STEPHEN N. LIMBAUGH Jr., District Judge.
Plaintiff Ward Hyundai, Inc. ("Ward") brought this action against its insurer Zurich American Insurance Company ("Zurich"). Zurich has moved to dismiss (#22) Ward's First Amended Complaint, and that motion has been fully briefed. This matter is now ripe for disposition.
According to the complaint, plaintiff worked with an insurance agent to obtain insurance coverage for Ward's inventory of vehicles. Plaintiff alleges that it sought coverage that would allow it to choose between body-shop estimates or "PDR estimates" for reimbursement of expenses.
Defendant has moved to dismiss all three Counts of the Amended Complaint.
The purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim is to test the legal sufficiency of a complaint so as to eliminate those actions which are fatally flawed in their legal premises and designed to fail, thereby sparing litigants the burden of unnecessary pretrial and trial activity. Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir. 2001) (quoting Neitzke v. Williams, 490 U.S. 319, 326-27 (1989)). A complaint must be dismissed for failure to state a claim if it does not plead enough facts to state a claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 560 (2007) (abrogating the traditional "no set of facts" standard set forth in Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). A petitioner need not provide specific facts to support his allegations, Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam), but "must include sufficient factual information to provide the grounds on which the claim rests, and to raise a right to relief above a speculative level." Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008), cert. denied, 129 S.Ct. 222 (2008) (quoting Twombly, 550 U.S. at 555-56 & n.3).
In ruling on a motion to dismiss, a court must view the allegations of the complaint in the light most favorable to the petitioner. Scheuer v. Rhodes, 416 U.S. 232 (1974); Kottschade v. City of Rochester, 319 F.3d 1038, 1040 (8th Cir. 2003). Although a complaint challenged by a Rule 12(b)(6) motion does not need detailed factual allegations, a petitioner must still provide the grounds for relief, and neither "labels and conclusions" nor "a formulaic recitation of the elements of a cause of action" will suffice. Twombly, 550 U.S. at 555 (internal citations omitted). "To survive a motion to dismiss, a claim must be facially plausible, meaning that the factual content . . . allows the court to draw the reasonable inference that the respondent is liable for the misconduct alleged." Cole v. Homier Dist. Co., Inc., 599 F.3d 856, 861 (8th Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). When determining the facial plausibility of a claim, the Court must "accept the allegations contained in the complaint as true and draw all reasonable inferences in favor of the nonmoving party." Id. (quoting Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir. 2005)).
Defendant contends that plaintiff is playing a "pleading game" in order to avoid application of the rule that the insured has a duty to examine the insurance policy to ensure it conforms with the desired or agreed upon coverage. See Safeco Ins. Co. of Am. v. Hamm, 718 F.Supp. 744, 746 (E.D. Mo. 1989) (citing Hartford Acc. & Indem. Co. v. Farmington Auction, Inc., 356 S.W.2d 512, 519 (Mo. App. 1962)). Indeed, plaintiff takes great pains not to claim wrongful denial of payment. Rather, its complaint is focused on the negligent or fraudulent misrepresentation (or mistake) that resulted in the policy that plaintiff says entitles it to damages or reformation of the contract.
Defendant is correct that whatever verbally transpired between the contracting parties is superseded and merged in a subsequent written policy issued by the insurer and accepted by the insured. Safeco Ins. Co. of Am. v. Hamm, 718 F.Supp. 744, 746 (E.D. Mo. 1989); Young v. Ray America, Inc., 673 S.W.2d 74, 79 (Mo. App. W.D. 1984); Hartford, 356 S.W.2d 512, 519. An insured has a reasonable time to accept or reject the policy after it is delivered. Hartford, 356 S.W.2d at 519. If the insured keeps the policy for a reasonable length of time, he is deemed to have accepted it. Id. Indeed, where the insured keeps the contract, thereby accepting its terms, the insured is bound in law to have known the contents of the instrument whether he read it or not. United States v. Home Life Ins. Co., 508 F.Supp. 559, 564 (E.D.Mo. 1980); Hartford, 356 S.W.2d at 519.
The law is clear that the "parol evidence rule bars evidence of prior or contemporaneous oral agreements that vary or contradict the terms of an unambiguous, final, and complete writing,
Defendant appears to assert that an insured can never bring a claim in tort against its insurer. Defendant insists that Hartford is controlling: "It is well settled law that insurance is a matter of contract, and is governed by the rules applicable to contracts and that any claim or suit by either party to an insurance contract must be based on the policy as issued." 356 S.W.2d at 518-19. But plaintiff cites to other law, which suggests that such is true only when the insured tries to recover the policy benefit. See Overcast v. Billings Mut. Ins. Co., 11 S.W.3d 62, 68 (Mo. banc 2000). That is, "an insurance company's denial of coverage itself is actionable only as a breach of contract and, where appropriate, a claim for vexatious refusal to pay." Id. at 69. Here, however, plaintiff insists that it does not seek the policy benefit, but rather — for Counts I and II — it seeks tort damages done to it as a result of the defendant's misrepresentation. Were the plaintiff attempting to recover under the theory that defendant should have allowed it a choice of estimate when it filed a claim under the contract, plaintiff would indeed be barred from doing so by the parol evidence rule. Defendant contends that plaintiff is barred from bringing any claim at all under these circumstances by the parol evidence rule, but plaintiff suggests that the defendant should not be permitted to hide behind its contract and its integration clause.
However, defendant also contends that plaintiff has not sufficiently pleaded the element of damages for Counts I and II. A court considering a Rule 12(b)(6) motion to dismiss must reject a complaint that offers "labels and conclusions" or a "formulaic recitation" of a cause of action's elements. Twombly, 550 U.S. at 555; Iqbal, 556 U.S. at 678. "Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement." Iqbal, 556 U.S. at 678 (internal quotations and changes omitted) (quoting Twombly, 550 U.S. at 557).
Here, it appears that plaintiff intentionally omitted facts about the damages it allegedly suffered in an effort to distance itself from a claim for damages based on contract, that is, based on defendant's failure to pay under the policy.
Reformation of an insurance contract is available in cases of mutual mistake, but it poses a high hurdle. See Galemore v. Haley, 471 S.W.2d 518 (Mo. App. W.D. 1971). Defendant suggests that plaintiff cannot rewrite the policy based on parol evidence, and it also contends plaintiff has not met the pleading standard required of complaints alleging mistake.
First, as addressed above, the parol evidence rule does not apply in cases where mistake is alleged. See Brown, 220 S.W.3d at 447; Hartford, 356 S.W.2d at 521. On the other hand, notwithstanding parol evidence to the contrary, "the sending of the written policy...constitutes a counter-offer and by receiving the policies and retaining them for the time shown here in evidence without object, the defendant accepted them and is bound by the policies as written." Hartford, 356 S.W.2d at 520. In Galemore, for example, the insured said there was a mistake as to a policy term, but the court held that the insured received the policy and accepted it as written, so she could not later "impugn its integrity." 471 S.W.2d at 525. And in Ray America, the court acknowledged that although reformation for mutual mistake was possible, the insured had read the policy, requested a correction as to the named insured, and renewed the policy as corrected — so a further correction as to the named insured was not permitted under the theory of reformation by mutual mistake. 673 S.W.3d at 82. Those cases were disposed of on the merits, however, and not on motions to dismiss. Although plaintiff is charged with reading the policy upon receiving it, he pleads that he asked his agent about the choice of estimate provision after receiving the policy, and that the agent assured him that the policy included that provision. It is not clear, however, when that discovery or subsequent conversation took place. Which brings the Court to defendant's other contention, which is that plaintiff has failed to adequately plead mistake.
Pursuant to Federal Rule of Civil Procedure 9(b), "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally."
As for the reformation claim based on mutual mistake, plaintiff's claim states only that a mistake was made. Plaintiff does not allege when or by which individuals the mistake was made. The only date mentioned in the complaint is April 27, 2011, which is the date defendant informed plaintiff that its agent had misinformed plaintiff about the insurance coverage. Although plaintiff alleges that the agent "represented to Ward that there must be some mistake about the coverage" (#21 at ¶ 13), the Court finds that allegations set forth by the amended complaint do not satisfy the requirements of Rule 9(b). Plaintiff does not explain whether the agent or someone else made the mistake on the defendant's end, nor does it offer specifics in terms of timing. For example, plaintiff does not explain when the agent represented that the choice of estimate provision would be in the policy, when the policy was issued, when plaintiff asked defendant about whether the choice of estimate provision was in the policy, when or how the defendant/agent confirmed the choice of estimate provision, or when or how the defendant informed plaintiff that the coverage did not include a choice of estimate provision. The allegations plaintiff has included are simply too general to state a claim for mutual mistake. See, e.g., J.J. Pager, L.L.C., 2008 WL 565752, at *2.
As with Counts I and II, the Court will permit plaintiff to replead Count III.
Accordingly,