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Bierman v. United Farm Family Ins. Co.

United States District Court,

D. Maryland.

Albert J. BIERMAN, Individually and d/b/a King Mulch and King Farm, and King Pallet, Inc., t/a King Mulch, Plaintiffs,

v.

UNITED FARM FAMILY INSURANCE COMPANY, Defendant.

 

Civil Action No. RDB–12–2445.

May 6, 2013.

 

MEMORANDUM OPINION

RICHARD D. BENNETT, District Judge.

*1 Plaintiffs Albert J. Bierman and King Pallet, Inc. (together, “Plaintiffs”) bring this action seeking damages against Defendant United Farm Family Insurance Company (“Defendant”) and arising out of Defendant’s fulfillment of an insurance claim. Plaintiffs allege that Defendant breached a contract, made false representations, and acted in bad faith due to conduct in relation to that insurance claim. Now pending is the Defendant’s Motion to Dismiss (ECF No. 12) Count Two of Plaintiffs’ Complaint for failure to state a claim. Defendant also moves to dismiss Count Three of Plaintiffs’ Complaint on grounds that this Court lacks subject matter jurisdiction over this claim.

 

The Court has reviewed the submissions by both parties and finds that no hearing is necessary. See Local Rule 105.6 (D.Md.2011). For the reasons that follow, Defendant’s Motion to Dismiss is GRANTED IN PART and DENIED IN PART. The Motion is GRANTED with respect to the dismissal of Count Two of Plaintiffs’ Complaint, but is DENIED with respect to the dismissal of Count Three of Plaintiffs’ Complaint.

 

BACKGROUND

In ruling on a motion to dismiss, the factual allegations in a plaintiff’s complaint must be accepted as true, and those facts must be construed in the light most favorable to the plaintiff. Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir.1999). Plaintiff King Pallet, Inc. (“King Pallet”) is a Maryland corporation whose principal place of business is located in Baltimore. Pls.’ Compl. ¶ 2, ECF No. 2. Plaintiff Albert J. Bierman (“Bierman”) operates King Pallet, and also does business under the name “King Mulch.” Id. ¶ 1. Plaintiffs own a building located at 1112 Hengemihle Avenue (“the Essex property”) in Essex, Maryland, in which they stored wooden pallets.FN1 Id. ¶ 3. Defendant United Farm Family Insurance Company (“Farm Family” or “Defendant”) is an insurance company, from which Plaintiffs bought three insurance policies for the Essex property:

 

FN1. A pallet is a flat structure that serves as a base for the transportation of objects by forklifts or other mechanisms.

 

1. Policy 1904I0001, an “Inland Marine” policy, which identifies the insured as Albert J. Bierman, and has a policy limit of $400,000 covering wooden pallets located on the Essex property;

 

2. Policy 1903X0034, a “Contractors Advantage” policy, which identifies the insured as Albert J. Bierman, and provides coverage for the building on the Essex property ($525,000), business personal property ($5000), and business income loss (actual loss value);

 

3. Policy 1901X0031, a “Commercial Property” policy, which identifies the insured as King Pallet, Inc., and covers the building on the Essex property with a policy limit of $575,000.

 

Pls.’ Resp., Exs. 1–3, ECF No. 13. On July 17, 2009, a fire “damaged and destroyed” the Essex property, and Plaintiffs have “sustained a loss due to damage to the building, … business property including wooden pallets, .. [and] business interruption.” Pls.’ Compl. ¶¶ 10, 15. Plaintiffs filed an insurance claim with Farm Family to recover the value of the incurred damages. Id. ¶ 11. Farm Family assessed the damage to the Essex property and paid an undisclosed amount of money to Plaintiffs. Id. ¶ 12. While Farm Family has made payments of “substantial amounts due,” they have not paid the “entire claim due.” Id. ¶ 12, 14.

 

*2 On July 16, 2012, Plaintiffs submitted a Complaint in the Maryland Circuit Court for Baltimore City. See id. The Complaint alleges three counts-namely, that Farm Family breached its contracts with Plaintiffs because it did not pay the appropriate amount of damages under the insurance policies (“Count One”); negligently made false representations to Plaintiffs regarding their insurance claim (“Count Two”); and acted in bad faith in its assessment of Plaintiffs’ insurance claim (“Count Three”). Id. ¶¶ 21, 27, 36. Plaintiffs seek $461,000 under Count One, $461,000 under Count Two, additional damages under Count Three, and interest as to all three Counts. Id. ¶¶ 24, 34, 43. On August 16, 2012, Defendant removed this case to this Court on the basis of diversity jurisdiction, pursuant to 28 U.S.C. § 1332. See Notice of Removal, ECF No. 1.

 

On October 17, 2012, Farm Family filed its Motion to Dismiss (“Motion”) Counts Two and Three of the Plaintiffs’ Complaint. As to Count Two, the negligent misrepresentation claim, Farm Family argues that Plaintiffs have failed to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Mot. to Dismiss 4. In addition, Farm Family argues that this Court does not have subject matter jurisdiction over Count Three, the bad faith claim, because Plaintiffs have failed to exhaust an administrative remedy required by section 27–1001 of the Maryland Insurance Code. See id. 2–3.

 

On November 5, 2012, Plaintiffs filed a Response, in which they assert that Farm Family’s Motion should be dismissed by this Court for two reasons. First, Plaintiffs argue that the Motion is not timely, because Farm Family filed it after submitting an answer to Plaintiffs’ Complaint. See Pls.’ Resp. 5–6. Second, Plaintiffs assert that Farm Family’s administrative remedy claim constitutes an affirmative defense that should have been raised in its Answer. See id. at 6.

 

After review, Defendant’s Motion to Dismiss is GRANTED IN PART and DENIED IN PART. This Court determines that Plaintiffs have failed to state a claim in Count Two of their Complaint, so their claim for negligent misrepresentations is DISMISSED WITHOUT PREJUDICE. However, this Court finds that it has jurisdiction over Count Three, because Plaintiffs need not exhaust their administrative remedy with the Maryland Insurance Administration before bringing a bad faith claim. Accordingly, Plaintiffs’ claim for bad faith may proceed.

 

STANDARD OF REVIEW

I. Motion to Dismiss Pursuant to Rule 12(b)(1)

Under Rule 12(b)(1) of the Federal Rules of Civil Procedure, a court may dismiss a suit because it lacks subject matter jurisdiction over the case.   CGM, LLC v. BellSouth Telecomms., Inc., 664 F.3d 46, 52 (4th Cir.2011). A motion to dismiss under Rule 12(b)(1) may be framed in either of two ways. First, a defendant may assert that the facts alleged in the complaint are insufficient to determine whether the court has subject matter jurisdiction.   Kerns v. United States, 585 F.3d 187, 192 (4th Cir.2009). When considering a motion made pursuant to Rule 12(b)(1) under this reason, the court must assume that the facts alleged in the complaint are true, and the motion must be denied if the facts in the complaint justify the invocation of the court’s subject matter jurisdiction. Id.

 

*3 Alternatively, a defendant may attack the veracity of the jurisdictional allegations in the complaint. Id. In this situation, the court “may go beyond the complaint, conduct evidentiary proceedings, and resolve the disputed jurisdictional facts.” Id. at 193. When attacking a complaint for this reason, “the presumption of truthfulness normally accorded a complaint’s allegations does not apply, and the district court is entitled to decide disputed issues of fact with respect to subject matter jurisdiction.” Id. at 192. When the jurisdictional allegations are inextricably intertwined with the facts central to the merits of the claim, however, the usual presumption of truthfulness should attach to the factual allegations of the complaint, and the court “should then afford the plaintiff the procedural safeguards—such as discovery—that would apply were the plaintiff facing a direct attack on the merits.” Id. at 193.

 

II. Motion to Dismiss Pursuant to Rule 12(b)(6)

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes the dismissal of a complaint if it fails to state a claim upon which relief can be granted. The purpose of Rule 12(b)(6) is “to test the sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir.2006).

 

The Supreme Court’s recent opinions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), “require that complaints in civil actions be alleged with greater specificity than previously was required.” Walters v. McMahen, 684 F.3d 435, 439 (4th Cir.2012) (citation omitted). The Supreme Court’s decision in Twombly articulated “[t]wo working principles” that courts must employ when ruling on Rule 12(b)(6) motions to dismiss. Iqbal, 556 U.S. at 678. First, while a court must accept as true all the factual allegations contained in the complaint, legal conclusions drawn from those facts are not afforded such deference. Id. (stating that “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice” to plead a claim).

 

Second, a complaint must be dismissed if it does not allege “a plausible claim for relief.” Id. at 679. Under the plausibility standard, a complaint must contain “more than labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. Although the plausibility requirement does not impose a “probability requirement,” id. at 556, “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 663; see also Robertson v. Sea Pines Real Estate Cos., 679 F.3d 278, 291 (4th Cir.2012) (“A complaint need not make a case against a defendant or forecast evidence sufficient to prove an element of the claim. It need only allege facts sufficient to state elements of the claim.” (emphasis in original) (internal quotation marks and citation omitted)). In short, a court must “draw on its judicial experience and common sense” to determine whether the pleader has stated a plausible claim for relief. Iqbal, 556 U.S. at 664.

 

ANALYSIS

*4 This Court first addresses Plaintiffs’ claim that Farm Family’s Motion to Dismiss has been waived. Finding that the Motion is timely, this Court turns to the merits of Defendant’s arguments, and determines that Count Two fails to state a claim while Count Three is properly before this Court.

 

I. Plaintiffs’ Argument that Farm Family’s Motion to Dismiss Has Been Waived

Plaintiffs argue that Farm Family’s Motion to Dismiss has been waived for two reasons. First, Plaintiffs claim that a motion to dismiss is not proper at this stage, because Farm Family has already submitted its Answer to the Complaint. See Pls.’ Resp. 6. Second, they assert that Farm Family cannot argue that Plaintiffs failed to exhaust their administrative remedy for Count Three, because it is an affirmative defense that must be addressed in the Answer. See Young v. Nat’l Ctr. for Health Servs. Research, 828 F.2d 235, 238 (4th Cir.1987). Neither claim has merit.

 

A. The Defendant’s Motion to Dismiss Has Been Properly Submitted

Plaintiffs claim that Farm Family has waived its opportunity to submit a motion to dismiss under Rule 12(b) of the Federal Rules of Civil Procedure. Specifically, Plaintiffs argue that Farm Family cannot submit their Motion to Dismiss at this stage, because it already filed an answer to Plaintiffs’ Complaint. See Pls.’ Resp. 6. Rule 12(b) requires that a motion asserting the defense of failure to state a claim or lack of subject matter jurisdiction “be made before pleading if a responsive pleading is allowed.” Fed.R.Civ.P. 12(b). Exceptions to this rule, however, fall under Rule 12(h)(2). In particular, Rule 12(h)(2)(B) allows a defendant to bring a motion to dismiss for failure to state a claim or for lack of subject matter jurisdiction “by a motion under Rule 12(c).” Rule 12(c) states that a motion on the judgment of the pleadings may be brought after the pleadings have been entered, but early enough so as to not delay trial. See Fed.R.Civ.P. 12(c); see also Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.1999) (stating that a defendant’s untimely motion to dismiss pursuant to Rule 12(b)(6) may be viewed as a Rule 12(c) motion).

 

This Court finds that it may construe Farm Family’s Motion to Dismiss as a motion made pursuant to Rule 12(c). See Edwards, 178 F.3d at 243. Plaintiffs do not proffer that Defendant’s Motion has been made so late as to delay the start of a trial. See, e.g., Reynolds Assocs. v. Kemp, 974 F.2d 1331 (4th Cir.1992) (unpublished table opinion) (finding that a district court’s consideration of a Rule 12(c) motion two weeks before trial was within “the sound discretion of the judge”). Furthermore, Plaintiffs do not describe any other prejudice that would occur if this Court considered Farm Family’s Motion to Dismiss. Accordingly, this Court rejects Plaintiffs’ waiver argument and construes Farm Family’s Motion to Dismiss as a Motion for Judgment on the Pleadings under Rule 12(c).

 

B. Farm Family Has Not Waived Any Affirmative Defense

*5 Plaintiffs also argue that Farm Family’s administrative remedy claim is an affirmative defense that should have been raised in the party’s Answer to the Complaint. See Moore v. Bennette, 517 F.3d 717, 725 (4th Cir.2008) ( “Failure to exhaust administrative remedies is an affirmative defense.”). Rule 8(c) of the Federal Rules of Civil Procedure requires that affirmative defenses be raised “in response to a pleading,” which, in this case, would be Farm Family’s Answer. Plaintiffs claim that the failure to raise an affirmative defense in the appropriate pleading results in the loss of that defense. See Pls.’ Resp. 6 (citing Brinkley v. Harbour Recreation Club, 180 F.3d 598, 612 (4th Cir.1999), and Peterson v. Air Line Pilots Ass’n Int’l, 759 F.2d 1161, 1164 (4th Cir.1985)).

 

Contrary to Plaintiffs’ argument, the law in the Fourth Circuit allows a defendant to raise an affirmative defense after filing a response to the complaint. Indeed, the United States Court of Appeals for the Fourth Circuit has held that “there is ample authority in this Circuit for the proposition that absent unfair surprise or prejudice to the plaintiff, a defendant’s affirmative defense is not waived when it is first raised in a pre-trial dispositive motion.” Brinkley, 180 F.3d at 612; see also Peterson, 759 F.2d at 1164. Thus, a defendant may properly raise an affirmative defense in a motion to dismiss made before trial, as long as no prejudice will occur. In their Response, Plaintiffs fail to show how Farm Family’s Motion has caused any unfairness or prejudice to their case. Moreover, Plaintiffs have been able to adequately address the merits of Farm Family’s Motion, and the timing of Farm Family’s administrative remedy claim has not hindered Plaintiffs’ case. See Pls.’ Resp. 7–9. Accordingly, Plaintiffs’ claim that Farm Family may not raise an affirmative defense in its Motion to Dismiss is without merit, and this Court will thus consider Farm Family’s argument that Plaintiffs failed to exhaust their administrative remedy.

 

II. Farm Family’s Motion for Dismissal of Plaintiffs’ Negligent Misrepresentation Claim (Count Two)

In its Motion to Dismiss, Farm Family claims that this Court should dismiss Count Two of Plaintiffs’ Complaint, which states that Farm Family negligently misrepresented certain aspects of Plaintiffs’ claim and Farm Family’s measurement of the loss. Farm Family argues that Plaintiffs have failed to state a claim, because Plaintiffs do not allege facts that satisfy the elements of negligent misrepresentation. Under Maryland law, a plaintiff must fulfill five elements in order to succeed on a claim for negligent misrepresentation. See Weisman v. Connors, 540 A.2d 783 (Md.1988). First, a plaintiff must show that the defendant owed a duty of care to the plaintiff and negligently asserted a false statement. Id. at 791. Second, the defendant must have intended that the false statement would be acted upon by the plaintiff. Id. Third, the defendant must have had knowledge that the plaintiff would probably rely upon the false statement and that it would cause loss or injury. Id. Fourth, the plaintiff must have taken action in reliance upon the false statement. Id. Finally, the plaintiff must have suffered damage proximately caused by the defendant’s negligence. Id. In their Complaint, Plaintiffs assert that Farm Family made negligent misrepresentations when it violated its duty to appropriately value an insurance claim. See Pls.’ Compl. ¶ 26. In particular, Plaintiffs state that Farm Family misrepresented the application of a coinsurance penalty.FN2 Id. at ¶ 27.

 

FN2. Plaintiffs do not elaborate on this claim in Count Two of their Complaint, and merely list it among allegations of Farm Family’s failure to properly evaluate the insurance claim. See Pls.’ Compl. ¶ 27.

 

*6 This Court finds that Plaintiffs have failed to specify sufficient facts to state a plausible claim for relief for negligent misrepresentation under Weisman. Under the first element of Weisman, Plaintiffs must show that Farm Family negligently asserted a false statement. See 540 A.2d at 791. Plaintiffs, however, merely state that “Defendant negligently misrepresented various aspects of the claim and the loss measurement” without identifying the actual false statements that Farm Family made. See Pls.’ Compl. ¶ 27. Plaintiffs also fail to sufficiently allege the second and third Weisman elements—that Farm Family intended that Plaintiffs act upon its statements and knew that Plaintiffs’ reliance upon the allegedly negligent statements would cause loss or injury. See Weisman, 540 A.2d at 791. Instead, Plaintiffs make the bare assertion that Farm Family “knew, or reasonably should have known, that [Plaintiffs] would probably rely on its statements, which, if erroneous, will cause loss or injury.” Pls.’ Compl. ¶ 28. Furthermore, Plaintiffs do not adequately allege that they took action in reliance on Farm Family’s negligent statements, but Plaintiffs merely avow that they acted to their detriment in relying on those representations. Pls.’ Compl. ¶ 30. Absent any particular facts to support their claim, Plaintiffs have wholly failed to state a claim upon which relief can be granted.

 

In response, Plaintiffs assert that Rule 8(a)(2) of the Federal Rules of Civil Procedure mandates only that they “comply with bare notice pleading requirements.” Pls.’ Resp. 15. Plaintiffs, however, misinterpret the pleading requirements of Rule 8. The Supreme Court in Twombly, 550 U.S. 544, and Iqbal, 556 U.S. 662, found that Rule 8 “require[s] that complaints in civil actions be alleged with greater specificity than previously was required.” Walters, 684 F.3d at 439. Plaintiffs’ Count Two improperly relies on a “[t]hreadbare recital[ ] of the elements of a cause of action.” Iqbal, 556 U.S. at 678. To withstand a motion to dismiss, Plaintiffs must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 663. As discussed above, Plaintiffs fail to allege the necessary facts that support the elements of a claim for negligent misrepresentation.

 

Plaintiffs also rely on Cooper v. Berkshire Life Ins. Co., 810 A.2d 1045 (Md.Ct.Spec.App.2002), in support of their argument that they have stated a valid claim. See Pls.’ Resp. 12–15. In Cooper, the defendant insurance company told the plaintiff that he would have to make premium payments for a period of ten years on a “vanishing premium” life insurance policy. 810 A.2d at 1049. After purchasing the insurance policy, the plaintiff discovered that the policy required premium payments for seventeen years. See id. The Maryland Court of Special Appeals held that the insurance company’s statements regarding the length of the premium payments constituted negligent misrepresentation, because they induced the plaintiff into buying the policy.   Id. at 1073. Plaintiffs’ reliance on Cooper is unavailing. In Cooper, the plaintiff specifically detailed the insurance company’s statements that misled him into buying the insurance policy and alleged that he relied on those misrepresentations in deciding to purchase the policy. Id. at 1049. In contrast, Plaintiffs in this case neglect to offer any facts illustrating Farm Family’s allegedly incorrect statements. Nor do Plaintiffs allege that they relied upon those statements when they bought the insurance policies on the Essex property.

 

*7 In sum, Plaintiffs’ claim for negligent misrepresentation fails to state a claim upon which relief can be granted. Rather than asserting the elements of negligent misrepresentation, Count Two essentially repeats Plaintiffs’ claim for breach of contract found in Count One. In Count Two of their Complaint, Plaintiffs state that they acted upon “the false belief that the insurer was valuing its claim in accordance with the policy.” Pls.’ Compl. ¶ 29. Though they couch these allegations as a negligent misrepresentation claim, Plaintiffs are merely disputing Farm Family’s assessment of their insurance policies and the amount owed to them—indeed, the alleged damages under Count Two are the same as those under Count One. See id. ¶¶ 24, 34. In their attempt to refashion their breach of contract claim as a negligent misrepresentation claim, Plaintiffs fail to make out the requisite elements for the cause of action. See Weisman, 540 A.2d at 791. Accordingly, this Court dismisses Count Two of Plaintiffs’ Complaint.

 

III. Farm Family’s Motion to Dismiss Plaintiffs’ Bad Faith Claim (Count Three)

Count Three of the Complaint alleges that Farm Family violated section 3–1701 of the Maryland Courts and Judicial Proceedings Code by acting in bad faith. Farm Family argues that Plaintiffs cannot raise this claim, because Maryland law requires that Plaintiffs first pursue an administrative remedy with the Maryland Insurance Administration before filing for bad faith. See Mot. to Dismiss 2.

 

Section 27–1001(d) (1) of the Maryland Insurance Code states that a “complaint stating a cause of action under § 3–1701 of the Courts Article shall first be filed with the Maryland Insurance Administration.” A plaintiff, however, may bypass section 3–1701’s administrative remedy when the action is under a commercial policy whose limit of liability exceeds $1,000,000. See Md.Code Ann., Ins. § 27–1001(c)(2)(iii). Plaintiffs claim that they have met this exception for two reasons. First, Plaintiffs argue that the aggregate liability limit of their three insurance policies with Farm Family exceeds $1,000,000. See Pls.’ Resp. 8. Second, they state that their “Contractors Advantage” insurance policy has no limit, thus that one policy alone meets the $1,000,000 requirement under section 27–1001(c)(2)(iii).FN3 See id. at 8–9. Farm Family counters that the policy limits cannot be aggregated and that a policy must have an explicitly stated monetary limit in excess of $1,000,000 to qualify for the section 27–1001(c) (2)(iii) exception.

 

FN3. Because this Court finds that Plaintiffs may aggregate their insurance policy limits to qualify for section 27–1001(c)’s exception, it need not decide whether an unlimited liability policy would also satisfy the exception.

 

This Court has previously noted that section 3–1701 of the Maryland Insurance Code has been addressed in only one reported case at the appellate level in Maryland. Millennium Inorganic Chems. Ltd. v. Nat’l Union Fire Ins. Co., 893 F.Supp.2d 715, 741 n.23 (D.Md.2012) (citing Thompson v. State Farm Mut. Auto Ins. Co., 9 A.3d 112 (Md.Ct.Spec.App.2010)). That case, decided by the Court of Special Appeals of Maryland in 2010, concerned a matter of venue unrelated to this case. See Thompson, 9 A.3d 112. As evident by the parties’ briefing and this Court’s research, no Maryland or federal court has addressed the issues regarding the application of section 27–1001(c)(2)(iii) that are before this Court. See Def.’s Mot. to Dismiss 3 n.1; Pls.’ Resp. 8; Def.’s Reply 3–4, ECF No. 15. In general, however, where an insurance policy is ambiguous, courts interpret that policy in a light more favorable to the insured. See Clendenin Bros., Inc. v. U.S. Fire Ins. Co., 889 A.2d 387, 394 (Md.2006) (stating that an insurance policy “will ordinarily be resolved against the party who drafted the contract, where no material evidentiary factual dispute exists”).

 

*8 In this case, the parties do not point out, and this Court cannot find, any specific provision of the insurance policies that states whether the liability limits on the Essex property can be aggregated. Because an ambiguity exists, this Court interprets the policies in favor of Plaintiffs and against the drafter. Thus the liability limits of the insurance policies on the Essex property may be aggregated. See Marvin J. Perry, Inc. v. Hartford Cas. Ins. Co., 412 F. App’x 607, 609 n.3 (4th Cir.2011) (noting that under Maryland law an ambiguity is resolved against the party who drafted the contract after consideration of extrinsic evidence).

 

The three Farm Family policies that Plaintiffs maintained on the Essex property are the “Inland Marine” policy, which covers the wooden pallets with a limit of $465,000, the “Contractors Advantage” policy, which covers the building on the Essex property with a limit of $525,000, and the “Commercial Property” policy, which also covers the building on the Essex property with a limit of $575,000. See Pls.’ Compl. ¶ 5. Because the aggregate limit of these three policies exceeds $1,000,000, Plaintiffs satisfy the exception under section 27–1001(c)(2)(iii) and they are not required to exhaust their administrative remedy with the Maryland Insurance Administration before they may file their bad faith claim before this Court. Accordingly, this Court has subject matter jurisdiction over Count Three.

 

CONCLUSION

For the reasons stated above, Defendant Farm Family’s Motion to Dismiss (ECF No. 12) is GRANTED IN PART and DENIED IN PART. Specifically, the Motion is GRANTED as to Count Two of Plaintiffs’ Complaint, because Plaintiffs fail to allege sufficient facts to make out a claim for negligent misrepresentation. The Motion is DENIED as to Count Three, because this Court has subject matter jurisdiction over Plaintiffs’ bad faith claim. Therefore, Count Two of Plaintiffs’ Complaint (ECF No. 1) is DISMISSED WITHOUT PREJUDICE.

 

A separate Order follows.

 

ORDER

For the reasons stated in the accompanying Memorandum Opinion, IT IS HEREBY ORDERED this 6th day of May, 2013, that:

 

1. Defendant United Farm Family Insurance Company’s Motion to Dismiss (ECF No. 12) is GRANTED IN PART and DENIED IN PART. Specifically, the Motion to Dismiss is GRANTED as to its claim that Count Two of Plaintiffs’ Complaint should be dismissed and is DENIED to its claim that Count Three of Plaintiffs’ Complaint should be dismissed;

 

2. Count Two of Plaintiffs’ Complaint (ECF No. 2) is DISMISSED WITHOUT PREJUDICE; and

 

3. The Clerk of the Court transmit copies of this Order and accompanying Memorandum Opinion to Counsel.

Gula v. Advanced Cargo Transp., Inc.

United States District Court,

M.D. Pennsylvania.

John GULA, Plaintiff,

v.

ADVANCED CARGO TRANSPORTATION, INC., and Washington Munozarevalo, Defendants.

 

Civil No. 3:13–CV–226.

May 7, 2013.

 

Michael Joseph Vazquez, Jr., O’Malley & Langan, Scranton, PA, Todd A. Romano, Romano Law Group, Lake Worth, FL, for Plaintiff.

 

Theodore M. Schaer, Philadelphia, PA, for Defendants.

 

MEMORANDUM

MALACHY E. MANNION, District Judge.

*1 Before the court is defendant Advanced Cargo Transportation’s motion to dismiss, (Doc. No. 5 ), those portions of the complaint containing requests for punitive damages and allegations of reckless conduct. (Doc. No. 1.) In his brief in opposition, plaintiff argues that he has stated sufficient facts at this stage of litigation and that a reasonable jury could find that defendants acted recklessly, thereby entitling him to punitive damages. (Doc. No. 8, at 9.) After reviewing the complaint and the parties’ briefs, the court has determined that defendants’ motion to dismiss will be DENIED.

 

BACKGROUND

On October 10, 2011, defendant Washington Munozarevalo was driving his tractor-trailer truck in the eastbound lane of Interstate 80 in Monroe County, Pennsylvania. (Doc. No. 1, at 2–3.) The truck was owned by defendant Munozarevalo but was “operated with the permission and consent of his employer, Advanced Cargo Transportation … under an owner-operator arrangement.” (Doc. No. 1, at 3.) At the time, plaintiff John Gula was a passenger in a vehicle being driven in the westbound lane of Interstate 80. (Doc. No. 1, at 3.) Although the precise chain of events are unclear from the complaint, defendant Munozarevalo appears to have struck the rear of two cars in the eastbound lane, crossed the highway median into the westbound lane, and collided with the vehicle in which plaintiff was a passenger. (Doc. No. 1, at 4.) As a result, plaintiff claims that he has sustained the following injuries: a jejunal perforation, a mesenteric hematoma, a splenic flexure, colonic ischemia, multiple acute left rib fractures, pleural effusion, numbness and coldness of both feet, occasional numbness of bilateral fingers, intermittent headaches, sensitivity to loud noises and light, fatigue, recurrent nightmares, and a left L5 radiculopathy, post-traumatic stress disorder and depressive disorder, slight bilateral tremor in the arms and mild psychomotor retardation, and intermittent left leg weakness. (Doc. No. 1, at 11,17–18.)

 

Investigation after the accident showed that defendant’s truck had a defective brake and relay valve on axle one and defective brakes on axle three. (Doc. No. 1, at 7–8, 15.) Plaintiff claims that defendant was driving over the speed limit while fatigued from operating his truck over the maximum legal operation time. (Doc. No. 1, at 7.) Plaintiff further claims that defendant Advanced Cargo failed to instruct defendant Munozarevalo how to safely operate the truck and did not provide Munozarevalo with proper training and supervision. (Doc. No. 1, at 6–7.) Finally, both Advanced and Munozarevalo failed to “maintain, inspect, and repair” the vehicle throughout its life of service. (Doc. No. 1, at 6, 14.)

 

Plaintiff filed suit against Munozarevalo for operating his truck in a “negligent, reckless and careless” manner. (Doc. No. 1, at 4.) He also sued Advanced Cargo under the alternative theories of direct liability and respondeat superior. (Doc. No. 1.) On February 25, 2013, defendants filed a consolidated motion to strike and motion to dismiss, arguing that the complaint fails to allege facts sufficient to support an award of punitive damages and that allegations of recklessness should therefore be stricken. (Doc. No. 6, at 2.) Defendants subsequently filed a third-party complaint against Trac Intermodal, the manufacturer of the truck, seeking indemnity or, in the alternative, contribution. (Doc. No. 13.) Plaintiff responded by filing an unopposed motion FN1 for leave to amend the complaint in order to add Trac Intermodal as a defendant to the case, (Doc. No. 15 ), which the court granted on April 30, 2013, (Doc. No. 20). The defendants Munozarevalo and Advanced Cargo withdrew their third party complaint on April 29, 2013. (Doc. No. 18.)

 

FN1. Pursuant to Local Rule 7.1, a party filing a unopposed motion must attach a certificate of concurrence. While plaintiff does not attach a certificate, the court will nonetheless rule on the motion.

 

STANDARD OF REVIEW

*2 Defendant’s motion to dismiss is brought pursuant to the provisions of Fed.R.Civ.P. 12(b)(6). This rule provides for the dismissal of a complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated, ( Hedges v. United States, 404 F.3d 744, 750 (3d Cir.2005) ), and dismissal is appropriate only if, accepting all of the facts alleged in the complaint as true, the plaintiff has failed to plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007) (abrogating “no set of facts” language found in Conley v. Gibson, 355 U.S. 41, 45–46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). The facts alleged must be sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. 544, 127 S.Ct. at 1965, 167 L.Ed.2d 929. This requirement “calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of” necessary elements of the plaintiff’s cause of action. (Id.) Furthermore, in order to satisfy federal pleading requirements, the plaintiff must “provide the grounds of his entitlement to relief,” which “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir.2008) (brackets and quotations marks omitted) (quoting Twombly, 550 U.S. 544, 127 S.Ct. at 1964–65 ).

 

DISCUSSION

In his complaint, plaintiff requests punitive damages from defendants Washington and Advanced Cargo Transportation, Inc. for “acts [which] constitute a reckless indifference to the risk of injury to Plaintiff.” (Doc. No. 1, at 11, 17.) Defendant subsequently filed a Rule 12(b)(6) motion to dismiss, but asking for relief under either 12(b)(6) or 12(f). (Doc. No. 5, at 3.) In that motion, defendants argue, “[p]laintiff’s Complaint in this matter has done nothing more than make conclusory allegations of a reckless state of mind without alleging facts sufficient to support such a finding, even if taken as true.” (Doc. No. 5, at 3.)

 

In analyzing defendant’s motion, the court is cognizant that Rule 12(f) and 12(b)(6) serve different purposes and provide different relief. Rule 12(f) has “no application to a request for punitive damages, in that it does not constitute redundant, immaterial, impertinent, or scandalous matter.”   North Side Foods Corp. v. Bag–Pack, Inc., 06–CV–1612, 2007 WL 954106, *3 (W.D.Pa.2007); see also Jordan v. Wilkes–Barre General Hosp., 07–CV–390, 2008 WL 3981460, *4 (M.D.Pa.2008) (court should not use 12(f) to eliminate request for punitive damages). Rather, rule 12(b)(6) provides the appropriate remedy when challenging a request for punitive damages. K.E.K. ex rel. Kauffman v. The Grier School, 05–CV–386, 2005 WL 2028700, *2 (M.D.Pa.2005) (analyzing punitive damages under Rule 12(b)(6)). On the other hand, “[t]o the extent plaintiffs wish to excise individual allegations, Rule 12(f) provides the appropriate vehicle for doing so.” North Side Foods Corp., v. Bag–Pack, 06–CV–1612, 2007 WL 954106, *3 (W.D.Pa.2007); Fed.R.Civ.P. 12(f). Because defendants ask the court to strike particular allegations and dismiss the request for punitive damages, the court will analyze defendants motion under both rules. Jordan v. Wilkes–Barre General Hosp., 07–CV–390, 2008 WL 3981460, *5 (M.D.Pa.2008) (recognizing court’s authority to interpret a motion and construe it according to the substance of the motion itself).

 

*3 As an initial matter, an award of punitive damages in a diversity case is governed by state law. Bridges v. Ashland Borough, 10–CV–1065, 2011 WL 5826676 (M.D.Pa.2011). Under Pennsylvania law, a party may recover punitive damages if “(1) a defendant had a subjective appreciation of the risk of harm to which the plaintiff was exposed and that (2) he acted, or failed to act, as the case may be, in conscious disregard of that risk.” Hutchison ex rel. Hutchison v. Luddy, 870 A.2d 766, 124 (2005). The Pennsylvania Supreme Court has said:

 

The standard governing the award of punitive damages in Pennsylvania is settled. Punitive damages may be awarded for conduct that is outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others. As the name suggests, punitive damages are penal in nature and are proper only in cases where the defendant’s actions are so outrageous as to demonstrate willful, wanton or reckless conduct. Hutchison ex rel. Hutchison v. Luddy, 582 Pa. 114, 870 A.2d 766, 770 (2005).

 

The complaint contains numerous allegations indicating that defendant Munozarevalo acted negligently and violated several Pennsylvania and federal regulations. (Doc. No. 1, at 13–17.) Allegations of negligence, however, are insufficient to survive a motion to dismiss a request for punitive damages under Pennsylvania law because punitive damages may not be awarded for simple negligence. Kempson v. American Honda Motor Co., 09–CV–0118, 2009 WL 744115, *5 (M.D.Pa.2009). Furthermore, allegations that a party violated state or federal law are legal conclusions to which the court need not give a presumption of truth. For the purpose of defendants’ Rule 12(b)(6) motion, the court will only consider factual allegations from which the court can draw an inference of a plausible claim for reckless conduct and, therefore, punitive damages.

 

Plaintiff first states that defendant Munozarevalo “[operated] his vehicle when he was so fatigued as to make it unsafe for him to operate the tractor trailer” and also “[operated] his vehicle in excess of the applicable Hours of Service.” (Doc. No. 1, at 14.) The complaint indicates that defendant failed to “maintain, inspect and repair his vehicle” and “[operated] the tractor on public highways with inoperative or defective brakes and a relay valve on axle 1[and] inoperative or defective brakes on axle 3.” (Doc. No. 1, at 14–15.) While these allegations may not conclusively establish recklessness, the court’s obligation is merely to determine whether they create a plausible inference of recklessness, one which discovery will further substantiate.   Williams v. Beard, 10–CV–979, 2012 WL 463441, *2 (M.D.Pa.2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). The court has determined that, in the aggregate, these allegations allow an inference that defendant Munozarevalo had a “subjective appreciation of the risk” he posed to other drivers. Hutchison ex rel. Hutchison v. Luddy, 582 Pa. 114, 870 A.2d 766, 770 (2005). The fact that he nonetheless operated his truck under these conditions indicates that he acted with “conscious disregard of that risk.” Id. Therefore, plaintiff’s allegations suffice to survive a motion to dismiss with regard to defendant Munozarevalo.

 

*4 As to defendant Advanced Cargo Transportation, plaintiff raises two theories of liability—vicarious and direct. (Doc. No. 1, 4–8.) Looking at vicarious liability under respondeat superior, the court has already determined that plaintiff may go forward with his claim for punitive damages against Munozarevalo. Plaintiff claims that Munozarevalo was acting within the scope of employment at the time of the accident, and neither defendant disputes this in the motion. Brezenski v. World Truck Transfer, Inc. 755 A.2d 36, 39 (Pa.Super.Ct.2000) (“An employer is vicariously liable for the wrongful acts of an employee if that act was committed during the course of and within the scope of employment.”) Therefore, plaintiff has averred sufficient facts to survive a motion to dismiss against Advanced Cargo under a theory of respondeat superior. The question remains, however, as to whether plaintiff has alleged sufficient facts to support a claim of direct liability.

 

Plaintiff alleges that Advanced Cargo allowed Munozarevalo to operate his truck with “inoperative or defective brakes and a relay valve on axle 1,” “inoperative or defective brakes on axle 3,” and “a missing registration lamp lens [sic] cover.” (Doc. No. 1, at 7–8.) Furthermore, the complaint indicates that Advanced Cargo permitted Munozarevalo to operate the truck when he was fatigued, in excess of the permissible time limit, and without proper training or supervision. (Doc. No. 1, at 6–7.) Finally, Advanced Cargo failed to “maintain, inspect, and repair” the vehicle. (Doc. No. 1, at 6.) Like the allegations against Munozarevalo, these allegations, while not conclusive as to recklessness, are sufficient to survive defendants’ motion to dismiss because they allow the court to make an inference of reckless conduct.

 

Having disposed of the first part of the motion, the court must now look at the motion to strike. Under Rule 12(f), “the court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). While this rule gives the court significant discretion, “striking a pleading is a drastic remedy and should be sparingly used by the courts.” Conklin v. Anthou, 10–CV–2501, 2011 WL 1303299, *1 (M.D.Pa.2011); see also Zaloga v. Provident & Acc. Ins. Co. of America, 671 F.Supp.2d 623, 633 (M.D.Pa.2009) (acknowledging court’s discretion to strike). In this case, defendants ask the court to strike the words “outrageous, careless, willfully, wantonly, reckless, and reckless indifference.” (Doc. No. 6, at 2.) This language precisely mirrors the standard for punitive damages enunciated by the Pennsylvania Supreme Court. Hutchison ex rel. Hutchison v. Luddy, 582 Pa. 114, 870 A.2d 766, 770 (2005). Because the court will deny the motion to dismiss plaintiff’s request for punitive damages, this language is not immaterial nor impertinent. Furthermore, the court does not perceive the allegations to be scandalous. Allegations are scandalous if they “improperly cast[ ] a derogatory light on someone, most typically on a party to the action.” Zaloga v. Provident Life & Acc. Ins. Co. of America, 671 F.Supp.2d 623, 633 (M.D.Pa.2009). Furthermore, “[s]candalous pleading must reflect cruelly upon the defendant’s moral character, use repulsive language or detract fro the dignity of the court. Id. The court is not prepared to find the terms “outrageous, careless, willfully, wantonly, reckless, and reckless indifference” scandalous, especially considering they are the terms used by the Supreme Court of Pennsylvania in the standard governing punitive damages. Finally, defendants make no claim that the language is redundant, instead requesting to have it totally stricken. (Doc. No. 6, at 3–4.) Therefore, the motion to strike will be DENIED.

 

ORDER

*5 IT IS HEREBY ORDERED:

 

(1) Defendants’ motion to strike, (Doc. No. 5 ), allegations in the complaint of the culpability of defendants’ alleged conduct, (Doc. No. 1 ), is DENIED.

 

(2) Defendants’ motion to dismiss, (Doc. No. 5 ), plaintiff’s request for punitive damages is DENIED.

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