Stafford v. Geico General Insurance Company et al, No. 3:2015cv00578 - Document 9 (D. Nev. 2016)
Court Description: ORDER granting in part and denying in part ECF No. 7 Motion to Dismiss, with leave to amend. Signed by Judge Robert C. Jones on 8/23/2016. (Copies have been distributed pursuant to the NEF - KR)
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Stafford v. Geico General Insurance Company et al Doc. 9 1 2 3 UNITED STATES DISTRICT COURT 4 DISTRICT OF NEVADA 5 6 _____________________________________ 7 PAMELA STAFFORD, 8 Plaintiff, 9 10 vs. GEICO GENERAL INSURANCE COMPANY et al., 11 Defendants. ) ) ) ) ) ) ) ) ) ) ) ) 3:15-cv-00578-RCJ-WGC ORDER 12 This case arises out of a hit-and-run accident and an insurance company’s alleged failure 13 14 to pay a claim on an underinsured motorist policy. Pending before the Court is a Motion to 15 Dismiss (ECF No. 7). The Court grants the motion in part and denies it in part. 16 I. 17 FACTS AND PROCEDURAL HISTORY On February 16, 2013, Plaintiff Pamela Stafford was involved in a hit-and-run motor 18 vehicle accident, which required Plaintiff to receive immediate and ongoing medical attention 19 for a concussion and cervical and lumbar strains. (Compl. ¶ 7, ECF No. 1). Plaintiff’s husband 20 notified Defendants (collectively, “GEICO”) of the accident the same day. (Id. ¶ 8). On 21 February 20, 2013, GEICO acknowledged receipt of Plaintiff’s claim. (Id. ¶ 10). GEICO paid 22 23 24 1 1 of 11 Dockets.Justia.com 1 $30,000 in medical expenses pursuant to the “Medical Payments” provision of Plaintiff’s 2 GEICO insurance policy (“the Policy”), but Plaintiff alleges that GEICO failed to investigate 3 her entitlement to Uninsured Motorist/Underinsured Motorist (“UM/UIM”) coverage under the 4 Policy. (Id. ¶ 12). She also alleges that GEICO failed to advise her of the potential for UM/UIM 5 coverage. (Id.). On December 13, 2013, Plaintiff sent GEICO a formal demand to pay the Policy’s 6 7 $100,000 UM/UIM limit per claim and provided information regarding her injuries, medical 8 treatment, wage loss, and disability. (Id. ¶ 13). On January 10, 2014, GEICO extended a 9 settlement offer of $24,765 under the UIM coverage of the policy, without an explanation of its 10 calculations or what Policy provisions apply. (Id. ¶ 14). From July 31, 2014 to October 23, 11 2015, the parties exchanged many communications to request and share information about 12 Plaintiff’s UIM claim and to discuss Plaintiff’s demands as to the claim. (Id. ¶¶ 15–57). The 13 parties also discussed the validity of GEICO’s assertion that an offset of $45,000 applies against 14 the UIM claim, (id. ¶¶ 26–36), and they discussed the details of a proposed arbitration 15 agreement, (id. ¶¶ 38–55). On October 12, 2015, Plaintiff sent GEICO a final demand to pay the 16 $100,000 UM/UIM limit under the Policy, (id. ¶ 56), and GEICO responded on October 23, 17 2015 by requesting additional information due to Plaintiff’s “new claims and allegations,” (id. ¶ 18 57). 19 Plaintiff makes the following claims against GEICO: (1) breach of contract; (2) tortious 20 breach of the covenant of good faith and fair dealing; (3) violation of eight subsections of NRS 21 686A.310 (Unfair Claims Settlement Practices Act (“UCSPA”)); and (4) punitive damages. 22 23 24 1 2 of 11 1 GEICO moves the Court to dismiss the UCSPA claims and to strike various portions of the 2 Complaint. 3 4 II. MOTION TO DISMISS Defendant moves the Court to dismiss Plaintiff’s UCSPA claims and her claim to 5 punitive damages. 6 A. 7 Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the 8 claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of 9 what the . . . claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 Legal Standards 10 (1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action 11 that fails to state a claim upon which relief can be granted. When considering a motion to dismiss 12 under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint 13 does not give the defendant fair notice of a legally cognizable claim and the grounds on which it 14 rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the 15 complaint is sufficient to state a claim, the court will take all material allegations as true and 16 construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 17 896, 898 (9th Cir. 1986). The court, however, is not required to accept as true allegations that are 18 merely conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. 19 Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 20 21 A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a plaintiff must plead facts pertaining to his own case making a violation “plausible,” not just 22 23 24 1 3 of 11 1 “possible.” Ashcroft v. Iqbal, 556 U.S. 662, 677–79 (2009) (citing Twombly, 550 U.S. at 556) 2 (“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to 3 draw the reasonable inference that the defendant is liable for the misconduct alleged.”). That is, a 4 plaintiff must not only specify or imply a cognizable legal theory, but also must allege the facts 5 of the plaintiff’s case so that the court can determine whether the plaintiff has any basis for relief 6 under the legal theory the plaintiff has specified or implied, assuming the facts are as the plaintiff 7 alleges (Twombly-Iqbal review). 8 B. 9 NRS 686A.310 lists sixteen types of “unfair practices in settling claims.” Plaintiff alleges 10 Analysis eight types of violations which GEICO asks the Court to dismiss. 11 1. Misrepresentation 12 Plaintiff alleges that GEICO made various misrepresentations of “pertinent facts or 13 insurance policy provisions relating to any coverage at issue.” Nev. Rev. Stat. § 686A.310(1)(a). 14 Specifically, Plaintiff alleges that GEICO failed to disclose that the Policy provided UM/UIM 15 coverage, but Plaintiff does not allege that GEICO misrepresented anything related to the 16 coverage, such as telling her that the Policy did not include UM/UIM coverage. Furthermore, 17 Plaintiff alleges that GEICO made a settlement offer based on the UIM coverage of her Policy, 18 which shows that GEICO acknowledged that the Policy included UIM coverage. (See Compl. ¶ 19 14). Plaintiff also alleges that the Policy failed to mention a possible offset to her UM/UIM 20 coverage, but this allegation discusses actual provisions of the Policy rather than alleging that 21 GEICO misrepresented something about the provisions. Plaintiff makes five other allegations 22 23 24 1 4 of 11 1 that fail to allege misrepresentation of pertinent facts or policy provisions related to the coverage; 2 rather, they allege that GEICO’s interpretation of Nevada law is incorrect or that GEICO made 3 misrepresentations regarding the process of arbitration, negotiation, and calculating damages. 4 (See id. ¶ 173). The Court dismisses the claim, with leave to amend. 5 2. Prompt Response to Communications 6 Plaintiff alleges that GEICO “[f]ail[ed] to acknowledge and act reasonably promptly 7 upon communications with respect to claims arising under insurance policies.” 8 § 686A.310(1)(b). Plaintiff alleges that GEICO responded to most of her communications within 9 a day to a week or two; however, she also alleges that GEICO failed to respond to two separate 10 communications regarding her claims within two months. (See Compl. ¶¶ 24–26, 53–57). 11 Plaintiff has provided sufficient facts to state a claim that GEICO failed to respond to her 12 communications in a reasonably prompt manner. The Court denies the motion to dismiss the 13 claim. 14 3. Reasonable Standards 15 Plaintiff alleges that GEICO “[f]ail[ed] to adopt and implement reasonable standards for 16 the prompt investigation and processing of claims arising under insurance policies.” 17 § 686A.310(1)(c). Under NAC 686A.670(1), insurers must establish procedures to begin 18 investigating a claim within twenty working days of receiving notice of the claim, and they must 19 provide to each claimant “a notice of all items, statements and forms, if any, which the insurer 20 reasonably believes will be required of the claimant,” within twenty working days of receiving 21 notice of the claim. The regulation also requires an insurer to “complete an investigation of each 22 23 24 1 5 of 11 1 claim within 30 days after receiving notice of the claim, unless the investigation cannot 2 reasonably be completed within that time.” § 686A.670(2). 3 Here, Plaintiff alleges that her husband gave GEICO notice of the claim on February 16, 4 2013. (Compl. ¶ 8). On February 20, 2013, GEICO acknowledged receipt of the claim. (Id. ¶ 10). 5 However, Plaintiff alleges that “[o]ver the ensuing months,” GEICO only “initially inquir[ed] as 6 to the details of the auto accident” and her medical treatment, (id. ¶ 11), and did not make a 7 settlement offer until January 10, 2014, nearly eleven months later, (id. ¶ 14). Plaintiff also 8 alleges that GEICO did not complete an investigation of her claim within thirty days of receiving 9 notice of it. She does not plead any facts showing the investigation could not have reasonably 10 been completed within thirty days. Plaintiff also alleges that GEICO failed to provide “notice of 11 all items, statements and forms” she would need for the claim within twenty days of receiving 12 the claim. (Id. ¶ 85). Although Plaintiff does not explicitly refer to GEICO’s standards for 13 investigating and processing claims, the facts she alleges regarding GEICO’s failure to 14 investigate her claims give rise to an inference that GEICO did not implement its standards, if it 15 has adopted standards. The Court denies the motion to dismiss the claim. 16 4. Affirm or Deny Coverage 17 Plaintiff alleges that GEICO “[f]ailed to affirm or deny coverage of claims within a 18 reasonable time after proof of loss requirements have been completed and submitted by the 19 insured.” Nev. Rev. Stat. § 686A.310(1)(d). She alleges that GEICO failed to affirm or deny 20 whether she was covered under the UM/UIM policy; however, she submitted proof of loss for 21 her injuries, medical treatment, wages, pain and suffering, and loss of enjoyment of life on 22 23 24 1 6 of 11 1 December 13, 2013, and on January 10, 2014, less than a month later, GEICO extended a 2 settlement offer “under the Underinsured Motorist Bodily Injury coverage of the Policy.” 3 (Compl. ¶ 14). Thus, GEICO affirmed coverage under the UM/UIM policy, and the 4 communications thereafter disputed only how much the UM/UIM coverage should be, not 5 whether it applies. Plaintiff also alleges that GEICO failed to affirm or deny whether the medical 6 payments offset applied, but that discussion also relates to the amount of UM/UIM coverage, not 7 to whether it applies. Finally, Plaintiff alleges that GEICO attempted to find a way to deny her 8 UM/UIM claim entirely after two and a half years, but this allegation only involves GEICO’s 9 efforts to avoid liability after initially affirming coverage. The Court dismisses the claim, with 10 leave to amend. 11 5. 12 Plaintiff alleges that GEICO “[f]ail[ed] to effectuate prompt, fair and equitable Effectuate Prompt, Fair, and Equitable Settlements 13 settlements of claims in which liability of the insurer has become reasonably clear.” 14 § 686A.310(1)(e). Plaintiff alleges that GEICO’s liability under the UM/UIM policy was 15 reasonably clear. Indeed, Plaintiff alleges that GEICO extended a settlement offer and negotiated 16 the amount of settlement based on the UM/UIM policy. (See Compl. ¶¶ 14, 34). Plaintiff alleges 17 that the settlement offer was a “lowball” offer, (id. ¶ 14), and that after two and a half years the 18 parties were still discussing settlement and arbitration, (see id. ¶ 52). In other words, Plaintiff 19 alleges that GEICO still has not effectuated a settlement of the claim and that its attempts to do 20 so were unfair. Plaintiff has stated a claim under subsection (1)(e) of the statute. The Court 21 denies the motion to dismiss the claim. 22 23 24 1 7 of 11 1 6. Compelling to Institute Litigation 2 Plaintiff alleges that GEICO compelled her “to institute litigation to recover amounts due 3 under [the] insurance policy by offering substantially less than the amounts ultimately 4 recovered.” § 686A.310(1)(f). As the Court has noted in other cases, a claim that a plaintiff has 5 been made to institute litigation under subsection (1)(f) appears to be a fee-shifting provision 6 depending on the success of other underlying claims and is better characterized as a remedy. The 7 Court dismisses the claim insofar as it is meant to be stated as an independent cause of action but 8 will not rule that a remedy under this provision is unavailable if Plaintiff were to prevail on the 9 breach of contract claim. 10 7. Advertising Material 11 Plaintiff alleges that GEICO “[a]ttempt[ed] to settle a claim by an insured for less than 12 the amount to which a reasonable person would have believed he or she was entitled by reference 13 to written or printed advertising material accompanying or made part of an application.” 14 § 686A.310(1)(g). However, Plaintiff fails to allege any specific facts about what GEICO’s 15 advertising material stated or why the material would have caused her to believe she was entitled 16 to a greater amount. The Court dismisses the claim, with leave to amend. 17 8. Reasonable Explanation 18 Plaintiff alleges that GEICO “[f]ail[ed] to provide promptly to an insured a reasonable 19 explanation of the basis in the insurance policy, with respect to the facts of the insured’s claim 20 and the applicable law, for the denial of the claim or for an offer to settle or compromise the 21 claim.” § 686A.310(1)(n). Specifically, Plaintiff alleges that on January 10, 2014 GEICO 22 23 24 1 8 of 11 1 extended a settlement offer under the UM/UIM policy without providing “the Policy provisions, 2 if any, which it contended would reduce the available coverage below the $100,000.00 Policy 3 Limit.” (Compl. ¶ 14). Plaintiff does allege that GEICO explained that the offset of the UIM 4 claim was appropriate “according to the quoted ‘Limits of Liability’ Policy provision,” (id. ¶ 18); 5 however, she also alleges that she did not receive this explanation until October 22, 2014 and 6 that the explanation was not reasonable, (see id. ¶¶ 18, 115). Thus, Plaintiff has stated a claim 7 that GEICO failed to provide promptly a reasonable explanation regarding the settlement of the 8 UM/UIM claim. The Court denies the motion to dismiss the claim generally; however, it 9 dismisses Plaintiff’s allegations addressing GEICO’s calculations and “post-hoc explanation” 10 because they do not address whether GEICO provided a basis in the policy for offering a 11 settlement rather than paying the full amount of the claim.1 12 9. Punitive Damages 13 GEICO also asks the Court to dismiss Plaintiff’s claim to punitive damages. Although the 14 Court notes that punitive damages are a measure of relief and not a freestanding cause of action, 15 the Court will not rule that they are unavailable at this time because one or more of Plaintiff’s 16 remaining claims may support punitive damages. To obtain punitive damages, a plaintiff must 17 prove “by clear and convincing evidence that the defendant has been guilty of oppression, fraud 18 or malice, express or implied.” Nev. Rev. Stat. § 42.005(1). Although success on a bad faith 19 claim does not entitle a plaintiff to punitive damages without more, see United Fire Ins. Co. v. 20 McClelland, 780 P.2d 193, 198 (Nev. 1989), Plaintiff has sufficiently alleged that Defendant 21 22 In other words, the Court dismisses allegations “a” and “d” but not “b” and “c” in paragraph 115 of the Complaint. 1 23 24 1 9 of 11 1 acted with “oppression, fraud or malice, express or implied,” as a layperson may interpret those 2 terms. (See Luna v. State Farm Mut. Auto. Ins. Co., No. 2:15-cv-01104-RCJ-NJK, 2016 WL 3 1595352, at *5 (D. Nev. Apr. 20, 2016)). 4 III. GEICO moves the Court to strike various allegations in the Complaint and the “DOE 5 6 MOTION TO STRIKE clause” in the caption. 7 A. Legal Standards 8 Under Rule 12(f), “[t]he Court may strike from a pleading an insufficient defense or any 9 redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). “The function of 10 a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from 11 litigating spurious issues by dispensing with those issues prior to trial.” Whittlestone, Inc. v. 12 Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (quotations omitted). “Generally, federal 13 courts disfavor motions to strike unless it is clear that the matter to be stricken could have no 14 possible bearing on the subject matter of the litigation.” Dannenbring v. Wynn Las Vegas, LLC, 15 907 F. Supp. 2d 1214, 1217 (D. Nev. 2013). “Given their disfavored status, courts often require a 16 showing of prejudice by the moving party before granting the requested relief.” Roadhouse v. 17 Las Vegas Metro. Police Dep’t, 290 F.R.D. 535, 543 (D. Nev. 2013) (quotation omitted). 18 “Whether to grant a motion to strike lies within the sound discretion of the district court.” Id. 19 /// 20 /// 21 /// 22 23 24 1 10 of 11 1 2 B. Analysis Although the Court recognizes that the Complaint is unnecessarily lengthy, Defendant 3 has not identified anything of consequence in the Complaint that is “redundant, immaterial, 4 impertinent, or scandalous.” The Court denies the motion to strike. CONCLUSION 5 6 7 IT IS HEREBY ORDERED that the Motion to Dismiss (ECF No. 7) is GRANTED in part and DENIED in part, with leave to amend as indicated. 8 IT IS SO ORDERED. 9 23rd day of August, 2016. Dated this 30th day of June, 2016. 10 11 12 13 14 15 _____________________________________ ROBERT C. JONES United States District Judge 16 17 18 19 20 21 22 23 24 1 11 of 11
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