YAKUBOV v. GEICO GENERAL INSURANCE COMPANY
Filing
13
MEMORANDUM AND/OR OPINION RE: MOTION TO DISMISS CLAIMS FOR PUNITIVE DAMAGES AND MISREPRESENTATION FROM THE AMENDED COMPLAINT (DOC. NO.7). SIGNED BY HONORABLE CYNTHIA M. RUFE ON 10/24/2011. 10/24/2011 ENTERED AND COPIES E-MAILED.(kk, )
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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
____________________________________
:
GERMAN YAKUBOV,
:
Plaintiff,
:
CIVIL ACTION
:
v.
:
NO. 11-3082
:
GEICO GENERAL INSURANCE CO., :
Defendant.
:
____________________________________:
MEMORANDUM OPINION AND ORDER
RUFE, J.
October 24, 2011
Plaintiff German Yakubov brings this action against his insurer, Defendant GEICO
General Insurance Company (“GEICO”), to obtain uninsured motorist and income loss benefits
under an automobile liability insurance policy issued by GEICO. Presently before the Court is
GEICO’s Motion to Dismiss Claims for Punitive Damages and Misrepresentation From the
Amended Complaint.1 For reasons that follow, the Motion will be granted in part and denied in
part.
I. FACTUAL AND PROCEDURAL BACKGROUND
On April 24, 2009, at approximately 1:30 p.m., Plaintiff was seriously injured in a motor
vehicle accident involving his own vehicle and a vehicle driven by an uninsured motorist.2
Plaintiff alleges that the uninsured motorist was factually and legally responsible for causing the
1
Doc. No. 7.
2
Am. Compl. ¶ 10.
1
accident.3 At the time of the accident, Plaintiff was insured under an automobile liability
insurance policy (the “Policy”) issued by GEICO.4 Plaintiff submitted a claim to GEICO for
Uninsured Motorist (“UM”) benefits and income loss benefits under the Personal Injury
Protection (“PIP”) coverage of the Policy.5 Beginning in May 2009, Plaintiff received income
loss payments from GEICO in the amount of $2,500 per month.6 These payments continued for
seven months, but then stopped without notice in December 2009.7 By letter dated November 3,
2010, GEICO issued a denial of further income loss benefits to Plaintiff.8 In addition, GEICO
has refused to pay Plaintiff the $300,000 UM benefits to which Plaintiff claims he is entitled.9
This action was originally filed by Plaintiff in the Court of Common Pleas of Philadelphia
County. On May 10, 2011, GEICO filed a timely Notice of Removal with this Court,10 followed
by a Motion to Dismiss Punitive Damages Claims from the Complaint.11 On June 1, 2011,
Plaintiff filed an Amended Complaint, thereby rendering the first Motion to Dismiss moot.12
GEICO then timely filed the Motion to Dismiss The Amended Complaint.
3
Am. Compl. ¶ 11.
4
Am. Compl. ¶ 6.
5
Am. Compl. ¶¶ 22, 34.
6
Am. Compl. ¶ 38.
7
Am. Compl. ¶¶ 38, 40.
8
Am. Compl. ¶ 41.
9
Am. Compl. ¶¶ 20-24.
10
Doc. No. 1.
11
Doc. No. 4.
12
Doc. No. 6.
2
The Amended Complaint contains five Counts: a claim for UM benefits (Count I); a
claim for income loss benefits (Count II); a claim alleging a violation of Pennsylvania’s Unfair
Trade Practices and Consumer Protection Law (“UTPCPL”) (Count III);13 a claim of bad faith
(Count IV); and a claim alleging intentional misrepresentation (Count V). GEICO moves to
dismiss Count V, arguing that the claim is not plead with the particularity required by Federal
Rule of Civil Procedure 9(b) and that it is barred by the “gist of the action” doctrine. In addition,
GEICO seeks dismissal of the claim for punitive damages contained in Count III, asserting that
UTPCPL does not provide for an award of punitive damages.
II. STANDARD OF REVIEW
Dismissal of a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure
to state a claim upon which relief can be granted is appropriate where a plaintiff’s “plain
statement” does not possess enough substance to show that plaintiff is entitled to relief.14 In
determining whether a motion to dismiss should be granted, the court must consider only those
facts alleged in the complaint, accepting the allegations as true and drawing all logical inferences
in favor of the non-moving party.15 Courts are not, however, bound to accept as true legal
conclusions couched as factual allegations.16 Something more than a mere possibility of a claim
must be alleged; plaintiff must allege “enough facts to state a claim to relief that is plausible on
13
73 Pa. Stat. Ann. §§ 201-1 to 205-10.
14
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007).
15
ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994); Fay v. Muhlenberg Coll., No. 07-4516, 2008
W L 205227, at *2 (E.D. Pa. Jan. 24, 2008).
16
Twombly, 550 U.S. at 555, 564.
3
its face.”17 The complaint must set forth “direct or inferential allegations respecting all the
material elements necessary to sustain recovery under some viable legal theory.”18 The court has
no duty to “conjure up unpleaded facts that might turn a frivolous . . . action into a substantial
one.”19
III. DISCUSSION
A.
Intentional Misrepresentation (Count V)20
Plaintiff alleges that GEICO represented to him that his Policy provided income loss
coverage and charged a premium for income loss coverage, but that GEICO’s promise to pay
income loss benefits was “wholly illusory” and GEICO never intended to pay income loss
benefits.21 GEICO argues that Plaintiff is attempting to recast his breach of contract claim as a
tort claim and is precluded from doing so by the gist of the action doctrine. The Court agrees.
Under Pennsylvania law, the gist of the action doctrine prevents a plaintiff from recasting
an ordinary breach of contract claim as a tort claim.22 The doctrine forecloses tort claims: “1)
arising solely from the contractual relationship between the parties; 2) when the alleged duties
breached were grounded in the contract itself; 3) where any liability stems from the contract; and
17
Id. at 570.
18
Id. at 562 (quoting Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)).
19
Id. at 562 (citing McGregor v. Industrial Excess Landfill, Inc., 856 F.2d 39, 42-43 (6th Cir. 1988)).
20
Am. Compl. ¶¶ 73-78. The Amended Complaint does not specify whether the alleged misrepresentation
was fraudulent/intentional, negligent, or innocent. However, the Amended Complaint describes intentional conduct
and, in response to GEICO’s Motion to Dismiss, Plaintiff asserts that the Amended Complaint alleges intentional
misrepresentation.
21
Am. Compl. ¶ 74.
22
Greenspan v. ADT Sec. Servs. Inc., No. 10-2901, 2011 W L 4361530, at *4 (3d Cir. Sept. 20, 2011).
4
4) when the tort claim essentially duplicates the breach of contract claim or where the success of
the tort claim is dependent on the success of the breach of contract claim.”23 “Where the alleged
misrepresentation or fraud concerns the performance of contractual duties, ‘then the alleged fraud
is generally held to be merely collateral to a contract claim for breach of those duties.’”24
In Smith v. Lincoln Benefit Life Co.,25 the Third Circuit affirmed a district court’s
dismissal of two negligent misrepresentation claims based on the gist of the action doctrine. The
Third Circuit explained:
Applying the gist doctrine here with respect to the Notice Claim, it is evident that
the parties’ relationship and duties were framed by the insurance policy. [The
Insurer’s] alleged misrepresentations and subsequent failure to pay death benefits
arose from the insurance contract between the parties and revolved around the
provisions for payment, grace period, and lapse. Indeed, this case is “really
about” the policy provisions of the contract, and the claims and liability cannot
be determined without looking to the terms of the contract. The alleged
misrepresentations were directly related to the underlying contractual rights and
obligations, and the District Court correctly concluded that the gist of the action
sounded in contract and barred [plaintiff’s] notice claim.26
Similarly, here, the relationship and duties of the parties arise under the Policy. Any
failure to pay the income loss benefits to which Plaintiff claims he is entitled would be a breach
of the PIP provisions of the Policy. The success of Plaintiff’s claims depend upon those
provisions of the Policy, and Plaintiff’s misrepresentation claim is duplicative of and collateral to
his contract claims. Based on the foregoing, it is evident that Plaintiff’s “misrepresentation”
23
Smith v. Lincoln Ben. Life Co., 395 F. App’x 821, 823 (3d Cir. 2010) (citing Hart v. Arnold, 884 A.2d
316, 340 (Pa. Super. Ct. 2005)).
24
Id. (quoting eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 19 (Pa. Super. Ct. 2002)).
25
395 F. App’x 821 (3d Cir. 2010).
26
Id. at 823 (citation omitted).
5
claim is “really about” GEICO’s alleged breach of its obligations under the Policy and is
therefore barred by the gist of the action doctrine.
Further, even if the Court found that the gist of the action doctrine did not bar Plaintiff’s
misrepresentation claim, it would nonetheless dismiss Count V for failure to state a claim
because Plaintiff has failed to plead misrepresentation with sufficient specificity. Pennsylvania
recognizes three types of misrepresentation: fraudulent or intentional misrepresentation,
negligent misrepresentation, and innocent misrepresentation.27 While the Complaint does not
specify whether the alleged misrepresentation was fraudulent/intentional, negligent, or innocent,
in response to GEICO’s Motion to Dismiss, Plaintiff characterizes the Amended Complaint as
alleging intentional misrepresentation. Further, the Amended Complaint describes intentional
conduct.28 Accordingly, the Court will construe Count V as a intentional misrepresentation
claim.
Under Pennsylvania law, the elements of intentional misrepresentation are: “(1) a
representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge
of its falsity or with recklessness as to whether it is true or false; (4) with the intent of misleading
another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) injury
resulting [from] and proximately caused by the reliance.”29 Bortz, 729 A.2d at 560. These
27
Square D Co. v. Scott Elec. Co., No. 06-459, 2008 W L 2096890, at *2 (W .D. Pa. May 16, 2008) (citing
Bortz v. Noon, 729 A.2d 555, 560 (Pa.1999)).
28
Am. Compl. ¶ 74(d) (“Defendant made material misrepresentations to Plaitniff including but not limited
to the following: . . . Representing that Plaitniff had automobile insurance coverage when in fact, Defendant had no
intention to issue or pay such benefits.”)
29
Square D Co., 2008 W L 2096890, at *2.
6
elements are equivalent to those of fraud and, as such, the heightened pleading requirements of
Federal Rule of Civil Procedure 9(b) apply.30
Rule 9(b) requires that a party alleging fraud “state with particularity the circumstances
constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s
mind may be alleged generally.” Pursuant to Rule 9(b), Plaintiff is required to allege with
particularity the “who, what, when, where, and how” of the alleged intentional
misrepresentation.31 Plaintiff has failed to do so here.
Plaintiff alleges that GEICO made the following material misrepresentations:
(a) Representing that Plaintiff had purchased automobile insurance coverage,
including income loss coverage, when in fact Defendant’s promise to pay such
benefits was wholly illusory; (b) Purporting to offer automobile insurance
coverage, including income loss coverage when in fact, Defendant had no
intention of providing such benefits; (c) Charging a premium based upon
automobile insurance coverage, including income loss coverage when in fact,
Defendant would use any excuse, justified or not, to avoid fulfilling its contract
with Plaintiff; (d) Representing that Plaintiff had automobile insurance coverage,
including income loss coverage when in fact, Defendant had no intention to issue
or pay such benefits; (e) Representing that Plaintiff had automobile insurance
coverage, including income loss benefits when in fact, Defendant without
reasonable justification or basis, refuses to pay said benefits; and (f)
Misrepresenting pertinent facts or policy or contract provisions relating to
coverages at issue.32
These allegations are general and conclusory, and do not meet the pleading requirements
of Rule 9(b). Plaintiff does not allege with specificity who made the statements, when or where
the statements were made, what the statements were, or even how the statements were
30
Id.
31
Kanter v. Barella, 489 F.3d 170, 175 (3d Cir. 2007).
32
Am. Compl. ¶ 74.
7
communicated. The only communication specifically identified by Plaintiff is a November 3,
2010 letter from a representative of GEICO denying Plaintiff’s claim for income loss benefits.33
However, Plaintiff does not allege that this letter contained material misrepresentations upon
which Plaintiff relied to his detriment. Instead, the letter is cited in support of Plaintiff’s claim
that GEICO breached the terms of the Policy in denying him continued income loss payments.
Finally, Plaintiff’s claim that GEICO misrepresented its intent to provide Plaintiff income loss
benefits under the terms of the Policy is seriously undermined by Plaintiff’s allegation that he
actually received $17,500 in income loss payments over a period of seven months.
For the additional reason that Plaintiff has failed to state a claim for intentional
misrepresentation, the Court will dismiss Count V from the Amended Complaint.
B.
Punitive Damages (Count III)34
In Count III, Plaintiff seeks, inter alia, treble and punitive damages for a violation of
Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”).35 GEICO
moves to dismiss the claim for punitive damage, arguing that the UTPCPL does not permit an
award of punitive damages. Plaintiff responds that, although the statute does not expressly
provide for punitive damages, it provides that a court may award “such additional relief as it
33
Am. Compl. ¶ 41.
34
Plaintiff also seeks punitive damages in Count IV (bad faith). GEICO does not move to dismiss this
claim for damages. Consequently, Plaintiff may proceed with the punitive damage claim contained in Count IV. See
Smith v. Cont’l Cas. Co., 347 F. App’x 812, 814-15 (3d Cir. 2009) (citing 42 Pa. Cons. Stat. § 8371) (“By statute,
Pennsylvania provides for interests, costs, attorneys’ fees and punitive damages for a bad faith denial of insurance
coverage.”).
35
73 Pa. Stat. Ann. §§ 201-1 to 205-10.
8
deems necessary or proper,” and several courts have held that punitive damages may be awarded
in appropriate circumstances.
Under the UTPCPL, a court may, at its discretion, award treble damages and “such
additional relief as it deems necessary or proper.”36 The Pennsylvania Supreme Court has held
that treble damages under the UTPCPL, although punitive in nature, are not constrained by the
common-law requirements associated with an award of punitive damages.37 The Pennsylvania
Supreme Court has not, however, determined whether punitive damages are permitted under the
UTPCPL as “additional relief.” Thus, in deciding whether punitive damages may be awarded
here, this Court “must predict how the Pennsylvania Supreme Court, if faced with the identical
issue, would construe the statute.”38 In predicting how the Pennsylvania Supreme Court would
rule, the Court may give “due regard, but not conclusive effect, to the decisional law of lower
state courts,” and may consider analogous decisions of other federal district courts.39
Few state courts have addressed the issue presented in this case, but several federal
district courts have. Of those courts that have addressed the issue, there is a split as to whether
punitive damages are available as “additional relief” under the UTPCPL.40 While some courts
36
73 Pa. Stat. Ann. § 201-9.2(a).
37
Schwartz v. Rockey, 932 A.2d 885, 898 (Pa. 2007).
38
Combs v. Homer-Ctr. Sch. Dist., 540 F.3d 231, 255 (3d Cir. 2008).
39
See Nationwide Mut. Ins. Co. v. Buffetta, 230 F.3d 634, 637 (3d Cir. 2000) (“In predicting how the
highest court of the state would resolve the issue, we must consider relevant state precedents, analogous decisions,
considered dicta, scholarly works, and any other reliable data tending convincingly to show how the highest court in
the state would decide the issue at hand.”) (internal quotation and citation omitted).
40
Nabal v. BJ’s W holesale Club, Inc., No. 02-2604, 2002 W L 32349137, at *3 n.5 (E.D. Pa. Aug. 2,
2002).
9
have held that punitive damages are not available,41 others have concluded that although not
expressly provided in the statute, punitive damages are available where the violation of the
UTPCPL is extreme.42
Whether punitive damages are available under the UTPCPL is an issue that the Court
will reserve pending resolution of Plaintiff’s substantive UTPCPL claim. Accordingly, the
Motion to Dismiss the Punitive Damage Claim will be denied without prejudice as premature
and may be renewed by GEICO at a later time, if appropriate.
IV. CONCLUSION
The misrepresentation claim contained in Count V is barred by the gist of the action
doctrine and will be dismissed. The Court will not dismiss the punitive damages claim
contained in Count III at this time.
An appropriate Order follows.
41
See, e.g., Smith v. Bristol-Myers Squibb Co., No. 06-6053, 2009 W L 5216982, at *7 (D.N.J. Dec. 30,
2009) (“[P]unitive damages are unavailable under the UTPCPL.”); Hockenberry v. Diversified Ventures, Inc., No.
04-1062, 2005 W L 1458768, at *5 (M.D. Pa. June 20, 2005) (dismissing the claim for punitive damages under
UTPCPL).
42
See W erwinski v. Ford Motor Co., No. 00-943, 2000 W L 375260, at *4 (E.D. Pa. Apr. 11, 2000)
(citing Aronson v. Creditrust Corp., 7 F. Supp. 2d 589, 593 (E.D. Pa. 1998)) (“The UTPCPL allows a court
discretionary authority to award punitive damages in addition to actual and treble damages in cases where the court
finds such additional relief to be ‘necessary or proper.’”), aff’d, 286 F.3d 661 (3d Cir. 2002); Adams v. General
Motors Corp., No. 89-7653, 1990 W L 18850, at *2 (E.D. Pa. Feb. 26, 1990) (“Although there is little caselaw on the
availability of punitive damages under the UTPCPL, what law there is suggests that punitive damages are
appropriate where violations are repeated or extreme.”).
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