Jacobs v. State Farm Mutual Automobile Insurance Company et al, No. 2:2018cv11126 - Document 28 (E.D. La. 2019)

Court Description: ORDER granting 16 Motion to dismiss plaintiff's claims for punitive damages is GRANTED. For the foregoing reasons set forth in the document, defendants' motion to dismiss plaintiff's claims for punitive damages is GRANTED. Plaintiff's claims under La. R.S. 22:1892 and La. R.S. 22:1973 are dismissed WITHOUT PREJUDICE and with leave to file an amended complaint within 21 days. Signed by Judge Sarah S. Vance on 6/3/2019. (mm)
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Jacobs v. State Farm Mutual Automobile Insurance Company et al Doc. 28 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA J EROME J ACOBS CIVIL ACTION VERSUS NO. 18-11126 STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY ET AL. SECTION “R” (4) ORD ER AN D REASON S Before the Court is defendants State Farm Fire and Casualty Com pany’s and State Farm Mutual Autom obile Insurance Com pany’s m otion to dism iss plaintiff’s claim s for penalties and attorney’s fees. 1 Because plaintiff has failed to plausibly allege that he is entitled to this relief, the Court grants the m otion. The Court also grants plaintiff leave to am end his com plaint to cure the deficiency. I. BACKGROU N D This case arises from a car accident. 2 On August 11, 20 16, plaintiff was allegedly stopped in traffic on Esplanade Avenue when another driver failed to stop and hit the back of his car. 3 According to plaintiff, the im pact caused 1 2 3 R. Doc. 16. R. Doc. 1-1. Id. at 1 ¶¶ 3-5. Dockets.Justia.com him severe injuries. 4 Plaintiff claim s that his injuries were caused by the driver’s negligence. 5 After the accident, plaintiff settled with the other driver involved in the accident, and with the driver’s insurance com pany. 6 He then filed this action on August 6, 20 18 in Orleans Parish against his uninsured/ under insured and excess claim insurers, State Farm Mutual Autom obile Insurance Com pany and State Farm Fire and Casualty Company, claim ing that the insurers were liable for the driver’s negligence. 7 On Novem ber 16, 20 18, State Farm Fire and Casualty Com pany rem oved the case to this Court on the basis of diversity jurisdiction. 8 On J anuary 7, 20 19, plaintiff filed an am ended com plaint alleging that the defendants failed to fairly adjust and settle his claim in bad faith and seeking statutory penalties and attorney’s fees. 9 Defendants have filed a m otion to dism iss plaintiff’s claim s for penalties and attorney’s fees. 10 Plaintiff opposes the m otion. 11 4 5 6 7 8 9 10 11 Id. ¶ 5. Id. at 2 ¶ 6. Id. ¶ 7. See R. Doc. 1-1. R. Doc. 1. R. Doc. 12. R. Doc. 16. R. Doc. 18. 2 II. LEGAL STAN D ARD To survive a Rule 12(b)(6) m otion, a party m ust plead “sufficient factual m atter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quoting Bell Atl. Corp. v. Tw om bly , 550 U.S. 544, 570 (20 0 7)). A claim is facially plausible when the party pleads facts that allow the court to “draw the reasonable inference that the defendant is liable for the m isconduct alleged.” Id. at 678. A court m ust accept all well-pleaded facts as true and m ust draw all reasonable inferences in favor of the nonm oving party. See Lorm and v. US Unw ired, Inc., 565 F.3d 228, 232 (5th Cir. 20 0 9). A legally sufficient com plaint m ust establish m ore than a “sheer possibility” that the party’s claim is true. Iqbal, 556 U.S. at 678. It need not contain detailed factual allegations, but it m ust go beyond labels, legal conclusions, or form ulaic recitations of the elem ents of a cause of action. Id. In other words, the face of the com plaint m ust contain enough factual m atter to raise a reasonable expectation that discovery will reveal relevant evidence of each elem ent of the party’s claim . Lorm and, 565 F.3d at 257. The claim m ust be dism issed if there are insufficient factual allegations to raise a right to relief above the speculative level, Tw om bly , 550 U.S. at 555, or if it is 3 apparent from the face of the com plaint that there is an insuperable bar to relief, Jones v. Bock, 549 U.S. 199, 215 (20 0 7). III. D ISCU SSION A. Failu re to State a Claim Punitive dam ages are prohibited under Louisiana law unless authorized by statute. W arren v. Shelter Mut. Ins. Co., 233 So. 3d 568, 586 (La. 20 17) (“It is well-settled in Louisiana that punitive dam ages are available only where authorized by statute.”). Two statutes allow plaintiffs to recover punitive dam ages when insurers arbitrarily or capriciously fail to pay a claim. See La. R.S. 22:1892, 22:1973. Plaintiffs m ay also recover attorney’s fees under Section 1892. La. R.S. 22:1892(b)(1). Statutory penalties are not warranted when the insurer has a reasonable basis to defend the claim and acts in good-faith reliance on that defense. Reed v. State Farm Mut. Auto Ins. Co., 857 So. 2d 10 12, 10 21 (La. 20 0 3). The bad faith statutes are penal in nature and m ust be strictly construed. Id. at 10 20 . Section 1892 requires that an insurer pay claim s or m ake an offer of settlement within thirty days of receipt of a satisfactory proof of loss. La. R.S. 22:1892. In order to recover under Section 1892, a claim ant m ust dem onstrate “that (1) an insurer has received satisfactory proof of loss, (2) 4 the insurer fail[ed] to tender payment within thirty days of receipt thereof, and (3) the insurer’s failure to pay is arbitrary, capricious or without probable cause.” La. Bag Co., Inc. v. Audubon Indem . Co., 999 So. 2d 110 4, 1112-13 (La. 20 0 8). The Louisiana Suprem e Court has interpreted “arbitrary and capricious” to m ean “vexatious” or “unjustified, without reasonable or probable cause or excuse.” Id. at 1114 (quoting Reed, 857 So. 2d at 10 21). Section 1973 requires that insurers adhere to a standard of good faith and fair dealing. La. R.S. 22:1973. An insurer breaches its duty of good faith if it m isrepresents pertinent facts, fails to pay a settlem ent within thirty days, denies coverage without notice or consent, m isleads a claim ant as to the applicable prescriptive period, fails to pay a claim within sixty days of a satisfactory proof of loss arbitrarily or capriciously, or fails to pay under Section 1893 arbitrarily or capriciously. Id. Courts have recognized that “[t]he conduct prohibited by the two sections is ‘virtually identical.’” Hibbets v. Lexington Ins. Co., 377 Fed. App’x 352, 355 (5th Cir. 20 10 ) (quoting Reed, 857 So. 2d at 10 20 ). Plaintiff’s am ended com plaint states that plaintiff subm itted a proof of loss to State Farm , and that State Farm has failed to tender any benefits to him . 12 Plaintiff then m akes the conclusory allegation that “State Farm has 12 R. Doc. 12 at 1 ¶ 1. 5 wrongfully, arbitrarily, capriciously, and without just cause delayed paying Mr. J acobs’ claim s, and as a result, plaintiff has sustained dam ages because of State Farm’s breach of the implied covenant of good faith and fair dealing.”13 Plaintiff does not allege any facts to support the allegation that State Farm acted arbitrarily and capriciously. For example, he does not identify what inform ation he subm itted to State Farm that am ounted to a satisfactory proof of loss. 14 Plaintiff’s allegations, which merely parrot the standard for liability, are not enough to state a claim . See Iqbal, 556 U.S. at 678; 5 Charles Alan Wright et al., Fed. Prac. & Proc. § 1218 (3d ed. 20 19) (“[L]egal conclusions— without substantiating facts—will be insufficient to state a claim .”). The only facts that plaintiff has alleged are: (1) that he subm itted a proof of loss, and (2) that State Farm has not paid his claim . “Without m ore, an insurer’s payment of less than the full value of an insured’s loss is insufficient evidence of arbitrary and capricious behavior for purposes of [La. R.S. 22:1892 and La. R.S. 22:1973].” Dickerson v. Lexington Ins. Co., 556 F.3d 290 , 299 (5th Cir. 20 0 9); see also Reed, 857 So. 2d at 10 21 (“The statutory penalties are inappropriate when the insurer has a reasonable basis to defend the claim 13 14 Id. ¶ 2. See id. 6 and acts in good-faith reliance on that defense.”). Plaintiff’s factual assertions are therefore insufficient to state a claim for statutory penalties and attorney’s fees under La. R.S. 22:1892 and La. R.S. 22:1973. B. Le ave to Am e n d Plaintiff has also requested leave to amend the com plaint. 15 Plaintiff’s deadline to am end his pleadings was J anuary 14, 20 19. 16 A party seeking to am end its com plaint after the deadline for amendm ents to pleadings in the Court’s scheduling order m ust show “good cause” for the am endment under Federal Rule of Civil Procedure 16(b). S&W Enters., LLC. v. SouthTrust Bank of Ala., N A, 315 F.3d 533, 53-36 (5th Cir. 20 0 3). “The good cause standard requires the ‘party seeking relief to show that the deadlines cannot reasonably be m et despite the diligence of the party needing the extension.’” Id. at 535 (quoting 6A Charles Alan Wright et al., Fed. Prac. & Proc. § 1522.1 (2d ed. 1990 )). The Court’s “judgment range is exceedingly wide” when m aking scheduling decisions, for it “must consider not only the facts of the particular case but also all of the dem ands on counsel’s tim e and the court’s.” Streber v. Hunter, 221 F.3d 70 1, 736 (5th Cir. 20 0 0 ) (quoting HC Gun & Knife Show s, Inc. v. City of Houston, 20 1 F.3d 544, 549-50 (5th Cir. 20 0 0 )). 15 16 R. Doc. 18 at 6 n.27. R. Doc. 9 at 1. 7 Courts specifically consider “(1) the explanation for the failure to [tim ely m ove for leave to am end]; (2) the im portance of the [am endm ent]; (3) potential prejudice in allowing the [am endm ent]; and (4) the availability of a continuance to cure such prejudice.” S&W Enters., 315 F.3d at 536 (quoting Reliance Ins. Co. v. La. Land & Exploration Co., 110 F.3d 253, 257 (5th Cir. 1997)) (alternations in original). If the Court finds that plaintiff has dem onstrated good cause to m odify the scheduling order, it then applies the m ore liberal standard of Federal Rule of Civil Procedure 15(a) to determine whether to grant the m otion. Id. Under Rule 15(a), the Court “freely give[s] leave [to am end] when justice so requires.” Fed. R. Civ. P. 15(a). The Suprem e Court has held that “[i]f the underlying facts or circum stances relied upon by a plaintiff m ay be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the m erits.” Fom an v. Davis, 371 U.S. 178, 182 (1962). Leave to amend, however, “is by no m eans autom atic.” Halbert v. City of Sherm an, 33 F.3d 526, 529 (5th Cir. 1994). The Court considers m ultiple factors, including “undue delay, bad faith or dilatory m otive on the part of the m ovant, repeated failure to cure deficiencies by am endm ents previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of am endm ent.” Fom an, 371 U.S. at 182. 8 The Court finds that plaintiff has shown good cause to am end his com plaint. The amendm ent is im portant, because if plaintiff cannot am end he will be precluded from recovering statutory penalties and attorney’s fees, which would significantly reduce his possible recovery. He will also be prejudiced by his inability to bring a claim under Sections 1892 and 1973 for the same reason. A continuance will not cure his prejudice. Further, am endment is not futile. Although not m entioned in his com plaint, plaintiff points out in his opposition that he subm itted a dem and letter to State Farm on October 4, 20 18 outlining the extent of his alleged injuries. 17 Plaintiff alleged in that letter that his m edical expenses exceeded $ 30 0 ,0 0 0 .0 0 . 18 The letter refers to enclosed medical records that allegedly dem onstrate his costs. 19 This inform ation indicates that plaintiff m ay have subm itted a valid proof of loss to State Farm, in which case State Farm ’s failure to pay his claim could be arbitrary and capricious. Because plaintiff m ay have a factual basis for his bad faith claim that he failed to allege in the amended com plaint, leave to am end a second tim e is warranted. 17 18 19 R. Doc. 1-5. Id. at 1. Id. at 3. 9 IV. CON CLU SION For the foregoing reasons, defendants’ m otion to dism iss plaintiff’s claim s for punitive dam ages is GRANTED. Plaintiff’s claim s under La. R.S. 22:1892 and La. R.S. 22:1973 are dism issed WITHOUT PREJ UDICE and with leave to file an am ended com plaint within 21 days. New Orleans, Louisiana, this _ _3rd _ _ _ day of J une, 20 19. _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 10