GUSSMAN v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, No. 1:2016cv08563 - Document 8 (D.N.J. 2017)
Court Description: OPINION FILED. Signed by Judge Joseph H. Rodriguez on 9/12/17. (js)
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GUSSMAN v. GOVERNMENT EMPLOYEES INSURANCE COMPANY Doc. 8 U N ITED STATES D ISTRICT COU RT D ISTRICT OF N EW JERSEY _________________ BETH GUSSMAN, ____ : : Plaintiff, : : v. : GOVERNMENT EMPLOYEES : INSURANCE COMPANY : : : Defendant. : _______________________ : H o n . Jo s e p h H . Ro d rigu e z Civil Action No. 16-8563 OPIN ION Plaintiff Beth Gussm an asserts that her car insurance provider, Defendant Governm ent Insurance Com pany (“Geico”), denied her under-insured m otorist (UIM) coverage under the parties’ insurance policy in bad faith. Presently before the Court is Geico’s m otion to dism iss pursuant to Federal Rules of Civil Procedure 12 (b) (1) and 12 (b) (6). Specifically, Geico claim s that diversity jurisdiction is wanting because Plaintiff’s claim does not exceed the statutory m inim um am ount in controversy, m eriting dism issal under Rule 12 (b) (1), and because Plaintiff fails to state a claim for com m on law bad faith denial of insurance coverage, pursuant to Fed. R. Civ. P. 12 (b) (6). Alternatively, Geico asks this Court to stay and sever the bad faith claim pending the disposition of Gussm an’s claim for breach of the insurance contract. The Court has reviewed the written subm issions of the parties and decides the m atter pursuant to Fed. R. Civ. P. 78 (b). For the reasons stated here, Defendant’s m otion to dism iss on jurisdictional grounds is denied. In the interest of judicial econom y and without objection from Plaintiff, Defendant’s request to sever and stay Paragraphs 24-29, is granted. Fed. R. Civ. P. 42 (b); Edwin, J r. v. The Robert Packer 1 Dockets.Justia.com Hospital, 579 F.2d 819, 824 (3d Cir. 1978) (The decision whether to bifurcate or sever claim s is left to the District Court's discretion.) I. Factu al Backgro u n d an d Pro ce d u ral H is to ry The following facts are taken as true as alleged in the Com plaint. On May 20 , 20 14, Plaintiff asserts she was stopped at the exit of a shopping center and was hit in the rear by another m otorist Robert Snyder. As a result of the accident, Plaintiff alleges she sustained serious bodily injuries. The vehicle driven by Robert Snyder on the date of the collision had an inadequate insurance policy coverage of $ 25,0 0 0 . This am ount did not fully com pensate Plaintiffs’ injuries, and on the date of the accident she had an UIM policy lim it of $ 10 0 ,0 0 0 per person and $ 30 0 ,0 0 0 per accident. The Plaintiff on J une 1, 20 16, requested that the Defendant, consent to a settlem ent between her and the underinsured driver Robert Snyder. Additionally, she filed a claim for UIM benefits. On J une 22, 20 16, Defendant consented to the requested settlem ent with the underinsured m otorist Snyder. Later, on J une 24, 20 16, Plaintiff, forwarded to the assigned underinsured m otorist adjuster for Geico, all docum entation supporting her injuries, and on August 2, 20 16, the underinsured m otorist adjuster was given perm ission by Plaintiff to review the first party file. However, Plaintiff asserts that Defendant, has ignored or acted with reckless indifference to the proofs subm itted by plaintiff which establish her entitlem ent to underinsured m otorist benefits. Plaintiff asserts a claim for the rem aining $ 75,0 0 0 lim it on her underinsured m otorist policy and for dam ages resulting from her bad faith claim . Defendant, filed a m otion to dism iss both claim s. 2 II. Stan d ard s o f Re vie w a. Motion to Dism iss Standard A m otion to dism iss for lack of subject m atter jurisdiction under Fed. R. Civ. P. 12 (b) (1) m ust be granted if the court lacks subject m atter jurisdiction to hear a claim . In re Schering Plough Corp. Intron/ Tem odar Consum er Class Action, 678 F.3d 235, 243 (3d Cir. 20 12). When a defendant files a m otion under Rule 12 (b) (1), the plaintiff bears the burden of establishing subject m atter jurisdiction for the sake of rem aining in federal court. Gould Elec., Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 20 0 0 ). A m otion to dism iss pursuant to Federal Rule of Civil Procedure 12 (b) (1) m ay involve either a facial challenge to subject m atter jurisdiction or a factual challenge to the jurisdictional allegations. Gould Elec., 220 F.3d at 176. If the defendant’s attack is facial—i.e., “asserting that the com plaint, on its face, does not allege sufficient grounds to establish subject m atter jurisdiction”—a court m ust accept all allegations in the com plaint as true. Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 20 0 6). Alternatively, a defendant m ay “challenge a federal court’s jurisdiction by factually attacking the plaintiff's jurisdictional allegations as set forth in the com plaint.” Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977). A factual challenge attacks the existence of a court’s subject m atter jurisdiction apart from any of the pleadings and, when considering such a challenge, a presum ption of truthfulness does not attach to a plaintiff's allegations.” Id.; see also Martinez v. U.S. Post Office, 875 F. Supp. 10 67, 10 70 (D.N.J . 1995). Alternatively, Federal Rule of Civil Procedure 12 (b) (6) allows a party to m ove for dism issal of a claim based on “failure to state a claim upon which relief can be granted.” 3 Fed. R. Civ. P. 12 (b) (6). A com plaint should be dism issed pursuant to Rule 12(b)(6) if the alleged facts, taken as true, fail to state a claim . Fed. R. Civ. P. 12 (b) (6). When deciding a m otion to dism iss pursuant to Rule 12 (b) (6), ordinarily only the allegations in the com plaint, m atters of public record, orders, and exhibits attached to the com plaint, are taken into consideration. See Chester County Interm ediate Unit v. Pa. Blue Shield, 896 F.2d 80 8, 812 (3d Cir. 1990 ). It is not necessary for the plaintiff to plead evidence. Bogosian v. Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir. 1977). The question before the Court is not whether the plaintiff will ultim ately prevail. Watson v. Abington Twp., 478 F.3d 144, 150 (20 0 7). Instead, the Court sim ply asks whether the plaintiff has articulated “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twom bly, 550 U.S. 544, 570 (20 0 7). The Court need not accept “‘unsupported conclusions and unwarranted inferences,’” Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 20 0 7) (citation om itted), however, and “[l]egal conclusions m ade in the guise of factual allegations . . . are given no presum ption of truthfulness.” Wyeth v. Ranbaxy Labs., Ltd., 448 F. Supp. 2d 60 7, 60 9 (D.N.J . 20 0 6) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)); see also Kanter v. Barella, 489 F.3d 170 , 177 (3d Cir. 20 0 7) (quoting Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 20 0 5) (“[A] court need not credit either ‘bald assertions’ or ‘legal conclusions’ in a com plaint when deciding a m otion to dism iss.”)). Accord Iqbal, 556 U.S. at 678-80 (finding that pleadings that are no m ore than conclusions are not entitled to the assum ption of truth). Further, although “detailed factual allegations” are not necessary, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlem ent to relief’ requires m ore than labels and conclusions, and a form ulaic recitation of a cause of action’s elem ents will not do.” Twom bly, 550 U.S. at 555 (internal citations om itted). 4 See also Iqbal, 556 U.S. at 678 (“Threadbare recitals of the elem ents of a cause of action, supported by m ere conclusory statem ents, do not suffice.”). Thus, a m otion to dism iss should be granted unless the plaintiff’s factual allegations are “enough to raise a right to relief above the speculative level on the assum ption that all of the com plaint’s allegations are true (even if doubtful in fact).” Twom bly, 550 U.S. at 556. “[W]here the well-pleaded facts do not perm it the court to infer m ore than the m ere possibility of m isconduct, the com plaint has alleged-but it has not ‘shown’-‘that the pleader is entitled to relief.’” Iqbal, 556 U.S. at 679. III. An alys is Defendant’s argum ents in favor of dism issal are intertwined. Essentially, if Plaintiff’s claim as plead in Paragraphs 24-29 fails under Rule 12 (b) (6), the Court m ust determ ine whether the dam ages sought in Plaintiff’s breach of contract claim satisfy 28 U.S.C. § 1332 (a), which requires that “the m atter in controversy exceeds the sum or value of $ 75,0 0 0 , exclusive of interest and costs.” 28 U.S.C. § 1332 (a). Paragraphs 2429 allege a claim against Geico for breach of the im plied duty of good faith and fair dealing. This claim alleges a breach of fiduciary duty in the handling of Plaintiff’s claim under the insurance contract; such claim s are often described as a claim for “bad faith.” See Pickett v. Lloyd’s, 621 A.2d 445, 451 (N.J . 1993) (“Most jurisdictions have characterized a cause of action for bad-faith failure to pay an insured’s claim as a tort that arises out of the im plied duty of an insurance company to deal fairly and act in good faith in processing the claim s of its policyholder.”). At the heart of Defendant’s challenge pursuant to Rule 12 (b) (1) is that, absent the bad faith claim , Plaintiff’s rem aining recovery under the insurance policy on the 5 breach of contract claim is lim ited to $ 75,0 0 0 , which does not “exceed” $ 75,0 0 0 . As a result, Geico is correct that, in the event Plaintiff’s bad claim fails under Rule 12 (b) (6), this Court lacks subject m atter jurisdiction because the am ount in controversy fails to vault the jurisdictional threshold. See 28 U.S.C. § 1332(a). Plaintiff’s bad faith claim alleges that Defendant breached the duty of good faith and fair dealing in processing Plaintiffs’ claim for UIM coverage and dem ands punitive dam ages. “In a case of denial of [insurance] benefits, bad faith is established by showing that no debatable grounds existed for the denial of benefits.” Id. at 481. “To show a claim for bad faith, a plaintiff m ust show the absence of a reasonable basis for denying benefits of the policy and the defendant's kn owledge or reckless disregard of the lack of a reasonable basis for denying the claim .... [T]he lack of a reasonable basis m ay be inferred ... where there is a reckless indifference to facts or proofs subm itted by the insured.” Id. at 473 (internal citation and quotation om itted); see also Ketzner v. J ohn Hancock Mut. Life Ins. Co., 118 Fed. Appx. 594, 599 (3d Cir. 20 0 4) (Plaintiff m ust satisfy two elem ents to support a bad faith claim “(1) the insurer lacked a ‘fairly debatable’ reason for its failure to pay a claim , and (2) the insurer knew or recklessly disregarded the lack of a reasonable basis for denying the claim .”). The Com plaint sets forth num erous exam ples of bad faith conduct that sufficiently allege a “reckless disregard” for Plaintiff’s rights. 1 Com pl. ¶ 25(a)-(q). Plaintiff’s allegations include engaging in delay tactics, m isusing the investigation of Plaintiff’s first party underinsured, and failing to reasonably evaluate the m edical Geico also attacks Plaintiff’s bad faith claim as an attempt to improperly manufacture federal jurisdiction under the diversity statute. The Court will not address whether Plaintiff is compelled to bring the bad faith claim at this time under New Jersey’s entire controversy doctrine because Defendant agrees that there is no preclusion to bringing the claim now and the Court finds no indication that pretext exists. The bad faith claim satisfies Rule 12 (b) (6) scrutiny and Defendant’s motion is denied. 1 6 records in the record. Com pl., ¶ 25 (b), (q) and (i). Geico’s Rule 12 (b) (6) m otion is denied. In addition, Geico’s m otion to dism iss pursuant to Fed. R. Civ. P. 12 (b) (1) is denied because Plaintiff’s bad faith claim , if successful, includes the potential for an award of consequential dam ages and punitive dam ages. Taddei v. State Farm Indem nity Co., 40 1 N.J . Super. 449, 461, 463 (App. Div. 20 0 8). When coupled with the potential recovery on the bad faith claim , Plaintiff’s dam ages on the breach of contract claim vault the statutory jurisdictional threshold of a claim in excess of $ 75, 0 0 0 . See 28 U.S.C. § 1332(a). As a result, the am ount in controversy exceeds the jurisdictional requirem ent and Geico’s Rule 12 (b) (1) m otion is denied. IV. Co n clu s io n For these reasons, Defendant’s m otion to dism iss Paragraphs 24-29 of the Com plaint under Federal Rules of Civil Procedure 12 (b) (1) and (6) is denied. In the interest of judicial econom y and to avoid any potential prejudice to Geico, the Court will grant Geico’s m otion to sever and stay Paragraphs 24-29. An appropriate Order shall issue. Dated: Septem ber 12, 20 17 s/ J oseph H. Rodriguez Hon. J oseph H. Rodriguez, UNITED STATES DISTRICT J UDGE 7
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