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Linthicum v. Praetorian Insurance Co.

United States District Court, W.D. Oklahoma

April 12, 2019

JOHN T. LINTHICUM dba LINTHICUM ANGUS RANCH, Plaintiff,
v.
PRAETORIAN INSURANCE COMPANY, Defendant.

          ORDER

          TIMOTHY D. DEGIUSTI UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendant's Motion to Dismiss [Doc. No. 9], filed pursuant to Fed.R.Civ.P. 12(b)(6). Plaintiff has filed a response [Doc. No. 14] in opposition to the Motion, and Defendant has replied [Doc. No. 15]. The Motion is fully briefed and ripe for decision.

         Plaintiff brings this diversity action to recover damages under Oklahoma law for breach of contract, insurer's bad faith, and fraud.[1] Plaintiff alleges Defendant wrongly denied his insurance claim for payment due under a livestock mortality policy, and breached its duty of good faith and fair dealing by failing to properly investigate, adjust, and pay the claim. Plaintiff also alleges Defendant's soliciting agent, Troy Alexander, misrepresented the valuation process for insured animals worth more than $100, 000 and falsely stated the insured value of the covered animal (payable in the event of a covered loss) would be the amount stated in the policy once it was approved by the underwriting department and issued. According to Plaintiff, only after the covered animal died did he learn that Defendant would actually conduct a valuation process during the investigation of the loss, and this process caused payment of his claim to be delayed and ultimately denied.

         By its Motion, Defendant asserts that Plaintiff's pleading fails to state any plausible claim. Defendant contends Plaintiff's contract claim is time barred, his bad faith claim fails for lack of a viable contract claim, and the fraud claim fails because Plaintiff's factual allegations are inconsistent with the terms of the written policy.[2]

         Standard of Decision

         “To survive a motion to dismiss [under Rule 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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 678. Determining whether a complaint states a plausible claim for relief is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” See id. at 679. The question to be decided is “whether the complaint sufficiently alleges facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed.” Lane v. Simon, 495 F.3d 1182, 1186 (10th Cir. 2007) (internal quotation omitted).

         “‘[I]f the allegations [of a complaint] show that relief is barred by the applicable statutes of limitations, the complaint is subject to dismissal for failure to state a claim.'” Vasquez Arroyo v. Starks, 589 F.3d 1091, 1096-97 (10th Cir. 2009) (quoting Jones v. Bock, 549 U.S. 199, 215 (2007)); accord Chance v. Zinke, 898 F.3d 1025, 1034 (10th Cir. 2018). This is so because “any party claiming the benefit of equitable tolling of a limitations period . . . [bears] the burden of [pleading and] proving justifiable circumstances.” Olson v. Federal Mine Safety & Health Review Comm'n, 381 F.3d 1007, 1014 (10th Cir. 2004); see Aldrich v. McCulloch Prop., Inc., 627 F.2d 1036, 1044 n.4 (10th Cir. 1980).

         Plaintiff's Allegations

         Accepting the allegations of the Complaint as true, Defendant issued a livestock mortality insurance policy to Plaintiff on November 11, 2016, for a registered angus cow, which died during the term of the policy on July 20, 2017.[3] Plaintiff timely submitted a claim to Defendant for the loss and complied with Defendant's instructions regarding handling and inspecting the animal for coverage. Then, contrary to representations made by Defendant's agent, Mr. Alexander, during the sale of the policy, Defendant began a valuation process to determine the coverage amount of the policy. In selling the policy, Mr. Alexander had stated that, for animals valued at more than $100, 000, Defendant required an appraisal to establish an insured amount for the animal during the underwriting and issuance of the policy, and once the policy was issued this stated insured amount would be payable upon a covered loss. The insured amount for Plaintiff's covered animal was $500, 000. Mr. Alexander repeatedly assured Plaintiff that the policy would provide this amount of coverage if Defendant's underwriting department approved it and issued the policy.

         After the loss, however, Defendant handled Plaintiff's claim in a different way, by initiating a process to determine the insured amount. Due to this process, payment due under the policy was delayed and eventually denied because Plaintiff failed to provide additional information and documentation that Defendant required. Plaintiff contends Mr. Alexander's misrepresentations and failure to disclose the requirements later imposed by Defendant regarding valuation of the animal “led to confusion, conflict and denial of [Plaintiff's] claim which otherwise could have been promptly paid upon verification of the covered death of the covered animal.” See Compl. [Doc. No. 1-2], ¶ 20.

         Specifically, Plaintiff admits that he “did not complete a request from the insurance company for his EUO [examination under oath] and his claim was declined for failure to comply.” Id. . ¶ 8. However, he alleges the following facts:

In June 2018, [Plaintiff] offered to complete the EUO and submit additional documentation, etc., and on July 11, 2018, the insurance company indicated that they were considering [Defendant's] prior declination of coverage and the reopening of [Plaintiff's] claim. On July 27, 2018, [Defendant] declined to go forward with the EUO's or to further consider the claim.

Id. Plaintiff alleges that a final denial letter issued on July 27, 2018, stated as the reasons for Defendant's decision, Plaintiffs “continued failure to produce [certain] documents” and “failure to comply with Condition 10” of the policy, which requires an EUO and the production of all records and receipts requested by Defendant. Id. ¶ 12; see Def.'s Mot, Ex. 1 [Doc. No. 9-1] (hereafter “Policy”) at 3, ¶ 10. Plaintiff alleges that if Defendant “had not refused to proceed with the offered EUO” but, instead, had completed the examination and an adequate investigation before denying reconsideration of the claim, Defendant would have been aware that the requested documentation that it “cited as lacking . . . does not exist.” See Compl. ¶¶ 10-12.

         Further, in apparent anticipation of a time-bar defense, Plaintiff alleges that he was required by the policy to “comply with Defendant's requested EUO prior to proceeding in civil litigation” and “Defendant did not decline to take his EUO until July 27, ...


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