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Atlantis Car Care, Inc. v. Phoenix Insurance Co.

United States District Court, W.D. Oklahoma

August 19, 2019




         Before the Court is Defendant's Motion to Dismiss [Doc. No. 18], filed pursuant to Fed.R.Civ.P. 12(b)(6). Defendant seeks only a partial dismissal of the Second Amended Complaint [Doc. No. 12], asserting that Plaintiff fails to state a tort claim under Oklahoma law for bad faith conduct by Defendant in handling Plaintiff's insurance claim.[1]

         Plaintiff has responded [Doc. No. 21] in opposition to the Motion, and Defendant has replied [Doc. No. 22]. Thus, the Motion is fully briefed and ripe for decision.

         Factual and Procedural Background

         Plaintiff brings this action to recover damages for breach of contract and bad faith based on allegations that Defendant, as its property insurer, unreasonably failed to timely investigate, adjust, and pay an insurance claim for covered hail damage to Plaintiff's property. By its Motion, Defendant asserts that the Second Amended Complaint fails to state a plausible claim of insurer's bad faith under federal pleading standards. Plaintiff contends the factual allegations of the Second Amended Complaint are sufficient but, alternatively, requests leave to amend its pleading if the Court finds a deficiency.[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)); see Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008). “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. Thus, for example, “[a] simple negligence action based on an automobile accident may require little more than the allegation that the defendant negligently struck the plaintiff with his car while crossing a particular highway on a specified date and time.” Robbins, 519 F.3d at 1248. 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).

         Plaintiff's Allegations

         Accepting the allegations of the Second Amended Complaint as true, Defendant issued an insurance policy to Plaintiff for a commercial property in Norman, Oklahoma, that sustained hail damage on June 7, 2018. The damage was a covered loss under the policy, and Plaintiff timely submitted a claim to Defendant for the loss. However, Defendant failed to properly investigate and evaluate the claim, and breached the insurance contract by offering to pay for only a partial roof repair. “Defendant's own investigation demonstrated that such a repair could not be completed and that a complete roof replacement was necessary.” See Second Am. Compl. ¶¶ 15, 17. Plaintiff explains more specifically as follows:

[T]he evidence gathered during the claim investigation demonstrated that Defendant's proposed partial parapet wall repair could not be done due to the age and condition of the roof. In the face of this evidence, Defendant took the unreasonable position that it didn't matter, and stated that Plaintiff should just find a different roofer that was willing to make the improper repair anyway.

Id. Further, Defendant “refus[ed] to consider additional information provided by Plaintiff's roofing contractor regarding the infeasibility and unreasonableness of Defendant's proposed parapet wall repair.” Id.


         Defendant contends Plaintiff's allegations are conclusory and provide insufficient facts to state a claim of insurer's bad faith. Defendant argues that the Second Amended Complaint merely “demonstrate[s] a difference of opinion where [Plaintiff's] roofer and [Defendant] disagreed on the repairs necessary[;] simply making a conclusory statement that Defendant's position is unreasonable does not establish bad faith.” See Def.'s Mot. Dismiss [Doc. No. 18] at 5.[3]

         To establish a breach of Defendant's duty of good faith and fair dealing with its insured, Plaintiff must show that Defendant breached the insurance contract and, in so doing, acted in a manner constituting bad faith. See Brown v. Patel, 157 P.3d 117, 121 (Okla. 2007); Badillo v. Mid Century Ins. Co., 121 P.3d 1080, 1093 (Okla. 2005). Although an insurer may reasonably refuse to pay a disputed claim, “a legitimate dispute as to coverage will not act as an impenetrable shield against a valid claim of bad faith;” for example, an inadequate investigation of a claim may permit a finding that the insurer acted unreasonably and in bad faith. See Timberlake ...

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