Opinion
CASE NO: 03-23157-CIV-GOLD/SIMONTON
March 2, 2004
ORDER DENYING IN PART AND GRANTING IN PART DEFENDANT'S MOTION TO DISMISS
THIS CAUSE is before the Court upon the Defendant's Motion to Dismiss [DE 6], filed December 29, 2003. Plaintiff filed opposition to this motion [DE 9] on January 23, 2004. Defendant filed its reply [DE 14] on February 5, 2004. The Court held oral argument on this motion upon Plaintiff's request on February 20, 2004. Having considered the parties' arguments and relevant case law and statute, the Court concludes that Defendant's motion should be denied as to Count I but granted as to Count II.
Facts
These facts are derived from the Plaintiff's complaint.
Melissa Plante ("Plante") purchased from USFG Specialty Insurance Company ("USFG") a homeowner's insurance policy in January 2000. (Complaint ¶ 6). The Policy's limits of liability are $10,000.00, plus an additional 10% for code upgrades, for the "Dwelling," $25,000.00 for "Personal Property," and $10,000.00 for "Loss of Use." (Complaint ¶ 7). In March 2000, Plante contacted a plumber to inspect and repair leaks in the bathroom tub. (Complaint ¶ 13). Plante returned to the home following the plumber's work and found it damaged and vandalized. (Complaint ¶ 14). On March 13, 2000, Plante notified USFG of the loss and damage resulting from the water leak and vandalism. (Complaint ¶ 17). Plante faced difficulty in soliciting an investigation from USFG, but eventually received an inspection of the premises by New Wave Construction, who handled the claim on behalf of USFG. (Complaint ¶¶ 18-20). While New Wave handled her claim, Plante remained unable to move into her home. (Complaint ¶ 23).
Between May 2, 2000 and June 10, 2000, Plante received four separate checks in the mail from USFG totaling $5,500.47 for the water leak. (Complaint ¶ 24). After receiving these checks, Plante was asked by an agent of New Wave to sign a Work Authorization and Contract with New Wave and to submit a sworn Proof of Loss, which she did. (Complaint ¶ 24). In July 2000, USFG sent an additional check for $5,400.29 on the vandalism claim, payable jointly to Plaintiff and New Wave. (Complaint ¶ 25).
New Wave commenced work on her home, but when Plante returned to the home in November 2000, she found that the contractor had not finished the promised repairs to the home and had damaged her property. (Complaint ¶¶ 26, 27). She paid New Wave $2,700.00 as an advance to have the work completed. (Complaint ¶ 28). On December 5, 2000, Plante arrived at the home to discover a gutted guest bathroom and the destruction of her alarm system. (Complaint ¶ 29). Plante contacted USFG and demanded the repair of her alarm system and return of the $2,700.00 advance. (Complaint ¶ 30). On December 13, 2000, USFG sent another contractor, All Claims Insurance Repairs, Inc. ("All Claims") to inspect the home. (Complaint ¶ 33). All Claims informed Plante that it would take at least several months before permits could be obtained to begin repairs. (Complaint ¶ 33). In May 2001, USFG cancelled Plante's homeowners' insurance policy, retroactive to January 27, 2001. (Complaint ¶ 39). On October 22, 2001, USFG wrote Plante and stated that USFG was denying responsibility "for any additional monies beyond that which has already been paid." (Complaint ¶ 40). USFG also stated that "the original water damage pre-existed the initiation of the USFG Specialty Insurance policy" and that "the losses claimed to be caused by the plumbers are not covered under the policy." (Complaint ¶ 40).
Plante filed a Civil Remedy Notice on July 11, 2003. (Complaint ¶ 43). More than sixty days after Plaintiff filed and sent the Notice to USFG, USFG has not paid the claims in full. (Complaint ¶ 44). Accordingly, Plante filed her complaint [DE 1] on November 26, 2003, alleging claims for statutory bad faith as per Florida Statute § 624.155(1)(b) and fraud in the inducement. Defendant filed the instant motion to dismiss [DE 6] on December 29, 2003.
Standard of Review
To warrant dismissal of a complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure, it must be "clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Rendon v. Valleycrest Prods., 294 F.3d 1279, 1282 (11th Cir. 1994) (quoting Hishon v. King Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232 (1984)), reh'g denied, 54 Fed. Appx. 493 (11th Cir. 2002). Determining the propriety of granting a motion to dismiss requires courts to accept all the factual allegations in the complaint as true and to evaluate all inferences derived from those facts in the light most favorable to the plaintiff. See Hoffend v. Villa, 261 F.3d 1148, 1150 (11th Cir. 2001) (citation omitted), cert. denied, 535 U.S. 1112 (2002). "[U]nless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," the complaint should not be dismissed on grounds that it fails to state a claim upon which relief can be granted. Beck v. Deloitte Touche, 144 F.3d 732, 736 (11th Cir. 1998) (citation omitted), reh'g denied, 189 F.3d 487 (11th Cir. 1999). Nevertheless, "to survive a motion to dismiss, [a] plaintiff must do more than merely label his claims." Excess Risk Underwriters, Inc. v. Lafayette Life Ins, Co., 208 F. Supp.2d 1310, 1313 (S.D. Fla. 2002) (citation omitted). Moreover, when on the basis of a dispositive issue of law no construction of the factual allegations will support the cause of action, dismissal of the complaint is appropriate. Id., citing Marshall County Bd. of Educ. v. Marshall County Gas Dist, 992 F.2d 1171, 1174 (11th Cir. 1993).
Analysis
Plante presents two claims in her complaint: count I, violation of the bad faith statute, Fla. Stat. § 624.155, and count II, fraud in the inducement. USFG seeks to dismiss both counts. USFG argues that count I is not ripe because there has not been a sufficient determination of liability and extent of damages owed on the insurance contract. USFG argues that count II fails to allege fraud with sufficient specificity under Federal Rule of Civil Procedure 9(b).
Count I: Statutory Bad Faith
USFG first argues that Plaintiff's claim under Fla. Stat. § 624.155 must be dismissed because it is not yet ripe. Section 624.155(1)(b)1 provides a civil remedy against an insurer for "[n]ot attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests." The damages recoverable by the insured in a first party bad faith action are those amounts that are the consequences of the insurer's bad faith. McLeod v. Continental Ins. Co., 591 So.2d 621, 626 (Fla. 1992). Those damages may include, but are not limited to, interest, court costs, and reasonable attorney's fees. Id.
USFG's motion to dismiss derives from the holding in Blanchard v. State Farm Mut Auto. Ins., 575 So.2d 1289 (Fla. 1991), in which the Florida Supreme Court held that a claim for bad faith pursuant to Fla. Stat. § 624.155 does not accrue until after a breach of insurance contract claim has been resolved. Id. at 1291 ("Absent a determination of the existence of liability . . . and the extend of the plaintiff's damages, a cause of action cannot exist for a bad faith failure to settle."). The basis for this rule is that an insurer cannot not be held liable for failure to settle claims in good faith when the insurer is not liable on those claims. USFG argues that it has not yet been found liable to Plante under her homeowner's policy, thus her count alleging bad faith is not yet ripe. Plante argues in response that USFG has already admitted to liability by making payments on her claim between May and July 2000. USFG responds by asserting that it has not admitted liability for any amounts above and beyond the $10,900.00 it paid on her claim, and thus Plante must assert and prevail on a breach of contract claim concerning that overage before she may bring a claim for bad faith.
The parties dispute whether this case involves a single insurance claim or multiple claims. However, for purposes of this motion to dismiss, the Court must accept Plaintiff's allegations in the pleadings as true; Plaintiff asserts that she filed an insurance claim.
The Court concludes that Plante has satisfied the prerequisite for bringing an action under Fla. Stat. § 624.155. While USFG argues that Plante must establish contract breach through litigation, arbitration, or a final settlement, Florida law does not require this much. The Florida Supreme Court clarified its Blanchard holding in Imhof v. Nationwide Mut. Ins. Co., 643 So.2d 617 (Fla. 1994), in which it held that an insured's breach of contract claim has been resolved sufficiently to bring a bad faith claim as long as the insurance carrier concedes liability on the claim, even when the carrier disputes the amount for which it is liable. Id. at 618. ("Neither Blanchard nor section 624.155(2)(b) requires the allegation of a specific amount of damages. Thus, if the . . . certified question asked whether a complaint must allege the specific amount of damages determined, we would answer that question in the negative.").
While a final settlement through litigation is unnecessary, there remains the question whether a insurer's payment on the policy may be considered a concession of liability. Several courts have held that an insurer's payment of the policy limits does constitute a concession of liability. See Brookins v. Goodson, 640 So.2d 110, 113 (Fla. 4th DCA 1994) (holding that payment of the policy limits by the insurer constitutes admission of liability); Marraccini v. Clarendon Nat'l Ins. Co., No. 02-20896-CIV, 2003 WL 22668842 (S.D. Fla. Oct. 1, 2003) (holding that payment of policy limits constitutes admission of liability). In Brookins, the plaintiff brought a claim under Fla. Stat. § 624.155 alleging bad faith against an automobile insurer. The plaintiff argued that his claim was ripe because the insurance company had already paid the policy limit of $10,000.00; accordingly, he argued, the company had admitted liability for purposes of his claim for benefits under the uninsured motorist provision of the insurance policy. Brookins, 640 So.2d at 111. The court held that payment of the policy limits by the insurer was the "functional equivalent" of an allegation that there was a final determination of the company's liability. Id. at 112-13 ("The bad faith statute imposes no requirement of a prior judgment as a condition precedent to a bad faith claim.").
The Florida Supreme Court's most recent case on this subject suggests that payment of an insurance claim does constitute a final determination of liability under § 624.155(1)(b). In Vest v. Travelers Ins. Co., 753 So.2d 1270 (Fla. 2000), the Court quoted extensively from its earlier opinions in Blanchard and Imhof and from the Fourth District's decision in Brookins in its determination of a related issue — whether an insured's damages under § 624.155(1)(b) are recoverable from the date that the conditions for payment of benefits under the policy have been fulfilled or from the date that the insurer's liability has been determined. While the ultimate holding in Vest is not relevant for purposes of the instant motion, the fact that the Court reaffirmed the Fourth District's decision in Brookins suggests that payment of an insurance claim satisfies the prerequisite for a bad faith suit.
The cases cited by the Defendant are not to the contrary. In Lane v. Provident Life and Accident Ins. Co., 71 F. Supp.2d 1255 (S.D. Fla. 1999), the plaintiff stipulated that his claim under Fla. Stat. § 624.155(1)(b)1 was not ripe, thus that case is entirely inapposite. Id. at 1255-56. Fishkin v. Guardian Life Insurance Company of America, 22 F. Supp.2d 1365 (S.D. Fla. 1998) is likewise inapposite since the plaintiff's complaint actually contained claims for breach of the insurance policy; the plaintiff was not permitted to add a claim for bad faith to her underlying claim for recovery on the policy since that underlying claim was outstanding USFG also cites Hartford Insurance Company v. Mainstream Construction Group, Inc., Case No. 5D03-2678, 2004 WL 220977 (Fla. 5th DCA Feb. 6, 2004). Initially, the Court notes that this opinion has not been released for publication and, until released, is subject to revision or withdrawal. Even assuming the opinion is released in its present form, it does not support USFG's position since there is no indication that the insurance company in that case made payment on the plaintiff's claims. In fact, the plaintiff in Hartford Ins. Co. raised claims for breach of the insurance contract, suggesting that the plaintiff agreed that a final determination had not been reached. Finally, in Marraccini v. Clarendon National Insurance Company, Case No. 02-20896-CIV, 2003 WL 22668842 (S.D. Fla. Oct. 1, 2003), the court held that payment of the policy limits acts as a verdict in favor the insured and permits a plaintiff to bring a claim for bad faith. Id. at *3.
This case is slightly different since the insurer did not make payment of the policy limits, but paid an amount less than that. The Florida Supreme Court has never ruled on the specific question whether an award less than the policy limits satisfies the prerequisite to a bad faith claim. In the absence of a clear state law standard on this issue, the normal course is to discern how the Florida Supreme Court would rule. See Meier ex rel. Meier v. Sun Intern. Hotels, Ltd., 288 F.3d 1264, 1271 (11th Cir. 2002) ("[F]ederal courts are required to construe [questions of Florida law] as would the Florida Supreme Court."); JB Oxford Holdings, Inc. v. Net Trade, Inc., 76 F. Supp.2d 1363, 1366 (S.D. Fla.1999). Applying this standard, I conclude that the Florida Supreme Court would find that an award need not meet the policy limit to permit a plaintiff to proceed with a bad faith claim. The basis for that conclusion is that in Imhof, the plaintiff's arbitration award for less than the policy limits sufficed to establish the requirement that the insured had a valid claim. 643 So.2d at 618; see also Martin v. Cigna Property Casualty Ins. Co., Case No. 96-2358-CIV-LENARD (S.D. Fla. Dec. 4, 1996) (holding that payment of amount less than the policy limits is an admission of liability for purposes of the bad faith statute). The further basis for my conclusion is that once an insurer has made payment on a plaintiffs claims, it has waived its coverage defenses that would otherwise exist regardless whether it pays the policy limits or an amount less than that. Florida Statute § 627.426(2) provides that an insurer's failure to provide written notice of its refusal to cover a claim works an estoppel. By making payment on Plante's claim, USFG did not refuse coverage but rather admitted it. Accordingly, USFG may not assert coverage defenses it could otherwise raise regardless of the fact that USFG made payment in an amount less than the policy limits. The inability of USFG to assert coverage defenses suggests that partial payment constitutes a "final determination of liability" for purposes of the bad faith statute. If the law required payment of the full policy limits, an insurer could too easily avoid defending against bad faith claims by paying an amount less than the policy limits.
USFG has admitted liability under the insurance policy by making payment on Plante's claims; whether or not it has paid the damage amount alleged by Plante in her complaint is irrelevant under Blanchard, Imhof, and Brookins. Accordingly, Plante's bad faith claim is ripe and the motion to dismiss on that basis is denied. Count II: Fraud in the Inducement
USFG presents a new argument in its reply brief that was not presented in its motion. USFG argues that the Civil Remedy Notice filed by Plante failed lo give USFG an adequate opportunity to cure the violations being alleged. USFG argues that Plante filed multiple claims with USFG and has not clarified which claims are the subject of this bad faith lawsuit. The Court notes initially that USFG has raised this argument in violation of Southern District of Florida Local Rule 7.1(C), which prohibits parties from raising new arguments in a reply brief. U.S. v. Oakley, 744 F.2d 1553, 1556 (11th Cir. 1984); U.S. v. Benz, 740 F.2d 903, 916 (11th Cir. 1984), cert. denied, 474 U.S. 817, 106 S.Ct. 62 (1985). Regardless, the Court concludes that the Civil Remedy Notice is sufficiently specific to have provided USFG with an opportunity to settle Plante's claim.
Count II of Plante's complaint alleges fraud in the inducement against USFG.
USFG argues that this count should be dismissed for failure to allege what false statements were made by USFG and/or its agents. The standard for a fraud claim is more stringent than for most claims. While Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim" that "will give the defendant fair notice of what the plaintiffs claim is and the grounds upon which it rests," see Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103 (quoting Fed.R.Civ.P. 8(a)(2)), Rule 9 requires greater specificity with respect to claims of fraud. Specifically, Rule 9(b) states that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed.R.Civ.P. 9(b). The purpose of Federal Rule of Civil Procedure 9(b) is to ensure that allegations of fraud are specific enough to provide sufficient notice of the acts complained of, so that defendants will be able to respond effectively, eliminate those complaints filed as a pretext for discovery of unknown wrongs, and to protect defendants from unfounded charges of wrongdoing that injure their reputations. Anderson v. Transglobe Energy Corp., 35 F. Supp.2d 1363, 1369 (M.D. Fla.1999) (citing McDonough v. Americom Int'l Corp., 151 F.R.D. 140, 141 (M.D. Fla.1993). However, a complaint need only provide a reasonable delineation of the underlying acts and transactions allegedly constituting the fraud. Id. at 1369-70 (citing In re Checkers Sec. Lit., 858 F. Supp. 1168, 1175 (M.D. Fla.1994). A fraud claim meets the requirements of Rule 9(b) if it sets forth precisely what statements or omissions were made in what documents or oral presentations, who made the statements, the time and place of the statements, the contents of the statements or manner in which they misled the Plaintiff, and what the defendants gained as a consequence. Brooks v. Blue Cross and Blue Shield of Florida, 116 F.3d 1364, 1371 (11th Cir. 1997).
The complaint facially recites the elements of fraud in the inducement: (1) a false statement concerning a material fact; (2) knowledge by the person making the statement that the representation is false; (3) intent by the person making the statement that the representation will induce another to act upon it, and (4) reliance on the representation to the injury of the other party. Mettler, Inc. v. Ellen Tracy Inc., 649 So.2d 253 (Fla. 2d DCA 1994). USFG argues that the complaint does not adequately allege the false statements of material fact made by USFG, nor does it recite what contract or agreement Plante was fraudulently induced to enter by USFG.
Plante argues that her complaint alleges the following material misrepresentations: "New Wave and GAB (acting on USFG's apparent behalf) told Plante that New Wave was authorized to, and would, perform the necessary repair work at the Home." Opposition to Motion to Dismiss at 16. This allegation is inadequate for two reasons. First, it is inadequate because it seems to allege fraud by New Wave and GAB rather than USFG. It is unclear whether Plante is alleging that these contractors committed fraud by misrepresenting that they acted on USFG's behalf when, in fact, they did not. If that is the case, Plante should be alleging fraud against New Wave and GAB, not USFG. Second, Plante's allegations are inadequate because they allege nothing apart from breach of contract. The Florida Supreme Court has held that "a tort action will lie for either intentional or negligent acts considered to be independent from acts that breached the contract." Eye Care Intern, Inc. v. Underhill, 92 F. Supp.2d 1310, 1315 (M.D. Fla. 2000) (quoting HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So.2d 1238, 1239 (Fla. 1996)); see also AFM Corp. v. Southern Bell Tel. Tel. Co., 515 So.2d 180, 181 (Fla. 1987). Where the facts surrounding a breach of contract action are indistinguishable from an alleged tort, and where the alleged tort does not cause harm distinct from that caused by the breach of contract, a plaintiff is barred from bringing a separate tort action. Eye Care Intern, 92 F. Supp.2d at 1315 (citing Serina v. Albertson's, Inc., 744 F. Supp. 1113, 1117-18 (M.D.Fla. 1990)). An independent tort "requires proof of facts separate and distinct from the breach of contract." HTP, Ltd., 685 So.2d at 1239. Plante has alleged no facts separate and distinct from the breach of contract. Accordingly, her claim for fraud in the inducement shall be dismissed without prejudice. It is hereby
ORDERED AND ADJUDGED that:
1. The Defendant's Motion to Dismiss [DE 6] is GRANTED IN PART and DENIED IN PART.
2. Defendant's Motion to Dismiss is DENIED as to Count I and GRANTED as to Count II.
3. Count II of the complaint is DISMISSED WITHOUT PREJUDICE.
4. Plaintiff may file an amended complaint on of before March 19, 2004 or this case shall proceed only on Count I.
DONE AND ORDERED.