Allen v. State Farm Fire and Cas. Co., CA 98-1226-MJ-C.

• Decision Date: 25 June 1999
• Docket Number: No. CA 98-1226-MJ-C.,CA 98-1226-MJ-C.
• Citation: 59 F.Supp.2d 1217
• Parties: William M. ALLEN, etc., Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY and Allstate Insurance Company, Defendants.
• Court: U.S. District Court — Southern District of Alabama

59 F.Supp.2d 1217

William M. ALLEN, etc., Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY and Allstate Insurance Company, Defendants.

No. CA 98-1226-MJ-C.

United States District Court, S.D. Alabama, Southern Division.

June 25, 1999.

COPYRIGHT MATERIAL OMITTED

Steven A. Martino, Mobile, AL, Stephen L. Klimjack, Jackson, Taylor & Martino, Mobile, AL, Richard Scruggs, W. Steve Bozeman, Charles J. Mikhail, Lee Young, Scruggs, Millette, Lawson, Bozeman & Dent, Pascagoula, MS, for plaintiffs.

Edward S. Sledge, III, Archibald T. Reeve, IV, McDowell Knight Roedder & Sledge, L.L.C., Mobile, AL, for State Farm Fire and Casualty Company, defendant.

Louis E. Braswell, Henry T. Morrissette, Hand Arendall, L.L.C., Mobile, AL, for Allstate Insurance Company, defendant.

MEMORANDUM OPINION AND ORDER

CASSADY, United States Magistrate Judge.

This cause is before the Court on the defendants' motions to dismiss and/or motions for summary judgment (Docs. 2, 19 & 25), plaintiff's briefs in opposition to the defendants' dispositive motions (Docs. 30 & 35; see also Doc. 34), the reply briefs of the defendants (Docs.37-38), the June 7, 1999 arguments of the parties in support of their respective positions, and the post-hearing submissions of the defendants. The parties have consented to the exercise of jurisdiction by the Magistrate Judge, pursuant to 28 U.S.C. § 636(c), for all proceedings, including disposition of these motions. (See Doc. 18 ("In accordance with the provisions of 2[8] U.S.C. 636(c) and Fed.R.Civ.P. 73, the parties in this case hereby voluntarily consent to have a United States Magistrate Judge conduct any and all further proceedings in the case including the trial, and order the entry of a final judgment.")) Upon consideration of the contents of the briefs and all pertinent material submitted in support of those briefs, the arguments of counsel, and the post-hearing submissions of the defendants, the Court GRANTS the defendants' motions and ORDERS that the plaintiffs' complaint be DISMISSED WITHOUT PREJUDICE.

FINDINGS OF FACT

1. The named plaintiffs, William M. Allen and Dorothy Todd, had homeowners insurance policies issued, respectively, by defendants State Farm Fire and Casualty Company ("State Farm") and Allstate Insurance Company ("Allstate"). (Doc. 9, Amended Complaint, ¶¶ 25 & 26)¹ Plaintiffs seek to represent a class of homeowners insurance policyholders in the costal counties of Alabama, specifically Mobile and Baldwin Counties, Alabama. (Id., ¶ 24)

2. Plaintiffs allege that Allstate and State Farm acted in concert to change the hurricane deductible in the putative class members' insurance policies from a "flat fee" deductible to a percentage of the value of the home and/or the loss. (Id., ¶ 23) Plaintiffs further allege that Allstate conspired with State Farm and that the two insurers threatened Alabama's insurance commissioner that they would not offer homeowners insurance coverage in the coastal counties of Alabama unless the commissioner allowed them to include a 5% hurricane deductible. (Id., ¶ 24) As a result of this alleged "forced arrangement" between the defendants and the commissioner, the commissioner allowed State Farm and Allstate to include the hurricane deductible in Alabama's coastal counties. (Id.)

3. When State Farm changed its homeowners policy provisions to add a hurricane deductible based on a percentage of the coverage amount in the coastal areas of Alabama, State Farm filed with and obtained approval from the commissioner for the hurricane deductible endorsement and the applicable rates with respect to the policies to which that endorsement would be applied. (Doc. 27, Exhibit A, Affidavit of Karen Terry, ¶ 3; see also id., Exhibit B (Department of Insurance Endorsement Approval))

4. Approximately ten days prior to the mailing of the renewal billing package, State Farm sent a pre-renewal letter to its insured Alabama homeowners which informed them of the changes in their policies, including the introduction of the new hurricane deductible. (Id., Exhibit A, Terry Affidavit, at ¶ 5 & Exhibit 1)

5. Forty-five days prior to the date of renewal, State Farm issued the renewal billings for its existing homeowners policyholders. (Terry Affidavit, at ¶ 4) Included within each billing was the approved hurricane endorsement, an insert discussing the rate changes and hurricane deductible program, and a renewal certificate itemizing both the applicable premium using the new rates and the endorsements applicable to the policy. (Id. at ¶ 4 & Exhibit 2) For renewal business, a notice was printed on the endorsement. (Terry Affidavit, at ¶ 4)

6. The notice State Farm issued was printed on the endorsement form entitled "Important Notice ... Concerning Your Hurricane Deductibles" and highlighted the addition of the new hurricane deductible endorsement to the policy. (Id., at Exhibit 2) The notice directed policyholders to read the endorsement carefully and advised that the higher hurricane deductible "means the portion of each covered hurricane loss for which you are responsible increases." (Id.) The notice provision also informed policyholders that the declarations page of their policies illustrated the new deductible. (Id.) Furthermore, the notice declared that the hurricane deductible endorsement was to be effective on the renewal date of the policy and advised policyholders to contact their State Farm agent if they had any questions. (Id.)

7. When Allstate changed its policy provisions to add a hurricane deductible for certain insureds in the state of Alabama, it mailed notices concerning the deductible change to each of these insureds, along with the endorsement setting forth the change. (Doc. 3, Exhibit B, Affidavit of James Rowland, ¶¶ 5-8)

8. The notice Allstate sent was a stand-alone document which was clearly labeled "Important Notice," and it specifically stated, "We've Made a Change to Your Allstate Property Insurance Policy[.]" (Rowland Affidavit, Exhibit 1 (emphasis in original)) The notice explained that Allstate was implementing a hurricane deductible with explicit reference to the deductible amount on an attached renewal declarations page. (Rowland Affidavit, Exhibits 1 & 2) The notice specifically stated "we are implementing a Hurricane Deductible, which will take effect with the renewal of your policy." (Rowland Affidavit, Exhibit 1)

9. Allstate sent the renewal information, including the hurricane deductible endorsement itself, as well as the aforementioned notice and a renewal declarations page showing the insured exactly how much, in dollars, the deductible would be, to the renewing insureds 45 days prior to the end of their policy term. (Id., ¶ 8 & attachments)

10. Plaintiffs regularly paid their insurance premiums and performed each act required to keep their policies in full force and effect. (Doc. 9, Amended Complaint, ¶ 27)

11. On or about September 27th, 28th and 29th, 1998, plaintiffs' homes, and those of the putative class, suffered damage as a result of Hurricane Georges. (Id., ¶ 28)

12. Plaintiffs contend that Allstate and State Farm became obligated to pay full benefits, without a percentage deductible, under the terms of the relevant policies and the laws of the state of Alabama, but have failed to pay those benefits. (Id., ¶¶ 28-29)

13. Plaintiffs have asserted causes of action for breach of contract, interference with contractual business relations, conspiracy, inadequate notice, restraint of trade and unjust enrichment. (Id., at 9-11)

CONCLUSIONS OF LAW

A. Standard of Review.

1. The defendants have filed their dispositive motions as motions to dismiss, or in the alternative, motions for summary judgment. The appropriate standard for ruling on these motions depends upon whether this Court considers matters outside the pleadings. Garcia v. Copenhaver, Bell & Assocs., 104 F.3d 1256, 1266 n. 11 (11th Cir.1997).

2. Under Rule 12(b) of the Federal Rules of Civil Procedure, whether a plaintiff fails to state a claim upon which relief can be granted must be ascertained from the face of the complaint. A motion to dismiss should be granted "`when the movant demonstrates beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" United States v. Pemco Aeroplex, Inc., 166 F.3d 1311, 1313 (11th Cir.1999) (citations omitted).

3. If this Court considers matters outside the complaint, the 12(b)(6) motion converts into a motion for summary judgment. Garcia, 104 F.3d at 1266 n. 11. Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment must be granted when the moving party establishes that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). The burden on the moving party may be discharged by "`"showing" — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case.'" Riley v. Newton, 94 F.3d 632, 638 (11th Cir.1996) (quoting Celotex v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986)), cert denied, 519 U.S. 1114, 117 S.Ct. 955, 136 L.Ed.2d 842 (1997).

4. In this case, the Court has considered matters outside the pleadings, specifically affidavits and other exhibits attached to the motions, and therefore, the defendants' motions are most amenable to analysis under the summary judgment standard. Nonetheless, regardless of which standard is employed, plaintiffs' claims against the defendants must fail. Plaintiffs' claims based upon the defendants' alleged unlawful inclusion of the hurricane deductible fail on each of the following separate grounds: (1) the defendants complied with Alabama's insurance code for submitting and receiving approval of the hurricane deductible; (2) under the insurance code and Alabama case law, hurricane deductibles are lawful...