Buntea v. State Farm Mut. Auto Ins. Co.
| Decision Date | 19 December 2006 |
| Docket Number | No. 05-72399.,05-72399. |
| Citation | 467 F.Supp.2d 740 |
| Parties | Anita BUNTEA, Plaintiff, v. STATE FARM, MUTUAL AUTO INSURANCE CO., Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Michael N. White, Richard H. Friedman, Friedman, Rubin, Bremerton, WA, Paul A. Zebrowski, Thomas A. Biscup, Paul Zebrowski Assoc.; Shelby Township, MI, for Plaintiff.
James F. Hewson, Hewson & Van Hellemont, Warren, MI, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S RENEWED MOTION TO DISMISS [44] AND DENYING DEFENDANT'S APPEAL FOR REVIEW OF THE MAGISTRATE JUDGE'S DECISION [48]
Pending before this Court are: (1) Defendant's renewed motion to dismiss, filed on September 14, 2006, and (2) Defendant's request for review and appeal of the magistrate judge's decision denying a protective order regarding discovery, filed on September 29, 2006.
Plaintiff Anita Buntea sued. Defendant State Farm for its alleged failure to provide the full benefits entitled to her under an insurance policy with Defendant. On August 24, 2006, this Court granted Plaintiffs motion for leave to file a Second Amended Complaint1 and denied Defendant's motion for partial summary judgment2 without prejudice, in order to give Defendant an opportunity to bring a motion to dismiss that addressed new claims contained in the Second Amended Complaint. Specifically, Plaintiffs Second Amended Complaint brings claims of (1) silent fraud, (2) actual fraud, (3) breach of contract under the Michigan No Fault Act, MCL § 500.3101, et seq, (4) negligence, and (5) a violation of the Michigan Consumer Protection Act ("MCPA"), MCL § 445.901, et seq. Defendant responded with the instant renewed motion to dismiss.3 For the reasons set forth below, the Court GRANTS IN PART Defendant's renewed motion to dismiss and DENIES IN PART. The Court also DENIES Defendant's appeal for review of the magistrate judge's decision.
On September 22, 1995, Plaintiff was involved in an automobile accident that rendered her a quadriplegic. Plaintiff made a claim for first-party benefits under her automobile insurance policy with Defendant, and Defendant has since paid for much of her care. This case concerns costs not covered by Defendant.
Plaintiff alleges that Defendant has failed to pay for, or inform her of its responsibility to pay for, several of her medical expenses. She states that Defendant "had a policy of not paying family members and others commercially reasonable agency market rates for attendant care" and "of not informing its insureds of all benefits available under the insurance policy...." (Compl. ¶¶ 29-30.) Plaintiff does not claim that Defendant has refused to pay for claims that she submitted. Rather, she argues in essence that Defendant understood its obligations to be greater than Plaintiff understood them to be, but concealed this fact to save money.
Plaintiff states that despite an occupational therapist's recommendation of a full twenty-four hours of attendant care, Defendant paid for only twelve hours of daily care by her mother and grandmother at $5 per hour in 1996, eight hours at $8 per hour beginning in 1998, and six hours at $12 per hour at present. Plaintiff also claims that her family caregivers were entitled to commercially reasonable rates for similar care provided by an outside agency, that she is entitled to housing and educational expenses, and that Defendants concealed these additional policy benefits from Plaintiff.
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a Complaint. In a light most favorable to Plaintiff, the Court must assume that Plaintiff's factual allegations are true and determine whether the Complaint states a valid claim for relief. See Albright v. Oliver, 510 U.S. 266, 114 S.Ct. 807, 127 L.Ed.2d 114 (1994); Bower v. Federal Express Corp., 96 F.3d 200, 203 (6th Cir.1996); Forest v. United States Postal Serv., 97 F.3d 137, 139 (6th Cir. 1996). This standard of review "`requires more than the bare assertion of legal conclusions." In re Sofamor Danek Group, Inc., 123 F.3d 394, 400 (6th Cir.1997) (quoting Columbia Natural Resources, Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir.1995)). The Complaint must include direct or indirect allegations "respecting all the material elements to sustain a. recovery under some viable legal theory." In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993) (citations omitted) (emphasis in original).
A district judge reviewing a magistrate judge's nondispositive order may only reverse or modify the order if the findings were clearly erroneous or contrary to law. Fed.R.Civ.P. 72(a); 28 U.S.C. § 636(b)(1)(A). "A finding is `clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." US. v. US. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948).
Defendant attacks all or part of each of Plaintiffs claims under the Complaint.
As an initial matter, Defendant argues that non-contract causes of action cannot coexist with breach of contract claims. Defendant primarily relies on the following language from the Michigan Supreme Court, explaining the policies behind Michigan's No—Fault Insurance Act:
The Michigan No—Fault Insurance Act, which became law on October 1, 1973, was offered as an innovative social and legal response to the long delays, inequitable payment structure, and high legal costs inherent in the tort (or "fault") liability system. The goal of the no-fault insurance system was to provide victims of motor vehicle accidents with assured, adequate, and prompt reparation for certain economic losses. The Legislature believed this goal could be most effectively achieved through a system of compulsory insurance, whereby every Michigan motorist would be required to purchase no-fault insurance or be unable to operate a vehicle legally in this state. Under this system, victims of motor vehicle accidents would receive insurance benefits for their injuries as a substitute for their common-law remedy in tort.
Cruz v. State Farm Mut. Auto. Ins. Co., 466 Mich. 588, 648 N.W.2d 591, 595 (2002).
Defendant argues that the purpose and effect of the No-Fault Act is to preclude any cause of action that is related to an insurance contract, but alleged under a non-contract theory of law. Thus, Defendant contends that Plaintiff's silent fraud, actual fraud, negligence and MCPA claims should be dismissed because "Plaintiffs remedies . . . [are] exclusively contained in the no-fault statute according to the intent of the Legislature and the accompanying case law." (Ders Mot. for Summ. J. at 2.) The No-Fault Act, however, does not contain an exclusive remedy provision, and this omission must be considered intentional. Farrington v. Total Petroleum, Inc., 442 Mich. 201, 501 N.W.2d 76, 80 (1993).
In Hearn v. Rickenbacker, 428 Mich. 32, 400 N.W.2d 90 (1987), the Michigan Supreme Court confronted a similar issue. The plaintiff and the defendant were parties to an insurance contract. When the plaintiffs property was destroyed by a fire, the defendant refused to pay the insurance claim, contending that the policy had been cancelled for nonpayment. The plaintiff then sued, filing a three-count complaint alleging breach of contract, fraud, and negligence. The breach of contract claim was based on the defendant's failure to pay the insurance claim. The fraud claim was based on "the actions and misrepresentations" of the defendant. And the negligence claim was based on the defendant's "breach of various duties alleged to be owed to the plaintiff." Id. at 91. The insurance policy at issue provided that no lawsuits "on this policy . . . shall be sustainable . . . unless commenced within twelve months next after inception of the loss." Id. at 92. The precise issue before the court was "whether the plaintiffs fraud and negligence counts amount to actions `on this policy' for purposes of applying the twelve-month limitation period." Id.
The court cited with approval a California court's finding that the "nature of the right sued upon, not the form of action or the relief demanded, determines the applicability of the statute of limitations." Id. (quoting Richardson v. Allstate Ins. Co., 117 Cal.App.3d 8, 12, 172 Cal.Rptr. 423 (Cal.Ct.App.1981)). The court also accepted an Ohio court's finding that tort liability Id. (quoting Plant v. Illinois Employers Ins. of Wausau, 20 Ohio App.3d 236, 485 N.E.2d 773, 775 (1984)).4 In addition to these foreign authorities, the Hearn court relied upon an 1892 Michigan Court of Appeals case holding that
a mere contract obligation may establish no relation out of which a separate and specific legal duty arises, and yet extraneous circumstances and conditions in connection with it may establish such a relation as to make its performance a legal duty, and its omission a wrong to be redressed. The duty and the tort grow out of the entire range of facts of which the breach of the contract was but one.
Id. at 94 (quoting Oliver v. Perkins, 92 Mich. 304, 52 N.W. 609, 612 (Mich.Ct.App. 1892)).
Based on these authorities, the court held that the plaintiffs fraud and negligence claims were not in fact "on the policy," since they were not "truly contractual in nature." Id. The court explained,
[T]he relationship between insurers and their...
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