Dern v. Liberty Mut. Ins. Co.

• Decision Date: 11 December 2015
• Docket Number: Case No.: GJH-15-1737
• Parties: JANE DERN, Plaintiff, v. LIBERTY MUTUAL INSURANCE CO., Defendant.
• Court: U.S. District Court — District of Maryland

JANE DERN, Plaintiff, v. LIBERTY MUTUAL INSURANCE CO., Defendant.

Case No.: GJH-15-1737

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND Southern Division

December 11, 2015

MEMORANDUM OPINION

Plaintiff Jane Dern filed the present action against Defendant Liberty Mutual Insurance Co.,¹ the insurer of her home, after her home was damaged by a fire on or about May 22, 2014. ECF No. 2 at ¶¶ 2-6. Presently before the Court is Defendant's Motion to Dismiss. ECF No. 9. The Court has reviewed the record and deems a hearing unnecessary.² See Loc. R. 105.6 (D. Md.). For the reasons stated herein, Defendant's Motion is granted.

I. BACKGROUND

According to the Complaint, Defendant insured Plaintiff's home located in Frederick, Maryland in exchange for monthly premiums. ECF No. 2 at ¶ 4. On or about May 22, 2014. Plaintiff's home was damaged by fire, which left it "extensively damaged" and "uninhabitable."and Plaintiff filed a claim with Defendant for coverage. Id. at ¶¶ 4-6. Although "numerous respected local contractors" have opined that Plaintiff's house must be torn down and rebudt, Defendant has relied on the opinion of one contractor who has stated that the house could be repaired, rather than rebuilt. Id. at ¶ 9.

Unable to reach a resolution, Plaintiff filed the present action alleging one count of unfair claim settlement practices under Md. Code Ann., Ins. § 27-303 and one count for breach of contract. See ECF No. 2. Specifically, as to her claim under § 27-303, Plaintiff alleges that "despite [her] good-faith efforts to resolve the matter . . . Defendant[] h[as] refused to move forward in good faith and h[as] continually pressured the Plaintiff to sign paperwork and settle the claim in such a way that would not appropriately cover the work that needs to be done . . . ." Id. at ¶ 8. She further contends that Defendant has failed to act in good faith with respect to covering personal property that was damaged in the fire, and that Defendant has "intimidated the [Plaintiff], as she has been repeatedly asked to agree to have [Defendant's] contractor perform inadequate repairs for an unrealistic price." Id. at ¶¶ 10-11. She further alleges that this claim is ripe for decision by this Court because "a final decision has been entered by the Maryland Insurance Administration . . . ." Id. at ¶ 13.

With respect to her breach of contract claim. Plaintiff alleges that, although she has paid the required monthly premiums, "Defendant has refused to adequately compensate the Plaintiff pursuant to the Homeowner's Insurance agreement between the parties for the damage it caused to the Plaintiff's vehicle," and that "no work has even begun toward rebuilding the home and the Plaintiff has . . . been unable to move back into her home." Id. at ¶¶ 15, 12(2)-13(2).³

Defendant now moves to dismiss both counts of the Complaint. Defendant argues that Plaintiff's claim under § 27-303 cannot be pursued in a civil cause of action and that Plaintiff's exclusive remedy under that statute is to seek redress before the Maryland Insurance Administration. See ECF No. 9-1 at 3-4. Defendant further argues that Plaintiff's breach of contract claim must be dismissed because the Complaint is so lacking in specificity as to render the claim inscrutable. Id. at 4-5.

II. STANDARD OF REVIEW

Defendants have moved to dismiss Plaintiff's Complaint on the ground that the Complaint fails to state a claim upon which relief can be granted.⁴ When deciding a motion to dismiss, a court "must accept as true all of the factual allegations contained in the complaint," and must "draw all reasonable inferences [from those facts] in favor of the plaintiff." E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011) (citations and internal quotation marks omitted). To survive a motion to dismiss invoking Fed. R. Civ. P. 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) (citing Bell Adantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The factual allegations must be more than "labels and conclusion . . . . Factual allegations must be enough to raise a right to relief above the speculative level . . . ." Twombly, 550 U.S. at 555; see also id. ("[T]he pleading must contain something more . . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action" (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, 235-36 (3d ed. 2004)). A complaint will not survive Rule 12(b)(6) review where itcontains "naked assertion[s]" devoid of "further factual enhancement." Id. at 557. "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 663. "But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show[n]'—'that the pleader is entitled to relief.'" See id. at 679 (citing Fed. Rule Civ. Proc. 8(a)(2)).

III. DISCUSSION

A. Unfair Claim Settlement Practices

The first count of the Complaint invokes § 27-303 of the Insurance Article of the Maryland Code, ECF No. 2 at ¶ 12, which provides that certain conduct of an insurer, including the refusal to pay a claim for an arbitrary or capricious reason, constitutes an unfair claim settlement practice. Md. Code Ann., Ins. § 27-303. Defendant seeks dismissal of this claim on the ground that § 27-303 provides for administrative remedies only and does not create a separate cause of action against an insurer. ECF No. 9-1 at 3. Plaintiff in opposing Defendant's Motion, first argues that, although the Complaint invokes § 27-303, "the relief requested by . . . Plaintiff is not wholly or independently reliant upon successfully proving . . . violations [of § 27-303]." ECF No. 14 at 3. Rather, Plaintiff contends that "Defendant's violations of § 27-303 serve to support the claims made by Plaintiff as to the bad faith nature of Defendant's conduct in breaching the contract it holds with . . . Plaintiff." Id. Plaintiff further argues, in the alternative, that this claim may be adjudicated by this Court because a final decision has been entered by the Maryland Insurance Administration under a complaint that was filed by Plaintiff acting pro se. ECF No. 14 at 3-4; see also ECF No. 2 at ¶ 13.

Based on Plaintiff's opposition to Defendant's Motion to Dismiss, it seems that she cannot decide whether she is pursuing a claim directly under § 27-303, or rather is raising an independent tort or contract claim for unfair claim settlement practices. In any case, this claim must be dismissed. If Plaintiff seeks to bring a civil claim directly under § 27-303, she cannot do so in this forum. The Maryland legislature made it explicit that the unfair claim settlement practices subtitle "provides administrative remedies only." Md. Code Ann., Ins. § 27-301. And any administrative appeals must be taken in accordance with Section 2-215 of the Insurance Code, see Md. Code Ann., Ins. § 27-306, which in turn provides that appeals from an administrative order may be appealed "(i) to the Circuit Court for Baltimore City; or (ii) if a party to an appeal is an individual, to the circuit court of the county where the individual resides." Md. Code Ann., Ins. § 2-215(c)(1). This Court, therefore, is without power to consider any claim arising under § 27-303.⁵ See Moye v. Avis Budget Grp., No. CIV.A. TDC-14-2714, 2015 WL 410515, at *3 (D. Md. Jan. 27, 2015) ("To the extent that [Plaintiff] seeks review of [an administrative] determination [under § 27-303], any available appeal would need to be brought in Maryland Circuit Court in accordance with Md.Code Ann., Ins. §§ 27-306 and 2-215. Accordingly, any claim brought under the provisions of the Unfair Claims Settlement Practices Act is not properly before the Court . . . ."); see also Hartz v. Liberty Mut. Ins. Co., 269 F.3d 474. 476 (4th Cir. 2001) ("[F]ederal courts simply have no license to upend Maryland's decision to resolve this sort of insurance complaint administratively.").

If Plaintiff's Complaint is intending to allege an independent tort violation, her claim also must fail because § 27-303 does not create an independent first party action in tort against aninsurer for a bad faith failure to settle a claim. Md. Code Ann., Ins. § 27-301(b)(2) ("This subtitle does not provide or prohibit a private right or cause of action to. or on behalf of, a claimant or other person in any state."); Johnson v. Fed. Kemper Ins. Co., 536 A.2d 1211, 1213 (Md. Ct. Spec. App. 1988) (holding that predecessor to § 27-303 provides for administrative relief only and "cannot be said to create a separate cause of action" in tort); see also Hartz, 269 F.3d at 475-76. Plaintiff cites Zappone v. Liberty Life Insurance Co., 706 A.2d 1060 (Md. 1998) in support of her contention that this Court may adjudicate a claim alleging unfair claim settlement practices so long as the claimant first exhausts her administrative remedies, ECF No. 14 at 4, but that case does not support such a broad proposition. In Zappone, the Court of Appeals of Maryland concluded that claims alleging fraud, negligent misrepresentation, and negligence in connection with the sale of insurance were not preempted by the Insurance Code of Maryland and that a plaintiff need not exhaust administrative remedies before pursuing such claims in court. Zappone, 706 A.2d at 1071. The court reached that conclusion, however, after recognizing that the plaintiff's causes of action in that case were "wholly independent of the Insurance Code's Unfair Trade Practices subtitle." Id. Thus, because the court would not be called upon to interpret or apply the Insurance Code or any of its regulations, and the plaintiff's right to recovery was ...