Haynes v. Allstate Fire & Cas. Ins.
| Decision Date | 18 February 2020 |
| Docket Number | Civil Action No. 19-cv-02397-STV |
| Parties | JACQUELINE HAYNES, Plaintiff, v. ALLSTATE FIRE & CASUALTY INSURANCE, Defendant. |
| Court | U.S. District Court — District of Colorado |
Entered by Magistrate Judge Scott T. Varholak
This matter is before the Court on the Motion to Dismiss or, Alternatively, Motion to Strike Pursuant to Fed. R. Civ. P. 12(f) (the "Motion"), filed by Defendant Allstate Fire & Casualty Insurance ("Allstate"). [#12] The parties have consented to proceed before the undersigned United States Magistrate Judge for all proceedings, including entry of a final judgment. [#18, 23] The Court has carefully considered the Motion and related briefing, the entire case file, and the applicable case law, and has determined that oral argument would not materially assist in the disposition of the Motion. For the following reasons, the Motion is DENIED.
Plaintiff Jacqueline Haynes entered into an automobile insurance policy (the "Policy") with Allstate, which includes coverage for claims involving underinsured motorists. [#3 at ¶¶ 11, 169] At all times relevant to the Policy, Plaintiff paid the insurance premiums required under the Policy. [Id. at ¶ 169] Pursuant to the Policy, Allstate is required to pay its insured "reasonable" medical expenses for covered expenses. [Id. at ¶ 38]
On November 3, 2018, Plaintiff was involved in a motor vehicle accident when another driver ran a stop sign and hit her. [Id. at ¶ 14] The other driver, who was under the influence of drugs and/or alcohol at the time he ran the stop sign, was negligent and caused the collision. [Id. at ¶¶ 15, 16] Plaintiff was injured as a result of the collision. [Id. at ¶ 19] The negligent driver who caused the collision was insured for up to $25,000 per person. [Id. at ¶ 21] Allstate gave Plaintiff permission to settle with the negligent driver's insurer for the policy limit of $25,000. [Id. at ¶¶ 21, 22, 24]
Plaintiff contends that her injuries, damages, and losses resulting from the motor vehicle accident exceeded the $25,000 limit of the negligent driver's policy. [Id. at ¶ 23] Plaintiff submitted a claim to Allstate for underinsured motorist ("UIM") benefits. [Id. at ¶ 27] In February 2019, Plaintiff requested that Allstate pay her underinsured motorist benefits, but Allstate did not pay benefits in response to that request. [Id. at ¶¶ 28, 29] On June 11, 2019, Plaintiff sent Allstate a second request to pay benefits under her Policy (the "June 11 Letter"). [Id. at ¶ 36; see also #12-1]2 On July 10, 2019, Brittney Montoya, the Allstate adjuster handling Plaintiff's claim, responded to Plaintiff's claim (the "July 10 Letter"). [#3 at ¶¶ 3, 4, 77; see also #12-3]3 Ms. Montoya informed Plaintiff that Allstate accepted as reasonable $15,556 of the $18,312.25 in total medical expenses that Plaintiff had incurred up to that date. [#3 at ¶ 77; #12-3] Ms. Montoya further informed Plaintiff that Allstate evaluated Plaintiff's general damages at $13,500. [#3 at ¶ 79; #12-3] Ms. Montoya thus offered Plaintiff $4,056 to settle her underinsured motorist claim. [#3 at ¶ 62; see also #12-3] At the time of that offer, Allstate did not advise Plaintiff of any failure to meet the conditions precedent under the Policy or raise any other coverage defense. [#3 at ¶¶ 67, 68; see also #12-3] Although Allstate did not dispute that at least $4,056 in underinsured motorist benefits were owed to Plaintiff, no underinsured motorist benefits were actually paid to Plaintiff at that time. [#3 at ¶¶ 64, 65] Plaintiff contends that, in evaluating her medical expenses, Allstate utilized a software program called Mitchell Decision Point ("MDP"). [Id. at ¶¶ 41, 44, 50] According to Plaintiff, Allstate uses MDP "to artificially depress healthcare reimbursements" and used MDP to reduce her medical expenses. [Id. at ¶¶ 49, 51] According to the Complaint, Allstate knows that its adjusters have used MDP "inappropriately or incorrectly in the past." [Id. at ¶ 109] Plaintiff further contends that, in evaluating her general damages, Allstate utilized a software program called Colossus. [Id. at ¶¶ 52, 58] According to Plaintiff, "Allstate engages in the institutional practice of inappropriately using Colossus to lower insured's general damages." [Id. at ¶ 123] More specifically, Plaintiff contends that Colossus fails to take life expectancy into account and cannot evaluate damages for physical impairment or disfigurement. [Id. at ¶¶ 129, 130] The Complaint alleges that Allstate knows that its adjusters handling UIM claims have failed to enter full and correct information into Colossus for certain past claims and provides seven examples specifically identifying both the Allstate adjuster and the claimant involved. [Id. at ¶¶ 114-121]
On July 10, 2019, in response to Allstate's offer, Plaintiff informed Ms. Montoya that she was aware that Allstate had entered information into Colossus incorrectly for other Allstate insureds. [Id. at ¶ 89] Although Ms. Montoya admitted that she had used MDP and Colossus to evaluate Plaintiff's claim, she refused to provide Plaintiff with copies of the MDP and Colossus reports used to adjust her claim. [Id. at ¶¶ 78, 80, 82, 83] Following that exchange, Ms. Montoya discussed Allstate's position regarding the production of MDP and Colossus reports with Allstate management. [Id. at ¶ 93] On July 16, 2019, Ms. Montoya advised Plaintiff that it was Allstate's position that the MDP andColossus reports are proprietary work product and thus would not be provided to the insured. [Id. at ¶ 94] According to Plaintiff, Allstate has produced MDP and Colossus reports in UIM litigation in Colorado without the protections of a protective order. [Id. at ¶¶ 96, 126] Plaintiff contends that Ms. Montoya's refusal to provide a reasonable basis for her July 10, 2019 offer—including production of the MDP and Colossus reports—caused unreasonable delay in the payment of the benefits owed to her, constituted a violation of the Unfair Claims Settlement Practices Act, breached Allstate's duty of good faith, and compelled her to file this lawsuit. [Id. at ¶¶ 137-140]
On July 29, 2019, Plaintiff filed the instant lawsuit in the Adams County, Colorado District Court asserting claims against Allstate for breach of contract, statutory unreasonable delay or denial of benefits, and common law bad faith breach of contract, and a claim against Ms. Montoya for statutory unreasonable delay or denial of benefits. [#3] As of the filing of the lawsuit, Allstate had not paid any benefits under the Policy to Plaintiff related to the November 3, 2018 motor vehicle accident. [Id. at 142] On August 22, 2019, Allstate removed Plaintiff's lawsuit to this Court. [#1]
On August 29, 2019, Allstate filed the instant Motion, seeking to dismiss Plaintiff's claims for unreasonable delay or denial of benefits and common law bad faith breach of contract for failure to state a claim and requesting that the Court strike the Complaint in its entirety. [#12] On September 19, 2019, Plaintiff filed her response to the Motion. [#17] On October 4, 2019, Allstate filed its reply in support of the Motion. [#20] On October 8, 2020, Plaintiff filed a notice of voluntary dismissal of her claims against Ms. Montoya. [#24]
Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a complaint for "failure to state a claim upon which relief can be granted." In deciding a motion under Rule 12(b)(6), a court must "accept as true all well-pleaded factual allegations . . . and view these allegations in the light most favorable to the plaintiff." Cassanova v. Ulibarri, 595 F.3d 1120, 1124 (10th Cir. 2010) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)). Nonetheless, a plaintiff may not rely on mere labels or conclusions, "and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
"To survive a motion to dismiss, 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 Twombly, 550 U.S. at 570). Plausibility refers "to the scope of the allegations in a complaint: if they are so general that they encompass a wide swath or conduct, much of it innocent, then the plaintiffs 'have not nudged their claims across the line from conceivable to plausible.'" Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (quoting Twombly, 550 U.S. at 570). "The burden is on the plaintiff to frame a 'complaint with enough factual matter (taken as true) to suggest' that he or she is entitled to relief." Id. (quoting Twombly, 550 U.S. at 556). The ultimate duty of the court is to "determine whether the complaint sufficiently alleges facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed." Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007).
Pursuant to Federal Rule of Civil Procedure 12(f), the Court—sua sponte or on a motion made by a party—"may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." The Court "possesses considerable discretion in disposing of a Rule 12(f) motion to strike" and "[a]ny doubt about whether the challenged material is redundant, immaterial, impertinent, or scandalous should be resolved in favor of the non-moving party." 5C Charles A. Wright et al., Fed. Prac. & Proc. § 1382 (3d ed. 2019).
"[A]s a general matter, motions to strike under Rule 12(f) are disfavored." Broach v. Yegappan, No. 17-CV-02791-MSK-NYW, 2019 WL 6724246, at *2 (D. Colo. Dec. 11, 2019) (quotation omitted). "[B]ecause federal judges have made it clear, in numerous opinions they have rendered in many substantive contexts,...
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