Kurz v. State Farm Fire & Cas. Co.

• Decision Date: 19 September 2017
• Docket Number: Civil No. 16-8681(RMB/AMD)
• Parties: JOHN E. KURZ; MICHELLE M. KURZ, Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.
• Court: U.S. District Court — District of New Jersey

JOHN E. KURZ; MICHELLE M. KURZ, Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

Civil No. 16-8681(RMB/AMD)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY CAMDEN VICINAGE

September 19, 2017

[Dkt. No. 15]

OPINION

BUMB, UNITED STATES DISTRICT JUDGE:

This matter comes before the Court upon the filing of a Motion to Dismiss [Dkt. No. 15] by Defendant State Farm Fire and Casualty Company ("State Farm" or "Defendant"). State Farm seeks to dismiss Plaintiffs John E. Kurz and Michelle Kurz's (the "Plaintiffs") Complaint pursuant to Fed. R. Civ. P. 12(b)(6).

I. Factual and Procedural Background

The following facts are taken from Plaintiffs' Complaint and are accepted as true for the purposes of this review.

Plaintiffs own the real property located at 397 Friendship Road (a/k/a 102 Harmony Road), Clarksboro, New Jersey (the "Property") and have resided there at all times relevant to this case. (Compl. ¶ 1, 3, 8). On August 28, 2011, Hurricane Irene hit New Jersey, resulting in high wind speeds that damaged the Property. (Id. at ¶ 3). On October 29-30, 2012, just over a year after Hurricane Irene hit New Jersey, Hurricane Sandy struck the state. (Id. at ¶ 8). The winds from the Hurricane also caused damage to the Property. (Id.)

At the time of each of these storms, Plaintiffs had a homeowner's insurance policy issued by Defendant, Policy Number 30-CD-3885-0 (the "Policy"). (Id. at ¶ 4, 9). The Policy was effective as of March 19, 2011, and had a one-year policy period subject to automatic annual renewal upon payment of the required premiums. (Id. at ¶ 14). Plaintiffs made claims under this policy after both Hurricane Irene (claim number 30-Y012-157) and Hurricane Sandy (claim number 30-3K75-117). (Id. at ¶ 5, 10). Defendant denied portions of both of these claims. (Id. at ¶ 5, 6, 11, 12).

On October 11, 2016, Plaintiffs filed a six-count Complaint in the Superior Court of New Jersey, Law Division, Civil Part, Gloucester County (Docket Number GLO-L-1232-16) seeking declaratory judgments as to coverage for the damage to the Property from Hurricane Irene (Count I) and Hurricane Sandy (Count II), and alleging breach of contract (Count III), breach of the covenant of good faith and fair dealing (Count IV), unjust enrichment (Count V), and "any and all additional causes of action as are permitted under the laws of the State of NewJersey, its statutes and common law" (Count VI). Plaintiffs' claims each boil down to the following contention: Defendant wrongly refused to provide Plaintiffs with the coverage to which they were entitled under the Policy.

On November 21, 2016, Defendant removed the case to this Court pursuant to 28 U.S.C. § 1441 and 28 U.S.C. § 1332(a)(1). Defendant filed this Motion to Dismiss on February 1, 2017, seeking, under Fed. R. Civ. P. 12(b)(6), an Order dismissing Plaintiffs' Complaint in its entirety or, in the alternative, dismissing Counts IV, V, and VI, along with Plaintiffs' claims for consequential damages and attorney's fees. Plaintiffs filed their opposition on February 21, 2017.

II. Legal Standard

To withstand a motion to dismiss under 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) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "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 662. "[A]n unadorned, the defendant-unlawfully-harmed-me accusation" does not suffice to survive a motion to dismiss. Id. at 678. "[A] plaintiff'sobligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).

In reviewing a plaintiff's allegations, the district court "must accept as true all well-pled factual allegations as well as all reasonable inferences that can be drawn from them, and construe those allegations in the light most favorable to the plaintiff." Bistrian v. Levi, 696 F.3d 352 n.1 (3d Cir. 2012). When undertaking this review, courts are limited to the allegations found in the complaint, exhibits attached to the complaint, matters of public record, and undisputedly authentic documents that form the basis of a claim. See In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997); Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).

Under New Jersey law, "determination of the proper coverage of an insurance contract is a question of law." Cnty. of Gloucester v. Princeton Ins. Co., 317 Fed. Appx. 156, 159 (3d Cir. 2008). "[T]he first step in examining an insurance contract is to determine whether an ambiguity exists." Pittston Co. Ultramar America Ltd. v. Allianz Ins. Co., 124 F.3d 508, 520 (3d Cir. 1997). An ambiguity exists when "the phrasing of the policyis so confusing that the average policyholder cannot make out the boundaries of coverage." Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247, 405 A.2d 788 (1979). In determining whether an ambiguity exists, it is also important to remember that insurance contracts are generally viewed as contracts of adhesion, and accordingly, ambiguities in their language are interpreted against the drafter. Cnty. of Gloucester, 317 Fed. Appx. at 161.

"When the terms of an insurance contract are clear, [however,] it is the function of a court to enforce it as written and not make a better contract for either of the parties." Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43, 161 A.2d 717 (1960) (internal citation omitted). Moreover, "[a]bsent statutory [prohibitions], an insurance company has the right to impose whatever conditions it desires prior to assuming its obligations and such provisions should be construed in accordance with the language used." Id.

III. Analysis

In support of its Motion to Dismiss, Defendant raises the following arguments:

(1) Any claims with respect to coverage for damage caused by Hurricane Irene (Counts I, III, IV, V) are time-barred by the "Suit Against Us" provision in the Policy;

(2) Any claims with respect to coverage for damage caused by Hurricane Sandy (Counts II, III, IV, V) are barred under the Policy because Plaintiffs failed to cooperate withDefendant and provide all required information, as mandated by the "Duties After Loss" and "Suit Against Us" provisions;

(3) Plaintiffs' Complaint fails to set forth any facts to support a claim for a breach of the covenant of good faith and fair dealing (Count IV);

(4) Because there was and is a valid, existing insurance contract between Plaintiffs and Defendant, Plaintiffs, as a matter of law, cannot invoke the quasi-contractual remedy of unjust enrichment (Count V);

(5) Count VI does not set forth any cause of action, and as such must be dismissed; and

(6) Plaintiffs' demands for consequential damages and attorneys' fees in the Wherefore Clause of each count are improper and should be dismissed.

(Def.'s Br. 1-3). The Court shall address these arguments in the order presented.

A. Hurricane Irene Claims

Defendant seeks the dismissal of all of Plaintiffs' claims arising out of Hurricane Irene for failure to timely file suit. In support of its motion, Defendant cites the "Suits Against Us" provision of the Policy, at Section I - Conditions, ¶ 6, which provides

No action shall be brought unless there has been compliance with the policy provisions. The action must be started within one year after the date of loss or damage.

(Policy No. 30-CD-3885-0, Ex. A to Cert. of Lorrie Moses) (emphasis added).¹ Specifically, Defendant argues that Plaintiffs failed to file suit within one year of any loss caused by Hurricane Irene, as required by the Policy. (Def.'s Br. 9). According to the Complaint, filed on October 11, 2016, the Property was damaged by Hurricane Irene on August 28, 2011. (Compl. ¶ 3). Defendant argues that this five year gap was too long, regardless of any tolling argument raised by Plaintiffs. (Def.'s Br. 9).

Plaintiffs do not dispute the validity of the limitations period in the Policy. (Pl.'s Br. 12). They argue, however, that their claims are not time-barred because either (1) the limitations period was extended under the doctrine of equitable tolling or (2) Defendant waived any statute of limitations defense it may have had. (Id. at 12-17). Specifically,Plaintiffs argue that Defendant lulled them into a false belief regarding the likelihood that the claim would be settled without the need for litigation, thereby causing Plaintiffs to delay commencing their suit. (Id. at 14-16). Plaintiffs further argue that Defendant waived any potential limitations defense by continuing to communicate with Plaintiffs regarding the Hurricane Irene claims after the limitations period had passed. (Id. at 17).

Under New Jersey law, insurance actions are generally governed by the statute of limitations applicable to contracts. See Breen v. New Jersey Mfrs. Indemn. Ins. Co., 252 A.2d 49, 53 (Law Div. 1969), aff'd, 263 A.2d 802 (App. Div. 1970). The statute of limitations for "recovery upon a contractual claim or liability, express or implied," is six years. N.J.S.A. 2A:14-1. This rule, however, applies in the "[a]bsen[ce] [of] a provision in the insurance policy or an express statute to the contrary," and the parties are free to shorten this period by agreement. Walkowitz v. Royal Globe Ins. Co., 374 A.2d 40, 43 (App. Div. 1977), certif. dismissed, 384 A.2d 815 (1977); Gahnney v. State Farm Ins. Co., 56 F. Supp. 2d 491, 495 (D.N.J. 1999) (citing James v. Federal Ins. Co., 73 A.2d 720, 721 (N.J. 1950)("[t]he law will not make a better contract for parties than they themselves have seen fit to enter into, or...