Larey v. Allstate Prop. & Cas. Co.
| Decision Date | 26 September 2014 |
| Docket Number | Case No. 4:14-cv-04008 |
| Parties | MICHAEL LAREY and TONI LAREY, et al., PLAINTIFFS v. ALLSTATE PROPERTY AND CASUALTY COMPANY DEFENDANT |
| Court | U.S. District Court — Western District of Arkansas |
Currently before the Court is Defendant's Motion to Dismiss. (ECF No. 17). Plaintiffs Michael Larey and Toni Larey have responded. (ECF No. 21). Defendant Allstate Property and Casualty Company ("AP&C") filed a reply to Plaintiffs' response. (ECF No. 29). The Court finds this matter ripe for consideration.
Defendant moves to dismiss some of the claims pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction because the Plaintiffs do not have standing. AP&C also moves to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). For reasons reflected herein, Defendant's Motion to Dismiss (ECF No. 17) is GRANTED in part and DENIED in part.
Plaintiffs' Second Amended Class Action Complaint, brought individually and on behalf of a class of individuals, alleged breach of contract and unjust enrichment against the Defendant. The named Plaintiffs allege two specific instances, one in 2008 and one in 2011. Plaintiffs allege that on or about March 31, 2008, their home, insured under a homeowners policy issued by AP&C, sustained damage for which they made a claim to AP&C and received actual cash value for theirclaim on or about April 14, 2008. Plaintiffs also allege that on or about February 4, 2011, an additional property owned only by Plaintiff Michael Larey, insured under a different AP&C homeowners policy, sustained damage for which Mr. Larey made a claim. In both instances, AP&C estimated the cost to repair the property, which included the cost of labor and materials. AP&C paid the Plaintiffs the "actual cash value" of their loss, after subtracting depreciation and the amount of the deductible. The depreciated amount included both the cost of labor and materials. Plaintiffs filed suit in Miller County, Arkansas on November 22, 2013. The Plaintiffs, in their Second Amended Complaint, argue that Arkansas law prohibits an insurance company from depreciating the cost of labor. Therefore, by depreciating this cost, Plaintiffs claim that AP&C (1) breached their contract with Plaintiffs and (2) were unjustly enriched for both the 2008 and 2011 claims.
The Defendant asserts that the contract and unjust enrichment claims arising in 2008 are barred by a settlement in a previous case, res judicata, and applicable statutes of limitations. They assert the unjust enrichment claims from both 2008 and 2011 should be dismissed due to the existence of a valid contract. Defendant has not moved to dismiss Plaintiffs' 2011 breach of contract claim.
"In appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). When ruling on a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss for failure to state a claim, the Court must take as true the alleged facts anddetermine whether they are sufficient to raise more than a speculative right to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). In deciding a Rule 12(b)(6) motion, courts are required to accept all of the Complaint's well-pled allegations as true and resolve all inferences in the Plaintiffs' favor. Miller v. Redwood Toxicology Lab., Inc., 688 F.3d 928, 933 n.4 (8th Cir. 2012). The issue in considering such a motion is not whether the Plaintiffs will ultimately prevail, but whether the Plaintiffs are entitled to present evidence in support of the claim. See Nusku v. Williams, 490 U.S. 319, 327 (1989).
In reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court is "not precluded in [its] review of the complaint from taking notice of items in the public record" or considering documents that do not contradict the complaint. Papasan v. Allain, 478 U.S. 265, 269 n.1 (1986); Stahl v. U.S. Dep't of Agric., 327 F.3d 697, 700 (8th Cir. 2003); Nixon v. Coeur D'Alene Tribe, 164 F.3d 1102, 1107 (8th Cir. 1999). All documents submitted to the court are either matters of public record or do not contradict the Plaintiffs' Second Amended Complaint, so the Court will review the current motion under Federal Rule of Civil Procedure 12(b)(6) standards. Compare BJC Health Sys. v. Columbia Cas. Co., 348 F.3d 685, 687-88 (8th Cir. 2003) (). Moreover, Defendant's argument that the Plaintiffs lack standing is a question of jurisdiction. Because jurisdiction is a threshold question, the court may look outside the pleadings in order to determine whether subject matter jurisdiction exists. Osborn v. United States, 918 F.2d 724, 728-30 (8th Cir. 1990).
First, Defendant argues the Plaintiffs claims from 2008 have been released by a settlement agreement in an earlier case, Feely v. Allstate County Mutual Insurance Company, et al., Case No. CV-2004-294-3A (Ark. Cir. Ct. 2004), and the claims should therefore be dismissed because the Plaintiffs lack standing. The Feely class action was filed in Miller County, Arkansas before Judge Kirk Johnson. The Plaintiffs alleged that certain Allstate Defendants, including AP&C, improperly underpaid homeowners structural loss claims by failing to properly pay for General Contractor's Overhead and Profit ("GCOP") from September 6, 1996 through December 6, 2010. The parties negotiated a settlement to end the litigation, and in exchange for consideration, the Allstate Defendants, including AP&C, obtained a release from all members of the Feely class for "Released Claims," defined as follows:
[A]ny and all known and Unknown Claims, rights, demands, actions, causes of action, allegations, or suits of whatever kind or nature . . . arising from or in any way related to any acts which have been alleged or which could have been alleged in the Action by the Plaintiffs for a Covered Loss; on behalf of themselves or on behalf of the Settlement Class, to the full extent of res judicata protections, and whether arising under or based on contract, extra-contractual or tort theories, common law or equity, or federal, state or local law, statute, ordinance, rule or regulation, and/or arising from or in any way related to any omission, dimunition, depreciation, inclusion, deduction, determination, modification and/or calculation of any form or manner of General Contractor's Overhead and Profit in the adjustment and/or payment of any Covered Loss by Allstate and/or any alleged conspiracy in connection therewith, provided, however, that the Released Claims do not include any claim for enforcement of this Stipulation and/or the Final Judgment.
The Final Judgment further states: "Upon the entry of this Final Judgment, each Class Member, acting individually or together, shall not and shall not seek to institute, maintain, prosecute, sue, assert or cooperate in any action or proceeding against any of the Released Persons for any of theReleased Claims."
Plaintiffs first reply that this Court is without jurisdiction to interpret and enforce the prior settlement because Judge Johnson retained all jurisdiction to interpret the terms of the settlement. The Court disagrees and finds that it has jurisdiction to interpret the Release as it relates to the present action. In the Final Order, Judge Johnson expressly "retain[ed] continuing jurisdiction" over the action for the purposes of "[e]nforcing the Stipulation and the Proposed Settlement;" "[h]earing and determining any application by any party to the Stipulation for a settlement bar order;" and "[a]ny other matters related or ancillary to the foregoing." (ECF No. 18, Ex. 1, ¶ 24). While the cases cited by the Plaintiffs, Thompson v.Edward D. Jones & Co., 992 F.2d 187, 189 (8th Cir. 1993); In re Y & A Group Securities Litigation, 38 F.3d 380, 383 (8th Cir. 1994); and Picon v. Morris, 933 F.2d 660, 662-63 (8th Cir. 1991), stand for the proposition that when a court issues an injunction, it automatically retains jurisdiction to enforce it, this is not an action to enforce the settlement and final judgment of the Feely Court. Instead, the Defendant is using the release as a defense, which was expressly permitted by the language of the Stipulation of Settlement, incorporated as part of the Final Judgment: "To the extent permitted by law, this Stipulation may be pleaded as a full and complete defense to, and may be used as the basis for an injunction against, any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of this Stipulation." A court does not usually "get to dictate to other courts the preclusion consequences of its own judgment." 18 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 4405, p. 82 (2d ed.2002)). Here, the state court retains jurisdiction to enforce the Feely settlement, but this Court is not deprivedof jurisdiction to apply its terms and preclusion consequences.1
Plaintiffs do not deny that they were members of the Feely class, but instead argue that the settlement language is not broad enough to cover the causes of actions alleged herein. "There is of course no dispute that under elementary principles of prior adjudication a judgment in a properly entertained class action is binding on class members in any subsequent litigation." Cooper v. Fed. Reserve Bank of Richmond, 467 U.S. 867, 874 (1984).
When a settlement agreement containing a release is unambiguous in its terms, it is the duty of the court to interpret the release. Pine Bluff, S. & S. Ry. Co. v. Leatherwood, 117 Ark. 524, 175 S.W. 1184 (1915). Under Arkansas law, settlement agreements are treated as...
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