Lewis v. Carolina Cas., Ins. Co.
| Decision Date | 05 March 2020 |
| Docket Number | 4:19-cv-00214 |
| Citation | 442 F.Supp.3d 1092 |
| Parties | Allen Michael LEWIS, Plaintiff, v. CAROLINA CASUALTY, INS. CO., Defendants. |
| Court | U.S. District Court — Southern District of Iowa |
Justin High, Daniel C. Wasson, Pro Hac Vice, Erin B. Fox, Pro Hac Vice, High & Younes, LLC, Omaha, NE, for Plaintiff
Michael C. Richards, Davis Brown Law Firm (DSM) Des Moines, IA, Adam P. Joffe, Pro Hac Vice, Chicago, IL, Dana Aaron Rice, Pro Hac Vice, Traub Lieberman, Chicago, IL, Rubina Sahar Khaleel, Hennessy & Roach, PC, Omaha, NE, for Defendants.
Before the Court is Defendant Carolina Casualty Insurance Company's Motion to Dismiss Plaintiff's Second Amended Complaint Pursuant to Rule 12(b)(6), filed on October 23, 2019, ECF No. 30. Plaintiff Allen Michael Lewis responded to the Motion on November 6, ECF No. 31, and Defendant replied on November 14, ECF No. 32. Although Defendant requested oral argument, the Court does not believe oral argument will substantially aid it in resolving the issues before the Court. Therefore, the matter is fully submitted.
On May 1, 2015, Plaintiff, a resident and citizen of Nebraska,1 suffered a severe workplace injury while employed with MBC Construction Co., Inc., a Nebraska corporation doing business in Iowa and Nebraska. ECF No. 26 ¶¶ 1, 2, 20. At all relevant times, MBC held a workers' compensation insurance policy with Defendant, an Iowa corporation doing business in Iowa, covering MBC's risk of operation in both states. Id. ¶¶ 3, 5. Defendant engaged another company, York Risk Services Group, Inc., a New York corporation with its principal office in New Jersey, as a third-party administer providing claims adjusting services for Defendant's workers' compensation claims. Id. ¶¶ 4, 7; ECF No. 30-3.
Following disputes over benefits, Plaintiff sought recovery of denied benefits under Nebraska workers' compensation laws. ECF No. 26 ¶¶ 15, 42. The Nebraska Workers' Compensation Court determined Defendant had inappropriately delayed benefits and ordered that they be paid. Id. ¶¶ 42, 47. Plaintiff subsequently sustained further injury resulting in the amputation of his left leg. Id. ¶¶ 51–52. Following more disputes regarding whether this later injury related to Plaintiff's prior workplace injury, Plaintiff again sought an order from the Nebraska Workers' Compensation Court to recover benefits, which was granted. Id. ¶¶ 61–62, 67. Plaintiff's benefits remained unpaid, and Defendant then terminated Plaintiff's benefits including his weekly indemnity checks. Id. ¶¶ 73–75. Months later, Defendant agreed to pay all reasonable and necessary medical expenses resulting from Plaintiff's work injury but declined to pay benefits from the date of his subsequent injury. Id. ¶¶ 79–80. This prompted Plaintiff to file another complaint. Id. ¶ 81. The Nebraska Workers' Compensation Court penalized Defendant under Nebraska Revised Statutes section 48-125 by awarding substantial attorney's fees. Id. ¶¶ 96.
On October 2, 2019, Plaintiff filed a Second Amended Complaint in this Court, alleging Defendant delayed and denied payment of his workers' compensation benefits in bad faith. Id. ¶¶ 26, 55, 70, 84, 93. Alternatively, Plaintiff alleges Defendant is vicariously liable for York's bad faith denial and delay of his workers' compensation benefits. Id. ¶ 118. Plaintiff also seeks an award of punitive or exemplary damages. Id. ¶ 122.
"Under Federal Rule of Civil Procedure 12(b)(6), the factual allegations in the complaint are accepted as true and viewed most favorably to the plaintiff." Hager v. Ark. Dep't of Health , 735 F.3d 1009, 1013 (8th Cir. 2013). In order "[t]o 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A pleading that merely pleads ‘labels and conclusions,’ or a ‘formulaic recitation’ of the elements of a cause of action, or ‘naked assertions’ devoid of factual enhancement will not suffice." Hamilton v. Palm , 621 F.3d 816, 817–18 (8th Cir. 2010) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ). "Determining whether a claim is plausible is a ‘context-specific task that requires the reviewing court to draw on its judicial experience and common sense.’ " Id. (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ).
In cases based on diversity, the Court "appl[ies] the choice-of-law rules of the forum state." John T. Jones Constr. Co. v. Hoot Gen. Constr. Co. , 613 F.3d 778, 783 (8th Cir. 2010). "[B]ecause a state may have adopted different choice of law approaches depending on the nature of the claim," the Court "must first determine the nature of the causes of action." Jackson v. Travelers Ins. Co. , 26 F. Supp. 2d 1153, 1156 (S.D. Iowa 1998) (citing Drinkall v. Used Car Rentals, Inc. , 32 F.3d 329, 331 (8th Cir. 1994) ). The Court must then "decide whether there is any conflict or difference between the state laws regarding the claims presented." Id. at 1156–57 (citing Phillips v. Marist Soc'y , 80 F.3d 274, 276 (8th Cir. 1996) ). "When there is no conflict or difference between the laws, then the law of the forum applies without a choice of law analysis being necessary." Id. at 1157 n.5. Finally, the Court "identif[ies] the applicable choice of law principles of the forum state," before "apply[ing] those principles to decide which state's [substantive] law applies." Id. at 1157.
In this case, the parties agree that Iowa's choice-of-law rules govern the Court's determination of the applicable substantive law because Iowa is the forum state. Here, Plaintiff alleges insurance bad faith, vicarious liability, and punitive damages stemming from Defendant's handling of Plaintiff's workers' compensation claim.
Specifically, Plaintiff alleges that Defendant delayed and denied authorization for medical treatment and payment of medical benefits. Plaintiff's claims for bad faith and vicarious liability for York's bad faith sound in tort under Iowa law. See id. Plaintiff's claim for punitive damages is incidental to his other two claims and is not recoverable as of right. If there is a conflict relating to this claim, the Court will apply Iowa's choice-of-law rules for damages. Id.
The parties agree that a conflict or difference exists between Nebraska's and Iowa's laws with regard to Plaintiff's claims for bad faith and vicarious liability. Under Nebraska law, a plaintiff cannot maintain a tort claim for common-law bad faith against an insurer of a workers' compensation policy. See Ihm v. Crawford & Co. , 254 Neb. 818, 580 N.W.2d 115, 119 (1998) (). In contrast, Iowa law allows a plaintiff to bring a tort claim for first-party bad faith against a workers' compensation insurance carrier. See Boylan v. Am. Motorists Ins. Co. , 489 N.W.2d 742, 744 (Iowa 1992) (); see also Zimmer v. Travelers Ins. Co. , 521 F. Supp. 2d 910, 925 (S.D. Iowa 2007) (); Buhmeyer v. Case New Holland, Inc. , 446 F. Supp. 2d 1035, 1040 (S.D. Iowa 2006) (same).
Additionally, there is a difference between the laws of Iowa and Nebraska regarding the right to pursue punitive or exemplary damages. Such damages are prohibited in civil cases in Nebraska, see Abel v. Conover , 170 Neb. 926, 104 N.W.2d 684, 688 (1960), while Iowa generally permits them, see Thornton v. Am. Interstate Ins. Co. , 940 N.W.2d 1, 26–27 (Feb. 28, 2020) (); see also Zimmer , 521 F. Supp. 2d at 934 ().
Because all three claims present conflicts between Iowa and Nebraska law, the Court must decide which state's substantive law applies using Iowa's choice-of-law rules. See John T. Jones Constr. Co. , 613 F.3d at 783. "The Iowa Supreme Court has repeatedly turned to the Restatement in analyzing choice of law issues." Washburn v. Soper , 319 F.3d 338, 342 (8th Cir. 2003). Iowa has adopted the "most significant relationship" test found in section 145 of the Restatement (Second) of Conflict of Laws for resolving choice-of-law questions in tort actions.2 See Veasley v. CRST Int'l, Inc. , 553 N.W.2d 896, 897 (Iowa 1996) ). "The theory behind this approach is that rather than focusing on a single factor, ‘the court of the forum should apply the policy of the state with the most interest in the litigants and the outcome of the litigation.’ " Id. (quoting Fuerste v. Bemis , 156 N.W.2d 831, 834 (Iowa 1968) ).
The Restatement directs courts to look first to the statutory choice-of-law directives of their own state, and if none, suggests that courts look to the following general principles to determine which state has the most interest in the litigants and the outcome, including, but not limited to:
To continue reading
Request your trial