Lydick v. Erie Ins. Prop. & Cas. Co.

• Decision Date: 14 January 2019
• Docket Number: CIVIL ACTION NO. 2:18-cv-01020
• Citation: 358 F.Supp.3d 552
• Court: U.S. District Court — Southern District of West Virginia
• Parties: Daniel C. LYDICK, Plaintiff, v. ERIE INSURANCE PROPERTY & CASUALTY COMPANY, Defendant.

358 F.Supp.3d 552

Daniel C. LYDICK, Plaintiff,

v.ERIE INSURANCE PROPERTY & CASUALTY COMPANY, Defendant.

CIVIL ACTION NO. 2:18-cv-01020

United States District Court, S.D. West Virginia, Charleston Division.

Signed January 14, 2019

Brent K. Kesner, Ernest G. Hentschel, II, Kesner Kesner & Bramble, Charleston, WV, Carrie L. Newton, Ripley, WV, for Plaintiff.

Matthew J. Perry, Jill E. Lansden, Lamp Bartram Levy Trautwein & Perry, Huntington, WV, for Defendant.

MEMORANDUM OPINION AND ORDER

THOMAS E. JOHNSTON, CHIEF JUDGE

Before the Court is Defendant Erie Insurance Property & Casualty Company's ("Erie") Motion to Dismiss. (ECF No. 6.) For the reasons discussed below, the Court GRANTS the motion.

I. BACKGROUND

This action arises from an automobile accident on August 29, 2003. (ECF No. 1-1 at 4 ¶ 5.) At the time of the accident, which allegedly caused Plaintiff serious injuries, Plaintiff was insured by Erie with a policy that included underinsured motorists coverage limits of $ 20,000 per person and $ 40,000 per occurrence. (Id. ¶¶ 6–8.) Following the accident, Plaintiff presented an underinsured motorists claim to Erie, and Erie subsequently paid Plaintiff the alleged underinsured motorists coverage limit of $ 20,000. (Id. at 4–5 ¶¶ 10, 13.) Plaintiff now challenges the underinsured motorists coverage provided by Erie. Plaintiff alleges that "Erie refused to use the forms prescribed by the West Virginia Insurance Commissioner, as required by the provisions of W. Va. Code § 33–6–31d, and its offer(s) was/were otherwise defective and failed to meet the standards set for the [sic: forth]" by the West Virginia Supreme Court of Appeals. (Id. at 5 ¶ 16 (emphasis removed) (citing Bias v. Nationwide Mut. Ins. Co. , 179 W.Va. 125, 365 S.E.2d 789 (1987) ).)

Based on these alleged facts, Plaintiff contends that Erie's offer of uninsured and underinsured motorists coverage generates the following causes of action: (1) breach of contract, (2) common law bad faith, and (3) violations of the West Virginia Unfair Trade Practices Act ("UTPA"). (Id. at 13–18 ¶¶ 48–74.) Plaintiff seeks compensatory and punitive damages, attorneys' fees and costs, pre- and post-judgment interest, and any other relief justified. (Id. at 18–19 ¶ 75.)

Plaintiff originally filed the Complaint in the Circuit Court of Kanawha County, West Virginia, on March 13, 2018. (Id. at 3.) Erie removed the case to this Court on June 8, 2018, asserting diversity jurisdiction pursuant to 28 U.S.C. § 1332 as the sole basis for this Court's subject matter jurisdiction. (ECF No. 1.) Erie filed its Motion to Dismiss on July 3, 2018, arguing that all of Plaintiff's claims should be dismissed because they are barred by a previously executed release and the applicable statute of limitations. (ECF No. 6.) Plaintiff responded to Erie's motion on August 10, 2018,¹ (ECF No. 9), and Erie filed its reply on August 17, 2018, (ECF No. 11). As such, the Motion to Dismiss is fully briefed and ripe for adjudication.

II. LEGAL STANDARD²

A motion to dismiss for failure to state a claim upon which relief may be granted tests the legal sufficiency of a civil complaint. Fed. R. Civ. P. 12(b)(6). A plaintiff must allege sufficient facts, which, if proven, would entitle him to relief under a cognizable legal claim. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 554–55, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A case should be dismissed if, viewing the well-pleaded factual allegations in the complaint as true and in the light most favorable to the plaintiff, the complaint does not contain "enough facts to state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955.

In applying this standard, a court must utilize a two-pronged approach. First, it must separate the legal conclusions in the complaint from the factual allegations. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Second, assuming the truth of only the factual allegations, the court must determine whether the plaintiff's complaint permits a reasonable inference that "the defendant is liable for the misconduct alleged." Id. Well-pleaded factual allegations are required; labels, conclusions, and a "formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ; see also King v. Rubenstein , 825 F.3d 206, 214 (4th Cir. 2016) ("Bare legal conclusions ‘are not entitled to the assumption of truth’ and are insufficient to state a claim." (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ) ). A plaintiff's "[f]actual allegations must be enough to raise a right to relief above the speculative level," thereby "nudg[ing] [the] claims across the line from conceivable to plausible." Twombly , 550 U.S. at 555, 570, 127 S.Ct. 1955.

III. DISCUSSION

The predicate task before the Court is to determine whether Plaintiff's claims against Erie can proceed in light of the release and applicable statute of limitations. Erie argues that Plaintiff's claims are barred because they are based on actions arising from the 2003 motor vehicle accident and are encompassed within a release of claims executed in connection with the prior resolution of Plaintiff's underinsured motorists claim. (See ECF No. 6 at 2.) Erie further asserts that Plaintiff's common law bad faith and UTPA claims are barred by the statute of limitations. (Id. ) This Court agrees with Erie.

A. Plaintiff's Claims Are Barred By The Prior Release

In ruling on a motion to dismiss, a court is not limited to the factual allegations in the complaint but "may properly take judicial notice of matters of public record" without converting the motion into one for summary judgment. Philips v. Pitt Cnty. Mem'l Hosp. , 572 F.3d 176, 180 (4th Cir. 2009) ; Fed. R. Evid. 201 (governing judicial notice). A court is also free to consider documents attached to the motion to dismiss, "so long as they are integral to the complaint and authentic." Philips , 572 F.3d at 180 (citing Blankenship v. Manchin , 471 F.3d 523, 526 n.1 (4th Cir. 2006) ). Erie's motion calls upon the Court to take judicial notice of the underlying complaint and dismissal order and find the release and settlement communications integral to the allegations in the Complaint. The Court will judicially notice the underlying complaint and dismissal order, finding they are public records. Further, the Court will consider the release and settlement communications because the Complaint references the settlement of the underinsured motorists claim and there is no dispute as to their authenticity. (See ECF No. 1-1 at 4–5 ¶¶ 10–13.)

Erie argues that Plaintiff, in connection with the prior resolution of his underinsured motorists claim, contractually released Erie from the instant claims. (ECF No. 6 at 11.) The release was executed in 2005 and includes a general release of any and all claims against Erie arising out of the 2003 motor vehicle accident.³ (ECF No. 6-4 at 1.) In addition, the release expressly acknowledges a release of "all claims for damages which exist as of this date, but of which the undersigned do not know or suspect to exist, whether through ignorance, oversight, error, negligence or otherwise, and which if known would materially affect the undersigned's decision to enter into this settlement agreement." (Id. ) After executing the release, Plaintiff voluntarily dismissed his claims against Erie with prejudice. (ECF. No. 6-5.)

Plaintiff responds that the release was fraudulently procured and must be void because the settlement was based on Erie's alleged misrepresentations of available coverage. (ECF No. 9 at 13–17.) Plaintiff's "factual misrepresentation" claim is based on the contention that Erie's offer of underinsured motorists coverage was commercially unreasonable. (Id. ) In the Complaint, Plaintiff presupposes that because "Erie refused to use the forms prescribed by the West Virginia Insurance Commissioner" its offer was commercially unreasonable.⁴ (ECF No. 1-1 at 5, 12 ¶¶ 16, 50.) Plaintiff's attempt to characterize Erie's failure to utilize the Insurance Commissioner's prescribed form as a "factual misrepresentation" falls short.

Ordinary principles of contract construction govern the interpretation of the release. West v. Liberty Mutual Insurance Co. , 30 F.3d 132, ––––, 1994 WL 399140, at *3 (4th Cir. Aug. 3, 1994) ("[B]ecause releases are contracts, conventional rules of construction dictate that when the scope of the agreement is stated in clear and unambiguous language, the words utilized to express this breadth should be given their ordinary meaning....") (citation omitted); Sanson v. Brandywine Homes, Inc. , 215 W.Va. 307, 599 S.E.2d 730, 734 (2004) ; Miller v. Liberty Mut. Ins. Co. , 393 F.Supp.2d 399, 406 (S.D. W. Va. 2005).

In addition, the law favors and encourages compromise of disputes. Messer v. Huntington Anesthesia Group, Inc. , 222 W.Va. 410, 664 S.E.2d 751, 758 (2008) ; West , 30 F.3d at *2 (noting "it is the policy of the law to uphold and enforce [settlement] contracts if they are fairly made and are not in contravention of some law or public policy.") (quoting Syl. Pt. 1, Acord v. Chrysler Corp. , 184 W.Va. 149, 399 S.E.2d 860 (1990) (citation omitted) ). Under West Virginia law, a settlement agreement will not be set aside absent clear and convincing proof of "accident, mistake or fraud in making the same." Burdette v. Burdette Realty Improvement, Inc. et al. , 214 W.Va. 448, 590 S.E.2d 641, 645 (2003) ; see also Messer , 664 S.E.2d at 758 (reinforcing the notion that resolved matters should not be revisited "except for grave cause.").

The proposition that Erie's offer was commercially unreasonable because it failed to use the Insurance Commissioner's form is faulty. Under West Virginia Code § 33–6–31(b), every automobile insurance agency must provide optional underinsured motor vehicle coverage to its insured under each policy. W. Va. Code § 33–6–31(b). An insurer is required to make a "commercially reasonable" offer of...