Pastor v. Union Central Life Ins. Co.

• Decision Date: 06 February 2002
• Docket Number: No. 01-3993-Civ.,01-3993-Civ.
• Citation: 184 F.Supp.2d 1301
• Parties: Otto PASTOR, Plaintiff, v. The UNION CENTRAL LIFE INSURANCE CO., Defendant.
• Court: U.S. District Court — Southern District of Florida

184 F.Supp.2d 1301

Otto PASTOR, Plaintiff, v. The UNION CENTRAL LIFE INSURANCE CO., Defendant.

No. 01-3993-Civ.

United States District Court, S.D. Florida.

February 6, 2002.

Brenton N. Ver Ploeg, Stephen A. Marino, Jr., Ver Ploeg & Lympkin, Miami, FL, for plaintiff.

Keith D. Post, Gallwey, Gillman, Curtis, Vento & Horn, P.A., Miami, FL, for defendant.

ORDER GRANTING MOTION TO DISMISS

GOLD, District Judge.

THIS CAUSE is before the court upon defendant Union Central Life Insurance Co.'s ("Union Central") motion to dismiss (DE # 5). The plaintiff, Otto Pastor ("Pastor"), has filed a one-count complaint against Union Central for statutory bad faith under Fla.Stat. § 624.155. The court has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332. According to Union Central, Pastor's complaint must be dismissed in its entirety because Florida law does not apply to this case, and Pastor seeks relief only under a Florida statute. Alternatively, Union Central argues that Pastor's complaint must be dismissed in whole or in part for three reasons: (1) the complaint fails to state a claim for punitive damages, (2) a claim for bad faith litigation cannot be sustained, and (3) the Florida statute at issue is void for vagueness. After carefully considering the parties' arguments and the applicable case law, the court grants Union Central's motion to dismiss.

Standard for Motion to Dismiss

To warrant dismissal of a complaint under Rule 12(b)(6) of the Federal Rules of Civil procedure, it must be "clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Blackston v. Alabama, 30 F.3d 117, 120 (11th Cir.1994) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984)). Determining the propriety of granting a motion to dismiss requires courts to accept all the factual allegations in the complaint as true and to evaluate all inferences derived from those facts in the light most favorable to the plaintiff. See Hunnings v. Texaco, Inc., 29 F.3d 1480, 1483 (11th Cir.1994). The threshold of sufficiency that a complaint must meet to survive a motion to dismiss is exceedingly low. See Ancata v. Prison Health Svcs., Inc., 769 F.2d 700, 703 (11th Cir.1985) (citation omitted); Jackam v. Hospital Corp. of America Mideast, Ltd., 800 F.2d 1577, 1579 (11th Cir.1986). "[U]nless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," the complaint should not be dismissed on grounds that it fails to state a claim upon which relief can be granted. M/V Sea Lion V v Reyes, 23 F.3d 345, 347 (11th Cir.1994) (citation omitted). Nevertheless, to survive a motion to dismiss, a plaintiff must do more than merely "label" his claims. Blumel v. Mylander, 919 F.Supp. 423, 425 (M.D.Fla.1996). Moreover, when on the basis of a dispositive issue of law no construction of the factual allegations will support the cause of action, dismissal of the complaint is appropriate. Marshall County Bd. of Educ. v. Marshall County Gas Dist., 992 F.2d 1171, 1174 (11th Cir.1993).

The Facts¹

In 1979 and 1981, Pastor purchased two disability insurance policies from Union Central, his employer at the time. On July 14, 1993, Pastor underwent curative surgery for prostate cancer. Pastor was hospitalized for an extended period after the surgery due to post-surgical complications. In November of 1993, Pastor began to suffer from depression. This condition was exacerbated by the death of his brother and mother while Pastor continued to recover from his surgery. By the time Pastor recovered from the surgery in January of 1994, his depression had reached the stage where it rendered him incapable of engaging in the sort of personal contact necessary to perform the duties of his occupation as an insurance salesman for Union Central. See Compl. at ¶ 15. Pastor's psychiatrist prepared an attending physician's statement for Union Central to this effect.

From the onset of Pastor's cancer and throughout his affliction with depression, Union Central allegedly adopted a hostile and adversarial position to Pastor's claim for benefits. See Compl. at ¶ 16. According to Pastor, even before he underwent the medical examinations ordered by Union Central, the insurance company claimed that Pastor was not disabled, and it attempted to build a case to terminate Pastor's benefits, rather than embarking upon a legitimate investigation. See Compl. at ¶ 19. For example, in an effort to buttress its premature determination that Pastor was not disabled, Union Central hired The Psych Team, whose employees possessed no medical education or background, to allegedly create evidence to justify denial of Pastor's claim. See Compl. at ¶ 20. The Psych Team conducted covert surveillance of Pastor and suspended its surveillance when it began to collect evidence that actually supported Pastor's claim. See Compl. at ¶ 22. Union Central also accused Pastor of selling insurance while concealing sales by using his daughter, a licensed insurance broker, as a front. See Compl. at ¶ 23. Additionally, Union Central allegedly discarded some of its records regarding its investigation of Pastor's claim. See Compl. at ¶ 23.

Union Central terminated Pastor's claim payments on February 13, 1995, retroactive to January 15, 1995. It also terminated Pastor's agency contract for failing to return to work. From this point forward, Union Central refused to consider additional evidence regarding Pastor's claim.

On August 23, 1995, Pastor brought suit against Union Central in Dade County Circuit Court. Throughout the litigation, Union Central allegedly employed tactics designed to maximize the expense and pressure on Pastor and his counsel by demanding large volumes of documents from Pastor and third parties. See Compl. at ¶ 27. Union Central also accused Pastor, his friends, and his family of insurance fraud.

The trial for Pastor's state action lasted three days. On January 15, 1995, Pastor obtained a judgment in Dade County Circuit Court against Union Central, declaring him disabled as of January 15, 1995 and continuously from that date through the time of trial. Union Central paid the judgment in August of 2001. Pastor claims that this six-year period of litigation and Union Central's conduct throughout the course of the investigation and litigation constitutes a violation by Union Central of Florida's law outlawing an insurance company's failure to settle a claim in good faith.

Analysis

The central issue in this motion to dismiss is the applicability of Fla.Stat. § 624.155. This provision creates a statutory civil remedy for any person against an insurer:

when such a person is damaged:

....

(b) By the commission of any of the following acts by the insurer:

1. Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests;

2. Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made; or

3. Except as to liability coverages, failing to promptly settle claims, when the obligation to settle a claim has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.

Fla.Stat. § 624.155(b). Union Central utilizes a traditional choice of law analysis in support of its position that the Florida statute does not apply to this case, which involves an insurance contract that was executed in New Jersey. Pastor contends that a choice of law analysis based on Florida common law is inappropriate because the Florida legislature has included a choice of law directive in the statute. Although this case presents a close question, the court agrees with Union Central that traditional choice of law analysis is appropriate and that Florida law does not apply to this case.

I. Choice of Law: General Principles

Federal jurisdiction in this case is based on diversity of citizenship, and Florida is the forum state. As a federal court exercising diversity jurisdiction, this court must examine the law of the forum state, which includes its choice of law rules, to determine whether Fla.Stat. § 624.155 is applicable here. See McMahan v. Toto, 256 F.3d 1120, 1131 (11th Cir.2001) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941)); Fioretti v. Mass. Gen. Life Ins. Co., 53 F.3d 1228, 1235 (11th Cir. 1995). If the Florida Supreme Court has not issued a definitive answer on an issue before this court, it must adhere to the decisions of the state's intermediate appellate courts. See Fioretti, 53 F.3d at 1236 n. 28 (citations omitted).

II. The Doctrine of Lex Loci Contractus

If this case had involved Pastor's claim against Union Central for recovery of his disability benefits under the insurance contracts (the issue litigation in the state court), it is clear that New Jersey law would govern the controversy. This is because, when resolving conflict of laws issues in contract actions, the Florida Supreme Court unambiguously has indicated its intent to adhere to the traditional rule of lex loci contractus. See Sturiano v. Brooks, 523 So.2d 1126, 1129 (holding that lex loci contractus doctrine governs disputes involving automobile insurance) (Fla. 1988); Goodman v. Olsen, 305 So.2d 753, 755 (Fla.1974) (same, for contracts in general); see also Fioretti, 53 F.3d at 1235 (discussing lex loci contractus rule in Florida). Under this doctrine, absent a contractual choice of law provision, a contract is governed by the law of the state in which the contract is made, i.e., where the last act necessary to complete the contract is done. See Sturiano, 523 So.2d at 1129 (discussing lex loci...