Peck v. Progressive N. Ins. Co.

• Decision Date: 30 March 2023
• Docket Number: 1:22-cv-00490-KWR-JFR
• Parties: JEREMY PECK, on behalf of himself And all others similarly situated, Plaintiff, v. PROGRESSIVE NORTHERN INSURANCE COMPANY, PROGRESSIVE ADVANCED INSURANCE COMPANY, PROGRESSIVE CASUALTY INSURANCE COMPANY, PROGRESSIVE CLASSIC INSURANCE COMPANY, PROGRESSIVE COMMERICAL CASUALTY COMPANY, PROGRESSIVE DIRECT INSURANCE COMPANY, PROGRESSIVE NORTHWESTERN INSURANCE COMPANY, PROGESSIVE PREFRRED INSURANCE COMPANY, PROGRESSIVE SPECIALTY INSURANCE COMPANY PROGRESSIVE WEST INSURANCE COMPANY, NATIONAL CONTINENTAL INSURANCE COMPANY, and UNITED FINANCIAL CASUALTY COMPANY, Defendants.
• Court: U.S. District Court — District of New Mexico

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JEREMY PECK, on behalf of himself And all others similarly situated, Plaintiff, v. PROGRESSIVE NORTHERN INSURANCE COMPANY, PROGRESSIVE ADVANCED INSURANCE COMPANY, PROGRESSIVE CASUALTY INSURANCE COMPANY, PROGRESSIVE CLASSIC INSURANCE COMPANY, PROGRESSIVE COMMERICAL CASUALTY COMPANY, PROGRESSIVE DIRECT INSURANCE COMPANY, PROGRESSIVE NORTHWESTERN INSURANCE COMPANY, PROGESSIVE PREFRRED INSURANCE COMPANY, PROGRESSIVE SPECIALTY INSURANCE COMPANY PROGRESSIVE WEST INSURANCE COMPANY, NATIONAL CONTINENTAL INSURANCE COMPANY, and UNITED FINANCIAL CASUALTY COMPANY, Defendants.

No. 1:22-cv-00490-KWR-JFR

United States District Court, D. New Mexico

March 30, 2023

MEMORANDUM OPINION AND ORDER

KEA W RIGGS, UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court upon Defendants' Motion to Dismiss Plaintiff's Class Action Complaint (Doc. 15), filed August 5, 2022. Having reviewed the pleadings and the relevant law, the Court finds that Defendants' Motion to Dismiss (Doc 15) is WELL-TAKEN IN PART, and therefore, is GRANTED IN PART and DENIED IN PART.

BACKGROUND

This case arises out of a dispute over stacked uninsured/underinsured motorist (“UM/UIM”) coverage on a single vehicle policy. Plaintiff purchased a motor vehicle insurance policy from Progressive for his motor home. Doc. 1-1 ¶ 18. Plaintiff selected a stacked UM/UIM coverage on a single vehicle policy. Id. Stacked UM/UIM coverage permits an insured to aggregate the UM/UIM coverages on all vehicles insured under a policy. Id. ¶ 20. Plaintiff alleges that stacked UM/UIM coverage on a policy insurance for a single vehicle is illusory because the insured receives no benefit for the additional premium. Id. ¶¶ 21, 24. Plaintiff alleges that Progressive does not disclose any benefits to the insured for paying the additional premium. Id. ¶ 25. Plaintiff alleges the following claims:

Count I: Violation of the Unfair Insurance Practice Act

Count II: Breach of Contract

Count III: Breach of Implied Covenant of Good Faith and Fair Dealing and Insurance Bad Faith

Count IV: Violation of the Unfair Trade Practices Act

Count V: Civil Conspiracy to Violate the Trade Practice and Frauds Act, the Unfair

Trade Practices Act, and Contractual and Common Law Duties

Count VI: Unjust Enrichment

Count VII: Injunctive Relief

Count VIII: Declaratory Judgment

Count IV: Punitive Damages

Defendants removed this case to this Court (Doc. 1) and subsequently filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). Doc. 15. The Court denies Defendants motion pursuant to Rule 12(b)(1). The Court grants Defendants' motion pursuant to Rule 12(b)(6) on Count II and denies Defendants' Motion for the remaining counts.

LEGAL STANDARD

Rule 12(b)(6) permits the Court to dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss, a complaint must have sufficient factual matter that if true, states a claim to relief that is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678. As such, a plaintiff's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). All well-pleaded factual allegations are “viewed in the light most favorable to the nonmoving party.” Brokers' Choice of Am., Inc. v. NBC Universal, Inc., 757 F.3d 1125, 1136 (10th Cir. 2014).

In ruling on a motion to dismiss, “a court should disregard all conclusory statements of law and consider whether the remaining specific factual allegations, if assumed to be true, plausibly suggest the defendant is liable.” Kansas Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011). The Court must draw all reasonable inferences in Plaintiff's favor. Kay v. Bemis, 500 F.3d 1214, 1217 (10th Cir. 2007). However, mere “labels and conclusions” or “formulaic recitation[s] of the elements of a cause of action” will not suffice. Twombly, 550 U.S. at 555.

DISCUSSION

Uninsured motorist (“UM”) insurance coverage protects drivers who are damaged by a tortfeasor who does not have automobile insurance. See NMSA 1978, § 66-5-301(A) (1983); Crutcher v. Liberty Mut. Ins Co., 2022-NMSC-001, ¶ 15, 501 P.3d 433, 436. Underinsured (“UIM”) insurance coverage protects drivers who are hit by a tortfeasor who does not have enough auto insurance to cover the cost of the driver's injuries and damages. Id.; see § 66-5- 301(B). Stacked UM/UIM coverage allows the insured to combine UM/UIM coverage for each vehicle covered under the policy. Schmick v. State Farm Mut. Auto. Ins. Co., 1985-NMSC-073, ¶ 10, 103 N.M. 216, 219, 704 P.2d 1092, 1095

Defendants argue that Plaintiff's claims fail because the stacked UM/UIM coverage on a single vehicle provides an actual tangible benefit and Defendants properly disclosed UM/UIM coverage. Doc. 16 at 9. Plaintiff argues that the UM/UIM coverage on a single vehicle provides no benefits and is illusory. Doc. 21 at 4. The Court finds that Plaintiff has adequately pled that the UM/UIM coverage on a single vehicle is illusory and that Defendants' misrepresented the coverage.

I. Proper Defendants in this Lawsuit

In this lawsuit, Plaintiff is suing not only Progressive Northern Insurance Company, but also other, separate corporate entities, namely: Progressive Advanced Insurance Company, Progressive Casualty Insurance Company, Progressive Classic Insurance Company, Progressive Commercial Casualty Company, Progressive Direct Insurance Company, Progressive Max Insurance Company, Progressive Northwestern Insurance Company, Progressive Preferred Insurance Company, Progressive Specialty Insurance Company, Progressive West Insurance Company, National Continental Insurance Company, and United Financial Casualty Company (Non-Insuring Defendants).

Defendants point out that Plaintiff's Policy was issued by Progressive Northern and because these other entities were not parties to the contract, Plaintiff's allegations as to these other entities should be dismissed. See Fleet Mortgage Corp. v. Schuster, 112 N.M. 48, 49, 811 P.2d 81, 82 (1991) (holding that generally one who is not a party to a contract cannot maintain suit upon the contract). Plaintiff contends that the other entities are “part of the Progressive Group of companies and, upon information and belief, operate in concert in implementation of certain policies, procedures, directives, strategies, training, guidance, and the like.” Doc. 1-1- ¶ 15. Plaintiff argues that his Complaint sufficiently alleges joint venture and civil conspiracy. Doc. 21 at 21. The Court finds that at no point in the Complaint is joint venture alleged. However, the Court agrees that Plaintiff has adequately pled a civil conspiracy claim for reasons provided in this decision.

The Court declines to decide this issue on a motion to dismiss. Defendants are correct that a subsidiary and its parent corporation “are viewed as independent corporations.” Cruttenden v. Mantura, 97 N.M. 432, 435, 640 P.2d 932, 934 (1982) (“A subsidiary and its parent corporation are viewed as independent corporations.”). However, Plaintiff provides a sound reason to defer ruling on this issue until after some discovery has been done. See, e.g., Dellaira v. Farmers Ins. Exch., 2004-NMCA-132, ¶ 14, 136 N.M. 552, 556, 102 P.3d 111, 115 (allowing claims for breach of the covenant of good faith and fair dealing, UPA, and UIPA against a non-contracting insurance carrier defendant to remain).

Defendants' Motion to Dismiss certain co-defendants is therefore DENIED at this time.

II. Court declines to dismiss Plaintiff's Unfair Insurance Practice Act claim (Count I)

Plaintiff alleges that Defendants violated the New Mexico Unfair Insurance Practices Act (“UIPA”), NMSA 1978, §§ 59A-16-1 to 59A-16-30. The UPIA states:

“No person shall willfully collect any sum as premium or charge for insurance or other coverage, which insurance or coverage is not then provided or in due course to be provided (subject to acceptance of the risk by the insurer) by a policy issued by an insurer as authorized by the Insurance Code.

NMSA 1978, Section 59A-16-24(A). “This act seeks to prohibit unfair or deceptive acts and practices in the insurance industry.” Brule v. Blue Cross & Blue Shield of New Mexico, 455 Fed.Appx. 836, 840 (10th Cir. 2011). Insurance companies “have a duty to disclose material facts about the policies they sell under the UIPA.” Id., citing Azar v. Prudential Ins. Co. of Am., 133 N.M. 669, 68 P.3d 909, 930 (2003). Additionally, New Mexico has long recognized that “both the insurer and the insured have a duty not to misrepresent or withhold information material to an insurance contract.” Id., quoting Azar, 68 P.3d at 930. “Thus, New Mexico law strongly encourages open and transparent dealings in the insurance context, particularly with regard to material information.” Brule, 455 Fed.Appx. at 840; see, e.g., Smoot v. Physicians Life Ins. Co., 2004-NMCA-027, ¶¶ 15-16, 135 N.M. 265, 87 P.3d 545 (concluding that “[t]he UPA and the UIPA each imposes a duty to disclose material facts reasonably necessary to prevent any statements from being misleading” and noting the existence of “a common law duty to disclose the allegedly material facts”).

Defendants argue that a single vehicle UM/UIM stacked coverage provides a tangible benefit because the UM/UIM coverage available on the policy automatically increases upon the policy holder's acquisition of an additional vehicle. Doc. 16 at 9. Plaintiff argues that it is not a benefit because it requires an...