Peltz v. State Farm Mut. Auto. Ins. Co.

Decision Date11 May 2021
Docket NumberCivil Action No. 21-0005
Citation538 F.Supp.3d 498
Parties Richard J. PELTZ, Jr., Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.
CourtU.S. District Court — Western District of Pennsylvania

Jason C. Tetlow, Tetlow Law, PC, Pittsburgh, PA, for Plaintiff.

Kevin D. Huber, Mark A. Martini, Robb Leonard Mulvihill LLP, Pittsburgh, PA, for Defendant.

Re: ECF No. 13

OPINION

MAUREEN P. KELLY, UNITED STATES MAGISTRATE JUDGE

Plaintiff Richard J. Peltz, Jr. ("Peltz") brings this breach of contract and insurance bad faith action against Defendant State Farm Mutual Automobile Company ("State Farm"). Peltz asserts that State Farm wrongfully denied coverage for the theft of a 2017 Bentley Continental (the "Bentley") that occurred in the course of a multi-state fraudulent lease consignment scheme. ECF No. 1-1.

Pending before the Court is a Motion to Dismiss filed on behalf of State Farm. ECF No 13. State Farm contends that: (1) the lease transferee is a necessary party to this action and thus Peltz's failure to join it as a party requires dismissal pursuant to Federal Rule of Civil Procedure 12(b)(7) ; (2) Peltz's breach of contract claim is time-barred by a policy suit limitation provision; and (3) coverage was properly denied because the policy explicitly excludes theft by a consignee and, therefore, Peltz fails to plead plausible breach of contract and bad faith claims. Alternatively, State Farm seeks an order striking an allegation from the Complaint that it owed a fiduciary obligation to Peltz and violated that obligation by denying coverage for his stolen vehicle.

For following reasons, the Motion to Dismiss will be granted in part and denied in part, and the alternative Motion to Strike will be granted.1

I. FACTUAL AND PROCEDURAL BACKGROUND

Peltz leased the Bentley for his personal use and obtained insurance to cover the vehicle from loss from State Farm pursuant to a policy for the period June 1, 2018 to December 1, 2018, as amended September 14, 2018. ECF No. 1-1 at 10, 12. The policy provides coverage for theft, but excludes coverage for theft by a consignee, an agent of a consignee, or a person who obtains possession of a covered vehicle with the permission of a consignee. ECF No. 1-1 at 45, 49-50.

On September 12, 2018, Peltz entered into a Lease Consignment Agreement with Haven Transfer ("Haven"), based on his belief that Haven was a valid company with a principal place of business in California. Id. ¶ 6; see also, ECF No. 14-1. Haven's agent picked up the Bentley from Peltz's home on September 13, 2018. Id. ¶ 9. That same day, believing the transfer was complete, Peltz contacted his State Farm agent to cancel coverage on the subject vehicle. The cancellation was effective on September 14, 2018. Id. ¶ 10.

In early 2019, Peltz received notice of highway toll violations in Florida and, upon investigation, discovered that the vehicle was stolen. Id. ¶¶ 11-12. Peltz later learned that Haven was a fraudulent company and that the lease consignment contract with Haven was part of a scheme to steal the Bentley. Id. ¶ 7. Haven's owner, Geoffrey Hull, has since been indicted in the United States District Court for the Central District of California for crimes related to an interstate scheme to defraud victims out of high-end or exotic vehicles using several fraudulent companies and aliases, including Haven. ECF No. 1-1 ¶ 8; ECF No. 16-1; United States v. Hull, No. 2:20-cr-00264, Indictment, ECF No. 4 at 6 (C.D. Cal. June 30, 2020).

On or about March 6, 2019, Peltz submitted a claim to State Farm reporting that the vehicle had been stolen on September 13, 2018 through a fraudulent transaction. ECF No. 1-1 ¶ 13; ECF No. 17-2. Peltz states that he received three letters denying coverage. He claims that State Farm first denied coverage on August 7, 2019, stating that the loss occurred on September 14, 2018, after the policy had been cancelled. ECF No. 1-1 ¶ 14. State Farm issued a second denial dated August 8, 2019 and reiterated its position that the loss occurred on September 14, 2018, when the policy was no longer in effect. Id. ¶ 16. One year later, on August 13, 2020, State Farm issued its third denial letter stating, "If it is determined that Haven did in fact steal the vehicle, we are unable to provide coverage as theft by a consignee is specifically excluded under Mr. Peltz's State Farm Pennsylvania Auto Policy Form 9838A." Id. ¶ 18.

State Farm has submitted two letters to the Court as part of the pending Motion to Dismiss. The first letter, dated July 24, 2019, reflects that State Farm raised both late notice for loss and the policy exclusion for theft by a consignee as potential bars to coverage and thus reserved its rights to deny coverage. ECF No. 17-2. State Farm followed up with a denial letter on August 8, 2019, based on its determination that the loss occurred on September 14, 2018, after the policy terminated. ECF No. 17-1.

Peltz alleges that contrary to State Farm's position, the loss occurred on September 13, 2018, when Haven took possession of the vehicle with the intent to steal it. ECF No. 1-1 ¶ 15. Peltz also challenges State Farm's characterization of Haven as a consignee, and alleges that it is a "sham company," and thus the "agreement signed by Plaintiff on September 12, 2018 was not a legally binding contract. Rather, it was a fraudulent transaction from the outset." Id. ¶ 19.

On September 11, 2020, Peltz commenced this action in the Court of Common Pleas of Allegheny County with the filing of a Praecipe for Writ of Summons. ECF No. 1-10. State Farm served a Rule to File Complaint on October 6, 2020, ECF No. 1-6, and Peltz filed his Complaint on December 9, 2020. ECF No. 1-1.

In the Complaint, Peltz alleges that he is a resident of Pennsylvania and that State Farm is a corporation with its principal place of business in Illinois. ECF No. 1-1 ¶¶ 1-2. State Farm removed the action to this Court under 28 U.S.C. § 1441, citing the diversity of the parties and a qualifying amount in controversy in accordance with 28 U.S.C. § 1331. ECF No. 1. The parties have since stipulated to strike Peltz's claims for attorneys’ fees and punitive damages for his breach of contract claim, and State Farm filed the pending Motion to Dismiss and brief in support. ECF Nos. 9, 13, and 14. Peltz filed a Brief in Opposition to the Motion to Dismiss, ECF No. 16, and State Farm filed a Reply Brief, ECF No. 17. The Motion to Dismiss is now ripe for consideration.

II. STANDARD OF REVIEW

A complaint may be dismissed under Federal Rule of Civil Procedure 12(b)(6) for "failure to state a claim upon which relief can be granted." "[D]etailed pleading is not generally required." Connelly v. Lane Const. Corp., 809 F.3d 780, 786 (3d Cir. 2016). Rather, the rules require " ‘only a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ " Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ) (internal quotations omitted). Thus, to survive a motion to dismiss, a complaint must "state a claim to relief that is plausible on its face" by providing facts which "permit the court to infer more than the mere possibility of misconduct." Ashcroft v. Iqbal, 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

In assessing the sufficiency of a complaint, the Court must accept as true all material allegations in the complaint and all reasonable factual inferences must be viewed in the light most favorable to the plaintiff. Odd v. Malone, 538 F.3d 202, 205 (3d Cir. 2008). The Court, however, need not accept bald assertions or inferences drawn by the plaintiff if they are unsupported by the facts set forth in the complaint. See Cal. Pub. Employees’ Ret. Sys. v. The Chubb Corp., 394 F.3d 126, 143 (3d Cir. 2004) (citing Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) ). Nor must the Court accept legal conclusions set forth as factual allegations. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Thus, the United States Supreme Court has held that a complaint is properly dismissed under Fed. R. Civ. P. 12(b)(6) where the factual content does not allow the court "to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 ; see also Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (finding that, under Twombly, "labels and conclusions, and a formulaic recitation of the elements of a cause of action" do not suffice. The complaint therefore "must allege facts suggestive of [the proscribed] conduct" and that are sufficient "to raise a reasonable expectation that discovery will reveal evidence of the necessary element[s] of his claim."). Id. at 233, 234.

Finally, as relevant here, the Court has reviewed the criminal proceedings pending against Geoffrey Hull in the United States District Court for the Central District of California, correspondence to Peltz from State Farm denying coverage, and the insurance policy attached to the Complaint. Generally, when considering a motion under Rule 12(b)(6), the Court may not consider matters outside of the complaint. "If, on a motion under Rule 12(b)(6) ..., matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56." Fed. R. Civ. P. 12(d).

An exception applies to: (i) exhibits attached to the complaint; (ii) matters of public record; and, (iii) any undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the document is integral to or explicitly relied on in the complaint. See In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) ; Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. ...

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