Stewart v. Mitchell Transport, Inc.

• Decision Date: 05 April 2002
• Docket Number: No. 01-2546-JWL.,01-2546-JWL.
• Citation: 197 F.Supp.2d 1310
• Parties: James STEWART and Gloria Stewart, Plaintiffs, v. MITCHELL TRANSPORT, INC. and Larry G. Ramsey and Insurance Corporation of Hannover and Insurance Company of Hanover, Defendants.
• Court: U.S. District Court — District of Kansas

Page 1310

197 F.Supp.2d 1310

James STEWART and Gloria Stewart, Plaintiffs, v. MITCHELL TRANSPORT, INC. and Larry G. Ramsey and Insurance Corporation of Hannover and Insurance Company of Hanover, Defendants.

No. 01-2546-JWL.

United States District Court, D. Kansas.

April 5, 2002.

Lawrence D. Flick, Prairie Village, KS, for Plaintiffs.

Roger W. Warren, Jeffrey C. Baker, Sanders Conkright & Warren LLP, Kansas City, MO, for Defendants.

MEMORANDUM & ORDER

LUNGSTRUM, District Judge.

This action stems from an automobile collision where defendant Larry Ramsey's tractor-trailer "rear-ended" plaintiff James Stewart's pickup truck. Plaintiffs allege that defendant Larry Ramsey and Mitchell Transport, Inc. were negligent, failed to "provide safe and adequate service" as required by 49 U.S.C.A. § 14101(a), violated 49 C.F.R. § 392.2 by failing to comply with local law and failed to comply with the "highest degree of safety in motor carrier transportation." Plaintiffs also allege that defendants Insurance Corporation of Hannover and/or Insurance Company of Hanover breached their duty to act in good faith and without negligence in defending and settling a claim against their insured. The matter is before the court on defendant Insurance Corporation of Hannover's (ICH) motion to dismiss count III of plaintiffs' complaint (Doc. 10). Specifically, defendant ICH argues that count III of plaintiffs' complaint, the count alleging a breach of duty to act in good faith in defending and settling a claim, should be dismissed because it is not ripe for consideration and because plaintiffs do not have standing to bring the claim. The court grants defendant's Rule 12(b)(1) motion to dismiss because the court agrees that plaintiffs do not have standing to bring the claim.¹

I. Uncontroverted Facts

On November 19, 1999, a collision occurred between plaintiffs and defendant Ramsey. Defendant Ramsey was cited for following too closely in violation of K.S.A. § 8-1523 and pled guilty to the charge. Following the collision, plaintiffs' counsel had a number of telephone conversations with adjusters representing defendants. By letter dated May 23, 2000, plaintiffs' counsel advised one of the adjusters, Ms. Marti Lemieux, of the nature of some of the potential claims and provided medical bills and records. On January 21, 2001, plaintiffs' counsel furnished Ms. Lemieux with additional medical records.

On October 31, 2001, on the brink of the statute of limitations deadline for plaintiffs' claims, plaintiffs submitted a 19-page demand letter extensively detailing the liability issues, medical evidence and lost income. The letter also provided a damage calculation and made a demand on defendants. The demand letter was accompanied by a settlement brochure containing documentation including a copy of the police report, the citation issued to Mr. Ramsey, a photograph of the damaged vehicle, medical bills, medical records, documentation supporting claims of lost income and the report of plaintiffs' vocational expert. The next day, Ms. Lemieux responded by faxing plaintiffs' counsel a letter stating that the case could not be settled before the running of the statute of limitations and requesting plaintiffs' previous employment records, medical records and income tax returns. On November 8, 2001, plaintiffs' counsel sent Ms. Lemieux a letter setting forth a list of plaintiff James Stewart's previous employers and health care providers, amending plaintiffs' demand to be within defendant's policy limits and stating that plaintiffs were in the process of filing a complaint unless they heard from defendant ICH. According to plaintiffs' counsel, to date he has never heard from defendant ICH regarding his settlement offer. Plaintiffs filed suit against defendants on November 16, 2001.

II. Motion to Dismiss Standard

The Tenth Circuit has explained that a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) may either be a facial or factual challenge. United States v. Rodriguez-Aguirre, 264 F.3d 1195, 1203-04 (10th Cir.2001) (citing Holt v. United States, 46 F.3d 1000, 1002 (10th Cir.1995)). A party making a facial challenge attacks the plaintiff's allegations regarding subject matter jurisdiction in the complaint. Id. In addressing a facial challenge, the court must treat the allegations in the complaint as true. Id. A party making a factual challenge goes "beyond allegations contained in the complaint and challenge[s] the facts upon which subject matter jurisdiction depends." Id. (quoting Holt, 46 F.3d at 1002). In addressing a factual challenge, "the court does not `presume the truthfulness of the complaint's factual allegations,' but `has wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to resolve disputed jurisdictional facts under Rule 12(b)(1).'" Id. (quoting Holt, 46 F.3d at 1002). Because the court construes defendant's motion to dismiss for lack of standing to be a facial challenge on the complaint, as opposed to a factual one, we accept plaintiff's allegations of material fact as true and construe the complaint in favor of plaintiff. Id. (citing Riggs v. City of Albuquerque, 916 F.2d 582, 584 (10th Cir.1990)).

III. Analysis

Defendant Insurance Company of Hanover (ICH) argues that the court should dismiss count III of plaintiffs' complaint because plaintiffs lack standing to bring the claim. Specifically, defendant ICH argues that there is no privity of contract between plaintiffs and defendant ICH and, consequently, plaintiffs are not entitled to bring a claim against defendant ICH for breach of contract. Plaintiffs argue that they have standing because they are third party beneficiaries of the insurance policy.

A party attempting to invoke the jurisdiction of the federal courts is required to set forth a case or controversy as imposed by Article III of the Constitution. "The case or controversy requirement of Article III admonishes federal courts to avoid `premature adjudication' and to abstain from `entangling themselves in abstract disagreements.'" Keyes v. School District No.1, Denver, Colorado, 119 F.3d 1437, 1443 (10th Cir.1997) (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 148, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967)). The doctrine of standing "is an essential and unchanging part of the case-or-controversy requirement of Article III." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (citations omitted). In order to establish Article III standing, a plaintiff must meet three requirements. Vermont Agency of Natural Resources v. United States ex. rel. Stevens, 529 U.S. 765, 771, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000) (citing Friends of Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 180-81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000)). First, a plaintiff "must demonstrate `injury in fact'-a harm that is both `concrete' and `actual or imminent, not conjectural or hypothetical.'" Id. (quoting Whitmore v. Arkansas, 495 U.S. 149, 155, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990)). Second, a plaintiff "must establish causation—a `fairly ... trace[able]' connection between the alleged injury in fact and the alleged conduct of the defendant." Id. (quoting Simon v. Eastern Ky. Welfare Rights Organization, 426 U.S. 26, 41, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976)). Finally, a plaintiff "must demonstrate redressability—a `substantial likelihood' that the requested relief will remedy the alleged injury in fact." Id. (quoting Simon, 426 U.S. at 45, 96 S.Ct 1917). The United States Supreme Court has stated that "[t]hese requirements together constitute the `irreducible constitutional minimum' of standing." Id. (quoting Lujan, 504 U.S. at 560, 112 S.Ct. 2130).

In addition to constitutional requirements, a plaintiff must also satisfy the following prudential principles: "(1) the plaintiff generally must assert his or her own legal rights; (2) the court must refrain from adjudicating `generalized grievances' most appropriately addressed by one of the other branches of government; and (3) the plaintiff's complaint must fall within the zone of interest to be protected or regulated by the statute or constitutional guarantee in question." United States v. Rodriguez-Aguirre, 264 F.3d 1195, 1204 (10th Cir.2001) (quoting Mount Evans Co. v. Madigan, 14 F.3d 1444, 1450-51 (10th Cir.1994)).

Finally, the Tenth Circuit has noted that "at the preliminary juncture in a case at which standing is typically assessed, `the claimant need not prove the full merits of her underlying claim.'" Id. (quoting United States v. Emerson Street, 942 F.2d 74, 78 (1st Cir.1991)). "All that needs to be shown is a facially colorable interest in the proceedings sufficient to satisfy the case-or-controversy requirement and prudential considerations defining and limiting the role of the court." Id. (quoting Emerson Street, 942 F.2d at 78). "At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we presum[e] that general allegations embrace those specific facts that are necessary to support the claim." Id. (citing Lujan, 504 U.S. at 561, 112 S.Ct. 2130).

Count III of plaintiffs' complaint charges defendant ICH with breaching its duty to act in good faith and without negligence in defending and settling a claim against its insured. Under Kansas law², such a claim is a contract action. Glenn v. Fleming, 247 Kan. 296, 799 P.2d 79, 88 (1990). As the Kansas Supreme Court has explained: "[i]mplicit in the usual liability insurance policy is a covenant on the part of the insurer that, in defending or settling a claim against its insured, it will act in good faith and with reasonable care for his interests." Id. (emphasis in original) (quoting Gilley v. Farmer, 207 Kan. 536, 485 P.2d 1284 (1971)). Typically, in order to maintain a breach of contract claim, there must be privity of contract...