Wright v. Allstate Fire & Cas. Ins. Co.

Decision Date25 April 2022
Docket Number2:21-cv-00335-DGE
CourtU.S. District Court — Western District of Washington
PartiesBENJAMIN WRIGHT, Plaintiff, v. ALLSTATE FIRE & CASUALTY INSURANCE COMPANY, Defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS FIRST AMENDED COMPLAINT (DKT. NO. 23) AND DIRECTING PARTIES TO SCHEDULE STATUS HEARING TO DISCUSS PLAINTIFF'S MOTION TO COMPEL (DKT. NO. 25)

David G. Estudillo, United States District Judge.

I. INTRODUCTION

Plaintiff's First Amended Complaint asserts Plaintiff tendered to Defendant funds to satisfy Defendant's subrogation claim arising out of Defendant's payment of $50, 000 personal injury protection coverage. It further alleges Defendant failed to investigate the basis for Plaintiff's tender and otherwise elevated its own interests over Plaintiff's when Defendant engaged in an intercompany arbitration without Plaintiff's consent or participation and knowing that Plaintiff disputed Defendant's claim for subrogation. Plaintiff further alleges that Defendant's conduct in attempting to “claw back” the funds provided to Plaintiff amounts to a denial of insurance coverage.

Based on the facts alleged in the First Amended Complaint and, for the reasons stated herein, the Court DENIES Defendant's Motion to Dismiss (Dkt. No. 23).

The Court also concludes State Farm is necessary party pursuant to Federal Rule of Civil Procedure 19 and ORDERS Plaintiff to join State Farm as a party in this matter.

Lastly with regard to Plaintiff's Motion to Compel Discovery (Dkt. No. 25), the parties are directed to schedule a hearing.

II. BACKGROUND

Plaintiff's First Amended Complaint alleges Plaintiff at all times relevant was a resident of King County, Washington. (Dkt. No. 22 at 2.) Plaintiff was injured while attending college in Oregon. (Id.) Plaintiff's mother supplied a vehicle for Plaintiff's use while attending college and purchased liability insurance from Defendant on behalf of Plaintiff. (Id.) Plaintiff's mother used her Issaquah, Washington insurance agent (an authorized agent of Defendant) to purchase the insurance. (Id.)

On November 14, 2016, Plaintiff was injured in Oregon while riding his bicycle. (Id. at 3.) He suffered significant injuries. (Id. at 3-4.) Defendant paid Plaintiff $50, 000 in personal injury protection (PIP) coverage, which were the limits of the PIP coverage under the insurance Plaintiff's mother purchased. (Id. at 4.)

Plaintiff initiated a lawsuit against the person involved in his bicycle accident and eventually settled that matter on December 13, 2018. (Dkt. Nos 22 at 4; 22-1.) As part of that settlement agreement, Plaintiff and the third party agreed Plaintiff was 65% at fault for the accident. (Dkt. No. 22-1.) Plaintiff also agreed to indemnify and hold harmless the third party's insurer, State Farm, from all subrogation claims. (Id.)

On January 23, 2019, Plaintiff tendered $11, 656.51 to Defendant as satisfaction for Defendant's PIP subrogation claim. (Dkt. Nos. 22 at 5; 22-2.) Plaintiff also informed Defendant of Plaintiff's settlement with the third party and the percentage of fault agreed to by the parties as part of the settlement. (Id.) Defendant “did not substantively respond” to Plaintiff's tender and instead returned the $11, 656.51 to Plaintiff. (Dkt. Nos. 22 at 5; 22-3.) Defendant did not investigate whether Plaintiff was contributorily negligent for his injuries and did not seek to resolve the PIP subrogation claim directly with Plaintiff. (Dkt. No. 22 at 5-6.)

State Farm informed Plaintiff that Defendant initiated intercompany arbitration to collect the $50, 000 PIP payment Defendant previously made to Plaintiff. (Id. at 6.) State Farm demanded Plaintiff indemnify State Farm for any award provided to Defendant. (Id.) Plaintiff was not a party to the intercompany arbitration proceedings, but did submit materials to the arbitrator in an attempt to influence the arbitration. (Id.) The arbitrator ordered State Farm to pay Defendant $50, 000 for the PIP payment Defendant previously paid to Plaintiff. (Id. at 7.) Defendant demanded State Farm pay the arbitration award. (Id.)

State Farm demanded from Plaintiff “payment of $50, 000 to State Farm for the benefit of [Defendant], or directly to [Defendant.] (Dkt. No. 22-6 at 5.) As part of this demand, State Farm asserts “interest at 9% per annum from August 4, 2019 until paid, plus attorney fees and costs to be determined.” (Id.) State Farm has threatened litigation to collect the $50, 000 for the benefit of Defendant. (Id.)

Plaintiff alleges Defendant's effort to “claw back and retain” the PIP benefits previously paid to Plaintiff is tantamount to a denial of coverage in violation of Revised Code of Washington § 48.30.015. (Id. at 8.) Plaintiff also alleges Defendant acted in bad faith by failing to investigate and address Plaintiff's position that he was contributorily negligent such that Defendant was not entitled to complete reimbursement of the $50, 000 PIP payment and by using a forum that prevented Plaintiff from resolving the subrogation dispute directly with Defendant. (Id. at 9.) Lastly, Plaintiff alleges Defendant's actions violated Washington's Consumer Protection Act.

Defendant moves to dismiss Plaintiff's First Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

III. STANDARD OF REVIEW

A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure can be granted only if the complaint, with all factual allegations accepted as true, fails to “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Mere conclusory statements in a complaint and “formulaic recitation[s] of the elements of a cause of action” are not sufficient. Id. “Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988) (citation omitted). Thus, the focus is on the allegations contained in the complaint, not on any information or matters presented outside of the complaint. “If . . . matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment” and parties must be given a reasonable opportunity to present” all relevant material. Fed.R.Civ.P. 12(d).

When ruling on a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court accepts all facts alleged in the complaint as true and makes all inferences in the light most favorable to the non-moving party. Baker v. Riverside Ctny. Off. of Educ., 584 F.3d 821, 824 (9th Cir. 2009). However, the court is not required to accept as true a “legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The complaint “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. at 678. This requirement is met 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. The complaint need not include detailed allegations, but it must have “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. Absent facial plausibility, a plaintiff's claims must be dismissed. Id. at 570.

IV. DISCUSSION
A. Documents Not Considered

Pursuant to Federal Rule of Civil Procedure 12(d), the only documents the Court considered was the First Amended Complaint (and any documents filed therewith), and the arguments contained in the motion, the opposition, and the reply. Declarations filed in opposition to the motion and any additional evidence referenced therein were not considered.

B. Choice of Law

As previously noted (see Dkt. No. 19 at 6 n.2), decisions regarding choice of law are fact dependent and require thorough analysis. This type of analysis is not readily accomplished by way of a motion to dismiss. See FutureSelect Portfolio Mgmt. Inc. v. Tremont Grp. Holdings, Inc., 331 P.3d 29, 36 n.12 (Wash. 2014) (Choice of law “requires a subjective analysis of objective factors. Though we hesitate to articulate any categorical rules, such an analysis does not lend itself readily to disposition on a CR 12(b)(6) motion.”)

Accordingly, the Court makes no ruling at this time as to whether Oregon or Washington law ultimately is the law applicable to this matter. For purposes of this motion only, and drawing all inferences in the light most favorable to Plaintiff, the Court assumes Washington law applies.

C. Failure to Investigate or Take Into Account Plaintiff's Possible Contributory Negligence Once Plaintiff Tendered PIP Reimbursement, Arguably, Could Support Bad Faith Claim Under Washington Law

Insurers owe a duty to exercise good faith when processing an insured's claim. Wash. Rev. Code § 48.01.030. [A] insurer must deal fairly with an insured, giving equal consideration in all matters to the insured's interests.' St. Paul & Marine Ins. Co. v. Onvia, Inc., 196 P.3d 664 (Wash. 2008) (quoting Tank v. State Farm Fire & Cas. Co., 715 P.2d 1133, 1136 (Wash. 1986)). In addition, a “PIP insured cannot be required to reimburse the insurer unless and until the insured is fully compensated.” Liberty Mut. Ins. Co. v. Tripp, 25 P.3d 997, 1007 (Wash. 2001).

The general rule is that, while an insurer is entitled to be reimbursed to the extent that its insured recovers payment for the same loss from a tort-feasor responsible for damage, it can recover only the excess which the insured has received from the wrongdoer, remaining after the insured is fully compensated for his loss.

Thiringer v. Am. Motors Ins. Co., 588 P.2d 191,...

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