Opinion
3:22-cv-00726-SB
01-23-2023
VINCENT D. BUTTERS, Plaintiff, v. TRAVELERS INDEMNITY COMPANY, Defendant.
FINDINGS AND RECOMMENDATION
HON. STACIE F. BECKERMAN UNITED STATES MAGISTRATE JUDGE
There are three motions before the Court in this insurance case. First, defendant Travelers Indemnity Company (“Defendant”) moves to dismiss plaintiff Vincent Butters's (“Plaintiff”) original complaint or stay this proceeding pending the completion of an insurance claim investigation. Second, Defendant moves to dismiss and/or strike Plaintiff's first amended complaint (“FAC”), pursuant to Federal Rules of Civil Procedure (“Rule”) 12(b)(6) and 12(f). Finally, Plaintiff moves for leave to file a second amended complaint (“SAC”), pursuant to Rule 15(a)(2).
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a)(1), but not all parties have consented to the jurisdiction of a magistrate judge under 28 U.S.C. § 636. For the reasons explained below, the Court recommends that the district judge deny Defendant's initial motion to dismiss or stay, grant Plaintiff's motion for leave to amend, and grant in part and deny in part Defendant's cross-motion to dismiss.
The following facts are undisputed and drawn from the Court's docket, the allegations in Plaintiff's pleadings, and documents that Plaintiff incorporated by reference into his pleadings. SeeChavez v. Robinson, 12 F.4th 978, 982 n.1 (9th Cir. 2021) (relying on facts from the complaint, and “attachments or documents incorporated by reference, and matters subject to judicial notice”) (simplified); Gonzalez v. Velez, 864 F.3d 45, 48 (1st Cir. 2017) (noting that courts “are at liberty . . . to supplement [the] facts [from the pleading] with facts gleaned from documents incorporated by reference”) (simplified); McGarry v. Pallito, 687 F.3d 505 (2d Cir. 2012) (drawing facts from the self-represented plaintiff's pleadings); Stolte v. Securian Life Ins.Co., __ F.Supp.3d __, 2022 WL 3357839, at *4 (N.D. Cal. Aug. 15, 2022) (taking judicial notice of insurance policy documents because the plaintiff “extensively refer[red] to the[] documents in the complaint and they form[ed] the basis of her claim,” and “[t]he parties d[id] not dispute the accuracy of the[] documents,” and declining to take judicial notice of “largely irrelevant” claim-related correspondence, which the pleading only referenced in “passing”); Kammeye v. U.S. Army Corps of Eng'rs, No. 15-cv-00869, 2022 WL 1782558, at *4 n.4 (C.D. Case Cal. Apr. 22, 2022) (taking notice, on the court's “own motion,” of incorporated records).
I. THE POLICY
This case relates to an insurance claim that Plaintiff filed for fire damage to his shed, home, and personal property. (See Notice Removal Ex. A (“Compl.”) at 1 -19, ECF No. 1-1, attaching Plaintiff's original complaint). The Travelers Home and Marine Insurance Company (“Travelers Home”), not Defendant, issued the relevant homeowner's policy (the “Policy”) to Plaintiff and his husband. (See Decl. David Ryan (“Ryan Decl.”) Supp. Def.'s Mot. Dismiss Ex. B at 1-54, ECF No. 6-2; Surresponse Def.'s Mot. Dismiss (“Pl.'s Surresponse”) Ex. 4 at 2, ECF No. 15-4.) The Policy covered a twelve-month period beginning on June 19, 2021. (Ryan Decl. Ex. B at 1.)
Defendant does not appear to object to the substitution of Travelers Home for “Travelers Indemnity Company,” and focuses instead on the merits of Plaintiff's claims, as the Court does. For clarity and simplicity, the Court often refers to both entities, interchangeably, as “Defendant.”
A. Coverage
The Policy's coverage included: (1) “Coverage A - Dwelling,” with limits of $162,000; (2) “Coverage B - Other Structures,” with limits of $16,200; (3) “Coverage C - Personal Property,” with limits of $117,509; and (4) “Coverage D - Loss of Use,” with limits of $50,100. (Id. at 2, 7, 11, 13.) The Policy also included an “Additional Coverages” provision for certain expenses, such as the “reasonable expense” for debris removal. (Id. at 13) (bold typeface omitted). The Additional Coverages provision stated that any debris removal expense is “included in the limit of liability that applies to the damaged property,” and “[i]f the amount to be paid for the actual damage to property plus the debris removal expense is more than the limit of liability for the damaged property, an additional 5% of that limit is available for such expense.” (Id. at 5.)
B. Conditions
In addition to these coverages, the Policy included a “Conditions” section, which addressed, among other things, an insured's “[d]uties after loss.” (Id. at 22) (bold typeface omitted). The Policy's duties after loss provision explained that “[i]n case of a loss to covered property, [the insurer] ha[s] no duty to provide coverage under th[e] policy if the failure to comply with the . . . duties [described herein] is prejudicial to [the insurer].” (Id.) Those duties included cooperating with the insurer in the investigation of a claim, preparing an inventory of damaged personal property and attaching all bills, receipts, and related documents, submitting a signed and sworn proof of loss within sixty days of the insurer's request, and showing the damaged property and providing requested documents as often as the insurer reasonably requires. (Id.)
The Conditions section also included a provision addressing any suit against the insurer. This provision provided that “[n]o action can be brought against [the insurer] unless there has been full compliance with all of the terms under Section I of this policy and the action is started within two years after the date of loss.” (Id. at 24.) The duties after loss provision is part of Section I. (Id. at 22.)
II. CLAIM PROCESS
On January 24, 2022, a faulty surge protector caused a fire to break out in Plaintiff's shed and eventually spread to his home. (Compl. ¶¶ 9, 65-67; FAC ¶ 3.5, ECF No. 11.) The fire destroyed Plaintiff's shed, resulted in the total constructive loss of Plaintiff's home, and caused extensive personal property damage. (See Compl. ¶¶ 9, 13, 15, 24; FAC ¶ 3.6; Ryan Decl. Ex. A at 1-11.)
After completing an investigation into the cause of the fire “by the end of the second week in February” 2022 (i.e., on or about February 11 or February 12, 2022), a fire investigator “turned over the scene and gave the adjusters the go ahead to proceed with [insurance] claims.” (Compl. ¶¶ 65, 68.) On February 15, 2022, Raquel Cruz (“Cruz”), an insurance claims representative, sent Plaintiff a “loss inventory spreadsheet to list all items lost in regard[] to the claim.” (Compl. ¶ 12; FAC ¶ 3.6.) One week later, on February 22, 2022, Cruz sent Plaintiff's husband $14,397.72 to cover expenses related to debris removal, along with “a memo stating [the payment] was for ‘Personal Property Nonsalvage Efforts.'” (Compl. ¶¶ 13, 41; FAC ¶ 3.6; see also Pl.'s Surresponse Ex. 9 at 3, reflecting that the debris removal portion amounted to $14,397.72).
It appears that Cruz may have handled only the portion of the claim that pertained to “Coverage C - Personal Property,” and related “Additional Coverages,” such as debris removal. (See Compl. ¶ 15, alleging that Amber Graves (“Graves”) handled “every part of the claim except contents”; Pl.'s Surresponse Exs. 2-4, reflecting that Cruz addressed the condition of nonsalvageable contents/personal property, “downed debris of the dwelling,” and “contents debris removal”).
The following week, on March 4, 2022, Plaintiff and his husband received $224,235.70 from Graves, who informed Plaintiff and his husband that they were “free to repair or demo and rebuild the property.” (Compl. ¶ 15; FAC ¶ 3.7.) On March 14, 2022, Plaintiff emailed Cruz the “completed version of [his] loss inventory spreadsheet,” and “a copy of [his] retail transactions from [his] primary banking account[.]” (Compl. ¶¶ 18, 41; FAC ¶ 3.8; Ryan Decl. Ex. A at 1-11; Pl.'s Surresponse Exs. 5-6; see also id. FAC ¶ 3.17; Pl.'s Surresponse Exs. 7-8, attaching supplemental purchasing histories Plaintiff sent one month later). The spreadsheet included 865 personal property items, including 565 grouped under the “Shed/Outdoor[]” area and many with an estimated condition of “[a]bove [a]verage.” (Ryan Decl. Ex. A at 1 -7, 11; Pl.'s Surresponse Ex. 5 at 1-4, 6.)
Cruz responded to Plaintiff's email on the following morning, and thanked him for submitting “the document and the esx.” (Id. Ex. 2 at 1; Compl. ¶ 19; FAC ¶ 3.9.) Cruz explained that Plaintiff's spreadsheet grouped items in “shed/outdoor areas and one deck area” but she “need[ed] to know specifically which items were in the shed” or “[w]hich grouping should [she] look to find these specific items.” (Pl.'s Surresponse Ex. 2 at 1.) Cruz also explained that to “validate” the “above average” condition of “many items,” she “would need to see photos supporting that the items were in above average condition prior to the loss.” (Id.) Cruz, however, added that if Plaintiff did not have or could not locate photos of the items or interior photos, she “would just use the default [condition] of ‘average,'” which could “always [be] amend[ed]” if, for example, Plaintiffs “locate[d] photos,” and “may be a m[oot] point” if they “hit limits.” (Id.) After briefly addressing issues related to artwork, Cruz concluded by again “not[ing] that it appear[ed] [that the] policy limits were reached/max[ed] so any amendments will be minimal.” (Id.)
“An .ESX file is the native file format for Xactimate . . . and is akin to an .xls file for a Microsoft Excel spreadsheet[.]” Shinui Builders, LLC v. Am. Zurich Ins. Co., No. 20-cv-00278, 2021 WL 4955909, at *4 n.3 (N.D. Fla. Aug. 26, 2021) (simplified). “Xactimate is an estimating software application used by roofing companies, contractors, and insurance companies to give an estimate[.]” Summit Restoration, Inc. v. Keller, 953 N.W.2d 816, 828 (Neb. Ct. App. 2020); see also in v. Belfor USA Grp. Inc., No. 923, 2022 WL 4546678, at *6 (Md. Ct. Spec. App. Sept. 29, 2022) (referring to Xactimate as “a unit cost estimating software . . . used by the insurance industry both on the contractor side and the carrier side,” and “the industry standard for creating an estimate in the insurance reconstruction industry and the disaster recovery industry”) (simplified).
Plaintiff sent a follow-up email to Cruz two days later, on March 17, 2022. (Compl. ¶ 22; FAC ¶ 3.12; Pl.'s Surresponse Ex. 2 at 1.) Plaintiff explained that he did not have photos because the fire destroyed “every device that would be used to take to store pictures on,” he had not “exaggerated, lied, or omitted anything,” he had “freely given access to anyone at [the insurer] who ha[d] requested it,” and he could not “provide a truer attestation” of his loss inventory given that his “items in the shed usually moved from inside the shed to a storage box directly outside the shed or under the porch” and a few items he specifically identified were “constantly in the shed.” (Id.)
Cruz responded to Plaintiff's follow-up email later that same day, March 17, 2022. (Compl. ¶ 23; FAC ¶ 3.13; Pl.'s Surresponse Ex. 2 at 1.) After thanking Plaintiff for following up, Cruz asked Plaintiff to “[l]et her know when the downed debris of the dwelling [was] removed from the living [and] dining room so [she could] walk the residence with [him] and validate the items that [he] claimed on [his] nonsalvage [inventory] list,” and to “please pause any contents debris removal effort until [she] had an opportunity to walk the site with [him].” (Id.)
Cruz sent additional correspondence to Plaintiff four days later, on March 21, 2022. (Compl. ¶ 26; FAC ¶ 3.15; Pl.'s Surresponse Ex. 4.) Cruz's correspondence enclosed a “Sworn Statement in Proof of Loss,” which she asked Plaintiff to complete, sign before a notary, and return by June 20, 2022. (Id. Ex. 4 at 1.) Cruz also explained that she needed Plaintiff to “provide a written statement detailing the facts and damages associated with this loss,” and to “[i]nclude original receipts, invoices, estimates or other documentation to support [his] claim.” (Id.)
The next month, on April 11, 2022, Plaintiff received a letter from a claims manager stating that his claim was still under investigation. (Compl. ¶ 31.) Four days later, on April 15, 2022, Plaintiff submitted additional purchasing records from “Amazon and Best Buy that aligned” with and “covered about 60%” of his spreadsheet. (FAC ¶ 3.17; Pl.'s Surresponse Exs. 7-8.) Plaintiff, however, never submitted a signed Sworn Statement in Proof of Loss or complied with Cruz's request for a walkthrough. (See Compl. ¶ 41; FAC ¶ 5.5, noting these outstanding requests.)
On April 27, 2022, Plaintiff received a partial payment of $19,027.00 for personal property damages, and an estimate that listed actual cash values, relied on the “average” default condition, and identified items that were still pending. (FAC ¶¶ 3.18-.21; Pl.'s Surresponse Exs. 9 & 12.)
III. PROCEDURAL HISTORY
On April 21, 2022, one month after Cruz first requested a Sworn Statement in Proof of Loss and about one week before Plaintiff received partial payment for his claimed personal property damages, Plaintiff filed this action against Defendant in Multnomah County Circuit Court. (Notice Removal ¶ 2; id. Ex. A at 1, 15.) Plaintiff served Defendant on April 29, 2022, and Defendant timely removed the case to federal district court on May 17, 2022. (Id. ¶ 2.) One week later, Defendant filed an unenumerated motion to dismiss or stay this proceeding. (See Def.'s Mot. Dismiss Stay Action Pending Claim Investigation (“Def.'s Initial Mot.”) at 1 -9, ECF No. 5.)
Plaintiff responded to Defendant's motion on May 31, 2022, but also filed a notice of partial voluntary dismissal (voluntarily dismissing a declaratory judgment claim) and a FAC on June 10, 2022. (See Pl.'s Resp./Opp'n Def.'s Mot. Dismiss (“Pl.'s Resp.”) at 1-2, ECF No. 8; Pl.'s Notice Partial Voluntary Dismissal at 1, FAC at 1-12.) After Defendant filed its reply on June 13, 2022 (see Def.'s Reply Supp. Mot. Dismiss Stay Action Pending Claim Investigation (“Def.'s Reply”) at 1-6, ECF No. 12), the Court scheduled oral argument for June 21, 2022. (ECF No. 14.)
During oral argument, the Court and parties addressed Defendant's motion, the status of any remaining investigation, Plaintiff's recently filed FAC, and whether Plaintiff's FAC rendered moot Defendant's motion to dismiss or stay. (Mot. Dismiss Hr'g Tr. (“Hr'g Tr.”) 4:150:14, June 21, 2022, ECF No. 19.) Defendant represented that it did not object to (1) Plaintiff's voluntary dismissal of his declaratory judgment claim, or (2) the Court treating its motion to dismiss as a motion to strike paragraphs 5.4 and 5.5 of the FAC, because they “re-purpose[]” and re-allege the “issues that drove the [initial] motion,” namely, whether, as a matter of law, Defendant waived its right to continue to investigate Plaintiff's claims and whether an insured's failure to comply with post-loss provisions relieves an insurer of its obligations to pay a non-compliant claim. (See Hr'g Tr. 47:8-49:10; FAC ¶¶ 5.4-.5; see also Hr'g Tr. 5:15-6:14.) Defendant also acknowledged that its motion does not “directly implicate[] any of the claims asserted in the [FAC].” (Id. 48:22-49:2.)
Plaintiff likewise did not object to the Court treating Defendant's motion as a motion to strike paragraphs 5.4 and 5.5 of the FAC. (Id. 49:9-10.) Plaintiff also represented that he had a signed and notarized Sworn Statement in Proof of Loss that he would submit to Defendant. (Id. 32:14-25.)
Plaintiff later “changed [his] mind” about submitting a Sworn Statement in Proof of Loss, noting that he agreed to do so “[w]hile under duress[.]” (Pl.'s Mot. Sanctions at 1, ECF No. 23.)
At the conclusion of the hearing, the Court took Defendant's motion under advisement, stayed discovery and Defendant's deadline to file an answer to Plaintiff's FAC pending resolution of Defendant's motion, and instructed the parties to file separate status reports regarding the status of Plaintiff's claim on or before August 19, 2022. (Hr'g Tr. 44:12-50:14; ECF No. 16.)
Defendant filed a status report on July 28, 2022. (Def.'s Status Report at 1-2, ECF No. 20.) Plaintiff filed his status report and a motion for leave to file a SAC on August 1 and August 2, 2022, respectively. (See Pl.'s Status Report at 1-2, ECF No. 21; Pl.'s Mot. Amend Compl. (“Pl.'s Mot. Amend”) at 1-2, ECF No. 22; id. Attach. 1 at 1-10.)
In its status report, Defendant explained that “Coverage A - Dwelling” and “Coverage B - Other Structures” were “resolved by payment of policy limits prior to initiation of this lawsuit on April 21, 2022,” and that “Coverage D - Loss of Use,” which addresses additional living expenses, was “approved for a period of restoration of 12 months and a temporary home was leased for the insureds through March 1, 2023.” (Def.'s Status Report at 2.) As to the outstanding dispute regarding “Coverage C - Personal Property,” Defendant explained that Travelers Home recently issued another payment to Plaintiff and his husband, this payment “exhausted the policy limit available under Coverage C,” and therefore the claim under Coverage C “now will be closed.” (Id.)
Plaintiff's status report reflected that he disagreed with portions of Defendant's status report. For example, although he agreed that the parties “[s]ettled” any claim under Coverage B, Plaintiff asserted that (1) “$16,513.20 [remained] due for Code Upgrade” under Coverage A, (2) $14,397.72, the same amount as the check Cruz sent to Plaintiff's husband on February 22, 2022, remained due under Coverage C, and (3) “$17,000+” was “left until the limit of liability” under Coverage D and Plaintiff “will require [additional living expenses] until at least July 2023.” (Pl.'s Status Report at 1.) Plaintiff also asserted that he had “only been paid $111,372.16” of the “maximum limit of liability of $125,769.88” under Coverage C (i.e., Plaintiff personally received $14,397.72 less than the policy limit under Coverage C), the “payment of $14,397.72 [was] directly deposited into [his] husband's personal checking account without [his] knowledge or consent,” his husband is not a party to this lawsuit, and he is “not in a position to take a $14,397.72 loss” due to Travelers Home's failure to “put all named payees” on the check. (Id. at 1-2.)
In his motion for leave, Plaintiff explained that he wanted to “remove[] [his] request for punitive damages and instead add[] a new cause of action for fraudulent misrepresentation.” (Pl.'s Mot. Amend at 1.) In support, Plaintiff emphasized that Defendant's representatives informed him that his personal property items were unsalvageable and did not need to cleaned, provided his husband with “money to discard [the] unsalvageable items,” represented that they would use Plaintiff's “proof of loss to pay [his] Coverage C claim,” and refused to use his proof of loss and “instead made one of their own” after he “thr[ew] away most of [his] items.” (Id. at 1-2.)
On August 16, 2022, Defendant filed a combined response to Plaintiff's motion for leave to file a SAC and a cross-motion to dismiss and/or strike. (Def.'s Resp. Mot. Am. Compl. & Cross-Mot. Dismiss and/or Strike (“Def.'s Resp. & Cross-Mot.”) at 1-19, ECF No. 26.) Defendant moved to dismiss and/or strike the three claims Plaintiff alleged in the FAC and SAC, as well as Plaintiff's fraudulent misrepresentation claim (if the Court allowed the proposed amendment) and “[a]ll claims for punitive damages under any remaining theory of liability[.]” (Id. at 2-3.)
On September 2, 2022, the parties appeared for a case management conference before the Court. (ECF No. 29.) The Court stayed discovery and the dispositive motions deadline pending resolution of the pending motions and discussed the possibility of arranging a judicial settlement conference.
On September 13, 2022, before Defendant filed its reply in support of its cross-motion and in accordance with the Court and parties' previous discussions (see ECF No. 29), the Court entered a scheduling order setting a settlement conference for 9:00 a.m. on October 14, 2022, in Portland, Oregon, before U.S. Magistrate Judge Mustafa Kasubhai (“Judge Kasubhai”). (ECF No. 32.)
On October 14, 2022, Judge Kasubhai entered a minute order noting that Defendant's counsel appeared for the settlement conference but Plaintiff “failed to appear.” (ECF No. 36.) As a result, Judge Kasubhai removed the settlement conference from the district court's calendar. (Id.)
On October 27, 2022, this Court took the parties' pending motions under advisement. (ECF No. 37.)
DISCUSSION
There are three motions before the Court: (1) Defendant's initial motion to dismiss Plaintiff's original complaint or stay this proceeding pending the completion of its claim investigation, (2) Plaintiff's motion for leave to file a SAC, which adds a new claim for fraudulent misrepresentation, and (3) Defendant's cross-motion to dismiss and/or strike the claims Plaintiff alleged in the FAC, Plaintiff's new claim, and any remaining punitive damages claim.
I. DEFENDANT'S INITIAL MOTION
A. Threshold Matters
Before reaching the merits of Defendant's initial motion, the Court must address two threshold matters. First, during oral argument, Defendant agreed the Court should treat its initial motion to dismiss as a motion to strike paragraphs 5.4 and 5.5 of the FAC. Although Defendant's motion and papers did not invoke a specific rule, Defendant effectively agreed that the standard for striking a pleading under Rule 12(f) applies to its motion. The Court will therefore apply that standard.
Second, and relatedly, the Court notes that in his response, Plaintiff asks the Court to treat Defendant's initial motion as a motion for summary judgment with respect to some, but not all, of the issues implicated therein. (See Pl.'s Resp. at 2.) It would be inappropriate to do so, in large part because Plaintiff does not attest under penalty of perjury that the contents of his filings are true and correct. Cf. Wallace v. Naphcare Healthcare, No. 3:19-cv-05329, 2020 WL 7872043, at *3 (W.D. Wash. Nov. 9, 2020) (“Plaintiff's Complaint was not signed under penalty of perjury and thus, may not be treated as an affidavit to oppose summary judgment.”) (footnote omitted), report and recommendation adopted, 2021 WL 22579, at *1-2 (W.D. Wash. Jan. 4, 2021); see also Rainwater v. Alarcon, 268 Fed.Appx. 531, 534 (9th Cir. 2008) (“[W]here the plaintiff is pro se, the court ‘must consider as evidence in his opposition to summary judgment all of [the plaintiff's] contentions offered in motions and pleadings, where such contentions are based on personal knowledge and set forth facts that would be admissible in evidence, and where [the plaintiff] attested under penalty of perjury that the contents of the motions or pleadings are true and correct[.]'” (quoting Jones v. Blanas, 393 F.3d 918, 923 (9th Cir. 2004), overruled in part on other grounds by Peralta v. Dillard, 744 F.3d 1076, 1083 (9th Cir. 2014))); Thomas v. Ponder, 611 F.3d 1144, 1150 (9th Cir. 2010) (explaining that non-incarcerated self-represented litigants must strictly comply with the summary judgment rules, but district “courts should construe liberally motion papers and pleadings filed by pro se inmates and should avoid applying summary judgment rules strictly”).
B. Merits
1. Defendant's Motion to Stay
Defendant argues that the Court should stay “this premature litigation and permit the claim process to play out.” (Def.'s Initial Mot. at 3.) Defendant also argues that “[a]t a minimum,” the Court should “stay this action in its entirety” to facilitate the “completion of the claim investigation” and “allow the parties to perform their respective contractual duties under the Policy,” all of which Defendant believes would “likely narrow the scope” of this suit. (Id. at 8.)
During the hearing, the Court took Defendant's initial motion under advisement and explained that it was not going to grant or deny the motion, or stay the entire case, at that time. (Hr'g Tr. 44:12-45:2.) The Court did, however, instruct the parties to file status reports on or before August 19, 2022, and stayed discovery and Defendant's deadline to answer Plaintiff's FAC pending the Court's resolution of Defendant's initial motion. (Id. 44:14-45:10; ECF No. 16.) The Court added that it would “continue to consider the motion while discovery [was] stayed and await [the] status report[s] from the parties to determine how to move forward.” (Hr'g Tr. 45:8-10.)
As discussed above, the parties filed their status reports before the August 19, 2022 deadline, but Plaintiff also filed a motion for leave to file a SAC that adds a new claim for fraudulent misrepresentation, and Defendant filed a cross-motion to dismiss and/or strike, among other things, the claims Plaintiff alleged in the FAC and SAC, not just paragraphs 5.4 and 5.5 of the FAC. Thereafter, the Court held a Rule 16 conference, continued the stay of discovery, stayed the dispositive motions deadline pending resolution of the parties' motions, and arranged a settlement conference.
The relevant procedural history suggests that Defendant's request for a stay of the entire case in its initial motion is now moot. Defendant's initial request to stay the case was intended to facilitate the remaining investigation and allow the parties to perform their post-loss and Coverage C-related contractual duties. Defendant's status report reflects that the investigation is complete, the latest payment “exhausted the policy limit available under Coverage C,” and “[t]hat claim now will be closed.” (Def.'s Status Report at 2.) Defendant's status report also reflects that Travelers Home paid policy limits under Coverages A and B, and leased Plaintiff a temporary home through March 1, 2023, in accordance with Coverage D. (Id.) Although Plaintiff disagrees with some of Defendant's assertions, it does not appear that Defendant continues to require a stay of the case to complete any claim investigation or allow the parties to perform any post-loss or pre-payment duties.
Accordingly, the Court recommends that the district judge deny as moot Defendant's initial motion to the extent it seeks a stay of the entire case. See Schaefer v. Townsend, 215 F.3d 1031, 1033 (9th Cir. 2000) (explaining that a case or dispute is generally “rendered moot ‘when the issue[] presented [is] no longer ‘live'”) (citation omitted).
2. Defendant's Motion to Strike
Defendant moves to strike paragraphs 5.4 and 5.5 of Plaintiff's FAC, pursuant to Rule 12(f). As explained below, this portion of Defendant's initial motion is premature in part, and moot in part.
Rule 12(f) provides that a district court “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” FED. R. CIV. P. 12(f); see also In re Mortgs. Ltd., 771 F.3d 623, 630 (9th Cir. 2014) (explaining that “[a] court can only strike a statement in a pleading under Rule 12(f) if the statement is ‘(1) an insufficient defense; (2) redundant; (3) immaterial; (4) impertinent; or (5) scandalous'”) (citation omitted). Here, Defendant is effectively moving to strike disputed issues of fact and law in paragraphs 5.4 and 5.5 of the FAC.
In paragraphs 5.4 and 5.5, Plaintiff alleges that Defendant waived its right to deny his claim because it concluded its investigation and did not seek an extension of time to allow for additional investigation (paragraph 5.4), and that Defendant must demonstrate prejudice to relieve its obligation to pay a claim based on the claimant's failure to comply with policy requirements (paragraph 5.5).
Addressing the latter paragraph first, Plaintiff alleges in paragraph 5.5 that “[f]ailure to comply with policy provisions alone is not enough to relieve the insurer of their obligation to pay a claim they are otherwise liable for,” that “[p]er the policy, the failure to comply must be prejudicial to the insurer,” and that “[n]ot providing the insurer a duplicate copy of a document they already have on file [i.e., a Sworn Statement in Proof of Loss when Defendant already has Plaintiff's loss inventory spreadsheet] is not prejudicial,” nor is “denying a walkthrough request” when Defendant's “own actions . . . le[d] to the items [sought] not being there [for a walkthrough].” (FAC ¶ 5.5.) Defendant responds that these allegations address a “legal question” that the Oregon Court of Appeals “resolved” in Safeco Insurance Co. of Oregon v. Masood, 330 P.3d 61, 62-65 & n.3 (Or. Ct. App. 2014), namely, whether an “insured has a parallel, unconditional duty to cooperate [with an insurer's post-loss investigation], which includes providing [the insurer] with requested materials and information.” (See Def.'s Initial Mot. at 5-7, citing Masood, 330 P.3d at 63-64, and arguing that the Policy is unambiguous and enforceable in accordance with Masood).
In Masood, “[t]he trial court entered summary judgment for [the insurer], concluding that the terms of the policy required [the insured] to cooperate with [the insurer's] claim investigation and that [the insured] could not condition his cooperation on the negotiation of additional contractual terms.” 330 P.3d at 62. The Oregon Court of Appeals affirmed the trial court's decision. Id. In doing so, the Oregon Court of Appeals addressed the “legal question” of insurance contract interpretation, and found no ambiguity because the contract stated that “an insured ‘must,' as often as [the insurer] reasonably requires, ‘provide [the insurer] with records and documents [that the insurer] request[s],” i.e., the insurer “had an express contractual right to request information, and [the insured] had an express contractual duty to provide the requested information.” Id. at 64. Notably, the Oregon Court of Appeals did “not address whether an insured may refuse an insurer's information request that is unreasonable or unrelated to the claim of loss.” Id. at 64-65.
“When ruling on a motion to strike, the court must accept the nonmoving party's allegations as true and liberally construe the complaint in the light most favorable to the nonmoving party.” Hayes v. City of Portland, No. 3:18-cv-00988-AC, 2020 WL 1154762, at *3 (D. Or. Mar. 10, 2020) (citation omitted). Applying that standard here, the Court finds that Plaintiff's allegations suggest that he was entitled to refuse Defendant's requests because they were unreasonable under the circumstances. Masood did not address any allegations regarding the unreasonableness of the insurer's investigation and, therefore, does not support Defendant's position at this early stage of the litigation.
Furthermore, the Court notes that Defendant refers to the Policy's duties after loss provision as a “cooperation clause.” (Def.'s Reply at 3.) In Bailey v. Universal Underwriters Insurance Co., 474 P.2d 746, 755 (Or. 1970), the Oregon Supreme Court explained that noncooperation is often a defense that a defendant must plead and prove:
Some courts have held that a duties after loss provision is not a cooperation clause. See, e.g., Foster v. State Farm Fire & Cas. Co., 674 F.3d 663, 667 (7th Cir. 2012) (“The Indiana Supreme Court made it clear that a Your Duties After Loss provision is not a cooperation clause that requires only reasonable assistance with the investigation of a claim, but is an entirely separate condition that explicitly requires the policyholder to perform specific duties.”) (simplified).
[I]f there has been any doubt as to the position of this court on this question, we now expressly recognize the rule that in order for non-cooperation to provide a defense, whether by a named insured or by a person who becomes an insured under the terms of the insurance policy, the insurance company has the burden to plead and prove that it has suffered prejudice as a result.... Applying these rules to this case, it would appear that if defendant is entitled to urge the defense of non-cooperation . . . defendant was prejudiced, as a matter of law, unless defendant could and should have [taken an action upon learning certain facts].Id.; see alsoMasood, 330 P.3d at 62-63 (reflecting that the insurer filed a declaratory judgment action “seeking a declaration that [the insurer] was entitled to the requested information,” i.e., cooperation).
In Gerke v. Travelers Casualty Insurance Co. of America, 815 F.Supp.2d 1190, 1192-93 (D. Or. 2011), the district court explained that insurers may proceed in a different manner when they do not invoke a policy's duties after loss requirements, such as an examination under oath requirement (cf. Ryan Decl. Ex. B at 22), as a defense of coverage, as opposed to a prematurely filed suit:
Plaintiff has argued that the examination under oath (‘EUO') requirement is a condition of forfeiture[, not a condition precedent,] and that Travelers therefore must show prejudice in order to have this suit dismissed. Judge Acosta rejected that argument[, in part because unlike Bailey and similar cases, Travelers had not denied coverage], but plaintiff argues that the Supplement filed by Travelers negates Judge Acosta's analysis.... As the Supplement acknowledges,
this letter conflicts with statements made by counsel for Travelers at oral argument before Judge Acosta[.] . . . ....
However, I find that it does not affect the validity of the F & R. Judge Acosta concluded that plaintiff's failure to comply with the EUO requirements of Travelers' policies barred his lawsuit based on the express terms of the policies at issue. Judge Acosta reasoned that, unlike the cases relied on by plaintiff, Travelers' motion did not invoke a cooperation requirement as a defense to coverage, but instead sought to dismiss a premature suit. Judge Acosta's conclusion relies on (a) the fact that the policies at issue require [an insured] to submit to reasonable EUO requests before filing suit, and (b) Judge Acosta's conclusion that ‘substantial compliance' alone does not satisfy the pre-suit EUO requirement and, even if it could, [plaintiff] did not substantially comply. It does not rely on Travelers' representation that it never denied coverage on the merits. Put another way, for purposes of the motion for summary judgment, Travelers did not invoke the EUO requirements as a defense to coverage, just as a defense to this lawsuit at this time. Thus, for purposes of [Travelers's] motion for summary judgment, Judge Acosta correctly concluded that ‘[plaintiff's] failure to comply with these conditions does not bar his ability to bring suit to recover, but merely suspends his ability to bring suit until he has fully complied with those conditions.' . . .Id. (simplified).
The case before the Court appears most similar to Gerke, insofar as Defendant does not appear to invoke post-loss requirements as a defense to coverage, but instead invokes them to seek the dismissal or stay of a premature suit. The cases discussed above, however, suggest that the Court cannot grant such a motion at this stage and on this record. Masood does not resolve Plaintiff's allegation that he was entitled to refuse Defendant's requests because they were unreasonable under the circumstances. Further, Gerke and Bailey suggest that an insurer may need to plead (i.e., in its answer, declaratory judgment claim, or counterclaim) the grounds that allegedly justify dismissal or the insurer's entitlement to compliance.
Finally, Plaintiff alleges in paragraph 5.4 of the FAC that “Defendant has waived [its] right to deny [Plaintiff's] policy,” and that, as a matter of law, Defendant's investigation terminated at an earlier date. (FAC ¶ 5.4.) These allegations are moot because Defendant has not (and thus far does not appear to intend) to deny Plaintiff's insurance claims, and because Defendant appears to have completed the relevant investigation into Plaintiff's claims under Coverage C.
For all of these reasons, the Court recommends that the district judge deny Defendant's motion to strike paragraphs 5.4 and 5.5 of the FAC. See generally Garfias v. Portland Spray Works, Inc., No. 3:20-cv-00873-IM, 2021 WL 27456, at *2 (D. Or. Jan. 3, 2021) (explaining that “a Rule 12(f) motion is not the proper vehicle for a [party] to argue disputed issues of facts and law,” and that “where there is ‘a substantial question of fact or a mixed question of law and fact' or ‘even when the defense seems to present a purely legal question, federal courts are very reluctant to determine disputed or substantial issues of law on a motion to strike' as such questions are ‘best determined only after further development'” (citing Fathers & Daughters Nev., LLC v. Moaliitele, No. 3:16-cv-926-SI, 2016 WL 7638187, at *4 (D. Or. Dec. 19, 2016) and quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1381 (3d ed. 1998))); see also Martin v. City of Portland, No. 3:19-cv-1647-SI, 2020 WL 363391, at *2 (D. Or. Jan. 2, 2020) (noting that motions to strike are disfavored and infrequently granted) (simplified).
II. PLAINTIFF'S MOTION FOR LEAVE TO AMEND
A. Applicable Law
Rule 15(a) provides that “[t]he court should freely give leave when justice so requires,” FED. R. CIV. P. 15(a)(2), but “leave to amend is not to be granted automatically.” Jackson v.Bank of Haw., 902 F.2d 1385, 1387 (9th Cir. 1990). The Ninth Circuit “considers the following five factors to assess whether to grant leave to amend: ‘(1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) futility of amendment; and (5) whether plaintiff has previously amended his complaint.'” In re W. States Wholesale Nat. Gas Antitrust Litig., 715 F.3d 716, 738 (9th Cir. 2013) (quoting Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990)).
Futility alone can justify a district court's denial of leave to amend, and a district court's discretion to do so is “particularly broad where plaintiff has previously amended the complaint.” Kuklok v. U.S. Dep't of Veterans Affairs, No. 21-15105, 2022 WL 256361, at *1 (9th Cir. Jan. 26, 2022) (holding that the district court did not abuse its discretion in denying a self-represented plaintiff's motion for leave to file a fourth amended complaint because it would have been futile (quoting Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1072 (9th Cir. 2008))). However, the rule favoring liberality in amendments to pleadings is particularly important in cases involving self-represented litigants. See, e.g., Crowley v. Bannister, 734 F.3d 967, 977-78 (9th Cir. 2013) (addressing a district court's grant of summary judgment and denial of a selfre presented plaintiff's request for leave to amend his second amended complaint in order to address a curable deficiency, and noting that “[t]he rule favoring liberality in amendments to pleadings is particularly important for [a] pro se litigant,” as a “pro se litigant is far more prone to make errors in pleading than the person who benefits from the representation of counsel”) (simplified).
B. Analysis
Plaintiff moves for leave to file a SAC adding a claim for fraudulent misrepresentation. (Pl.'s Mot. Amend at 1-2; id. Attach. 1 at 1-10.) Defendant opposes Plaintiff's motion on three grounds. (Def.'s Resp. & Cross-Mot. at 1-2.) First, Defendant argues that the Court should deny Plaintiff's motion because he failed adequately to comply with the conferral requirement under Local Rule (“LR”) 7-1. (Id. at 1.) Second, Defendant argues that Plaintiff's motion is untimely. (Id.) Finally, Defendant argues that the Court should deny Plaintiff's motion “as futile, in whole or in part, because the proposed [SAC] fails to state claims upon which relief could be granted.” (Id. at 2.)
1. Conferral Requirement
LR 7-1(a) provides that “the first paragraph of every motion must contain a certification regarding attempts to meet and confer; otherwise, the court may deny the motion.” Ovitsky v.Oregon, 594 Fed.Appx. 431, 431 (9th Cir. 2015) (citation omitted). Specifically, the first paragraph of a party's motion must certify, among other things, that “the parties made a good faith effort through personal or telephone conferences to resolve the dispute and have been unable to do so.” LR 7-1(a)(1)(A). A court may deny a self-represented plaintiff's motion if he failed adequately to comply with this conferral requirement. See Ovitsky, 594 Fed.Appx. at 431 (holding that “[t]he district court did not abuse its discretion by denying [the self-represented plaintiff's] motion for leave to file a third amended complaint because [her] motion failed to comply with [LR 7-1(a)]”).
The first paragraph of Plaintiff's motion for leave to amend states that he “conferred with [Defendant's counsel] in regard[] to amending [his FAC] via email,” and that he discussed “at length” with Defendant's counsel the factual basis for his new claim for fraudulent misrepresentation. (Pl.'s Mot. Amend at 1.) Plaintiff added that Defendant's counsel stated that “he'd oppose the motion,” and therefore Plaintiff believed that “[a] phone call would have been futile.” (Id.)
Defendant argues that Plaintiff's certification demonstrates that he failed to comply with LR 7-1(a), as “no personal or phone conference took place.” (Def.'s Resp. & Cross-Mot. at 4.) Defendant also argues that Plaintiff is mischaracterizing his conferral efforts and Defendant's response thereto. (Id.) In doing so, Defendant relies on a conferral-related email exchange that Plaintiff initiated on July 5, 2022, and Defendant answered at an unspecified time before Plaintiff filed his motion for leave to amend on August 2, 2022. (See id., citing “July 5,” “ex. 101,” and “Ex. 101”).
The parties reference Exhibit 101, which does not appear to be part of the record before the Court. Plaintiff does not dispute the portions of the exchange Defendant quoted in support of its argument that Plaintiff failed adequately to confer, but he asserts that Defendant “exclud[ed] a key piece of the conference email to intentionally mislead the Court.” (See Def.'s Resp. & Cross-Mot. at 4, with Pl.'s Reply Supp. Mot. Amend & Resp. (“Pl.'s Reply & Resp.”) at 2-3, ECF No. 28.) In this portion of the exchange, Defendant purportedly advised Plaintiff that it did not “imagine that [its] position will change, but [it would be] happy to discuss it with [Plaintiff] so that [he could] satisfy [his] ¶ 7-1 obligation.” (Pl.'s Reply & Resp. at 2) (emphasis omitted).
Based on this record, the Court concludes that Plaintiff made a good faith attempt to comply with LR 7-1(a) and, therefore, does not recommend denial of Plaintiff's motion on this ground. The Court previously denied a motion when Plaintiff made no attempt to confer and noted the requirements of LR 7-1(a). (See ECF Nos. 24, 35, reflecting that Plaintiff received the Court's notice about conferral after filing his motion for leave). It is clear, however, that unlike his prior failure to confer, Plaintiff discussed the merits of his new claim (and others) with Defendant. (See Pl.'s Mot. Amend at 1; Def.'s Resp. & Cross-Mot. at 4; Pl.'s Reply & Resp. at 2-3; Pl.'s Mot. Sanctions at 1.)
Conferring by email alone does not satisfy LR 7-1(a)'s requirements. See Williamson v.Munsen Paving LLC, No. 09-cv-00736-AC, 2010 WL 1063575, at *3 (D. Or. Mar. 2, 2010) (“The court wishes to make clear that an exchange of emails, standing alone, does not satisfy [Local] Rule 7-1(a).”), findings and recommendation adopted, 2010 WL 1224232, at *1 (D. Or. Mar. 19, 2010). But self-represented plaintiffs are also “entitled to some latitude and leniency with procedural matters[.]” See Lloyd v. Fitzwater, No. 17-cv-05627, 2020 WL 10540933, at *3 (W.D. Wash. Apr. 15, 2020) (citations omitted), report and recommendation adopted, 2020 WL 5630507, at *1 (W.D. Wash. Sept. 18, 2020). Given Plaintiff's good faith effort to confer with Defendant and entitlement to some latitude and leniency with procedural matters, the district judge should not deny Plaintiff's motion for leave to amend based on his failure adequately to comply with LR 7-1(a). See Id. (preferring to address the merits and thus recommending that the district judge deny the defendant's request to strike a self-represented plaintiff's untimely response).
At a subsequent Rule 16 conference, Plaintiff explained to the Court why the telephonic conferral requirement created a barrier for him to access the court, and therefore the Court agreed to waive LR 7-1(a)'s requirement of conferral by telephone and allow conferral by electronic mail moving forward in this case. (See ECF No. 29.)
2. Timeliness
Defendant also argues that the Court should deny Plaintiff's motion for leave to amend because it is untimely and violates the Court's June 21, 2022 minute order, which temporarily stayed discovery and Defendant's deadline to answer the FAC pending the Court's resolution of Defendant's initial motion to dismiss or stay. (Def.'s Resp. & Cross-Mot. at 5, citing ECF No. 16.)
Defendant acknowledges that the Court's limited stay “did not expressly prohibit [P]laintiff from filing a motion to amend[.]” (Def.'s Resp. & Cross-Mot. at 5.) Defendant, however, argues that because the stay “granted [Defendant] relief from its obligation to file a responsive pleading,” Plaintiff's filing of a motion to amend “forc[ed] a Hobson's choice upon [D]efendant,” in that it could either (1) “respond substantively to the motion/proposed [SAC], essentially waiving the protection of the stay,” or (2) “rely on the stay and risk waiver of defenses.” (Id.)
The Court stayed Defendant's deadline to answer the FAC pending resolution of Defendant's initial motion to dismiss, in part as a response to Plaintiff's question regarding whether Defendant was required to answer the unchallenged paragraphs of his FAC prior to the Court's resolution of the motion to dismiss. (See Hr'g Tr. 46:11-47:4, reflecting that the Court addressed Plaintiff's question about whether a moving defendant must answer the unchallenged portion of a pleading); cf.El v. San Diego Unified Sch. Dist., No. 21-55805, 2022 WL 1714284, at *1 (9th Cir. May 27, 2022) (addressing a party's “incorrect belief that a defendant is required to file an answer prior to the resolution of a [Rule 12] motion,” and noting that “a responsive pleading is not required until after a [Rule 12] motion . . . has been denied” (citing FED. R. CIV. P. 12(a)(4))), petition for cert. docketed, No. 22-5322 (U.S. Aug. 9, 2022).
By staying Defendant's deadline to respond to the FAC, the Court did not intend to prohibit Plaintiff from seeking leave to amend the FAC, and therefore the district judge should not deny Plaintiff's motion for leave to amend as untimely.
3. Futility
Defendant also opposes Plaintiff's motion for leave to file a SAC on futility grounds, and cross-moves to dismiss and/or strike. (Def.'s Resp. & Cross-Mot. at 1-19.) Specifically, Defendant moves to dismiss and/or strike the three claims Plaintiff alleged in both the FAC and SAC, as well as Plaintiff's fraudulent misrepresentation claim (if the Court allows Plaintiff to file the SAC), and “[a]ll claims for punitive damages under any remaining theory of liability[.]” (Id. at 2-3.)
Recognizing the rule that encourages liberality in allowing self-represented litigants to amend pleadings and that the timing of Plaintiff's pleadings in this case has resulted in a unique procedural posture, for several reasons the Court recommends that the district judge grant Plaintiff's motion for leave to file the SAC and address Defendant's pleading challenges by evaluating its cross-motion to dismiss. See generally Ewert v. eBay, Inc., 602 Fed.Appx. 357, 35960 (9th Cir. 2015) (“A court may deny leave to amend due to futility or legal insufficiency if the amendment would fail a motion to dismiss under Rule 12(b)(6).” (citing Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1998), overruled on other grounds by Ashcroft v. Iqbal, 556 U.S. 662 (2009)).
First, Defendant's only remaining objection to allowing Plaintiff to file his SAC is on futility grounds, which is “essentially failure to state a claim.” Thomas v. Dart, 39 F.4th 835, 841 (7th Cir. 2022). As discussed below, with the exception of Plaintiff's re-pleaded breach of contract claim, Plaintiff's proposed amendments are not futile. Second, Defendant addresses the SAC's alleged pleading deficiencies in its cross-motion to dismiss and reply, which are the same pleading deficiencies Defendant raises in its futility argument. (See Def.'s Resp. & Cross-Mot. at 2 n.1-3; id. at 10, 14-15; Def.'s Reply Supp. Cross-Mot. Dismiss (“Def.'s Second Reply”) at 3-4, 6-7, ECF No. 33.) Finally, the interests of efficiency and clarity support granting Plaintiff leave to file his SAC and then addressing all of Defendant's pleading challenges, including the insufficient challenges to the only new claim in the SAC (see infra Part III.C.4.), via its crossmotion to dismiss.
For these reasons, the Court recommends that the district judge grant Plaintiff's motion for leave to amend, and evaluate Defendant's cross-motion as a motion to dismiss the SAC under Rule 12(b)(6) .
III. DEFENDANT'S CROSS-MOTION TO DISMISS
A. Applicable Law
To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a plaintiff's “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A plaintiff's “claim has facial plausibility 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. (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Mashiri v. Epsten Grinnell & Howell, 845 F.3d 984, 988 (9th Cir. 2017) (simplified).
B. Analysis
Defendant moves to dismiss Plaintiff's SAC on the grounds that (1) he fails to state plausible claims for negligence per se, breach of contract, intentional infliction of emotional distress (“IIED”), and fraudulent misrepresentation, and (2) punitive damages are not recoverable under any of Plaintiff's claims. (See Def.'s Resp. & Cross Mot. at 10-11, 14, 17-18, arguing that punitive damages are “not recoverable” under Plaintiff's claims and that Plaintiff “fail[s] to state a cognizable” negligence per se claim, “states no claim for breach of contract,” “states no claim for IIED upon which relief could be granted,” and asserts a futile and “legally insufficient” fraudulent misrepresentation claim, which the Court should “dismiss[] if asserted”).
1. Negligence Per se
To state a claim for negligence per se, a plaintiff must plausibly allege that “(1) [the] defendants violated a statute; (2) [the] plaintiff was injured as a result of that violation; (3) [the] plaintiff was a member of the class of persons meant to be protected by the statute; and (4) the injury [the] plaintiff suffered is of a type that the statute was enacted to prevent.” Buoy v. Soo Hee Kim, 221 P.3d 771, 779 (Or. Ct. App. 2009) (simplified). As explained below, Plaintiff has stated a claim for negligence per se.
Plaintiff bases his negligence per se claim on Defendant's “various violations” of Oregon Revised Statutes (“ORS”) § 746.230. (See SAC ¶¶ 3.1-.12.) This statute addresses an insurer's unfair claim settlement practices, see ORS § 746.230(1), including, as alleged here:
(c) Failing to adopt and implement reasonable standards for the prompt investigation of claims;
....
(e) Failing to affirm or deny coverage of claims within a reasonable time after completed proof of loss statements have been submitted;
(f) Not attempting, in good faith, to promptly and equitably settle claims in which liability has become reasonably clear;
(g) Compelling claimants to initiate litigation to recover amounts due by offering substantially less than amounts ultimately recovered in actions brought by such claimants;
....
(k) Delaying investigation or payment of claims by requiring a claimant or the claimant's physician, naturopathic physician, physician assistant or nurse practitioner to submit a preliminary claim report and then requiring subsequent submission of loss forms when both require essentially the same information.Id.; see also SAC ¶¶ 3.1-.12 (alleging that Defendant committed the unfair claim settlement practices described above).
Defendant argues that the Court should dismiss Plaintiff's negligence per se claim as a matter of law. (Def.'s Resp. & Cross-Mot. at 10.) However, Defendant acknowledges that in Moody v. Oregon Community Credit Union, 505 P.3d 1047, 1052-53 (Or. Ct. App.), rev. allowed, 512 P.3d 446 (Or. 2022), the Oregon Court of Appeals recently “permitted an insured to avoid Oregon's long-standing prohibition on tort liability in a first-party insurance claim for life insurance benefits by recasting the allegations in terms of ‘negligence per se.'” (Def.'s Resp. & Cross-Mot. at 6, quoting Moody, 505 P.3d at 1052.) Defendant argues that the Court is “obligated to follow binding precedent from the Oregon Supreme Court, which has not recognized the novel theory asserted in Moody, . . . [or] expanded the ruling to include the handling of property damages claims.” (See id. & n.8, citing Strader v. Grange Mut. Ins. Co., 39 P.3d 903, 906-07 (Or. Ct. App. 2022), as the Oregon Court of Appeals' “last word” on property damage claims).
The Court begins by noting that the Ninth Circuit and judges from this district have previously made similar observations regarding Oregon's handling of tort liability in first-party insurance claims. For example, the district judge assigned to this case previously declined to expand tort remedies against insurers, as a plaintiff had requested:
Oregon courts have repeatedly held that an insured may not bring a tort claim against its insurer except under narrow circumstances, which are not present in this case. Although the Court does not agree with the parties that Oregon law is clear on these issues, the Oregon Supreme Court has not been expansive in providing tort remedies to first party insureds and has repeatedly focused on contract remedies as providing the appropriate claim. Allowing a negligence per se claim for alleged violations of ORS § 746.230 is not materially different from allowing a direct statutory tort claim, which is expressly precluded. Thus, it would be an expansion of Oregon law. Without better guidance from the Oregon appellate courts, the Court declines to expand tort remedies against insurers as Plaintiff requests in this case....
Moreover, as explained by the Ninth Circuit in an unpublished decision, Oregon's highest and intermediate courts . . . have allowed a negligence per se claim only where a negligence claim otherwise exists. [In Braun-Salinas, the Ninth Circuit explained that] [b]ecause the [i]nsureds cannot bring a negligence claim under a statutory or common law theory, they are also precluded from bringing a hybrid negligence per se claim.
. . . In this case, Plaintiff cannot bring a traditional negligence claim against her insurer. Thus, Plaintiff may not bring a claim of negligence per se.
. . . [Ultimately,] this federal court is tasked with evaluating what it believes the Oregon Supreme Court would most likely decide. After considering the body of Oregon case law, the Court does not believe Oregon would allow an insured to bring a negligence per se claim against its insurer for an alleged violation of ORS § 746.230 under the facts of this case. Thus, Defendant's motion to dismiss this claim is granted and Plaintiff's motion to amend is denied.Foraker v. USAA Cas. Ins. Co., No. 3:14-cv-00087-SI, 2017 WL 3184716, at *7 (D. Or. July 26, 2017) (quoting Braun-Salinas v. Am. Fam. Ins. Grp., 665 Fed.Appx. 576, 577-78 (9th Cir. 2016) and Deckard v. Bunch, 370 P.3d 478, 483 n.6 (Or. 2016))); see also Great N. Ins. Co. v. Crown Piper Timber 4, L.P., No. 3:18-cv-2104-YY, 2021 WL 38187, at *15 (D. Or. Jan. 5, 2021) (noting that the Foraker court “held that an insured could not assert a negligence per se claim against its first-party insurer premised on Oregon statutes prohibiting unfair claims settlement practices (except in limited circumstances not present there),” and “Foraker specifically acknowledged Abraham's holding outside of the first-party insurance context-that ‘there is no requirement that the violated statute (or rule) provide for a private cause of action to remedy its breach'”) (citation omitted).
The Ninth Circuit and district court decisions referenced above predated the Moody opinion. In Moody, the plaintiff-widow filed breach of contract and negligence per se claims against her husband's life insurance provider. 505 P.3d at 1050-51. The relevant life insurance policy “provided that, if [the plaintiff's husband] suffered an accidental loss of life, [the insurer] would pay the benefit amount to [the] plaintiff.” Id. at 1050. The plaintiff's negligence per se claim was based on the insurer's “failure to conduct a reasonable investigation of [her husband's] death and its failure, in good faith, to settle her claim-all in breach of ORS 746.230(1).” Id. at 1050. The trial court dismissed the negligence per se claim, and the Oregon Court of Appeals reversed. Id.
The Oregon Court of Appeals addressed the issue of “when a party to a contract may sue another party to the same contract for negligence.” Id. at 1051. The Oregon Court explained that although “generally a party to a contract may not bring a tort claim against another party to the contract, an exception applies when the tort claim is predicated on a violation of a standard of care that exists independent of the contract.” Id. at 1051 (citing Abraham v. T. Henry Constr., Inc., 572, 217 P.3d 212 (Or. Ct. App. 2009) (Abraham I), aff'd on other grounds, 249 P.3d 534, 538-41 (Or. 2011) (Abraham II)). The Oregon Court of Appeals cited Abraham I as illustrative of this point. Id.
In Abraham I, a case involving a contract between homeowners and builders and a construction defect, the Oregon Court of Appeals held that a plaintiff could base a negligence claim on the defendants' violation of the “independent standard of care” under the Oregon Building Code. Id. at 1051-52. Consistent with and pursuant to Abraham I, the Oregon Court of Appeals in Moody held that ORS § 746.230(1) “provide[d] the basis for [the] plaintiff's negligence per se claim.” Id. at 1052-53. The Oregon Court of Appeals also provided several reasons why it rejected the insurer's argument that such a negligence per se claim failed as a matter of law. Id. at 1053-57. This portion of the decision addressed most of the cases discussed in Foraker and Braun-Salinas. See Id.
Defendant argues that the Court “should not attempt to predict the result of the Moody appeal, or assume that the Oregon Supreme Court will change controlling law, and then apply [this Court's] notion of what the new state law might be.” (Def.'s Resp. & Cross-Mot. at 7.) However, Defendant also acknowledges (see id.) that this Court must follow a state appellate decision unless there is “convincing evidence” that the Oregon Supreme Court, which allowed review in Moody, would decide differently. See Bliss Sequoia Ins. & Risk Advisors, Inc. v. Allied Prop. & Cas. Ins., 52 F.4th 417, 419 (9th Cir. 2022) (“[W]e are obligated to follow the decisions of the state's intermediate appellate courts unless there is convincing evidence that the state supreme court would decide differently.”) (simplified). Defendant suggests that the Court should not follow Moody because the Oregon Supreme Court's decision in Farris v. U.S. Fidelity &Guaranty Co., 587 P.2d 1015 (Or. 1978), a case that is “irreconcilable” with and “must prevail over the contrary analysis” in Moody, is “convincing evidence” that the Oregon Supreme Court would decide differently. (See Def.'s Resp. & Cross-Mot. at 7, 9-10, citing Farris as “such evidence” and adding that it goes “without saying that the Court of Appeals cannot overrule Farris”).
Notably, the Oregon Court of Appeals' decision in Moody addresses the Farris decision at length. See Moody, 505 P.3d at 1054-57. The Court of Appeals explained, among other things, that Farris never “even mentioned” the relevant issue of whether ORS § 746.230(1) “provides a standard of care for purposes of a claim for negligence per se,” that the defendant erred in “assuming that a decision concerning whether an enactment creates statutory liability is dispositive of whether the same statute may supply a standard of care in a negligence per se case,” and that Farris was “not relevant” because “[w]hether the legislature intended its enactment of a law to create direct statutory liability does not preclude courts from determining that it is appropriate to treat the enactment as a standard of care for purposes of stating a claim for negligence per se.” Id. at 1055.
The Oregon Court of Appeals in Moody also addressed Defendant's argument that a negligence claim must “otherwise exist[]” for a plaintiff to be able to bring a claim for negligence per se. See Id. at 1054. Defendant emphasizes that Oregon law “does not recognize negligence per se as an independent claim,” and Oregon courts have recognized that negligence per se is “available only ‘when a negligence claim otherwise exists.'” (Def.'s Resp. & Cross-Mot. at 9, quoting Deckard, 370 P.3d at 483 n.6.) Such a claim otherwise exists if, for example, an insurer assumes a contractual relationship to defend an insured. See Moody, 505 P.3d at 1051 (explaining that if a party to a contract is injured and “seeks to maintain a tort claim, such a claim must be based on the breach of a standard of care independent of the contract,” as is the case when an insurer “assume[s] a contractual relationship to defend an insured . . . and, as a result, [is] subject to tort liability for a violation of the standard of care that applies to that particular relationship”) (citation omitted).
The Oregon Court of Appeals in Moody, however, held that such a claim also exists in the first-party insurance context, and in doing so, rejected the defendant's reliance on Deckard and the notion that only a special relationship may create an independent standard of care for purposes of stating a negligence per se claim:
[D]efendant argues that plaintiff errs in relying on Abraham I for the proposition that the violation of a statute may support a claim for negligence per se.... [N]othing in the [Oregon] Supreme Court's decision [in Abraham II] suggests that our decision in Abraham I was incorrect. [Abraham II] decided that it did not need to address that question. Defendant cites no authority for the proposition that, when the [Oregon] Supreme Court affirms a decision of ours on a different ground, our opinion loses any precedential value, and we are aware of none. We reject defendant's argument without further discussion. ....
Based on that footnote [in Deckard], defendant [also] argues that the [Oregon] Supreme Court requires that, to state a claim for negligence, a commonlaw claim must ‘otherwise exist.' In our view, defendant reads more into the footnote than a fair reading will bear. All the court said in Deckard was that, if all the other elements of a negligence claim otherwise exist, a statute or rule may supply the standard of care for a negligence per se claim. When pressed at oral argument, defendant could not cite a single appellate court decision holding that an independently alleged common-law negligence claim is a necessary precondition for alleging a negligence per se claim. We reject that argument as well.Id. at 1053-54. In light of the Oregon Court of Appeals' Moody opinion, the Court finds unpersuasive Defendant's argument that Plaintiff's negligence per se claim fails as a matter of law, and its suggestion that ORS § 746.230(1) cannot provide the basis for such a claim.
Finally, the Court addresses one arguably relevant Oregon case that the Oregon Court of Appeals did not address in Moody. In Braun-Salinas, the Ninth Circuit rejected the insureds' reliance on Abraham I as an example of a case “recogniz[ing] negligence per se claims based on statutes outside the insurance context,” noting that “[i]n the insurance context, . . . Oregon courts have declined to recognize a claim based on failure to pay first-party insurance benefits under . . . [a] common law negligence theory.” 665 Fed.Appx. at 578 (citing, inter alia, Strader, 39 P.3d at 906-07 (addressing a common law theory)). The Oregon Court of Appeals did not address Strader in Moody. See Moody, 505 P.3d at 1050-57. However, importantly, Strader did not address the question that Moody addressed, i.e., whether in the insurance context, ORS § 746.230(1) can provide the standard of care for a negligence per se claim. Compare Strader, 39 P.3d at 904-07 (observing that the “allegedly tortious conduct that plaintiffs identify as the cause of the personal injury-underpayment and nonpayment-are precisely the same conduct that they identify as the breach of contract,” not alleged violations of ORS § 746.230(1)), with Moody, 505 P.3d at 1057 (explaining that a “number of the provisions of ORS 746.230 . . . are directed at unfair claim settlement practices that implicate not only adverse economic consequences to the policyholder but also the stresses of dealing with insurance company bad faith and delaying tactics”). Thus, Strader does not change the Court's analysis here.
For these reasons, the Court recommends that the district judge deny Defendant's crossmotion to dismiss Plaintiff's negligence per se claim. See Bryant v. Allstate Indem. Co., No. 3:22-cv-00201-YY, __ F.Supp.3d __, 2022 WL 1910128, at *2 (D. Or. June 3, 2022) (stating that “Moody clearly stands for the proposition that a plaintiff can bring a negligence per se claim pursuant to O.R.S. § 746.230(1), in addition to a breach of contract claim, against an insurance company”). If the Oregon Supreme Court reverses Moody on appeal, Defendant may renew its challenge.
2. Breach of Contract
Defendant moves to dismiss Plaintiff's breach of contract claim on the ground that he “states no claim for breach of contract upon which relief could be granted.” (Def.'s Resp. & Cross-Mot. at 10-11.) As explained below, the Court agrees that Plaintiff's breach of contract theory fails.
Plaintiff alleges that the policy limit under Coverage C was $125,769.88 and Defendant “materially breached the contract by not fully indemnifying [him] for Coverage C.” (SAC ¶¶ 2.6, 2.8.) In support, Plaintiff alleges that Defendant has “not listed him as a payee on payments that total $125,769.88.” (Id. ¶ 2.7.)
As Defendant notes and Plaintiff does not dispute (see Def.'s Resp. & Cross-Mot. at 1011; Pl.'s Reply & Resp. at 10), Plaintiff's status report reflects that Defendant paid Plaintiff and his husband (both of whom are named insureds) a total of $125,769.88 under Coverage C. (See Pl.'s Status Report at 1-2, ECF No. 21, referring to $125,769.88 as the “maximum limit of liability” under Coverage C and acknowledging that Defendant deposited a payment of $14,397.72 into Plaintiff's husband's personal checking account, but nevertheless referring to $14,397.72 as the only outstanding amount under Coverage C and a “loss” Plaintiff was “not in a position to take” given that Defendant paid Plaintiff's husband “without [Plaintiff's] knowledge or consent”; see also Ryan Decl. Ex. B at 1, listing both Jeffrey and Vincent Butters as named insureds). In other words, Plaintiff acknowledges in his status report that Defendant paid the policy limits under Coverage C.
Further, Plaintiff does not identify any contractual provision requiring that Defendant make payments only to Plaintiff, as opposed to either named insured or the insured with the necessary banking information on file with Defendant. Absent such a provision and allegation, Plaintiff has not alleged a plausible breach of contract. Accordingly, the Court recommends that the district judge grant Defendant's motion to dismiss Plaintiff's breach of contract claim.
3. IIED
Defendant argues that Plaintiff fails to state an IIED claim. (Def.'s Resp. & Cross-Mot. at 11-14.) The Court disagrees.
To state an IIED claim, a plaintiff must allege facts demonstrating that the defendant: “(1) intentionally caused, i.e., intended to cause or knew with substantial certainty that his conduct would cause, severe emotional distress; (2) engaged in outrageous conduct, i.e., conduct that was an extraordinary transgression of the bounds of socially tolerable behavior; and (3) caused the plaintiff severe emotional distress.” Vineyard v. Soto, No. 10-cv-01481-SI, 2011 WL 5358659, at *8 (D. Or. Nov. 7, 2011) (citing Checkley v. Boyd, 14 P.3d 81, 85-86 (Or. Ct. App. 2000)).
In seeking dismissal of Plaintiff's IIED claim, Defendant emphasizes that Plaintiff “admits” certain facts that “undermine his claim,” and even when drawing all inferences in Plaintiff's favor, as the Court must, Plaintiff fails plausibly to allege that Defendant's conduct transgressed socially tolerable bounds. (Def.'s Resp. & Cross-Mot. at 11-12.) While noting that the relevant allegations from Plaintiff's SAC are set forth in paragraphs 4.1 through 4.8 (see Id. at 2 n.3; Def.'s Second Reply at 6), Defendant argues that Plaintiff alleges in his IIED claim nothing more than a wrongful denial claim, a typical disagreement about insurance coverage, and/or a dispute over value, which is insufficient to state an IIED claim under Oregon law. (See id.; Def.'s Resp. & Cross-Mot. at 11-14.)
Despite acknowledging the relevant allegations in the SAC, Defendant fails to address Plaintiff's claims that Defendant “baselessly investigated” him and that Defendant “stall[ed] [his] much-needed insurance payment,” ran “an unwarranted fraud investigation,” and sent his “claim to SIU,” which the Court infers to mean a special investigations unit. (SAC ¶ 4.2.) As the district judge assigned to this case has observed, “the issue of whether conduct transgresses socially tolerable bounds becomes a question for the jury if a court determines that reasonable minds could differ.” Conroy v. Mewshaw, No. 3:21-cv-00298-SB, 2022 WL 2981453, at *4 (D. Or. July 28, 2022).
Plaintiff alleges that he disposed of his unsalvageable personal contents based on Defendant's misrepresentations, and that Defendant then initiated an unwarranted fraud and SIU investigation based, in part, on actions Defendant caused him to take. Plaintiff also alleges that Defendant intentionally stalled the processing of his claim and forced him to litigate as part of its unfair settlement practices. Accepting all of Plaintiff's allegations as true, reasonable minds could differ on whether the alleged conduct transgresses socially tolerable bounds. See Id. at *6 (“[U]nder Oregon law, an IIED claim must be dismissed if no reasonable juror could conclude that the alleged conduct transgresses socially tolerable bounds. If the Court determines that reasonable minds could differ on whether the alleged conduct transgresses socially tolerable bounds, then that question becomes a matter for the jury.”); see also Yoakam v. State Farm Fire& Cas. Co., No. 6:15-cv-00478-AA, 2017 WL 132845, at *2 (D. Or. Jan. 11, 2017) (noting that an Oregon court has “allow[ed] [a] tort claim where [the] defendant insurance company falsely accused the insured plaintiffs of arson, threatened and intimidated [the] plaintiffs, and falsely told third parties that [a] plaintiff was an arsonist, burglar, and rapist” (citing Thompson v. Allied Mut. Ins. Co., No. 99-cv-01076-AS, 2000 WL 264318, at *1 (D. Or. Mar. 3, 2000))).
Accordingly, the Court recommends that the district judge deny Defendant's motion to dismiss Plaintiff's IIED claim. See Mancuso v. Am. Family Mut. Ins. Co., No. 07-cv-00835-ST, 2009 WL 130259, at *5-7 (D. Or. Jan. 16, 2009) (stating that courts have found “deceitful conduct by the insurance company to constitute outrageous conduct” but that “an insurance company had not committed outrageous conduct where its agents lied about the existence of evidence with the ‘nefarious purpose of putting financial pressure on [the plaintiff] to accept a lowball settlement offer,'” and noting that the insurer “did not, through deceit, induce [the insurer] to take any actions which prejudiced his otherwise valid claim or attempt, through excessive delay or harassment, to get him in such an emotional state that he would readily settle his otherwise meritorious claim,” and “[w]hile accusing an insured of fraud and concealment is a serious charge, there [was] no evidence that [the insurer] ha[d] taken this position in anything but good faith or with the intent to coerce [the insurer] to compromise or abandon his claim” (citing Green v. State Farm Fire & Cas. Co., 667 F.2d 22 (9th Cir. 1982) and quoting Pittman v. Travelers Indemn. Co., No. 06-cv-00147-ST, 2006 WL 1643655, at *7 (D. Or. June 7, 2006), aff'd, 286 Fed.Appx. 449 (9th Cir. 2008))); see also Williams v. Integon Nat'l Ins. Corp., 191 F.Supp.3d 1126, 1133 (S.D. Cal. 2016) (applying California law, denying a motion to dismiss an IIED claim, and explaining that the insured alleged that the insurer “accused him of fraud as a pretext for denying the claim and in an effort to cause him to abandon his claim” and “if true, such conduct certainly would exceed all bounds of decency and could be regarded as atrocious”); Hackler v. State Farm Mut. Auto. Ins. Co., 210 F.Supp.3d 1250, 1256-57 (D. Nev. 2016) (applying Nevada law and finding that disputed factual issues precluded summary judgment on an IIED claim, which was based largely on the insurer “sitting on [an uninsured motorist] claim for an extended period,” “ignor[ing] letters, requir[ing] [the insured] to complete duplicative forms, and delay[ing] its investigation”).
4. Fraudulent Misrepresentation
Defendant also argues that the Court should dismiss Plaintiff's fraudulent misrepresentation claim. (Def.'s Resp. & Cross-Mot. at 14-17.)
For claims sounding in fraud, such as a claim for fraudulent misrepresentation, Rule 9(b)'s heightened pleading requirement applies. See Svenhard's Swedish Bakery v. U.S. Bakery, No. 3:20-cv-1454-SI, 2022 WL 2341731, at *9 (D. Or. June 29, 2022) (citing Ramirez v.Medtronic Inc., 961 F.Supp.2d 977, 984 (D. Ariz. 2013)). As a result, a plaintiff “must state the content of the allegedly false statements and the time and place of the false representations as well as the identities of the parties to the misrepresentation.” Id. (simplified). In other words, “[t]o satisfy Rule 9(b), a pleading must identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about [the purportedly fraudulent] statement, and why it is false.” Id. (quoting Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011)).
Plaintiff alleges that in February 2022, Defendant represented that it would use Plaintiff's spreadsheet for payment of his property damage claim under Coverage C and “none of the contents in [his] home . . . needed to be cleaned and almost nothing was salvageable,” although Defendant did “provide[] instructions to try to salvage artwork and jewelry.” (SAC ¶ 5.2.) Plaintiff further alleges that in the months that followed, and contrary to Defendant's initial representations, Defendant did not use his spreadsheet, “undervalued [his] property,” and attempted to investigate his claims and contents, including whether they could be cleaned or salvaged, even though it knew that he had relied on its representations and “disposed of most all [his] contents.” (id. ¶¶ 5.3-.14.)
Defendant argues that the allegations in Plaintiff's SAC suggest that “[a]t most,” Defendant's representations “induced [Plaintiff] into throwing away some items of personal property (which were destroyed and for which full value was sought in benefits [and ultimately paid]).” (Def.'s Second Reply at 7.) Defendant argues that Plaintiff fails to state a fraudulent misrepresentation claim, as “[t]here is no allegation of a knowingly false statement, an intent not to perform, fraud, a failure to perform, or harm arising from the alleged representations.” (id.) The Court disagrees.
Plaintiff alleges that Defendant's claims adjuster “wrote a check intended for throwing away items the same day she told [Plaintiff that] none of the items needed to be cleaned,” and despite doing only “a virtual walkthrough,” not a “thorough in person evaluation[.]” (SAC ¶ 5.5.) Plaintiff also alleges that the adjuster “waited until [he] turned in [his] contents inventory and then acknowledged that she knew [he] had thrown items away,” and requested that he “make a new contents inventory . . . knowing [he had] disposed of most all [his] contents.” (id.) Plaintiff also incorporates his claims that Defendant “baselessly investigated” him and that Defendant “stall[ed] [his] much-needed insurance payment,” ran “an unwarranted fraud investigation,” and sent his “claim to SIU.” (SAC ¶¶ 4.2, 5.1.) As to damages, Plaintiff alleges that he has suffered, among other things, non-economic damages due to Defendant's actions and the “emotionally draining” events that ensued. (id. ¶ 5.12.)
At this stage, the Court must accept as true Plaintiff's well-pleaded factual allegations. The record before the Court does not appear complete, but does not necessarily belie Plaintiff's claims, as Defendant suggests. Defendant emphasizes that “[c]onducting an investigation by requesting information and an inspection does not constitute a breach of the promise to pay.” (Def.'s Resp. & Cross-Mot. at 15.) Defendant also refers to Plaintiff's eventual receipt of full payment under Coverage C as “[p]erhaps” his fraudulent misrepresentation's claim's “greatest shortcoming.” (id. at 17.)
Plaintiff's allegations, however, suggest that the claims adjuster may have made promises related to content disposal and payment with reckless disregard as to whether Defendant could or could not perform. See Glob. Exec. Mgmt. Sols., Inc. v. Int'l Bus. Machs. Corp., 260 F.Supp.3d 1345, 1383-84 (D. Or. 2017) (“Plaintiff may establish fraud by showing that ‘at the time of the making of the promise, there was no present intention of performance or, alternatively, that the promise was made with reckless disregard as to whether the promisor could or could not perform'”) (citation omitted). Plaintiff's allegations also suggest that Defendant's alleged misrepresentations resulted in unwarranted and baseless fraud and SIU investigations, and caused him non-economic damages. Defendant fails adequately to address all of Plaintiff's factual allegations, or his claims for non-economic damages that stem from the claims adjuster's initial representations. See generally Staley v. Taylor, 994 P.2d 1220, 1225-26 (Or. Ct. App. 2000) (explaining that “there are four categories of cases in which a plaintiff may recover damages for emotional distress in the absence of physical injury,” but expressing “no opinion” as to whether the plaintiff “would otherwise be able to recover emotional distress damages” because “there was no evidence from which the jury reasonably could determine the emotional distress damages that defendants' fraud caused”).
For these reasons, the Court recommends that the district judge deny Defendant's motion to dismiss Plaintiff's fraudulent misrepresentation claim.
5. Punitive Damages
Finally, Defendant argues that it is entitled to dismissal of Plaintiff's claims for punitive damages because such damages are “not recoverable under any theory” Plaintiff asserts. (Def.'s Resp. & Cross-Mot. at 17.)
“The Oregon Supreme Court has held that punitive damages are ‘a penalty for conduct that is culpable by reason of motive, intent, or extraordinary disregard of or indifference to known or highly probable risks to others.'” Ibanez v. Bettazza, No. 3:11-cv-01518-SI, 2013 WL 1295219, at *3 (D. Or. Mar. 28, 2013) (quoting Andor by Affatigato v. United Air Lines, Inc., 739 P.2d 18 (Or. 1987)). “To award punitive damages, a defendant's ‘degree of culpability' must be ‘greater than inattention or simple negligence.'” Id. (quoting Badger v. Paulson Inv. Co., Inc., 803 P.2d 1178, 1186 (Or. 1991)).
Oregon statutory law “provides that punitive damages ‘are not recoverable in a civil action unless it is proven by clear and convincing evidence that the party against whom punitive damages are sought has acted with malice or has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with a conscious indifference to the health, safety and welfare of others.'” Id. (quoting ORS § 31.730(1)). Consequently, “where ‘the evidentiary record supports findings of both negligence and the additional factors of aggravated misconduct requisite for award of punitive damages, a punitive damages award may lie in connection with a negligence claim.'” Id. (quoting Jane Doe 130 v. Archdiocese of Portland inOr., 717 F.Supp.2d 1120, 1140 (D. Or. 2010)).
Plaintiff stated in his motion for leave to amend that he “removed the request for punitive damages and instead added a new cause of action for fraudulent misrepresentation.” (Pl.'s Mot. Amend at 1.) However, it appears that Plaintiff intended only to remove his request for punitive damages with respect to his breach of contract claim. (See id., citing Plaintiff's understanding of “a punitive damage award in cases of breach of contract” as the basis for removing a request for punitive damages; compare FAC ¶¶ 7.1-.7, with SAC ¶¶ 2.1-.9, and id. ¶¶ 3.12, 4.8, 6.2-.4, reflecting that Plaintiff removed his punitive damages request under his breach of contract claim but still seeks such damages under his tort claims, including his new claim for fraudulent misrepresentation; see also Pl.'s Reply & Resp. at 14-15, stating that “punitive damages are allowable in all of [the] tort actions” and “not available for a breach of contract cause of action in [the] SAC”). Consistent with this understanding and the Court's finding that Plaintiff fails to state a breach of contract claim, the Court limits its analysis to whether Plaintiff may recover punitive damages under any of his tort claims.
With respect to Plaintiff's IIED claim, Defendant argues that Plaintiff cannot recover punitive damages, as a matter of law, because Defendant's “allegedly tortious act was based only on speech.” (Def.'s Resp. & Cross-Mot. at 18.) Plaintiff's IIED claim is not based only on speech, however. Rather, Plaintiff's IIED claim appears to be based largely on conduct, such as Defendant's initiation of a fraud/SIU investigation after it informed him that he could dispose of his contents. Accordingly, the Court recommends that the district judge deny Defendant's motion on this ground. See Pence v. Aspen Educ. Grp., Inc., No. 05-cv-06199-HO, 2006 WL 3345192, at *4 (D. Or. Nov. 16, 2006) (denying a defendant's motion for summary judgment on a claim for punitive damages and explaining that the “gravamen” of the plaintiff's claim was “conduct, rather than speech”).
With respect to Plaintiff's fraudulent misrepresentation claim, Defendant argues that because Plaintiff received the “full benefit of the [relevant] bargain” (i.e., a policy limit recovery under Coverage C), “there are no recoverable ‘actual damages' arising from the alleged misrepresentation,” and therefore a jury may not award punitive damages. (Def.'s Resp. & Cross-Mot. at 18) (citation omitted). As discussed above, Defendant fails adequately to address Plaintiff's alleged non-economic damages. Accordingly, the Court recommends that the district judge deny Defendant's motion on this ground. See Benson Tower Condo. Owners Ass'n v.Victaulic Co., 22 F.Supp.3d 1126, 1135 n.4 (D. Or. 2014) (“Because a portion of Plaintiff's fraud claim remains, the Court denies [the] motion to strike Plaintiff's request for punitive damages under that claim.”).
With respect to Plaintiff's negligence per se claim, Defendants argues only that even if Plaintiff's negligence per se claim is viable under Oregon law, “negligence alone is not sufficient to support an award of punitive damages.” (Def.'s Resp. & Cross-Mot. at 17-18.) In its reply, Defendant suggests that Plaintiff's allegations do not rise to the level necessary to recover punitive damages, noting that Plaintiff “alleges nothing more than a delay of several weeks in recovering money for lost household items, during which he willfully refused to provide his insurer with requested information.” (Def.'s Second Reply at 8.)
Defendant does not acknowledge Plaintiff's allegation that Defendant engaged in other conduct beyond merely delaying the processing of his claim. Accepting all of Plaintiff's well-pleaded allegations as true, the Court finds that Defendant has not demonstrated it is entitled to dismissal of Plaintiff's claim for punitive damages under his negligence per se theory. Cf. Unigestion Holding, S.A. v. UPM Tech., Inc., No. 3:15-cv-00185-SI, --- F.Supp.3d ----, 2022
WL 2714007, at *7 (D. Or. July 13, 2022) (“[The defendant] argues that [the plaintiff] is not entitled to punitive damages because it cannot demonstrate that [the defendant] ‘acted with malice or has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with a conscious indifference to the health, safety and welfare of other.' . . . The Court declines to consider this question, typically reserved for the jury, on [the defendant]'s renewed motion for summary judgment.”) (simplified). Accordingly, the Court recommends that the district judge deny Defendant's motion to dismiss on this ground.
CONCLUSION
For the reasons stated, the Court recommends that the district judge DENY Defendant's initial motion to dismiss or stay (ECF No. 5); GRANT Plaintiff's motion for leave to amend (ECF No. 22); and GRANT IN PART and DENY IN PART Defendant's cross-motion to dismiss (ECF No. 26).
SCHEDULING ORDER
The Court will refer its Findings and Recommendation to a district judge. Objections, if any, are due within fourteen (14) days from service of the Findings and Recommendation. If no objections are filed, the Findings and Recommendation will go under advisement on that date. If objections are filed, a response is due within fourteen (14) days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendation will go under advisement.