Opinion
Civil Action 8:22-2245-HMH-KFM
12-19-2022
Brandy Krug, Plaintiff, v. The Travelers Home and Marine Insurance Company, Defendant.
REPORT OF MAGISTRATE JUDGE
Kevin F. McDonald United States Magistrate Judge
This matter is before the court on the defendant's motion to strike (doc. 58) and motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) (doc. 59). Pursuant to the provisions of 28 U.S.C. § 636(b)(1)(A) and Local Civil Rule 73.02(B)(2)(e) (D.S.C.), this magistrate judge is authorized to review all pretrial matters in cases involving pro se litigants and submit findings and recommendations to the district court.
The defendant's motion is docketed as a motion to dismiss, but the caption of the motion states that it is a partial motion to dismiss (see doc. 59). Nevertheless, because the defendant argues in its motion for dismissal of all of the plaintiff's claims in her amended complaint, the undersigned considers the caption to be a scrivener's error and will consider the defendant's motion in regards to all of the plaintiff's claims.
I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
The plaintiff filed a complaint in the Pickens County Court of Common Pleas on June 9, 2022, alleging negligence, bad faith, and breach of contract against the defendant based on the defendant's partial denial of her claim on her homeowners insurance policy with the defendant (doc. 1-1). The defendant removed the matter based on diversity jurisdiction on July 14, 2022 (doc. 1). The plaintiff filed a motion for judgment as a matter of law on September 12, 2022 (doc. 40). The undersigned issued a report and recommendation of denial of the plaintiff's motion on November 1, 2022, which the district court adopted on November 16, 2022 (docs. 55; 67).
Additionally, with leave from the court, the plaintiff filed an amended complaint against the defendant on October 19, 2022, alleging that the defendant was negligent and acted in bad faith regarding her homeowners insurance policy (doc. 52). Specifically, the plaintiff contends that the defendant knowingly exposed her to asbestos, continues to do so, and refuses to fix the asbestos (id. at 1). Additionally, the plaintiff submits that a tornado struck her home in Easley, South Carolina, and the defendant has downplayed and denied the foundation damage that occurred (id.). The plaintiff further submits that there is damage to her home that is not in an engineering report from J. Drew Wilkie, P.E. ("Mr. Wilkie") (id.). The plaintiff alleges that the foundation keeps moving, which continues to release asbestos into the air inside and outside of her home (id.). Moreover, the plaintiff alleges that the defendant cancelled her policy due to nonpayment when "payment was being made out of her escrow account," and therefore the defendant has "placed fraudulent activity on [her] escrow account" (id.). The plaintiff contends that the defendant was obligated "to either fix the home or total out the home under policy and they did not" (id. at 2). The plaintiff seeks $11,500,000,000 in damages (id. at 1).
While the plaintiff alleged a claim for breach of contract in her original complaint, she did not include this claim in her amended complaint (see docs. 1-1; 52). As stated in the undersigned's order granting the plaintiff's motion to amend her complaint, the plaintiff was required to “include all factual allegations and all causes of action against the defendant in one document captioned as an amended complaint” (doc. 48 at 3). Accordingly, because the plaintiff did not include a breach of contract claim in her amended complaint, she has apparently abandoned the claim, and the undersigned will not address such claim herein.
The defendant previously filed a motion to dismiss the plaintiff's original complaint on July 21,2022, which was rendered moot by the filing of the plaintiff's amended complaint (see docs. 10; 44 at 2; 48 at 2-3).
On November 8, 2022, the defendant filed a motion to strike (doc. 58) and a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) (doc. 59). On the same date, by order filed pursuant to Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975), the plaintiff was advised of the motion to dismiss and motion for summary judgment procedures and the possible consequences if she failed to respond adequately (doc. 60).
The plaintiff filed a response to the defendant's motion to dismiss on November 15, 2022 (doc. 62). Accordingly, this matter is now ripe for review.
II. APPLICABLE LAW AND ANALYSIS
A. Motion to Dismiss
1. Standard of Review
“The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint.” Williams v. Preiss-Wal Pat III, LLC, 17 F.Supp.3d 528, 531 (D.S.C. 2014) (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). Rule 8(a) sets forth a liberal pleading standard, which requires only a" ‘short and plain statement of the claim showing the pleader is entitled to relief,' in order to ‘give the defendant fair notice of what . . . the claim is and the grounds upon which it rests.'" Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41,47 (1957)). “In assessing the sufficiency of a complaint, [the court] assume[s] as true all its well-pleaded facts and draw[s] all reasonable inferences in favor of the plaintiff.” Nanni v. Aberdeen Marketplace, Inc., 878 F.3d 447, 452 (4th Cir. 2017) (citing Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir. 2009)). “[T]he facts alleged ‘must be enough to raise a right to relief above the speculative level' and must provide ‘enough facts to state a claim to relief that is plausible on its face.'" Robinson v. American Honda Motor Co., Inc., 551 F.3d 218, 222 (4th Cir. 2009) (quoting Twombly, 550 U.S. at 555, 570). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). The court must liberally construe pro se complaints to allow the development of a potentially meritorious case, Hughes v. Rowe, 449 U.S. 5, 9 (1980), and such pro se complaints are held to a less stringent standard than those drafted by attorneys. Gordon v. Leeke, 574 F.2d 1147, 1151 (4th Cir.1978).
“In deciding whether a complaint will survive a motion to dismiss, a court evaluates the complaint in its entirety, as well as documents attached or incorporated into the complaint.” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011). The court may consider such a document, even if it is not attached to the complaint, if the document “was integral to and explicitly relied on in the complaint,” and there is no authenticity challenge. Id. (quoting Phillips v. LCI Int'l, Inc., 190 F.3d 609, 618 (4th Cir. 1999)); see also Int'l Assn of Machinists & Aerospace Workers v. Haley, 832 F.Supp.2d 612, 622 (D.S.C. 2011) (“In evaluating a motion to dismiss under Rule 12(b)(6), the Court . . . may also ‘consider documents attached to . . . the motion to dismiss, so long as they are integral to the complaint and authentic.'”) (quoting Sec'y of State for Def. v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007)). Rule 12(d) states: “If on a motion under Rule 12(b)(6) . . ., matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d).
2. Documents Outside the Pleadings
Both parties have provided documents for the court's consideration here. Specifically, the plaintiff attached various documents to her amended complaint, and the defendant attached to its motion to dismiss a copy of a homeowners insurance policy that it had with the plaintiff; a notice of loss; a claim investigation notice; Mr. Wilkie's engineering report; and a partial denial letter (docs. 52-1; 52-2; 59-1; 59-2; 59-3; 59-4; 59-5). As set out above, the court evaluates the complaint in its entirety, as well as documents attached or incorporated into the complaint, at the motion to dismiss stage. Accordingly, the undersigned has considered the documents attached to the plaintiff's amended complaint herein. Further, the undersigned may consider the documents that the defendant attached to its motion to dismiss if those documents are integral to and explicitly relied on in the plaintiff's amended complaint and there is no authenticity challenge. The plaintiff has not challenged the authenticity of any of these documents in her response to the defendant's motion to dismiss (see doc. 62). Further, the plaintiff attached the engineering report and a portion of the same homeowners insurance policy to her amended complaint (doc. 52-1 at 28-35, 48-52), so those documents will be considered herein. However, because the plaintiff did not attach or mention the partial denial letter, claim investigation notice, or notice of loss, the undersigned declines to consider those documents at this stage.
3. Bad Faith
The plaintiff alleges that the defendant engaged in bad faith with regard to her homeowners insurance policy by knowingly exposing her to asbestos; continuing to do so; refusing to fix the asbestos exposure "per asbestos laws"; downplaying and denying foundation damage; and cancelling her policy due to nonpayment when payments were being made out of her escrow account (doc. 52 at 1).
To establish a claim for bad faith refusal to pay first party benefits under an insurance contract under South Carolina law, a plaintiff must show the following elements:
(1) the existence of a mutually binding contract of insurance between the plaintiff and the defendant; (2) refusal by the insurer to pay benefits due under the contract; (3) resulting from the insurer's bad faith or unreasonable action in breach of an implied covenant of good faith and fair dealing arising on the contract; (4) causing damage to the insured.BMW of N. Am., LLC v. Complete Auto Recon Servs., Inc., 731 S.E.2d 902, 907 (S.C. Ct. App. 2012) (citation omitted). "[A]n insurer acts in bad faith when there is no reasonable basis to support the insurer's decision [for contesting a claim]." Id. (citation and internal quotation marks omitted). "However, where an insurer has a reasonable ground for contesting a claim, there is no bad faith." Id.
The plaintiff's amended complaint contains only bare and conclusory allegations which, without more, are insufficient to state a claim of bad faith that is plausible on its face. The plaintiff argues that the defendant's motion to dismiss should be denied because it knows about the asbestos but has not removed it (doc. 62 at 1-5). However, the plaintiff has failed to allege that the defendant owed her benefits pursuant to her homeowners insurance policy based on the presence of asbestos or specify which portions of the policy required the defendant to pay under these circumstances. Further, regarding the foundation damage, the plaintiff alleges that she has damage to her house that is not in Mr. Wilkie's engineering report (doc. 52 at 1). Mr. Wilkie provides in his report that he conducted an evaluation of the tree impact damage and wind force damage to the plaintiff's residence, visited the property, and prepared a summary of his findings (doc. 59-4 at 1). Mr. Wilkie did not find that there was any foundation damage caused by the tornado, and the plaintiff has failed to allege that the defendant's reliance on Mr. Wilkie's report was unreasonable or in bad faith. Because the plaintiff has failed to plead that the defendant did not have any reasonable basis to support partially denying her claim, the undersigned recommends that the district court grant the defendant's motion to dismiss on the plaintiff's bad faith claim.
4. Negligence
Identical to her bad faith claim, the plaintiff alleges that the defendant was negligent for knowingly exposing her to asbestos; continuing to do so; refusing to fix the asbestos exposure "per asbestos laws"; downplaying and denying foundation damage; and cancelling her policy due to nonpayment when payments were being made out of her escrow account (doc. 52 at 1). The undersigned finds that because the plaintiff's allegations underlying her negligence claim are duplicative of those underlying her bad faith claim, dismissal is warranted. See Givens v. Erie Ins. Co., C/A No. 6:22-00842-HMH, 2022 WL 2759167, at *5 n.5 (D.S.C. July 14, 2022) (“The Estate has titled its third cause of action as “Negligence and Bad Faith.” . . . To the extent the Estate is alleging a separate cause of action for negligence against the Erie Defendants, this claim also fails because it is duplicative of the bad faith claim.”) (citations omitted); Allstate Assurance Co. v. Kelly, 3:17-1614-TLW, 2019 WL 8194482, at *7 (D.S.C. Mar. 15, 2019) ("The allegations supporting the negligence claim rely on the duty of good faith implied in the contract. Allowing the negligence action to go forward would be effectively allowing the bad faith action to go forward as a negligence claim. Accordingly, summary judgment is granted on Kelly's negligence claim."); Skinner v. Horace Mann Ins. Co., 369 F.Supp.3d 649, 654 (D.S.C. 2019) ("The negligence/gross negligence claim is duplicative of the bad faith claim, and as other judges in this District have recognized, a freestanding claim of negligence is improper in these specific circumstances.") (citing Maranto v. State Farm Mut. Auto. Ins. Co., No. 2:98-cv-03131-PMD, ECF No. 19 at 3-4 (filed Aug. 11, 1999) (explaining that while an insurer's negligence can be considered in a bad faith claim, "no authority support[s] the existence of a separate, free-standing claim of negligence in such circumstances")); Kraemer v. Mass. Mut. Life Ins. Co., C/A No.2:15-cv-04571-CWH, 2017 WL 5635469, at *6 (D.S.C. Apr. 28, 2017) ("Based on the South Carolina elements of bad faith and Maranto, it appears that [the plaintiff]'s negligence claim is better suited as a bad faith claim."), aff'd by 701 Fed.Appx. 268 (4th Cir. 2017)).
Moreover, the plaintiff has failed to show that the defendant owed her a duty in tort to remove the asbestos or repair her foundation. See Chakrabarti v. City of Orangeburg, 743 S.E.2d 109 (S.C. Ct. App. 2013) ("A plaintiff must prove three elements to recover on a claim for negligence: (1) a duty of care owed by the defendant to the plaintiff; (2) a breach of that duty by a negligent act or omission; and (3) damage proximately resulting from the breach."). Accordingly, the undersigned recommends that the district court grant the defendant's motion to dismiss the plaintiff's negligence claim.
The defendant also argues that the plaintiff's claim for negligence per se should be dismissed (doc. 59 at 5). While the plaintiff does not explicitly allege a claim for negligence per se, the undersigned will address this claim out of an abundance of caution based on the plaintiff's assertion that the defendant was negligent "per asbestos laws" (doc. 52 at 1). "Negligence per se is established by showing a statute created a duty to the plaintiff, and the defendant breached that duty by violating the statute." Seals by Causey v. Winburn, 445 S.E.2d 94, 96 (S.C. Ct. App. 1994) (citation omitted).
In order to show that the defendant owes [her] a duty of care arising from a statute, the plaintiff must show two things: (1) that the essential purpose of the statute is to protect from the kind of harm the plaintiff has suffered; and (2) that [s]he is a member of the class of persons the statute is intended to protect.Wogan v. Kunze, 623 S.E.2d 107, 117-18 (S.C. Ct. App. 2005) (citation omitted). Additionally, the plaintiff must show that "violation of the statute was causally linked, both in fact and proximately, to the injury." Id. at 118. While the plaintiff asserts that the defendant was negligent "per asbestos laws," she has failed to point to any particular statute creating a duty that the defendant owed under the circumstances here. As a result, the plaintiff has failed to plead a claim for negligence per se sufficient to survive the defendant's motion to dismiss.
B. Motion to Strike
The defendant also moves to strike from the plaintiff's amended complaint allegations related to the parties' settlement negotiations (doc. 58 at 1-3). The defendant has identified two statements in the plaintiff's amended complaint that it wishes to be stricken: “I tried several attempts to settle this issue with Travelers” and “Travelers offered me 10,000 for exposing me to asbestos [through] mediation on Oct 13, 2022" (id. at 1-2; doc. 52 at 2). The plaintiff did not file a response.
Federal Rule of Civil Procedure 12 provides that "[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Moreover, Federal Rule of Evidence 408 provides as follows:
Federal Rule of Civil Procedure 12 allows a court to make these strikes “on its own” or “on motion made by a party either before responding to the pleading or, if a response is not allowed, within 21 days after being served with the pleading.” Fed.R.Civ.P. 12(f)(1)-(2). The defendant filed its motion to strike on the same date that it filed its answer to the plaintiff's amended complaint (see docs. 57; 58). To the extent that the defendant did not file its motion “before responding to the pleading,” the court, on its own and for the reasons discussed herein, finds that the strikes discussed herein are warranted.
(a) Prohibited Uses. Evidence of the following is not admissible--on behalf of any party--either to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction:
(1) furnishing, promising, or offering--or accepting, promising to accept, or offering to accept--a valuable consideration in compromising or attempting to compromise the claim; and
(2) conduct or a statement made during compromise negotiations about the claim--except when offered in a criminal case and when the negotiations related to a claim by a public office in the exercise of its regulatory, investigative, or enforcement authority.Fed. R. Evid. 408(a)(1)-(2). This evidence may be admissible, however, if it is being used "for another purpose, such as proving a witness's bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution." Id. 408(b). Because statements from the plaintiff tend to indicate that she is offering this evidence to prove the validity of her claim (see doc. 62 at 2), as well as the fact that the plaintiff has not responded to the defendant's motion to strike or argued that an exception applies, the undersigned recommends that the district court find that the plaintiff's statements in her amended complaint related to settlement negotiations, as set out above, are immaterial and should be stricken. See, e.g., Renaissance Greeting Cards, Inc. v. Dollar Tree Stores, Inc., 227 Fed.Appx. 239, 246-48 (4th Cir. 2007) (affirming a district court's decision pursuant to Rule 408 to strike two portions of a plaintiff's complaint that detailed certain communications between the parties' attorneys made during settlement negotiations); Parris v. Laliberte, C/A No. 3:12-2202-MBS-SVH, 2012 WL 5417421, at *1 (D.S.C. Nov. 5, 2012) ("The allegations set forth in Plaintiff's complaint fall within the compromise evidence contemplated by Rule 408 and none of the exceptions apply."); Phillips v. DolgenCorp LLC, C/A No. 5:10-1016-MBS-JRM, 2011 WL 2214754, at *3 (D.S.C. June 7, 2011) (adopting an R&R recommending that a plaintiff's allegations in her complaint related to settlement negotiations be stricken and noting that "whether or not conciliation efforts took place and failed is irrelevant to Plaintiff's claims"); see also Fiberglass Insulators, Inc. v. Dupuy, 856 F.2d 652, 654 (4th Cir.1988) (“The public policy of favoring and encouraging settlement makes necessary the inadmissibility of settlement negotiations in order to foster frank discussions.”).
III. CONCLUSION AND RECOMMENDATION
Wherefore, based on the foregoing, the court recommends that the defendant's motion to dismiss (doc. 59) and motion to strike (doc. 58) be granted.
IT IS SO RECOMMENDED.
The attention of the parties is directed to the important notice on the next page.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk United States District Court 250 East North Street, Suite 2300 Greenville, South Carolina 29601
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).