Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_07-cv-00823/USCOURTS-almd-2_07-cv-00823-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Breach of Contract

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IN THE UNITED STATES DISTRICT COURT FOR

THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

MALCOLM HERRING, )

)

Plaintiff, )

)

v. ) CASE NO. 2:07-cv-823-MEF

)

STATE FARM MUTUAL AUTOMOBILE ) (WO)

INSURANCE COMPANY, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

This cause is before the Court on Defendant State Farm’s Motion to Dismiss (Doc.

# 2), filed September 13, 2007. Plaintiff Malcolm Herring (“Herring”) has sued State Farm

for breach of contract and bad faith in failing to pay benefits on an underinsured motorist

claim Herring filed. State Farm has moved to dismiss the Complaint on the ground that

Herring’s claims are not ripe for adjudication. After careful review of the submissions made

by the parties, this Court finds that State Farm’s Motion to Dismiss is due to be DENIED.

II. RULE 12(B)(6) STANDARD

A Rule 12(b)(6) motion tests the legal sufficiency of the complaint. Prior to the

Supreme Court’s recent decision in Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955 (2007), a

motion to dismiss could only be granted if a plaintiff could prove “no set of facts . . . which

would entitle him to relief.” See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also

Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Wright v. Newsome, 795 F.2d 964, 967

(11th Cir. 1986). Now, in order to survive a motion to dismiss for failure to state a claim,

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the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.”

Twombly, 127 S. Ct. at 1974. Plaintiff’s “[f]actual allegations must be enough to raise a right

to relief above a speculative level on the assumption that the allegations in the complaint are

true.” Id. at 1965. It is not sufficient that the pleadings merely “le[ave] open the possibility

that the plaintiff might later establish some set of undisclosed facts to support recovery.” Id.

at 1968 (internal quotation and alteration omitted). In considering a defendant’s motion to

dismiss, a district court will accept as true all well-pleaded factual allegations and view them

in a light most favorable to the plaintiff. See Am. United Life Ins. Co. v. Martinez, 480 F.3d

1043, 1057 (11th Cir. 2007). Accord Nelson v. Campbell, 541 U.S. 637, 640 (2004) (where

a court is considering dismissal of a complaint at the pleading stage, it must assume the

allegations of the complaint are true). Furthermore, the threshold is “exceedingly low” for

a complaint to survive a motion to dismiss for failure to state a claim. See Ancata v. Prison

Health Servs., Inc., 769 F.2d 700, 703 (11th Cir. 1985).

III. FACTS AND PROCEDURAL HISTORY

The allegations in the complaint establish the following facts. On August 2, 2005,

Herring was driving a 1995 Chevrolet Suburban south on Perry Hill Road. At this time,

David Hooks (“Hooks”), negligently and/or wantonly drove his vehicle such that it collided

with a vehicle being driven by Nancy Beeman (“Beeman”). This collision caused Beeman’s

vehicle to collide with Herring’s vehicle. As a result of this collision, Herring suffered

several severe injuries and medical expenses.

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Hooks insurance coverage was limited to $20,000, which Hook offered as a settlement

for Herring’s claims against him. This amount was not sufficient to cover all of Herring’s

damages, so Herring notified his insurance provider, State Farm, of the settlement offer and

provided all medical records and other documentation related to the accident. Herring also

notified State Farm that if it approved the settlement, he would file a claim with State Farm

under his underinsured motorist insurance coverage.

On April 10, 2007, State Farm approved Hooks’ settlement offer and waived its

subrogation rights. However, State Farm ultimately rejected Herring’s underinsured motorist

claim.

This claim was originally filed in the Circuit Court of Montgomery County on July

30, 2007. On September 13, 2007, State Farm filed Notice of Removal in this Court basing

jurisdiction on 28 U.S.C. § 1332 (diversity).

IV. DISCUSSION

State Farm argues that Herring’s claims are not ripe and are due to be dismissed. State

Farm bases its argument on the Alabama Supreme Court rulings in Pontius v. State Farm

Mut. Auto. Ins. Co., 915 So. 2d 557 (Ala. 2005), and LeFevre v. Westberry, 590 So. 2d 154

(Ala. 1991). In an underinsured motorist claim, the insured is not entitled to payment on a

claim unless he can show that he is “legally entitled” to collect from the underinsured

motorist. See LeFevre, 590 So. 2d at 159. In other words, the insured must be able to show

fault on the part of the underinsured motorist and the extent of the damages to which he is

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entitled. See id. Moreover, the State of Alabama recognizes the doctrine of bad faith in

underinsured motorist claims. See id. at 160. A delay in payment on an underinsured

motorist claim does not rise to the level of bad faith if there is a “bona fide dispute” on the

issue of liability of the underinsured motorist, or damages. See id. at 161. If the insurer

refuses to settle with the insured, such refusal must be reasonable. See id.

This Court finds that dismissal of the Complaint against State Farm is not warranted

at this early stage in the litigation. Because the Court is ruling on a motion to dismiss, it must

assume all well-pleaded facts in the Complaint are true and view them in the light most

favorable to the plaintiff. See Am. United Life Ins. Co., 480 F.3d at 1057. Here, Herring has

pled sufficient facts to survive a motion to dismiss. Herring’s factual allegations are

sufficient to raise a right to relief above a speculative level. Twombly, 127 S. Ct. at 1965.

In LeFevre, a case relied upon by State Farm, the Alabama Supreme Court affirmed

the trial court’s entry of summary judgment on a claim for bad faith in favor of an insurer

because the Court found that there was a “legitimate dispute” concerning the amount of

damages the plaintiff was entitled to under the claim. See id. at 162. However, the fact that

the procedural posture of LeFevre was a summary judgment ruling is enough to distinguish

it from this case. State Farm also cites Pontius, which affirmed a dismissal of an insured’s

breach of contract and bad faith claims on ripeness grounds. See Pontius, 915 So. 2d at 564-

65. However, in Pontius, when the trial court dismissed for lack of jurisdiction, the plaintiff

was, at that time, still involved in active litigation with the uninsured motorist on the issue

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of liability. This case is therefore distinguishable because the conduct giving rise to

Herring’s claims against State Farm occurred after Herring settled his dispute with the

underinsured motorist. See id. at 565 (“We recognize that Pontious has now resolved her

underlying lawsuit against the [uninsured motorist]. . . . [A]ny claims alleging bad-faith

failure to pay an insurance claim or breach of contract based on State Farm’s failure to pay

UIM benefits must be based on conduct arising after . . . liability was established and

damages fixed.” (emphasis added)).

V. CONCLUSION

For the reasons set forth above, it is hereby ORDERED that Defendant’s Motion to

Dismiss (Doc # 2) is DENIED.

DONE this the 19 day of February, 2008. th

 /s/ Mark E. Fuller 

CHIEF UNITED STATES DISTRICT JUDGE

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