Opinion ID: 2100146
Heading Depth: 1
Heading Rank: 6

Heading: failure to state cause of action

Text: In the petition, the following causes of action were asserted: breach of contract; breach of the covenant of good faith and fair dealing; violation of the Uniform Deceptive Trade Practices Act, § 87-301 et seq.; fraud; unjust enrichment; and violation of the Consumer Protection Act, & sect; 59-1601 et seq. In sustaining State Farm's demurrer as to each of McGinn's claims under the ninth amended petition, the district court noted that McGinn had not filed a claim under the medical payments coverage provision of his policy and, therefore, had not had a claim denied by State Farm. The district court, in sustaining State Farm's demurrer, initially assessed these facts relative to McGinn's contract allegations and, thereafter, as to all of the causes of action as they pertained to McGinn. In reviewing the district court's decision sustaining State Farm's demurrer, we accept as true all the facts which are well pled and the proper and reasonable inferences of law and fact which may be drawn therefrom, but not the conclusions of the pleader. In considering McGinn's facts as pled to determine whether those facts state a cause of action, we construe the petition liberally. In the petition, McGinn alleges that he is a policyholder under a State Farm automobile insurance policy that contains a provision for medical payments coverage which is subject to a utilization review as to reasonableness and necessity. Unlike the Lynches, McGinn admits in paragraph 9 of the petition that he has not made a medical payments claim. McGinn nevertheless asserts that he has a justiciable legal issue, because he claims to have purchased a type of medical payments coverage which will not be delivered if he makes a claim. In support of his assertion that he has stated a cause of action, McGinn relies on cases such as Sitton v. State Farm Mut. Auto. Ins. Co., 116 Wash.App. 245, 63 P.3d 198 (2003), and urges us to reverse the district court's order sustaining State Farm's demurrer. We find the cases upon which McGinn relies, which are not repeated here, unpersuasive or inapposite. For example, although Sitton was certified as a class action and the allegations in Sitton are similar to those in the petition, the opinion makes clear that unlike McGinn's circumstance as alleged in the instant case, each of the class representatives who brought the class action against their automobile insurance carrier in Sitton had filed claims with the insurance company, which claims were denied, at least in part. We review McGinn's claims and determine whether, despite McGinn's failure to have filed a claim under his medical payments coverage provision, he nevertheless has stated a cause of action against State Farm. We conclude as a matter of law that he has not. Initially, we note that an insurance policy is a contract. Guerrier v. Mid-Century Ins. Co., 266 Neb. 150, 663 N.W.2d 131 (2003); Farm Bureau Ins. Co. v. Martinsen, 265 Neb. 770, 659 N.W.2d 823 (2003). In assessing claims for damages in insurance contract actions, it has been recognized that it is ordinarily necessary to assert a breach. 16 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 232:42 (2000) (stating that allegation of breach is element of claim in action for failure to provide insurance benefits as called for under policy). In the absence of a breach, a cause of action has not ordinarily been stated. See id. See, also, Snyder v. EMCASCO Ins. Co., 259 Neb. 621, 627, 611 N.W.2d 409, 415 (2000) (stating cause of action for breach of insurance contract accrues at the time of the breach or failure to do the thing agreed to). In connection with the breach of contract cause of action, McGinn has admittedly not filed a claim under his medical payments coverage and has not had a claim denied. As such, McGinn cannot allege, as the Lynches have, that State Farm billed [him] for traditional indemnity medical payments coverage, while actually delivering ... a medical cost containment/managed care program. McGinn has not been subject to the administration of the policy, and specifically, he has not actually had the coverage at issue delivered to him. If McGinn would submit a claim, we do not know if he would be afforded coverage, denied coverage, or denied coverage in part. Referring to the facts alleged in his contract cause of action, it cannot yet be said that State Farm has breached the contract of insurance or failed to do the thing agreed to. See Snyder, supra . McGinn has not asserted a case involving a breach of contract, and therefore he has not stated a cause of action for breach of contract, as the district court found. We agree with the district court's reasoning relative to McGinn's claim based in contract. The district court extended its reasoning to McGinn's remaining claims. This was not error. Each of the other causes of action incorporates the existence of the contract for insurance and each is dependent on the viability of McGinn's breach of contract claim. Because McGinn has not alleged a case involving breach of contract, as a matter of law, the remaining causes of action likewise fail to state a cause of action. The district court did not err in granting the demurrer.