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Radchyshyn v. Allstate Indemnity Co.

United States District Court, W.D. North Carolina, Asheville Division

August 19, 2014

MYKHAIL RADCHYSHYN, Plaintiff,
v.
ALLSTATE INDEMNITY COMPANY, Defendant.

MEMORANDUM AND RECOMMENDATION

DENNIS L. HOWELL, Magistrate Judge.

Pending before the Court is Defendant's Motion to Dismiss [# 4]. Plaintiff brought this action in state court asserting claims for breach of contract and for unfair and deceptive trade practices. Both claims arise out of the denial of an insurance claim. Defendant removed the action to this Court on the basis of diversity jurisdiction. After removing the action to this Court, Defendant moved to dismiss the unfair and deceptive trade practices claim. Plaintiff, who is represented by counsel, failed to file a response to the motion. The Court RECOMMENDS that the District Court GRANT the motion [# 4].

I. Background

Plaintiff is a resident of North Carolina who purchased an automobile for $30, 000.00 on October 24, 2013. (Pl.'s Compl. at ¶¶ 1, 3.) The next day, Plaintiff acquired a bill of sale and obtained the executed and notarized first re-assignment of title by the car dealer for the vehicle. (Id. ¶ 5.) Plaintiff then purchased an insurance policy from Defendant insuring the vehicle. (Id. ¶ 6.) Plaintiff also attempted to obtain a North Carolina inspection for the vehicle on October 25, 2013, but was unable to do so because of computer problems with the vehicle. (Id. ¶ 7.)

Two days later, on October 27, 2013, the vehicle suffered damage caused by an electrical fire. (Id. ¶ 8.) Plaintiff then submitted an insurance claim with Defendant to cover the loss. (Id. ¶ 9.) Defendant denied the claim. (Id.) Plaintiff then brought this action in state court asserting claims for breach of contract and unfair and deceptive trade practices. After removing the action to this Court, Defendant moved to dismiss the unfair and deceptive trade practices claim. Defendant's motion is now before the Court for a Memorandum and Recommendation to the District Court.

II. Legal Standard

The central issue for resolving a Rule 12(b)(6) motion is whether the claims state a plausible claim for relief.[1] See Francis v. Giacomelli , 588 F.3d 186, 189 (4th Cir. 2009). In considering Defendant's motion, the Court accepts the allegations in the Complaint as true and construes them in the light most favorable to Plaintiff. Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc. , 591 F.3d 250, 253 (4th Cir. 2009); Giacomelli , 588 F.3d at 190-92. Although the Court accepts well-pled facts as true, it is not required to accept "legal conclusions, elements of a cause of action, and bare assertions devoid of further factual enhancement...." Consumeraffairs.com , 591 F.3d at 255; see also Giacomelli , 588 F.3d at 189.

The claims need not contain "detailed factual allegations, " but must contain sufficient factual allegations to suggest the required elements of a cause of action. Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 1964-65 (2007); see also Consumeraffairs.com , 591 F.3d at 256. "[A] formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. at 1965. Nor will mere labels and legal conclusions suffice. Id . Rule 8 of the Federal Rules of Civil Procedure "demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009).

The Complaint is required to contain "enough facts to state a claim to relief that is plausible on its face." Twombly , 550 U.S. at 570, 127 S.Ct. at 1974; see also Consumeraffairs.com , 591 F.3d at 255. "A 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." Iqbal , 556 U.S. at 678, 129 S.Ct. at 1949; see also Consumeraffairs.com , 591 F.3d at 255. The mere possibility that a defendant acted unlawfully is not sufficient for a claim to survive a motion to dismiss. Consumeraffairs.com , 591 F.3d at 256; Giacomelli , 588 F.3d at 193. Ultimately, the well-pled factual allegations must move a plaintiff's claim from possible to plausible. Twombly , 550 U.S. at 570, 127 S.Ct. at 1974; Consumeraffairs.com , 591 F.3d at 256.

III. Analysis

Count Two of the Complaint asserts a claim pursuant to North Carolina's Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1, et seq. In order to make out a prima facie claim for unfair and deceptive trade practices, Plaintiff must show that: (1) Defendant committed an unfair or deceptive act or practice; (2) that this act or practice was in or affecting commerce; and (3) that the act or practice proximately caused the Plaintiff's injury. Gray v. N.C. Ins. Underwriting Ass'n , 529 S.E.2d 676, 681 ( N.C. 2000); Hospira Inc. v. Alphagary Corp. , 671 S.E.2d 7, 12 ( N.C. Ct. App. 2009); Sessler v. March , 551 S.E.2d 160, 167 ( N.C. Ct. App. 2001). A practice is unfair if it "is immoral, unethical, oppressive, unscrupulous, or substantially injurious to customers.'" Thompson , 418 S.E.2d at 699 (quoting Johnson v. Phoenix Mut. Life Ins. Co. , 266 S.E.2d 610, 621 ( N.C. 1980)); Sessler , 551 S.E.2d at 167. A practice is deceptive where it has the tendency or capacity to deceive. Thompson , 418 S.E.2d at 699; Sessler , 551 S.E.2d at 167. "In making a claim of unfair and deceptive trade practices on a theory of misrepresentation or fraud, a plaintiff must show that a defendant's words or conduct possessed the tendency or capacity to mislead' or create the likelihood of deception.'" Hospira , 671 S.E.2d at 12 (quoting Marshall v. Miller , 276 S.E.2d 397, 403 (1981)). Moreover, a plaintiff does not have to show actual deception to prevail, he or she need only demonstrate that the acts of defendant "possessed the tendency or capacity to mislead or create the likelihood of deception." RD & J Props. v. Lauralea-Dilton Enters., LLC , 600 S.E.2d 492, 500-501 ( N.C. Ct. App. 2004).

Actions for unfair and deceptive trade practices, however, are distinct from actions for breach of contract, and the mere breach of contract, even where the breach is intentional, cannot constitute an action pursuant to North Carolina's Unfair and Deceptive Trade Practices Act. Eastover Ridge, L.L.C. v. Metric Constructors, Inc. , 533 S.E.2d 827, 832-33 ( N.C. Ct. App. 2000); Branch Banking & Trust co. v. Thompson , 418 S.E.2d 694, 700 ( N.C. Ct. App. 1992). As the North Carolina Court of Appeals has explained:

The plaintiff must show "substantial aggravating circumstances attending the breach to recover under the Act, which allows for treble damages." Id . It is "unlikely that an independent tort could arise in the course of contractual performance, since those sorts of claims are most appropriately addressed by asking simply whether a party adequately fulfilled its contractual obligations." Broussard v. Meineke Discount ...

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