United States District Court, M.D. North Carolina
MEMORANDUM OPINION AND ORDER
CARLTON TILLEY, JR. SENIOR UNITED STATES DISTRICT JUDGE.
matter is before the Court on a Motion to Dismiss [Doc. #11]
by Defendant American States Insurance Company
(“American States”) in which it argues pursuant
to Rule 12(b)(6) of the Federal Rules of Civil Procedure that
Plaintiff Loretta T. Elliott's Complaint fails to state a
claim upon which relief can be granted. For the reasons
explained below, the motion is granted.
evaluating a Rule 12(b)(6) motion, well-pled facts are
accepted as true and construed in the light most favorable to
Elliott. Nemet Chevrolet, Ltd. v. Consumeraffairs.com,
Inc., 591 F.3d 250, 255 (4th Cir. 2009). Elliott
suffered serious, painful, and permanent bodily injuries as a
result of a January 2013 vehicle accident in which a truck
driven by Michael F. Jones collided with Elliott's
vehicle. (Compl. ¶¶ 3, 4, 6 [Doc. #7].) Jones had
primary liability coverage up to $30, 000.00 with State Farm.
(Id. ¶ 8.) Elliott had underinsured motorist
(“UIM”) coverage up to $100, 000.00 with American
States. (Id.; id. Ex. A (American States
Policy).) On July 8, 2014, Elliott submitted a settlement
demand package to State Farm for $234, 847.00 after which it
paid Elliott the policy limit of $30, 000.00. (Id.
25, 2014, Elliott submitted the same settlement package to
American States and demanded that it pay $70, 000.00 in UIM
coverage. (Id. ¶ 13.) In response, on August
28, 2014, American States refused to pay any amount of UIM
coverage. (Id. ¶ 14.) Elliott then notified
American States that, “As a result we feel compelled to
institute litigation to recover amounts due under” her
UIM coverage. (Id.) When American States did not
respond, Elliott instituted an action on October 8, 2014 in
Durham County Superior Court which she refers to as
“the ‘Elliott v. Jones
lawsuit'”. (Id. ¶ 15.) American
States defended the suit as an unnamed party. (Id.)
the matter was referred to arbitration by Order of the
Superior Court, an arbitration hearing was held and Elliott
was awarded $90, 000.00 in actual damages plus prejudgment
interest and costs as provided by law. (Id. ¶
16.) A judgment was later entered in favor of Elliott against
Jones in the amount of $60, 000.00, taking into account State
Farm's $30, 000.00 payment on Jones' behalf, with
interests and costs. (Id. ¶ 17; id.
Ex. C (Mar. 1, 2016 Judgment).) Thereafter, Elliott recovered
that award from American States as her UIM coverage. (See
id. ¶¶ 18, 21.B.) Nevertheless, she has
subsequently sued American States for unfair and deceptive
alleges that American States has violated North Carolina
General Statute § 58-63-15(11), and each such violation
constitutes an unfair and deceptive trade practice under
North Carolina General Statutes Chapter 75. (Id.
¶¶ 21, 23.) Specifically, she alleges that American
States violated North Carolina General Statute §
58-63-15(11)f when it “did not attempt in good faith to
effectuate a prompt, fair and equitable settlement of [her]
claims in which liability had become reasonably clear”.
(Id. ¶ 21.A.) American States allegedly
violated North Carolina General Statute § 58-63-15(11)g
when it “compelled [her] to institute litigation to
recover amounts due under the UIM provisions of her . . .
insurance policy” by refusing to offer any amount of
UIM payment until its token offers preceding arbitration that
were “substantially less than the amount of UIM
coverage ultimately recovered”. (Id. ¶
21.B.) Finally, Elliott alleges that American States violated
North Carolina General Statute § 58-63-15(11)h when it
“attempted to settle [her] claim for an amount of UIM
coverage less than the amount . . . a reasonable person would
have believed Elliott was entitled to recover”.
(Id. ¶ 21.C.) In response, American States
argues that “Elliott has failed to plausibly state a[n
Unfair and Deceptive Trade Practices] claim against [it]
where [it] complied with the provisions of the Subject Policy
by resolving [Elliott's] UIM claim through arbitration
and paid [her] the Arbitration Award once entered”.
(Br. in Supp. of Mot. to Dismiss (“Br. in Supp.”)
at 3 [Doc. #12].)
survive a Rule 12(b)(6) motion, the complaint “must
contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007)). “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.”
Id. (citing Twombly, 550 U.S. at 556);
see also McCleary-Evans v. Md. Dep't of Transp.,
State Highway Admin., 780 F.3d 582, 585 (4th Cir. 2015)
(noting that a complaint must “contain sufficient
factual matter, accepted as true, to state a claim to relief
that is plausible on its face in the sense that the
complaint's factual allegations must allow a court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged”). When evaluating whether
the complaint states a claim that is plausible on its face,
the facts are construed in the light most favorable to the
plaintiff and all reasonable inferences are drawn in her
favor. U.S. ex rel. Oberg v. Pa. Higher Educ. Assistance
Agency, 745 F.3d 131, 136 (4th Cir. 2014). Nevertheless,
“labels and conclusions[, ]” “a formulaic
recitation of the elements of a cause of action[, ]”
and “naked assertions . . . without some further
factual enhancement” are insufficient.
Twombly, 550 U.S. at 557.
elements of a claim under North Carolina's Unfair and
Deceptive Trade Practices Act (“UDTPA”), North
Carolina General Statute § 75-1.1, are (1) an unfair or
deceptive act or practice, (2) in or affecting commerce, (3)
which proximately caused injury to the plaintiff. Gray v.
N.C. Ins. Underwriting Ass'n, 529 S.E.2d 676, 681 (
N.C. 2000) (citing N.C. Gen. Stat. § 75-1.1(a)).
“The determination of whether an act or practice is an
unfair or deceptive practice that violates [the UDTPA] is a
question of law for the court.” Id.
58-63-15(11) of the North Carolina General Statutes lists
“Unfair Claim Settlement Practices” in the
insurance industry that are actionable by the Commissioner of
Insurance if they are committed or performed “with such
frequency as to indicate a general business practice”.
In addition, “the types of conduct listed in [this
section] can be used to support a private cause of action
pursuant to the UDTPA.” Federated Mut. Ins. Co. v.
Williams Trull Co., Inc., 838 F.Supp.2d 370, 421 (M.D.
N.C. 2011). A violation of § 58-63-15(11)
“constitutes a violation of N.C. G.S. § 75-1.1, as
a matter of law, without the necessity of an additional
showing of frequency indicating a ‘general business
practice'”. Gray, 529 S.E.2d at 683
(finding that a violation of subsection (f) of §
58-63-15(11) is an unfair and deceptive practice because
“such conduct is inherently unfair, unscrupulous,
immoral, and injurious to consumers”); see also
Country Club of Johnston Cty., Inc. v. U.S. Fid. & Guar.
Co., 563 S.E.2d 269, 279 ( N.C. Ct. App. 2002)
(extending Gray to apply to all conduct described in
parties do not dispute that the unfair claim settlement
practices provisions of North Carolina law apply to
underinsured motorist insurance. However, Elliott fails to
acknowledge that her underinsured motorist coverage differs
from primary liability insurance in that it is
“derivative and conditional.” Brown v.
Lumbermens Mut. Cas. Co., 204 S.E.2d 829, 834 ( N.C.
1974) (finding, under the terms of the applicable policy,
unless the plaintiff is legally entitled to recover from the
uninsured motorist, he is precluded from recovering against
the defendant insurer). Under the terms of Elliott's
policy, American States agreed to “pay compensatory
damages which an insured is legally entitled to
recover from the owner or operator of an underinsured
motor vehicle because of bodily injury sustained by an
insured and caused by an accident.” (Am. States Policy
Pt. C2, “INSURING AGREEMENT”, at 9 (emphasis
added).) The amount due under an underinsured motorist policy
“is conclusively determined in litigation against the
uninsured motorist”. Chew v. Progressive Universal
Ins. Co., No. 5:09-CV-351-FL, 2010 WL 4338352, *10 (E.D.
N.C. Oct. 25, 2010) (involving uninsured motorist coverage
with the same policy language as Elliott's and citing
Brown, 204 S.E.2d at 834 and McLaughlin v.
Martin, 374 S.E.2d 455, 456 ( N.C. Ct. App. 1988));
see id. at *7 (analyzing a breach of contract claim
and explaining that, although an investigation established
the uninsured motorist's fault, the amount of damages was
contested and, because those damages were “the measure
of the uninsured motorist's liability, defendant was not
liable under the contract to pay the claim until the extent
of the uninsured motorist's liability for plaintiff's
alleged [injuries] was established”).
the instant case, in Bendrick v. State Farm Mutual
Automobile Insurance Co., No. 3:11-CV-573-RJC-DCK, 2012
WL 1247158, *1 (W.D. N.C. ), adopted 2012 WL 1247178
(Apr. 13, 2012), the “crux” of the
plaintiff's complaint was that she was compelled to
arbitrate before the defendant insurer would tender the
limits of its underinsured motorist coverage. In evaluating
the insurer's motion to dismiss, the court found
persuasive the insurer's argument that “it was not
required to make any offers before or after the arbitration,
since it had no duty to pay under its policy until such
amounts were proven recoverable against [the
tortfeasor].” Id. at ...