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Hunter v. State Farm Fire and Casualty Co.

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

July 30, 2018



          Frank D. Whitney, Chief United States District Judge

         THIS MATTER is before the Court on Defendant's Motion to Dismiss (Doc. No. 16) Plaintiff's Amended Complaint (Doc. No. 13), pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failing to state a claim upon which relief can be granted. Plaintiff responded in a timely manner (Doc. No. 19). For the reasons stated below, the Court DENIES Defendant's Motion to Dismiss Count IV.

         I. BACKGROUND

         Plaintiff Eileen Hunter (“Plaintiff”) alleges causes of action arising out of Defendant State Farm Fire and Casualty Company's (“Defendant”) repeated denial of Plaintiff's insurance claims. According to the Amended Complaint, [1] Plaintiff has a Homeowners Insurance policy (“the Policy”) with Defendant on a house which has experienced extensive water and structural damage. (Doc. No. 13, 3-5, ¶¶ 7-17). Plaintiff filed claims in 2009, 2013, 2014, 2015, and 2016, and Defendant denied all of them. (Doc. No. 13, at 4, ¶ 10; at 5, ¶¶ 18-19).

         In assessing Plaintiff's claims, Defendant retained Donan Engineering Co., Inc. (“Donan”), an engineering firm, to inspect the structure and file reports (“Donan reports”) concerning Donan's findings. (Doc. No. 13, at 11, ¶ 32). The Donan reports attributed the water damage to improperly installed window trim, deteriorating window sealant, which continuously led to more leakage, deterioration and rot. (Doc. No. 13, at 5-6, ¶ 20). The 2014 Donan report stated, “[t]he basement has three sets of windows and doors on the east side, ” and the “central door . . . was not operable due to a sagging header, and the sills and the top of the board have some water stains.” (Doc. No. 13-14, at 5). Further, it detailed, “[t]he long-term intrusion has also resulted in wood rot that has weakened the horizontal members between the living room windows and the basement window and door headers, ” and recommended that the wall be “exposed to properly determine the extent of structural damage.” (Doc. No. 13-14, at 6).

         Plaintiff hired a construction consultant in 2015, who tore open the walls and reported the “structural members supporting the windows had failed as a result of the hidden decay to those members” and certain parts of those “members had caved in causing certain parts of the home to be uninhabitable without causing a catastrophic failure of the entire wall resulting in additional property damage and potential bodily injury.” (Doc. No. 13, at 4-5, ¶ 17).

         Plaintiff, “at the recommendation of experts moved out of the home because it had become dangerously uninhabitable.” (Doc. No. 13, at 9-10, ¶ 25). In between March and November of 2016, Plaintiff made repairs to the home, which cost a total of $308, 564.96. (Doc. 13, at 10, ¶ 28-29).

         Plaintiff alleges multiple causes of action, including: (1) the Policy's language supports Plaintiff's interpretation; (2) the Policy's language is ambiguous, and as a result, the Policy covers repair costs to Plaintiff's home; (3) Breach of Contract; and (4) Unfair and Deceptive Trade Practices (“UDTP”). For these claims, Plaintiff seeks damages in the amount of at least $308, 564.96, plus attorney's fees and court costs, (Doc. No. 13, at 17-18, ¶ 54), (Doc. No. 13, at 20-21, ¶ 70), (Doc. No. 13, at 28-29, ¶ 96), except as to the Breach of Contract claim, which Plaintiff requests this Court to enter a judgment in favor of plaintiff for at least $50, 000 and costs of the suit, (Doc. No. 13, at 22, ¶ 78). Defendant moves the Court to dismiss Plaintiff's fourth claim alleging UDTP under Federal Rule of Civil Procedure 12(b)(6).


         "The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint"-"not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Edwards v. City of Goldsboro, 178 F.3d 231, 243(4th Cir. 1999) (quoting Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir. 1992)). The court accepts all well-pleaded allegations in the complaint as true and draws all reasonable factual inferences from those facts in the plaintiff's favor. Edwards, 178 F.3d at 244 (citations omitted); see also Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993) (“In considering a motion to dismiss, the court should accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff.”). Well-pleaded allegations "must contain sufficient factual matter . . . to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "A claim has facial plausibility when the plaintiff pleads sufficient 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 (citing Twombly, 550 U.S. at 556). While the Court accepts plausible factual allegations in the complaint as true and considers those facts in the light most favorable to a plaintiff in ruling on a motion to dismiss, a court "need not accept as true unwarranted inferences, unreasonable conclusions, or arguments." E. Shore Mkt.'s Inc. v. J.D. Assoc.'s, LLP, 213 F.3d 175, 180 (4th Cir. 2000).

         III. ANALYSIS

         Unfair and deceptive trade practices are generally prohibited by North Carolina's Unfair and Deceptive Trade Practices Act (“UDTPA”). N.C. Gen. Stat. § 75-1.1; see also N.C. Gen. Stat. § 58-63-15(11) (defining unfair practices in the settlement of insurance claims). While § 75-1.1 provides a private cause of action for violations, § 58-63-15(11) does not. Instead, “the remedy for a violation of [§] 58-63-15 is the filing of a [§] 75-1.1 claim.” Country Club of Johnston Cty., Inc. v. U.S. Fid. & Guar. Co., 150 N.C.App. 231, 244, 563 S.E.2d 269, 278 (2002). Thus, an individual may file an independent § 75-1.1 claim, or may file a § 75-1.1 claim that relies on a violation of § 58-63-15(11). Elliott v. Am. States Ins. Co., 883 F.3d 384, 396 (4th Cir. 2018) (citing Gray v. N.C. Ins. Underwriting Ass'n, 352 N.C. 61, 529 S.E.2d 676, 684 (2000)).

         Under N.C. Gen. Stat. § 75-1.1, the three elements for a UDTP claim are "(1) defendant committed an unfair or deceptive act or practice, (2) the action in question was in or affecting commerce, and (3) the act proximately caused injury to the plaintiff." Dalton v. Camp, 353 N.C. 647, 656, 548 S.E.2d 704, 711 (2001). “Under the UDTPA, the occurrence of the alleged conduct, damages, and proximate cause are fact questions for the jury.” ABT Bldg. Prod. Corp. v. Nat'l Union Fire Ins. Co. Of Pittsburgh, 472 F.3d 99, 122-23 (4th Cir. 2006). The determination that a trade practice is unfair or deceptive is a question of law for the court. Elliott, 883 F.3d at 396 (4th Cir. 2018) (quoting Gray, 352 N.C. at 68, 529 S.E.2d at 681). “A practice is unfair when it offends established public policy as well as when the practice is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers.” Elliott, 883 F.3d at 396 (quoting Walker v. Fleetwood Homes of N.C., Inc., 362 N.C. 63, 653 S.E.2d 393, 398 (2007)). The determination that a trade practice is unfair or deceptive "depends upon the facts of [the] case and the impact the practice has in the marketplace." Marshall v. Miller, 302 N.C. 539, 548, 276 S.E.2d 397, 403 (1981) (citation omitted). “As a result, the intent of the actor is not relevant and the ‘unfairness and deception is gauged by considering the effect of the practice on the marketplace' and the ‘consuming public.'" Legacy Data Access, LLC v. Mediquant, Inc., 2017 WL 6001637, *7 (W.D.N.C Dec. 04, 2017) (quoting Marshall, 302 N.C. at 548, 276 S.E.2d at 403 (1981) (citation omitted).

         “Moreover, although N.C. Gen. Stat. § 58-63-15(11) requires a showing of a ‘frequency indicating a general business practice, a claim brought under the UDTPA does not require a frequency showing.'” Majstorovic v. State Farm Fire & Cas. Co., 2018 WL 1473427, at *4 (E.D. N.C. Mar. 24, 2018) (quoting Gray, 529 S.E.2d at 683). No. showing is required because conduct in violation of § 58-63-15(11) also violates N.C. G.S. § 75-1.1 as a matter of law, as “such conduct is inherently unfair, unscrupulous, immoral, and injurious to consumers.” Elliott, 883 F.3d at 396 (citing Gray, 529 S.E.2d at 683 (applying ...

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