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Valley Boys, Inc. v. State Farm Fire and Casualty Co.

United States District Court, District of Nebraska

October 22, 2014

VALLEY BOYS, INC., doing business as Valley Boys Roofing, Assignee Plaintiff,
v.
STATE FARM FIRE AND CASUALTY COMPANY, incorrectly named as;

MEMORANDUM AND ORDER

Joseph F. Bataillon Senior United States District Judge

This matter is before the court on the defendant’s motion to dismiss, Filing No. 11. This is an action by an assignee for breach of contract and bad faith that was removed from state court under 28 U.S.C. §§ 1441 and 1446. Jurisdiction is premised on diversity of citizenship under 28 U.S.C. § 1332.

In its complaint, Valley Boys, Inc. d/b/a Valley Boys Roofing (“Valley”) alleges that defendant State Farm Fire and Casualty Company (“State Farm” or “the Insurance Company”) breached contracts of insurance with one hundred fifty-four Nebraska State Farm insureds by failing to cover hail damage to the insureds’ homes. Filing No. 1, Notice of Removal, Attachment 1, Exhibit (“Ex.”) 1, Complaint at 14-20. Valley further alleges that each of the insureds assigned the claims to Valley. Id. at 2. Also, they allege that they requested copies of the insurance policies from State Farm, but State Farm has refused to provide them. Id. It seeks damages in the amount of $3, 099, 249.33. Id. at 14. Valley also asserts a claim for bad faith and seeks attorney fees under Neb. Rev. Stat. § 44-359. Id. at 20-22.

Valley alleges that State Farm delayed and denied payment of the insureds’ claims, which prevented the insureds from beginning or completing the necessary repairs and replacements to their homes. Id. at 21-22. Attached to the complaint are numerous assignments of claims.[1] Id., Ex. B.

The defendant moves to dismiss for failure to state a claim for relief under Fed.R.Civ.P. 12(b)(6). State Farm argues that the plaintiffs complaint is entirely deficient in that it fails to identify the policy provision that State Farm allegedly breached and fails to identify the necessary expenses State Farm did not pay. With respect to the bad faith claims, State Farm argues that the purported assignments do not convey any right to pursue any extra-contractual claims against State Farm and does not allege any facts that amount to bad faith.

Under the Federal Rules, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 n.3. (2007). “Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Twombly, 550 U.S. at 555). In order to survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the plaintiff’s obligation to provide the grounds for his entitlement to relief necessitates that the complaint contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555.

Determining whether a complaint states a plausible claim for relief is “a context-specific task” that requires the court “to draw on its judicial experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Under Twombly, a court considering a motion to dismiss may begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. Id. Although legal conclusions “can provide the framework of a complaint, they must be supported by factual allegations.” Id. Courts follow a “two-pronged approach” to evaluate Rule 12(b)(6) challenges. Id. First, a court divides the allegations between factual and legal allegations; factual allegations should be accepted as true, but legal allegations should be disregarded. Id. Second, the factual allegations must be parsed for facial plausibility. Id.

“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. at 677 (stating that the plausibility standard does not require a probability, but asks for more than a sheer possibility that a defendant has acted unlawfully.). The court must find “enough factual matter (taken as true) to suggest” that “discovery will reveal evidence” of the elements of the claim. Twombly, 550 U.S. at 558, 556. When the allegations in a complaint, however true, could not raise a claim of entitlement to relief, the complaint should be dismissed for failure to set a claim under Fed.R.Civ.P. 12(b)(6). Twombly, 550 U.S. at 558; Iqbal, 556 U.S. at 679.

An assignment is a transfer vesting in the assignee all of the assignor’s rights in the property which is the subject of the assignment.[2] Ehlers v. Perry, 494 N.W.2d 325, 327 (1993). “The assignee of a thing in action may maintain an action thereon in his own name and behalf, without the name of the assignor.” Neb. Rev. Stat. § 25-312; see Eli’s Inc. v. Lemen, 591 N.W.2d 543, 552 (Neb. 1999). “‘Subject to certain exceptions in case of contracts involving relations of personal confidence or trust or being for personal services all contracts are assignable.’” Eli’s Inc., 591 N.W.2d at 553 (quoting 6 A C.J.S. Assignments § 29 (1975)). Actions in tort for fraud or fraudulent conveyance are similarly assignable. Eli’s, Inc., 591 N.W.2d at 552-53.

“The intention of the assignor must be to transfer a present interest in the debt or fund or subject matter; if this is clearly expressed, the transaction is an assignment; otherwise not.” Tilden v. Beckmann, 278 N.W.2d 581, 586 (Neb. 1979). Where there is no valid assignment of a particular right, the purported assignee lacks standing to bring a claim exercising that right. See Neb. Rev. Stat. § 25-301 (2006) (“Every action shall be prosecuted in the name of the real party in interest . . .”).

Under Nebraska law,
In all cases when the beneficiary or other person entitled thereto brings an action upon any type of insurance policy . . . against any company, person, or association doing business in this state, the court, upon rendering judgment against such company, person, or association, shall allow the plaintiff a reasonable sum as an attorney’s fee in addition to the amount of his or her recovery, to be taxed as part of the costs.

Neb. Rev. Stat. § 44-359. When the assignor has not limited the scope of the assignment or retained any interest, the right to fees and costs under Neb. Rev. Stat. § 44-359 can be assigned along with policy rights. See, e.g., Sherman v. Sherman, 751 N.W.2d 168, 175 (Neb.App. 2008); accord Gaur. Nat’l Ins. Co. v. McGuire, 192 F.Supp.2d 1204, 1207 (D. Kan. 2002) (applying Kansas law and enforcing assignment that specifically and unequivocally transferred right to pursue certain extracontractual claims against insurer).

Under Nebraska law, in order to recover for a breach of contract, the plaintiff must prove a promise, the breach of that promise, and damages resulting from that breach. K.M.H. v. Lutheran General Hosp., 431 N.W.2d 606, 608 (Neb.1988). To create a contract, there must be both an offer and an acceptance; there must also be a meeting of the minds or a binding mutual understanding between the parties to ...


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