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Insured Financial Services v. State Farm Insurance Co.

United States District Court, D. Nebraska

May 8, 2018

INSURED FINANCIAL SERVICES, Plaintiff,
v.
STATE FARM INSURANCE COMPANY, Defendant.

          MEMORANDUM AND ORDER

          JOHN M. GERRARD UNITED STATES DISTRICT JUDGE.

         The plaintiff, Insured Financial Services (IFS) is suing the defendant, State Farm Insurance Company, for breach of contract, based on State Farm's alleged failure to pay for injuries sustained by insured homeowners. State Farm moves to dismiss IFS's complaint pursuant to Fed.R.Civ.P. 12(b)(1) and (6), asserting that IFS lacks standing to assert claims assigned by the homeowners, and that IFS has failed to state a claim for breach of contract. But the Court finds no merit to State Farm's arguments, and will deny its motion to dismiss.

         BACKGROUND

         The underlying injuries for which IFS seeks to recover were allegedly sustained to insured premises due to hailstorm. Filing 1-1 at 2. But IFS was not an insured party. Instead, IFS was assigned those claims by the "Disaster Response Group LLC d/b/a Disaster Response Group Insurance Network" (DRG), which had originally been assigned the claims by the homeowners. E.g.filing 1-1 at 6, 13.

         For example, one of the insurance claims originally belonged to Darrin and Jennifer Bradley. Filing 1-1 at 6. According to IFS's records, the Bradleys sustained a loss due to hail on September 22, 2015. Filing 1-1 at 23. They were contacted on October 2 and executed an "Assignment of Insurance Claim" to DRG the same day, in which,

for and in consideration of the performance of the work pursuant to the contract executed by [the Bradleys] and DRG, as well as any change orders executed thereafter, and for other good and valuable consideration, the receipt and sufficiency whereof is hereby mutually acknowledged, and intending to be legally bound, hereby transfer, assign and set over unto DRG, all of the right, title and interest of the [Bradleys] in and to those certain insurance claim(s) made by [the Bradleys] . . . including but not limited to any and all insurance proceeds owed under [the Bradleys' insurance claim] . . . and any other claims arising out of [their insurance claim] asserted thereunder and proceeds thereof.

Filing 1-1 at 6. The Bradleys' property was inspected by DRG on October 9. Filing 1-1 at 23. The record does not reflect how any subsequent work on the home proceeded.

         But on November 28, 2017, DRG executed an "Assignment of Insurance Claim" to IFS, reassigning the Bradleys' claims from DRG to IFS "for good and valuable consideration, the receipt and sufficiency whereof is hereby mutually acknowledged[.]" Filing 1-1 at 13. The DRG-IFS assignment was executed on behalf of both entities by Steve Shannon, who had also executed the initial assignment on behalf of IFS. Filing 1-1 at 13; see filing 1-1 at 6. The same day, IFS sent a letter to State Farm's claims department, advising State Farm that the claim had been assigned to IFS. Filing 1-1 at 24-25. A summary for the Bradleys' property, apparently printed the same day, was provided to State Farm and indicates that IFS believed the "replacement cost value" for the repair was $54, 697.45, and that $14, 903.45 had been paid, leaving a net claim of $39, 794.00. Filing 1-5 at 2; seefiling 1 at 4.

         IFS's complaint is premised on eight such claims, including the Bradleys'-while there are some differing details, the structure of the assignments is essentially the same. See filing 1-1 at 5-43; filing 1-5.[1] IFS alleges that under its insurance policies with the affected homeowners, State Farm "agreed to pay for direct physical loss to the insured premises resulting from any peril not otherwise excluded within the Policy." Filing 1-1 at 2. IFS further alleges that the policies were in force, and that the insureds or assignee fulfilled their post-loss duties, but that State Farm breached the insurance policies by failing to pay all benefits due and owing under the policies. Filing 1-1 at 3.

         STANDARD OF REVIEW

         A complaint must set forth a short and plain statement of the claim showing that the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2). This standard does not require detailed factual allegations, but it demands more than an unadorned accusation. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The complaint need not contain detailed factual allegations, but must provide more than labels and conclusions; and a formulaic recitation of the elements of a cause of action will not suffice. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). For the purposes of a motion to dismiss a court must take all of the factual allegations in the complaint as true, but is not bound to accept as true a legal conclusion couched as a factual allegation. Id.

         A motion pursuant to Rule 12(b)(1) challenges whether the court has subject matter jurisdiction. The party asserting subject matter jurisdiction bears the burden of proof. Great Rivers Habitat Alliance v. FEMA, 615 F.3d 985, 988 (8th Cir. 2010). Rule 12(b)(1) motions can be decided in three ways: at the pleading stage, like a Rule 12(b)(6) motion; on undisputed facts, like a summary judgment motion; and on disputed facts. Jessie v. Potter, 516 F.3d 709, 712 (8th Cir. 2008). It appears to the Court that State Farm is advancing a "facial attack" to subject matter jurisdiction, based on the pleadings-that is, State Farm claims that IFS has not sufficiently alleged a basis for subject matter jurisdiction. See Branson Label, Inc. v. City of Branson, Mo., 793 F.3d 910, 914 (8th Cir. 2015). Accordingly, the Court restricts itself to the face of the pleadings and IFS receives the same protections as it would defending against a motion brought under Rule 12(b)(6). Hastings v. Wilson, 516 F.3d 1055, 1058 (8th Cir. 2008).

         To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a complaint must also contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Iqbal, 556 U.S. at 678. 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. Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but has not shown-that the pleader is entitled to relief. Id. at 679.

         When deciding a motion to dismiss under Rule 12(b)(6), the Court is normally limited to considering the facts alleged in the complaint. If the Court considers matters outside the pleadings, the motion to dismiss must be converted to one for summary judgment. Fed.R.Civ.P. 12(d). However, the Court may consider exhibits attached to the complaint and materials that are necessarily embraced by the pleadings without converting the motion.Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003). Documents necessarily embraced by the pleadings include those whose contents are alleged in a complaint and ...


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