United States District Court, S.D. West Virginia, Beckley Division
MEMORANDUM OPINION AND ORDER
C. BERGER, UNITED STATES DISTRICT JUDGE.
Court has reviewed the Defendants' Motion to Dismiss
Complaint (Document 7), the Defendants'
Memorandum of Law in Support of Motion to Dismiss
Complaint (Document 8), the Complaint (Document
1-2), and all attached exhibits. For the reasons stated
herein, the Court finds that the motion should be granted.
Plaintiffs, Alan and Janet Johnston, initiated this suit in
the Circuit Court of Wyoming County, West Virginia, with a
complaint filed on April 28, 2017. They named the following
Defendants: CitiFinancial, Inc. and American Health and Life
Insurance Company (American Life). The Defendants removed to
federal court on June 12, 2017, citing diversity
Life offered credit life insurance to CitiFinancial
customers, in which a life insurance policy guaranteed loan
payments in the event of the death of the insured. The
Plaintiffs entered into a loan agreement with CitiFinancial
with credit life insurance coverage provided by American
Life. The insurance premiums were built into the loan
agreement. The sales material provided assurance that the
credit life insurance could cover the loan and provide
“protection for the term of your loan up to the maximum
age.” (Compl. at ¶ 6.) American Life ceased
offering coverage during the life of the loan. The Plaintiffs
assert that “[t]he opportunity to purchase credit life
insurance coverage was an inducement to the remaining terms
of the loan and indeed an inducement to contract with
CitiFinancial, Inc., at all, ” and the cancellation of
the insurance coverage constitutes a breach. (Id. at
¶ 8.) The Plaintiffs also allege that the Defendants
violated “truth in lending by making promises and
failing to disclose fully the terms of the credit life
insurance policy that induced Plaintiffs to contract.”
(Id. at ¶ 11.) The Plaintiffs seek punitive and
compensatory damages based on the alleged outrageous conduct,
as well as attorney's fees and costs, extinguishment of
the lien, forfeiture of the security interest in the
property, and voiding of the promissory agreement for amounts
owed under the contract.
Defendants filed a motion to dismiss on July 3, 2017. The
Plaintiffs did not file a response. As the response time has
long expired, the motion is ripe for review.
motion to dismiss filed pursuant to Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim upon which
relief can be granted tests the legal sufficiency of a
complaint or pleading. Francis v. Giacomelli, 588
F.3d 186, 192 (4th Cir. 2009); Giarratano v.
Johnson, 521 F.3d 298, 302 (4th Cir. 2008). Federal Rule
of Civil Procedure 8(a)(2) requires that a pleading contain
“a short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed.R.Civ.P.
8(a)(2). Additionally, allegations “must be simple,
concise, and direct.” Fed.R.Civ.P. 8(d)(1).
“[T]he pleading standard Rule 8 announces does not
require ‘detailed factual allegations, ' but it
demands more than an unadorned,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atlantic Corp v. Twombly, 550 U.S.
544, 555 (2007)). In other words, “a complaint must
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.
Moreover, “a complaint [will not] suffice if it tenders
naked assertions devoid of further factual
enhancements.” Iqbal, 556 U.S. at 678
(quoting Twombly, 550 U.S. at 557) (internal
quotation marks omitted).
Court must “accept as true all of the factual
allegations contained in the complaint.” Erickson
v. Pardus, 551 U.S. 89, 93 (2007). The Court must also
“draw[ ] all reasonable factual inferences from those
facts in the plaintiff's favor.” Edwards v.
City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
However, statements of bare legal conclusions “are not
entitled to the assumption of truth” and are
insufficient to state a claim. Iqbal, 556 U.S. at
679. Furthermore, the court need not “accept as true
unwarranted inferences, unreasonable conclusions, or
arguments.” E. Shore Mkts., v. J.D. Assocs. Ltd.
P'ship, 213 F.3d 175, 180 (4th Cir. 2000).
“Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice . . . [because courts] ‘are not bound to accept
as true a legal conclusion couched as a factual
allegation.'” Iqbal, 556 U.S. at 678
(quoting Twombly, 550 U.S. at 555).
survive a motion to dismiss, “a complaint must contain
sufficient factual matter, accepted as true, ‘to state
a claim to relief that is plausible on its face.'”
Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 570). In other words, this “plausibility
standard requires a plaintiff to demonstrate more than
‘a sheer possibility that a defendant has acted
unlawfully.'” Francis, 588 F.3d at 193
(quoting Twombly, 550 U.S. at 570). A plaintiff
must, using the complaint, “articulate facts, when
accepted as true, that ‘show' that the plaintiff
has stated a claim entitling him to relief.”
Francis, 588 F.3d at 193 (quoting Twombly,
550 U.S. at 557). “Determining whether a complaint
states [on its face] a plausible claim for relief [which can
survive a motion to dismiss] will . . . be a context-specific
task that requires the reviewing court to draw on its
judicial experience and common sense.” Iqbal,
556 U.S. at 679.
Defendants identify claims for breach of contract, fraud, and
violations of the Truth in Lending Act (TILA) in the
Plaintiffs' complaint, and seek to dismiss each claim.
They assert that the insurance policy language permitted
American Health to cancel the policy with written notice
provided thirty days in advance. American Health notified the
Plaintiff that the credit life insurance policy would be
cancelled effective April 30, 2015, in a letter dated January
5, 2015. (Att'd as Def.'s Ex. B, Document
7-2). Thus, the Defendants assert that the
breach of contract claim should fail because they complied
with the terms of the policy. The Defendants further argue
that the fraud claims were not pled with sufficient
particularity, and the terms of the policy were clear. The
Defendants argue that the facts alleged do not support a TILA
claim. Finally, the Defendants assert that the statute of
limitations has expired for TILA and fraud
Breach of Contract
Virginia, courts “accord the language of an insurance
policy its common and customary meaning.” Boggs v.
Camden-Clark Mem'l Hosp. Corp., 693 S.E.2d 53, 57-58
(2010). If, after giving the language its customary meaning,
the provisions in an insurance policy “are plain and
unambiguous and where such provisions are not contrary to a
statute, regulation, or public policy, the provisions will be
applied and not construed.” Syl. pt. 1, Kelly v.
Painter, 504 S.E.2d 171, 172 (1998). Courts are to
determine whether a contract is ambiguous as a question of
law. Syl. pt. 4, Blake v. State Farm Mut. Auto. Ins.
Co., 685 S.E.2d 895, 897 (2009) (noting that
“[t]he mere fact that parties do not agree to the
construction of a contract does not render it
ambiguous”). Courts must give full effect to the plain
meaning of clear and unambiguous insurance policy contract
provisions. Id., Syl. pt. ...