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Johnston v. Citifinancial, Inc.

United States District Court, S.D. West Virginia, Beckley Division

October 5, 2017

ALAN JOHNSTON and JANET JOHNSTON, Plaintiffs,
v.
CITIFINANCIAL, INC., and AMERICAN HEALTH AND LIFE INSURANCE COMPANY, Defendants.

          MEMORANDUM OPINION AND ORDER

          IRENE C. BERGER, UNITED STATES DISTRICT JUDGE.

         The 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.

         FACTUAL ALLEGATIONS

         The 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 jurisdiction.

         American 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.

         The 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.

         STANDARD OF REVIEW

         A 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, the-defendant-unlawfully-harmed-me accusation.” 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).

         The 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).

         To 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.

         DISCUSSION

         The 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).[1] 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 claims.[2]

         A. Breach of Contract

         In West 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. ...


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