United States District Court, N.D. West Virginia
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT'S PARTIAL MOTION TO DISMISS
FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE.
plaintiffs, Philip and Janie Slampak (“Mr. and Mrs.
Slampak”), filed a complaint in the Circuit Court for
Wetzel County, West Virginia. ECF No. 1-1. The defendant,
Nationwide Insurance Company of America
(“Nationwide”), removed the civil action to the
United States District Court for the Northern District of
West Virginia on September 14, 2018. ECF No. 1. The complaint
alleges that David Michael Kestner (“Mr.
Kestner”) operated an automobile recklessly and
negligently, causing a rear-end collision with Mr.
Slampak's vehicle, and permanent injuries and damages to
Mr. and Mrs. Slampak (Count I). Id. at 8-10.
Plaintiffs further allege that Mr. Slampak was insured under
an automobile insurance policy or contract that was purchased
from defendant Nationwide prior to the automobile accident,
and that defendant Nationwide is liable to plaintiffs under
the policy or contract for the bodily injuries and damages
arising from the automobile accident pursuant to the terms
and coverage limits of the policy or contract (Count II).
Id. at 11-14. Plaintiffs assert various injuries
caused by Mr. Kestner (Count III). Id. at 14-15.
Plaintiffs also assert common law misconduct due to defendant
Nationwide's unreasonable delay, wrongful denial of
liability, and wrongful withholding of payment for Mr.
Slampak's claim for underinsured motorists bodily injury
insurance benefits covered under the insurance policy by
defendant Nationwide (Count IV). Id. at 15-16.
Plaintiffs further allege that defendant Nationwide violated
the West Virginia Unfair Trade Practices Act
(“UTPA”) (Count V), and that defendant Nationwide
breached the implied covenant of good faith and fair dealing
(Count VI). Id. at 16-27. Plaintiffs also assert a
separate count for punitive damages (Count VII). Id.
at 22-23. Lastly, plaintiffs allege that Mr. Slampak was
forced to hire counsel in order to establish the full amount
of his damages and reach the eventual policy limits
settlement after defendant Nationwide refused and failed to
pay Mr. Slampak's first-party claim under his Nationwide
automobile insurance policy. Id. at 23. Plaintiffs
state that they substantially prevailed against defendant
Nationwide since the eventual policy limits settlement was
substantially more than what defendant Nationwide offered for
first-party underinsured automobile insurance benefits under
the terms and conditions of the Nationwide automobile
insurance policy (Count VIII). Id. at 23-24.
Therefore, plaintiffs contend that defendant Nationwide
directly and proximately caused damages and injury due to its
wrongful failure to make prompt, fair, and equitable
settlement of this first-party claim. Id. at 24.
Mrs. Slampak alleges that due to defendant Nationwide's
actions, she “has lost the consortium, society and
services of her husband.” Id. at 25.
Plaintiffs seek compensatory damages, punitive damages,
attorneys' fees and expenses in reaching settlement with
defendant Nationwide, and any other attorneys' fees,
pre-judgment interest, post-judgment interest, costs, and any
other appropriate relief. Id. at 25-26.
Nationwide filed a motion to partially dismiss
plaintiffs' complaint to limit plaintiffs' claims to
common law bad faith (Count IV), and violations of the UTPA
(Count V), and, therefore, to dismiss the other Counts. ECF
No. 3. In the motion, defendant Nationwide first asserts that
plaintiffs settled and released their bodily injury claims
arising from plaintiffs' contractual relationship with
defendant Nationwide and only preserved allegations of breach
of the UTPA and common law bad faith. ECF No. 4 at 6.
Therefore, defendant Nationwide asserts that Counts I through
III should be dismissed. Id. Second, defendant
Nationwide contends that the plaintiffs have released their
claim for Hayseeds damages against defendant
Nationwide or, in the alternative, the plaintiffs are banned
by the doctrine of claim preclusion or issue preclusion, or
both, from requesting such damages. Id.
Specifically, defendant Nationwide notes that
Hayseeds damages arise from a contract and since the
plaintiffs' allegations are based on defendant
Nationwide's alleged breach of its contractual duties by
failing to promptly pay for their injuries, the release
prevents the plaintiffs from collecting on Counts I through
III. Id. at 6-7. Alternatively, defendant Nationwide
indicates that the three factors for claim preclusion apply
here since: (1) both the civil action and the prior state
court action involve the same parties; (2) the Circuit Court
of Wetzel County, West Virginia dismissed their complaint
after settlement; and (3) before settlement and dismissal of
the prior state court action, plaintiffs pursued
attorneys' fees related to their efforts to recover money
under their policy. Id. Similarly, defendant
Nationwide contends that issue preclusion would also apply
here since: (1) the plaintiffs filed a prior state court
action against the defendant, which alleged several of the
same allegations asserted in this case; (2) the plaintiffs
specifically requested attorneys' fees in the previous
civil action; and (3) the plaintiffs released their claims in
the prior state court action and only preserved certain
claims. Id. at 8-9. Third, defendant Nationwide
states that under West Virginia law, there is no independent
claim for breach of the implied covenant of good faith and
fair dealing. Id. at 9 (citing Highmark W.Va.,
Inc. v. Jamie, 655 S.E.2d 509, 514 ( W.Va. 2007)).
Fourth, defendant Nationwide contends that West Virginia law
does not recognize an independent claim for punitive damages,
and therefore Count VII fails to state a claim upon which
relief can be granted. Id. at 10 (citing Susko
v. Cox Enters., Inc., No. 5:07-cv-144, 2008 WL 4279673
*4 (N.D. W.Va. Sept. 16, 2008) (Stamp, J.)).
plaintiffs filed a response in opposition to defendant
Nationwide's motion to partially dismiss plaintiffs'
complaint. ECF No. 6. First, the plaintiffs assert that the
plain language of the release preserves all claims other than
bodily injury claims against defendant Nationwide.
Id. at 1. Second, the plaintiffs contend that
defendant Nationwide has not provided any basis in the
language of the policy that damages for attorneys' fees,
annoyance and inconvenience and/or Hayseeds damages
were contemplated in the settlement agreement and were
expressly excluded from the release and dismissal order.
Id. at 3. Third, the plaintiffs assert that claim
preclusion does not apply since the law requires
substantially different evidence to support a claim for
personal injury under a motorist policy than it requires to
support a claim for extra contractual damages. Id.
at 4 (“One case evaluates whether the insured
substantially prevails, while the other case evaluates
liability and damages arising from an underinsured loss under
a contract of automobile insurance. The underlying tort suit
and the instant derivative suit require substantially
different evidence to sustain them.”). Fourth,
plaintiffs state that there is no statutory or common law
requirement that Hayseeds claims must be brought in
the same civil action as the underlying suit against a
carrier; rather, the plaintiffs contend that it is well
settled that “[a] cause of action for insurance bad
faith may arise even if there has been a settlement and
release of the underlying case against the tortfeasor so long
as the release does not cover the insurer and the insurer is,
or should be, aware of the possibility of a bad faith action
at the time it agrees to the settlement.” Id.
at 4-5 (citing Poling v. Motorists Mut. Ins. Co.,
Syl. Pt. 2, 192 W.Va. 46, 47, 450 S.E.2d 635, 636 (1994)).
Fifth, the plaintiffs assert that they are permitted to
allege a breach of the covenant of good faith and fair
dealing since they are not seeking duplicative damages, but
are seeking such damages in the alternative. Id. at
5-6. Fifth, the plaintiffs request leave of court to amend
any and all inartful pleading with respect to the claim of
punitive damages, indicating that they only seek punitive
damages as a remedy rather than as an independent cause of
Nationwide filed a reply in support of its motion to
partially dismiss plaintiffs' complaint. ECF No. 7. First
defendant Nationwide asserts that the plaintiffs failed to
address why they are not barred from re-pursuing their claims
with respect to bodily injury claims that were alleged and
released in the prior state court action. Id. at 2.
Second, defendant Nationwide contends that the plaintiffs
released their Hayseeds damages when they released
their underinsured motorist coverage claim since “a
claim for Hayseeds relies upon a finding that the
insured substantially prevailed against the insurer
concerning a coverage dispute under the insurance
contract.” Id. at 3. Third, defendant
Nationwide states that the plaintiffs are claim precluded
from asserting Count VI since the Hayseeds claim
relies on the same evidence as their underinsured motorist
coverage claim, because the Hayseeds claim depends
on whether the plaintiffs substantially prevailed with
respect to the insurance claim dispute. Id. at 5-6.
Fourth, defendant Nationwide contends that there is no
independent cause of action for breach of the implied
covenant of good faith and fair dealing, and that such a
covenant arises from a contract. Id. at 6. Moreover,
defendant Nationwide states that even if there was an
independent cause of action, the plaintiffs already released
their state court claims and the Circuit Court of Wetzel
County, West Virginia already dismissed the plaintiffs'
complaint in the prior state court action with prejudice.
Id. Lastly, defendant Nationwide requests the Court
to dismiss Count VII because “[p]laintiffs agree that
West Virginia law does not permit a plaintiff to bring an
independent cause of action for punitive damages.”
Id. at 7.
reasons stated below, this Court grants defendant
Nationwide's motion for partial dismissal with respect to
Counts I through III of the complaint, grants as framed the
defendant's motion with respect to the punitive damages
claim (Count VII), and grants the defendant's motion with
respect to the implied covenant of good faith and fair
dealing claim (Count VI). This Court denies the
defendant's motion with respect to the plaintiffs'
Hayseeds claim (Count VIII). Therefore,
plaintiffs' claims based on common law misconduct (Count
IV), the UTPA (Count V), and Hayseeds (Count VIII)
assessing a motion to dismiss for failure to state a claim
under Rule 12(b)(6), a court must accept all well-pled facts
contained in the complaint as true. Nemet Chevrolet, Ltd
v. Consumeraffairs.com, Inc, 591 F.3d 250, 255 (4th Cir.
2009). However, “legal conclusions, elements of a cause
of action, and bare assertions devoid of further factual
enhancement fail to constitute well-pled facts for Rule
12(b)(6) purposes.” Id. (citing Ashcroft
v. Iqbal, 129 S.Ct. 1937, 1949 (2009)). This Court also
declines to consider “unwarranted inferences,
unreasonable conclusions, or arguments.” Wahi v.
Charleston Area Med. Ctr., Inc., 562 F.3d 599, 615 n.26
(4th Cir. 2009).
purpose of a motion under Rule 12(b)(6) is to test the formal
sufficiency of the statement of the claim for relief; it is
not a procedure for resolving a contest about the facts or
the merits of the case. 5B Charles Alan Wright & Arthur
R. Miller, Federal Practice and Procedure §
1356 (3d ed. 1998). The Rule 12(b)(6) motion also must be
distinguished from a motion for summary judgment under
Federal Rule of Civil Procedure 56, which goes to the merits
of the claim and is designed to test whether there is a
genuine issue of material fact. Id. For purposes of
the motion to dismiss, the complaint is construed in the
light most favorable to the party making the claim and
essentially the court's inquiry is directed to whether
the allegations constitute a statement of a claim under
Federal Rule of Civil Procedure 8(a). Id. §
complaint should be dismissed “if it does not allege
‘enough facts to state a claim to relief that is
plausible on is face.'” Giarratano v.
Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “Facial plausibility is established once the
factual content of a complaint ‘allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.'” Nemet
Chevrolet, 591 F.3d at 256 (quoting Iqbal, 129
S.Ct. at 1949). Detailed factual allegations are not
required, but the facts alleged must be sufficient “to
raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555.
stated above, this Court grants the defendant's motion
for partial dismissal with respect to Counts I through III of
the complaint, grants as framed the defendant's motion
with respect to the punitive damages claim (Count VII), and
grants the defendant's motion with respect to the implied
covenant of good faith and fair dealing claim (Count VI).
This Court denies the defendant's motion with respect to
the plaintiffs' Hayseeds claim (Count VIII).
Therefore, the plaintiffs' claims based on common law
misconduct (Count IV), the UTPA (Count V), and
Hayseeds (Count VIII) remain.
Counts I through III
complaint alleges that Mr. Kestner operated a vehicle
recklessly and negligently, causing a rear-end collision with
Mr. Slampak's automobile, and permanent injuries and
damages to Mr. and Mrs. Slampak (Count I). ECF No. 1-1 at
8-10. Plaintiffs further allege that Mr. Slampak was insured
under an automobile insurance policy or contract that was
purchased from defendant Nationwide prior to the automobile
accident, and that defendant Nationwide is liable to
plaintiffs under the policy or contract for the bodily
injuries and damages arising from the automobile accident
pursuant to the terms and coverage limits of the policy or
contract (Count II). Id. at 11-14. Plaintiffs then
assert various injuries caused by Mr. Kestner (Count III).
Id. at 14-15. Defendant Nationwide states that the
plaintiffs settled and released their bodily injury claims
arising from the plaintiffs' contractual relationship
with Nationwide. ECF No. 4 at 6.
The Release states:
. . . the undersigned, does hereby release and forever
discharge Nationwide Mutual Insurance Company, its heirs and
assigns . . . from any and all liability, claims, actions,
causes of action, whatsoever, which the Releasor now has or
which may hereafter accrue, on account of or in any way
growing out of bodily injuries and damages, having already
resulted or to result at any time in the future, whether or
not they are in the contemplation of the parties at the
present time or whether or not they arise following the
execution of this Release, as a result of, due to, arising
from, by reason of, or in any way ...