United States District Court, S.D. West Virginia, Charleston Division
MEMORANDUM OPINION AND ORDER
R. GOODWIN, UNITED STATES DISTRICT JUDGE
before the court is Defendant Harco National Insurance
Company's Motion to Dismiss Counts II and III [ECF No.
7]. For the reasons that follow, the Motion is
GRANTED in part and DENIED in
Automotive, Inc., Rodney LeRose II, Jonathan LeRose,
Mid-State Properties, LLC, and Mid-State Ford, LLC
(“Plaintiffs”) brought the current action against
Defendant Harco National Insurance Co. (“Harco”).
Plaintiffs obtained insurance coverage from Harco for their
businesses. Compl. [ECF No. 1]. On June 9, 2017, a fire
devastated the building and business personal property owned
by Plaintiffs. Id. at ¶ 12. Plaintiffs
presented claims to their insurer, Harco, for the substantial
damages to their building, business personal property, lost
business income, and increased expenses as a result of the
fire. Id. at ¶ 13. Harco accused Plaintiffs of
arson and refused to pay the benefits to which they were
entitled under their insurance policy. Id. at
¶¶ 15-16. Plaintiffs then hired counsel.
Id. at ¶17.
counsel asked Harco to pay the value of the damage to the
business personal property and to pay the policy limit for
damage to the building. Id. at ¶¶ 20, 22.
After months of negotiations, Plaintiffs and Harco resolved
the claim for damages to business personal property.
Id. at ¶ 25. After continued requests by
Plaintiffs and delays by Harco, Harco tendered the policy
limit for damages to the building caused by the fire almost
two years later on April 3, 2019. Id. at
24, 2019, Plaintiffs initiated the instant action against
Defendant alleging a breach of contract claim in Count I, a
Hayseeds damages claim in Count II, a breach of the
implied covenant of good faith and fair dealing in Count III,
and an unfair claims settlement practices claim in Count IV.
On August 2, 2019, Defendant Harco moved to dismiss Counts II
and III for failure to state a claim under Rule 12(b)(6) of
the Federal Rules of Civil Procedure.
Rule of Civil Procedure 8(a)(2) requires only “a short
and plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). “When
ruling on a motion to dismiss, courts must accept as true all
of the factual allegations contained in the complaint and
draw all reasonable inferences in favor of the
plaintiff.” Farnsworth v. Loved Ones in Home Care,
LLC, No. 2:18-CV-01334, 2019 WL 956806, at *1 (S.D.
W.Va. Feb. 27, 2019). To survive a motion to dismiss, the
plaintiff's factual allegations, taken as true, must
“state a claim to relief that is plausible on its
face.” Robertson v. Sea Pines Real Estate Co.,
679 F.3d 278, 288 (4th Cir. 2012) (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009)). Although “the
complaint must contain sufficient facts to state a claim that
is plausible on its face, it nevertheless need only give the
defendant fair notice of what the claim is and the grounds on
which it rests.” Ha l v. DIRECTV,
LLC, 846 F.3d 757, 777 (4th Cir. 2017). “[A]
complaint is to be construed liberally so as to do
substantial justice.” Id.
Count II: Substantially Prevailing Damages
moves to dismiss Count II of Plaintiffs' Complaint asking
for Hayseeds damages. In West Virginia, “a
first-party insured may bring a bad faith claim against an
insurer, once the underlying claim has been resolved.”
Slampak v. Nationwide Ins. Co. of Am., No.
5:18CV154, 2019 WL 3304814, at *6 (N.D. W.Va. July 23, 2019).
“Such a claim typically arises from the insurer's
duty to settle with its insured on a claim for which the
insured was legally entitled to recover.” Id.
(internal quotes removed). However, it is “of little
importance whether an insurer contests an insured's claim
in good or bad faith.” Hayseeds, Inc. v. State Farm
Fire & Cas., 352 S.E.2d 73, 79 (W.Va. 1986).
“In either case, the insured is out his consequential
damages and attorney's fees.” Id.
seminal Hayseeds case, the West Virginia Supreme
Court of Appeals held that when a policyholder
“substantially prevails in a property damage suit
against an insurer, ” the policyholder is entitled to
reasonable attorney's fees in vindicating the claim,
damages for economic loss caused by the delay in settlement,
and aggravation and inconvenience. 352 S.E.2d 73, 80 (W.Va.
1986). In Jordan v. Nat'l Grange Mut. Ins. Co.,
the Court explained “that an insured
‘substantially prevails' in a property damage
action against his or her insurer when the action is settled
for an amount equal to or approximating the amount claimed by
the insured immediately prior to the commencement of the
action, as well as when the action is concluded by a
jury verdict for such an amount.” 393 S.E.2d 647, 652 (
W.Va. 1990) (emphasis added). The insured can recover
reasonable attorney's fees “as long as the
attorney's services were necessary to obtain payment of
the insurance proceeds.” Id. “To hold
otherwise would be unfair to the insured, who originally
purchased the insurance policy to be protected from incurring
attorney's fees and expenses arising from
litigation.” Hayseeds, 352 S.E.2d at 79.
Plaintiffs submitted a claim under their insurance policy
issued by Harco for damages to their building and business
personal property from the June 9, 2017 fire. Harco accused
Plaintiffs of arson and refused to pay. As a result,
Plaintiffs hired counsel to recover their benefits. After
months of negotiations and delays from Harco, Harco agreed to
pay the policy limit for damages to the building and resolved
the business personal property claim. Thus, Plaintiffs have
stated sufficient facts at this stage showing they
substantially prevailed when Harco tendered the full policy
limit for the damage to their business prior to the
commencement of this action. See Jordan, 393 S.E.2d
at 652. Plaintiffs have also shown that an
“attorney's services were necessary to obtain
payment of the insurance proceeds.” See id.
argues this claim should be dismissed because the matter was
settled before a lawsuit was initiated. However, the West
Virginia Supreme Court of Appeals has stated that a plaintiff
“substantially prevails in a property damage
action” when the action is settled “prior to the
commencement of the action.” See id. In
addition, Defendant Harco has not cited any cases stating a
Hayseeds claim ...