Opinion
No.: 2:22-cv-35-TAV-CRW
01-27-2023
Taylor COSTELLO, individually and on behalf of all others similarly situated, Plaintiff, v. MOUNTAIN LAUREL ASSURANCE COMPANY, Defendant.
Amy Lynn Judkins, Pro Hac Vice, Newsome Melton, Orlando, FL, Edmund A. Normand, Jacob L. Phillips, Pro Hac Vice, Joshua Jacobson, Normand PLLC, Orlando, FL, Andrew J. Shamis, Pro Hac Vice, Edwin Eliu Elliott, Pro Hac Vice, Shamis & Gentile, P.A., Miami, FL, Christopher Chagas Gold, Pro Hac Vice, Scott Adam Edelsberg, I, Pro Hac Vice, Edelsberg Law, P.A., Aventura, FL, Edwin Lee Lowther, III, Joseph Henry Bates, III, Carney Bates & Pulliam, PLLC, Little Rock, AR, J. Gerard Stranch, IV, Stranch, Jennings & Garvey, PLLC, Nashville, TN, for Plaintiff. Allison H. White, Pro Hac Vice, Jeffrey S. Cashdan, Pro Hac Vice, Zachary A. McEntyre, Pro Hac Vice, James Matthew Brigman, Erin Munger, King & Spalding LLP, Atlanta, GA, Dwight E. Tarwater, Taylor Andrew Williams, Lindsey M. Collins, Paine Tarwater & Bickers LLP, Knoxville, TN, Julia C. Barrett, Pro Hac Vice, King & Spalding, Austin, TX, for Defendant.
Amy Lynn Judkins, Pro Hac Vice, Newsome Melton, Orlando, FL, Edmund A. Normand, Jacob L. Phillips, Pro Hac Vice, Joshua Jacobson, Normand PLLC, Orlando, FL, Andrew J. Shamis, Pro Hac Vice, Edwin Eliu Elliott, Pro Hac Vice, Shamis & Gentile, P.A., Miami, FL, Christopher Chagas Gold, Pro Hac Vice, Scott Adam Edelsberg, I, Pro Hac Vice, Edelsberg Law, P.A., Aventura, FL, Edwin Lee Lowther, III, Joseph Henry Bates, III, Carney Bates & Pulliam, PLLC, Little Rock, AR, J. Gerard Stranch, IV, Stranch, Jennings & Garvey, PLLC, Nashville, TN, for Plaintiff. Allison H. White, Pro Hac Vice, Jeffrey S. Cashdan, Pro Hac Vice, Zachary A. McEntyre, Pro Hac Vice, James Matthew Brigman, Erin Munger, King & Spalding LLP, Atlanta, GA, Dwight E. Tarwater, Taylor Andrew Williams, Lindsey M. Collins, Paine Tarwater & Bickers LLP, Knoxville, TN, Julia C. Barrett, Pro Hac Vice, King & Spalding, Austin, TX, for Defendant. MEMORANDUM OPINION AND ORDER Thomas A. Varlan, UNITED STATES DISTRICT JUDGE
This civil case is before the Court on defendant Mountain Laurel Assurance Company's Motion to Dismiss Plaintiff's Amended Complaint [Doc. 30]. Specifically, defendant moves to dismiss plaintiff's amended complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff filed a response [Doc. 40], and defendant replied [Doc. 46]. Thus, defendant's motion is fully briefed and ready for disposition. See E.D. Tenn. L.R. 7.1(a), 7.2. For the reasons explained below, defendant's motion [Doc. 30] is GRANTED in part and DENIED in part. I. Background
For purposes of this opinion, the Court accepts all factual allegations in plaintiff's complaint as true. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
On March 25, 2021, plaintiff Taylor Costello ("Plaintiff") was involved in a car accident and sustained physical damage to her vehicle [Doc. 29, ¶ 16]. At the time of the accident, plaintiff's vehicle was insured by defendant Mountain Laurel Assurance Company ("Defendant") under an insurance policy (the "Policy") [Id. at ¶¶ 2, 16; Doc. 29-1]. Following the wreck, plaintiff made a property damage claim to defendant [Doc. 29, ¶ 17]. Pursuant to uniform policies and procedures, defendant declared plaintiff's vehicle a total loss and purported to pay her the actual cash value ("ACV") of her loss vehicle [Id. at ¶ 18].
When calculating its valuations and claims payments, defendant systemically employs a routine "total loss settlement process" [Id. at ¶ 19]. This process involves obtaining a "Vehicle Valuation Report" from Mitchell International, Inc. ("Mitchell") and relying on that valuation as the ACV amount owed under a policy [Id. at ¶¶ 1, 19]. Defendant provided a Mitchell Vehicle Valuation Report for plaintiff's claim on May 4, 2021 [Id. at ¶ 19; Doc. 29-2].
Similar to plaintiff's report, all of the Mitchell Vehicle Valuation Reports utilized by defendant during the relevant period followed the same process, provided and disclosed the same or substantially the same material information, and presented that material information in the same or substantially the same format [Doc. 29, ¶ 20]. The valuation reports purport to contain values for comparable vehicles for sale in the claimant's geographic area and a valuation of the loss vehicle based on the prices of these comparable vehicles [Id.]. The reports then adjust the advertised prices of those comparable vehicles to account for differences in equipment, mileage, and vehicle configuration [Id.].
In addition, the valuation reports make a further adjustment to each loss vehicle called a "Projected Sold Adjustment" ("PSA") [Id. at ¶ 21]. For plaintiff's claim, PSAs of -$697.00, -$680.00, -$623.00, -$681.00, and -$720.00 were applied to five of the seven comparable vehicles [Id.; Doc. 29-2, pp. 6-8]. Defendant provides no data specific to the comparable vehicles or any explanation of industry practices in its valuation reports to support the PSAs [Doc. 29, ¶ 22]. Instead, the only explanation of the PSA in the report states, "Projected Sold Adjustment - an adjustment to reflect consumer purchasing behavior (negotiating a different price than the listed price)" [Id.; Doc. 29-2, p. 9].
However, PSAs do not reflect market realities and run contrary to customary automobile dealer practices and inventory management [Doc. 29, ¶ 23]. Due to the developments in sophisticated pricing software and the ease with which consumers can compare advertised prices of identical vehicles online, used car dealerships no longer price vehicles above market with the expectation of negotiation [Id. at ¶ 25]. Instead, car dealerships use sophisticated pricing software to appraise vehicles before acquiring them and then, price the vehicles to market without negotiating from that price before selling [Id.].
Moreover, PSAs are contrary to appraisal standards [Id. at ¶ 28]. There are multiple generally recognized and acceptable methodologies for determining the ACV, including use of comparable vehicles [Id.]. Defendant uses comparable vehicles' mileage, options, and trim to make dollar adjustments to the ACV [Id.]. However, defendant further applies the PSAs to the ACV, which are an arbitrary adjustment from the advertised price based on undocumented and unverifiable projections [Id.].
By applying the PSAs, defendant is ignoring vast amounts of relevant data that demonstrate that PSAs should not be utilized in making valuation reports and failing to control for certain variables that could influence pricing [Id. at ¶¶ 29, 43-44]. For example, until July 2021, defendant excluded from the calculation of the PSAs all transactions in which the list price of a vehicle equaled the sold price [Id. at ¶ 30]. Even after July 2021, defendant continued to exclude some transactions in which the list price of a vehicle equaled the sold price [Id. at ¶ 31]. Thus, defendant has excluded and continues to exclude from the calculation of PSAs all transactions in which the sold price of a vehicle is greater than the list price [Id. at ¶ 32].
Furthermore, defendant has not investigated whether market realities support the application of PSAs, nor has defendant or its vendors attempted to verify whether the reason for why an advertised price exceeded the sold price was due to negotiation [Id. at ¶ 34]. Defendant's data is also suspect because it contains a significant number of transactions where the advertised date in the database comes after the sold date [Id. at ¶ 36]. All advertised prices for comparable vehicles listed in defendant's valuation reports are derived from Internet sources such as Cars.com, Autotrader.com, Vast.com, and TrueCar.com [Id. at ¶ 39]. This is problematic because these advertised prices include discounts for consumers who are financing and providing a trade-in, which would require those consumers to pay in cash more than the prices listed on the websites [Id. at ¶ 40].
Finally, the impropriety and arbitrariness of the PSAs is further demonstrated by the fact that Mitchell's primary competitor, CCC Intelligent Solutions, Inc., does not apply PSAs in making valuation reports [Id. at ¶ 46]. Instead, it utilizes list prices [Id.]. In addition, application of the PSAs is arbitrary because defendant does not apply PSAs when calculating the ACV of total losses in California or Washington [Id. at ¶ 47].
Plaintiff filed this class action against defendant on April 7, 2022 [Doc. 1]. After defendant filed a motion to dismiss for failure to state a claim [Doc. 26], plaintiff filed the First Amended Class Action Complaint (the "Amended Complaint") [Doc. 29]. In the Amended Complaint, plaintiff asserts causes of action for breach of contract, breach of the covenant of good faith and fair dealing, and declaratory judgment [Id. at ¶¶ 58-77]. The theory upon which plaintiff's claims rest is that plaintiff and each member of the proposed class were damaged by defendant's application of the PSAs to the valuation reports because the PSAs caused defendant to not pay the ACV they would have received had defendant applied the proper methodologies and appraisal standards [Id. at ¶ 48]. Plaintiff alleges that if it were not for the PSAs, the "Base Value" in each valuation report would have been higher, resulting in a higher settlement value and a higher payment by defendant for the ACV [Id. at ¶ 49]. For plaintiff's individual claim, plaintiff contends that had the PSAs not been applied, the ACV for her loss vehicle would have been $485.86 higher, before adding the related increase in payments for applicable sales taxes [Id.].
II. Standard of Review
Rule 8(a)(2) sets out a liberal pleading standard. Smith v. City of Salem, Ohio, 378 F.3d 566, 576 n.1 (6th Cir. 2004). Thus, a complaint filed in federal court need only contain " 'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the [opposing party] fair notice of what the . . . claim is and the grounds upon which it rests.' " Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). Detailed factual allegations are not required, but a party's "obligation to provide the 'grounds' of h[er] 'entitle[ment] to relief' requires more than labels and conclusions." Id. " '[A] formulaic recitation of the elements of a cause of action will not do' "; nor will "an unadorned, the-defendant-unlawfully-harmed-me accusation"; nor will " 'naked assertion[s]' devoid of 'further factual enhancement.' " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (second alteration in original) (quoting Twombly, 550 U.S. at 555, 557, 127 S.Ct. 1955).
In deciding a Rule 12(b)(6) motion, the Court must determine whether the complaint contains "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. 1955; accord Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). "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." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. "Determining whether a complaint states a plausible claim for relief will [ultimately] . . . be a context-specific task that requires [the Court] to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. In conducting this inquiry, the Court "must construe the complaint in a light most favorable to plaintiff[ ], accept all well-pled factual allegations as true, and determine whether plaintiff[ ] undoubtedly can prove no set of facts in support of those allegations that would entitle [her] to relief." Bishop v. Lucent Techs., Inc., 520 F.3d 516, 519 (6th Cir. 2008) (citing Harbin-Bey v. Rutter, 420 F.3d 571, 575 (6th Cir. 2005)).
III. Analysis
As previously mentioned, plaintiff has alleged claims against defendant for breach of contract, breach of the covenant of good faith and fair dealing, and declaratory judgment [Doc. 29, ¶¶ 58-77]. The Court will address each claim individually along with defendant's arguments for dismissal.
A. Breach of Contract
First, plaintiff contends that defendant breached the terms of the Policy. She states that after she was involved in a car accident, she made a claim for property damage pursuant to the Policy [Id. at ¶ 60]. She alleges that defendant breached the Policy when it utilized PSAs in its vehicle valuation reports and thereafter, handled, adjusted, and paid plaintiff's claim, and the claims of the members of the proposed class, for less than the ACV [Id. at ¶ 62]. Plaintiff asserts that as a result of defendant's breaches, she and the members of the class sustained actual damages [Id. at ¶ 63]. For plaintiff's claim in particular, she claims that her damages are at least $485.86, before calculation of additional sales tax benefits, plus pre-judgment and post-judgment interest [Id.].
Defendant maintains that plaintiff's claim for breach of contract should be dismissed because although plaintiff alleges that defendant paid her insurance claim for less than the ACV, she has not identified any specific provision of the Policy that defendant breached [Doc. 30-1, p. 11]. Moreover, defendant maintains that plaintiff has failed to identify (1) the ACV of her total-loss vehicle, (2) the amount necessary to replace her total-loss vehicle, (3) the stated amount on the declarations page of the Policy, or (4) how much defendant paid her to settle the claim [Id.]. Absent these allegations, defendant argues that plaintiff cannot show that defendant has breached the contract or that she has been damaged [Id.].
Conversely, defendant contends that plaintiff's Amended Complaint and exhibits demonstrate that defendant determined the ACV of plaintiff's loss vehicle in the manner required by the Policy [Id.]. It explains that the Vehicle Valuation Report shows that defendant used Mitchell, who provides an "estimating, appraisal, or injury evaluation system" and in doing so, "considered the market value, age, and condition of the vehicle at the time [of] the loss" [Id.].
Moreover, defendant maintains that plaintiff's assertion that defendant improperly calculated the ACV due to the application of PSAs is also insufficient to state a claim for breach of contract [Id.]. Defendant states that at most, plaintiff has alleged that she is entitled to recover the average of the PSAs applied to five comparable vehicles' list prices in plaintiff's Vehicle Valuation Report [Id. at 11-12]. However, defendant asserts that there is no provision in the Policy that prevents it from relying on a PSA in determining the ACV [Id. at 12]. Defendant claims that simply identifying the amount of a PSA, or the average of the PSAs, does not support the conclusion that plaintiff was paid less than the ACV or explain the amount plaintiff should have been paid under the Policy [Id.]. Defendant contends that in order to state a claim for breach of contract, plaintiff must allege the amount she thinks her loss vehicle was worth and that defendant paid her less than that amount [Id.].
Furthermore, defendant contends that based on plaintiff's theory of the case, defendant could have complied with the Policy by determining the ACV based only on the "sold price" comparable vehicle or the lower "list prices" because those figures do not include a PSA, even though this method would have resulted in a lower value for plaintiff's loss vehicle [Id. at 13]. Based on this assertion, defendant argues that the real substance of plaintiff's claim is a technical challenge to the propriety of the PSAs, which is separate and apart from the settlement amount that defendant paid plaintiff for her total loss claim [Id.]. In other words, defendant contends that plaintiff does not plausibly allege that the PSA led to payment of less than what she was owed, just that the PSA is improper in principle [Id.]. However, defendant asserts that the Policy does not entitle plaintiff to have her loss calculated by any specific method or technique, but instead, it expressly permits defendant to use a third-party valuation service like Mitchell [Id.].
Finally, defendant addresses plaintiff's references made to "Tennessee law" in her Amended Complaint [Id.]. While plaintiff does not identify the "Tennessee law" to which she is referring, defendant presumes she is referring to the Total Loss Regulation found at Tenn. Comp. R. & Regs. 0780-01-05-.09(1)(b) [Id. at 13-14]. Defendant contends that the chapter of the Tennessee Administrative Code on Unfair Claims Settlement Practices ("UCSP"), which contains the Total Loss Regulation, expressly forecloses any private right of action [Id. at 14]. Thus, defendant argues that to the extent plaintiff's claims are based on the contention that defendant violated the Total Loss Regulation, or any other provision of the UCSP chapter, those claims should be dismissed with prejudice [Id.].
Plaintiff responds that she has stated a valid claim for breach of contract [Doc. 40, p. 11]. Plaintiff states that she was in an enforceable contract for auto insurance with defendant and that the Policy required defendant to pay for loss to her insured vehicle limited to the ACV of the vehicle at the time of loss [Id.]. Plaintiff further contends that defendant declared her vehicle a total loss, invoked the policy's limit of liability of the ACV, and purported to pay her the ACV of her vehicle [Id.]. Plaintiff alleges that when calculating the ACV of her vehicle, defendant applied a downward adjustment to the values of comparable vehicles that is not supported by market realties or accepted appraisal methodologies [Id.]. In addition, plaintiff asserts that defendant ignored empirical data that conclusively demonstrated that PSAs are illegitimate and false [Id.].
As a result of applying the PSAs in calculating the ACV of plaintiff's loss vehicle, plaintiff contends that defendant breached the contract by undervaluing the vehicle's ACV [Id. at 12]. She states that she was damaged by this breach because she was not paid the ACV she would have received had defendant applied proper methodologies and appraisal standards [Id.]. In the absence of the PSAs, plaintiff claims her ACV would have been $485.86 higher [Id.].
Plaintiff also argues that she has provided specific detail of her theory of liability and has attached the contract to which she alleges was breached by defendant [Id. at 14]. She contends that she need not formulaically include the language of the specific contract provisions in her allegations because she has provided the Court with the actual contract [Id.]. Nonetheless, plaintiff states that she has clearly alleged that the Policy imposes a duty on defendant to pay plaintiff the ACV of the loss vehicle when adjusting total loss claims [Id.]. Plaintiff further maintains that she has asserted more than a "technical" challenge to the PSAs because she alleges that due to the application of the PSAs, defendant under-calculated the ACV by $485.86, thereby underpaying plaintiff by that amount [Id. at 14-15].
In plaintiff's response, she occasionally uses "Mountain Laurel" and "Progressive" interchangeably. The Court notes that in plaintiff's Amended Complaint, she states that defendant is a subsidiary of Progressive Group entities [Doc. 29, ¶ 12].
Plaintiff further addresses defendant's argument that she cannot state a claim under Tennessee law or the Total Loss Regulation. Plaintiff asserts that it is irrelevant whether § 0780-01-05-.09 affords a private right of action for any violation [Id. at 15]. Instead, plaintiff explains that § 0780-01-05-.09 is relevant to the contractual interpretation and obligations under the Policy [Id.]. Plaintiff points to case law that states when interpreting an insurance contract, courts must consider any relevant statutes, and those statutes become part of the policy, superseding anything in the policy that is repugnant to the provisions of the statute [Id.]. Plaintiff argues that because Tennessee regulations dictate how to determine the ACV under an insurance contract, those regulations are relevant to whether an interpretation of the Policy's rights and obligations was reasonable in this case [Id. at 16].
Based on these regulations, plaintiff maintains that the method used by defendant to calculate the ACV was improper because the Mitchell reports fail to determine the actual cost of the loss vehicle due to the application of the PSAs [Id.]. In addition, plaintiff argues that defendant is not protected by the catch-all provision in the Total Loss Regulation because the PSAs utilized by defendant are based on manipulated data and ignore the modern used-car market where vehicles are priced to market [Id.]. Moreover, plaintiff claims that the only explanation a claimant receives about the PSAs is that they arbitrarily remove hundreds of dollars from a claim and they reflect consumer purchasing behavior, neither of which complies with Tennessee law [Id. at 16-17].
Defendant replies that plaintiff's subjective belief of what method defendant should have used to calculate the ACV of her total loss vehicle is not sufficient to state a breach of contract claim [Doc. 46, p. 3]. Defendant maintains that the ACV is not a methodology but is a limit of liability in the Policy and is to be determined by the market value, age, and condition of the vehicle at the time the loss occurs [Id. at 4]. Thus, defendant claims that the fact that plaintiff disagrees with one aspect of the methodology employed by Mitchell in calculating the ACV of her total loss vehicle does not equate to a breach of the Policy [Id.].
Instead, defendant contends that it could have only breached the Policy had it paid less than it owed in settlement of plaintiff's claim, an amount plaintiff has failed to state [Id.]. Defendant repeats its assertion that plaintiff had no right under the Policy to dictate what method defendant used to calculate the ACV of her loss vehicle, and the Policy expressly permitted defendant to use estimating, appraisal, or injury evaluation systems developed by a third party [Id.]. Defendant argues that this is exactly what it did when calculating the ACV, including application of the PSAs [Id.].
Defendant further argues that plaintiff's claim that absent the application of the PSAs, the payment of her ACV would have been $485.86 higher is insufficient to plausibly allege a violation of defendant's obligations under the Policy [Id. at 5]. It states that the question of whether the settlement payment would have been different if a different methodology had been applied is irrelevant to the question of whether the settlement payment made to plaintiff was too low [Id.]. Defendant repeats its contention that plaintiff must allege that the amount paid was less than the amount of her loss, and the Amended Complaint is silent as to what defendant paid for her total loss or what she believes the ACV of her vehicle was [Id.].
Finally, defendant replies to plaintiff's contention that the Total Loss Regulation is relevant to her claims. Defendant maintains its argument that the enforcement authority of the Total Loss Regulation is expressly reserved to the Commissioner of Commerce and Insurance, and thus, no private right of action exists [Id. at 7]. Moreover, defendant asserts that plaintiff has failed to account for the fact that relevant statutes to an insurance policy become part of the policy and supersede anything in the policy only if the provisions of the policy are repugnant to the provisions of the statute [Id. at 8]. Defendant contends that plaintiff has not alleged that anything in the Policy is repugnant to or otherwise conflicts with the Total Loss Regulation [Id.]. Nonetheless, defendant states that nothing in the policy conflicts or is inconsistent with the Total Loss Regulation [Id.]. In fact, defendant asserts that the Policy's definition of the ACV directly aligns with the Total Loss Regulation, which permits an insurer to offer a cash settlement based upon the actual cost, less any deductible provided in the policy, to purchase a comparable automobile [Id.].
Defendant continues that even if plaintiff could assert a private right of action to enforce the Total Loss Regulation, defendant's chosen valuation method complies with the Total Loss Regulation [Id.]. First, defendant argues that because the Total Loss Regulation states that a settlement value may be derived from one of four options, using one of the methods listed under the regulation is permissive [Id. at 9]. Second, defendant asserts that even if the four options were exclusive and mandatory, application of the PSAs meets the criteria of subsection (b)(4) [Id.]. Third, defendant contends that it has complied with subsections (b)(1) and (b)(2) because the Vehicle Valuation Report uses the average of seven comparable vehicles, all located within 60 miles of plaintiff's ZIP code and all of which were available within 90 days of her loss [Id. at 10].
Because insurance policies are contracts, courts are to interpret insurance policies in compliance with the same rules of any other contract. Garrison v. Bickford, 377 S.W.3d 659, 663-64 (Tenn. 2012). To be successful on a breach of contract claim under Tennessee law, a plaintiff "must prove the existence of a valid and enforceable contract, a deficiency in the performance amounting to a breach, and damages caused by the breach." Fed. Ins. Co. v. Winters, 354 S.W.3d 287, 291 (Tenn. 2011).
Both parties base their arguments on Tennessee law, so the Court will assume that the parties' contract, i.e., the Policy, is governed by Tennessee law.
In this case, there is no dispute between the parties regarding whether a valid and enforceable contract existed. Both parties admit that they contracted under the Policy to insure plaintiff's vehicle [See Doc. 29-1; Doc. 30-1, pp. 6-7; Doc. 40, p. 11]. However, the parties disagree as to whether defendant breached the Policy when defendant used the PSAs in its valuation of the ACV of plaintiff's total loss vehicle.
Before reaching the issue of breach, the Court must first address defendant's argument that plaintiff has failed to identify the specific provision of the Policy that it has breached. The Court agrees with defendant that in order to state a claim for breach of contract, a plaintiff must identify and present the actual terms of the contract allegedly breached. McKnelly v. Wyndham Destinations, Inc., No.: 3:19-CV-103, 2020 WL 1518624, at *3 (E.D. Tenn. Mar. 30, 2020). However, the Court is mindful that the question at this stage of the proceeding is whether plaintiff's factual allegations are sufficient to "raise a right to relief above the speculative level[.]" Twombly, 550 U.S. at 555, 127 S.Ct. 1955.
Here, plaintiff has attached the Policy to her Amended Complaint [Doc. 29-1]. Cf. McKnelly, 2020 WL 1518624, at *3 (where the plaintiffs failed to attach any contracts to the complaint). She alleges that under the Policy, defendant had a duty to pay the ACV of a loss vehicle when adjusting total loss claims and that it failed to fulfill this duty [Doc. 29, ¶¶ 3-4]. Cf. id. at *4 (where the plaintiffs alleged that because the defendant failed to provide certain benefits and services and perform certain obligations, they were damaged).
On a motion to dismiss, courts are permitted to consider the documents attached to and incorporated by reference into the complaint. Smith v. Bd. of Trs. Lakeland Cmty. Coll., 746 F. Supp. 2d 877, 889 (N.D. Ohio 2010).
After analyzing the terms of the Policy, the Court finds that defendant had an obligation to pay plaintiff the ACV of her loss vehicle minus the applicable deductible [Doc. 29-1, pp. 19, 23-24]. See, e.g., Grady v. Progressive Direct Ins. Co., 643 F.Supp.3d 929, 938 (D. Minn. 2022). Defendant even acknowledges that under the Policy, it agreed to pay for sudden, direct, and accidental loss, and the maximum payment it was required to pay was the lowest of four limits of liability enumerated in the Policy, including the ACV of plaintiff's total-loss vehicle [Doc. 30-1, pp. 6-7]. The ACV is defined by the Policy as "the market value, age, and condition of the vehicle at the time the loss occurs" [Doc. 29-1, p. 24]. Thus, regardless of whether defendant breached this obligation in the manner in which plaintiff alleges, plaintiff has identified the provision of the Policy that defendant has allegedly breached. See Archambeault v. Wyndham Vacation Ownership, Inc., No. 3:20-cv-01044, 2021 WL 6496827, at *8-9 (M.D. Tenn. July 14, 2021) (finding that the complaint showed plausible entitlement to relief where it alleged the existence of a cognizable contract, the breach of a specific term of that contract, and the damages that resulted).
The Court recognizes that the amount defendant is required to pay plaintiff under the terms of the Policy is the ACV reduced by the applicable deductible [See Doc. 29-1, p. 23]. Thus, in no way does this Court find that defendant has breached the Policy by paying plaintiff a settlement amount less than the ACV. Instead, as demonstrated below, this opinion only analyzes whether plaintiff has stated a claim that defendant breached the Policy by applying the PSAs in its calculation of the ACV, thereby lowering the settlement payment to plaintiff.
Having made this finding, the Court will now consider whether plaintiff has pled factual content that gives rise to the reasonable inference that defendant breached the Policy. Plaintiff alleges that defendant breached the Policy by "taking advantage of a valuation process that employs improper and unreasonable adjustments to reduce the value of comparable vehicles specified in the valuation reports, which in turn reduces the valuation of the total loss vehicles and the corresponding claim payment" [Doc. 29, ¶ 4]. Specifically, plaintiff disagrees with defendant's application of the PSAs in calculating the ACV because the PSAs caused defendant to pay less than the amount required by the Policy [Id. at ¶¶ 4, 62-63].
Plaintiff explains that the PSAs are contrary to appraisal standards and methodologies and contrary to the used car industry's market pricing and inventory management practices [Id. at ¶ 5]. Plaintiff has alleged that defendant neglected to conduct research into the application of PSAs to the ACV, discarded vast amounts of data indicating that PSAs should not be applied when calculating the ACV, and failed to control for multiple variables when applying PSAs to the ACV [Id. at ¶ 6]. In sum, plaintiff alleges that by applying PSAs to the ACV, defendant "intentionally distorts the data, excludes transactions that undercut its false hypothesis, and ignores market realities," all of which leads to defendant underpaying claimants for the ACV [Id. at ¶ 9].
Assuming plaintiff's claims are true, plaintiff has pled factual content that allows the Court to draw the reasonable inference that defendant breached the Policy by utilizing PSAs to calculate the ACV of her loss vehicle and as a result, underpaid plaintiff for her loss. See Watson v. Progressive Direct Ins. Co., No. 5:22-203, 2022 WL 18027628, at *8 (E.D. Ky. Dec. 30, 2022) (finding that the plaintiff had stated a claim for breach of contract based on similar allegations); Petri v. Drive New Jersey Ins. Co., No. 1:21-cv-20510, 2022 WL 4483437, at *5 (D.N.J. Sept. 26, 2022) (finding similar allegations to be "about as close to a contract law casebook's definition of breach as one could get"); Brown v. Progressive Mountain Ins. Co., No. 3:21-cv-175, slip. op. at 11, 2022 WL 18777475 (N.D. Ga. Aug. 15, 2022) (finding that similar allegations "at least plausibly conflict[ ] with the policy's definition of 'actual cash value' "); Clippinger v. State Farm Mut. Auto. Ins. Co., No. 2:20-cv-02482, 2020 WL 6750357, at *6-7 (W.D. Tenn. Nov. 17, 2020). As a result, plaintiff's claim is more than "a technical challenge to the propriety of the [PSA]" [Doc. 30-1, p. 13], and she has plausibly stated a claim of relief for breach of contract.
See also Smith v. S. Farm Bureau Cas. Ins. Co., 18 F.4th 976, 980-81 (8th Cir. 2021). In Smith, the Eighth Circuit dealt with facts almost identical to this case and found that the plaintiff had stated a claim for breach of contract. Id. Defendant asserts that Smith is not persuasive authority because Smith did not deal with "the sufficiency of the factual allegations to plausibly allege breach and damages" [Doc. 46, p. 6]. Despite defendant's assertion, the Court finds Smith to be persuasive. After the Smith court determined that the plaintiff had asserted a common law breach of contract theory, the court analyzed the theory and found that it should survive the defendant's motion to dismiss based on allegations nearly identical to the ones made in this case. Smith, 18 F.4th at 980-81.
The Court notes that the Policy includes a provision that permits defendant to "use estimating, appraisal, or injury evaluation systems to assist [ ] in adjusting claims under this [P]olicy" and "[s]uch systems may be developed by [ ] a third party" [Doc. 29-1, pp. 29-30]. However, this provision does not eliminate defendant's responsibility under the Policy to pay plaintiff the ACV of her loss vehicle minus the applicable deductible. See Watson, 2022 WL 18027628, at *8 (recognizing that the plaintiff is challenging application of the PSA to the ACV, not the use of a third party to calculate the ACV); Schroeder v. Progressive Paloverde Ins. Co., No. 1:22-cv-00946, 2022 WL 17752171, at *5 (S.D. Ind. Dec. 19, 2022). Thus, even if the Policy does not give plaintiff the right to choose the valuation method utilized by defendant and does not prevent defendant's reliance on a PSA to determine the ACV, defendant's obligation under the Policy remains the same and cannot be eliminated by this provision.
As for the damages element of plaintiff's breach of contract claim, the Court is unpersuaded by defendant's argument that before plaintiff can state a claim for breach of contract, she must allege the amount she thinks her vehicle was actually worth and that defendant paid her less than that amount. Once again, the Court is mindful that the question at this stage of the proceeding is whether plaintiff's factual allegations are sufficient to "raise a right to relief above the speculative level[.]" Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Plaintiff has alleged that had the PSAs not been applied to calculate the ACV of her loss vehicle, her ACV would have been $485.86 higher [Doc. 29, ¶ 49]. While the Court recognizes that plaintiff will be required to provide evidence that supports her allegations later in this litigation, plaintiff need not explain her damages at the motion to dismiss stage, as these numbers will become more precise through the discovery process. Schroeder, 2022 WL 17752171, at *5; Petri, 2022 WL 4483437, at *5. Thus, plaintiff's allegations as to damages are sufficient at this stage of the proceeding to state a claim for breach of contract.
Similarly unavailing is defendant's argument that had it complied with plaintiff's suggested method of valuation, the value of plaintiff's loss vehicle would have been reduced. As demonstrated by plaintiff's Vehicle Valuation Report, defendant applied PSAs to five of the seven comparable vehicles that it utilized in calculating a valuation of plaintiff's loss vehicle [Doc. 29-2, pp. 5-8]. Had defendant not applied those PSAs, plaintiff alleges that the ACV of her vehicle would have been $485.86 higher [Doc. 29, ¶ 49]. As already explained, discovery may shed light on the accuracy of this number, but plaintiff's allegation is enough to plausibly state that defendant has breached the Policy by applying the PSAs in calculating the ACV of her vehicle. See Grady, 643 F.Supp.3d at 939. Having found that plaintiff has pled sufficient factual allegations as to each element of a breach of contract claim, defendant's motion is DENIED as to this claim.
The Court's opinion as to plaintiff's breach of contract claim is in line with many district court decisions across the country that have dealt with cases nearly indistinguishable from this case. See Watson, 2022 WL 18027628, at *8; Schroeder, 2022 WL 17752171, at *5; Grady, 643 F.Supp.3d at 938-39; Volino v. Progressive Cas. Ins. Co., 21 Civ. 6243, 22 Civ. 1714, 2022 WL 5242894, at *2 (S.D.N.Y. Oct. 6, 2022); Williams v. Progressive Direct Ins. Co., 631 F.Supp.3d 202, 215-16 (D. Del. 2022); Petri, 2022 WL 4483437, at *5-6; Holmes v. Progressive Universal Ins. Co., No. 1:22-cv-00894, 2022 WL 17718878 (N.D. Ill. Aug. 29, 2022); Brown, No. 3:21-cv-175, slip. op. at 10-12; Clippinger, 2020 WL 6750357, at *6-7.
Before reaching plaintiff's claim for breach of the covenant of good faith and fair dealing, the Court must address the parties' arguments regarding the Tennessee Total Loss Regulation as it relates to plaintiff's breach of contract claim. The Court first notes plaintiff's argument that she has "plausibly alleged a viable breach of contract claim irrespective of any Tennessee regulation or law" [Doc. 40, p. 15] (emphasis added). She continues by saying that she relies on Tennessee regulations to the extent that they form part of the Policy and are relevant to her breach of contract claim [Id. at 15-17]. Thus, because plaintiff has disclaimed the possibility that she relies on the Total Loss Regulation as a separate cause of action, any argument made by defendant concerning plaintiff's ability to assert a private right of action under the Total Loss Regulation is DENIED as moot. See Schroeder, 2022 WL 17752171, at *9.
Although plaintiff does not assert a separate cause of action under the Total Loss Regulation, she states that she relies on it to form part of her breach of contract claim. Thus, the Court will analyze whether the Total Loss Regulation serves as yet another basis for her claim for breach of contract.
The Tennessee Supreme Court has stated that "any statute applicable to an insurance policy becomes part of the policy and such statutory provisions override and supersede anything in the policy repugnant to the provisions of the statute." Martin v. Powers, 505 S.W.3d 512, 517-18 (Tenn. 2016) (internal quotation marks omitted). In addition, "rules and regulations promulgated pursuant to statutory directive and not inconsistent with such statutes have the force of law." Kogan v. Tennessee Bd. of Dentistry, No. M2003-00291, 2003 WL 23093863, at *5 (Tenn. Ct. App. Dec. 30, 2003).
The Tennessee Total Loss Regulation is promulgated at Tenn. Comp. R. & Regs. 0780-01-05-.09. Subsection (1) requires insurers to apply certain methods "[w]hen the insurance policy provides for the adjustment and settlement of first party automobile total losses on the basis of actual cash value or replacement with another of like kind and quality[.]" Tenn. Comp. R. & Regs. 0780-01-05-.09. If an insurer decides to elect "a cash settlement based upon the actual cost, less any deductible provided in the policy," subsection (1)(b) states that "[actual] cost may be derived" in one of four ways. Id.
This regulation has also been referred to by another district court in Tennessee as the "Equitable Settlements Regulation." See Clippinger v. State Farm Mut. Auto. Ins. Co., 630 F.Supp.3d 947, 954 (W.D. Tenn. 2022). However, for purposes of this opinion, the Court will refer to it as the "Total Loss Regulation."
Due to the word "may," the Court agrees with defendant that under the Total Loss Regulation, insurers are not required to calculate actual cost in one of the four ways listed under subsection (1)(b). However, under subsection (1)(c), if an insurer deviates from one of the prescribed methods:
the deviation must be supported by documentation giving particulars of the automobile condition. Any deductions from the cost, including deduction for salvage, must be as specific as reasonably possible, and specific and appropriate as to dollar amount, and shall be documented in the claim file as required by rule 0780-01-05-.05. The basis for the settlement shall be fully explained to the first party claimant.Id.
Based on the Vehicle Valuation Report, defendant's chosen method of valuation seems to align with the first and second valuation methods [Doc. 29-2, p. 4]. See Tenn. Comp. R. & Regs. 0780-01-05-.09(1)(b). However, plaintiff has alleged that defendant's chosen valuation method is not in line with any of these methods due to the application of the PSAs to the ACV [Doc. 29, ¶ 62]. Thus, plaintiff has alleged a deviation from one of the prescribed methods, and any deviations must comply with subsection (1)(c). Plaintiff has alleged that the only explanation given for the PSAs is "a general, nondescript statement claiming that the reduction is to 'reflect consumer purchasing behavior (negotiating a different price than the listed price)' " [Id. at ¶ 5; Doc. 29-2, p. 9]. Thus, defendant's method of applying and explaining the PSAs to an insured plausibly seems to be repugnant to the provisions of the Total Loss Regulation. As a result, plaintiff has pled factual content that gives rise to the reasonable inference that defendant has breached the Policy via application of the Total Loss Regulation to the Policy.
Moreover, to the extent defendant relies on the fourth method of valuation listed under subsection (1)(b), plaintiff has alleged that defendant's data used to form an ACV is distorted, irrelevant, suspect, and skewed [Doc. 29, ¶¶ 9, 29, 36-37]. Thus, because the Total Loss Regulation requires "fair market values based on current data," the Policy's definition of ACV cannot directly align with the Total Loss Regulation's definition of ACV if defendant is relying on questionable data in forming this number. See Tenn. Comp. R. & Regs. 0780-01-05-.09(1)(b). As a result, plaintiff has also plausibly alleged that defendant's chosen method of valuation does not comply with the fourth valuation method.
The Court notes that this decision follows the court's reasoning in Clippinger, 630 F.Supp.3d at 953-56. Although the court's analysis in that case dealt with the defendant's motion for summary judgment, this Court finds the court's reasoning instructive in deciding defendant's motion to dismiss, as it discusses the Total Loss Regulation under Tennessee law as it applies to insurance contracts on almost identical facts of this case. Of course, in making its ruling, the Court takes into consideration the difference in the standards of review for a motion for summary judgment versus a motion to dismiss.
Based on the foregoing, the Court finds that plaintiff has stated a claim for breach of contract based on the Total Loss Regulation, and defendant's motion to dismiss plaintiff's breach of contract claim is DENIED on this basis.
B. Breach of Covenant of Good Faith and Fair Dealing
Next, plaintiff alleges that by applying the PSAs, defendant breached the covenant of good faith and fair dealing by calculating the ACV in a manner that is arbitrary, capricious, and inconsistent with the reasonable expectations of the parties [Doc. 29, ¶ 68]. However, defendant asserts in its motion to dismiss that under Tennessee law, a claim based on the implied covenant of good faith and fair dealing cannot be a stand-alone claim and must be part of an overall breach of contract claim [Doc. 30-1, p. 14]. As a result, defendant contends that because plaintiff's breach of contract claim fails, so too does plaintiff's claim for breach of the covenant of good faith and fair dealing [Id. at 15].
Plaintiff responds that defendant has misinterpreted Tennessee law [Doc. 40, p. 18]. Plaintiff argues that in order for a claim for breach of the covenant of good faith and fair dealing to exist, all that is required is an underlying contract [Id.]. In its reply, defendant reiterates that no independent action exists for a breach of the covenant of good faith and fair dealing [Doc. 46, pp. 10-11]. However, defendant contends that even if plaintiff could state a separate bad faith claim, her claim fails because her allegations demonstrate that defendant did not breach the contract [Id. at 11].
Under Tennessee law, "implied in every contract [is] a duty of good faith and fair dealing in its performance and enforcement[.]" Dick Broad. Co. of Tennessee v. Oak Ridge FM, Inc., 395 S.W.3d 653, 660 (Tenn. 2013) (quoting Wallace v. Nat'l Bank of Com., 938 S.W.2d 684, 686 (Tenn. 1996)). However, " '[b]reach of the implied covenant of good faith and fair dealing is not an independent basis for relief.' " Davidson v. Arlington Cmty. Schs. Bd. of Educ., 847 F. App'x 304, 310 (6th Cir. 2021) (quoting Shah v. Racetrac Petroleum Co., 338 F.3d 557, 572 (6th Cir. 2003)). Instead, "a cause of action purportedly for breach of the covenant of good faith and fair dealing is properly construed as one of breach of contract." Id. (citing Wallace, 938 S.W.2d at 685 n.1). Thus, in order to successfully state a claim for the breach of the covenant of good faith and fair dealing, a plaintiff must first satisfy the elements of a breach of contract claim. Id.
Here, the Court has already determined, supra, that plaintiff has pled factual content to state a plausible claim for breach of contract. As a result, she can also state a claim for breach of the covenant of good faith and fair dealing. The duty of good faith and fair dealing is invoked "only in the context of explaining the breach or nonperformance of the contract." Id. The Sixth Circuit has explained the covenant in the following way:
The purpose of the duty is to honor the contracting parties' reasonable expectations and protect the rights of the parties to receive the benefits they bargained for. The scope of the duty depends upon the individual contract in each case. But this implied duty does not create new contractual rights or obligations, nor can it be used to circumvent or alter the specific terms of the parties' agreement.Id. (internal quotation marks and citations omitted).
Here, plaintiff has alleged that defendant unreasonably exercised its discretion under the Policy when calculating the ACV of her loss vehicle [Doc. 29, ¶ 68]. Plaintiff explains that defendant exercised its discretion "with an improper motive, and in a manner that was arbitrary, capricious, and inconsistent with the reasonable expectations of the parties" [Id.]. Specifically, plaintiff alleges that defendant breached the covenant of good faith and fair dealing by:
a. Intentionally inventing and applying [PSAs] to undervalue comparable vehicles, and, in turn, insureds' total-loss vehicles; b. Failing to conduct any investigation or study or research into whether the [PSA] (i) reflects the used auto market, (ii) is based on accurate data or extrapolations, (iii) is consistent with accepted appraisal methods and practices, or (iv) has any justification whatsoever; c. Failing to pay insureds the ACV of their total-loss vehicles; d. Interpreting the terms and conditions of their insurance policies in an unreasonable manner solely in an effort to understate the value of total-loss vehicles and avoid paying insureds the ACV on their total-loss claims; e. Inventing spurious grounds for undervaluing total loss claims that are hidden, not specific in dollar amount, not adequately explained, and unreasonable.[Id. at ¶ 69]. These allegations raise questions about whether defendant breached its duty under the Policy to act reasonably and in good faith. See Clippinger, 2020 WL 6750357, at *7. Accepting these allegations as true, defendant's motion is DENIED as to this claim.
Contrary to defendant's assertion that the court in Clippinger failed to recognize well-settled Tennessee law [Doc. 46, p. 11 n.4], this Court finds that the Court in Clippinger followed Tennessee law by upholding plaintiff's breach of the covenant of good faith and fair dealing claim after it found that she had stated a claim for breach of contract, the same analysis the Court follows here. See 2020 WL 6750357, at *7.
C. Declaratory Judgment
Finally, plaintiff, for herself and on behalf of the class, seeks a declaration that "in paying total loss claims with first-party insureds, it is a breach of the insurance contract with [defendant] for [defendant] to base the valuation and payment of claims on values of comparable vehicles that have been reduced by factually erroneous [PSAs]" [Doc. 29, ¶ 74]. Plaintiff contends that defendant's "unlawful common policy and general business practice of applying [PSAs] is ongoing" [Id. at ¶ 75]. She explains that "[defendant] has breached, and continues to breach, the express terms of its contracts of insurance with [p]laintiff and members of the [c]lass[,] requiring it to settle total loss claims on the basis of the total loss vehicle's ACV" [Id.]. Plaintiff continues that she seeks a declaration that "[defendant]'s application of unfounded [PSAs] results in a valuation of less than the ACV [that defendant] is required [to pay insureds] under its insurance contracts" [Id. at ¶ 77].
Defendant argues that plaintiff lacks standing to bring her claim for declaratory judgment because she cannot allege any likelihood of future injury [Doc. 30-1, p. 15]. At most, defendant asserts that plaintiff's bare legal conclusions, even if accepted as true, do not demonstrate a certainly impending risk of future injury to plaintiff [Id.]. Defendant further maintains that plaintiff cannot claim future injury from the possibility that she might someday be in another car accident that results in a total loss of her vehicle and have a settlement issued under the same insurance policy on a valuation report that includes a PSA [Id. at 15-16]. In the alternative, defendant argues that plaintiff's claim for declaratory judgment should be dismissed because the judicial declaration she seeks is expressly reserved for the Commissioner of Commerce and Insurance under the Insurance Trade Practices Act [Id. at 16].
Plaintiff responds that she need not allege risk of future injury because she has alleged present injury [Doc. 40, p. 20]. Moreover, plaintiff states that her claim for declaratory judgment arises out of an insurance contract and that each side has interests adverse to the other [Id. at 21]. As a result, plaintiff argues that this action seeks to determine the rights and obligations of the parties under the Policy, and plaintiff's injury would be redressed by the declaration she seeks [Id.]. In support, she cites to other district courts who have upheld a claim for declaratory judgment under similar circumstances [Id.]. Furthermore, plaintiff states that contrary to defendant's assertion, she does not ask the Court to declare the imposition of the PSA as an unlawful common policy and general business practice of defendant [Id. at 21 n.6].
Defendant replies that nothing in the Amended Complaint can be construed to allege a present injury [Doc. 46, p. 12]. Defendant explains that plaintiff has alleged that she was in a total loss accident in March 2021, and that defendant declared her vehicle a total loss and purported to pay her the ACV of her loss vehicle [Id.]. As a result, defendant contends that any alleged injury occurred over a year ago at the time defendant adjusted and paid plaintiff's claim, and her declaratory judgment claim must be dismissed [Id.].
Under the Declaratory Judgment Act, a federal court "may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). In order to have standing under Article III, plaintiffs have the burden of showing "1) that they have suffered an injury-in-fact that was 2) caused by [d]efendant['s] conduct and that 3) this Court can likely redress the injury with a decision for [p]laintiffs." Kanuszewski v. Michigan Dep't of Health & Hum. Servs., 927 F.3d 396, 405 (6th Cir. 2019). "In the context of a declaratory judgment action, allegations of past injury alone are not sufficient to confer standing. The plaintiff must allege and/or demonstrate actual present harm or a significant possibility of future harm." Fieger v. Ferry, 471 F.3d 637, 643 (6th Cir. 2006) (internal quotation marks omitted).
Here, the Court finds that plaintiff's claim fails because she has not pled factual content giving rise to the reasonable belief that she is presently suffering or will suffer harm. Instead, her claim relates to events that occurred in the past, i.e., that defendant breached the terms of the Policy when it used the PSAs to calculate the ACV of her loss vehicle. Thus, she has not met her burden in showing a likelihood of present or future harm from defendant's actions. See Watson, 2022 WL 18027628, at *11 (citing Williams, 631 F.Supp.3d at 217 and Petri, 2022 WL 4483437, at *7).
Plaintiff cites to various cases in support of the proposition that her claim for declaratory judgment should not be dismissed. First, plaintiff cites to Clippinger v. State Farm Mut. Auto. Ins. Co., No. 2:20-cv-02482, 2021 WL 4887984, at *16 (W.D. Tenn. Oct. 19, 2021), where the court found that plaintiff had standing to bring a claim for declaratory judgment and this claim survived summary judgment. However, as defendant has pointed out, Clippinger is distinguishable from this case because the defendant in Clippinger was attempting to enforce an appraisal provision of the insurance policy against the plaintiff. Id. The court held that although the plaintiff had standing to bring her declaratory judgment claim, it was unclear until the parties participated in appraisal whether the plaintiff had suffered any injury from the defendant's alleged breach of contract. Id. at *17. Here, defendant is not attempting to enforce an appraisal provision against plaintiff, and the Court has already determined that any injury plaintiff suffered from defendant's breach of contract occurred in the past.
Plaintiff next cites to Ngethpharat v. State Farm Mut. Auto. Ins. Co., 499 F. Supp. 3d 908, 919 (W.D. Wash. 2020), which also involved a defendant attempting to enforce an appraisal provision against the plaintiff and is distinguishable from this case for the same reasons as Clippinger. Plaintiff further cites to Chadwick v. State Farm Mut. Auto. Ins. Co., No: 4:21-cv-1161, slip op. at 2, 2022 WL 18779022 (E.D. Ark. July 5, 2022), where the Court allowed the plaintiff's declaratory judgment claim to survive. However, the Court finds this opinion unpersuasive because the court in that case provided no reasoning as to why the plaintiff had standing to bring the claim.
Finally, plaintiff cites to Guidant Sales Corp. v. George, No. 05-2890, 2006 WL 3307633, at *4 (D. Minn. Nov. 14, 2006) and Landau v. Viridian Energy PA LLC, 223 F. Supp. 3d 401, 421 (E.D. Pa. 2016) to argue that because the meaning or enforceability of a contract may be settled through a declaratory judgment before or after breach, she has standing to assert her claim. The Court first notes that "[s]ince its inception, the Declaratory Judgment Act has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants." Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). Regardless of this discretion bestowed on the Court, Landau is unpersuasive because in that case, the court upheld the declaratory judgment claim as a potential basis for class certification, a circumstance that is not present in this case. 223 F. Supp. 3d at 422. In addition, Guidant is unpersuasive because in that case, the court upheld a declaratory judgment claim where the parties disputed the enforceability of an agreement. 2006 WL 3307633, at *4. Here, the parties dispute whether defendant breached the Policy, not whether the Policy is enforceable.
Having found that plaintiff has not stated a plausible claim for relief for declaratory judgment, defendant's motion is GRANTED as to this claim.
IV. Conclusion
Based on the foregoing, defendant's motion to dismiss [Doc. 30] is GRANTED in part and DENIED in part. Defendant's motion is GRANTED as to plaintiff's declaratory judgment claim, but it is DENIED as to plaintiff's claims for breach of contract and breach of the covenant of good faith and fair dealing.
IT IS SO ORDERED.