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Jacobs v. State Farm Mutual Automobile Insurance Co.

United States District Court, E.D. Louisiana

June 3, 2019

JEROME JACOBS
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY ET AL.

         SECTION “R” (4)

          ORDER AND REASONS

          SARAH S. VANCE UNITED STATES DISTRICT JUDGE

         Before the Court is defendants State Farm Fire and Casualty Company's and State Farm Mutual Automobile Insurance Company's motion to dismiss plaintiff's claims for penalties and attorney's fees.[1]Because plaintiff has failed to plausibly allege that he is entitled to this relief, the Court grants the motion. The Court also grants plaintiff leave to amend his complaint to cure the deficiency.

         I. BACKGROUND

         This case arises from a car accident.[2] On August 11, 2016, plaintiff was allegedly stopped in traffic on Esplanade Avenue when another driver failed to stop and hit the back of his car.[3] According to plaintiff, the impact caused him severe injuries.[4] Plaintiff claims that his injuries were caused by the driver's negligence.[5]

         After the accident, plaintiff settled with the other driver involved in the accident, and with the driver's insurance company.[6] He then filed this action on August 6, 2018 in Orleans Parish against his uninsured/under insured and excess claim insurers, State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company, claiming that the insurers were liable for the driver's negligence.[7] On November 16, 2018, State Farm Fire and Casualty Company removed the case to this Court on the basis of diversity jurisdiction.[8] On January 7, 2019, plaintiff filed an amended complaint alleging that the defendants failed to fairly adjust and settle his claim in bad faith and seeking statutory penalties and attorney's fees.[9]

         Defendants have filed a motion to dismiss plaintiff's claims for penalties and attorney's fees.[10] Plaintiff opposes the motion.[11]

         II. LEGAL STANDARD

         To survive a Rule 12(b)(6) motion, a party must plead “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when the party pleads facts that allow the court to “draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678. A court must accept all well-pleaded facts as true and must draw all reasonable inferences in favor of the nonmoving party. See Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).

         A legally sufficient complaint must establish more than a “sheer possibility” that the party's claim is true. Iqbal, 556 U.S. at 678. It need not contain detailed factual allegations, but it must go beyond labels, legal conclusions, or formulaic recitations of the elements of a cause of action. Id. In other words, the face of the complaint must contain enough factual matter to raise a reasonable expectation that discovery will reveal relevant evidence of each element of the party's claim. Lormand, 565 F.3d at 257. The claim must be dismissed if there are insufficient factual allegations to raise a right to relief above the speculative level, Twombly, 550 U.S. at 555, or if it is apparent from the face of the complaint that there is an insuperable bar to relief, Jones v. Bock, 549 U.S. 199, 215 (2007).

         III. DISCUSSION

         A. Failure to State a Claim

          Punitive damages are prohibited under Louisiana law unless authorized by statute. Warren v. Shelter Mut. Ins. Co., 233 So.3d 568, 586 (La. 2017) (“It is well-settled in Louisiana that punitive damages are available only where authorized by statute.”). Two statutes allow plaintiffs to recover punitive damages when insurers arbitrarily or capriciously fail to pay a claim. See La. R.S. 22:1892, 22:1973. Plaintiffs may also recover attorney's fees under Section 1892. La. R.S. 22:1892(b)(1). Statutory penalties are not warranted when the insurer has a reasonable basis to defend the claim and acts in good-faith reliance on that defense. Reed v. State Farm Mut. Auto Ins. Co., 857 So.2d 1012, 1021 (La. 2003). The bad faith statutes are penal in nature and must be strictly construed. Id. at 1020.

         Section 1892 requires that an insurer pay claims or make an offer of settlement within thirty days of receipt of a satisfactory proof of loss. La. R.S. 22:1892. In order to recover under Section 1892, a claimant must demonstrate “that (1) an insurer has received satisfactory proof of loss, (2) the insurer fail[ed] to tender payment within thirty days of receipt thereof, and (3) the insurer's failure to pay is arbitrary, capricious or without probable cause.” La. Bag Co., Inc. v. Audubon Indem. Co., 999 So.2d 1104, 1112-13 (La. 2008). The Louisiana Supreme Court has interpreted “arbitrary and ...


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