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Mendy v. AAA Insurance

United States District Court, D. Kansas

October 5, 2017

AAA INSURANCE, et al., Defendants.



         Pro se plaintiff Alphonse J. Mendy filed this lawsuit against defendant Auto Club Family Insurance Company (misnamed by the Complaint as AAA Insurance) and defendant ABC Insurance Company.[1] Plaintiff's Complaint asserts that defendants failed to pay an insurance claim for water damage to plaintiff's home and that defendants wrongfully cancelled the insurance contract between plaintiff and defendant Auto Club Family Insurance Company (hereinafter “Auto Club Family”). Plaintiff's Complaint asserts 10 separate claims for relief. Defendant Auto Club Family has filed a Motion to Dismiss. Doc. 8. The motion seeks dismissal of eight of the Complaint's claims. For reasons explained below, the court grants in part and denies in part defendant's motion.

         I. Factual Background

         The following facts are taken from plaintiff's Complaint (Doc. 1). The court accepts the facts asserted in the Complaint as true and views them in the light most favorable to plaintiff. Burnett v. Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231, 1235 (10th Cir. 2013) (citing Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)). The court also construes plaintiff's allegations liberally because he proceeds pro se. See Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991) (holding that courts must construe pro se litigant's pleadings liberally and hold them to a less stringent standard than formal pleadings drafted by lawyers).

         On May 1, 2007, plaintiff purchased insurance coverage from Auto Club Family to insure his residence-a three-bedroom single-family home located in Johnson County, Kansas. Consistent with the parties' insurance agreement, plaintiff paid insurance premiums to Auto Club Family until it cancelled the policy in 2016. Plaintiff contends that he received no notice of cancellation from Auto Club Family. Instead, in April 2016, Midwest Regional Credit Union received a Notice of Cancellation from Auto Club Family. The Notice was sent to the Credit Union around the same time that plaintiff visited an Auto Club Family branch to renew the insurance policy that was due to expire on May 31, 2016. Auto Club Family cancelled the insurance policy about a month after sending the Notice and eight days before the policy's expiration. Auto Club Family collected a monthly premium from plaintiff even after sending the Notice of Cancellation.

         Plaintiff alleges that Auto Club Family cancelled the insurance policy because plaintiff had a covered claim for water damage. Plaintiff also alleges that Auto Club Family refused to cover the water damage claim even though it was covered by the insurance policy. After plaintiff filed the insurance claim for water damage, an adjuster visited his home. The adjuster filed a report with Auto Club Family concluding that the damage resulted from a faulty design and prolonged water seepage into the building. Based on the adjustor's report, Auto Club Family denied plaintiff's insurance claim. Auto Club Family also contended that the damage was caused by pre-existing conditions, not covered under the policy. Auto Club Family had inspected and photographed the building before it entered into the insurance contract with plaintiff. And, after that initial inspection, Auto Club Family never noted any evidence of faulty design or prolonged water seepage. Plaintiff (who is African-American) contends that Auto Club Family's reasons for denying coverage are a pretext for denying coverage to deserving insureds, particularly African-Americans and other minority insureds.

         Plaintiff has asserted 10 claims for relief: (1) unlawful race discrimination (Count I); (2) discrimination based on termination (Count II); (3) breach of contract (Count III); (4) breach of contract for post-termination violations (Count IV); (5) unjust enrichment (Count V); (6) civil conspiracy (Count VI); (7) unfair trade practices (Count VII); (8) breach of the duty of good faith and fair dealing (Count VIII); (9) punitive damages (Count IX); and (10) expenses of litigation and attorney's fees (Count X). Auto Club Family moves to dismiss eight of these 10 claims- Counts I, II, IV, V, VI, VII, VIII, and X-under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failing to state a claim for relief. The court considers the motion below.

         II. Is Subject Matter Jurisdiction Properly Invoked?

         Before turning to the substance of the Motion to Dismiss, the court considers whether subject matter jurisdiction exists. Plaintiff invokes this court's diversity jurisdiction under 28 U.S.C. § 1332. Doc. 1 (Compl. ¶ 1). Diversity jurisdiction requires: (1) complete diversity between the parties, and (2) an amount in controversy exceeding $75, 000. 28 U.S.C. § 1332. Here, plaintiff alleges the requisite amount in controversy. Doc. 1 (Compl. ¶ 2). Plaintiff also alleges that the parties are diverse but the citizenship facts he alleges do not demonstrate that diversity exists.

         Plaintiff alleges that he is a Kansas citizen. Id. (Compl. ¶ 7.A). Also, he alleges that defendant Auto Club Family Insurance Company (misnamed AAA Insurance) is a Missouri citizen. Id. (Compl. ¶ 8.A). And, he alleges that defendant ABC Insurance Company is “a Kansas or foreign insurance company licensed to do business and doing business in Kansas . . . .” Id. (Compl. ¶ 8.B). The ambiguity created by plaintiff's alternative allegation about ABC Insurance Company prevents plaintiff from discharging his burden to establish complete diversity. Because he is the party invoking the court's jurisdiction, plaintiff bears the burden to establish that he and ABC Insurance Company are citizens of different states. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (explaining that “the burden of establishing” federal jurisdiction “rest upon the party asserting jurisdiction”). All plaintiff has done is allege that ABC may or may not be a Kansas citizen. That will not suffice.

         Nevertheless, the court concludes that it has federal question subject matter jurisdiction under 28 U.S.C. § 1331. For a federal court to have federal question jurisdiction over a lawsuit, plaintiff must assert a “civil action[ ] arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. Here, plaintiff asserts several claims arising under federal law. In the first claim for unlawful race discrimination, Count I, the Complaint asserts that “Plaintiff was wrongly discriminated against in his contract because of his race in violation of 42 U.S.C. Section 1981, The Civil Rights Act of 1866, as amended.” Doc. 1 (Compl. ¶ 53). Count II asserts unlawful discrimination based on plaintiff's “race, in violation of Plaintiff's Civil Rights, including the Civil Rights Act of 1866, as amended.” Id. (Compl. ¶ 58). And, Count VII asserts a “violation of federal unfair trade practices legislation in both Title 12 and Title 15 of the United State[s] Code.” Id. (Compl. ¶ 111). Because plaintiff alleges claims arising under federal law, the court has subject matter jurisdiction here over these federal claims. The court concludes that it also has supplemental jurisdiction over plaintiff's state law claims under 28 U.S.C. § 1367. The court thus is satisfied that subject matter jurisdiction exists here.

         III. Rule 12(b)(6) Standard

         Federal Rule of Civil Procedure 8(a)(2) provides that a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Although this Rule “does not require ‘detailed factual allegations, '” it demands more than “[a] pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action'” which, as the Supreme Court explained, “will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

         “To survive a motion to dismiss [under Rule 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). “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.” Id. (citing Twombly, 550 U.S. at 556). “Under this standard, ‘the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims.'” Carter v. United States, 667 F.Supp.2d 1259, 1262 (D. Kan. 2009) (quoting Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007)).

         While the court must assume that the factual allegations in the complaint are true, it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Id. at 1263 (quoting Iqbal, 556 U.S. at 678). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice” to state a claim for relief. Bixler v. Foster, 596 F.3d 751, 756 (10th Cir. 2010) (quoting Iqbal, 556 U.S. at 678).

         IV. Analysis

         On July 11, 2017, defendant filed its Motion to Dismiss. Under our court's local rules, plaintiff's response to the motion “must be filed or served within 21 days, ” or by August 1, 2017. D. Kan. Rule 6.1(d)(2). Plaintiff failed to file a timely response. Almost two months after the deadline for responding had passed, plaintiff filed a Memorandum in Opposition to defendant's motion. Doc. 11. Plaintiff never asked for leave to file the response out of time. And, he never explains why he failed to file the response in a timely fashion.

         The court recognizes that plaintiff proceeds pro se here. But, plaintiff's pro se status does not excuse him from complying with federal and local rules. Nielsen v. Price, 17 F.3d 1276, 1277 (10th Cir. 1994) (“This court has repeatedly insisted that pro se parties follow the same rules of procedure that govern other litigants.” (citations and internal quotation marks omitted)). Under D. Kan. Rule 7.4(b), a party “who fails to file a responsive brief or memorandum within the time specified in D. Kan. Rule 6.1(d) waives the right to later file such brief or memorandum.” The rule also states that “if a responsive brief or memorandum is not filed within the D. Kan. Rule 6.1(d) time requirements, the court will consider and decide the motion as an uncontested motion. Ordinarily, the court will grant the motion without further notice.” D. Kan. Rule 7.4(b).

         Because plaintiff failed to file a timely response to defendant's Motion to Dismiss, the court could consider the motion an uncontested one. But, even though plaintiff filed his response out of time, the court has considered its contents when analyzing defendant's Motion to Dismiss in the sections below.[2]

         A. Count I (Unlawful Race Discrimination under § 1981)

         Plaintiff's first claim for relief asserts that Auto Club Family treated him differently based on his race and national origin. Specifically, plaintiff contends that Auto Club Family treated him differently by: (1) the manner of its correspondence with him, (2) denying an auto insurance claim, (3) denying his water damage claim on two different occasions, (4) cancelling his insurance policy without cause and without notice, (5) giving the Notice of Cancellation to his bank, and (6) refusing to negotiate with plaintiff in good faith. Doc. 1 at 8-9 (Compl. ¶¶ 41- 42). Plaintiff also alleges that Auto Club Family simply denied his claims instead of “process[ing] [them] as it does for white people.” Id. at 9 (Compl. ¶ 43). And, he alleges that Auto Club Family subjects plaintiff and “other like minorities” to greater and stricter claim requirements than other policy holders. Id. (Compl. ΒΆ 47). Plaintiff also asserts that Auto Club Family agents subjected him ...

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