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Garver v. Principal Life Insurance Co.

United States District Court, D. Kansas

October 18, 2019

ROBERT P. GARVER, Plaintiff,



         This case arises out of plaintiff Garver's purchase of and attempted claim on a disability insurance policy. Defendant Duane Roth, President of defendant The Roth Companies (collectively, “Roth”) sold plaintiff this policy. Defendant Principal Life Insurance Company (“Principal”) was the carrier of plaintiff's policy. After a work-related injury, plaintiff made a claim under the policy which was ultimately denied by defendant Principal. In the instant action, plaintiff brings three claims against defendants Roth based on their representations about policy coverage and their conduct in acquiring the appropriate policy. Defendants Roth move to dismiss plaintiff's claims as either precluded or inadequately pleaded under Kansas law. (Doc. 18.) Although the court is persuaded that plaintiff's claim for intentional infliction of emotional distress is inadequate under Kansas law, the court is not persuaded that plaintiff's other tort claims are precluded. Accordingly, Roth defendants' motion to dismiss is granted in part and denied in part.

         I. Factual Background

         On or about July 12, 2017, sometime after plaintiff purchased the policy from defendant Roth, he was injured when he fell off the roof of a home he was building. (Doc. 1-1, at 2.) This injury left him with severe disabilities which plaintiff alleges leave him permanently unable to perform any construction work. (Id.) In July 2017, plaintiff filed a claim with Principal for total disability insurance benefits under his policy.

         In March 2018, amid Principal's investigation into plaintiff' claim, plaintiff alleges that defendant Roth made several pertinent representations to him. First, plaintiff alleges Roth told him that because the disability policy provided coverage for his “own occupation, ” he would still receive total disability benefits without reduction even if he worked in another occupation. (Id. at 7.) Second, plaintiff alleges Roth represented that they had received this information from Principal. (Id.) In reliance on these representations, plaintiff began working at Welborn Sales. (Id.) This was not his previous occupation, but rather a “new job in sales and office work.” (Id. at 10.)

         On September 28, 2018, Principal denied plaintiff's claim for total disability benefits after more than a year of investigation and processing. (Id. at 12.) Plaintiff alleges that Principal based this decision on several grounds, two of which are relevant for this motion. First, Principal noted that because plaintiff was working, he no longer met the definition of total disability under the policy. (Id. at 13.) Second, plaintiff's proven capability of working in another occupation also supported claim denial. (Id.)

         In response to this denial, plaintiff filed a complaint against Principal and Roth alleging four separate causes of action: (1) breach of contract by Principal, (2) misrepresentation by Principal and Roth, (3) intentional infliction of emotional distress by Principal and Roth, and (4) negligence by Principal and Roth. Plaintiff's first two claims against Roth (Counts II-III) arise out of Roth's alleged representations about the policy coverage in the event that plaintiff began working in a different occupation. Plaintiff's negligence claim against Roth (Count IV) arises out of Roth's alleged duty in procuring an appropriate policy for plaintiff. Roth now moves to dismiss Counts II-IV under Rule 12(b)(6) for failure to state a claim upon which relief may be granted.

         II. Legal Standard

         On a motion to dismiss under Rule 12(b)(6), the court assumes true all well-pleaded facts in the complaint, disregards all legal conclusions worded as factual allegations, and grants the plaintiff all reasonable inferences from the pleadings. Colony Ins. Co. v. Burke, 698 F.3d 1222, 1228 (10th Cir. 2012). To survive a motion to dismiss, the complaint “must contain 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) (citing Bell Atl. Co. v. Twombly, 550 U.S. 544, 570 (2007)) (quotation marks omitted). “While the 12(b)(6) standard does not require that Plaintiff establish a prima facie case in [the] complaint, the elements of each alleged cause of action help to determine whether Plaintiff has set forth a plausible claim.” Khalik v. United Air Lines, 671 F.3d 1188, 1192 (10th Cir. 2012).

         A party claiming fraud or mistake is subject to a heightened pleading standard. See Fed. R. Civ. P. 9(b). Under Rule 9(b), the party “must state with particularity the circumstances constituting fraud or mistake, ” with the exception that “[m]alice, intent, knowledge, and other conditions of a person's mind” may be alleged generally. Id. This heightened pleading standard serves to protect the defending party from “unfounded charges of wrongdoing which might injure its reputation or goodwill.” Swimwear Sol., Inc. v. Orlando Bathing Suit, LLC, 309 F.Supp.3d 1022, 1045 (D. Kan. 2018). Rule 9(b) supplements the requirements of Rule 8(a), rather than replacing them. Id. To meet the requirements of Rule 9(b), a complaint must “set forth the time, place and contents of the false representation, the identity of the party making the false statements and the consequences thereof.” Tal v. Hogan, 453 F.3d 1244, 1263 (10th Cir. 2006) (quoting Koch v. Koch Indus., 203 F.3d 1202, 1236 (10th Cir. 2000)). In other words, the complaint must state the “who, what, where, and when of the alleged fraud.” Swimwear Sol., 309 F.Supp. at 1045.

         III. Discussion

         Roth's main argument in its motion to dismiss is that plaintiff's claims are precluded as arising out of the same subject matter of the contact between plaintiff and Roth. Plaintiff argues that Kansas law recognizes separate tort actions in negligence against insurance brokers or agents, and that plaintiff's claim for misrepresentation arises out of an independent duty. The court will address plaintiff's claims for misrepresentation and negligence before turning to his claim for intentional infliction of emotional distress.

         A party's tort claim is precluded if it is based on the same facts alleged in its contract claim and the contract specifically defines the duties of the parties. Ford Motor Credit Co. v. Suburban Ford, 699 P.2d 992, 999 (Kan. 1985) (citing Isler v. Tex. Oil & Gas Corp., 749 F.2d 22 (10th Cir. 1984)). The Isler court noted several “historic and well-defined” exceptions to this general rule, such as fraud and unconscionability. Isler, 749 F.2d at 23; see also Klein v. Grynberg, 44 F.3d 1497, 1503 n.3 (10th Cir. 1995). These exceptions are simply illustrations of the rule that tort claims are not precluded if they are based on a duty that is independent of any contractually defined duties between the parties. See Isler, 749 F.2d at 24; Graphic Techs., Inc. v. Pitney Bowes Inc., 998 F.Supp. 1174, 1179 (D. Kan. 1998). Accordingly, the relevant inquiry is whether plaintiff's tort causes of action are based on duties independent of any contractually defined duties defendant Roth may have had.

         a. Count II - ...

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