United States District Court, W.D. Missouri, Southern Division
February 12, 2015
ALLSTATE INDEMNITY COMPANY, Plaintiffs,
JOSEPH DIXON and CASEY DIXON, Defendants.
DOUGLAS HARPOOL, District Judge.
Before the Court is Defendants' Motion for More a Definite Statement (Doc. 4). Defendants argue Plaintiff should be required to file a more definite statement, pursuant to Federal Rule of Civil Procedure 12(e), concerning Paragraph 9 of the Complaint. Plaintiff counters that the current pleading is sufficient to satisfy the pleading standards in federal court. The Court, after full and careful consideration, hereby GRANTS Defendants' motion.
Plaintiff Allstate Indemnity Company ("Allstate") filed a complaint in federal court pursuant to 28 U.S.C. §§ 2201 and 1332, seeking a declaratory judgment concerning the rights and obligations of the respective parties under an insurance policy. According to the Complaint, Allstate issued a policy of insurance to Defendants Joseph and Casey Dixon effective March, 11, 2014 through March 11, 2015. Plaintiff states that Defendants thereafter submitted a claim for damages arising from an alleged fire that occurred at Defendants' home on or about April 12, 2014. The Complaint alleges that Defendants are not entitled to recover for their alleged losses under the policy because certain policy conditions and exclusions prohibit recovery where, as alleged here, (1) Defendants concealed and/or misrepresented material facts with regard to the claimed loss,  and (2) Defendants, or someone at their direction, started the fire. Plaintiff seeks a declaration from the Court that there is no coverage under the policy for Defendants' claimed loss, that Plaintiff is not liable under the aforesaid policy in any manner for Defendants' claimed loss, that Defendants or someone at their direction started the fire, that Defendants intentionally concealed or misrepresented material facts concerning the loss, and that Plaintiff is entitled to recover costs and expenses in bringing this action.
In response to the Complaint, Defendants filed a motion for more definite statement. Defendants argue that Paragraph 9 of the Complaint, which alleges in part that "Defendants concealed and/or misrepresented material facts with regard to the claimed loss, " is so vague or ambiguous that Defendants cannot reasonably prepare a response. Defendants further argue that Plaintiff's allegations are in the nature of fraud and therefore must be pleaded with particularity pursuant to Federal Rule of Civil Procedure 9(b). Defendants request a more definite statement as to the allegations within Paragraph 9 and ask Plaintiff to "state with particularity the material facts defendants are accused of having concealed and/or misrepresented."
Plaintiff filed suggestions in opposition to Defendants' motion. Plaintiff argues that Rule 9(b) is inapplicable here because the Complaint seeks a declaratory judgment that the contract at issue has been breached rather than a cause of action based on common law fraud. Moreover, Plaintiff states that there is "no question that Defendants have been given fair notice of the grounds for Plaintiff's claim." Plaintiff concludes that Defendants' motion involves lack of detail rather than unintelligibility and, therefore, the information requested by Defendants is more appropriately gleaned from discovery rather than a more definite statement.
A party may move for a more definite statement where a pleading "is so vague or ambiguous that the party cannot reasonably prepare a response." Fed.R.Civ.P. 12(e). A motion for more definite statement is "not to be used to test the opponent's case by requiring him to allege certain facts or retreat from his allegations" nor is it to be used "as a substitute for discovery in trial preparation." Tinder v. Lewis Cnty. Nursing Home Dist., 207 F.Supp.2d 951, 960 (E.D. Mo. 2001). Rather, such motions are "designed to strike at unintelligibility rather than lack of detail in the complaint." Id. They are appropriate where a party cannot determine the issues he must meet or where there is a major ambiguity or omission in the complaint such that the complaint is unanswerable. Pfitzer v. Smith & Wesson Corp., No. 4:13-CV-676-JAR, 2014 WL 636381, at *1 (E.D. Mo. Feb. 18, 2014). In light of the liberal standards of notice pleading and the availability of extensive discovery, courts disfavor motions for more definite statement. See, e.g., Batten v. Fairway Capital Recover, LLC, No. 2:12-CV-04224-NKL, 2012 WL 5866564, at *2 (W.D. Mo. Nov. 19, 2012) (citing Tinder, 207 F.Supp.2d at 959-60).
Nonetheless, district courts are willing to sustain a Rule 12(e) motion where a complaint fails to satisfy the particularity requirements of Rule 9(b). See, e.g., Pfitzer, 2014 WL 636381, at *3; 2911 Belleview, LLC v. ATL Holdings, LLC, No. 08-0442-CV-W-FJG, 2008 WL 3852720 (W.D. Mo. Aug. 14, 2008). This practice is logical in light of Rule 9(b)'s heightened pleading requirements and purposes, which are to "to inhibit the filing of a complaint as a pretext for the discovery of unknown wrong, protect defendants from the harm that might come to their reputations when charged with acts of moral turpitude, and finally ensure that the allegations are particularized enough to enable defendants to prepare an adequate defense." Fed.R.Civ.P. 9; see U.S. ex rel. O'Keefe v. McDonnell Douglas Corp., 918 F.Supp. 1338, 1345 (E.D. Mo. 1996).
The first issue the Court must address in deciding Defendants' motion is whether the heightened pleadings standards of Rule 9(b) apply to the Complaint. Defendants argue that Rule 9(b) applies because Paragraph 9 of the Complaint is "in the nature of fraud" in that it alleges Defendants concealed and/or misrepresented material facts in the claims process. As noted by Plaintiff, however, Defendants fail to cite any case law holding that Rule 9(b) applies in the specific context at issue here - an action by an insurer seeking declaration of non-coverage based upon the insured's failure to comply with a policy provision prohibiting misrepresentations during the claims process. Unfortunately, Plaintiff also fails to cite any directly relevant case that holds Rule 9(b) does not apply in the specific context at issue here.
The Court's own research reveals that federal courts applying Missouri law hold that fraud-type claims arising under insurance contracts are distinct from common law fraud claims. Gen. Cas. Ins. Companies v. Holst Radiator Co., 88 F.3d 670, 671 (8th Cir. 1996) ("The District Court, by refusing Holst's proposed instruction, held that the meaning of the word fraud in the insurance contract is not the same as common-law fraud. We agree."); see also Travelers Indem. Co. of Am. v. Willig, No. 4:98CV713 RWS, 2000 WL 288396, at *1 (E.D. Mo. Mar. 10, 2000) ("a fraud claim concerning an insurance contract is not the same as common law fraud"). Not only do the elements of these claims differ, but the definitions of a "material misrepresentation" may also differ. See Warren v. State Farm Fire & Cas. Co., 531 F.3d 693, 698-99 (8th Cir. 2008) (holding language of insurance contract governs whether statement amounts to material misrepresentation); Patterson v. State Auto. Mut. Ins. Co., 105 F.3d 1251, 1253 (8th Cir. 1997) (insurer need not allege detrimental reliance); Holst Radiator Co., 88 F.3d at 671 (insurer not required to prove all of the elements of common law fraud).
However, the mere fact that a claim requires different elements than those required for common law fraud does not render the claim exempt from the heightened pleading standards of Rule 9(b). Rule 9(b) applies generally to allegations of fraud or mistake and requires a party to "state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). As explained by Judge Laughrey in the context of determining whether Rule 9(b) applies to claims brought under the MMPA, "the substantive Missouri law question of what elements constitute a claim under the MMPA is distinct from the procedural question of how those elements must be pleaded." Khaliki v. Helzberg Diamond Shops, Inc., No. 4:11-CV-00010-NKL, 2011 WL 1326660, at *2 (W.D. Mo. Apr. 6, 2011). The fact that a cause of action may require different elements than common law fraud "has no relevance to the question of whether Rule 9(b) of the Federal Rules of Civil Procedure applies, or what level of particularity Rule 9(b) demands, but only to the issue of what substantive elements Rule 9(b) would apply to." Id.
The Eleventh Circuit stated a similar rationale when it held that the heightened pleading standards of Rule 9(b) apply to situations like the one currently before the Court. See Hendley v. Am. Nat. Fire Ins. Co., 842 F.2d 267, 268 (11th Cir. 1988). In that case, the district court struck the insurance company's defense alleging that the insured concealed and misrepresented material facts in the claims process where the insurer failed to plead its allegations in compliance with Rule 9(b). Id. On appeal, the defendant insurance company argued that the aforementioned defense should not have been subject to Rule 9(b) because it constituted a contract claim under the insurance policy rather than a fraud claim. Id. The Eleventh Circuit disagreed with defendants and explained:
First, when the court demands that fraud be pled with particularity, it does not read any provision into the contract between the insurer and the insured; instead, it applies an external, purely procedural rule to the contract as it stands. Secondly, requiring the insurer to plead fraud more specifically will not force it to pay claims which it suspects may be false. The insurer remains free to deny the claim so long as it understands that it must give the court and the opposing party a reason why it did so. In essence American National attempts to convince us that fraud is not always fraud. We disagree.
Id. at 268-69.
The Eleventh Circuit's holding is consistent with the purposes of Rule 9(b) stated above. When an insurer's denial is based upon the insured's alleged fraudulent misrepresentation in the claims process, the protections of Rule 9(b) are implicated - i.e. the need to inhibit the filing of a complaint as a pretext for the discovery of unknown wrong, the need to protect the insured from harm that might come to its reputation, and the need to ensure allegations are particularized enough to enable the defendant to prepare an adequate defense. Moreover, the Eighth Circuit has indicated that one of the main purposes of Rule 9(b) is to "facilitate a defendant's ability to respond to and to prepare a defense to a plaintiff's charges"; conclusory allegations about false or omitted material facts are "insufficiently specific to satisfy the requisites of Fed.R.Civ.P. 9(b)." Greenwood v. Dittmer, 776 F.2d 785, 789 (8th Cir. 1985).
Furthermore, the Court's research indicates that the Eleventh Circuit's holding is consistent with Missouri law applicable to insurance contracts. Missouri law provides that the non-performance of a condition precedent must be pleaded "specifically and with particularity." See Mo. Rev. Stat. § 509.170; Mo. Sup.Ct. R. 55.16; see, e.g., Nichols v. Preferred Risk Grp., 44 S.W.3d 886, 896-97 (Mo.Ct.App. 2001) ("The failure of the insured to comply with a condition is an affirmative defense which the Insurer must plead. A denial of performance or occurrence shall be made specifically and with particularity.' Rule 55.16."). A 1974 Committee Note to Missouri Rule 55.16 indicates that "[t]his is the same as Rule 9(c) of the Federal Rules of Civil Procedure[.]"
Based upon the foregoing authorities, the Court finds that Rule 9(b) applies to Plaintiff's claims alleging Defendants misrepresented and/or concealed certain information in the claims process. The Court must now determine whether Plaintiff's current allegations satisfy Rule 9(b). The sufficiency of a pleading under Rule 9(b) depends on the circumstances of the specific case before the court, taking into account factors such as the nature of the case and the relationship of the parties. See Payne v. United States, 247 F.2d 481, 486 (8th Cir. 1957). The Eighth Circuit holds that Rule 9(b) is typically satisfied where the complaint alleges "such matters as the time, place, and contents of false representations, as well as the identity of the person making the misrepresentation and what was obtained or given up thereby." Drobnak v. Andersen Corp., 561 F.3d 778, 783 (8th Cir. 2009) (quoting Schaller Tel. Co. v. Golden Sky Sys., Inc., 298 F.3d 736, 746 (8th Cir. 2002)). A plaintiff need not plead every alleged misrepresentation but must provide some representative examples in order to enable defendant to respond. U.S. ex rel. Joshi v. St. Luke's Hosp., Inc., 441 F.3d 552, 557 (8th Cir. 2006); see also Moua v. Jani-King of Minnesota, Inc., 613 F.Supp.2d 1103, 1110 (D. Minn. 2009). Where a complaint alleges omission rather than misrepresentation, Rule 9(b) standards are more lenient. See Lewey v. Vi-Jon, Inc., No. 4:11CV1341 JAR, 2012 WL 1859031, at *3 (E.D. Mo. May 22, 2012).
Here, Plaintiff alleges that "Allstate's investigation into the facts and circumstances surrounding the claimed loss has revealed that Defendants concealed and/or misrepresented material facts with regard to the claimed loss." Compl. ¶ 9. Such a broad and conclusory allegation is insufficient under Rule 9(b). Defendants are entitled to adequate notice of the claims against them, including notice of the material facts that were allegedly concealed and/or misrepresented. The Complaint's allegations concerning misrepresentation and concealment are effectively unanswerable without such information. Accordingly, the Court will grant Defendants' motion insofar as it seeks a more definite statement pursuant to Rule 12(e).
Based on the foregoing analysis, Defendants' Motion for More a Definite Statement (Doc. 4) is GRANTED. Plaintiff shall file an Amended Complaint within fourteen (14) days of the date of this order and shall plead with particularity the material facts allegedly misrepresented and/or concealed by Defendants. See Fed.R.Civ.P. 12(e).
IT IS SO ORDERED.