United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER
STEPHEN R. CLARK UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Plaintiff Allied World
Specialty Insurance Company's Motion to Dismiss
Defendant's Counterclaim . The Court grants the
31, 2018, Plaintiff Allied World Specialty Insurance Company
filed a complaint in this Court seeking a declaratory
judgment that Allied World does not have a duty to defend or
indemnify the City of Ferguson in the “Fee Refund
Lawsuit” filed in the Circuit Court of St. Louis
County. The plaintiffs in the Fee Refund Lawsuit allege
Ferguson “charges a variety of illegal fees designed to
profit the municipality at the expense of the general
welfare.” ECF No. 32, ¶ 12. In its answer to
Allied World's complaint, Ferguson asserted a
counterclaim for vexatious refusal to pay pursuant to
Missouri Revised Statute § 375.420. In response, Allied
World filed the pending motion to dismiss asserting
Ferguson's counterclaim fails to state a claim upon which
relief may be granted.
Federal Rule of Civil Procedure (“FRCP”)
12(b)(6), a party may move to dismiss a claim for
“failure to state a claim upon which relief can be
granted.” The notice pleading standard of FRCP 8(a)(2)
requires a party to give “a short and plain statement
showing that the pleader is entitled to relief.” To
meet this standard and to survive a FRCP 12(b)(6) motion to
dismiss, “a [pleading] 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) (internal quotations and citation
omitted). This requirement of facial plausibility means the
factual content of the party's allegations must
“allow the court to draw the reasonable inference
that the defendant is liable for the misconduct
alleged.” Park Irmat Drug Corp. v. Express Scripts
Holding Co., 911 F.3d 505, 512 (8th Cir. 2018) (quoting
Iqbal, 556 U.S. at 678). The Court must grant all
reasonable inferences in favor of the nonmoving party.
Lustgraaf v. Behrens, 619 F.3d 867, 872-73 (8th Cir.
claim fails to allege one of the elements necessary to
recovery on a legal theory, that claim must be dismissed for
failure to state a claim upon which relief can be granted.
Crest Constr. II, Inc. v. Doe, 660 F.3d 346, 355
(8th Cir. 2011). Threadbare recitals of a cause of action,
supported by mere conclusory statements, do not suffice.
Iqbal, 556 U.S. at 678; Bell Atlantic v.
Twombly, 550 U.S. 544, 555 (2007). Although courts must
accept all factual allegations as true, courts do not take as
true a legal conclusion couched as a factual allegation.
Twombly, 550 U.S. at 555 (internal quotations and
citation omitted); Iqbal, 556 U.S. at 677-78.
motion to dismiss, Allied World argues Ferguson did not plead
a claim for breach of contract, which is a necessary
predicate to a claim for vexatious refusal to pay. Allied
World also claims Ferguson cannot assert a claim for breach
of contract, even if allowed to amend its pleading.
Additionally, Allied World asserts Ferguson's claim fails
because a claim for vexatious refusal to pay is predicated on
a first-party claim for insurance coverage, not a third-party
claim at issue here. Lastly, Allied World contends Ferguson
cannot assert a claim for bad faith failure to settle because
Ferguson did not allege any damages, a demand for settlement,
or facts as to Allied World's state of mind, all of which
are necessary to establish a claim for bad faith failure to
Predicate Breach of Contract Claim
World argues Ferguson must plead a breach of contract claim
along with a vexatious refusal to pay claim, that a vexatious
refusal to pay claim cannot be a stand-alone claim. Missouri
Revised Statute § 375.420 provides:
In any action against any insurance company to recover the
amount of any loss under a policy of automobile, fire,
cyclone, lightning, life, health, accident, employers'
liability, burglary, theft, embezzlement, fidelity,
indemnity, marine or other insurance except automobile
liability insurance, if it appears from the evidence that
such company has refused to pay such loss without reasonable
cause or excuse, the court or jury may, in addition to the
amount thereof and interest, allow the plaintiff damages not
to exceed twenty percent of the first fifteen hundred dollars
of the loss, and ten percent of the amount of the loss in
excess of fifteen hundred dollars and a reasonable
attorney's fee; and the court shall enter judgment for
the aggregate sum found in the verdict.
statute enhances a breach of contract claim; a plaintiff may
recover what the contract provides, and “the
enhancements provided by the statute.” Overcast v.
Billings Mut. Ins. Co., 11 S.W.3d 62, 68 (Mo. 2000). To
establish a claim for vexatious refusal to pay, Ferguson must
prove: (1) it has an insurance policy with Allied World; (2)
Allied World refused to pay; and (3) Allied World's
refusal was without reasonable cause or excuse. Dhyne v.
State Farm Fire & Cas. Co., 188 S.W.3d 454, 457 (Mo.
2006); see also D.R. Sherry Constr., Ltd. v. Am. Family
Mut. Ins. Co., 316 S.W.3d 899, 907 (Mo. 2010).
plead a claim for vexatious refusal to pay, a party must also
plead a claim for breach of contract. The statute itself
states, “in any action against any insurance company to
recover the amount of any loss under a policy . . .”
Mo. Rev. Stat. § 375.420; see also Aziz v. Allstate
Ins. Co., 875 F.3d 865, 869 (8th Cir. 2017)
(“Under Missouri law, a vexatious refusal is a
derivative of a breach-of-contract claim.”); Thomas
Farms, Ltd. v. Nat'l Union Fire Ins. Co. of
Pittsburgh, No. 1:18CV00196 AGF, 2019 WL 460503 at *3
(E.D. Mo. Feb. 6, 2019) (“[A] claim for vexatious
refusal to pay is necessarily predicated on a ...