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Blount v. Nationwide Agribusiness Insurance Co.

United States District Court, W.D. Missouri, Southwestern Division

August 28, 2019

PATRICIA BLOUNT and SANTA FE RANCH ENTERPRISES, LLC, f/k/a SANTA FE RANCH HOLDINGS, LLC, Plaintiffs,
v.
NATIONWIDE AGRIBUSINESS INSURANCE COMPANY, Defendant.

          ORDER

          STEPHEN R. BOUGH, UNITED STATES DISTRICT JUDGE

         Before the Court is Defendant Nationwide Agribusiness Insurance Company's Motion to Dismiss Plaintiffs' First Amended Complaint. (Doc. #17). For the following reasons the motion is GRANTED IN PART and DENIED IN PART.

         I. Legal Standard

         Pursuant to Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a claim for “failure to state a claim upon which relief can be granted.” “To survive a motion to dismiss [for failure to state a claim], a 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) (internal citations and quotation marks omitted) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); Zink v. Lombardi, 783 F.3d 1089, 1098 (8th Cir. 2015). “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.” Ash v. Anderson Merchs., LLC, 799 F.3d 957, 960 (8th Cir. 2015) (quoting Iqbal, 556 U.S. at 678) (internal quotations omitted). The Court must accept all facts alleged in the complaint as true when deciding a motion to dismiss. See Data Mfg., Inc. v. United Parcel Serv., Inc., 557 F.3d 849, 851 (8th Cir. 2009) (noting “[t]he factual allegations of a complaint are assumed true and construed in favor of the plaintiff, even if it strikes a savvy judge that actual proof of those facts is improbable”).

         II. Background

         Plaintiffs Patricia Blount and Santa Fe Ranch Enterprises, LLC, f/k/a Santa Fe Ranch Holdings, LLC, allege the following facts, which the Court accepts as true in deciding Defendant's motion. Data Mfg., 557 F.3d at 851. Plaintiffs own a ranch near Miller, Missouri (the “Ranch”). Plaintiffs maintained farm liability insurance coverage through an insurance policy with Defendant, which was in effect during August of 2015. “Plaintiffs were third-party beneficiaries to [an] agreement with Solar Sun World, LLC [(“Solar Sun World”)] for the purchase and installation” of solar panels at the Ranch. (Doc. #12, ¶ 7). On August 12, 2015, “approximately 704 solar panels for the construction of the solar arrays, arranged on 24 pallets, were delivered to the Ranch and stored at the Ranch.” (Doc. #12, ¶ 10). On August 16, 2015, “the barn at the Ranch caught fire, destroying all but one pallet of the solar panels.” (Doc. #12, ¶ 11).

         Because Solar Sun World “threatened to sue” Plaintiffs, Defendant “agreed to pay Solar Sun World, LLC $55, 000 for a full settlement of all claims . . . .” (Doc. #12, ¶¶ 13, 14). Defendant, “however, failed to settle the claim in a manner in which Plaintiffs' owners and agents were released from future claims arising out of the same occurrence.” (Doc. #12, ¶ 16). “Defendant Nationwide was able to negotiate a lower settlement by not releasing Plaintiffs from liability or refused to settle the claims within policy limits.” (Doc. #12, ¶ 32). Solar Sun World then filed a state-court lawsuit (the “Lawsuit”) against Plaintiffs “arising from the loss of the 23 pallets of solar panels that were destroyed at the Ranch . . . .” (Doc. #12, ¶ 17). “Plaintiffs were forced to litigate with Solar Sun World” and “requested the insurance file from Defendant Nationwide in order to obtain all of the settlement documents from the prior settlement negotiations . . . .” (Doc. #12, ¶¶ 20-21). Defendant “never provided any documents” to Plaintiffs. (Doc. #12, ¶ 21). “Defendant's failure to produce Plaintiffs' insurance claims file restricted the defense Plaintiffs had in the Lawsuit . . . .” (Doc. #12, ¶ 46). Plaintiffs formed a settlement agreement with Solar Sun World, under which Plaintiffs paid Solar Sun World $40, 000 in exchange for being “released form any and all claims of Solar Sun World, LLC on account of the fire at the Ranch.” (Doc. #12, ¶ 23). Plaintiffs bring four causes of action against Defendant: negligence (Count I), bad faith failure to settle within policy limits (Count II), breach of fiduciary duty (Count III), and breach of legal duty (Count IV).

         III. Discussion

         A. Negligence (Count I)

         Defendant argues Plaintiffs' negligence claim “fails to allege any independent tortious conduct (distinct from a purported alleged breach of the [insurance policy]) that could serve as a basis for an independent and separate negligence claim.” (Doc. #18, pp. 5-6). Plaintiffs argue that their claim “Defendant negligently drafted a settlement agreement and release that did not in fact release Plaintiffs from collateral litigation . . . is unrelated to a breach of the [insurance] policy.” (Doc. #19, p. 3).

         “Missouri courts allow for tort claims by an insured against an insurer where: (1) the claim is for bad faith refusal to settle a claim brought by a third party; or (2) the claim is based on conduct distinct from conduct constituting a breach of the insurance contract.” Sentry Select Ins. Co. v. Hosmer, No. 08-4254-CV-C-NKL, 2009 WL 2151557, at *8 (W.D. Mo. July 17, 2009) (citing Overcast v. Billings Mut. Ins. Co., 11 S.W.3d 62, 68 (Mo. banc 2000)). Plaintiffs' claim that Defendant negligently drafted a settlement agreement that did not release Plaintiffs from liability is “not distinct from conduct which would constitute a breach of the [insurance policy].” Sentry Select, 2009 WL 2151557, at *8. Much like the negligent claims handling cause of action in Sentry Select was “based entirely on Sentry's breach of the Policy, ” Plaintiffs' claim that Defendant negligently drafted the settlement agreement “relates to [Defendant's] refusal to defend [Plaintiffs] and to settle claims against [Plaintiffs] pursuant to the [insurance policy].” Id.; Springfield Soc. Club v. Aspen Specialty Ins. Co., No. 11-3366-CV-S-RED, 2012 WL 12896252, at *2 (W.D. Mo. Feb. 6, 2012) (“[I]t is clear that Plaintiff would have no claim for negligent claims handling absent the insurance contract between the parties. Without the insurance contract . . . Defendant would have no duty to act in the best interest of Plaintiff, to properly investigate [the] claim, to properly determine the issue of coverage or to settle or pay out on [the] claim[.]”)

         Plaintiffs cite no support for their contention that Defendant's alleged negligence arises out of a duty of care the insurer owes the insured that is unrelated to the insurance contract. Plaintiffs' reliance on Overcast is misplaced. In Overcast, the Missouri Supreme Court recognized defamation as a tort claim independent of conduct constituting a breach of insurance contract. 11 S.W.3d at 68. Plaintiffs cite no case in which the Missouri Supreme Court recognized “the negligent drafting of [a] release” as a tort claim “distinct from conduct constituting a breach of the insurance contract.” Sentry Select, 2009 WL 2151557, at *8. Defendant's motion to dismiss Count I is granted.

         B. Bad Faith Failure to Settle Within Policy Limits (Count II)

         Defendant argues Plaintiffs' claim for bad faith failure to settle within policy limits lacks factual support sufficient to survive a motion to dismiss. Plaintiffs argue they “have pled facts sufficient to state a bad faith claim.” (Doc. #19, p. 6). An “insurance company is held to a duty to act in good faith to protect the interests of its insured.” Overcast, 11 S.W.3d at 67. “Inherent in a policy of insurance is the insurer's obligation to act in good faith regarding settlement of a claim.” Truck Ins. Exch. v. Prairie Framing, LLC, 162 S.W.3d 64, 93 (Mo. App. W.D. 2005). A claim for bad faith failure to settle within policy limits “is a tort action based on the insurer's ...


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