United States District Court, D. Nevada
J. Dawson United States District Judge
the Court is Defendant Geico Casualty Company's Motion to
Dismiss, or in the Alternative, to Strike and to
Sever/Bifurcate and Stay Claims for Bad Faith (docketed at
ECF Nos. 5, 6, and 7). Plaintiff, Michelle Clifford, filed
one response to Geico's three motions (docketed at ECF
Nos. 10, 12), and Geico replied (ECF No. 13).
Clifford has sued her own insurer, Geico Casualty Company,
for breach of contract, unfair claims practices, bad faith,
and declaratory relief. Clifford's claims arise out of
injuries she suffered in an accident with a third-party
driver in August of 2015. Apparently, Clifford's medical
bills and other damages exceeded the adverse driver's
coverage, which prompted Clifford to make a claim against her
own uninsured/underinsured motorist (UIM) coverage with
Geico. Clifford claims she has UIM coverage under two
separate Geico policies: her own policy and her mother's
policy. Together, Clifford believes the policies stack for
$115, 000 in total UIM coverage.
moves to dismiss Clifford's bad faith, unfair claims
practices, and declaratory relief claims. It does not
challenge her breach of contract claim. Geico argues that
Clifford failed to allege sufficient facts to support her
extracontractual claims and that Clifford's declaratory
relief claim is redundant. Geico is correct. The key to
insurer bad faith is the reasonableness of the insurer's
denial or delay. Clifford's complaint lacks specific
allegations of fact to support her assertion that Geico's
delay or denial of her UIM benefits was unreasonable. She
also fails to allege any facts that Geico was aware of or
recklessly disregarded the fact that its coverage decisions
were unreasonable. Thus, Clifford's bad faith and unfair
claims practices claims are dismissed. Likewise,
Clifford's declaratory relief claim fails because the
declaration she seeks will necessarily be subsumed into her
breach of contract claim. Accordingly, the Court grants
Geico's motion to dismiss and need not reach its
August 4, 2015, Michelle Clifford was injured in a car
accident. Compl. at 2. Clifford reported the accident to
Geico, her insurer, that same day and then began medical
treatment. Id. Clifford was not at fault in the
accident. Id. According to Clifford, her medical
bills and other damages exceed $50, 000. Id. At some
point, Clifford settled with the adverse driver for the
limits of his policy, $15, 000. That settlement did not cover
all of Clifford's damages. So, Clifford submitted claims
against two Geico policies that she believes provide her UIM
coverage. Clifford first claimed coverage under her
individual Geico policy. That policy carries $15, 000 in UIM
coverage. Id. at 2-3. Nine months later, Clifford
claimed coverage under her mother, Holly Clifford's
policy, which carried $100, 000 in UIM coverage. Id.
two claims sparked a flurry of communications between she and
Geico over the next two years. In May of 2017, Geico
responded to Clifford's claims and offered her $9, 650
above the third-party limits. Id. at 3-4. Clifford
rejected the offer as she claimed over $50, 000 in medical
bills and damages. Id. Three months later, Geico
increased its offer to $21, 000 above the third-party limits.
Id. at 4. Again, Clifford declined, citing the
balance of her outstanding medical bills. In January of 2018,
Geico increased its valuation to $24, 000 above third-party
limits. Id. Clifford simultaneously declined that
offer and asked Geico to disclose what bills and property
damage the insurer was relying upon to evaluate her claim.
Id. In response, Geico increased its offer to $60,
000 over third-party limits but did not disclose what
evidence it based its valuation on. Id. at 5. The
parties continued to communicate through October of 2018, and
Geico's apparent final offer was $62, 000 over
third-party limits. Id. at 6. According to Clifford,
Geico still has not disclosed what evidence it considered in
valuing her claim.
point during the parties' back-and-forth, Geico
authorized its “special investigations unit” to
investigate Clifford's claims. Id. at 7.
According to Clifford, the special investigations unit
investigates fraud in the claims process. That investigation
examined Clifford's pending claim, her medical history,
her social media accounts, her finances, and her background.
the parties' sustained communication and Geico's
investigation, they did not reach an agreement on the
valuation of Clifford's claim. That prompted Clifford to
file her first complaint on March 28, 2019, in the Eighth
Judicial District Court in Las Vegas. Pet. for Removal, ECF
No. 1-B. Clifford amended her complaint three weeks later.
ECF No. 1-A. Geico then removed the action to this Court and
moves to dismiss.
Court may dismiss a plaintiff's complaint for
“failure to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). A properly pleaded
complaint must provide “a short and plain statement of
the claim showing that the pleader is entitled to
relief.” Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does
not require detailed factual allegations, it demands more
than “labels and conclusions or a formulaic recitation
of the elements of a cause of action.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citations omitted).
“Factual allegations must be enough to raise a right to
relief above the speculative level.” Twombly,
550 U.S. at 555. Thus, “[t]o survive a motion to
dismiss, a complaint must contain sufficient factual matter
to ‘state a claim for relief that is plausible on its
face.'” Iqbal, 556 U.S. at 678 (citation
Iqbal, the Supreme Court clarified a two-step
approach district courts are to apply when considering
motions to dismiss. First, the Court accepts as true all
well-pleaded factual allegations in the complaint. Legal
conclusions or mere recitals of the elements of a cause of
action, on the other hand, do not receive the assumption of
truth. Id. at 678. Second, the Court considers
whether the factual allegations in the complaint allege a
plausible claim for relief. Id. at 679. A claim is
facially plausible when the complaint alleges facts that
allow the court to draw a reasonable inference that the
defendant is liable for the alleged misconduct. Id.
at 678. Further, where the complaint does not permit the
court to infer more than the mere possibility of misconduct,
the complaint has “alleged-but it has not show[n]-that
the pleader is entitled to relief.” Id. at 679
(internal quotation marks omitted). Thus, when the claims in
a complaint have not crossed the line from conceivable to
plausible, the complaint must be dismissed. Twombly,
550 U.S. at 570.
“[a]ll allegations of material fact in the complaint
are taken as true and construed in the light most favorable
to the non-moving party.” In re Stac Elecs. Sec.
Litig., 89 F.3d 1399, 1403 (9th Cir. 1996) (citation
now moves to dismiss each of Clifford's extracontractual
claims. It also asks the Court to decide as a matter of law
that the Cliffords' two Geico policies cannot be stacked.
Before the Court reaches the merits of Geico's motion to
dismiss, it must first determine whether to evaluate
Geico's motion as a motion to dismiss or as a motion for
summary judgment. Clifford urges the Court to treat the
motion as a motion for summary judgment because Geico
produced Clifford's insurance policy in its motion to
dismiss. That extrinsic evidence, Clifford argues,
necessarily converts the motion into a motion for summary
judgment. As a result, Clifford asks the Court for time to
discover and produce evidence to show a genuine issue of
motion to dismiss stage, the Court only considers the
well-pleaded allegations in the plaintiff's complaint.
Twombly, 550 U.S. at 555. Typically, when a party
submits evidence outside the pleadings in a motion to
dismiss, the Court converts the motion to a motion for
summary judgment and imposes Rule 56's standard.
Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988,
998 (9th Cir. 2018). There are exceptions to that rule,
however. Relevant here is the doctrine of incorporation by
reference. Incorporation allows the Court to “treat
certain documents as though they are part of the complaint
itself.” Id. at 1002. By incorporating the
extrinsic document into the complaint, the Court avoids
converting the motion into a motion for summary judgment. In
a contract dispute like this one, incorporation prevents a
plaintiff from including in their complaint only the
contractual provisions that strengthen their allegations,
while omitting other provisions “that ...