Ana E. Medina Eckart v. Allstate Northbrook Indemnity Company

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 23-10753
Non-Argument Calendar
____________________
ANA E. MEDINA ECKART,
Plaintiff-Appellant,
versus
ALLSTATE NORTHBROOK INDEMNITY COMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Northern District of Georgia
D.C. Docket No. 1:22-cv-00281-JPB
____________________
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2 Opinion of the Court 23-10753
Before J ORDAN, ROSENBAUM , and J ILL PRYOR , Circuit Judges.
PER CURIAM:
Plaintiff Ana Medina Eckart appeals the district court's dis-
missal with prejudice of her fraud lawsuit against defendant All-
state Northbrook Indemnity Company (“Allstate”). Because Eckart
has failed to state a claim for relief, we affirm.
I. BACKGROUND
A. Allstate and Eckart’s Insurance Settlement Negotiations
This lawsuit arises from insurance settlement negotiations
following an automobile accident. Eckart collided with another
driver, Crista Ballew, and sustained injuries in the crash. Allstate
insured Ballew.
Seeking compensation for her injuries, Eckart entered settle-
ment negotiations with Allstate. They reached a settlement that
valued Eckart’s claim at $16,378. An Allstate adjuster, Dwalyn Rob-
erts, sent Eckart a letter reflecting the settlement and breaking
down Eckart’s claim. The letter said that Eckart would pay $15,818
of the settlement to her medical providers. Eckart would keep the
remaining $560: $30 as reimbursement for prescriptions, $280 for
lost wages, and $250 for personal compensation.
With the letter Roberts included a document entitled “Re-
lease of All Claims” (“Release”). Eckart says that Allstate required
her to sign the Release before the settlement funds were disbursed,
as consideration for the settlement. In the letter, Roberts
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23-10753 Opinion of the Court 3
instructed, “It is important that you read the enclosed release be-
fore you sign . . . and return it to me.” Doc. 9-2 at 2.1 Above the
signature line, the Release warned, “CAUTION-READ BEFORE
SIGNING.” Doc. 9-1 at 3.
The Release read that “in consideration of the sum of
[$16,378],” Eckart released Ballew, Allstate, and all others “from
any and all claims” and damages arising from the accident. Id. at 2.
According to Roberts’s letter, by signing the release, Eckart ac-
cepted $16,378 as the settlement amount. Doc. 9-2 at 2 (“Signing
the release means you agree to accept the amount of money noted
on the release[.]”).
Eckart signed the release and emailed it to Allstate. By sign-
ing the Release, she agreed that no “representations regarding the
nature and extent of legal liability or financial responsibility of any
of the parties release[d] . . . have induced me to make this settle-
ment.” Doc. 9-1 at 2. Her signature on the Release also acknowl-
edged receipt of the $16,378 and promised to pay her healthcare
providers “prior to the final disbursement of the settlement pro-
ceeds,” even though Roberts had not sent her any money. Id.
The day after Eckart returned the signed Release, Roberts
informed Eckart by email that her emergency room bill from Cart-
ersville Medical Center was adjusted downward by $12,595.50. Ac-
cordingly, Allstate adjusted the total settlement amount downward
from $16,378 to $3,782.50. Allstate explained that Eckart would
1 “Doc.” numbers refer to district court docket entries.
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4 Opinion of the Court 23-10753
now be responsible for paying only $3,222.50 to her medical pro-
viders. Her direct compensation would remain at $560.
Allstate sent Eckart a check for the $3,782.50 settlement
amount. Eckart sent the check back to Allstate and demanded re-
scission of the settlement agreement. Allstate did not respond.
B. Procedural History
Eckart filed this lawsuit in the Northern District of Georgia,
asserting a claim against Allstate under Georgia state law for fraud-
ulent inducement to enter a contract.2 Eckart alleged that Allstate
misrepresented that it would pay her the $16,378 settlement
amount when it had no intention of doing so, solely to induce her
to sign the Release and extinguish her claims against Allstate and
Ballew. As a result, she was left humiliated and unable to pursue
compensation for the injuries she suffered in the accident.
In her complaint, Eckart sought various remedies. On her
claim that Allstate had fraudulently induced her to sign the Release,
Eckart sought an order rescinding the contract. She also asked for
compensatory damages for her injuries sustained in the accident,
“general damages for her wounded feelings resulting from the
2 Eckart also asserted claims against Allstate under the federal Racketeer In-
fluenced and Corrupt Organizations (RICO) Act, 18 U.S.C. § 1961 et seq., and
Georgia’s RICO statute, O.C.G.A § 16-14-1 et seq. Because Eckart does not ar-
gue on appeal that the district court erred in dismissing these claims, we dis-
cuss them no further.
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23-10753 Opinion of the Court 5
fraud,” “punitive damages for Allstate’s intentional fraudulent con-
duct,” and attorney’s fees and costs. Doc. 1 at ¶ 65.
Allstate filed a motion to dismiss the complaint. It filed three
exhibits to support its motion: the Release; Roberts’s letter reflect-
ing the $16,378 settlement offer; and Roberts’s email reflecting the
$3,782.50 adjusted settlement.
After the motion to dismiss was fully briefed, the district
court dismissed Eckart’s complaint. As an initial matter, the district
court concluded that the exhibits Allstate filed were “incorpo-
rate[ed] by reference” into Eckart’s complaint and therefore could
be considered in evaluating the motion to dismiss. Doc. 16 at 2–3.
It then dismissed Eckart’s fraudulent inducement claim for two al-
ternative reasons: (1) under Georgia law, Eckart could not bring an
action directly against Allstate for money damages; and (2) Eckart
failed to state a claim for relief.
First, the district court ruled that Eckart could not collect
damages from Allstate under Georgia law. It relied on Georgia law
providing that an injured person may not bring an action for dam-
ages directly against the insurer of the party who allegedly caused
the injury, except under circumstances not present here.
Second, the district court concluded that Eckart failed to
state a claim for fraudulent inducement. Because Eckart only pled
“[t]hreadbare recitals” of the elements of fraud in the inducement,
and not facts substantiating her allegations, she failed to state a
claim for relief. Id. at 16 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009)). And because Eckart failed to state a claim for fraudulent
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6 Opinion of the Court 23-10753
inducement, the district court concluded that she was not entitled
to the remedy of rescission.
This is Eckart’s appeal.
II. STANDARD OF REVIEW
We review de novo the district court’s grant of a Rule 12(b)(6)
motion to dismiss for failure to state a claim, accepting the com-
plaint’s allegations as true and construing them in the light most
favorable to the plaintiff. Marquez v. Amazon.com, Inc., 69 F.4th
1262, 1269 (11th Cir. 2023).
III. DISCUSSION
The issue before us in this appeal is whether Eckart’s com-
plaint stated a claim for fraudulent inducement under Georgia
law.3 To state a Georgia-law claim for fraudulent inducement,
Eckart had to allege that: (1) Allstate misrepresented that $16,378
was the settlement amount; (2) Allstate knew its statement of the
settlement amount was false when it presented the offer (the scien-
ter requirement); (3) Allstate intended to induce Eckart to sign the
Release based on the $16,378 offer; (4) Eckart justifiably relied on
the $16,378 offer; and (5) Allstate’s fraudulent inducement caused
Eckart damage. See Scarbrough v. Hallam, 525 S.E.2d 377, 379 (Ga.
Ct. App. 1999).
3 Eckart brought her fraudulent inducement claim under Georgia law. Allstate
does not dispute that Georgia law applies.
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23-10753 Opinion of the Court 7
We focus here on whether Eckart’s complaint adequately al-
leged the second element, scienter. In analyzing the sufficiency of
Eckart’s allegations, we turn to Federal Rule of Civil Procedure 8.4
Rule 8 requires that a pleading must contain “a short and plain
statement” of the claim alleged, “showing that the pleader is enti-
tled to relief.” Fed. R. Civ. P. 8(a)(2). To satisfy this requirement
and survive a motion to dismiss, the “complaint must contain suf-
ficient factual matter, accepted as true, to state a claim to relief that
is plausible on its face.” Iqbal, 556 U.S. at 678 (internal quotation
marks omitted). A complaint is insufficient if it “tenders naked as-
sertions devoid of further factual enhancement.” Id. (alteration
adopted) (internal quotation marks omitted). And “labels and con-
clusions” or a “formulaic recitation of the elements of a cause of
action will not do.” Id. (internal quotation marks omitted). To sur-
vive a motion to dismiss, the plaintiff must plead “factual content
that allows the court to draw the reasonable inference that the de-
fendant is liable for the misconduct alleged.” Id.
4 Because the complaint alleged fraud, Eckart’s pleadings are also subject to
the heightened standard of Federal Rule of Civil Procedure 9(b), which re-
quires a plaintiff to state with particularity the circumstances constituting
fraud. Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1066–67 (11th Cir.
2007) (citing Fed. R. Civ. P. 9(b)). But we need not discuss Rule 9’s heightened
standard further, for two reasons. First, as we explain below, Eckart’s claim
fails under the less demanding strictures of Rule 8. Second, her complaint fails
to allege adequately the element of scienter, which is subject to Rule 8 only,
even in fraud cases. Iqbal, 556 U.S. at 686–87.
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8 Opinion of the Court 23-10753
We conclude that the allegations in Eckart’s complaint fail
to support a reasonable inference that Allstate acted with scien-
ter—that is, that Allstate knew that it would not pay the amount
presented in its initial settlement offer ($16,378) at the time it made
the offer. True, Eckart repeatedly alleged that “Allstate . . . had no
intention . . . of actually paying the $16,378.00 settlement amount”
when it was offered to her. Doc. 1 at ¶¶ 20, 60, 62. But these alle-
gations were conclusory and simply a “formulaic recitation of [an]
element[] of a cause of action.” Iqbal, 556 U.S. at 678 (internal quo-
tation marks omitted). Stripping Eckart’s complaint of the conclu-
sory allegation that Allstate had no intention of paying the offered
amount when the offer was made, we are left with the following
facts: Eckart sent Allstate the signed Release reflecting a settlement
amount of $16,378, and the next day Allstate responded, lowering
the settlement amount to $3,782.50.
The exhibits Allstate submitted in support of its motion to
dismiss, which were properly considered as part of the pleadings
under the incorporation-by-reference doctrine,5 render any infer-
ence of scienter implausible. They support instead the alternative
5 Under the doctrine of incorporation by reference, a court may consider a
document attached to a motion to dismiss as part of the pleadings without
converting the motion into one for summary judgment so long as the docu-
ment meets certain requirements. Hi-Tech Pharms., Inc. v. HBS Int’l Corp.,
910 F.3d 1186, 1189 (11th Cir. 2018). To be incorporated, a document must be
(1) referred to in the complaint; (2) central to the plaintiff’s claim; and (3) of
undisputed authenticity. Id. On appeal, Eckart does not contest that Allstate’s
exhibits met these requirements.
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23-10753 Opinion of the Court 9
explanation that Allstate initially intended to pay the larger settle-
ment but then readjusted the amount to account for the reduction
in Eckart’s medical bills. See Iqbal, 556 U.S. at 681 (concluding that
“more likely explanations” rendered plaintiff’s allegations of dis-
criminatory purpose implausible). Roberts’s email explained that
after making the initial settlement offer, Allstate reduced the settle-
ment amount because Cartersville Medical Center adjusted
Eckart’s emergency room bill downward by more than $12,000. In-
deed, Allstate’s initial offer letter contained an itemized breakdown
of the settlement amount with the full, unadjusted emergency
room bill. The settlement amount changed in the precise amount
of the adjustment to the medical bill, indicating an honest adjust-
ment. What is more, even after this adjustment, Eckart’s net recov-
ery of $560 remained the same because the settlement agreement
obligated her to pay her medical providers out of the settlement
proceeds.
Eckart pled no facts to support a conclusion that Allstate in-
tentionally misrepresented the settlement amount. Given the min-
imal allegations in the complaint, it would be speculative to infer
that Allstate did not intend to pay the $16,378 when offered; thus,
the scienter allegations were deficient under Rule 8. See Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007) (explaining that to sur-
vive a motion to dismiss, the factual allegations pled “must be
enough to raise the right to relief above the speculative level”).
Eckart resists this analysis by arguing that we cannot look to
Allstate’s documents to “discredit” the allegations in her complaint.
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10 Opinion of the Court 23-10753
Appellant’s Br. at 12. She contends that the district court’s consid-
eration of these documents improperly converted Allstate’s mo-
tion to dismiss into one for summary judgment. Id. at 13. But a
court may look to an incorporated document at the motion to dis-
miss stage. See Hi-Tech Pharms., Inc. v. HBS Int’l Corp., 910 F.3d 1186,
1189 (11th Cir. 2018). And facts from a document incorporated by
reference may dispel a plaintiff’s conclusory allegations. See Day v.
Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005) (concluding that plain-
tiffs failed to state a claim after analyzing pled facts against an in-
corporated contract, dispelling plaintiffs’ conclusory allegations).
Importantly, we do not consider the incorporated documents to
dispel or discredit any well-pled facts about scienter here, because
there were no well-pled facts about scienter. We need not ignore
the facts in the incorporated documents in favor of Eckart’s conclu-
sory assertions of fraud. See Griffin Indus., Inc. v. Irvin, 496 F.3d 1189,
1207 (11th Cir. 2007).
Eckart nevertheless argues that her complaint sufficiently al-
leged scienter because it stated that Allstate and its employees were
engaged in a “fraudulent scheme and artifice” in which Allstate
would “routinely enter[] into firm, binding settlement agreements”
and “upon receipt of releases from [] injured claimants . . . forward[]
settlement checks . . . in amounts far below the agreed upon settle-
ment amounts.” See Doc. 1 at ¶¶ 20, 23. But Eckart alleged no facts
that would raise an inference that such a scheme existed. A conclu-
sory allegation that such a scheme existed is not enough. See, e.g.,
Twombly, 550 U.S. at 554–56 (ruling that complaint failed to state
claim because plaintiffs did not allege sufficient facts to infer illegal
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23-10753 Opinion of the Court 11
agreement and dispel idea that companies were acting inde-
pendently).
Because Eckart failed to allege facts sufficient to raise an in-
ference that Allstate acted with the requisite scienter, we agree
with the district court that she failed to state a claim for fraudulent
inducement.6
IV. CONCLUSION
For the above reasons, we affirm the district court’s judg-
ment.7
AFFIRMED.
6 Because Eckart failed to state a claim for fraudulent inducement, it follows
that she was not entitled to the remedy of rescission of the contract. Though
Eckart stylized her request for rescission as a separate claim, Georgia law treats
rescission as a remedy for fraudulent inducement. See Legacy Acad., Inc. v. Ma-
milove, LLC, 771 S.E.2d 868, 870 (Ga. 2015).
7 Because we conclude that Eckart failed to state a claim for fraudulent induce-
ment, we need not address the district court’s alternative conclusion that
Eckart lacked statutory standing under Georgia law.
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