Loporchio v. State Farm Mutual Automobile Insurance Company

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA
STEPHEN LOPORCHIO, 	)
)
Plaintiff, 	)
v. 	) 	Case No. CIV-22-334-JFH-GLJ
)
STATE FARM MUTUAL 	)
AUTOMOBILE INSURANCE 	)
COMPANY, 	)
)
Defendant. 	)
REPORT AND RECOMMENDATION
The Plaintiff filed this action on November 1, 2022, in Pontotoc County District
Court of Oklahoma, alleging that Defendant State Farm Mutual Automobile Insurance
Company breached Plaintiff’s insurance contract and breached its duty of good faith and
fair dealing in the handling of Plaintiff’s claims [Dkt. 2-2]. 	On November 23, 2022,
Defendant removed the action to this Court [Dkt. 2]. On November 30, 2022, Defendant
filed its Motion to Dismiss Plaintiff’s Petition and Brief in Support [Dkt. 10] pursuant to
Fed. R. Civ. P. 12(b)(6). 	On February 13, 2023, the Court referred this case to the
undersigned Magistrate Judge for all further proceedings in accordance with jurisdiction
pursuant to 28 U.S.C. § 636 [Dkt. 16]. Defendant seeks the dismissal of all of Plaintiff’s
claims. 	For the reasons set forth below, the undersigned Magistrate Judge finds that
Defendant’s Motion to Dismiss Plaintiff’s Petition and Brief in Support (“Motion”) [Dkt.
10] should be DENIED.
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I. 	BACKGROUND
Plaintiff alleges that for many years he had an insurance policy issued by Defendant
on his 2006 Ford F550 (“Truck”), policy number 443440736 (“Policy”). See Docket No.
2-2 at ¶ 5. 	On August 1, 2022, at 2:14 p.m., Plaintiff received a text message from
Defendant stating that his “2006 Ford Auto Policy is set to cancel 08/09/22.” 	Id. at ¶ 6.
Afterwards, Plaintiff drove his Truck to California to attend his daughter’s memorial
service and to retrieve her belongings. Id. at ¶ 7. Plaintiff parked his Truck and a trailer at
a friend’s office in Santa Ana, California. 	Id. 	In the early morning hours of August 10,
2022, Plaintiff used the internet at a coffee shop to make the Policy premium payment. Id.
at ¶ 8. 	Sometime thereafter that morning, upon returning to his friend’s office, Plaintiff
discovered his Truck and tailer were missing. Id. at ¶ 9. Plaintiff notified the local police
of the theft at around 6:30 a.m. on August 10, 2022, and then notified Defendant of the loss
later that morning. Id. at ¶¶ 9 & 11. The Truck and trailer were stolen sometime late on
August 9 or in the early morning hours of August 10, 2022. Id. at ¶ 10.
Plaintiff alleges that the Policy provides that it may be canceled by Defendant
“mailing or delivering a written notice to the most re-cent [sic] address provided to us by
you as the policy address.” Id. at ¶ 14 (emphasis original). Moreover, the Policy provides
that “[t]he date cancellation is effective will be at least 10 days after the date we mail or
deliver the cancellation notice.” 	Id. (emphasis original). 	Plaintiff alleges that the only
cancellation notice he received from Defendant was the August 1, 2022 text message, and,
therefore, the Policy was not eligible for cancellation until August 11, 2022. Id. at ¶ 16.
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Plaintiff also alleges that the Truck was recovered on August 21, 2022, when it was
involved in a collision and suffered damage. Id. at ¶¶ 19-20. Plaintiff notified Defendant
of the damage claim, but it was also denied by Defendant. Id. at ¶¶ 21-22.
Defendant argues that the Policy was cancelled effective August 9, 2022 at 2:01
a.m. and therefore was not in effect at the time the Truck was stolen late on August 9 or
early on August 10, 2022. Defendant relies on a policy cancellation notice dated July 25,
2022 (“July 25 Notice”), it alleges was mailed to Plaintiff. See Docket Nos. 10 at p. 2. The
July 25 Notice, which Defendant attaches to its Motion, states that “[w]e have not received
the payments required to keep this policy in force. 	In accordance with the cancellation
provisions, your policy identified in this notice is hereby canceled effective 12:01 A.M.
standard time on the cancellation date specified due to non-payment of the premium.” Id
at No. 10-1. 	The July 25 Notice provides the cancelation date of August 9, 2022. 	Id.
Defendant alleges the July 25 Notice was mailed to Plaintiff more than 10 days before the
Policy terminated. 	Id. at No. 10, p. 3. 	Defendant alleges that because Plaintiff did not
make the premium payment before August 9, 2022, the Policy terminated on August 9,
2022 at 12:01 a.m. standard time in accordance with the July 25 Notice or 2:01 a.m. Pacific
standard time. Id. at p. 2. Defendants further allege that, based on Plaintiff’s August 10,
2022 premium payment, the Policy was reinstated effective 12:01 a.m. on August 11, 2022.
Id. at No. 10-2. Defendant argues that because the Policy was not in effect at the time the
Truck was stolen and the damage occurred as a result of it being stolen, there is no coverage
for the loss and Plaintiff’s claims should be dismissed.
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II. 	MOTION TO DISMISS STANDARD
In considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a court must
determine whether the claimant has stated a claim upon which relief may be granted. 	A
motion to dismiss is properly granted when a complaint provides no “more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action.” Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint must contain enough “facts to
state a claim to relief that is plausible on its face” and the factual allegations “must be
enough to raise a right to relief above the speculative level.” Id. (citations omitted). “Once
a claim has been stated adequately, it may be supported by showing any set of facts
consistent with the allegations in the complaint.” Id. at 562. “While the 12(b)(6) standard
does not require that Plaintiff establish a prima facie case in her complaint, the elements of
each alleged cause of action help to determine whether Plaintiff has set forth a plausible
claim.” 	Khalik v. United Air Lines, 671 F.3d 1188, 1192 (10 th Cir. 2012). 	Thus, the
appropriate inquiry is “whether the complaint sufficiently alleges facts supporting all the
elements necessary to establish an entitlement to relief under the legal theory proposed.”
Lane v. Simon, 495 F.3d 1182, 1186 (10th Cir. 2007) (quoting Forest Guardians v.
Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007)). For the purpose of making the dismissal
determination, a court must accept all the well-pled allegations of the complaint as true,
even if doubtful in fact, and must construe the allegations in the light most favorable to the
claimant. 	Twombly, 550 U.S. at 555; Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215
(10 th Cir. 2007); Moffett v. Halliburton Energy Servs., Inc., 291 F.3d 1227, 1231 (10 th Cir.
2002). However, the court need not accept as true those allegations that are conclusory in
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nature. Erikson v. Pawnee County Bd. of County Comm’rs, 263 F.3d 1151, 1154-55 (10 th
Cir. 2001). “[C]onclusory allegations without supporting factual averments are insufficient
to state a claim upon which relief can be based.” Hall v. Bellmon, 935 F.2d 1006, 1109-10
(10 th Cir. 1991).
III. 	ANALYSIS
A. Consideration of Extrinsic Matters Outside the Pleadings.
Defendant attaches to its Motion and relies heavily on the July 25 Notice. 	In
evaluating a Rule 12(b)(6) motion to dismiss, the court typically may not look beyond the
pleadings. Casanova v. Ulibarri, 595 F.3d 1120, 1125 (10 th Cir. 2010); see also Rubio ex
rel. Z.R. v. Turner Unified Sch. Dist. No. 202, 475 F.Supp.2d 1092, 1097 n.3 (D. Kan.
2007) ( the court generally may not look beyond “the four corners of the complaint when
deciding a Rule 12(b)(6) motion to dismiss”)). 	“If, on a motion under Rule 12(b)(6),
matters outside the pleadings are presented to and not excluded by the court, the motion
must be treated as one for summary judgment under Rule 56.” 	Johnson v. Spencer, 950
F.3d 680, 705 (10th Cir. 2020) (quoting Fed. R. Civ. P. 12(d)) (alterations omitted). The
failure to convert a Rule 12(b)(6) motion to one for summary judgment where a court does
not exclude outside materials is reversible error unless the dismissal can be justified
without considering the outside materials. 	See Brown v. Zavaras, 63 F.3d 967, 970 (10th
Cir.1995). 	While “pleadings” generally refer only to the complaint and any attachments
thereto, the Tenth Circuit recognizes that there are three exceptions to this restriction on
what the court can consider, “but they are quite limited: (1) documents that the complaint
incorporates by reference; (2) documents referred to in the complaint if the documents are
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central to the plaintiff’s claim and the parties do not dispute the documents’ authenticity;
and (3) matters of which a court may take judicial notice.” Gee v. Pacheco, 627 F.3d 1178,
1186 (10 th Cir. 2010) (internal quotations and citations omitted); see also Tellabs, Inc. v.
Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); Tal v. Hogan, 453 F.3d 1244, 1264
n.24 (10 th Cir. 2006).
None of the three exceptions apply in this case. 	While the Policy itself is clearly
referenced in the Complaint and is central to Plaintiff’s claims, although neither party
attaches it to any pleading, the same cannot be said of the July 25 Notice. 	Plaintiff’s
Complaint does not reference to or incorporate the July 25 Notice or reference it in any
way. To the contrary, the Complaint specifically alleges that the only cancellation notice
Plaintiff received was the August 1, 2022 text message. Plaintiff also appears to, at least
by inference, challenge either the authenticity of the July 25 Notice or whether it was
mailed to him.1 While Defendant argues Plaintiff is “omitting and blatantly ignoring” the
July 25 Notice, such an accusation is simply an argument regarding the underlying facts
and does not make the July 25 Notice central to Plaintiff’s claim, as opposed to Defendant’s
defense. It is Plaintiff’s claims and not Defendant’s theories of defense to which the outside
matter must be central to be considered an exception to the general rule. See e.g., Capital
Sols., LLC v. Konica Minolta Bus. Sols. USA, Inc., 2008 WL 3538968, *3 (D. Kan. Aug.
11, 2008). 	Moreover, the cases cited by Defendant in support of considering the July 25
1 Although Defendant argues it is not required to provide proof of mailing by affidavit, it
concedes that some form of proof must be provided, such as a sworn statement, deposition
testimony or verified interrogatory answer. See Docket No. 15 at pp. 3-4. The Defendant,
however, provided no such proof that the July 25 Notice was mailed to Plaintiff.
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Notice involved documents or insurance policies central to the plaintiff’s claims, not a
cancellation 	notice 	the 	plaintiff 	never 	referenced 	in 	the 	complaint. 	As 	such, 	the
undersigned Magistrate Judge concludes that the July 25 Notice does not fall within one of
the limited exceptions for consideration of extrinsic matters outside the pleadings and,
therefore, declines to convert the Motion to one for summary judgement under Rule 56 or
consider such extrinsic evidence as part of Defendant’s Rule 12(b)(6) Motion.
B. Breach of Contract Claim.
Plaintiff alleges that Defendant breached the Policy by improperly cancelling the
Policy and denying his claim for his stolen Truck and the subsequent damage to his Truck.
Defendant correctly notes that the Policy is a contract, Silver v. Slusher, 770 P.2d 878 883
(Okla. 1988), and that the elements for breach of an insurance contract are: (1) the existence
of a contract; (2) breach of the contract; and (3) actual damages suffered as a result of that
breach. Vickers v. Progressive Northern Ins. Co., 353 F.Supp.3d 1153, 1166 (N.D. Okla.
2018) (citing Oklahoma Uniform Jury Instructions – Civil No. 23.1). 	Defendant argues
that Plaintiff’s breach of contract claim must fail because he cannot prove the existence of
the contract because the Policy was cancelled on August 9, 2022 at 12:01 a.m., before
Plaintiff alleges his Truck was stolen.
As noted above, however, Plaintiff’s Complaint alleges that the only cancellation
notice he received was by text message on August 1, 2022 and that, as a result, the Policy
could not be canceled until 10 days after such notice, or August 11, 2022. Plaintiff further
alleges that his Truck was stolen late on August 9 or early on August 10, 2022, or within
the time-period in which his Policy should have been in effect, and he suffered damages as
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a result of Defendant’s denial. Accepting these well-pled allegations and construing them
in the light most favorable to Plaintiff, the undersigned Magistrate Judge concludes that
Plaintiff’s Complaint alleges sufficient facts to raise a right to relief above the speculative
level. While Defendant seeks to challenge the Plaintiff’s allegations regarding the notice
he received, such a challenge to factual allegations at the motion to dismiss stage is not
appropriate. Moreover, although Defendant appears to quote extensively from the Policy
in its Reply, arguing that any damage because of the Truck’s theft is not a covered loss,
Defendant did not attach a copy of the Policy to its Motion. 	Therefore, the undersigned
Magistrate Judge declines to consider such Policy language’s application at the Rule
12(b)(6) motion to dismiss stage.
C. Breach of Duty of Good Faith and Fair Dealing.
Plaintiff alleges that Defendant breached its duty of good faith and fair dealing by
failing to promptly and appropriately investigate his claim and unreasonably and unjustly
delaying and denying coverage for his loss. 	Defendant again correctly notes that a bad
faith claim is “premised on the existence of a contract,” Milroy v. Allstate Ins. Co., 151
P.3d 922, 927 (Okla. Civ. App. 2006), and that the elements are: (1) claimant was entitled
to coverage under the insurance policy at issue; (2) the insurer had no reasonable basis for
delaying payment; (3) the insurer did not deal fairly and in good faith with the claimant;
and (4) the insurer’s violation of its duty of good faith and fair dealing was the direct cause
of the claimant’s injury. Caughron v. Liberty Mut. Fire Ins. Co., 2014 WL 11531560, *11
(N.D. Okla. March 6, 2015); Beers. v. Hillary, 241 P.3d 285, 292 (Okla. Civ. App. 2010).
Defendant argues only that Plaintiff does not state a bad faith claim because he cannot
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show that he had a valid claim because the Policy had lapsed at the time of the loss due to
the failure to timely pay the premium. Such an argument, however, relies on the July 25
Notice, which as previously noted is not being considered because it is an extrinsic matter
outside the pleadings and is improper for consideration on a Rule 12(b)(6) motion.
Therefore, the undersigned Magistrate Judge concludes that the Complaint sufficiently
alleges facts supporting all the elements necessary to establish an entitlement to relief under
Plaintiff’s bad faith claim.
CONCLUSION
Accordingly, the undersigned Magistrate Judge hereby RECOMMENDS that
Defendant’s Motion to Dismiss Plaintiff’s Petition and Brief in Support [Docket No. 10]
be DENIED. 	Any objections to this Report and Recommendation must be filed within
fourteen days. 	See 18 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). 	Any objection and
response shall each be limited to 10 pages and a reply is permitted only with leave of court
upon a showing of good cause.
DATED this 23 rd day of March, 2023.
GERALD L. JACKSON
UNITED STATES MAGISTRATE JUDGE
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