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Advanced Pain Therapies, LLC v. Hartford Financial Services Group, Inc.

United States District Court, D. South Carolina, Columbia Division

September 3, 2014

ADVANCED PAIN THERAPIES, LLC, Plaintiff,
v.
THE HARTFORD FINANCIAL SERVICES GROUP, INC., d/b/a HARTFORD CASUALTY INSURANCE COMPANY, Defendant.

OPINION AND ORDER

MARY G. LEWIS, District Judge.

Plaintiff Advanced Pain Therapies, LLC ("Plaintiff") filed this action against Defendant The Hartford Financial Services Group, Inc. ("Defendant") asserting claims for bad faith refusal to pay insurance benefits, breach of contract, breach of contract accompanied by a fraudulent act, conversion, violation of the Unfair Trade Practices Act, negligent misrepresentation, attorney's fees, unfair acts in the business of insurance, and estoppel and waiver. (ECF No. 1-1.) This matter is before the Court on Defendant's Motion to Dismiss Plaintiff's Complaint brought pursuant to Federal Rule of Civil Procedure 12(b)(6), 8(a)(2), and 9(b) and filed on January 14, 2014. (ECF Nos. 6-1 & 7.) On January 30, 2014, Plaintiff filed a response in opposition to Defendant's motion to dismiss maintaining that it has stated sufficient allegations under the applicable standards. (ECF No. 10.) Defendant filed a reply in support of its motion to dismiss on February 10, 2014. (ECF No. 11.) For the reasons set forth below, this Court GRANTS Defendant's Motion to Dismiss Plaintiff's Complaint.

FACTUAL AND PROCEDURAL BACKGROUND

This matter was removed to this Court from the Court of Common Pleas in Lexington County, South Carolina based on diversity jurisdiction. (ECF No. 1.) This action arises out of an insurance contract between Plaintiff, a medical practice, and Defendant, an insurer. According to the complaint, the relevant dispute involves Plaintiff's insurance claim to recover business losses allegedly sustained as a result of Plaintiff's office manager's embezzlement of funds. Defendant ultimately denied the full loss claimed and tendered limited payment to Plaintiff. (ECF No. 1-1.) Defendant moves to dismiss this action on the grounds that the complaint fails to allege facts to support the causes of action asserted and is otherwise insufficient under the federal rules. Defendant argues that Plaintiff's third, fourth, fifth, eighth, and ninth causes of action are not viable as a matter of law and should be dismissed on this additional ground. (ECF No. 6-1.)

LEGAL STANDARDS

Defendant moves to dismiss this case pursuant to Rules 12(b)(6), 8(a)(2) and 9(b)[1] of the Federal Rules of Civil Procedure. "The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint." Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.1999). To survive a motion to dismiss, the Federal Rules require that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Although Rule 8(a) does not require "detailed factual allegations, " it requires "more than an unadorned, the-defendant-unlawfully-harmed-me accusation, " Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)), in order to "give the defendant fair notice of what the... claim is and the grounds upon which it rests, " Twombly, 550 U.S. at 555. In other words, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678. A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (quoting Twombly, 550 U.S. at 556). A complaint alleging facts that are "merely consistent with' a defendant's liability... stops short of the line between possibility and plausibility of entitlement to relief.'" Id. (quoting Twombly, 550 U.S. at 557). In considering a motion to dismiss, a plaintiff's well-pled allegations are taken as true, and the complaint and all reasonable inferences are liberally construed in the plaintiff's favor. Mylan Laboratories, Inc. v. Matkari, 7 F.3d 1130 (4th Cir. 1993). Although the court must accept the plaintiff's factual allegations as true, any conclusory allegations are not entitled to an assumption of truth, and even those allegations pled with factual support need only be accepted to the extent that "they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at 679.

DISCUSSION AND ANALYSIS

In view of the applicable standards, the Court concludes that Plaintiff's complaint must be dismissed for failure to state a claim. Although "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, " "mere labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. In this case, Plaintiff's general allegations do not allow the Court to draw the reasonable inference that Defendant is liable for the alleged misconduct and the complaint is therefore subject to dismissal. Additionally, several of Plaintiff's claims are not viable as a matter of law as discussed more fully below.

A. Count I: Bad Faith Refusal to Pay Insurance Benefits

As a first cause of action, Plaintiff generally claims that Plaintiff and Defendant are parties to a mutually binding contract of insurance and that Defendant has in bad faith refused to pay benefits due under the contract. (ECF No. 1-1 at 8-9.) Under South Carolina law, the elements of a bad faith refusal to pay insurance benefits cause of action are "(1) the existence of a contract of insurance between the parties; (2) refusal by the insurer to pay benefits due under the contract; (3) resulting from the insurer's bad faith or unreasonable action; and (4) causing damage to the insured." Snyder v. State Farm Mut. Auto. Ins. Co., 586 F.Supp.2d 453, 457 (D.S.C.2008) (citing Howard v. State Farm Mut. Auto. Ins. Co., 316 S.C. 445, 450 S.E.2d 582, 586 (S.C.1994)). Here, Plaintiff's complaint fails to adequately allege facts establishing the existence of a contract or its essential terms. It contains only bare and conclusory allegations which are insufficient to establish a cause of action for bad faith refusal to pay insurance benefits. Accordingly, this cause of action is dismissed.

B. Count II: Breach of Contract

Plaintiff also maintains that Defendant breached the contract of insurance by failing to properly pay benefits which resulted in damage to Plaintiff. To establish a breach of contract, Plaintiff must establish three elements: (1) a binding contract entered into by the parties; (2) breach or unjustifiable failure to perform the contract; and (3) damage as a direct and proximate result of the breach. Bank v. How Mad, Inc., 4:12-cv-3159, 2013 WL 5566038, *3 (D.S.C. Oct. 8, 2013) (citing Fuller v. E. Fire & Cas. Ins. Co., 240 S.C. 75, 124 S.E.2d 602 (1962)). As noted above, the complaint fails to set forth sufficient facts establishing the existence of a binding contract between Plaintiff and Defendant. It likewise fails to set forth sufficient facts regarding how the contract was breached. Here, Plaintiff's breach of contract claim is supported by nothing more than legal conclusions which the Court need not accept as true. See Iqbal, 556 U.S. at 678 ("[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions"). Plaintiff's breach of contract claim is subject to dismissal.

C. Count III: Breach of Contract Accompanied by a Fraudulent Act

To support its claim for breach of contract accompanied by a fraudulent act, Plaintiff alleges that Defendant represented that the insurance policy purchased by Plaintiff would provide coverage for its business losses, that these representations were false, intentional, and material, and that Plaintiff relied upon these representations. (ECF No. 1-1 at 9-10.) In order to recover for breach of contract accompanied by a fraudulent act, a plaintiff must establish: (1) a breach of contract; (2) that the breach was accomplished with a fraudulent intention; and (3) that the breach was accompanied by a fraudulent act. Minter v. GOCT, Inc., 322 S.C. 525, 529-530, 473 S.E.2d 67, 70 (S.C. Ct. App. 1996). A claim for breach of contract accompanied by a fraudulent act "requires proof of fraudulent intent relating to the breaching of the contract not merely to its making." Ball v. Canadian American Exp. Co., Inc., 314 S.C. 272, 276, 442 S.E.2d 620, 623 (S.C. Ct. ...


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