United States District Court, D. South Carolina, Charleston Division
ORDER AND OPINION
Richard Mark Gergel, United States District Court Judge
matter is before the Court on Defendant American Auto Club
Insurance Agency's ("American Auto") motion to
dismiss the amended complaint under Rule 12(b)(6) of the
Federal Rules of Civil Procedure. For the reasons set forth
below, the Court grants the motion.
an automobile insurance coverage case. Plaintiffs Juanita
Hart and Devon Hart-Barron allege that, in August 2015, they
purchased an automobile insurance policy (number F3013258)
issued by Defendant Safeco Insurance Company
("Safeco") from American Auto, an independent
insurance agent. (Am. Compl. ¶¶ 4, 7.) Effective
December 31, 2015, Ms. Hart added a 2015 Nissan Sentra to the
Safeco policy and Plaintiff Devon Hart-Barron as a named
insured. (Id. ¶¶ 7, 11-14.) Plaintiffs
allege American Auto and Safeco setup a monthly automatic
draft payment plan for the insurance premiums. (Id.
February 1, 2016, Ms. Hart-Barron was involved in an
automobile accident that rendered the 2015 Sentra a total
loss. (Id. ¶ 15-16.) Plaintiffs notified Safeco
and American Auto. (Id.) On February 4, 2016, Safeco
acknowledged coverage for the accident and offered to pay
fair market value for the vehicle. (Id. ¶ 18.)
That offer was contingent on Plaintiffs executing a power of
attorney authorizing Safeco to salvage the vehicle.
(Id. ¶ 19.)
allege that on February 9, 2016, Ms. Hart called American
Auto to ask for instructions regarding transfer of the
vehicle to Safeco, she was informed that the January premium
payment was not processed and that her policy may be
cancelled. (Id. ¶ 21.) It is undisputed that
the premium due on January 3, 2016 premium was not paid. (See
id. ¶ 24.) Plaintiffs allege Safeco never
executed the scheduled automatic draft and provided no notice
of nonpayment. (Id.) Plaintiffs nonetheless executed
the power of attorney and Safeco took possession of the
vehicle on February 15, 2016. (Id. ¶ 22.) After
Safeco took possession of the vehicle, Safeco informed them
that it was cancelling the insurance policy and denying
coverage because the January 2016 premium payment was not
made. (Id. ¶¶ 23, 25.) Plaintiffs allege
they learned the policy was in fact cancelled from a South
Carolina Department of Motor Vehicles letter. (Id.
¶ 23.) Plaintiffs have not made any representation about
the date of that letter, but assuming the allegation to be
true, the letter likely must have been received after
February 15, 2016 (when Safeco took possession of the
vehicle) and before or very near to February 23, 2016, which
is the date of a letter from Safeco to an attorney for
Raymond Baumil, denying Mr. Baumil's claim against Ms.
Hart-Barron's policy number F3013258 arising from a
February 1, 2016 incident. (See Dkt. No. 37-5.)
5, 2016, Plaintiffs filed the present action in the
Charleston County Court of Common Pleas. The case was removed
to this court on August 9, 2016. The amended complaint
asserts two causes of action against American Auto: equitable
estoppel and breach of fiduciary duty.
12(b)(6) of the Federal Rules of Civil Procedure permits the
dismissal of an action if the complaint fails "to state
a claim upon which relief can be granted." Such a motion
tests the legal sufficiency of the complaint and "does
not resolve contests surrounding the facts, the merits of the
claim, or the applicability of defenses. ... Our inquiry then
is limited to whether the allegations constitute 4a short and
plain statement of the claim showing that the pleader is
entitled to relief" Republican Party of N.C. v.
Martin, 980 F.2d 943, 952 (4th Cir. 1992)
(quotation marks and citation omitted). In a Rule 12(b)(6)
motion, the Court is obligated to "assume the truth of
all facts alleged in the complaint and the existence of any
fact that can be proved, consistent with the complaint's
allegations." E. Shore Mkts., Inc. v. J.D. Assocs,
Ltd, P'ship, 213 F.3d 175, 180 (4th Cir. 2000).
However, while the Court must accept the facts in a light
most favorable to the non-moving party, it "need not
accept as true unwarranted inferences, unreasonable
conclusions, or arguments." Id.
survive a motion to dismiss, the complaint must state
"enough facts to state a claim to relief that is
plausible on its face." Bell All. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). Although the
requirement of plausibility does not impose a probability
requirement at this stage, the complaint must show more than
a "sheer possibility that a defendant has acted
unlawfully." Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). A complaint has "facial plausibility"
where the pleading "allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged." Id.
claim American Auto "should be estopped from denying
coverage under the Safeco policy." (Am. Compl. ¶
69.) That equitable estoppel claim is without merit. American
Auto cannot be "estopped" from denying insurance
coverage because it is not a provider of insurance and
because it has no role in insurers' coverage decisions.
even if American Auto somehow had control of the coverage
decision at issue in this case, it could be equitably
estopped from denying coverage only if it represented it
would notify Plaintiffs of any failed premium payment and if
Plaintiffs had relied upon that representation.
'"The elements of an equitable estoppel as related
to the party claiming the estoppel are (1) lack of knowledge
and of the means of knowledge of the truth as to the facts in
question; (2) [justifiable] reliance upon the conduct of the
party estopped; and (3) the... [prejudicial] change [in]
position of the party claiming the estoppel.'"
Walton v. Walton, 318 S.E.2d 14, 16 (S.C. 1984)
(quoting Murphy v. Hagan, 271 S.E.2d 311, 313 (S.C.
1980)). Plaintiffs allege Safeco failed to initiate the bank
draft for the January premium and failed to notify them of
the resulting nonpayment of premium before the February 1,
2016 accident. (See Am. Compl. ¶¶ 24, 56.)
They allege American Auto knew of Safeco's alleged
failures (id), but, as American Auto rightly notes,
they fail to allege American Auto represented it would notify
them of failed premium payments (see Dkt. No. 36 at
8). In other words, Plaintiffs identify no representation
that they relied upon to their detriment.
also claim American Auto breached fiduciary duties owed
Plaintiffs by failing to notify them that the January 2016
premium payment was not processed under the automatic payment
plan that American Auto allegedly helped setup. (See
Am. Compl. ¶¶ 51-58.) That claim is also without
merit because no fiduciary relationship existed between
American Auto and Plaintiffs. "A confidential or
fiduciary relationship exists when one imposes a special
confidence in another, so that the latter, in equity and good
conscience, is bound to act in good faith and with due regard
to the interests of the one imposing the confidence."
Hendricks v. Clemson Univ.,578 S.E.2d 711, 715
(S.C. 2003) (internal quotation marks omitted). The sale of
insurance is an arm's length transaction that does not
create a fiduciary relationship between buyer and seller.
Pitts v. Jackson Nat. Life Ins. Co.,574 S.E.2d 502,
508 (S.C. Ct. App. 2002). Plaintiffs allege no ...