Ferrario v. USAA Casualty Insurance Company

• Court: District Court, D. Nevada
• Decided: October 21, 2024
• Docket: 2:24-cv-01261
• Status: Unknown

Opinion

1 UNITED STATES DISTRICT COURT

2 DISTRICT OF NEVADA

3 MIA FERRARIO, 4 Plaintiff, Case No.: 2:24-cv-01261-GMN-EJY 5 vs. ORDER DENYING MOTION TO 6 USAA CASUALTY INSURANCE REMAND AND GRANTING PARTIAL 7 COMPANY, MOTION TO DISMISS

8 Defendant. 9 Pending before the Court is the Partial Motion to Dismiss, (ECF No. 6), filed by 10 Defendant USAA Casualty Insurance Company. Plaintiff Mia Ferrario filed a Response, (ECF 11 No. 13), to which Defendant filed a Reply, (ECF No. 16). Also pending before the Court is the 12 Motion to Remand, (ECF No. 11), filed by Plaintiff. Defendant filed a Response, (ECF No. 13 18), to which Plaintiff filed a Reply, (ECF No. 19). 14 Because the record currently before the Court demonstrates that complete diversity 15 exists between the parties, the Court DENIES Plaintiff’s Motion to Remand. The Court further 16 GRANTS Defendant’s Motion to Dismiss Plaintiff’s bad faith claim for failure to allege 17 sufficient facts. 18 I. BACKGROUND 19 Plaintiff suffered injuries when her vehicle was struck by a non-party driver. (See 20 generally Compl., ECF No. 1-1). Plaintiff was insured by Defendant USAA Casualty 21 Insurance Company, and her coverage included benefits for compensation resulting from 22 injuries caused by underinsured motorists. (Id.). The insurers of the two non-party tortfeasors 23 paid Plaintiff, but she alleges that these payments were insufficient to fully compensate her for 24 her injuries. (Id. ¶¶ 17–18, 23–24). 25 1 Plaintiff provided Defendant with her medical records and requested underinsured 2 motorist and medical payment policy benefits. (Id. ¶¶ 20–21). She presented total medical 3 expenses of $44,480.89 and noted a future surgical recommendation from her treating 4 physician. (Id. ¶¶ 22, 28). Defendant subsequently valued her underinsured motorist claims at 5 $100,000, and Plaintiff alleges that Defendant failed to tender UIM benefits owed to her. (Id. 6 ¶¶ 25, 31). Plaintiff brings causes of action for Breach of Contract and “Breach of the 7 Covenant of Good Faith/Insurance Bad Faith.” (Id. ¶¶ 7–33). She now moves to remand to 8 state court, and Defendant moves to dismiss her bad faith claim. 9 II. LEGAL STANDARD 10 “Federal courts are courts of limited jurisdiction,” and “possess only that power 11 authorized by Constitution and statute, which is not to be expanded by judicial decree.” 12 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (internal citations 13 omitted). “It is to be presumed that a cause lies outside this limited jurisdiction, and the burden 14 of establishing the contrary rests upon the party asserting jurisdiction.” Id. (internal citations 15 omitted). Generally, district courts have subject matter jurisdiction over civil actions in which:

16 (1) the claims arise under federal law; or (2) where no plaintiff is a citizen of the same state as a 17 defendant and the amount in controversy exceeds $75,000.00. See 28 U.S.C. §§ 1331, 1332(a). 18 Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon 19 which relief can be granted. Fed. R. Civ. P. 12(b)(6). A pleading must give fair notice of a 20 legally cognizable claim and the grounds on which it rests, and although a court must take all 21 factual allegations as true, legal conclusions couched as factual allegations are insufficient. Bell 22 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Accordingly, Rule 12(b)(6) requires “more 23 than labels and conclusions, and a formulaic recitation of the elements of a cause of action will 24 not do.” Id. “To survive a motion to dismiss, a complaint must contain sufficient factual 25 matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. 1 Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial 2 plausibility when the plaintiff pleads factual content that allows the court to draw the 3 reasonable inference that the defendant is liable for the misconduct alleged.” Id. This standard 4 “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. 5 III. DISCUSSION 6 Because the Court must have jurisdiction to decide the pending Motion to Dismiss, it 7 will first address Plaintiff’s argument that this case should be remanded for lack of complete 8 diversity between the parties. 9 A. Motion to Remand 10 Plaintiff is a citizen of Nevada, and Defendant USAA Casualty Insurance Company is a 11 Texas corporation with its principal place of business in Texas. (Compl. ¶¶ 1–2, Ex. 1 to Pet. 12 Removal); (Cert. Interested Parties, ECF No. 2). Although there appears to be complete 13 diversity between the Plaintiff and Defendant USAA Casualty Insurance Company, Plaintiff 14 argues that the case should be remanded because in USAA Casualty Insurance Company’s 15 Certificate of Interested Parties, it states that it is a wholly-owned subsidiary of United States

16 Automobile Association, (“USAA”). (See generally Mot. Remand, ECF No. 11); (Reply Mot. 17 Remand 2:7–20, ECF No. 19). Defendant’s parent company USAA is an unincorporated 18 association insurance exchange, and thus it is a citizen of every state in which it has members. 19 See California Auto. Ins. Co. v. Basscraft Mfg. Co., No. CV 5:19-2259-MWF-SHK, 2020 WL 20 730851, at *4 (C.D. Cal. Feb. 13, 2020) (collecting cases that have held USAA’s citizenship for 21 diversity purposes is determined on the citizenship of each its members). Thus, if USAA’s 22 citizenship is properly imputed to its subsidiary USAA Casualty Insurance Company, diversity 23 would be destroyed because USAA has members in the state of Nevada. (Mot. Remand 8:16– 24 21). 25 1 “In an action in which jurisdiction is based on diversity under 28 U.S.C. § 1332(a), a 2 party or intervenor must, unless the court orders otherwise, file a disclosure statement” to 3 “identify the citizenship of every individual or entity whose citizenship is attributed to party.” 4 Fed. R. Civ. P. 7.1(a)(2).1 The Advisory Committee’s Notes to Rule 7.1 provide insight into 5 when attributed citizenship may apply. Initially, the notes explain that the citizenship 6 disclosure exists to help judges determine whether complete diversity of citizenship exists. The 7 Notes clarify that a corporation’s disclosure is “straightforward,” because its citizenship is its 8 place of incorporation and principal place of business. See U.S.C §1332(c)(2). Unincorporated 9 associations, however, assume the citizenship of each of their members. See Carden v. Arkoma 10 Assocs., 494 U.S. 185, 195–96 (1990). 11 In her Reply brief, Plaintiff cites a case from the Eastern District of California for the 12 proposition that a corporation wholly owned by an LLC or a reciprocal inter-insurance 13 exchange is a citizen of every state of which its owners or members are citizens. (Reply 3:13– 14 21) (citing Yong In v. BMW of N. Am., LLC, No. 1:18-CV-1267 AWI-JLT, 2018 WL 6040764, 15 at *1 (E.D. Cal. Nov. 19, 2018)). But the case the does not stand for that proposition. The

16 BMW court was simply iterating the defendant’s argument that LLCs are citizens of every state 17 of which its owners or members are citizens, and the defendant in that case was an LLC. 18 Unlike here, where the Defendant is a corporation, the defendant in BMW was an LLC wholly 19 owned by a corporation parent company. The Court therefore does not find this cited order’s 20 reasoning to be applicable. 21 Generally, in a suit involving a subsidiary corporation, the court looks to the state of 22 incorporation and principal place of business of the subsidiary, not the parent. Danjaq, S.A. v. 23 Pathe Commc’ns Corp., 979 F.2d 772, 775 (9th Cir. 1992). However, it is possible for a 24

25 1 Defendant’s Certificate of Interested Parties asserts that USAA CIC is a Texas Corporation, but does not affirmatively state its citizenship. The Court therefore STRIKES the Certificate and grants Defendant two weeks to refile. 1 corporation defendant to take on the citizenship of its parent company if the subsidiary is an 2 alter ego of the parent company. Id. “Under these circumstances, courts view the formal 3 separateness between the two corporations as merely a legal fiction.” Id. 4 At this point, Plaintiff has not made the argument that USAA Casualty Insurance 5 Company is an alter ego of USAA. To the extent that Plaintiff wishes to determine whether 6 Defendant is in fact operating as an alter ego, she may pursue jurisdictional discovery and file a 7 separate motion to remand in the future. Accordingly, because Defendant has carried its 8 burden of establishing subject matter jurisdiction over this case, Plaintiff’s Motion to Remand 9 is DENIED. 10 B. Motion to Dismiss 11 Next, Defendant moves to dismiss Plaintiff’s claim for breach of the implied covenant of 12 good faith for failure to allege sufficient supporting facts. (Mot. Dismiss 6:12–11:13). Plaintiff 13 alleges that Defendant breached its duty of good faith and fair dealing “when it chose not to 14 evaluate Plaintiff’s claims reasonably and in good faith.” (Compl. ¶ 30, Ex. 1 to Pet. Removal). 15 She further contends that Defendant breached its “special relation duty,” constituting the tort of

16 insurance bad faith, “when it chose not to reasonably, properly, fairly, and timely evaluate and 17 tender reasonable underinsured motorist policy benefits and medical payments benefits.” (Id. ¶ 18 31). 19 The implied covenant of good faith and fair dealing arises out of every contractual 20 relationship and “prohibits arbitrary or unfair acts by one party that work to the disadvantage of 21 the other.” Nelson v. Heer, 163 P.3d 420, 427 (Nev. 2007). When a special relationship exists 22 between an insurer and its insured—akin to a fiduciary relationship—the relationship can create 23 tort liability. Allstate Ins. Co. v. Miller, 212 P.3d 318, 325–26 (Nev. 2009). To state a claim for 24 tortious breach of the implied covenant, the insured must plausibly allege that: (1) an insurer 25 denied a claim; (2) without any reasonable basis; and (3) with the knowledge or reckless 1 disregard of any reasonable basis to deny coverage. See Falline v. GNLV Corp., 823 P.2d 888, 2 891 (Nev. 1991). That is, bad faith requires an insurer’s denial of benefits to be both 3 objectively and subjectively unreasonable. See Rivas v. Gov’t Employees Ins. Co., No. 2:20-cv- 4 306, 2020 WL 3128596, at *2 (D. Nev. June 12, 2020). 5 Plaintiff’s bad faith claim is a mere recitation of the elements, supported with vague 6 conclusions that Defendant chose not to fairly and timely evaluate her claims. The only factual 7 allegations that could support her claim are that she presented total medical expenses in the 8 amount of $44,480.89, her physician recommended a future surgery, and Defendant valued her 9 UIM claims at $100,000. (Compl. ¶¶ 22, 25, 28).2 These facts can lead the court to infer the 10 existence of a dispute as to the value of Plaintiff’s claim, but a dispute as to value is not enough 11 on its own to support a cause of action for bad faith. See Plaza v. Geico Direct, 430 F. Supp. 3d 12 689, 692 (D. Nev. 2020); Yoon v. Travelers Indem. Co., No. 2:20-cv-1507-JCM-EJY, 2021 WL 13 1968279, at *3 (D. Nev. May 17, 2021). Plaintiff does not state whether Defendant’s valuation 14 claim was accompanied by an explanation for its evaluation. She also fails to allege facts to 15 support her conclusion that Defendant’s valuation of $100,000 was knowingly unreasonable

16 and that Defendant lacked a reasonable basis to come to that valuation. Thus, the Court 17 GRANTS Defendant’s Motion to Dismiss Plaintiff’s bad faith claim and associated request for 18 punitive damages. But because Plaintiff may be able to cure the noted deficiency with 19 additional factual allegations, the claim is dismissed with leave to amend. 20 21 22

23 2 Plaintiff’s Response contains a few additional background facts, such as the fact that her UIM demand totaled $290,000.00 24 and included ongoing physical and mental impairments, but such facts were not alleged in her Complaint and cannot now remedy the deficiencies identified in this Order. (Resp. to Mot. Dismiss, 3:17–26). Plaintiff’s Response further explains that 25 USAA first evaluated her claim at $83,750.00 and eventually increased it to $100,000, but this dispute in value determination provides no additional support for Defendant’s bad faith. (Id. 4:1–8). Plaintiff still does not provide facts to explain why $100,000 is objectively and subjectively unreasonable. 1 CONCLUSION 2 IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss, (ECF No. 6), is 3 || GRANTED. Plaintiff's second claim for tortious breach of the implied covenant of good faith 4 fair dealing is DISMISSED with leave to amend. 5 IT IS FURTHER ORDERED that Plaintiff's Motion to Remand is DENIED. 6 IT IS FURTHER ORDERED that Defendant’s Certificate of Interested Parties, (ECF 7 || No. 2), is STRICKEN for failure to affirmatively state the citizenship of Defendant USAA g || Casualty Insurance Company. The Court GRANTS Defendant two weeks from the date of this 9 |} Order to refile its Certificate of Interested Parties. 10 11 DATED this 21 day of October, 2024. 12 Ly, Yi, 8 4 Uy 4 avarro, District Judge UNITED STATES DISTRICT COURT 15 16 17 18 19 20 21 22 23 24 25

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