Zielinski v. The Travelers Indemnity Company

Opinion

3 STEVEN THOMAS ZIELINSKI, 4 Plaintiff, Case No.: 2:24-cv-02189-GMN-NJK 5 vs. ORDER GRANTING DEFENDANT’S 6 THE TRAVELERS INDEMNITY MOTION TO DISMISS

8 Defendant.

9 10 Pending before the Court is the Motion to Dismiss (“MTD”), (ECF No. 5), filed by 11 Defendant The Travelers Indemnity Company (“Travelers”). Plaintiff Steven Thomas Zielinski 12 filed a Response, (ECF No. 7), to which Defendant filed a Reply, (ECF No. 8). 13 For the reasons discussed below, the Court GRANTS Defendant’s Motion to Dismiss. 15 This case arises from injuries Plaintiff sustained in the course of his employment during 16 an accident with a third-party driver in May 2022. (See generally Compl., Ex. A to Pet. 17 Removal, ECF No. 1-2). As a result of the collision, Plaintiff suffered damage to his vehicle 18 and physical injury. Id. At the time of the accident, Plaintiff’s employer (“Takeda”) had a 19 policy with Defendant, (the “Policy”). (Id. ¶ 10). Plaintiff alleges that pursuant to the Policy, 20 Defendant first refused, then agreed to pay compensatory damages for bodily injury caused by 21 the third-party driver who was “underinsured/uninsured.” (Id. ¶¶ 20–30). Because Plaintiff’s 22 medical expenses exceeded the third-party driver’s policy limits, Plaintiff made a claim to 23 Defendant to pay the remainder of his damages. (Id. ¶ 31). According to Plaintiff, Defendant 24 thereafter recanted the confirmation of benefits and communicated to Plaintiff that there was no 25 uninsured and underinsured motorist coverage (“UM/UIM”). (Id. ¶¶ 36–41). 1 Plaintiff subsequently filed suit in the Eighth Judicial District Court of Nevada, asserting 2 claims for: (1) declaratory relief; (2) breach of contract; (3) tortious breach of the implied 3 covenant of good faith and fair dealing; and (4) breach of statutory duties under Nevada 4 Revised Statues (“NRS”) § 686A.310. (Id. ¶¶ 54–94). Defendant then removed to this Court 5 based on diversity jurisdiction. (See generally Pet. Removal, ECF No. 1). Defendant now 6 moves to dismiss explaining Travelers’ policy did not include UM/UIM motorists coverage in 7 Nevada due to Takeda’s waiver of said coverage. (See generally MTD, ECF No. 5). 9 Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon 10 which relief can be granted. Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 11 555 (2007). A pleading must give fair notice of a legally cognizable claim and the grounds on 12 which it rests, and although a court must take all factual allegations as true, legal conclusions 13 couched as factual allegations are insufficient. Twombly, 550 U.S. at 555. Accordingly, Rule 14 12(b)(6) requires “more than labels and conclusions, and a formulaic recitation of the elements 15 of a cause of action will not do.” Id. “To survive a motion to dismiss, a complaint must contain 16 sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its 17 face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A 18 claim has facial plausibility when the plaintiff pleads factual content that allows the court to 19 draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. This 20 standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

21 “Generally, a district court may not consider any material beyond the pleadings in ruling 22 on a Rule 12(b)(6) motion.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 23 1555 n.19 (9th Cir. 1990). “However, material which is properly submitted as part of the 24 complaint may be considered.” Id. Similarly, “documents whose contents are alleged in a 25 complaint and whose authenticity no party questions, but which are not physically attached to 1 the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss.” Branch v. 2 Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Otherwise, if a court considers materials outside of 3 the pleadings, the motion to dismiss is converted into a motion for summary judgment. Fed. R. 4 Civ. P. 12(d). 5 If the court grants a motion to dismiss for failure to state a claim, leave to amend should 6 be granted unless it is clear that the deficiencies of the complaint cannot be cured by 7 amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Pursuant 8 to Rule 15(a), the court should “freely” give leave to amend “when justice so requires,” and in 9 the absence of a reason such as “undue delay, bad faith or dilatory motive on the part of the 10 movant, repeated failure to cure deficiencies by amendments previously allowed undue 11 prejudice to the opposing party by virtue of allowance of the amendment, futility of the 12 amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962). 14 Plaintiff’s Complaint asserts the following claims: (1) declaratory relief; (2) breach of 15 contract; (3) tortious breach of the implied covenant of good faith and fair dealing; and (4) 16 breach of statutory duties — NRS 686A.310: Unfair Practices in Claim Handling. (See 17 generally Compl., Ex. A to Pet. Removal, ECF No. 1-2). Defendant moves to dismiss all of 18 Plaintiff’s causes of action. (See generally MTD). The Court discusses these claims below, 19 beginning with declaratory relief. 20 A. Declaratory Relief

21 Defendant moves to dismiss Plaintiff’s claim for declaratory relief. (MTD 7:1–9:7). 22 Rule 8(a)(2) of the Federal Rules of Civil Procedure requires “a short and plain statement of the 23 claim showing that the pleader is entitled to relief.” This statement must demonstrate “some 24 setting” suggesting facts that “raise a reasonable expectation that discovery will reveal 25 evidence” of a cause of action. Twombly, 550 U.S. at 556. Declaratory relief is an equitable 1 remedy, not an independent cause of action. Butler v. Progressive Direct Ins. Co., 772 F. Supp. 2 3d 1185, 1204 n.7 (D. Nev. 2025). Thus, because declaratory relief is not an independent cause 3 of action, Plaintiff has failed to allege “sufficient factual matter, accepted as true, to ‘state a 4 claim.’” See Ashcroft, 556 U.S. at 678. Accordingly, this claim is DISMISSED. Because the 5 deficiencies identified cannot be cured by amendment, the Court does not grant leave to amend 6 on this claim. However, this dismissal would not preclude the Court from awarding declaratory 7 relief if Plaintiff prevails on his subsequent claims. See Wang v. LM Gen. Ins. Co., No. 2:22- 8 CV-2075-JCM-DJA, 2023 WL 2913396, at *3 (D. Nev. Apr. 12, 2023). 9 B. Breach of Contract 10 Defendant next moves to dismiss Plaintiff’s claim for breach of contract based on the 11 Supplementary Commercial Automobile Application (“the Application”) for insurance 12 coverage made by Plaintiff’s employer which is attached as Exhibit B to Defendant’s Motion to 13 Dismiss. (MTD 5:2–6:5). The Court must first analyze whether it can consider the Application 14 before turning to the merits of Defendant’s arguments. 15 a. Consideration of Documents Incorporated by Reference 16 “Generally, a district court may not consider any material beyond the pleadings in ruling 17 on a Rule 12(b)(6) motion.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 18 1555 n.19 (9th Cir. 1990). But “documents whose contents are alleged in a complaint and 19 whose authenticity no party questions, but which are not physically attached to the pleading, 20 may be considered in ruling on a Rule 12(b)(6) motion to dismiss.” Branch v. Tunnell, 14 F.3d

21 449, 454 (9th Cir. 1994). “Certain written instruments attached to pleadings may be considered 22 part of the pleading” if incorporated by reference. United States v. Ritchie, 342 F.3d 903, 908 23 (9th Cir. 2003). A document not attached to a complaint is incorporated by reference if the 24 plaintiff refers extensively to the document or if it forms the basis of the plaintiff’s claim. Id. 25 1 Here, Plaintiff does not question the authenticity of the Application. (See generally 2 Resp.). The Complaint references the Application. (Compl. ¶ 45) (“Plaintiff’s counsel received 3 an email confirming there is no coverage for uninsured and underinsured motorist coverage out 4 of Nevada and included a copy of the waiver signed on April 2, 2022.”). Although the 5 Complaint does not extensively reference the Application for coverage, it nevertheless 6 necessarily relies upon the Application received from the Defendant explaining why his 7 employer does not have UM/UIM coverage for his damages. See Parrino v. FHP, Inc., 146 8 F.3d 699, 706 (9th Cir. 1998) (holding that the district court properly considered a document 9 not attached to and not explicitly referenced in the complaint, but attached to defendant’s 10 motion to dismiss because plaintiff’s claims rested on the terms of that document); see also 11 Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (holding that it was proper to incorporate 12 surrounding photos and caption defendant submitted because the claim necessarily depended on 13 them). Accordingly, the Court concludes that it may consider the Application attached to 14 Defendant’s Motion to Dismiss. 15 b. Defendant’s Motion to Dismiss 16 Because the Court concludes that it can consider the Application, it now turns to the 17 merits of Defendant’s arguments for dismissal based on the Application. In Nevada, “[t]he 18 starting point for the interpretation of any contract, including insurance policies, is with its 19 plain language.” WP6 Rest. Mgmt. Grp. LLC v. Zurich Am. Ins. Co., 595 F. Supp. 3d 973, 977 20 (D. Nev. 2022). An insurance policy’s provisions are viewed in their “plain, ordinary[,] and

21 popular sense.” Levy Ad Grp., Inc. v. Chubb Corp., 519 F. Supp. 3d 832, 836 (D. Nev. 2021). 22 Any limitation in coverage must be “clearly and distinctly” communicated. Id. Under Nevada 23 law, a breach of contract is “a material failure of performance of a duty arising under or 24 imposed by agreement.” Bernard v. Rockhill Dev. Co., 734 P.2d 1238, 1240 (1987). The three 25 elements required to show a breach of contract in Nevada are (1) the existence of a valid 1 contract, (2) a breach by the defendant, and (3) damages as a result of the breach. Saini v. Int'l 2 Game Tech., 434 F. Supp. 2d 913, 919-920 (D. Nev. 2006). 3 Plaintiff and Defendant agree on the existence of a valid contract, which is the Policy for 4 Takeda’s fleet insurance coverage issued by Travelers. (Compl. ¶ 10). The parties disagree on 5 whether there was a breach of this contract. (See generally Compl.). Failure to perform one’s 6 obligations within the terms of the contract constitutes a literal breach of contract. Saini v. Int'l 7 Game Tech., 434 F. Supp. 2d 913, 923 (D. Nev. 2006). Defendant provides the Application 8 executed by Plaintiff’s employer rejecting uninsured motorist coverage to support its argument 9 that it did not have a duty to provide UM/UIM coverage to Plaintiff and therefore did not 10 breach by declining to do so. (Application, Ex B to MTD, ECF 5-2). 11 Upon review of the Application’s plain language, the Court agrees with Defendant that 12 Takeda checked the box rejecting Uninsured Motorists Coverage. (See generally Application, 13 Ex. B to MTD, ECF No. 5-2). “I wish to reject Uninsured Motorists Coverage” can reasonably 14 be understood to mean that Takeda did not want to be covered by the protection Defendant 15 offered through UM/UIM coverage outlined in the paragraphs preceding the checkboxes. By 16 checking the box, Takeda and Defendant agreed that Defendant has no contractual obligation to 17 pay UM/UIM benefits. Thus, Defendant did not breach its contract as a matter of law by 18 denying coverage because it had no duty to cover the UM/UIM claim under the policy. See 19 Bernard, 734 P.2d at 1240. Accordingly, this claim is DISMISSED. 20 C. Tortious Breach of the Implied Covenant of Good Faith and Fair Dealing

21 Defendant also moves to dismiss Plaintiff’s claim for tortious breach of the implied 22 covenant of good faith and fair dealing. (MTD 6:6–15). Under Nevada law, breach of the 23 implied covenant can give rise to tort liability when a special relationship exists between the 24 parties to the contract, such as the relationship between an insurer and an insured. Ins. Co. of 25 the West v. Gibson Title Co., Inc., 134 P.3d 698, 702 (Nev. 2006). “Primary to establishing a 1 prima facie case of bad faith refusal to pay an insurance claim is proof that the insurer was 2 required to pay the insurance claim.” WP6 Rest. Mgmt. Grp. LLC, 595 F. Supp. 3d at 981. “An 3 insurer breaches the duty of good faith when it refuses ‘without proper cause to compensate its 4 insured for a loss covered by the policy.’” Pioneer Chlor Alkali Co. v. Nat'l Union Fire Ins. Co. 5 of Pittsburgh, Pennsylvania, 863 F. Supp. 1237, 1242 (D. Nev. 1994) (quoting Peterson, 540 6 P.2d at 1071). To constitute a denial “without proper cause,” an insurer must have an “actual 7 or implied awareness of the absence of a reasonable basis for denying benefits of the policy.” 8 Am. Excess Ins. Co.., 729 P.2d at 1354. In other words, an insurer’s incorrect determination 9 that coverage does not exist under a particular policy is not an actional tort unless there was no 10 reasonable basis for that determination. Pioneer, 863 F. Supp at 1242. 11 In order for Plaintiff to establish a prima facie case of bad faith against Defendant, 12 Plaintiff must show that Defendant had an obligation to pay UM/UIM benefits under the 13 Policy. As explained above, the Policy’s plain language precludes paying out UM/UIM 14 benefits. (See generally Application, Ex. B to MTD, ECF No. 5-2). Without demonstrating that 15 Defendant had an obligation to pay UM/UIM benefits, Plaintiff fails to establish a prima facie 16 case of bad faith against Defendant. See WP6 Rest. Mgmt. Grp. LLC, 595 F. Supp. 3d at 981. 17 Plaintiff’s Complaint does not allege facts that demonstrate how Defendant’s actions give rise 18 to tort liability. Thus, the Court DISMISSES this claim. 19 D. Breach of Statutory Duties (NRS 686A.310) 20 Lastly, Defendant moves to dismiss Plaintiff’s breach of statutory duties claim because

21 Plaintiff has not yet exhausted all administrative remedies. (MTD 9:8–11:28). Plaintiff argues 22 that such a requirement does not foreclose actions for tortious and contractual bad faith. (Resp. 23 5:6–14). Defendant contends that the statute does require Plaintiff to exhaust all administrative 24 remedies, but also allows a separate cause of action for bad faith. (Reply 7:13–27). 25 1 NRS 679B.120(3) grants the Nevada Department of Insurance (“NDOI”) the express 2 authority to “enforce the provisions” of the Nevada Insurance Code, NRS Title 57. Allstate Ins. 3 Co. v. Thorpe, 123 Nev. 565, 572 (2007). The NDOI has exclusive jurisdiction over matters in 4 which a party seeks to ensure compliance with NRS Title 57, meaning certain statutes cannot 5 be enforced through private civil actions because the “legislative scheme provided the sole 6 means by which to address violations.” Id. Plaintiffs must exhaust their administrative 7 remedies with the NDOI “before their claims under the Insurance Code become ripe.” Fehr v. 8 Am. Fam. Mut. Ins. Co., No. 2:23-CV-02077-RFB-EJY, 2024 WL 2836446, at *3 (D. Nev. 9 May 2, 2024). 10 NRS 686A.310 (Unfair Claims Practices Act “UCPA”) falls under Title 57, making 11 Plaintiff’s UCPA claim subject to the NDOI’s exclusive jurisdiction. Hwang v. Redwood Fire 12 & Cas. Ins. Co., 714 F. Supp. 3d 1280, 1287 (D. Nev. 2024). Plaintiff has failed to 13 demonstrate that he has exhausted his administrative remedies available through the NDOI. 14 (See generally Compl.). But Plaintiff argues that the requirement to exhaust all administrative 15 remedies does not foreclose actions for tortious and contractual bad faith. (See generally 16 Resp.). If that were true, this UCPA claim would be redundant because Plaintiff has already 17 pled a cause of action for tortious breach of the implied covenant of good faith and fair dealing. 18 See Hwang, 714 F. Supp. 3d at 1291 n.5. “Either the claim is wholly duplicative of [Plaintiff’s] 19 bad faith claim and must be dismissed on that basis, or it is not, in which case the claim must be 20 dismissed because the court lacks subject matter jurisdiction to adjudicate it.” Id. In either

21 case, this claim must be DISMISSED. 22 In sum, Defendant’s Motion to Dismiss is GRANTED. Because the Application 23 establishes that Defendant did not have a duty to cover the UM/UIM claim, and each of 24 Plaintiff’s claims rely on Defendant having the duty to cover the UM/UIM claim, the Court 25 1 || finds that amendment would be futile. Accordingly, the Court does not grant leave to amend 2 || on any of the claims. 3 |}IV. CONCLUSION 4 IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss, (ECF No. 5), is 5 GRANTED without leave to amend. 6 The Clerk of Court is kindly directed to close this case. 7 DATED this 15 __ day of August, 2025. i,

10 Gloria M. faye, District Judge UNITED STATES DISTRICT COURT 1] 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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