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Coultas v. Liberty Mutual Fire Insurance Co.

United States District Court, D. Oregon

May 18, 2015

WILLIAM H. COULTAS, CHRISTINE COULTAS, and CHRISTINE SCHWANENBERG, filing individually and in her capactity as personal representative of the Estate of Roark Schwanenberg, Plaintiffs,
v.
LIBERTY MUTUAL FIRE INSURANCE CO., Defendant.

OPINION AND ORDER

PAUL PAPAK, Magistrate Judge.

Plaintiffs William H. Coultas and Christine Coultas, as well as Christine Schwanenberg, filing individually and as a personal representative of the Estate of Roark Schwanenberg (collectively, "Plaintiffs"), filed the instant action against defendant Liberty Mutual Fire Insurance Company ("Liberty Mutual"), alleging two counts of conversion in violation of Oregon law. This court has jurisdiction over those claims pursuant to 28 U.S.C. § 1332.

Now before the court is Liberty Mutual's motion to dismiss (#10) pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6) for failure to state a claim upon which relief can be granted. For the reasons discussed below, Liberty Mutual's Motion is denied.

PROCEDURAL BACKGROUND

On December 10, 2014, Plaintiffs filed a complaint in the Circuit Court of Oregon for the County of Multnomah alleging conversion, wrongful use of civil proceedings, and a breach of the duty of good faith and fair dealing on behalf of all Plaintiffs, as well as one count of fraud on behalf of Plaintiff Schwanenberg. Plaintiffs later filed their Amended Complaint (# 1-1) eliminating all but their fraud and conversion claims.

On February 11, 2015, Liberty Mutual removed Plaintiffs' lawsuit to this court (#1). On February 18, 2015, Liberty Mutual filed the current Motion to Dismiss Plaintiffs' claims pursuant to Rule 12(b)(6) (#10).

On March 4, 2015, Plaintiffs filed a Notice of Voluntary Dismissal (#20) of their fraud claim pursuant to Rule 41(a). That same day, Plaintiffs filed their Response (#21) to Liberty Mutual's Motion to Dismiss.

On April 7, 2015, the court heard Oral Argument on Liberty Mutual's Motion. This matter is fully submitted and prepared for decision.

FACTUAL BACKGROUND[1]

In August 2008, Roark Schwanenberg and Plaintiff William Coultas were involved in a tragic helicopter crash that proved fatal for Mr. Schwanenberg and caused Mr. Coultas to suffer an extended coma and severe bums. Amended Complaint, #1, Ex. A, 20, ¶¶ 6, 8, 12. Thereafter, Liberty Mutual, which contracted with the employer of the individuals involved in the crash, began paying workers' compensation benefits to Mr. Coultas and Mr. Schwanenberg's widow, Plaintiff Christine Schwanenberg. Id. ¶¶ 12-14.

In October 2008, Liberty Mutual sent letters to Mr. Coultas and Mrs. Schwanenberg allowing them to elect whether to file suit themselves against the parties potentially responsible for the helicopter crash or, alternatively, to assign their right to file suit to Liberty Mutual. Id. ¶¶ 16, 20. Mrs. Schwanenberg received her letter from Liberty Mutual on October 14, 2008. Id. ¶ 17. Mr. Coultas received his letter on October 16, 2008. Id. The letters instructed the recipients to sign and return their election to Liberty Mutual "within 60 days of receipt" of the letters. Id. ¶ 20. The letters further informed the recipients of Oregon's two-year Statute of Limitations governing their claim. Id. ¶ 21.[2]

Both Mr. Coultas and Mrs. Schwanenberg elected to file suit themselves. Id. ¶¶ 22-23. After noting his election, Mr. Coultas mailed the letter to Liberty Mutual. Amended Complaint, #1, Ex. A, 20, ¶ 23. After noting her election, Mrs. Schwanenberg gave the letter to a family friend, Mr. Johnson, to mail to Liberty Mutual. Id. ¶ 22.

Liberty Mutual acknowledged receipt of Mr. Coultas's letter and election but maintains that it did not receive Mrs. Schwanenberg's letter and election. Id. ¶ 24. Liberty Mutual's internal documents indicate that the Schwanenberg election letter was mailed to Liberty Mutual but was then returned to sender. Id.

At no point did Liberty Mutual inform Plaintiffs that their responses were invalid, that Liberty Mutual was not in receipt of their responses, or that Liberty Mutual intended to proceed against the potentially responsible parties. Id. ¶ 25.

On December 10, 2008, fifty-seven days after Mrs. Schwanenberg received her election letter, Liberty Mutual filed a lawsuit in the United States District Court for the Northern District of California on behalf of Roark Schwanenberg and his survivors and beneficiaries against multiple defendants, ...


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