United States District Court, D. Oregon
FINDINGS AND RECOMMENDATION
Honorable Paul Papak United States Magistrate Judge
Craig Barnard ("Craig"), Teresa Barnard
("Teresa"), and Brady Barnard ("Brady"
and, collectively with Craig and Teresa, the
"Barnards") fded this action against defendant
State Farm Fire & Casualty Company ("State
Farm") in the Clackamas County Circuit Court on August
2, 2017. State Farm removed the Barnards' action to this
court effective August 28, 2017, on the asserted ground of
through their complaint as filed in state court, the Barnards
allege that State Farm provided them with homeowners
insurance for their Lake Oswego, Oregon, residence, that in
2014 their residence was damaged by water intrusion, that the
damage to their residence was covered under their State Farm
homeowners insurance policy, and that State Farm nevertheless
refused to cover the costs of the damage. Arising out of the
foregoing, the Barnards allege State Farm's liability
under Oregon common law (i) for breach of contract and for
breach of the implied covenant of fair dealing, in two
separate counts, (ii) for tortious interference with business
relationships, (iii) for negligence, (iv) for negligent
misrepresentation, (v) for intentional misrepresentation,
(vi) for bad faith and unfair dealing, (vii) for intentional
infliction of emotional distress, and (viii) for conversion.
The Barnards seek award of money damages in the amount of
either $1, 500, 000 or $1, 000, 000 (depending on the
specific claim at issue), and for award of their attorney
fees and costs. This court has diversity jurisdiction over
the Barnards' claims pursuant to 28 U.S.C. § 1332
based on the complete diversity of the parties and the amount
before the court is State Farm's motion (#3) to dismiss
the Barnards' sixth claim for relief only, by and through
which the Barnards allege State Farm's liability for bad
faith and unfair dealing. I have considered the motion, oral
argument on behalf of the parties, and all of the pleadings
and papers on file. For the reasons set forth below, State
Farm's motion (#3) should be denied.
survive dismissal for failure to state a claim pursuant to
Rule 12(b)(6), a complaint must contain more than a
"formulaic recitation of the elements of a cause of
action;" specifically, it must contain factual
allegations sufficient to "raise a right to relief above
the speculative level." Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007). To raise a right to
relief above the speculative level, "[t]he pleading must
contain something more ... than ... a statement of facts that
merely creates a suspicion [of] a legally cognizable right of
action." Id., quoting 5 C. Wright & A.
Miller, Federal Practice and Procedure § 1216, pp.
235-236 (3d ed. 2004); see also Fed. R. Civ. P.
8(a). Instead, the plaintiff must plead affirmative factual
content, as opposed to any merely conclusory recitation that
the elements of a claim have been satisfied, that
"allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged."
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009),
citing Twombfy, 550 U.S. at 556. "In sum, for a
complaint to survive a motion to dismiss, the non-conclusory
'factual content, ' and reasonable inferences from
that content, must be plausibly suggestive of a claim
entitling the plaintiff to relief." Moss v. United
States Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009),
citing Iqbal, 556 U.S. at 678.
ruling on a 12(b)(6) motion, a court may generally consider
only allegations contained in the pleadings, exhibits
attached to the complaint, and matters properly subject to
judicial notice." Swartz v. KPMGLLP, 476 F.3d
756, 763 (9th Cir. 2007). In considering a motion to dismiss,
this court accepts all of the allegations in the complaint as
true and construes them in the light most favorable to the
plaintiff. See Kahle v. Gonzales, 474 F.3d 665, 667
(9th Cir. 2007). Moreover, the court "presume[s] that
general allegations embrace those specific facts that are
necessaiy to support the claim." Nat'l Org. for
Women v. Scheidler, 510 U.S. 249, 256 (1994),
quoting Lujan v. Defenders of Wildlife, 504 U.S.
555, 561 (1992). The court need not, however, accept legal
conclusions "cast in the form of factual
allegations." Western Mining Council v.Watt,
643 F.2d 618, 624 (9th Cir. 1981).
Craig and Teresa are a married couple, and plaintiff Brady is
their "19-year-old disabled son." The Barnards are
all citizens and residents of Oregon. Craig and Teresa own
the home (the "insured premises") in Lake Oswego,
Oregon, where the Barnards at all material times resided.
Craig is employed in the real estate business, and Teresa
owns a State Farm insurance agency.
State Farm is an Illinois corporation headquartered in
Illinois. State Farm is engaged in the insurance business.
State Farm provided homeowners insurance to the Barnards for
the insured premises in Lake Oswego, Oregon.
Material Allegations 
Farm issued a homeowners insurance policy (the
"policy") to the Barnards. The policy required
State Farm to pay for certain losses suffered by the
plaintiffs in connection with structural damage to the
insured premises, loss of personal property, and living
expenses for periods when damage to the insured premises
required the plaintiffs to pay for lodging elsewhere.
See Complaint, ¶¶ 1, 3-4. On or around
August 14, 2015, the failure of an under-sink water heater
resulted in water intrusion that caused structural damage to
the insured premises and damage to the Barnards' personal
property, and required them to pay for lodging elsewhere.
See id., ¶¶ 5, 12. The Barnards made a
claim under the policy. See id,, ¶ 6.
four or five days after the water intrusion occurred, a State
Farm claims representative inspected the insured premises.
See id., ¶ 12. Explaining that he was "not
supposed to do this, " and that he would "deny it
if it ever comes up, " the adjuster retrieved tools from
his car and used them to remove the water heater from the
premises, thus compromising the key evidence upon which the
Barnards would otherwise have relied in the ...