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Barnard v. State Farm Fire & Casualty Co.

United States District Court, D. Oregon

December 6, 2017

CRAIG BARNARD, TERESA BARNARD, and BRADY BARNARD Plaintiffs,
v.
STATE FARM FIRE & CASUALTY COMPANY, Defendant.

          FINDINGS AND RECOMMENDATION

          Honorable Paul Papak United States Magistrate Judge

         Plaintiffs 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 diversity jurisdiction.

         By and 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 in controversy.

         Now 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.

         LEGAL STANDARD

         To 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.

         "In 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).

         FACTUAL BACKGROUND

         I. The Parties

         Plaintiffs 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.

         Defendant 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.

         II. Material Allegations [1]

         State 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.

         Approximately four or five days after the water intrusion occurred, a State Farm claims representative inspected the insured premises. See id., ΒΆ 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 ...


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