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Bierman v. United Farm Family Insurance Co.

United States District Court, Fourth Circuit

May 6, 2013

ALBERT J. BIERMAN, Individually and d/b/a King Mulch and King Farm, and KING PALLET, INC., t/a King Mulch Plaintiffs,
v.
UNITED FARM FAMILY INSURANCE COMPANY, Defendant.

MEMORANDUM OPINION

RICHARD D. BENNETT, District Judge.

Plaintiffs Albert J. Bierman and King Pallet, Inc. (together, "Plaintiffs") bring this action seeking damages against Defendant United Farm Family Insurance Company ("Defendant") and arising out of Defendant's fulfillment of an insurance claim. Plaintiffs allege that Defendant breached a contract, made false representations, and acted in bad faith due to conduct in relation to that insurance claim. Now pending is the Defendant's Motion to Dismiss (ECF No. 12) Count Two of Plaintiffs' Complaint for failure to state a claim. Defendant also moves to dismiss Count Three of Plaintiffs' Complaint on grounds that this Court lacks subject matter jurisdiction over this claim.

The Court has reviewed the submissions by both parties and finds that no hearing is necessary. See Local Rule 105.6 (D. Md. 2011). For the reasons that follow, Defendant's Motion to Dismiss is GRANTED IN PART and DENIED IN PART. The Motion is GRANTED with respect to the dismissal of Count Two of Plaintiffs' Complaint, but is DENIED with respect to the dismissal of Count Three of Plaintiffs' Complaint.

BACKGROUND

In ruling on a motion to dismiss, the factual allegations in a plaintiff's complaint must be accepted as true, and those facts must be construed in the light most favorable to the plaintiff. Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999). Plaintiff King Pallet, Inc. ("King Pallet") is a Maryland corporation whose principal place of business is located in Baltimore. Pls.' Compl. § 2, ECF No. 2. Plaintiff Albert J. Bierman ("Bierman") operates King Pallet, and also does business under the name "King Mulch." Id. § 1. Plaintiffs own a building located at 1112 Hengemihle Avenue ("the Essex property") in Essex, Maryland, in which they stored wooden pallets.[1] Id. § 3. Defendant United Farm Family Insurance Company ("Farm Family" or "Defendant") is an insurance company, from which Plaintiffs bought three insurance policies for the Essex property:

1. Policy 1904I0001, an "Inland Marine" policy, which identifies the insured as Albert J. Bierman, and has a policy limit of $400, 000 covering wooden pallets located on the Essex property;
2. Policy 1903X0034, a "Contractors Advantage" policy, which identifies the insured as Albert J. Bierman, and provides coverage for the building on the Essex property ($525, 000), business personal property ($5000), and business income loss (actual loss value);
3. Policy 1901X0031, a "Commercial Property" policy, which identifies the insured as King Pallet, Inc., and covers the building on the Essex property with a policy limit of $575, 000.

Pls.' Resp., Exs. 1-3, ECF No. 13. On July 17, 2009, a fire "damaged and destroyed" the Essex property, and Plaintiffs have "sustained a loss due to damage to the building, ... business property including wooden pallets, .. [and] business interruption." Pls.' Compl. §§ 10, 15. Plaintiffs filed an insurance claim with Farm Family to recover the value of the incurred damages. Id. § 11. Farm Family assessed the damage to the Essex property and paid an undisclosed amount of money to Plaintiffs. Id. § 12. While Farm Family has made payments of "substantial amounts due, " they have not paid the "entire claim due." Id. § 12, 14.

On July 16, 2012, Plaintiffs submitted a Complaint in the Maryland Circuit Court for Baltimore City. See id. The Complaint alleges three counts - namely, that Farm Family breached its contracts with Plaintiffs because it did not pay the appropriate amount of damages under the insurance policies ("Count One"); negligently made false representations to Plaintiffs regarding their insurance claim ("Count Two"); and acted in bad faith in its assessment of Plaintiffs' insurance claim ("Count Three"). Id. §§ 21, 27, 36. Plaintiffs seek $461, 000 under Count One, $461, 000 under Count Two, additional damages under Count Three, and interest as to all three Counts. Id. §§ 24, 34, 43. On August 16, 2012, Defendant removed this case to this Court on the basis of diversity jurisdiction, pursuant to 28 U.S.C. § 1332. See Notice of Removal, ECF No. 1.

On October 17, 2012, Farm Family filed its Motion to Dismiss ("Motion") Counts Two and Three of the Plaintiffs' Complaint. As to Count Two, the negligent misrepresentation claim, Farm Family argues that Plaintiffs have failed to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Mot. to Dismiss 4. In addition, Farm Family argues that this Court does not have subject matter jurisdiction over Count Three, the bad faith claim, because Plaintiffs have failed to exhaust an administrative remedy required by section 27-1001 of the Maryland Insurance Code. See id. 2-3.

On November 5, 2012, Plaintiffs filed a Response, in which they assert that Farm Family's Motion should be dismissed by this Court for two reasons. First, Plaintiffs argue that the Motion is not timely, because Farm Family filed it after submitting an answer to Plaintiffs' Complaint. See Pls.' Resp. 5-6. Second, Plaintiffs assert that Farm Family's administrative remedy claim constitutes an affirmative defense that should have been raised in its Answer. See id. at 6.

After review, Defendant's Motion to Dismiss is GRANTED IN PART and DENIED IN PART. This Court determines that Plaintiffs have failed to state a claim in Count Two of their Complaint, so their claim for negligent misrepresentations is DISMISSED WITHOUT PREJUDICE. However, this Court finds that it has jurisdiction over Count Three, because Plaintiffs need not exhaust their administrative remedy with the Maryland ...


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