United States District Court, D. Maryland, Southern Division
MEMORANDUM AND ORDER
PAUL W. GRIMM, District Judge.
Plaintiff seeks to recover against its insurance company on two counts, the second of which is a claim for insurance bad faith that Defendant insists is subject to dismissal because Plaintiff did not exhaust its administrative remedies by bringing the claim first to the Maryland Insurance Administration ("the Administration"). Because the applicable limit of liability does not exceed $1 million, Plaintiff is required to bring its insurance bad faith claim to the Administration before stating its claim before this Court. It has not. Therefore, I will grant Defendant's motion and dismiss Count II. Count I will continue.
I. FACTUAL BACKGROUND
Defendant issued an insurance policy ("the Policy") for July 21, 2011 through July 21, 2012 for real property, buildings, radio towers, and personal property that Plaintiff owned at multiple addresses, including four radio towers ("Towers") at 43835 St. Andrews Church Road, California, Maryland ("SAC Property"). Compl. ¶¶ 1, 3, 4, ECF No. 2; Policy, Compl. Ex. A., ECF No. 2-1. Plaintiff then lost two of the Towers to "severe weather damage" that destroyed them completely on August 21, 2011. Compl. ¶ 9. Defendant refused to pay Plaintiff the amount Plaintiff sought under the Policy, but agreed to pay a lesser amount without prejudice to Plaintiff seeking further compensation under the Policy. Id. ¶¶ 12-15. Plaintiff brought this two-count suit to recover the balance of the compensation it sought, claiming breach of contract (Count I) and "lack of good faith, " which commonly is referred to as "insurance bad faith" (Count II). Id. ¶¶ 20-28.
Defendant moves to dismiss Count II for failure to comply with the "administrative condition precedent generally applicable to judicial actions for first party bad faith, requiring any such claim to be presented, initially, to the Maryland Insurance Administration." Def.'s Mot. ¶ 3 (citing Md. Code Ann., Ins. § 27-1001; Md. Code Ann., Cts. & Jud. Proc. § 3-1701(c)(1)). Defendant insists that "the applicable coverage sets forth a limit of liability of only $100, 000.00 per tower and under the allegations in the Complaint, only two towers were damaged, " such that "[t]he total potential limit of liability is far less than one million dollars, " the minimum amount for filing suit in this case without proceeding first before the Administration. Id. ¶ 4.
II. STANDARD OF REVIEW
When, as here, a defendant moves to dismiss for failure to exhaust administrative remedies, asserting that "a complaint simply fails to allege facts upon which subject matter jurisdiction can be based, " it is a Fed.R.Civ.P. 12(b)(1) motion for lack of subject matter jurisdiction, and "the facts alleged in the complaint are assumed to be true and the plaintiff, in effect, is afforded the same procedural protection as he would receive under a 12(b)(6) consideration." Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982); see Lutfi v. United States, 527 F.Appx. 236, 241 (4th Cir. 2013); Fianko v. United States, No. PWG-12-2025, 2013 WL 3873226, at *4 (D. Md. July 24, 2013). Thus, "the facts alleged in the complaint are taken as true, and the motion must be denied if the complaint alleges sufficient facts to invoke subject matter jurisdiction." Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009); see In re KBR, Inc., Burn Pit Litig., 925 F.Supp.2d 752, 758 (D. Md. 2013) (quoting Kerns, 585 F.3d at 192). This Court must act "on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007) (citations omitted).
Insurance bad faith is a statutory cause of action under Maryland law, but it is not available until a party first has pursued its claim to a final decision before the Administration. See Md. Code Ann., Cts. & Jud. Proc. § 3-1701(c)(1), (d)(2); Md. Code Ann., Ins. § 27-1001(c)(1), (d)(1). One exception to this requirement that an insured exhaust its administrative remedy is that an action "under a commercial insurance policy on a claim with respect to which the applicable limit of liability exceeds $1, 000, 000" may be filed in court without first seeking relief before the Administration. Cts. & Jud. Proc. § 3-1701(c)(2)(iii); Ins. § 27-1001(c)(2)(iii).
Cts. & Jud. Proc. § 3-1701(c)-(d) provides:
(c) Time for filing; exceptions. - (1) Except as provided in paragraph (2) of this subsection, a party may not file an action under this subtitle before the date of a final decision under § 27-1001 of the Insurance Article.
(2) Paragraph (1) of this subsection does not apply to an action:
(iii) Under a commercial insurance policy on a claim with respect to which the applicable limit of ...