United States District Court, D. Maryland
P. Gesner Chief United States Magistrate Judge
Biejan Arvon (“plaintiff”) filed this lawsuit
against Liberty Mutual Fire Insurance Company
(“defendant”), alleging unfair insurance claim
settlement practices in violation of Maryland's Insurance
Article § 27-303, and both negligent and intentional
misrepresentation under Maryland law. The parties consented
to proceed before a Magistrate Judge, pursuant to 28 U.S.C.
§ 636(c) and Local Rule 301.4. (ECF Nos. 9, 18).
Currently pending before the court is: Defendant's Motion
to Dismiss the Complaint (“Motion”) (ECF No. 10),
Plaintiff's Opposition to Motion to Dismiss
(“Opposition”) (ECF No. 24), and Defendant's
Reply to Plaintiff's Opposition to Defendant's Motion
to Dismiss the Complaint (“Reply”) (ECF No. 27).
The issues are fully briefed, and no hearing is necessary.
Loc. R. 105.6. For the reasons stated below, defendant's
Motion (ECF No. 10) is granted in part and denied in part.
case arises out of a car accident on July 8, 2011 between
plaintiff and two individuals, Alireza Gol
(“Gol”) and Hamed Khodaparasti Dehboneh
(“Dehboneh”). (ECF No. 24 at 2). Plaintiff was
taken from the scene by medical professionals without
exchanging information with the other individuals.
Id. at 1. After the accident, plaintiff was
contacted by defendant on behalf of one of its insureds, Puya
Shakiba (“Shakiba”), who was not involved in the
accident. Id. Shakiba was the roommate of the two
individuals involved in the crash. Id. at 2.
According to the complaint in this case, plaintiff, through
his counsel's conversations with defendant after the
accident, was led to believe that Shakiba was the party at
fault. Id. at 1. Indeed, defendant paid for
plaintiff's property damage claims under Shakiba's
name. (ECF No. 10-3 at 4).
parties were unable to settle the dispute, prompting
plaintiff to file suit against Shakiba in Baltimore County
Circuit Court before the expiration of the statute of
limitations. (ECF No. 24 at 5). After filing the lawsuit,
plaintiff learned that Gol and Dehboneh, not Shakiba, were
the parties actually involved in the accident. (ECF No. 10-3
at 1). Plaintiff filed an amended complaint naming Gol and
Dehboneh as defendants, but only after the statute of
limitations had run. Id. The defendants filed
motions to dismiss, which were all denied. Id. at 4.
The defendants then moved for summary judgment, which the
trial court granted and plaintiff appealed to the Maryland
Court of Special Appeals. Id. Plaintiff argued that
his amended complaint related back to his original complaint,
and that he was misled by false representations made by
Liberty Mutual, in an effort to delay him from correcting the
named defendants until after the limitations period passed.
Id. at 5-8. The Court of Special Appeals affirmed
the Circuit Court and held that summary judgment was proper
as to Shakiba because he was not involved in the accident and
therefore breached no duty he owed the plaintiff.
Id. at 5-6. The court also held, applying the
doctrine of equitable tolling, that plaintiff's
limitations period was not tolled because the plaintiff
failed to exercise reasonable care and due diligence by not
discovering the police report from the accident, which
identified Gol and Dehboneh as the responsible parties.
Id. at 6-9. Regardless of whether Liberty
Mutual's conduct was done intentionally or by mistake,
the court noted that plaintiff had access to the necessary
information and Liberty was under no duty to tell plaintiff
who to sue. Id.
June 12, 2017, plaintiff filed the present lawsuit against
defendant in Baltimore County Circuit Court. Defendant
removed the action to this court on July 21, 2017. Plaintiff
alleges a violation of Insurance Article of the Maryland
Annotated Code Section 27-303, along with claims alleging
both negligent and intentional misrepresentation.
STANDARD OF REVIEW
purpose of a motion to dismiss for failure to state a claim
under Federal Rule of Civil Procedure 12(b)(6) is to test the
legal sufficiency of a complaint. Edwards v. City of
Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). When
ruling on such a motion, the court must “accept all
well-pleaded allegations in the plaintiff's complaint as
true” and “draw all reasonable factual
inferences from those facts in the plaintiff's
favor.” Id. at 244. Nonetheless, “[t]he
mere recital of elements of a cause of action, supported only
by conclusory statements, is not sufficient to survive a
motion made pursuant to Rule 12(b)(6).” Walters v.
McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citing
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
Rather, “a complaint must contain sufficient factual
matter . . . to state a claim to relief that is plausible on
its face.” Ashcroft, 556 U.S. at 678 (internal
citation and quotation marks omitted). A plaintiff satisfies
this standard not by forecasting evidence sufficient to prove
the elements of the claim, but by alleging sufficient facts
to establish those elements. Walters, 684 F.3d at
439. Accordingly, “while a plaintiff does not need to
demonstrate in a complaint that the right to relief is
‘probable, ' the complaint must advance the
plaintiff's claim ‘across the line from conceivable
to plausible.'” Id. (citing Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
Count I-Violation of Maryland Code §
of plaintiff's complaint seeks relief under Section
27-303 of the Maryland Insurance Article. (ECF No. 2 at 7).
Defendant argues that this count should be dismissed because
any “bad faith” insurance settlement practices
claim based in tort must be brought by a first-party
claimant, or a party insured by the insurance company, rather
than a third party claimant. (ECF No. 10-1, at 7-8).
Defendant also argues that even if plaintiff was a
first-party claimant, the count must be dismissed because
Section 27-303 provides administrative remedies only and not
a private cause of action in civil court. Id. at
8-9. Plaintiff argues that he can maintain a cause of action
under the statute, arguing that Section 27-303 is meant to
protect persons such as him, that defendant violated the
statute, and the violation caused plaintiff's harm. (ECF
No. 24 at 7-8). Plaintiff also argues that he is not pursuing
his claim under a theory of bad faith or tort, but rather
misrepresentation. Id. at 9-10.
27-303 is intended to provide an additional remedy,
administrative in nature, to plaintiffs seeking to recover
from insurance companies for unfair claims settlement
practices. This statute provides administrative remedies
only; it does not provide a private cause of action.
See Md. Code Ann., Insurance, §§ 27-301,
303. The Fourth Circuit has held that § 27-303 provides
only an administrative remedy that must be pursued through
the Maryland Insurance Administration (“MIA”) and
that it similarly does not provide for an action in tort
against an insurer for bad faith failure to settle a claim.
Hartz v. Liberty Mut. Ins. Co., 269 F.3d 474, 475-
77 (4th Cir. 2001); see also Dern v. Liberty
Mutual Ins. Co., No. GJH-14-1737, 2015 WL 8665329, at *3
(D. Md. Dec. 11, 2015) (same); Johnson v. Fed. Kemper
Ins. Co., 536 A.2d 1211, 1213 (Md. Ct. Spec. App. 1988)
as defendant argues, plaintiff cannot maintain a cause of
action in tort because “Maryland law recognizes a tort
cause of action only by an insured party where an insurer
refuses in bad faith to settle a third-party's claim
against the insured.” Moye v. Avis Budget
Grp., No. TDC-14-2714, 2015 WL 410515, at *4 (D. Md.
Jan. 27, 2015). Plaintiff is a third party claimant who is
not insured by the defendant; therefore, the defendant owes
no duty to plaintiff. Id. Further, § 27-303
provides administrative remedies only; it does not provide a
private cause of action. Such a cause of action must be
brought administratively through the MIA, not in a civil
court. Hartz, 269 F.3d at 476 (“[F]ederal
courts simply have no license to upend Maryland's
decision to resolve this sort of insurance complaint
administratively.”) As for plaintiff's argument
that he is pursuing his claim under a theory of
misrepresentation and not bad faith, plaintiff cannot
maintain an action under § 27-303 in this court
regardless of the legal theory asserted. Accordingly, Count
I, alleging unfair claims settlement practices under
§27-303, is dismissed.
Counts II and III-Negligent and ...