Desrivieres ( 2016 )


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  •        IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
    MARIE DESRIVIERES &                          :
    EDNER JOSEPH                           :
    :
    Plaintiffs,               :     K15C-07-025 JJC
    :     In and For Kent County
    v.                               :
    :
    GARNIER RICHARD &                      :
    NATIONWIDE INSURANCE                         :
    COMPANY                                :
    :
    Defendants.                :
    Submitted: November 13, 2015
    Decided: January 14, 2016
    OPINION AND ORDER
    Upon Defendant’s Motion to Dismiss
    GRANTED in part and DENIED in part
    Andres Gutierrez de Cos, Esquire, of Andres de Cos, LLC, Wilmington, Delaware,
    Attorney for Plaintiffs.
    Sean A. Dolan, Esquire, of Law Office of Cynthia G. Beam, Newark, Delaware,
    Attorney for Defendant, Garnier Richard.
    Donald M. Ransom, Esquire, of Casarino Christman Shalk Ransom & Doss, P.A.,
    Wilmington, Delaware, Attorney for Defendant, Nationwide Insurance Company.
    Clark, J.
    I. INTRODUCTION
    Defendant Nationwide (“Nationwide”) moves to dismiss Plaintiffs Marie
    Desrivieres’s and Edner Joseph’s (“Plaintiffs”) claims against Nationwide pursuant
    to Superior Court Civil Rule 12(b)(6). The Complaint includes allegations of
    Nationwide’s bad faith, breach of the implied covenant of fair dealing, and fraud. For
    the following reasons, Nationwide’s motion to dismiss Plaintiffs’ Complaint is
    GRANTED in part and DENIED in part. Furthermore, Plaintiffs are granted leave
    to amend the Complaint within 30 days to alleged the proper Nationwide party, if
    necessary.
    II. FACTUAL BACKGROUND AS ALLEGED IN COMPLAINT
    As alleged in Plaintiff’s Complaint, Plaintiffs suffered injuries in a single car
    accident on March 3, 2014 when Defendant Garnier Richard, the driver of a vehicle
    they were occupying, negligently caused an accident. According to the Complaint,
    Nationwide was both the liability carrier for the tortfeasor, and the personal injury
    protection (“PIP”) carrier for the Plaintiffs. Accordingly, Nationwide’s relationship
    to the Plaintiffs has both a first-party and a third-party component.
    The Complaint further alleges that Plaintiffs contacted Nationwide on March
    5, 2014 inquiring about payment of medical care. On March 6, a Nationwide adjuster
    presented the Plaintiffs with releases for their bodily injury claims for $1,000 each.
    2
    The Plaintiffs signed the releases and the adjuster gave them $1,000 “gift cards.” The
    Nationwide adjuster also presented medical record authorizations to Plaintiffs which
    they signed.
    The Complaint specifically alleges that the Nationwide on-site adjustor knew
    that the Plaintiffs did not speak or read English. It also alleges that the Nationwide
    adjuster did not seek the services of an interpreter and took no action to inform
    Plaintiffs that they were releasing their bodily injury claims for $1,000. In fact, the
    allegations in the Complaint allege that the adjuster affirmatively misrepresented “the
    nature of and consequences of signing the [releases].” The Complaint further alleges
    that the adjuster hid the releases under a medical authorization.         Finally, the
    Complaint alleges that Nationwide’s employee’s actions were taken pursuant to a
    reward system set up which Nationwide knew would cause its adjusters to commit
    fraud. It also alleges various unfair business practices by Nationwide in connection
    with adjuster practices designed to take advantage of Plaintiffs.
    III. STANDARD OF REVIEW
    When deciding a motion to dismiss pursuant to Superior Court Civil Rule
    12(b)(6), all allegations in the complaint must be accepted as true.1 The test for
    sufficiency is a broad one: the complaint will survive a motion to dismiss so long as
    1
    Spence v. Funk, 
    396 A.2d 967
    , 968 (Del. 1978).
    3
    “a plaintiff may recover under any reasonably conceivable set of circumstances
    susceptible of proof under the complaint.”2 Stated differently, a complaint will not
    be dismissed unless it clearly lacks factual or legal merit.3
    Moreover, Delaware Civil Procedure Rule 9(b) requires that averments of
    fraud, negligence or mistake be pled with particularity.”4 This means the "mere use
    of the word ‘fraud’ or its equivalent is not a sufficiently particular statement of the
    circumstances relied upon".5
    IV. DISCUSSION
    Plaintiffs have alleged facts that, if true, satisfy all elements of a fraud claim.
    However, Plaintiffs have failed to allege facts that generate claims for bad faith or a
    breach of the implied covenant of good faith and fair dealing. Therefore, pursuant to
    Rule 12(b)(6), Plaintiff’s allegations regarding bad faith and breach of the implied
    covenant of good faith and fair dealing claims are dismissed.
    A.    Plaintiffs’ Complaint states a claim upon which relief may be granted
    regarding fraud.
    Plaintiffs allege Nationwide committed fraud in the inducement, which voids
    2
    
    Id.
     (citing Klein v. Sunbeam Corp., 
    94 A.2d 385
     (Del. 1952)).
    3
    Diamond State Tel. Co. v. Univ. of Del., 
    269 A.2d 52
    , 58 (Del. 1970).
    4
    Del. Super. Ct. Civ. R. 9.
    5
    Halpern v. Barran, 
    313 A.2d 139
    , 143 (Del. Ch. 1973).
    4
    the release of Plaintiffs’ bodily injury claims. The elements of a fraud claim include:
    (1) a false representation of material fact; (2) the knowledge or belief that the
    representation was false, or made with reckless indifference for the truth; (3) the
    intent to induce another party to act or refrain from acting; (4) the action or inaction
    taken was in justifiable reliance on the representation; and (5) damage to the other
    party as a result of the representation.6
    In the context of an insurance claim, fraud by an insurer will invalidate a
    signed release.7 In Delaware “‘courts will enforce a general release that is ‘clear and
    unambiguous,’ unless the Plaintiff can show there was “fraud, duress, coercion, or
    mutual mistake concerning the existence of [her] injuries.’” 8 A release is voidable if
    the Plaintiff can show that there was fraud.9 However, unless a Plaintiff was
    precluded from reading the release, a “release will not lightly be set aside where the
    language is clear and unambiguous” despite any misrepresentation by an adjuster.10
    Here, Plaintiffs allege that Nationwide: (1) made a false representation of fact
    by misrepresenting to non-English speaking claimants the purpose of the presented
    6
    In re Lyle, 
    2013 WL 4543284
    , at *8 (Del. 2013).
    7
    Bernal v. Feliciano, 
    2013 WL 1871756
    , at *3 (Del.Super. May 1, 2013).
    8
    
    Id.
    9
    
    Id.
    10
    Id. *3-4.
    5
    documents; (2) had knowledge or belief that the representation was false; (3)intended
    to induce Plaintiffs to abandon their claims; (4) through its adjuster, told the Plaintiffs
    that the consideration for the releases, the $1,000 gift cards, were for medical care and
    that they were simply signing a receipt for the gift cards; and (5) caused damages to
    Plaintiffs in the amount of their bodily injury claims which remain uncompensated.
    Accordingly, Plaintiffs have stated a prima facie case as to fraud with sufficient
    particularity.
    Nationwide argues in its Motion to Dismiss, that based upon two prior Superior
    Court decisions,         Bernal v. Feliciano and Patrick v. Ellis, an alleged
    misrepresentation by an insurance adjuster cannot overcome clearly worded,
    unambiguous language in a written release. Namely, Nationwide argues that because
    the language of the releases clearly apprise Plaintiffs of the extent of the releases, and
    they should have read them before signing them, allegations of misrepresentation by
    the adjuster cannot support a          fraud claim. Both Bernal and Patrick are
    distinguishable at this stage of the proceedings, however.
    In Bernal, Plaintiff was fluent in Spanish but did not read, write or speak
    English.11 The Plaintiff had not been compensated for her lost wages resulting from
    11
    Id. at *1.
    6
    an accident.12 Plaintiff’s daughter, Yasmin Martinez (“Martinez”) was fluent in both
    Spanish and English and the Plaintiff in that case chose to rely upon her for
    translation between the adjuster and the Plaintiff.13 Martinez only spoke to the
    adjuster on behalf of her mother regarding compensation for Plaintiff’s lost wages.14
    Nevertheless, the adjuster sent a general release to Martinez’s place of employment
    citing consideration of $410. Martinez mistakenly believed it was solely for lost
    wages.15 Relying on Martinez’s understanding of the document, the Plaintiff signed
    the general release form and returned it to the adjuster.16
    The Plaintiff in Bernal thereafter brought a personal injury action against the
    Defendant and the Defendant moved to dismiss based on the general release.17 The
    Court converted the motion to one for summary judgment because it relied on
    materials outside of the pleadings.18 The Court then granted summary judgment. It
    based its decision on the fact that nothing precluded Plaintiff (through Martinez) from
    12
    Id. at *2.
    13
    Id. at *1-2.
    14
    Id. at *2.
    15
    Bernal, 
    2013 WL 1871756
     at, *4.
    16
    
    Id.
    17
    Id. at *2.
    18
    Id.
    7
    reading the release and that release was clear and unambiguous. The fact that the
    Plaintiff could not speak, write or read English was not addressed in the decision’s
    reasoning, perhaps because of the English-literate intermediary.
    Bernal v. Feliciano is distinguishable from the case at hand on multiple
    grounds. First, the Court in Bernal ruled on a motion for summary judgment and not
    a motion to dismiss. Here, Plaintiffs adequately allege fraud with sufficient
    particularity to survive a Rule 12(b)(6) motion. Discovery will ultimately reveal
    whether sufficient evidence exists to generate a triable issue of fact. Second, the
    allegations in this case do not involve an English literate interpreter such as Martinez
    in the Bernal case. The facts applicable to this motion are as alleged and Plaintiffs
    allege they had no ability to read or understand the releases at issue. Finally, the
    cases cited by the Court in Bernal involve various claims where the various Plaintiffs
    chose not to read the releases, despite adequate opportunity. Here, as alleged, the
    nature of the documents were hidden from the non-English-literate Plaintiffs.
    Likewise, Patrick v. Ellis is distinguishable. In Patrick, Plaintiff was in an
    accident involving a dump truck, another vehicle and Plaintiff’s vehicle.19 Five days
    after the accident, an adjuster for one of several alleged tortfeasors met with Plaintiff
    19
    Patrick v. Ellis, 
    2013 WL 5800908
    , at *1 (Del. Super. Oct. 18, 2013).
    8
    at Plaintiff’s home.20 The meeting lasted over an hour, in which Plaintiff signed a
    general release, releasing all claims against all parties, in exchange for a check worth
    $750.21 The Plaintiff later filed a personal injury action and the alleged tortfeasors
    relied on the affirmative defenses of accord and satisfaction and release.22 Plaintiff
    was deposed and testified that he was taking approximately eleven medications when
    he signed the release (although only one medicine was new).23 He further testified
    that during the day of the meeting with the adjuster, he felt out of sorts and thought
    that the new steroid prescription he was given after the accident “might” have
    affected his clarity of thought, yet he was unsure.24 He stated that he only had a
    seventh-grade education, and though he could read, he chose to not read the general
    release before signing it.25 He testified that he was not feeling well and just wanted
    the adjuster to leave.26
    Notwithstanding the signed bodily injury release, the Plaintiff in Patrick sued
    20
    
    Id.
    21
    
    Id.
    22
    Id. at *2.
    23
    Id.
    24
    Id.
    25
    Id.
    26
    Id.
    9
    for bodily injury as a result of the collision.27 After discovery, the Defendant moved
    for summary judgment and the Court granted Defendant’s motion.28 As in Bernal, the
    Court in Patrick ruled that a release is not invalidated because “an individual chose
    not to read it before signing.”29 Furthermore, in Patrick, discovery revealed that
    Plaintiff was given ample time to read the document, ask any questions, and if he had
    read the document, he would have been aware that the general release was for all
    claims against all parties.30 The Court in Patrick held that it was the Plaintiff’s
    obligation to read and understand the release prior to signing.31 The Plaintiff chose
    to not read it, so the Plaintiff could not claim that he signed under duress, coercion,
    or undue influence.32
    Patrick v. Ellis was also a summary judgment decision, not a decision
    regarding a motion to dismiss.33 There was deposition testimony available to shed
    light on the factual aspects of the fraud claim. Here, the parties have conducted no
    27
    Id.
    28
    Id. at 3, 9.
    29
    Patrick, 
    2013 WL 5800908
    , at *5.
    30
    Id. at *7.
    31
    Id.
    32
    Id.
    33
    Id. at *1.
    10
    written discovery or depositions. Furthermore, as alleged, the Plaintiffs speak no
    English, the adjuster knew that, and allegedly hid a release under a medical
    authorization form. Unlike a situation involving a literate individual’s choice to not
    read a release, the facts alleged here state a potential fraud claim. For these reasons,
    Plaintiffs’ Complaint states a claim upon which relief may be granted.
    B.       Plaintiffs’ Complaint fails to state a bad faith claim against Nationwide.
    Delaware recognizes claims for bad faith against an insurer when an insured
    can show that an insurer’s denial of benefits was “clearly without any reasonable
    justification.”34 However, an injured third-party may not directly bring an action of
    bad faith against a tortfeasor’s insurer. “Under Delaware law, an injured party may
    not bring a direct action against a liability insurer based upon the negligence of the
    insured.” 35 In this regard, an injured third-party may not bring a direct action against
    a liability insurer of an insured before a determination of the insured's liability.36
    Furthermore, an insurer does not owe any duty to a third-party to negotiate a
    settlement in good faith.37 This duty of good faith runs only to the insured and not to
    34
    Tackett v. State Farm Fire & Cas. Ins. Co., 
    653 A.2d 254
    , 264 (Del. 1995).
    35
    Shipley v. Shaw, 
    2007 WL 521813
    , at *2 (D. Del. Feb. 16, 2007).
    36
    
    Id.
    37
    Swain v. State Farm Mut. Auto. Ins. Co., 
    2003 WL 22853415
    , at *1 (Del. Super. May 29,
    2003).
    11
    an injured third-party. 38
    A first-party insured may establish a claim of bad faith in a first-party insured-
    insurer contractual relationship if they “show that the insurer lacked reasonable
    justification in delaying or refusing payment of a claim.”39 In this context, the mental
    impressions, strategy, and “opinions of [the insurer’s] agents concerning the handling
    of the claim are directly at issue.”40
    In the case at hand, Plaintiffs’ suit seeks third-party benefits. As passengers
    in the same vehicle, however, Plaintiffs are also first-party claimants for personal
    injury protection benefits. This first-party element to the case, would under certain
    circumstances, permit Plaintiffs to bring a direct action against Nationwide for bad
    faith.
    However, Plaintiffs’ Complaint does not allege Nationwide’s bad faith
    regarding Plaintiffs’ PIP claims. Namely, Plaintiffs have not alleged a bad faith
    denial or delay in payment of PIP benefits. Plaintiffs Complaint focuses only on the
    alleged bad faith activities of the adjuster in her role as a representative of the
    tortfeasor. Accordingly, Plaintiffs’ claim of bad faith must be dismissed without
    38
    Hullinger v. Thompson, 
    1992 WL 9307
    , at *1 (Del.Super. Jan. 9, 1992).
    39
    Tackett, 
    653 A.2d at 262
    .
    40
    
    Id. at 263
     (Quoting Holmgren v. State Farm Mut. Auto. Ins. Co., 
    976 F.2d 573
    , 577
    (1992)).
    12
    prejudice for failure to state a claim upon which relief may be granted.
    C.    Plaintiffs’ Complaint also fails to state a claim regarding the breach of the
    implied covenant of good faith and fair dealing.
    In the context of insurance contracts, a breach of the implied covenant of good
    faith and fair dealing occurs “[w]here an insurer fails to investigate or process a claim
    or delays payment in bad faith.”41 The relationship between an insured and the
    insurer arises from a mutual exchange of consideration, such as paying premiums for
    insurance in exchange for coverage, and is controlled by the terms and standards set
    in the agreement.42 A claim that is in breach of the terms of that agreement should be
    treated like a breach of contract because there is no sound theoretical difference
    between a first-party insurance contract versus other contracts.43 “The implied
    covenant requires a party in a contractual relationship to refrain from arbitrary or
    unreasonable conduct which has the effect of preventing the other party to the
    contract from receiving the fruits of the bargain.” 44 Parties are liable for breaching the
    implied covenant when their conduct frustrates the overarching purpose of the
    41
    Id. at 264.
    42
    Id.
    43
    Id.
    44
    Dunlap v. State Farm Fire & Cas. Co., 
    878 A.2d 434
    , 442 (Del. 2005)
    13
    contract.45
    Here, Plaintiffs have not alleged the elements of a breach of the implied
    covenant of good faith and fair dealing to notice pleading standards. As Nationwide
    argued and Plaintiffs correctly emphasize in their response, a claim for a breach of
    the implied covenant of good faith and fair dealing ensures that the injured party
    receives “the fruits of the contract.” 46 Plaintiffs have not alleged what terms of the
    PIP contract were violated or breached. The Complaint has also not alleged that
    Nationwide has delayed a payment or failed to process a PIP claim, or that
    Nationwide denied Plaintiffs any benefits through Nationwide’s role as the Plaintiffs’
    PIP insurer. Because cognizable damages resulting from this claim have not been
    alleged in the Complaint, it must also be dismissed without prejudice.
    V. CONCLUSION
    WHEREFORE, for the reasons cited, Nationwide’s Motion to Dismiss is
    granted in part and denied in part. Specifically, Nationwide’s Motion to Dismiss
    Plaintiffs’ fraud claim is DENIED. Plaintiff’s Motion to Dismiss the bad faith and
    unfair dealing claims against Nationwide is GRANTED, without prejudice. Plaintiffs
    are further granted leave to amend the Complaint to allege, if necessary, the correct
    45
    
    Id.
    46
    Wilgus v. Salt Pond Inv. Co., 
    498 A.2d 151
    , 159 (Del. Ch. 1985).
    14
    Nationwide entity provided they do so within thirty days of the date of this Order.
    IT IS SO ORDERED.
    /s/Jeffrey J Clark
    Judge
    15