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Konecky v. Allstate Fire And Casualty Insurance Co.

United States District Court, D. Montana, Missoula Division

December 28, 2017

SETH KONECKY and JENNIFER KONECKY, husband and wife, FLATHEAD COUNTY DIST., INC., a Montana Corporation, individually, and on behalf of all others similarly situated, Plaintiffs,
v.
ALLSTATE FIRE & CASUALTY INSURANCE COMPANY, et al., Defendants.

          OPINION AND ORDER

          DONALD W. MOLLOY, DISTRICT JUDGE UNITED STATES DISTRICT COURT.

         Defendants Allstate Fire & Casualty Insurance Company, Allstate Indemnity Company, Allstate Property & Casualty Insurance Company, and Allstate Insurance Company (collectively "Allstate") seek to dismiss Plaintiffs Seth and Jennifer Konecky and Flathead Valley District, Incorporated's (collectively "Plaintiffs") First Amended Complaint. (Doc. 37.) Plaintiffs request contractual underinsured coverage (Count One) and allege statutory insurance bad faith (Count Two), breach of the insurance policy contract and the implied covenant of good faith and fair dealing (Count Three), constructive fraud (Count Four), conversion (Count Six), [1] civil conspiracy (Count Seven), and aiding and abetting (Count Eight). (Doc. 34 at ¶¶ 33-63.) Plaintiffs also bring class-action claims not at issue here. Allstate's motion to dismiss is denied.

         Plaintiffs sufficiently allege that Allstate violated Montana's "made whole" rule by subrogating for property damages when Plaintiffs had unrecovered losses, costs, and attorney fees within that category of coverage. Next, Plaintiffs' claim that Allstate violated the implied covenant of good faith and fair dealing is a contract claim, and thus not barred by Montana's Unfair Trade Practices Act. Plaintiffs' constructive fraud claim is pled with sufficient particularity because it lays out the who, what, when, where, and how of the alleged constructive fraud, and, because Plaintiffs' tort claims survive, so do Plaintiffs' civil conspiracy and aiding and abetting claims. Finally, Plaintiffs' specific claim for contractual underinsured coverage is sufficient to maintain their breach of contract claim.

         Factual Background

         The facts outlined below are taken from the First Amended Complaint, (Doc. 34), and accepted as true, Harris v. Rand, 682 F.3d 846, 850 (9th Cir. 2012). Plaintiff Seth Konecky ("Seth") was involved in an auto accident caused by Hailey and Nathan Tolson in Flathead County on December 25, 2014. (Id. at ¶¶ 2, 24.) Plaintiffs were insured by Allstate and the Tolsons were insured through AAA. (Id. at ¶¶ 1, 4.) Plaintiffs' automobile insurance policy included liability, medical, uninsured motorist, underinsured motorist, comprehensive, and collision coverages. (Doc. 39-2 at 19-20.)

         As a result of the Tolson's conduct, Seth suffered bodily injury and Plaintiffs suffered loss of income and loss of earning capacity, and incurred medical expenses and property damage losses including repair costs, diminution, replacement vehicle and rental charges, and loss of use. (Doc. 34 at ¶ 24.) Plaintiffs subsequently claimed and received a payout from their collision coverage with Allstate in the amount of $6, 426.77, the cost of repair minus the $500.00 deductible. (Id. at ¶ 25.) Plaintiffs began pursuing further property damages from the Tolsons and their insurer, AAA, incurring $2, 717.86 of attorney fees in the process. (Id. at ¶¶ 24-25.) Allstate never investigated whether Plaintiffs had been made whole. (Id. at ¶ 30.) Then, before Plaintiffs were made whole for their bodily injury damages or their property damages, Allstate subrogated with AAA for the property damages which Allstate paid Plaintiffs. (Id. at ¶ 29.)

         Procedural History

         Plaintiffs subsequently filed suit in the Eleventh Judicial District Court of Montana on October 21, 2016. (Doc. 6.) Allstate removed the action to this Court on January 27, 2017, (Doc. 1), and subsequently filed a motion to dismiss. (Doc. 20.) Plaintiffs filed their First Amended Complaint on September 25, 2017, mooting that motion. (Doc. 34.) Allstate filed a second motion to dismiss on October 16, 2017. (Doc. 37.)

         Standard

         "A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). However, "[a] complaint must include more than just conclusory allegations to survive a Rule 12(b)(6) motion to dismiss." Harris, 682 F.3d at 850 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). "Trial courts must accept a complaint's factual allegations as true, but those allegations must plausibly suggest 'the pleader is entitled to relief" Id. (quoting Twombly, 550 U.S. at 557).

         Analysis

         Allstate first argues that Plaintiffs' made whole claims are, as a whole, legally deficient. (Doc. 38 at 10.) Allstate also specifically challenges Plaintiffs' Plaintiffs' claims for violation of the covenant of good faith and fair dealing (Count Three), constructive fraud (Count Four), conspiracy (Count Seven), aiding and abetting (Count Eight) and breach of contract (Count One). These challenges are addressed in turn.

         I. Subrogation and the "Made Whole" Rule

         Allstate insists subrogation was appropriate because it was not required to cover Plaintiffs' unrecovered damages under the policy. Plaintiffs argue Allstate violated the "made ...


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