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Byorth v. USAA Casualty Insurance Co.

United States District Court, D. Montana, Missoula Division

December 10, 2019

PETER BYORTH and ANN McKEAN, on behalf of all others similarly situated, Plaintiff,
v.
USAA CASUALTY INSURANCE COMPANY and JOHN DOES I-X, Defendant.

          ORDER

          Kathleen L. DeSoto United States Magistrate Judge

         Plaintiffs Peter Byorth and Ann McKean bring this action against USAA Casualty Insurance Company (“USAA”), alleging USAA improperly administered medical payment insurance benefits and wrongfully denied coverage to Montana consumers. Plaintiffs assert five counts against USAA: (1) breach of fiduciary duty; (2) breach of contract; (3) violation of Montana's Unfair Trade Practices Act (“UTPA”); (4) punitive damages; and (5) declaratory and injunctive relief. This Court granted class certification under Fed.R.Civ.P. 23(b)(2) as to Plaintiffs' claim for declaratory and injunctive relief. (Doc. 148.)

         This Court has previously discussed this matter's factual history[1] and therefore refrains from repeating it here. For purposes of the pending Rule 12(b)(6) motion to dismiss, the Court accepts as true all factual allegations in the Second Amended Complaint, and construes them in a light most favorable to the plaintiffs.

         Currently before this Court is USAA's motion to dismiss with prejudice Counts I and V of Plaintiffs' Second Amended Complaint. (Doc. 121.) USAA also requests dismissal of Count III to the extent Plaintiffs seek to assert private causes of action that are not recognized by the UTPA. On December 2, 2019, the Court heard oral argument from the parties on the motion. (Doc. 159.) Having reviewed the parties' arguments and submissions, and for the reasons discussed below, USAA's motion is GRANTED in part and DENIED in part.

         I. Legal Standard

         The Defendants move to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). A Rule 12(b)(6) motion to dismiss tests the sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal under Rule 12(b)(6) is informed by Rule 8(a)(2), which requires a pleading to contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). Dismissal is proper under Fed.R.Civ.P. 12(b)(6) only when the complaint lacks a cognizable legal theory or fails to allege sufficient facts to support a cognizable legal theory. Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008)).

         To survive a 12(b)(6) motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. at 678. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Plausibility is context-specific, requiring courts to draw on judicial experience and common sense when evaluating a complaint. Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014).

         When considering a 12(b)(6) motion, a court must accept as true the allegations of the complaint and construe them in the light most favorable to the nonmoving party. Hardesty v. Barcus, 2012 WL 705862, *2 (D. Mont. Jan. 20, 2012). However, “factual allegations must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S 544, 555 (2007).

         II. Discussion

         a. Count I - Breach of Fiduciary Duty

         USAA argues Plaintiffs' claim for breach of fiduciary duty is barred by the UTPA. Under Montana law, the UTPA governs all claims brought by “[a]n insured who has suffered damages as a result of the handling of an insurance claim[.]” Mont. Code Ann. § 33-18-242(3). An insured's claim for breach of fiduciary duty is preempted by the UTPA. Burton v. State Farm, 105 Fed.Appx. 154, 160 (9th Cir. 2004); See also Hoffman v. Geico Ins. Co., 2007 WL 9710396, n. 2 (D. Mont. 2007) (The UTPA “precludes an insured from maintaining an independent action in tort predicated upon breach of fiduciary duty for an insurer's conduct in the handling of a claim for benefits.”). The law is clear on this issue and Plaintiffs do not oppose dismissal of their claim for breach of fiduciary duty. (Doc. 130 at 10.) Accordingly, USAA's request to dismiss Count I with prejudice is GRANTED.

         b. Count III - Unfair Trade Practices Act

         USAA next requests dismissal of Plaintiffs' claim for violation of the UTPA to the extent Plaintiffs seek to assert private causes of action that are not recognized by the Act. USAA contends it is unclear from the Second Amended Complaint whether Plaintiffs allege that USAA violated Mont. Code Ann. § 33-18-201(2) and (7). Because subsection (2) and (7) do not fall within the UTPA's limited right of action, USAA argues Plaintiffs cannot assert those claims for damages.

         In response, Plaintiffs clarify that they are not asserting a claim for damages under § 33-18-201(2) and (7). (Doc. 130 at 9.) Rather, Plaintiffs request damages only for USAA's alleged violations of the UTPA under § 33-18-201(1), (4), (5), (6), (9), and (13). (Doc. 118 at ¶ 50.) Plaintiffs explain that their allegations under subsections (2) and (7) are contained in their request for declaratory and injunctive relief under Count V. The Court therefore finds Count III of Plaintiffs' Second Amended Complaint ...


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