Ana Alpizar-Fallas v. Frank Favero
908 F.3d 910
| 3rd Cir. | 2018Background
- Alpizar-Fallas was injured in a car accident; both she and the other driver (Favero) were insured by Progressive.
- A Progressive claims adjuster, Bryan Barbosa, visited her home the morning after the accident, told her signing paperwork would expedite payment, and required her to sign a document in his presence.
- The document was a broad general release of all claims (including personal injury claims); Alpizar-Fallas alleges she did not understand its legal effect, was not advised to seek counsel, and was not communicated with in Spanish.
- Alpizar-Fallas sued Favero in state court and amended to add a class claim against Progressive and Barbosa under the New Jersey Consumer Fraud Act (CFA) and the Unfair Claims Settlement Practices Regulations (UCSPR); defendants removed to federal court.
- The District Court dismissed the CFA claim, treating it as a denial-of-benefits case outside the CFA (relying on Myska), and dismissed UCSPR claims for lack of private right of action; Alpizar-Fallas appealed.
- The Third Circuit vacated the dismissal and remanded, holding the complaint alleges deceptive conduct in the performance of an insurance contract covered by the CFA and that pleading requirements were satisfied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does CFA cover alleged deception in performance of insurance (signing release) | CFA covers fraud in subsequent performance of insurance contracts; Barbosa’s conduct was deceptive and induced release | CFA does not apply to disputes that are essentially denials/refusals to pay benefits; UCSPR/ITPA preclude CFA here | CFA covers alleged fraudulent performance here; claim survives dismissal |
| Do UCSPR/ITPA preclude CFA private action | Alpizar says CFA applies notwithstanding UCSPR; remedies can be cumulative | UCSPR/ITPA and their lack of private right conflict with CFA so CFA should be precluded | No preclusion: Lemelledo presumes CFA applies and remedies are cumulative; no direct unavoidable conflict found |
| Did complaint meet Rule 9(b) heightened pleading for fraud | Alleged specific time, place, actor, statements, and conduct (home visit, document, representations) | Allegations are conclusory and lack particularity | Complaint pleaded circumstances with sufficient particularity under Rule 9(b) |
| Did complaint allege an "ascertainable loss" under CFA | Alleged loss of right to pursue third-party claims and detailed injuries/expenses from accident | No ascertainable loss; any losses were recovered (argued later) | Allegations (loss of right to pursue claims; medical expenses; diminished earning capacity) suffice at motion-to-dismiss stage |
Key Cases Cited
- Weiss v. First Unum Life Ins. Co., 482 F.3d 254 (3d Cir. 2007) (CFA covers fraudulent discontinuation of previously authorized benefits and fraud in subsequent performance)
- Lemelledo v. Beneficial Mgmt. Corp., 696 A.2d 546 (N.J. 1997) (CFA applies to sale of insurance; remedies cumulative with other statutes)
- Myska v. N.J. Mfrs. Ins. Co., 114 A.3d 761 (N.J. Super. Ct. App. Div. 2015) (denial of benefits generally outside CFA’s scope)
- Thiedemann v. Mercedes-Benz U.S.A., LLC, 872 A.2d 783 (N.J. 2005) (defines "ascertainable loss" under CFA)
- Daaleman v. Elizabethtown Gas Co., 390 A.2d 566 (N.J. 1978) (example of when CFA would conflict with a comprehensive regulatory scheme)