HM Hotel Properties v. Peerless Indemnity Insurance
874 F. Supp. 2d 850
D. Ariz.2012Background
- Plaintiff HM Hotel Properties is an LLC insured by Peerless Indemnity Insurance Company under an active storm-damage policy.
- Plaintiff paid annual premiums in exchange for coverage for storm damage including hail and wind.
- On October 5, 2010, high winds and hail damaged Plaintiff’s property; Plaintiff filed a claim on May 11, 2011.
- An engineering firm retained by Peerless reported minimal damage on May 17, 2011, and Peerless offered to settle for $0.
- After Plaintiff retained counsel, Peerless used Absolute Adjusting for a second inspection on November 14, 2011 and issued a check for $39,587.41 (depreciated).
- Plaintiff asserts seven counts: breach of contract, breach of implied covenant of good faith and fair dealing, intentional and negligent infliction of emotional distress, fraud, negligent misrepresentation, and declaratory relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a corporate/LLC Plaintiff recover IIED/NIED? | HM Hotel Properties argues for emotional-distress damages to corporate entity. | Peerless contends LLC cannot suffer emotional distress; no cognizable damages for IIED/NIED. | LLC cannot state IIED/NIED claims; claims dismissed. |
| Are fraud and negligent misrepresentation pled with particularity? | Plaintiff asserts misrepresentations by Peerless concerning coverage. | Peerless contends lack of specificity in time, speaker, and content; failure to plead with particularity. | Both fraud and negligent misrepresentation claims lack Rule 9(b) particularity. |
| Is the declaratory-relief claim duplicative of the contract claim? | Plaintiff seeks a declaration regarding policy interpretation separate from contract relief. | Claim duplicative of breach of contract claim. | Count 7 (declaratory relief) is duplicative and dismissed. |
Key Cases Cited
- Bodett v. Cox-Com, Inc., 366 F.3d 736 (9th Cir. 2004) (elements for IIED: extreme conduct, intent or reckless disregard, severe distress)
- Ford v. Revlon, 734 P.2d 580 (Ariz. 1987) ( Arizona standard for IIED negligence distinctions)
- Pierce v. Casas Adobes Baptist Church, 782 P.2d 1162 (Ariz. 1989) (physical injury/substantial emotional disturbance required for NIED)
- Vess v. Ciba-Geigy Corp., 317 F.3d 1097 (9th Cir. 2003) (requirements of Rule 9(b) fraud pleading: who, what, when, where, how)
- FDIC v. Hulsey, 22 F.3d 1472 (10th Cir. 1994) (corporation cannot suffer emotional distress)
- Inter-phase Garment Solutions, LLC v. Fox Television Stations, Inc., 566 F. Supp. 2d 460 (D. Md. 2008) (LLC cannot claim IIED)
- Barreca v. Nicholas, 683 N.W.2d 111 (Iowa 2004) (limits on extending corporate/LLC emotional-distress claims)
- Midas Muffler Shop v. Ellison, 650 P.2d 496 (Ariz. Ct. App. 1982) (first-impression analysis guiding extrajurisdictional authority)
- Edwards v. American Home Assurance Co., 361 F.2d 622 (9th Cir. 1966) (informing use of other jurisdictions for issues of first impression)