Background
- Michael Mayes, acting pro se, sued American Hallmark Insurance Company of Texas over its claims handling practices after a property damage incident allegedly caused by JM Construction (American Hallmark's insured).
- The district court dismissed Mayes’ complaint with prejudice and denied American Hallmark’s motion for attorneys’ fees.
- Mayes had not obtained a final judgment against JM Construction and asserted both direct liability and claims for emotional distress related to American Hallmark’s claim settlement conduct.
- The Ninth Circuit affirmed the complaint’s dismissal but reversed in part to allow Mayes an opportunity to amend his negligence per se claims.
- The court also affirmed the denial of attorneys’ fees to American Hallmark, finding Mayes’ claims were not entirely devoid of legal support.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Direct action against insurer prior to judgment | Mayes argued American Hallmark should be liable for JM Construction’s acts without prior judgment. | Insurer argued state law bars direct action until judgment against insured is secured. | Barred as premature; dismissal proper. |
| IIED (Emotional Distress) from claims handling | Alleged insurer’s staff’s rude and delayed behavior warrants tort recovery. | Such conduct does not reach the threshold for IIED under state law. | Conduct not outrageous; claim fails. |
| Negligence per se for claim handling under Oregon Insurance Code | American Hallmark’s violations of claim settlement practices statute support claim for emotional distress. | Complaint lacks specific, plausible facts to show statutory violation. | Mayes failed to state a claim; but given leave to amend. |
| Attorneys’ fees for defending against lawsuit | -- | Mayes’ claims objectively unreasonable, fees are warranted. | Claims had some legal basis, so fees denied. |
Key Cases Cited
- Sonoma Cnty. Ass’n of Retired Emps. v. Sonoma County, 708 F.3d 1109 (9th Cir. 2013) (de novo review standard for dismissals)
- Hebbe v. Pliler, 627 F.3d 338 (9th Cir. 2010) (liberal construction of pro se pleadings)
- Patton v. J.C. Penney Co., Inc., 719 P.2d 854 (Or. 1986) (outlines standards for IIED claims)
- Bell v. City of Kellogg, 922 F.2d 1418 (9th Cir. 1991) (discusses futility exception for remand)
- Watison v. Carter, 668 F.3d 1108 (9th Cir. 2012) (leave to amend for pro se litigants)
- Williams v. Salem Women’s Clinic, 263 P.3d 1072 (Or. Ct. App. 2011) (attorneys’ fees standard under Oregon law)