ANA LIDIA ALPIZAR-FALLAS, Individually and on behalf of all others similarly situated, Appellant v. FRANK E. FAVERO; BRIAN BARBOSA; PROGRESSIVE GARDEN STATE INSURANCE COMPANY; JOHN DOE 1-5; JOHN DOE INCORPORATED 1-5, (fictitious designations)
No. 17-3837
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
November 15, 2018
PRECEDENTIAL. Argued September 11, 2018. Before: JORDAN, VANASKIE and RENDELL, Circuit Judges. District Court No.: 3-17-cv-02768. District Judge: Honorable Michael A. Shipp.
(Opinion Filed: November 15, 2018)
Charles X. Gormally, Esquire ARGUED
Thomas Kamvosoulis, Esquire
Brach Eichler
101 Eisenhower Parkway, 2nd Floor
Roseland, NJ 07068
Counsel for Appellant
Francis J. Leddy, III, Esquire
McGivney & Kluger
23 Vreeland Road
Suite 220
Florham Park, NJ 07932
Kymberly Kochis, Esquire ARGUED
Francis X. Nolan, IV, Esquire
Eversheds Sutherland
1114 Avenue of the Americas
The Grace Building, 40th Floor
New York, NY 10036
Counsel for Appellee
RENDELL, Circuit Judge:
Ana Lidia Alpizar-Fallas brought a class action claim against Progressive Garden State Insurance Company (“Progressive“) and one of its agents, Bryan Barbosa, alleging that Progressive and Barbosa‘s deceptive business practices violated New Jersey‘s Consumer Fraud Act (“CFA“). The District Court dismissed her claim, characterizing it as a denial of insurance benefits, which the New Jersey appellate courts have ruled is not covered by the CFA. Because we view Alpizar-Fallas‘s complaint as alleging deception that would be covered by the CFA rather than a denial of benefits, we disagree and will vacate and remand.
I.
A.1
This case began with an all too common occurrence: a car accident. Frank Favero‘s car struck that of Alpizar-Fallas, causing
the accident, both Alpizar-Fallas and Favero were insured by Progressive.
The morning following the accident, Barbosa, a Progressive claims adjuster, contacted Alpizar-Fallas by phone. He represented that he was a Progressive agent and asked if he could come to her home to inspect the damage to her car and have her sign “paperwork” that would “expedite the processing of the property damage claim.” A. 2, 6. Barbosa arrived about an hour later with multiple documents for Alpizar-Fallas to sign. She alleged in her complaint that he told her that her accident “had a questionable issue of liability” and that her signature was “necessary” for Progressive to advance the payment of her claim. A. 6. Barbosa presented a document to Alpizar-Fallas that he “required” her to sign and that he “expressly represented would expedite the property damage claim of the accident.” Id. In reliance on Barbosa‘s statements, Alpizar-Fallas signed the document.
Contrary to Barbosa‘s assertions, the document was, in fact, “a broadly written comprehensive general release of any and all claims,” including claims against Favero for “any and all known and unknown personal injuries resulting from the motor vehicle accident.” A. 7. Alpizar-Fallas was unaware of the legal significance of the release language in the document, and Barbosa failed to alert her to it. Barbosa also failed to advise Alpizar-Fallas to seek legal counsel and did not communicate with her in Spanish, her native language. Furthermore, he required that Alpizar-Fallas “sign the release in his presence at her home.” Id.
B.
Alpizar-Fallas commenced this action in New Jersey state court against Favero,2 seeking damages for the personal injuries she sustained in the accident. She amended her complaint to include a class action claim against Progressive and Barbosa under the New Jersey Unfair Claims Settlement Practices Regulations (“UCSPR“),
Once in federal court, Progressive and Barbosa (collectively, “Appellees“) moved to dismiss Alpizar-Fallas‘s class action claim for failure to state a claim. They lodged several arguments: the UCSPR does not provide a private right of action, the UCSPR precludes application of the CFA, the CFA does not apply to schemes to defraud policyholders of their benefits and personal injury claims, and Alpizar-Fallas failed to properly plead a claim for relief under the CFA. Specifically, with respect to their final argument, Appellees contended that Alpizar-Fallas did not meet the heightened pleading standard of
C.
The District Court granted Appellees’ motion without prejudice in an order and letter opinion. The District Court first dismissed
Thereafter, the District Court, upon Alpizar-Fallas‘s motion and the agreement of the other parties, entered a consent order, amending its dismissal to one with prejudice
and remanding the remaining personal injury claims to New Jersey state court. Alpizar-Fallas filed this timely appeal.
II.
The District Court had jurisdiction pursuant to
III.
On appeal, Alpizar-Fallas contends that the District Court erred in dismissing her CFA claim because the allegations of her complaint set forth the type of harm that the CFA is designed to remedy.3 In opposition, Appellees argue that her CFA claim is precluded by the UCSPR, that her allegations are not within the scope of the CFA, and that her pleading fails to conform to the requirements of the CFA and
A.
In determining the extent to which the CFA applies to the performance of insurance contracts, we must predict how the New Jersey Supreme Court would rule if faced with the issue. Covington v. Continental Gen. Tire, Inc., 381 F.3d 216, 218 (3d Cir. 2004) (citation omitted). In doing so, we must consider:
decisions of state intermediate appellate courts, of federal courts interpreting that state‘s law, and of other state supreme courts that have addressed the issue, as well as to analogous decisions, considered dicta, scholarly works, and any other reliable data tending convincingly to show how the highest court in the state would decide the issue at hand.
Spence v. ESAB Grp., Inc., 623 F.3d 212, 216-17 (3d Cir. 2010) (citation and internal quotation marks omitted). Intermediate state court decisions are relevant and should not be disregarded unless we are “convinced by other persuasive data that the highest court of the state would decide otherwise.” Covington, 381 F.3d at 218 (quotation marks and citation omitted).
1.
In relevant part, the CFA prohibits:
[t]he act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby . . . .
The CFA is intended to “combat the increasingly widespread practice of defrauding the consumer.” Cox v. Sears Roebuck & Co., 647 A.2d 454, 460 (N.J. 1994) (quoting S. Comm., Statement to the Senate Bill No. 199 (N.J. 1960)) (internal quotation marks omitted). In enacting the CFA, the New Jersey Legislature intended to “give New Jersey one of the strongest consumer protection laws in the
nation.” Id. (citing Governor‘s Press Release for Assembly Bill No. 2402, at 1 (Apr. 19, 1971)). Therefore, its history “is one of constant expansion of consumer protection,” Gennari v. Weichert Co. Realtors, 691 A.2d 350, 364 (N.J. 1997), and it “should be construed liberally in favor of consumers,” Cox, 647 A.2d at 461.
2.
The New Jersey Supreme Court addressed whether the sale of insurance is covered by the CFA in Lemelledo v. Beneficial Management Corp., 696 A.2d 546 (N.J. 1997). There, the court was faced with the application of the CFA to an insurance-related lending practice, namely, “loan packing,” or “increasing the principal amount of a loan by combining the loan with loan-related services, such as credit insurance, that the borrower does not want.” Id. at 548. The plaintiff alleged that the defendant, a financial services company, led her to believe that she would not receive her loan unless she also purchased other loan-related services with it. She maintained this claim despite the fact that the defendant provided a disclosure statement informing her that she was not required to purchase the services. Id. at 549. Although the CFA does not explicitly name insurance policies as covered “merchandise,” the court held that “the statute‘s language is ample enough to encompass the sale of insurance policies as goods and services that are marketed to consumers.” Id. at 551 (emphasis added). In so holding, the court noted that “several lower courts have held that the payment of
certif. denied, 517 A.2d 402 (N.J. 1986)); id. at 551 n.3.
In extending the CFA to the sale of insurance, the Lemelledo court endorsed a broad application of the statute: “The language of the CFA evinces a clear legislative intent that its provisions be applied broadly in order to accomplish its remedial purpose, namely, to root out consumer fraud.” Id. at 551. Even though insurance was not named in the statute, the court reasoned that the CFA “could not possibly enumerate all, or even most, of the areas and practices that it covers without severely retarding its broad remedial power to root out fraud in its myriad, nefarious manifestations.” Id.
The court also addressed whether application of the CFA to the sale of insurance “would run counter to our traditional reluctance to impose potentially inconsistent administrative obligations on regulated parties.” Id. at 552. In holding that application of the CFA was not precluded by four other insurance-related statutes—the Consumer Loan Act, the New Jersey Insurance Trade Practices Act (“ITPA“), the Insurance Producer Licensing Act, and the Credit Life and Health Insurance Act—the court noted “the strong and sweeping legislative remedial purpose apparent in the CFA” and found that the CFA‘s cumulative remedies and private right of action provisions “reflect an apparent legislative intent to enlarge fraud-fighting authority and to delegate that authority among various governmental and nongovernmental entities . . . .” Id. at 553-55. Because all of the reviewed statutes have the same goal, “namely, the prevention of fraud and misrepresentation in the sale of credit and/or insurance,” the CFA “simply complements” the others. Id. at 555.
We were guided by Lemelledo‘s holding in Weiss v. First Unum Life Insurance Co., where we addressed whether the CFA covered the allegedly fraudulent practice of discontinuing previously authorized benefit payments. 482 F.3d at 256, 265. In responding in the affirmative, we predicted that the New Jersey Supreme Court would hold that the CFA covers “fraud both in the initial sale (where the seller never intends to pay), and fraud in the subsequent performance (where the seller at some point elects not to fulfill its obligations).” Id. at 266 (emphasis added). In doing so, we highlighted the language of the statute, which explicitly covers acts “in connection with . . . the subsequent performance of such person as aforesaid,” and Lemelledo‘s “sweeping statements regarding the application of the CFA to deter and punish deceptive insurance practices.” Id. (quotation marks and citation omitted).
3.
Appellees contend that the UCSPR precludes application of the CFA in this case. Specifically, Appellees argue that the ITPA, the statute pursuant to which the UCSPR regulations were promulgated, creates a “direct and unavoidable conflict” with the CFA because the former does not offer a private right of action while the latter does. Br. for Appellees at 14 (quoting Lemelledo, 696 A.2d at 554). As noted above, however, the New Jersey Supreme Court directly addressed any potential conflict between the CFA and the ITPA in Lemelledo and held that none exists. 696 A.2d at 555 (noting that the ITPA‘s remedies are explicitly cumulative).
The allowance of a private right of action in conjunction with regulatory action does not amount to “a direct and unavoidable conflict” reproved by Lemelledo. First, the New Jersey Supreme Court has explicitly authorized multiple remedies of these types, stating that the allowance of a cause of action for damages in one statute does not “inhibit[] enforcement of . . . other statutes, because a court can assess damages in addition to any other penalty to which a defendant is subject.” Id. at 555. Second, regulation by the
New Jersey Department of Banking and Insurance under the UCSPR would not be inconsistent with Alpizar-Fallas‘s CFA claim to the same extent as the potential conflict with utility rate-setting in Daaleman, since, in this case, both would potentially punish unlawful behavior and neither would affirmatively approve the same conduct. Finally, the remedies of both the CFA and the ITPA are explicitly cumulative, which “reflect[s] an apparent legislative intent to enlarge fraud-fighting authority and to delegate that authority among various governmental and nongovernmental entities, each exercising different forms of remedial power.” Id. at 553. For these reasons, we reject Appellees’ argument that application of the CFA to this case is precluded by the UCSPR.
4.
Appellees rely, as did the District Court, on Myska for the proposition that the denial of benefits is outside the scope of the CFA. See Myska v. N.J. Mfrs. Ins. Co., 114 A.3d 761, 777 (N.J. Super. Ct. App. Div. 2015). In Myska, the defendant insurance company had denied the plaintiffs’ claims for payment for diminution of value of their cars after they had been damaged in accidents. Id. at 765-67. In finding the plaintiffs’ allegations outside the scope of the CFA, the court reasoned that the CFA “was not intended as a vehicle to recover damages for an insurance company‘s refusal to pay benefits.” Id. at 777. Because “the essence of plaintiffs’ causes of action involved whether they filed and supported a claim for a specified amount of benefits under their respective policies,” their claims were not cognizable under the CFA. Id.
That case is inapposite. Here, Alpizar-Fallas alleges neither that she filed an insurance claim nor that she was denied any benefits. Instead, the allegations in her complaint fall squarely within the language of the CFA and our holding in
- Alpizar-Fallas “relied on the express false representations of the agent and/or employee of her insurance company‘s claims adjuster—Defendant Barbosa—that the documents he prepared and delivered to her needed to be signed merely to facilitate her receipt of the money for the damages to her motor vehicle;”
- Barbosa “falsely represented the nature of the documents that [she] signed;”
- “The document, prepared by the [Appellees,] was in fact a broadly written comprehensive general release of any and all claims;”
- “Plaintiff reasonably relied on the materially false representations of [Appellees] when she signed the documents since Defendant Barbosa, [sic] represented to [Alpizar-Fallas] that he was an agent of [her] own insurance company, Progressive;”
- “[Appellees] and others at the insurance company have engaged in this same pattern of unlawful conduct with respect to other similarly situated individuals;” and
- “As a result of this deceptive and unconscionable practice, present and former insurance policy holders of Defendant, Progressive[,] have continued to be stripped of their rights to pursue claims against other policy holders of Progressive Garden State Insurance Company due to the [Appellees‘] false and misleading representations . . . .” A. 7-8.
These facts, taken together, amount to an allegation of fraud in connection with the subsequent performance of a consumer contract, a situation explicitly covered by the language of the CFA, sanctioned by this Court in Weiss, and supported by the New Jersey Supreme Court‘s broad statements regarding the application of the CFA.4
In sum, we predict that the New Jersey Supreme Court would apply the CFA to Alpizar-Fallas‘s claim, where an insurance company is alleged to have fraudulently performed a contract with a consumer. Accordingly, we conclude that Alpizar-Fallas stated a viable claim under the CFA.
B.
Finally, Appellees argue that Alpizar-Fallas‘s complaint does not conform to the heightened pleading requirement of
1.
the Plaintiff‘s own insurance company, Progressive.” A. 6-7 (emphasis added). Therefore, Alpizar-Fallas has alleged fraud in conjunction with the performance of her own insurance policy.
surrounding her CFA claim. She pled the date, time, and place of Appellees’ conduct and provided a detailed description of that conduct. Therefore, her allegations meet Rule 9(b)‘s standard.
2.
The CFA requires a plaintiff to allege “ascertainable loss.” See
In Alpizar-Fallas‘s complaint, she alleged that, because of Appellees’ conduct, she and other class members were “stripped of their rights to pursue claims against other policy holders of Progressive . . . .” A. 8 (emphasis added). In Alpizar-Fallas‘s case, this means that she is unable to recover certain losses from her accident with Favero, which are detailed in the beginning of her complaint. Specifically, she has required and will continue to require medical care;
has suffered “impairment of her earning capacity and power;” has suffered and will continue to suffer “great pain, suffering agony, mental anguish, embarrassment and humiliation;” has been hindered and will be hindered “from attending to her daily duties, functions and occupation;” and will “continue to incur other financial losses or expenses.” A. 4-5. These allegations are sufficient to demonstrate a “loss in value that is quantifiable or measureable .”5
IV.
For the foregoing reasons, we will vacate the District Court‘s dismissal and remand for further proceedings consistent with this opinion.