JC PICKETT, a minor child, KV PICKETT, a minor child, ANESSA PICKETT, an individual, IAN PICKETT and KHALIA PICKETT, husband and wife, both individually and on behalf of their minor children, Plaintiffs, v. TEMPORARY HOUSING, INC., d/b/a CRS TEMPORARY HOUSING, Defendant.
NO. 2:21-CV-0174-TOR
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON
October 26, 2021
THOMAS O. RICE, United States District Judge
ORDER GRANTING IN PART DEFENDANT’S SECOND MOTION TO DISMISS
This case concerns an insurance dispute that arose after a fire destroyed Plaintiffs’ home. See ECF No. 9. On May 21, 2021, Plaintiffs filed a complaint against Defendant. ECF No. 1. On August 3, 2021, the Court granted Defendant’s motion to dismiss Plaintiffs’ constructive fraud claim and granted Plaintiffs leave to amend their complaint within 21 days. ECF No. 8.
On August 24, 2021 Plaintiffs filed an amended complaint. ECF No. 9. The amended complaint raises the following causes of action: (1) violation of duty of good faith, (2) negligent claims handling, (3) violation of the Washington Consumer Protection Act (“CPA”) pursuant to
On September 7, 2021, Defendant filed the present motion to dismiss, seeking to dismiss all of Plaintiffs’ claims. ECF No. 11. The parties timely filed their respective response and reply. ECF Nos. 13, 15.
FACTS
The following facts are drawn from Plaintiffs’ amended complaint and are accepted as true for the purposes of the present motion. Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012).
On August 11, 2018, Plaintiffs lost their home to a fire in Kettle Falls, Washington. ECF No. 9 at 3, ¶¶ 8-10. Plaintiffs’ home was destroyed and as a
Liberty Mutual hired Defendant to “assist” Plaintiffs with providing ALE benefits. ECF No. 9 at 3, ¶ 14. Pursuant to an agreement, Liberty Mutual incentivizes Defendant to pay as little as possible on ALE claims to maintain and support the business and income Defendant receives from Liberty Mutual. ECF No. 9 at 4, ¶ 22. Defendant did not disclose the details of its business relationship or financial interest with Plaintiffs. ECF No. 9 at 4, ¶ 23. Defendant was motivated by its own financial interest to keep payment of ALE benefits as low as possible to the detriment of Plaintiffs. ECF No. 9 at 5, ¶ 24.
Liberty Mutual paid for Plaintiffs to stay in various hotels and a trailer for a short period of time, neither of which provided the standard of living Plaintiffs were promised. ECF No. 9 at 3, ¶ 15. Liberty Mutual terminated Plaintiffs’ ALE benefits after twelve months despite there being no ALE coverage limit and a policy that provided a period of repair, restoration, or permanent relocation. ECF No. 9 at 4, ¶ 16. Plaintiffs had to relocate out of Washington State to live with family. ECF No. 9 at 4, ¶ 17.
During the year following Plaintiffs’ loss, Defendant negligently or intentionally failed to explain or provide a full measure of the ALE benefits covered under the policy, including that Defendant (1) failed to inform Plaintiffs of their rights and benefits under the policy, (2) never investigated the needs of the Plaintiff children, (3) never treated the Plaintiff children as insureds, (4) never familiarized itself with the available temporary housing options in the vicinity of Plaintiffs’ home, (5) never sent anyone to meet with Plaintiffs, (6) failed to explore the purchase of a temporary home, (7) failed to schedule motel stays for more than a week which necessitated multiple moves for the family, (8) never responded appropriately to Plaintiffs’ expressions of distress when forced to live in unsatisfactory conditions, (9) shamed Plaintiffs into believing they were not entitled to a standard of living comparable to that which existed pre-loss, (10)
Notably, Plaintiffs removed the allegation that “Defendant is an adjuster and is charged with the duties and responsibilities of an adjuster under Washington law” that was alleged in the original complaint. ECF No. 1 at 3, ¶ 14.
DISCUSSION
A. Motion to Dismiss
While the plaintiff’s “allegations of material fact are taken as true and construed in the light most favorable to the plaintiff” the plaintiff cannot rely on “conclusory allegations of law and unwarranted inferences … to defeat a motion to dismiss for failure to state a claim.” In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1403 (9th Cir. 1996) (citation and brackets omitted). That is, the plaintiff must provide “more than labels and conclusions, and a formulaic recitation of the elements.” Twombly, 550 U.S. at 555. When deciding, the Court’s review is limited to the complaint, documents incorporated into the complaint by reference, and judicial notice. Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 1061 (9th Cir. 2008) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).
B. Whether Defendant is an “adjuster”
As an initial matter, the parties dispute whether Defendant is an “adjuster” under Washington law as alleged in the amended complaint. ECF Nos. 11 at 10, 13 at 13-16.
Under Washington law, an “adjuster” is defined as “any person who either investigates and negotiates settlement relative to insurance claims, or applies the factual circumstances of an insurance claim to the insurance policy provisions, or
Here, Plaintiffs removed the allegation that “Defendant is an adjuster and is charged with the duties and responsibilities of an adjuster under Washington law” that was alleged in the original complaint. ECF No. 1 at 3, ¶ 14. Plaintiffs now assert that they “did not ‘drop’ any allegation that CRS acted as an adjuster under Washington law. The claims were presented differently and factually focused to comply with the Court’s request. This does not prevent a later finding that CRS falls under the statutory definition of ‘adjuster.’” ECF No. 13 at 5, n. 8. Plaintiffs do not allege that Defendant was hired to act as an adjuster nor do they allege that Defendant performed the tasks of an adjuster. Plaintiffs merely allege that Liberty Mutual hired Defendant to “assist” Plaintiffs with providing ALE benefits. ECF No. 9 at 3, ¶ 14. The Court finds that Plaintiffs’ amended complaint lacks factual allegations that are sufficient to find that Defendant is an insurance adjuster under Washington law.
//
//
Defendant asserts that it did not owe any duty to Plaintiffs outside of the duties set forth in the parties’ contract. ECF No. 11 at 9. Plaintiffs did not plead breach of contract. ECF No. 9. Plaintiffs contend that Defendant owed them duties by statute and common law due to Defendant’s status as an “adjuster.” See ECF Nos. 9 at 7-9; 13 at 13-16.
Duties may be created by statute or common law. Bernethy v. Walt Failor’s, Inc., 97 Wash. 2d 929, 932 (1982). For duties under common law, courts “consider logic, common sense, justice, policy, and precedent, as applied to the facts of the case, when determining whether a defendant owes a duty in tort.” Certification from the United States Ct. of Appeals for the Ninth Cir. in Centurion Properties III, LLC v. Chicago Title Ins. Co., 186 Wash. 2d 58, 65 (2016) (internal citation omitted). “Whether an individual has a duty in the first instance is a question of law.” Kim v. Lakeside Adult Family Home, 185 Wash. 2d 532, 548 (2016) (internal citation omitted).
As mentioned supra, Plaintiffs fail to allege that Defendant is an adjuster. Even if Defendant were pled as an adjuster, Plaintiffs cannot rely on
Moreover, based on the current allegations that fail to plead Defendant as an adjuster, the Court cannot say that “logic, common sense, justice, policy, and precedent” dictate that Defendant owes Plaintiffs duties under the common law. Keodalah, 194 Wash. 2d at 358. With mere legal conclusions that Defendant owed Plaintiffs duties outside of their contract, ECF No. 9, Plaintiffs fail to state a necessary element for claims of the violation of duty of good faith, negligent claims handling, and constructive fraud. Therefore, these claims must be dismissed.
//
//
Defendant asserts Plaintiffs have failed to state a claim for unfair and deceptive business practices on the grounds that Plaintiffs rely on conclusory statements, a breach of contract claim does not affect the public interest, and Defendant owed Plaintiffs no duty outside of the contract. ECF No. 11 at 12-13. Plaintiffs assert that their complaint plausibly states a claim for a violation of Washington’s Consumer Protection Act (“CPA”). ECF No. 13 at 9-11.
The Washington Consumer Protection Act (“CPA”) prohibits “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”
To prevail on a non-per se CPA claim, “the plaintiff must prove an (1) unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) public interest impact; (4) injury to plaintiff in his or her business or property; [and] (5) causation.” Klem v Washington Mut. Bank, 176 Wash. 2d 771, 782 (2013)
1. Unfair or Deceptive Act or Practice
Under the first element, the plaintiff can demonstrate a deceptive act if the “alleged act had the capacity to deceive a substantial portion of the public” even if there was no intent to deceive. Merriman, 198 Wash. App. 594, 628 (quoting Hangman Ridge, 105 Wash. 2d at 785). The plaintiff can demonstrate an unfair act if the act “(1) causes or is likely to cause substantial injury which (2) consumers cannot avoid, and (3) is not ‘outweighed by countervailing benefits.’” Id. (quoting Klem v. Wash. Mut. Bank, 176 Wash. 2d 771, 787 (2013)). Whether an act constitutes an unfair or deceptive practice is a question of law. Columbia Physical Therapy, Inc., P.S. v. Benton Franklin Orthopedic Assocs., P.L.L.C., 168 Wash. 2d 421 (2010).
Here, some of Plaintiffs’ allegations amount to unfair or deceptive acts, including that Defendant “[s]uggested a ‘travel trailer’ be brought to the property and that this was the ‘only option’ that could keep the family together in their school district [and] [p]romised a winterized trailer but provided one from Arizona with no winterization.” ECF No. 9 at 6, ¶ 25(k)-(l). These actions have the capacity to deceive a substantial portion of the public and/or is likely to cause substantial injury that Plaintiffs could not avoid without any clear countervailing
2. Trade or Commerce
Under the second element, “trade” and “commerce” are defined to “include the sale of assets or services, and any commerce directly or indirectly affecting the people of the state of Washington.”
3. Public Interest
Under the third element, “[o]rdinarily, a breach of a private contract affecting no one but the parties to the contract is not an act or practice affecting the public interest.” Hangman Ridge, 105 Wash. 2d at 790. However, a plaintiff can establish that the private “lawsuit would serve the public interest by showing a likelihood that other plaintiffs have been or will be injured in the same fashion.” Trujillo v. Nw. Tr. Servs., 183 Wash. 2d 820, 835 (2015) (internal citations omitted). To assess the public interest in a private dispute, courts are guided by “(1) whether the defendant committed the alleged acts in the course of his/her business, (2) whether the defendant advertised to the public in general, (3) whether the defendant actively solicited this particular plaintiff, and (4) whether the
Here, Plaintiffs assert there is a public interest by statute –
4. Injury and Causation
Under the fourth and fifth elements, the plaintiff can establish injury and causation by showing “the deceptive act or practice proximately caused injury to the plaintiff’s ‘business or property.’” Panag, 166 Wash. 2d at 63-64. Plaintiffs allege Defendant’s deprivation of adequate housing forced them to move frequently and eventually relocate to live with family California. ECF No. 9 at 4-6, ¶¶ 17, 25. Therefore, the fourth and fifth elements are satisfied.
Plaintiffs adequately state all the elements for a non-per se CPA claim. Therefore, dismissal of this claim is not warranted.
Here,
//
//
- Defendant’s Motion to Dismiss (ECF No. 11) is GRANTED in part.
- Plaintiffs are granted leave to AMEND their complaint within 21 days of this Order.
The District Court Executive is directed to enter this Order and furnish copies to counsel.
DATED October 26, 2021.
THOMAS O. RICE
United States District Judge