Mullowney v. USAA Casualty Insurance Company

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
JAMES MULLOWNEY, JR. )
)
Plaintiff, )
)
v. ) C.A. No. 22-404 WES
)
USAA CASUALTY INSURANCE )
COMPANY, )
)
Defendant. )
___________________________________)
MEMORANDUM AND ORDER
WILLIAM E. SMITH, District Judge.
This case involves a claim for insurance coverage made
pursuant to a homeowner’s insurance policy issued by Defendant
USAA Casualty Insurance Company to Plaintiff James Mullowney.
Plaintiff alleges that a water loss occurred at his insured
property in Newport, Rhode Island, on July 5, 2021, that resulted
in extensive damage. See Am. Compl. ¶¶ 9, 31, ECF No. 9. Before
the Court is USAA’s Motion to Dismiss (“Def.’s Mot.”), ECF No. 8,
which challenges two counts of the Complaint, ECF No. 1, and one
corresponding count of the Amended Complaint, ECF No. 9. For the
reasons that follow, Defendant’s Motion to Dismiss is GRANTED
insofar as it concerns Plaintiff’s negligence claim (Count II of
the Complaint and Count V of the Amended Complaint) and DENIED as
MOOT insofar as it concerns Plaintiff’s claim under the Unfair
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Trade Practices and Consumer Protection Act (Count V of the
Complaint).
I. Background
Plaintiff is the owner of a property located at 38 Pelham
Street in Newport, Rhode Island. Am. Compl. ¶ 5. Defendant issued
a homeowner’s insurance policy, effective August 9, 2020, to August
9, 2021, to Plaintiff, covering the property. Id. ¶ 6. A water
loss occurred at Plaintiff’s property on July 5, 2021. Id. ¶ 9.
That same day, he notified Defendant of the loss. Id. ¶ 10.
Plaintiff alleges that Defendant failed to conduct an adequate
investigation into the loss and failed to make payments as required
by the terms of the insurance policy, leaving him unable to
promptly repair and rent the property. Id. ¶¶ 12-19.
II. Discussion
a. Legal Standard
To survive a motion to dismiss, a complaint must set forth
sufficient facts to establish a “claim to relief that is plausible
on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). The Court need not find the claim to be probable but
must find the claim to be more than merely possible. Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009). Claims comprised of “meager,
vague, or conclusory statements” are insufficient. Alston v.
Spiegel, 988 F.3d 564, 571 (1st Cir. 2021) (citing SEC v. Tambone,
597 F.3d 436, 442 (1st Cir. 2010)). When reviewing a motion to
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dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure, the Court must assume the truth of well-pleaded facts
and give the plaintiff the benefit of all reasonable inferences.
Cook v. Gates, 528 F.3d 42, 48 (1st Cir. 2008).
The parties agree that Rhode Island law applies because the
policy at issue is for Rhode Island property and the conduct has
the most significant relationship with Rhode Island. See Webster
Bank Nat’l Ass’n v. Rosenbaum, 268 A.3d 556, 560 (R.I. 2022);
Def.’s Mot. 4 n.3; Pl.’s Obj. Def.’s Mot. Dismiss (“Pl.’s Obj.”)
3, ECF No. 10 (citing Rhode Island Supreme Court cases).
b. Operative Complaint
As a preliminary matter, Plaintiff argues that his filing the
Amended Complaint moots Defendant’s motion to dismiss. Pl.’s Obj.
2. “A party may amend its pleading once as a matter of course
within . . . 21 days after service of a motion under Rule 12(b)”
“if the pleading is one to which a responsive pleading is
required.” Fed. R. Civ. P. 15(a)(1)(B). Here, the Complaint was
a pleading to which a responsive pleading was required, and
Defendant filed a motion to dismiss under Rule 12(b)(6) on January
10, 2023. See generally Def.’s Mot. On January 17, 2023, within
twenty-one days of the filing of the motion to dismiss, Plaintiff
filed his Amended Complaint. See generally Am. Compl. Therefore,
the Amended Complaint was filed as of right, and thus “became the
operative complaint.” Connectu LLC v. Zuckerberg, 522 F.3d 82, 95
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(1st Cir. 2008) (amended complaint “filed as of right . . . became
the operative complaint without judicial intervention.”).
However, even where an amended pleading has superseded the
original, district courts “may either deny a pending motion to
dismiss as moot or consider the merits of the motion, analyzing
the facts as alleged in the amended pleading.” Pettaway v.
National Recovery Solutions, LLC, 955 F.3d 299, 303 (2d Cir. 2020).
Because the parties have fully briefed Defendant’s challenge to
Plaintiff’s negligence claim and have addressed the changes to
that claim made in the Amended Complaint, the Court elects to
address the motion to dismiss now in order to “promote[] judicial
economy [and] obviat[e] the need for multiple rounds of briefing.”
Id.1
c. Negligence Claim
Plaintiff alleges that Defendant was negligent because it
“owed [Plaintiff] a duty to promptly, appropriately, and
accurately adjust and pay the claim related to the Loss,” that it
breached this duty, and that Defendant’s “breach was the direct
and proximate cause of [Plaintiff’s] damages.” Am. Compl. ¶¶ 65-
70. Defendant contends that Plaintiff’s negligence claim is barred
1 Plaintiff’s original Complaint asserted a cause of action
under the Unfair Trade Practices and Consumer Protection Act. See
Compl. ¶¶ 65-69. Plaintiff removed that count from the Amended
Complaint. See generally Am. Compl. Therefore, Defendant’s Motion
to Dismiss, insofar as it concerns that claim, is DENIED as MOOT.
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both by the parties’ contractual relationship and by the economic
loss doctrine. Def.’s Mot. Dismiss 2. Because the Court concludes
that Plaintiff’s negligence claim must be dismissed on the basis
that Defendant did not owe a duty to Plaintiff, it is unnecessary
to consider the applicability of the economic loss doctrine.
“[T]he existence of [a duty of care] is a question of law to
be determined by the court . . . [and] [i]n the absence of a legal
duty, [a] plaintiff[’s] claim must fail as a matter of law.” Ouch
v. Khea, 963 A.2d 630, 632–33 (R.I. 2009); see Benaski v. Weinberg,
899 A.2d 499, 502 (R.I. 2006) (“[A] defendant cannot be liable
under a negligence theory unless the defendant owes a duty to the
plaintiff.”). Plaintiff asserts that Bibeault v. Hanover
Insurance Co., 417 A.2d 313, 319 (R.I. 1980) establishes that
Defendant owed a negligence duty to Plaintiff here. See Pl.’s
Opp’n 3. The Bibeault court concluded that “an insurer doing
business in Rhode Island is obligated to act in good faith in its
relationship with its policyholders,” and “[a] violation of this
duty will give rise to an independent claim in tort in which . . .
there has been a specific finding that the insurer has in bad faith
refused to pay the claims due an insured.” Bibeault, 417 A.3d at
319. However, this holding is specific to “the tort of bad faith,”
which “is an intentional one,” and requires a showing by a
plaintiff of “the absence of a reasonable basis for denying
benefits of the policy and the defendant’s knowledge or reckless
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disregard of the lack of reasonable basis for denying the claim.”
Id. (quoting Anderson v. Continental Ins. Co., 85 Wis. 2d 675,
691, 693 (1978)). The case makes no mention of a negligence claim,
and, although the case discusses a “duty,” it is not the type of
duty that gives rise to a claim of negligence, but rather a duty
of good faith in contract dealings. In Skaling v. Aetna Insurance
Co., the Rhode Island Supreme Court further clarified the bad faith
tort articulated in Bibeault, explaining that “mere negligence in
failing to settle a claim . . . is not actionable in tort.” 799
A.2d 997, 1006-07 (R.I. 2002).
Plaintiff also points to Forte Brothers, Incorporated v.
National Amusements, Incorporated, 525 A.2d 1301, 1030 (R.I.
1987), which he argues establishes that “a tort duty of care may
exist between parties that are in a contractual relationship with
on[e] another.” Pl.’s Opp’n 3. In that case, the Rhode Island
Supreme Court concluded that “[a] supervising architect, in the
performance of its contract with the owner, is required to exercise
the ability, skill and care customarily exercised by architects in
similar circumstances” and that that “duty of care extends to
contractors who share an economic relationship and community of
interest with the architect on a construction project,” which is
“based on circumstances establishing a direct and reasonable
reliance by the contractor on the contractual performance of the
architect when the architect knows, or should know, of that
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reliance.” Forte Bros., 525 A.2d at 1303. The court, however,
has not extended this conclusion beyond the construction context;
Plaintiff points to no cases that establish a similar duty in the
insurance context.
Therefore, because “[a] defendant cannot be liable under a
negligence theory unless the defendant owes a duty to the
plaintiff,” Benaski, 899 A.2d at 502 (quoting Lucier v. Impact
Recreation, Ltd., 864 A.2d 635, 638 (R.I. 2005)), and Plaintiff
has failed to establish the existence of that duty here,
Defendant’s motion to dismiss is GRANTED insofar as it concerns
Plaintiff’s negligence claim.
III. Conclusion
For the foregoing reasons, Defendant’s Motion to Dismiss, ECF
No. 8, is GRANTED as to Count V of the Amended Complaint, ECF No.
9, and DENIED as MOOT as to Count V of the Complaint, ECF No. 1.
IT IS SO ORDERED.
William E. Smith
District Judge
Date: April 26, 2023
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