Tagliaferri v. Palomar Specialty Insurance Company

Background

Mary Tagliaferri alleged that Palomar Specialty Insurance Company issued a flood-insurance policy covering her property and that Sedgwick Claims Management Services administered claims under the policy. After a January 2023 rainstorm caused flooding and water intrusion, Tagliaferri submitted repair estimates. She alleged that the defendants ultimately treated parts of the repairs as non-covered improvements, betterments, and upgrades. She claimed that the total project cost was $267,214.01 and that she remained owed $180,790.95, although the opinion also describes later payments and a different claimed balance at later points in the timeline.

The operative complaint asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and intentional misrepresentation and concealment. Tagliaferri also requested restitution, disgorgement, and injunctive relief. The defendants moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient and plausible claim.

Intentional Misrepresentation Based on the Line-by-Line Review

Tagliaferri alleged that Sedgwick adjuster John Weber promised on January 30, 2023, to conduct a line-by-line coverage review and identify in advance any non-reimbursable items with citations to the policy. She alleged that she repeatedly requested the promised review but never received it.

The court held that Tagliaferri adequately identified the alleged misrepresentation but did not adequately plead reliance. The court noted that she requested the review several times, complained about the handling of the claim after not receiving it, and did not explain how she reasonably relied on the promise. The court therefore dismissed with prejudice the intentional-misrepresentation claim to the extent it was based on Weber’s promise of a line-by-line analysis.

Concealment of the Intended Coverage Denial

Tagliaferri separately alleged that the defendants concealed their intent to deny a significant part of the claim as non-covered improvements and betterments. The court treated this as a fraudulent-concealment theory and held that the claim was adequately pleaded at the motion-to-dismiss stage.

The court found that Tagliaferri sufficiently alleged a duty to disclose because the defendants allegedly represented that payments would be forthcoming, approved additional payments, and continued discussing repair scope and costs without disclosing their intended betterment or improvement exclusion. The court also found sufficient allegations of the defendants’ knowledge and intent, as well as Tagliaferri’s reliance and damages. The court declined to require more detail about when the defendants made particular coverage decisions because that information appeared more appropriate for discovery.

The court therefore denied the motion to dismiss the third claim to the extent it was based on the alleged failure to disclose the intended denial of coverage for betterments and improvements.

Restitution, Disgorgement, and Injunctive Relief

The defendants also sought dismissal of Tagliaferri’s requests for restitution, disgorgement, and injunctive relief. The court noted that these requests had been added in connection with an unfair-competition claim that the court had previously dismissed with prejudice, and that Tagliaferri did not argue that the requested remedies were proper. The court dismissed the requests with prejudice.

Disposition

Judge Westmore granted in part and denied in part the defendants’ motion to dismiss. The court granted the motion as to the requests for restitution, disgorgement, and injunctive relief. The court denied the motion as to the concealment-based portion of the third claim.