Austin v. Kemper Corporation

Background

A driver insured by Kemper rear-ended George Jarvis Austin. Austin then sought a settlement from Kemper, alleging that Kemper responded slowly or failed to offer a settlement. Austin’s lawsuit asserted discrimination under state and federal law, breach of contract, breach of an insurance contract, and bad faith.

The court had previously dismissed Austin’s first amended complaint, but allowed him to amend. It identified three principal deficiencies: Austin had not alleged direct or circumstantial facts supporting intentional discrimination; he had not shown that he had an insurance contract with Kemper supporting his contract claims; and he could not assert a bad-faith claim based on the insurance policy of the third-party driver.

Austin later filed a second amended complaint and submitted a document that he argued showed a pre-existing contractual relationship with Kemper.

Court’s Analysis

Kemper moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which asks whether a complaint alleges enough facts to state a legally plausible claim. Kemper also moved to strike portions of the complaint.

The court examined the document Austin cited as a contract. It found that the document was an insurance policy between Austin and Financial Indemnity Company, described as part of Kemper Specialty, effective March 19, 2020. The policy provided liability coverage for bodily injury and property damage. Austin had not elected medical-payments coverage or several other listed types of coverage.

The court concluded that the policy did not require Kemper to pay Austin’s personal medical expenses and lost wages. The court also stated that liability insurance does not generally require an insurer to pay every loss incurred by its insured, and that a separate contractual relationship does not create a broad duty of good faith for claims unrelated to that contract. The court therefore dismissed the contract, insurance-contract, and bad-faith claims.

The court separately dismissed the discrimination claims. It found that the second amended complaint added no facts curing the deficiencies identified in the earlier complaint. The court said that, at most, Austin repeated that Kemper delayed or refused to settle “in spite of” his race, rather than alleging that Kemper acted “because of” his race.

Disposition

Judge Susan Illston granted Kemper Corporation’s motion to dismiss without leave to amend. The court stated that the dismissal was granted in its entirety. The motion to strike was moot. The opinion does not state a separate disposition using the phrase “with prejudice.”