De Laveaga Service Center, Inc. v. Nationwide Insurance Company

Background

De Laveaga Service Center, Inc. filed a Second Amended Complaint asserting three claims: breach of the implied covenant of good faith and fair dealing, fraud, and conspiracy to commit fraud. The motion addressed only the fraud and conspiracy claims. The defendants seeking dismissal were Nationwide Insurance Company and AMCO Insurance Company.

The plaintiff’s fraud theory was based on an alleged representation that coverage would be provided under the insurance policy. The complaint also alleged that the defendants provided some coverage and made a partial payment on the claim. The plaintiff had previously been given an opportunity to amend the two challenged claims.

Court’s analysis

The court applied Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. Because the claim involved fraud, Federal Rule of Civil Procedure 9(b) also required the plaintiff to describe the alleged misconduct in detail, including who made the representation, what was said, when and where it was said, and how it was fraudulent.

The court concluded that the fraud claim failed for multiple reasons. First, the plaintiff did not identify the specific misrepresentation. The court stated that the entire multi-page insurance policy could not be treated as one misrepresentation. The alleged difference between the coverage the defendants provided and the amount the plaintiff believed it was entitled to did not establish the specific misrepresentation required for fraud.

Second, the plaintiff did not identify who made the alleged fraudulent representation. The only individual named in the complaint was Stephen Rothhammer, but the complaint alleged that he was a new adjuster who was not involved in issuing the policy. The only statement attributed to him concerned the business’s prior ownership and was not related to issuing the policy. The court therefore found that the complaint did not identify the person responsible for the alleged fraud.

The conspiracy-to-commit-fraud claim failed because the court determined that the underlying fraud claim failed. The court explained that there is no separate civil conspiracy claim unless the underlying tort was committed and caused damage.

Disposition

The court found that the amendments had not corrected the defects previously identified and that further amendment would be futile. It granted the defendants’ motion to dismiss. The second claim, for fraud, and the third claim, for conspiracy to commit fraud, were dismissed without leave to amend. The first claim, for breach of the implied covenant of good faith and fair dealing, remained in the case, and the defendants were ordered to answer that claim within 21 days of the order. The court also stated that dismissal of the two claims did not affect the scope of damages or evidence the plaintiff could present on the remaining claim.