Wright v. Travelers Home and Marine Insurance Company, The

Background

In August 2021, a water pipe above Morgan Wright’s residence burst and damaged her residence and personal property, including her piano. The residence was insured under a homeowners condominium policy issued by The Travelers Home and Marine Insurance Company. Wright alleged that Travelers breached the policy by failing to pay all amounts owed, delaying payment for a replacement piano, refusing to relocate her while repairs were made, and failing to cover related losses. She also alleged that Travelers discriminated against her based on disabilities resulting from the removal of a cancerous brain tumor.

The complaint asserted three counts: declaratory relief concerning coverage and the value of Wright’s losses, breach of contract, and disability discrimination. The complaint did not identify the legal authority supporting the disability-discrimination claim. Travelers moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not plausibly state a legally valid claim. Wright separately sought review of Magistrate Judge Tony N. Leung’s denial of her motion for leave to amend the complaint to add a bad-faith claim under Minnesota Statutes section 604.18.

Rule 12(b)(6) Motion

The court held that the policy, Wright’s sworn proof-of-loss statement, and the appraisal award could be considered because they were attached to, incorporated into, or integral to the complaint. The court declined to consider a payment-history document to the extent it would contradict the complaint’s allegation that Travelers had not paid all amounts owed. The court also declined to consider declaration testimony that would add or contradict allegations in the complaint.

The court dismissed the declaratory-judgment claim because it sought no relief distinct from the breach-of-contract claim. Resolving the contract claim would resolve all questions raised by the request for declaratory relief.

The court held that the breach-of-contract claim did not plausibly allege a breach. The complaint did not allege that Travelers’ piano payment was made later than the policy allowed, identify another contractual deadline, or identify a policy provision covering lost income associated with the payment delay. The complaint also did not allege that Wright incurred additional living expenses, submitted a claim for those expenses, or provided receipts after Travelers allegedly refused to approve her relocation. The policy’s loss-of-use provision covered necessary increases in living expenses, not pre-approval of a relocation request. The court further found that the complaint did not identify an independent legal wrong supporting recovery of health-related damages under Minnesota’s rule limiting contract damages.

Finally, the court found that the complaint’s general allegation that Travelers had not fully paid all damages was insufficient. The complaint did not identify the unpaid amounts, explain why they were owed under the policy, challenge the appraisal award, or allege that Travelers had failed to pay amounts due under that award.

The disability-discrimination claim also failed to state a plausible claim because the complaint did not identify whether it arose under federal, state, or local law, or identify the statute or other legal authority supporting it. Wright’s brief referred to the Minnesota Human Rights Act and a Minneapolis ordinance, but the court held that a brief could not amend the complaint.

Motion to Amend

The proposed amended complaint sought to add a bad-faith claim under Minnesota’s Insurance Standard of Conduct statute. The proposed claim relied on Travelers’ alleged refusal to approve Wright’s relocation request. Magistrate Judge Leung denied leave to amend because the amendment would be futile—that is, the proposed claim could not survive a motion to dismiss.

The district court reviewed the futility determination independently and affirmed the denial. The court reasoned that Wright had not plausibly alleged that Travelers breached the policy’s loss-of-use provisions. The policy did not require Travelers to pre-approve relocation, Wright did not allege that she incurred and claimed additional living expenses, and she did not identify an independent legal wrong supporting the health-related damages she sought. Without a plausible breach, she could not plausibly allege that Travelers lacked a reasonable basis for handling the claim as it did.

Disposition

The court granted Travelers’ motion to dismiss. It overruled Wright’s objections to Magistrate Judge Leung’s order denying leave to amend and affirmed that order. The complaint was dismissed without prejudice. Wright was permitted to file an amended complaint on or before February 23, 2024. If she did not do so, the court stated that the complaint would be dismissed with prejudice and final judgment would be entered.