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Baires v. Blue Cross Blue Shield of Minnesota

United States District Court, E.D. Wisconsin

September 2, 2016

ELIZABETH MOCTEZUMA BAIRES and WALTER A. BAIRES, Plaintiffs,
v.
BLUE CROSS BLUE SHIELD OF MINNESOTA and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Involuntary Plaintiffs,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Defendant.

          ORDER

          J.P. Stadtmueller U.S. District Judge.

         The plaintiffs, Elizabeth Moctezuma Baires and Walter A. Baires (the “Baireses”), bring this action against the defendant, State Farm Mutual Automobile Insurance Company (“State Farm”) for breach of contract, loss of society and companionship and consortium, and bad faith insurance claims. (Docket #15). Initially, the Baireses filed a motion to compel discovery. (Docket #16). Shortly thereafter, on July 7, 2016, State Farm filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), or, in the alternative, to bifurcate and stay the proceedings on the bad faith and statutory interest claims. (Docket #26). Because certain arguments in the motion to compel were more fully developed in the motion to dismiss briefing, the Court found it prudent to address these matters together. Both motions are now fully briefed and ready for disposition. (Docket #17, #26, #27, #29, #31, #33). As discussed more thoroughly below, the Court will deny State Farm's motion to dismiss for failure to state a claim, deny State Farm's motion to bifurcate and stay, and will grant the Baireses' motion to compel.

         1. FACTUAL BACKGROUND[1]

         This action arises out of an insurance dispute between the parties. Elizabeth Moctezuma Baires was injured in an automobile accident on September 2, 2010. (Am. Compl. ¶ 7). The accident was caused by the negligence of Eric Steele (“Steele”). (Am. Compl. ¶¶ 6-8). At the time of the accident, Steele was insured by American Family Mutual Insurance Company (“American Family”), under a policy that had $100, 000.00 limits. (Am. Compl. ¶ 9). At the time of the accident, the Baireses were insured by State Farm. (Am. Compl. ¶ 5).

         On or about March 26, 2014, American Family tendered the sum of $100, 000.00 to Ms. Baires and State Farm authorized her to accept the offer. (Am. Compl. ¶ 11). The Baireses allege that the liability limits under the American Family policy, however, were inadequate to make them whole from the injuries and damages arising out of the accident. (Am. Compl. ¶ 10).

         The Baireses' insurance policy with State Farm provided underinsured motorist benefits (“UIM”). (Am. Compl. ¶ 5). Ms. Baires provided State Farm with medical records and reports documenting the significant and permanent injuries and the need for ongoing medical care; she then requested that State Farm pay its UIM limits. (Am. Compl. ¶ 12). State Farm declined to pay the amount demanded by Ms. Baires. (Am. Compl. ¶ 13). State Farm offered only $40, 000.00 in UIM benefits. (Am. Compl. ¶ 12). On December 24, 2015, State Farm sent a letter to the Baireses in response to the their further request for UIM benefits. (Am. Compl. ¶ 13). State Farm admitted it has “a business practice in place where [it] would advance [its] initial offer when settlement negotiations failed, ” but State Farm nonetheless failed to pay to $40, 000.00 or any other benefits owed to the Baireses. (Am. Compl. ¶ 13).

         The Baireses initially brought suit in Milwaukee County Circuit Court, and, on April 1, 2016, State Farm removed the case to this Court. (Docket #1). On June 16, 2016, the Baireses amended the original complaint to add a claim for bad faith. (Docket #15).

         2. MOTION TO DISMISS

         State Farm argues that the Baireses' claim for bad faith must be dismissed for the failure to state a claim. (Docket #2-6). “A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the viability of a complaint by arguing that it fails to state a claim upon which relief may be granted.” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014). When reviewing a complaint, the Court construes it in the light most favorable to the plaintiff, accepts as true all well-pleaded facts alleged, and draws all reasonable inferences in the plaintiff's favor. See Foxxxy Ladyz Adult World, Inc. v. Vill. of Dix, Ill., 779 F.3d 706, 711 (7th Cir. 2015).

         To survive a motion to dismiss under Rule 12(b)(6), “the complaint must provide enough factual information to ‘state a claim to relief that is plausible on its face' and ‘raise a right to relief above the speculative level.'” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007)); see Runnion ex rel. Runnion v. Girl Scouts of Greater Chi. & Nw. Ind., 786 F.3d 510, 526 (7th Cir. 2015) (explaining that a plausible claim need only “‘include enough details about the subject-matter of the case to present a story that holds together.'”) (quoting Carlson v. CSX Transp., Inc., 758 F.3d 819, 827 (7th Cir. 2014)). Thus, a plausible claim is one with “enough facts to raise a reasonable expectation that discovery will reveal evidence supporting the plaintiff's allegations.” Twombly, 550 U.S. at 556.

         To state a plausible claim, a plaintiff is not, however, required to plead specific or detailed facts, see Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam), nor does the plausibility standard also “impose a probability requirement on plaintiffs: ‘a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that recovery is very remote and unlikely.'” Alam v. Miller Brewing Co., 709 F.3d 662, 666 (7th Cir. 2013) (quoting Twombly, 550 U.S. at 556); see Olson v. Champaign Cnty., Ill., 784 F.3d 1093, 1099 (7th Cir. 2015) (“In deciding or reviewing a Rule 12(b)(6) motion, [courts] do not ask did these things happen; instead, the proper question to ask is still could these things have happened.”) (internal quotations omitted). And, there is also no requirement that plaintiffs must state in their complaint “all possible legal theories.” Camasta, 761 F.3d at 736 (citing Dixon v. Page, 291 F.3d 485, 486-87 (7th Cir. 2002)); see Runnion, 786 F.3d at 517 (finding a lower court's conclusion that a plaintiff must allege “facts supporting specific legal theories [to be] problematic, to say the least”). “A court may dismiss a complaint [for failure to state a claim] only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.” Hishon v. King & Spalding, 467 U.S. 69, 73 (1984).

         The tort of bad faith is a separate intentional wrong which results from a breach of a duty imposed by a contractual relationship. Anderson v. Continental Ins. Co., 85 Wis.2d 675, 687, 271 N.W.2d 368 (1978). It is not a tortious breach of contract. Id. The Wisconsin Supreme Court has recognized bad faith claims to help “redress a bargaining power imbalance between parties to an insurance contract.” McEvoy v. Group Health Coop. of Eau Claire, 213 Wis.2d 507, 518, 570 N.W.2d 397, 402 (1997).

         To recover on a claim for bad faith, a plaintiff must prove: (1) “the absence of a reasonable basis for denying benefits”; and (2) the insurance company's “knowledge or reckless disregard of the lack of a reasonable basis for denying the claim.” Id. at 691. If the duty to pay is “fairly debatable, ” that is, if the company has investigated and developed the facts necessary to evaluate the claim, and has not recklessly ignored or disregarded the facts necessary to evaluate the claim, the company is entitled to argue that its decision to deny benefits is fairly debatable. Id. ...


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