United States District Court, E.D. Wisconsin
ELIZABETH MOCTEZUMA BAIRES and WALTER A. BAIRES, Plaintiffs,
BLUE CROSS BLUE SHIELD OF MINNESOTA and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Involuntary Plaintiffs,
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Defendant.
Stadtmueller U.S. District Judge.
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.
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).
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. ¶
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).
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.
MOTION TO DISMISS
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.
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.
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).
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).
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.