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Edwards v. 21st Century Insurance Co.

June 23, 2010


The opinion of the court was delivered by: Simandle, District Judge



This putative class action is about the sale of consumer automobile insurance that allegedly did not comply with New Jersey insurance law. The matter is before the Court on a motion to dismiss by Defendants American International Insurance Company of Delaware (AII Delaware) and American International Insurance Company of New Jersey (AII New Jersey) [Docket Item 22], who argue that the Amended Complaint fails to state a claim against them and should be dismissed under Rule 12(b)(6), Fed. R. Civ. P., because they had no contractual relationship with Plaintiff or the members of the class she represents. Also before the Court is Defendant 21st Century Insurance Co. and Defendant AIG Marketing, Inc.'s motion to dismiss part of Plaintiff's claims for lack of standing or in the alternative to strike portions of the Complaint under Rule 12(f), Fed. R. Civ. P. [Docket Item 23.]

The principal questions to be decided are whether Plaintiff's claims can be stated against the defendants who were not parties to the insurance contracts but who are alleged to be principals of the agents who were parties, and whether the fact that Plaintiff purchased her insurance policy by telephone means that the allegations regarding Defendants' website should be stricken from the Complaint. For the reasons explained below, the motions will be denied.


According to the allegations in the Amended Complaint, Defendants collectively and through their agents sold automobile insurance policies that did not comply with New Jersey law. A New Jersey insurance statute requires a company selling automobile insurance in New Jersey to comply with certain requirements when the policy provides less than §250,000 in personal injury protection benefits. N.J. Stat. Ann. § 39:6A-4.3. Specifically, it requires the customer to receive and sign a form that notifies the customer of the minimal nature of the coverage. § 39:6A-4.3(e).*fn1 When this form is not completed, the statute requires default coverage of $250,000 to be provided by the policy regardless of the content of the agreement. Id. The Amended Complaint alleges that Defendants sold to the class members insurance policies with coverage of less than $250,000 in personal injury protection benefits, but did not obtain the disclosure forms required by statute, and did not provide the default coverage.

The Amended Complaint alleges that "Defendants had a common policy of failing to obtain coverage selection forms from putative class members, regardless of whether the sale of the standard automobile insurance policy took place via the internet or telephone." (Am. Compl. ¶ 38.) The class includes:

All persons who, since at least October 12, 2006 (or such dated as discovery may disclose) have been policyholders owning or beneficiaries of standard automobile liability insurance policies sold in the State of New Jersey by Defendants that have provided limits of less than $250,000 in Personal Injury Protection (PIP) medical expense benefits coverage and as to whom Defendants do not have their affirmative choice in writing in the form proscribed by N.J.S.A. 39:6A-4.3 and 39:6A-23. (Id. ¶ 54.) Plaintiff also alleges that 21st Century and AIG Marketing acted as agents or representatives of the AII Defendants, who approved their conduct. (Id. ¶¶ 12-21.)

Plaintiff maintains that the alleged conduct violated the relevant insurance statutes (for which they seek injunctive and declaratory relief); breached the implied covenant of good faith and fair dealing; breached the insurance contract; and as to Plaintiff and a subclass including those policyholders who actually incurred medical expenses in excess of the state limit, violated New Jersey's Consumer Fraud Act, N.J. Stat. Ann. § 56:8-1.

The AII Defendants argue that, as against them, these allegations fail to state a claim because they did not enter any contract with Plaintiff or those similarly situated. Plaintiff maintains that the actual parties to the insurance contract were acting as agents or representatives of the AII Defendants. Additionally, the other two Defendants maintain that because Plaintiff purchased her policy over the phone, the Amended Complaint's allegations with respect to Defendants' website should be stricken.


A. Standard of Review

In order to state a claim upon which relief may be granted, a complaint must allege, in more than legal boilerplate, those facts about the conduct of each defendant giving rise to legal liability. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). These factual allegations must present a plausible basis for relief (i.e. something more than the mere possibility of legal misconduct). See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1951 (2009). In its review of Defendants' motion to dismiss pursuant to Rule 12(b)(6), Fed. R. Civ. P., the Court must "accept all factual allegations as true and construe the complaint in the light most favorable to the plaintiff." Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). The defendant bears the burden of showing that the complaint, so construed, fails to state a claim; simply stating that a complaint is insufficient without relevant legal argument is not sufficient to warrant dismissal or to force a plaintiff to prove the case at that preliminary stage. See Gould Electronics Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000) ("The defendant bears the burden of showing no claim has been stated.").

On this procedural posture, "courts generally consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim." Lum v. Bank of America, 361 F.3d 217, 222 n.3 (3d Cir. 2004) (citation omitted). In the present motion, Defendants urge the Court to consider an affidavit which makes various declarations regarding the relationships between Defendants. The Court will not consider this affidavit on the motion to dismiss, which simply attempts to raise factual issues with respect to the Amended Complaint's allegations. Id. Conversion of the motion to one for partial summary judgment would be inappropriate at this pre-discovery stage. Further, if the motion to dismiss were to be converted to a ...

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