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Fischer v. National Surety Corp.

United States District Court, D. New Jersey

October 20, 2017

Annette FISCHER and Randi FISCHER, Plaintiffs,
v.
NATIONAL SURETY CORPORATION and ACE AMERICAN INSURANCE COMPANY, Defendants.

          OPINION

          Kevin McNulty, U.S.D.J.

         Annette Fischer and Randi Fischer ("the Fischers") sue based on the denial of a claim under their homeowners' insurance policy for damage resulting from a burst water pipe. The complaint alleges that National Surety Corporation ("National Surety") issued the policy, and that ACE American Insurance Company ("ACE American") "serviced" the claim. Now before the Court is the motion of ACE American to dismiss the Amended Complaint for failure to state a claim, pursuant to Fed.R.Civ.P. 12(b)(6). (ECF no. 26.) ACE American argues (1) that the Fischers have failed to allege the existence of a valid contract between themselves and ACE American, and (2) that, even if a valid contract has been alleged, the Fischers still have failed to allege a bad faith claim. In other words, ACE argues that this dispute is really between the Fischers and National Surety, the insurer. For the reasons stated herein, I will deny the motion and allow the parties to proceed to discovery in order to better determine the relationships among ACE American, National Surety, and the Fischers.

         I. Background[1]

         On January 9, 2015, a frozen water pipe burst in the lower level of the Fischers' home in Short Hills, New Jersey, causing much damage to both their home and their personal property.[2] (AC ¶ 12.) They were insured under a Prestige Home Premier Policy, issued by Fireman's Fund, underwritten by National Surety, and serviced by ACE American.[3] (Id. ¶ 7.) The policy insured their dwelling for $1.8M and their personal property/valuables for $1.1M. [Id. ¶ 8.) They reported their claim the same day as the accident. (Id. ¶ 13.)

         The Fischers allege that they have not received full payment of their claim, despite their prompt initial report and several interactions with representatives of the defendants over the course of twenty months.[4] (See id.)

         Additionally, they say, the experience has exacerbated the health issues facing them, evidenced in part by Annette Fischer's heart failure, insomnia, and twelve mini-strokes since the first denial. (Id. ¶ 137.)

         On October 4, 2016, the Fischers (then appearing pro se) filed a complaint seeking $490, 000 in damages in New Jersey Superior Court. On November 3, 2016, the defendants removed the case based on this Court's diversity jurisdiction under 28 U.S.C. § 1332. (See Notice of Removal, ECF no. 1.) The Fischers contested the removal. (See Motion for Remand, ECF no. 5.) In a December 9, 2016 Order and Opinion, I denied their motion to remand, finding that there was diversity jurisdiction. (ECF no. 12.) The Fischers then obtained counsel and amended their complaint. (ECF no. 25.)

         The Amended Complaint contains two counts. Count 1 alleges breach of contract, and Count 2 alleges bad faith denial of an insurance claim. Now before me is ACE American's Rule 12(b)(6) motion to dismiss both Counts of the Complaint.

         II. Standard of Review

         Under Fed.R.Civ.P. 12(b)(6), a complaint may be dismissed, in whole or in part, if it fails to state a claim upon which relief can be granted. When deciding such a motion, all allegations in the complaint are taken as true and viewed in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998); see also Phillips v. Cty. Of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (noting that the "reasonable inferences" principle was not undermined by Twombly, infra). However, the formulaic recitation of the elements of a cause of action won't do. BellAtl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The factual allegations of a complaint must be sufficient to raise a plaintiffs right to relief above a speculative level, such that it is "plausible on its face." See Id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir, 2008). Therefore, a claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a 'probability requirement'... it asks for more than a sheer possibility." Iqbal, 556 U.S. at 678 (2009).

         III. Analysis

         1. Breach of Contract (Count 1)

         ACE American moves to dismiss Count 1 (breach of contract), arguing that the Fischers have failed to allege the existence of a valid contract between themselves and ACE. (Def. Br. 4.) ACE points to the Amended Complaint, where the Fischers allege that National Surety issued the policy under which the Fischers make their claim. (Id.) It follows, says ACE American, that National Surety is the sole party against whom a breach-of-contract claim can be asserted. (Id.)

         It is true that the existence of a valid contract is an essential element of a breach of contract action. EnviroFinance Grp., LLC v. Envt'l Barrier Co., LLC, 440 N.J.Super. 325, 345 (App. Div. 2015) (listing the opposing party's failure to perform a contractual duty and damages as two other elements). An insurance policy is a contract. See Finnegan v. Inductotherm Corp., No. A-4267-15T1, 2017 WL 3597032, at *4 (App. Div. Aug. 22, 2017) ("As Judge Skillman noted, '[a]n insurance policy is a contract between the insurer and the insured." (quoting Jeffrey M. Brown Assocs., Inc. v. Interstate Fire & Cas. Co.,414 N.J.Super. 160, ...


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