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Rabinowitz v. American Water Resources, LLC

United States District Court, D. New Jersey

March 25, 2019

JOSEPH RABINOWITZ, on behalf of himself and all others similarly situated, Plaintiff,
v.
AMERICAN WATER RESOURCES, LLC, Defendant.

          OLIMPIO LEE SQUITIERI SQUITIERI & FEARON, LLP RAYMOND NICHOLAS BARTO STEPHEN J. FEARON, JR. PAUL V. SWEENY SQUIRIERI & FEARON LLP On behalf of Plaintiff

          MICHAEL P. DALY DRINKER, BIDDLE & REATH, LLP DANIEL ELLIOT BREWER DRINKER BIDDLE & REATH ONE LOGAN SQUARE On behalf of Defendant

          OPINION

          NOEL L. HILLMAN, U.S.D.J.

         This putative class action concerns claims by Plaintiff and all similarly situated individuals arising out of water and sewer line protection programs provided by Defendant. Pending before the Court is the motion of Defendant to dismiss Plaintiff's complaint and to strike certain allegations in the complaint. For the reasons expressed below, Defendant's motion will be denied.

         BACKGROUND[1]

         Plaintiff, Joseph Rabinowitz, owns a home in Brooklyn, New York. In February 2013, Plaintiff enrolled in the water and sewer line protection programs offered by Defendant American Water Resources, LLC (“AWR”). AWR provides line protection services to more than 1.4 million consumers across the country. Plaintiff has paid approximately $150 a year for this protection.

         In February 2018, Plaintiff contacted AWR concerning a sewer leak in his home. AWR claimed any damage to the sewer line inside of the home was not covered under the line protection agreements. Plaintiff then hired a plumber who, in order to repair the interior line, had to open the exterior wall to find a good piece of pipe to make a new connection. In doing so he found that the exterior portion of the sewer line was broken, clogged, or blocked due to extensive rotting, erosion, cracking, and other damage. Plaintiff's plumber implemented temporary measures to keep the sewer line functioning pending a permanent solution.

         From February to March 2018, Plaintiff repeatedly contacted AWR concerning repairs to his exterior sewer line, that is, the portion of the sewer line the line protection agreements oblige AWR to pay to repair. Despite its broad duty under the line protection agreements to dispatch an independent contractor to a home when there is a break, clog, or blockage of the sewer line, AWR refused to do so citing nonexistent exceptions, including that it would only dispatch an independent contractor where there is an active backup or where there is a crack to the bottom of the line (as opposed to the top). AWR also informed Plaintiff it would not dispatch an independent contractor to a home based on the recommendation of a third-party, even though the line protection agreements contain no provision to that effect.

         AWR eventually dispatched an independent contractor to Plaintiff's home, but after the independent contractor inspected the sewer line, AWR denied Plaintiff's claim in late March 2018. AWR asserted that the repair was not covered because Plaintiff's privately hired plumber had purportedly caused the damage even though the substantial deterioration and cracking of the exterior sewer line could not have been caused by Plaintiff or a third-party.

         Plaintiff claims that AWR violated its obligations under the line protection agreements by delaying to dispatch an independent contractor and ultimately denying Plaintiff's claim for coverage of repairs to his exterior sewer line. The break, clog, or blockage of Plaintiff's exterior sewer line occurred after Plaintiff enrolled in the line protection programs and resulted from normal wear and usage in the form of extensive rot, erosion, cracking, and other damage. Plaintiff claims that contrary to AWR's representations, that damage could not have been caused by the one-time, temporary repair of the in-home portion of Plaintiff's sewer line, and AWR was obligated to pay for the cost of repairs. In his complaint, Plaintiff states that his exterior sewer line remains broken, blocked, or clogged, and he is currently considering various contractors to undertake the costly repair that was wrongly denied by AWR. Since he filed his complaint, Plaintiff has paid to have the sewer line repaired.[2]

         Plaintiff claims that just like his experience, AWR regularly denies covered claims for the payment of repairs without cause and in violation of the terms and conditions of its line protection agreements. By violating its contractual duties, Plaintiff claims that AWR is able to enrich itself at the expense of line protection program participants who have dutifully paid their premiums and rightly expect coverage.

         Plaintiff brings this action on behalf of himself and other similarly situated homeowners across the United States. Plaintiff alleges claims for (1) breach of contract; (2) a breach of the implied covenant of good faith and fair dealing; (3) violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et seq. (“NJCFA”); and (4) New York General Business Law § 349 (“NYGBL § 349”). Plaintiff seeks permanent injunctive relief, as well as damages caused by AWR's practices.

         AWR has moved to dismiss Plaintiff's complaint in its entirety. AWR argues that Plaintiff has not pleaded the necessary elements for a breach of contract claim. AWR also argues that Plaintiff cannot maintain a parallel breach of implied covenant of good faith and fair dealing if a valid contract governs the parties' relationship. AWR further argues that Plaintiff cannot transform this basic breach of contract case into one for fraud, and even if he could, his fraud claims are not properly pleaded and untimely, in addition to the fact that the NJCFA does not apply to Plaintiff, who is a citizen of New York. To the extent that any of Plaintiff's claims may proceed, AWR seeks to strike certain allegations in Plaintiff's complaint that AWR contends have no possible relation to the controversy and may either cause prejudice or confuse the issues. Plaintiff has opposed AWR's motion.

         DISCUSSION

         A. Subject Matter Jurisdiction

         This Court has original jurisdiction over this case under the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2). Minimal diversity exists between members of the class and Defendant: AWR is a citizen of Delaware and New Jersey, [3] and Plaintiff is a citizen of New York. The amount in controversy in this action exceeds $5, 000, 000 and there are more than 100 members in the class.

         B. AWR's ...


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