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Ortiz v. Zurich American Insurance Co.

United States District Court, D. Arizona

April 10, 2014

David Ortiz, Plaintiff,
v.
Zurich American Insurance Company, Kelly Thompson, Sedgwick Claims Management Services Incorporated, Defendants.

ORDER

JAMES A. TEILBORG, District Judge.

Pending before the Court is Sedgwick Claims Management Services, Inc.'s ("Sedgwick") and Kelly Thompson's ("Thompson") Motion to Dismiss Plaintiff's claims against them. (Doc. 29). Plaintiff has filed a response (Doc. 32) and Sedgwick and Thompson have filed a reply (Doc. 34).

I. BACKGROUND

Plaintiff David Ortiz suffered an on-the-job injury while working for Starwood Hotels & Resorts ("Starwood") and then filed a claim for workers' compensation benefits. Starwood is covered by a workers' compensation insurance policy issued by Zurich American Insurance Company ("Zurich"). Sedgwick is the third-party administrator of Zurich's workers' compensation coverage for Starwood. Thompson handled Plaintiff's workers' compensation claim as Sedgwick's claims adjuster. Although Plaintiff eventually received the benefits to which he was entitled, he experienced a great deal of difficulty working with Thompson, Sedgwick, and Zurich.

Subsequently, Plaintiff brought this action alleging a breach of the duty of good faith and fair dealing that resulted in wrongfully denied and unreasonably delayed payment of benefits. (Doc. 9 at 5). Plaintiff named Zurich, Sedgwick, and Thompson as defendants. ( Id. at 1-4).

Plaintiff alleges four claims for relief. ( Id. at 7-12). Plaintiff alleges the first claim only against Zurich for breach of the duty of good faith and fair dealing. ( Id. at 7-8). Plaintiff alleges the second claim only against Sedgwick for aiding and abetting Zurich's breach of the duty of good faith and fair dealing. ( Id. at 8-10). Plaintiff alleges the third claim only against Thompson for aiding and abetting Zurich's breach of the duty of good faith and fair dealing. ( Id. at 10-11). Plaintiff alleges the fourth claim against all defendants for punitive damages. ( Id. at 11-12). Plaintiff alleges Zurich is vicariously liable for the acts of its employees or agents such as Sedgwick and Thompson, and that Zurich is directly liable for a breach of the non-delegable duty of good faith and fair dealing. ( Id. at 2). As for Sedgwick, Plaintiff alleges that it is vicariously liable for the acts of its employees or agents such as Thompson, and that Sedgwick is directly liable for aiding and abetting Zurich in its violations of the duty of good faith and fair dealing. ( Id. at 3). As for Thompson, Plaintiff alleges that she is personally liable for aiding and abetting Zurich in its violations of the duty of good faith and fair dealing. ( Id. at 4).

Plaintiff also alleges the following facts give rise to the bad faith claims: Defendants (1) failed to conduct a reasonable investigation; (2) failed to timely recognize and acknowledge Plaintiff's compensable injury; (3) failed to accept undisputed evidence regarding Plaintiff's workers' compensation claim; (4) denied the existence or extent of the injury without proper input; (5) created pretextual reason to deny payment; (6) engaged in an outcome-driven approach to Plaintiff's claim; (7) ignored and refused to consider information favorable to Plaintiff's claim; and (8) failed to ensure the industry's best practices were applied to Plaintiff's claim. ( Id. at 6-7).

Sedgwick and Thompson filed the pending Federal Rule of Civil Procedure ("Rule") 12(b)(6) Motion to Dismiss. (Doc. 29). Sedgwick and Thompson argue they should be dismissed from this lawsuit because Thompson's actions are the sole basis for Plaintiff's claims against Zurich, and she took those actions as an employee of Sedgwick, which is Zurich's agent. ( Id. at 4). Even if Zurich breached its duty of good faith and fair dealing via Thompson's actions, Sedgwick and Thompson argue, one actor performing a single set of actions cannot simultaneously form the basis for both primary and secondary liability. ( Id. ) In other words, Sedgwick and Thompson argue one cannot aid and abet one's self.

II. ANALYSIS

A. Federal Pleading Requirements

The Court may dismiss a complaint for failure to state a claim under Rule 12(b)(6) for two reasons: (1) lack of a cognizable legal theory; or (2) insufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). To survive a 12(b)(6) motion for failure to state a claim, a complaint must meet the requirements of Rule 8(a)(2), which requires a "short and plain statement of the claim showing that the pleader is entitled to relief, " so that the defendant has "fair notice of what the... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

Although a complaint attacked for failure to state a claim does not need detailed factual allegations, the pleader's obligation to provide the grounds for relief requires "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal citations omitted). Rule 8(a)(2) "requires a showing, ' rather than a blanket assertion, of entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirement of providing not only fair notice' of the nature of the claim, but also grounds' on which the claim rests." Id. (citing 5 C. Wright & A. Miller, Federal Practice and Procedure ยง 1202, pp. 94, 95 (3d ed. 2004)). Thus, Rule 8's pleading standard demands more than "an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555).

In deciding a motion to dismiss under Rule 12(b)(6), the Court must construe the facts alleged in the complaint in the light most favorable to the drafter of the complaint and the Court must accept all well-pleaded factual allegations as true. See Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). Nonetheless, the Court does not have to accept as true a ...


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