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Centeno v. American Liberty Insurance Co.

United States District Court, D. Arizona

February 12, 2019

Jeanette Centeno, Plaintiff,
v.
American Liberty Insurance Company, et al., Defendants.

          ORDER

          honorable Susan M. Brnovich, United States District Judge.

         Defendants S&C Claims Services, Inc. and Randi Kerner filed a Motion to Dismiss All Claims Against Defendants S&C Claims Services and Randi Kerner pursuant to Fed. R. Civ. Pro. 12(b)(6) and/or 12(c). Oral argument was held on January 18, 2019. The Court has now considered the Motion (Doc. 16, “Mot.”), Response (Doc. 17, “Resp.”) and Reply (Doc. 20, “Reply”) along with arguments of counsel and relevant case law.

         I. BACKGROUND

         This case arises out of Plaintiff Jeanette Centeno's workers' compensation claim filed with American Liberty Insurance Company (“ALIC”). Plaintiff alleged to have tripped and injured her back on or about August 5, 2016 while providing services at a patient's house in the course of her employment. The claim was initially accepted by ALIC, but the acceptance was later rescinded and the claim was denied. ALIC alleged that the incidents did not occur on-the-job. Plaintiff initiated litigation before the Industrial Commission of Arizona (“ICA”), which ruled in Plaintiff's favor awarding medical and financial benefits.

         On April 6, 2018, Plaintiff initiated this action by filing a complaint against defendants ALIC, S&C Claims Services, Inc. (“S&C”), and Randi Kerner. (Doc. 1, the “Complaint”). Plaintiff claims that the ICA “retains jurisdiction to determine medical and disability benefits payable under the Arizona Workers' Compensation Act, ” but that jurisdiction of “general damages arising from the wrongful conduct of Defendants is wholly separate from the relief accorded” by the ICA. (Mot. at 6). In regard to the handling of her workers' compensation claim, Plaintiff alleges that the wrongful conduct of ALIC, S&C, and Kerner includes failing to conduct a reasonable investigation, failing to timely recognize Plaintiff's compensable injury, failing to accept undisputed medical evidence, denying the existence and/or extent of injury without input of competent individuals, creating pretextual reasons to deny and/or delay payment, ignoring and refusing to consider information favorable to Plaintiff, and failing to ensure that the industry's best practices were applied consistently. (Mot. at 5).

         Defendants S&C and Kerner now move to dismiss all claims against them. Plaintiff's first claim rests on the “breach of the duty of good faith and fair dealing” as to defendants ALIC and S&C. Plaintiff's second and third claims are for “aiding and abetting American Liberty's breach of duty of good faith & fair dealing” as to S&C and Kerner respectively. Plaintiff's fourth claim is for punitive damages.

         II. LEGAL STANDARD

         To survive a Rule 12(b)(6) motion for failure to state a claim, a complaint must meet the requirements of Rule 8(a)(2). Rule 8(a)(2) 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)). Dismissal under Rule 12(b)(6) “can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988).

         In ruling on a Rule 12(b)(6) motion to dismiss, the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). However, legal conclusions couched as factual allegations are not given a presumption of truthfulness, and “conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

         III. ANALYSIS

         a. Breach of the Duty of Good Faith and Fair Dealing

         Defendants allege that “S&C cannot be held liable for breach of the duty of good faith and fair dealing for the simple reason that S&C is not an insurance carrier, ” but is rather a “third party administrator.” (Mot. at 3-4). Defendants further contend that the Complaint “does not plead that S&C had any contractual relationship with Plaintiff[.]” (Mot. at 4) (emphasis in original).

         The duty of good faith and fair dealing is implied in every contract. Rawlings v. Apodaca, 726 P.2d 565, 569 (Ariz. 1986). “The essence of that duty is that neither party will act to impair the right of the other to receive the benefits which flow from their agreement or contractual relationship.” Id. A claim for breach of the duty of good faith and fair dealing requires a contractual relationship. Without a contract, there is no duty of good faith and fair dealing. See, e.g., Walter v. F.J. Simmons & Others, 818 P.2d 214, 222 (Ariz.Ct.App. 1991) (agent dismissed from bad faith claim “because he owed no contractual duty to act in good faith or deal fairly”).

         In this case, there is no contractual relationship between Plaintiff and Defendants S&C or Kerner. Plaintiff provided no case law or analysis to support this claim in her response (Doc. 17). Accordingly, Plaintiff's claim for breach of duty of good faith and fair dealing against S&C ...


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