Bacon v. State Auto Prop. & Cas. Ins. Co.

CARLTON F. BACON,Administrator of the Estate of Mikal U. Bacon, deceased, Plaintiff, v. STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY, Defendant.

1:20cv1007

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

June 1, 2021

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

This case comes before the undersigned United States Magistrate Judge for a recommendation on "Defendant's Motion to Dismiss Pursuant to Rule 12(b)(6) [of the Federal Rules of Civil Procedure (the 'Rules')]" (Docket Entry 11) (the "Dismissal Motion"). For the reasons that follow, the Court should grant the Dismissal Motion.

BACKGROUND

Alleging violations of North Carolina law, Carlton F. Bacon, as Administrator of the Estate of Mikal U. Bacon, (the "Plaintiff") filed suit in North Carolina state court against State Auto Property & Casualty Insurance Company (the "Defendant") for Defendant's alleged "bad faith claim investigating, adjusting, appraising and negotiating, in addition to unfair and deceptive conduct" (Docket Entry 3 (the "Complaint"), ¶ 1). (See generally Docket Entry 3.) After removing this action under the Court's diversity jurisdiction (see Docket Entry 1 at 2-3),¹ Defendant moved to dismiss Plaintiff's Complaint on the grounds that "it fails to state claims upon which relief can be granted" (Docket Entry 11 at 1). Plaintiff opposes the Dismissal Motion, contending that he "plead over 130 specific facts in his Complaint this Court must accept as true," and that, "[c]onstruing these facts in Plaintiff's favor, this Court should deny [the Dismissal M]otion." (Docket Entry 13 at 4.) According to the Complaint:

At all relevant times, Plaintiff possessed an insurance contract with Defendant that provided combined uninsured and underinsured motorist ("UIM") coverage (the "State Auto Policy"). (Docket Entry 3, ¶¶ 2, 32, 41, 45, 46.) "Plaintiff's decedent and natural son, Mikal [U. Bacon ('Mikal')]" (id., ¶ 3), "liv[ed] with [Plaintiff]" (id., ¶ 4), and "was a named insured driver on [the State Auto P]olicy and was an insured resident relative" (id., ¶ 3). "Plaintiff's State Auto Policy included UIM coverage available to himself and Mikal in the amount of $500,000.00 per person and $500,000.00 per accident." (Id., ¶ 48.) "Plaintiff voluntarily paid an extra premium for the UIM coverage on the State Auto Policy so that Plaintiff and his son would have the safeguardof additional coverage in the event he or his son were injured or killed by someone with insufficient liability coverage." (Id., ¶ 49.)

Mikal worked as a third-shift delivery truck driver for Ceva Logistics U.S., Inc. ("Ceva Logistics"). (Id., ¶¶ 8, 51.) "During the early hours of June 17, 2017, Mikal was on the job . . . making deliveries throughout southeastern North Carolina." (Id., ¶ 51.) "Around 4:40 a.m., Mikal was driving a 2016 Freightliner three-axle single unit box truck in an easterly direction on U.S. Highway 74 ('U.S. 74') approaching Chadbourn in Columbus County, North Carolina." (Id., ¶ 52.) "This stretch of U.S. 74 is in a rural farming area that is completely unlit and very dark between four-and five o'clock in the morning." (Id., ¶ 53.) "The speed limit on this stretch of U.S. 74 is 70 miles per hour, but Mikal was driving less than the speed limit at 65 miles per hour as he approached Chadbourn[]." (Id., ¶ 54.) "Prior to Mikal's approach to Chadbourn, Michael Rice [('Rice')] parked his black 2008 Chevrolet sport utility vehicle halfway in the travel lane in which Mikal was traveling" (id., ¶ 55) even though "there was nothing mechanically defective with [his] vehicle, and [Rice] had not run out of gas" (id., ¶ 58). "Rice parked his vehicle in the dark in Mikal's travel lane without any lights or hazard indicators." (Id., ¶ 56.) "Rice and his female companion left the vehicle to urinate in the woods." (Id., ¶ 57.)

"At around 4:40 a.m., Mikal suddenly came upon Mr. Rice's unlit vehicle obstructing his lane, was not able to avoid it, causing Mikal to lose control of his box truck and run off the roadway." (Id., ¶ 59.) "Mikal's box truck hit a ditch and tree off the road to the right, causing the truck to turn over on its passenger side." (Id., ¶ 60.) Mikal managed to climb through one of the truck windows, but "collapsed on the side of the trailer, complaining of difficulty breathing." (Id., ¶ 62.) Shortly thereafter, Mikal died from "massive head and chest trauma from the motor vehicle accident" (id., ¶ 67) as EMS officials "were preparing to transport him to the hospital" (id., ¶ 66).

That same morning, "the North Carolina State Highway Patrol charged Mr. Rice with misdemeanor death by vehicle." (Id., ¶ 68.) Rice fled North Carolina, leading to issuance of a warrant for his arrest, which remained active as of the filing of the Complaint. (Id., ¶¶ 69-70.) The North Carolina Highway Patrol investigated the accident and produced a report in early July 2017. (See id., ¶ 71.) The police report attributed no contributing circumstances to Mikal, but noted that, per one witness, Rice and his companion smelled strongly of alcohol. (See id., ¶¶ 72-73.) Within days after the accident, "Ceva Logistics opened a Workers' CompensationClaim, providing benefits based on Mikal's income in the year preceding his death of over $48,000.00." (Id., ¶ 74.)²

At the time of his death at age 39 (id., ¶ 11), Mikal financially supported his minor daughters, aged 12 and 7 (id., ¶ 75). "Plaintiff sought counsel for assistance with the liability and UIM claims for the benefit of his grandchildren, Mikal's two daughters." (Id., ¶ 76.) "Rice had Thirty Thousand No/100 dollars ($30,000.00) of liability insurance coverage through a Progressive Insurance affiliate ('Progressive'), at the time of the collision." (Id., ¶ 77.) "At the time of Mikal's injuries and subsequent death, he had his own insurance policy with State Farm Mutual Insurance Company ('State Farm'), and he duly paid for UIM benefits of $50,000.00 per person." (Id., ¶ 79.) As noted, Mikal also "was a named insured and resident relative insured on Plaintiff's [State Auto Policy], for which Plaintiff duly paid premiums for UIM benefits of $500,000.00 per person." (Id., ¶ 80.) On August 28, 2017, "Plaintiff's counsel opened up claims and sent letters of representation to Progressive, State Farm and Defendant." (Id., ¶ 81.) "Progressive and State Farm evaluated and resolved theclaims promptly, reasonably and good faith" (id., ¶ 82), offering on October 4, 2017, and October 16, 2017, to tender their $30,000 and $50,000 policy limits, respectively (id., ¶¶ 85-86). "By contrast, Defendant [] sought, from the beginning of the claim, to deny liability." (Id., ¶ 83.)

More specifically, Defendant pursued a contributory negligence defense for the next two and a half years. (See generally id., ¶¶ 83-155.) During this period, Defendant twice sought to inspect Mikal's truck (see id., ¶¶ 89, 104), repeatedly sought records, including cell phone records, Mikal's employment records, ten years of Mikal's medical records, Mikal's June 2017 driving/travel log, and Ceva Logistics's driver safety protocol documents (see, e.g., id., ¶¶ 98, 104), as well as various law enforcement records relevant to the accident (see, e.g., ¶¶ 101, 104, 112), and refused to negotiate, notwithstanding Defendant's counsel's requests for authority to negotiate (see, e.g., id., ¶¶ 141, 158). "On December 5, 2018, Plaintiff filed a wrongful death complaint with a demand for arbitration and request for a stay of the civil action pending arbitration." (Id., ¶ 109.) "Plaintiff chose arbitration to resolve the claim faster than court and because it is allowed in the UIM policy drafted by Defendant." (Id., ¶ 110.) "On February 15, 2019, Defendant [] answered Plaintiff's complaint, alleging contributory negligence and claiming that liability coverage must first be proven to be inadequate, even though Defendant [] wasalready aware that liability carrier Progressive already offered its minimum [sic] limits coverage and UIM carrier State Farm had offered its UIM policy limits." (Id., ¶ 113.)

"On February 26, 2019, Defendant['s outside] counsel told Plaintiff's counsel that he knew that Progressive and State Farm wanted out of the case, but [Defendant's] adjuster would not resolve the case unless the contributory negligence defense becomes impossible to maintain." (Id., ¶ 114.) "During the same conversation on February 26, 2019, Defendant['s outside] counsel stated that he understood that Rice left his vehicle halfway in the roadway, but they were still wanting phone records, employment records and the law enforcement file." (Id., ¶ 115.) "Defendant['s] insistence on obtaining phone records, employment records and the law enforcement file were tactics [sic] intended to further delay payment of UIM benefits." (Id., ¶ 117.)

In March 2019, Plaintiff's counsel obtained, and provided to Defendant's counsel, pictures from the investigating Highway Patrol officer, including pictures of "the black Chevy Equinox that Mr. Rice left in the roadway" (id., ¶ 120), as well as the Highway Patrol "Fatal Packet" (id., ¶ 121). (Id., ¶¶ 120-21.) This packet contained more details from the investigation, including that (i) Rice admitted smoking marijuana and drinking alcohol prior to the accident, and smelled strongly of both substances when speaking with the officer at the scene of the accident, (ii) Rice's "[b]lackvehicle [was] sitting half way in [the] road['s] east bound lane," (iii) Rice stopped his vehicle to urinate, (iv) "[t]here were no mechanical problems with" the vehicle, (v) Rice indicated that he "was heading from Myrtle Beach to Boston" following a night of drinking to celebrate his birthday but he "was driving eastbound on U.S. 74 away from Interstate 95 and back toward the coast," and (vi) Rice and his girlfriend, a passenger in his vehicle, each maintained an elevated blood alcohol concentration (a "BAC") for multiple hours after the...