Butters v. Travelers Indem. Co.

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VINCENT D. BUTTERS, Plaintiff, v. TRAVELERS INDEMNITY COMPANY, Defendant.

No. 3:22-cv-00726-SB

United States District Court, D. Oregon

January 23, 2023

FINDINGS AND RECOMMENDATION

HON STACIE F. BECKERMAN UNITED STATES MAGISTRATE JUDGE

There are three motions before the Court in this insurance case. First, defendant Travelers Indemnity Company (“Defendant”) moves to dismiss plaintiff Vincent Butters's (“Plaintiff”) original complaint or stay this proceeding pending the completion of an insurance claim investigation. Second, Defendant moves to dismiss and/or strike Plaintiff's first amended complaint (“FAC”), pursuant to Federal Rules of Civil Procedure (“Rule”) 12(b)(6) and 12(f). Finally Plaintiff moves for leave to file a second amended complaint (“SAC”), pursuant to Rule 15(a)(2).

The Court has jurisdiction over this matter pursuant to 28 U.S.C § 1332(a)(1), but not all parties have consented to the jurisdiction of a magistrate judge under 28 U.S.C. § 636. For the reasons explained below, the Court recommends that the district judge deny Defendant's initial motion to dismiss or stay, grant Plaintiff's motion for leave to amend, and grant in part and deny in part Defendant's cross-motion to dismiss.

BACKGROUND^[1]

I. THE POLICY

This case relates to an insurance claim that Plaintiff filed for fire damage to his shed, home, and personal property. (See Notice Removal Ex. A (“Compl.”) at 1 -19, ECF No. 1-1, attaching Plaintiff's original complaint). The Travelers Home and Marine Insurance Company (“Travelers Home”), not Defendant, issued the relevant homeowner's policy (the “Policy”) to Plaintiff and his husband.^[2] (See Decl. David Ryan (“Ryan Decl.”) Supp. Def.'s Mot. Dismiss Ex. B at 1-54, ECF No. 6-2; Surresponse Def.'s Mot. Dismiss (“Pl.'s Surresponse”) Ex. 4 at 2, ECF No. 15-4.) The Policy covered a twelve-month period beginning on June 19, 2021. (Ryan Decl. Ex. B at 1.)

A. Coverage

The Policy's coverage included: (1) “Coverage A - Dwelling,” with limits of $162,000; (2) “Coverage B - Other Structures,” with limits of $16,200; (3) “Coverage C - Personal Property,” with limits of $117,509; and (4) “Coverage D - Loss of Use,” with limits of $50,100. (Id. at 2, 7, 11, 13.) The Policy also included an “Additional Coverages” provision for certain expenses, such as the “reasonable expense” for debris removal. (Id. at 13) (bold typeface omitted). The Additional Coverages provision stated that any debris removal expense is “included in the limit of liability that applies to the damaged property,” and “[i]f the amount to be paid for the actual damage to property plus the debris removal expense is more than the limit of liability for the damaged property, an additional 5% of that limit is available for such expense.” (Id. at 5.)

B. Conditions

In addition to these coverages, the Policy included a “Conditions” section, which addressed, among other things, an insured's “[d]uties after loss.” (Id. at 22) (bold typeface omitted). The Policy's duties after loss provision explained that “[i]n case of a loss to covered property, [the insurer] ha[s] no duty to provide coverage under th[e] policy if the failure to comply with the . . . duties [described herein] is prejudicial to [the insurer].” (Id.) Those duties included cooperating with the insurer in the investigation of a claim, preparing an inventory of damaged personal property and attaching all bills, receipts, and related documents, submitting a signed and sworn proof of loss within sixty days of the insurer's request, and showing the damaged property and providing requested documents as often as the insurer reasonably requires. (Id.)

The Conditions section also included a provision addressing any suit against the insurer. This provision provided that “[n]o action can be brought against [the insurer] unless there has been full compliance with all of the terms under Section I of this policy and the action is started within two years after the date of loss.” (Id. at 24.) The duties after loss provision is part of Section I. (Id. at 22.)

II. CLAIM PROCESS

On January 24, 2022, a faulty surge protector caused a fire to break out in Plaintiff's shed and eventually spread to his home. (Compl. ¶¶ 9, 65-67; FAC ¶ 3.5, ECF No. 11.) The fire destroyed Plaintiff's shed, resulted in the total constructive loss of Plaintiff's home, and caused extensive personal property damage. (See Compl. ¶¶ 9, 13, 15, 24; FAC ¶ 3.6; Ryan Decl. Ex. A at 1-11.)

After completing an investigation into the cause of the fire “by the end of the second week in February” 2022 (i.e., on or about February 11 or February 12, 2022), a fire investigator “turned over the scene and gave the adjusters the go ahead to proceed with [insurance] claims.” (Compl. ¶¶ 65, 68.) On February 15, 2022, Raquel Cruz (“Cruz”), an insurance claims representative, sent Plaintiff a “loss inventory spreadsheet to list all items lost in regard[] to the claim.”^[3] (Compl. ¶ 12; FAC ¶ 3.6.) One week later, on February 22, 2022, Cruz sent Plaintiff's husband $14,397.72 to cover expenses related to debris removal, along with “a memo stating [the payment] was for ‘Personal Property Nonsalvage Efforts.'” (Compl. ¶¶ 13, 41; FAC ¶ 3.6; see also Pl.'s Surresponse Ex. 9 at 3, reflecting that the debris removal portion amounted to $14,397.72).

The following week, on March 4, 2022, Plaintiff and his husband received $224,235.70 from Graves, who informed Plaintiff and his husband that they were “free to repair or demo and rebuild the property.” (Compl. ¶ 15; FAC ¶ 3.7.) On March 14, 2022, Plaintiff emailed Cruz the “completed version of [his] loss inventory spreadsheet,” and “a copy of [his] retail transactions from [his] primary banking account[.]” (Compl. ¶¶ 18, 41; FAC ¶ 3.8; Ryan Decl. Ex. A at 1-11; Pl.'s Surresponse Exs. 5-6; see also id. FAC ¶ 3.17; Pl.'s Surresponse Exs. 7-8, attaching supplemental purchasing histories Plaintiff sent one month later). The spreadsheet included 865 personal property items, including 565 grouped under the “Shed/Outdoor[]” area and many with an estimated condition of “[a]bove [a]verage.” (Ryan Decl. Ex. A at 1 -7, 11; Pl.'s Surresponse Ex. 5 at 1-4, 6.)

Cruz responded to Plaintiff's email on the following morning, and thanked him for submitting “the document and the esx.”^[4] (Id. Ex. 2 at 1; Compl. ¶ 19; FAC ¶ 3.9.) Cruz explained that Plaintiff's spreadsheet grouped items in “shed/outdoor areas and one deck area” but she “need[ed] to know specifically which items were in the shed” or “[w]hich grouping should [she] look to find these specific items.” (Pl.'s Surresponse Ex. 2 at 1.) Cruz also explained that to “validate” the “above average” condition of “many items,” she “would need to see photos supporting that the items were in above average condition prior to the loss.” (Id.) Cruz, however, added that if Plaintiff did not have or could not locate photos of the items or interior photos, she “would just use the default [condition] of ‘average,'” which could “always [be] amend[ed]” if, for example, Plaintiffs “locate[d] photos,” and “may be a m[oot] point” if they “hit limits.” (Id.) After briefly addressing issues related to artwork, Cruz concluded by again “not[ing] that it appear[ed] [that the] policy limits were reached/max[ed] so any amendments will be minimal.” (Id.)

Plaintiff sent a follow-up email to Cruz two days later, on March 17, 2022. (Compl. ¶ 22; FAC ¶ 3.12; Pl.'s Surresponse Ex. 2 at 1.) Plaintiff explained that he did not have photos because the fire destroyed “every device that would be used to take to store pictures on,” he had not “exaggerated, lied, or omitted anything,” he had “freely given access to anyone at [the insurer] who ha[d] requested it,” and he could not “provide a truer attestation” of his loss inventory given that his “items in the shed usually moved from inside the shed to a storage box directly outside the shed or under the porch” and a few items he specifically identified were “constantly in the shed.” (Id.)

Cruz responded to Plaintiff's follow-up email later that same day, March 17, 2022. (Compl. ¶ 23; FAC ¶ 3.13; Pl.'s Surresponse Ex. 2 at 1.) After thanking Plaintiff for following up, Cruz asked Plaintiff to “[l]et her know when the downed debris of the dwelling [was] removed from the living [and] dining room so [she could] walk the residence with [him] and validate the items that [he] claimed on [his] nonsalvage [inventory] list,” and to “please pause any contents debris removal effort until [she] had an opportunity to walk the site with [him].” (Id.)

Cruz sent additional correspondence to Plaintiff four days later, on March 21, 2022. (Compl. ¶ 26; FAC ¶ 3.15; Pl.'s Surresponse Ex. 4.) Cruz's correspondence enclosed a “Sworn Statement in Proof of Loss,” which she asked Plaintiff to complete, sign before a notary, and return by June 20, 2022. (Id. Ex. 4 at 1.) Cruz also explained that she needed Plaintiff to “provide a written statement detailing the facts and damages associated with this loss,” and to “[i]nclude original receipts, invoices, estimates or other documentation to support [his] claim.” (Id.)

The next month, on April 11, 2022, Plaintiff received a letter from a claims manager stating that his claim was still under investigation. (Compl. ¶ 31.) Four days later, on April 15, 2022, Plaintiff submitted additional purchasing records from “Amazon and Best Buy that aligned” with and “covered about 60%” of his spreadsheet. (FAC ¶ 3.17; Pl.'s Surresponse Exs. 7-8.) Plaintiff, however, never submitted a signed Sworn Statement in Proof of Loss or complied with Cruz's request for a walkthrough. (See Compl. ¶ 41; FAC ¶ 5.5, noting these outstanding requests.)

On April 27, 2022, Plaintiff received a partial payment of $19,027.00 for...