Fazio v. James River Ins. co.

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MICHAEL FAZIO Plaintiff, v. JAMES RIVER INSURANCE COMPANY, et al., Defendants.

CIVIL No. 22-1186 (MEL)

United States District Court, D. Puerto Rico

September 30, 2022

OPINION & ORDER

Marcos E. López, U.S. Magistrate Judge.

I. Procedural & Factual Background

On September 29, 2020, Plaintiff Mr. Michael Fazio (“Plaintiff” or “Mr. Fazio”) filed a second amended complaint against James River Insurance Company (“James River” or “Defendant”) and four other co-defendants alleging that while being transported in a vehicle which Plaintiff had hired through the ride-sharing application Uber, the vehicle in which Plaintiff was a passenger was struck from behind while stopped at a traffic light (“The 2020 lawsuit”). ECF No. 71 at 3-6 in Case No. 20-1074. As a result of this accident, Plaintiff alleges that he suffered “bodily injuries, pain, suffering mental anguish and other damages” entitling him to compensation in excess of one million dollars ($1,000,000). ECF No. 71 at 6 in Case No. 201074. In the 2020 lawsuit Plaintiff further contends that James River breached the provisions of the uninsured motorist coverage as part of a policy issued to Uber “for the benefit of Uber drivers and passengers” by denying coverage and by failing to compensate Plaintiff for his injuries. ECF No. 71 at 5, 7 in Case No. 20-1074. In the lawsuit filed in 2020, Plaintiff also brought four additional causes of action against James River alone: breach of contract, contractual and tortious breach of the implied covenant of good faith and fair dealing, bad faith, and unfair claim adjustment practices. ECF No. 71 at 7-12 in Case No. 20-1074.

On June 22, 2022, Plaintiff filed an amended complaint in a second lawsuit against James River alone, alleging violations of Article II, Section 8 of the Constitution of the Commonwealth of Puerto Rico; violations of the Puerto Rico Libel and Slander Act of 1902, 32 L.P.R.A. §§ 3141-3149; and violations of the general tort provisions of Puerto Rico Civil Code Articles 1536 and 1538, 21 L.P.R.A. §§ 10801 and 10803 (“the 2022 lawsuit”). ECF No. 26 at 1 in Case No. 22-1186. In the 2022 lawsuit, Plaintiff alleges that James River defamed him in the course of litigating the 2020 lawsuit. ECF No. 26 at 1 in Case No. 22-1186.

Now pending before the court is a motion to dismiss filed by James River seeking the dismissal of Plaintiff's amended complaint in the 2022 lawsuit. ECF No. 33 in Case No. 221186. James River moves to dismiss Plaintiff's amended complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”). ECF No. 30 at 6 in Case No. 22-1186. James River also moves to dismiss Plaintiff's amended complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(6) for Plaintiff having failed to allege facts which establish that the amount in controversy exceeds $75,000. ECF No. 30 at 6 in Case No. 22-1186. James River also requests that the court sanction the Plaintiff under Rule 44.1 of the Puerto Rico Rules of Civil Procedure for the filing of a complaint which is “frivolous and without merit[.]” ECF No. 30 at 31 in Case No. 22-1186. Plaintiff filed a response in opposition to the motion to dismiss. ECF No. 33 in Case No. 22-1186.

II. Factual Allegations

A. First Cause of Action: James River's July 13, 2021 Accusation of Fraud

In the amended complaint of the 2022 lawsuit, Plaintiff asserts three causes of action. The first two causes of action regard a letter sent by James River to the Puerto Rico Insurance Commissioner on two separate occasions. Plaintiff recounts that on June 28, 2021 he filed a “Form for Prior Notice for Bringing Civil Action Under Section 27.164 of the Insurance Code of Puerto Rico” with the Office of the Commissioner of Insurance of Puerto Rico in order to “perfect his right to pursue civil remedies against James River” in the original 2020 case. ECF Nos. 26 at 6; 30-1 in Case No. 22-1186. A little more than two weeks later, on July 13, 2021 James River sent a letter to the Commissioner of Insurance of Puerto Rico in response to Plaintiff's prior notice which was cited to and incorporated into the Plaintiff's amended complaint in the present case. ECF Nos. 26 at 6; 30-2 in Case No. 22-1186. In the letter, James River wrote that it “has a well-founded reason to believe that the Claimant [Plaintiff] violated Art. 27.180 of the Insurance Code of Puerto Rico by requesting compensation for damages that were pre-existing or degenerative or caused as a result of the treatment of the other conditions suffered by the Claimant prior to the motor vehicle accident.” ECF Nos. 26 at 7; 30-2 at 1-2, 7-8 in in Case No. 22-1186. In the same letter, Plaintiff also notes that James River stated that it was “looking into the appropriateness of requesting an investigation against [Plaintiff], pursuant to Art. 27.200 of the Insurance Code.” ECF Nos. 26 at 9; 30-2 at 6, 12 in Case No. 22-1186. Plaintiff alleges that because insurance fraud is a felony under Art. 27.180 of the Puerto Rico Insurance Code, James River had “maliciously and negligently” accused Plaintiff of fraud which constituted defamatory libel “for the purpose of wilfully [sic] injuring and damaging” Plaintiff. ECF No. 26 at 6-10 in Case No. 22-1186.

B. Second Cause of Action: James River's August 27, 2021 Accusation of Fraud

Plaintiff's second cause of action for defamatory libel arises from Plaintiff's allegation that on August 27, 2021 James River “falsely, maliciously and negligently republished its letter dated July 13, 2021” which contains allegedly libelous and defamatory accusations of insurance fraud, when James River included the letter as an attachment to email and written correspondence with the Investigations Division of the Office of the Insurance Commissioner of Puerto Rico. ECF No. 30 at 10 in Case No. 22-1186; ECF No. 215-9 at 1-3, 6-7 in Case No. 201074. The correspondence containing the alleged second republication was cited and incorporated into Plaintiff's amended complaint. ECF No. 215-9 at 1-3, 6-7 in Case No. 201074.

C. Third Cause of Action: James River's Emailed Accusation of Extortion

Finally, in Plaintiff's third cause of action, Plaintiff alleges that on November 3, 2021, Plaintiff sent to James River a settlement demand via email. ECF No. 26 at 10 in Case No. 221186. In an emailed response, which was cited and incorporated into the amended complaint in the present case, Plaintiff alleges that James River replied that “this grossly exaggerated settlement demand shows nothing from your client's part to want to settle this action, and it seems to us [James River] a transparent attempt [to] try to extort the policy limits from our client for alleged damages that are not justified and that your client will not be able to establish at trial . . . .” ECF No. 26 at 10-11 in Case No. 22-1186; ECF No. 201-2 in Case No. 20-1074. Plaintiff alleges that by using the word “extort” James River committed defamatory libel by accusing Plaintiff of having committed felony extortion as defined by the Penal Code of Puerto Rico 33 L.P.R.A. § 4828. ECF No. 26 at 10-11 in Case No. 22-1186.

III. Analysis

A. Legal Framework of the Substantive Law

Under Puerto Rico Law, protection against defamation derives from Article II, Section 8 of the Constitution of the Commonwealth of Puerto Rico, and “parallel actions for defamation under the Libel and Slander Act of 1902, 32 L.P.R.A. §§ 3141-3149 (1990),” and Article 1536 of the Puerto Rico Civil Code, 31 L.P.R.A. § 5311.^[1] Gierbolini Rosa v. Banco Popular de Puerto Rico, 930 F.Supp. 712, 717 (D.P.R. 1996), aff'd, 121 F.3d 695 (1st Cir. 1997); Porto y Siurano v. Bentley P.R., Inc., 132 P.R. Dec. 331, 343 (1992). In the Libel and Slander Act of 1902, Puerto Rico “codified the basic features of the Anglo-Saxon common law governing claims of defamation[.]” Gierbolini Rosa, 930 F.Supp. at 717.

“Claims for defamation encompass both libel and slander.” Díaz v. Gazmey Santiago, 2020 WL 1042041, at *2 (D.P.R. Mar. 3, 2020). “Libel is the malicious defamation of a person made public by writing, printing, . . . or other mechanical mode of publication tending to subject him to public hatred or contempt, or to deprive him of the benefit of public confidence and social intercourse, or to injure him in his business, or in any other way to throw discredit, contempt or dishonor upon him ....” P.R. Laws Ann. tit. 32 § 3142. Slander, in contrast, is a “false and unprivileged publication other than libel, which imputes to any person the commission of a crime or tends directly to injure him in respect to his office, profession, trade or business, or which by natural consequences causes actual damages.” 32 L.P.R.A. § 3143. For a claim of libel to prosper under Puerto Rico law, “a plaintiff must . . . prove: (1) that the information is false; (2) that he or she suffered real damages; and (3) that in the case of a private figure, the publication was negligently made.” González Pérez v. Gómez Águila, 312 F.Supp.2d 161, 173 (D.P.R. 2004); Comité Fiestas De La Calle San Sebastián, Inc. v. Cruz, 207 F.Supp.3d 129, 147 (D.P.R. 2016); Torres Silva v. El Mundo, Inc., 106 P.R. Dec. 415, 599 (1977).

B. Rule 12(b)(6) Motion Standard

James River moves to dismiss all three of Plaintiff's causes of action under Rule 12(b)(6). A defendant may move to dismiss an action pursuant to Rule 12(b)(6) for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When considering a motion to dismiss under Rule 12(b)(6), the court must limit its focus to the allegations of the complaint and “accept as true ‘all well-pleaded factual averments and indulg[e] all reasonable inferences in ...