Romero v. Hartford Cas. Ins. Co.

FERNANDO ROMERO, doing business as FERNY'S ELECTRONICS, Plaintiff, v. HARTFORD CASUALTY INSURANCE COMPANY a foreign corporation, and JOHN DOE, Defendants.

1:16-cv-1335-RB-LF

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

August 3, 2017

MEMORANDUM OPINION AND ORDER

This matter comes before the Court on Plaintiff Fernando Romero's Opposed Motion to Amend/Correct the Complaint (Doc. 23) and Defendant Hartford Casualty Insurance Company's ("Hartford") Cross Motion for Judgment on the Pleadings (Doc. 26). Having reviewed the accompanying briefing and being otherwise fully advised, the Court will deny Plaintiff's Motion to Amend and grant in part and deny in part Defendant's Motion for Judgment on the Pleadings.

I. PROCEDURAL POSTURE

Plaintiff filed a Complaint against both the company that issued his insurance policy and an individual, identified as John Doe, who he alleges trespassed on his property while acting as Hartford's agent. Plaintiff seeks to recover for the losses he incurred after an armed robbery occurred at Ferny's Electronics on February 11, 2013. (Doc. 1-1.) Plaintiff claims that Hartford engaged in bad faith, unfair practices, and breach of contract for failing to act reasonably under the circumstances to conduct a timely and fair evaluation of his claim and failing to accept and pay Plaintiff's claim for coverage for the losses after charging and collecting premiums from him. Id.

Plaintiff initially brought suit in the New Mexico First Judicial District Court, County of Santa Fe, and Defendant Hartford removed the action to this Court on December 7, 2016. (Doc. 1.) On April 13, 2017, Plaintiff filed a motion to amend his complaint in order to identify the aforementioned John Doe as Wade Mascarenas, the claims contractor assigned to inspect Romero's property by Hartford. (Doc. 23.) On May 11, 2017, Defendant Hartford filed a cross motion to dismiss Plaintiff's claims for Count VI (Trespass), Count IV (Breach of Contract), and Count II (Unfair Practices Act) and opposed amendment of the Complaint on the basis that Plaintiff's trespass claim against Mr. Mascarenas is merely pretext for the purpose of defeating diversity jurisdiction and returning this action to state court. (Doc. 26.) Following extension, the parties filed their respective responses/replies and briefing was completed on July 10, 2017. (See Docs. 30, 32, 37, 38.)

II. PLAINTIFF'S FACTUAL ALLEGATIONS

A. Allegations Regarding Insurance Contract and Investigation of Claim

Plaintiff is a New Mexico resident who, while doing business as Ferny's Electronics, conducted business in Albuquerque, Bernalillo County, New Mexico. (Doc. 1-1 at 1.) Hartford, a non-resident insurer authorized to do business in the State of New Mexico, issued a Spectrum business insurance policy to Plaintiff Romero d/b/a Ferny's Electronics (policy number 34 SBA RV0470) that was effective May 4, 2012 through May 5, 2013. (Id. at 1-2.) During the effective term of the Insurance Policy, an armed robbery occurred at Ferny's Electronics on February 11, 2013. (Id. at 2.) After the armed robbery, Plaintiff was discovered with serious and extensive personal injuries to his brain and skull which required hospitalization and surgery at theUniversity of New Mexico Hospital. (Id.) As a result of these injuries, Plaintiff could no longer generate income from the electronic repair business. (Id. at 3.) Additionally, the robbery resulted in extensive damage to the building structure, as well as loss or damage to much of the merchandise available for sale. (Id.)

On May 1, 2013, Defendant Hartford notified Plaintiff that it was denying him coverage under the insurance policy for the injuries he sustained and advised him to forward additional information which might alter its coverage decision. (Id.) Thereafter, Plaintiff retained counsel and on March 3, 2014, notified Hartford of his intent to pursue claims under the Insurance Policy for damage to the building, personal property losses, and loss of business income, and provided documentation and estimates of the damage to the building and of the personal property losses as well as copies of tax return transcripts for 2008 through 2012 to demonstrate that he was unable to continue with his business. (Id.)

On April 4, 2014, Hartford, through a second claims adjuster, advised Plaintiff that the claim was delayed because estimates for damages to the building and supporting documentation for claimed personal property losses had not been received. (Id. at 3.) On May 6, 2014, Hartford again requested the documentation in support of the pending claims for damage to Ferny's Electronics, personal property loss, and loss of business income. (Id. at 4.) On October 3, 2014, at the request of Hartford, Plaintiff provided a personal property inventory and estimates in support of personal property loss; a structural damages form and estimates in support of structural damages; and a copy of the police report regarding the burglary of February 11, 2013. (Id.)

On November 17, 2014, Hartford notified Plaintiff that it had reassigned a third adjuster to handle the pending claims. (Id.) After a telephone conference on November 18, 2014, withrepresentatives for Mr. Romero and Ferny's Electronics, on January 13, 2015, Plaintiff provided Hartford with tax returns for 2012, and copies of sales receipts for December 2012 through January 2013, in support of the claim for loss of business income as requested by Hartford. (Id.) On February 12, 2015, Hartford requested that a completed Proof of Loss Sworn Statement be submitted and again requested a list of damaged and/or stolen property along with other previously provided information in support of the pending claims. (Id.) On March 30, 2015, Plaintiff again provided information in support of the pending claims for coverage and submitted the executed Proof of Loss Sworn Statement as requested by Hartford. (Id.) On April 10, 2015, Hartford again requested estimates in support of the damages to the building and indicated that a request had been made for inspection of the building. (Id. at 4-5.) On June 30, 2015, Plaintiff provided additional documentation in support of the pending claims to Hartford. Plaintiff did not receive a response from Hartford to the June 30, 2015 correspondence. (Id. at 5.) On July 30, 2015, Plaintiff provided another narrative account of the events leading to the pending claims and a list of the documentation submitted in support of such claims. (Id.) Plaintiff requested a value at which Hartford was willing to settle the pending claims. (Id.)

On July 30, 2015, Hartford advised Plaintiff that a fourth Hartford adjuster would now handle the claims. (Id.) Hartford indicated that the information provided on July 30, 2015 would be provided to the fourth adjuster. Id. On August 18, 2015, the fourth adjuster again requested, by telephone, information and documentation regarding the pending claims on behalf of Mr. Romero and Ferny's Electronics. (Id.) On September 8, 2015, Plaintiff provided an additional narrative of facts in support of the pending claims. (Id. at 6.) Yet again, Plaintiff gave the newest adjuster a complete file of all correspondence and documentation regarding the pending claims. (Id.) On September 8, 2015, Plaintiff requested documentation regarding the inspectionconducted solely by Hartford but received no response. (Id.) Also on September 8, 2015, Plaintiff notified Hartford that the failure to resolve the claims on behalf of Mr. Romero constituted violations of New Mexico law and demanded an amount to settle the pending claims. Plaintiff requested a response to the demand by September 18, 2015. (Id.)

On October 20, 2015, Hartford offered to resolve the claims regarding structural damage and the claims regarding the personal property. (Id.) Additionally, Hartford offered to resolve the loss of business income claim for a two-week period of restoration. (Id.) The total amount offered was approximately 18.75% of the initial demand. (Id.) On November 18, 2015, Plaintiff rejected the offer of settlement proffered by Hartford and demanded another amount to resolve all pending claims. (Id.) On December 2, 2015, Hartford offered to resolve the structural damage and personal property loss claims for an amount slightly more than originally claimed for those items. (Id.) Hartford offered to continue to negotiate the remaining claims. (Id.) On December 4, 2015, Plaintiff accepted the offer to resolve the structural damage and personal property loss claims. (Id. at 7.) This settlement expressly preserved the right to pursue the remaining claims. (Id.) On April 28, 2016, in response to ongoing discussions regarding the remaining claims, Plaintiff demanded an amount to resolve the claims for loss of business income, trespass, and violations of New Mexico law. (Id.) On June 10, 2016, after a telephone inquiry due to Hartford's failure to respond to the April 28, 2016 letter, Hartford offered to resolve the remaining claims on behalf of Mr. Romero for 6.25% of the prior demand. (Id.)

B. Allegations Regarding Trespass Claim and Motion to Amend

On April 14, 2015, Hartford notified Plaintiff that its agent and/or employee, claims adjuster, John Doe, had "driven by" Ferny's Electronics without the prior approval from or knowledge of a representative on behalf of Mr. Romero or Ferny's Electronics. (Doc. 1-1 at 5.)On June 30, 2015, Plaintiff requested information regarding the pending inspection indicated in the April 14, 2015 correspondence so a representative on behalf of Mr. Romero and Ferny's Electronics could be present at that time. (Id.) During an August 18, 2015 telephone conversation, the fourth adjuster indicated that Defendant John Doe conducted an inspection of Ferny's Electronics. (Id. at 5-6.) Hartford provided photographs that Defendant John Doe took during said inspection. (Id.) The photographs provided demonstrate that Defendant John Doe trespassed upon the...