Suber v. Liberty Mut. Ins. Grp.

650 F.Supp.3d 282

Eric SUBER et al., on their own behalf and on behalf of all others similarly situated v. LIBERTY MUTUAL INSURANCE GROUP et al.

CIVIL ACTION NO. 21-4750

United States District Court, E.D. Pennsylvania

Signed March 30, 2022

Kevin William Fay,Kenneth J. Grunfeld,Golomb Spirt Grunfeld PC,Philadelphia, PA,for Eric Suber, Mary Lynne Forrey-Suber.

Tiffany L. Powers,Elizabeth H. Helmer,Alston & Bird LLP,Atlanta, GA,Christopher J. Rubinate,Bennett, Bricklin & Saltzburg, LLC,Philadelphia, PA,for Liberty Mutual Insurance Company, LM General Insurance Company.

MEMORANDUM

McHUGH, United States District Judge

This is an action seeking class relief related to the denial of auto insurance claims subject to an exclusion related to racing events. Defendants Liberty Mutual Insurance Company, Liberty Mutual Group,¹ and Safeco Insurance Company ("Moving Defendants")² move to dismiss the Complaint. They contend that the Court lacks subject matter jurisdiction under Rule 12(b)(1) and personal jurisdiction under Rule 12(b)(2). Alternatively, they argue that the Court lacks subject matter jurisdiction over the nationwide class claims. For the reasons below, I conclude that the Court does not have personal jurisdiction over two of the Moving Defendants, but that Plaintiffs may otherwise move forward with their claims against Liberty Mutual Insurance Company and LM General.³

I. Background

Plaintiffs Eric Suber and Mary Lynne Forrey-Suber filed a complaint seeking individual and class relief after their auto insurance claims were denied for an accident involving Mr. Suber's 2021 Porsche 718. LM General Insurance Company ("LM General") concedes that it issued the auto insurance policy in question. Answer ¶ 18, ECF 12. According to letters submitted with the Complaint from agents of LM General and its parent company, Liberty Mutual Insurance Company ("LMIC"), coverage was denied because the accident was subject to an exclusion for losses that occur when the vehicle is being used for "a. competing in; or b. practicing or preparing for any organized racing, speed, demolition, stunt or performance contest or related activity whether or not for pay." Compl. Ex. E, ECF 1-5; Ex. G, ECF 1-7. Plaintiffs contend that participation in certain programs where individuals receive some classroom instruction and then are permitted to drive at high speeds on closed racetracks, which Plaintiffs define as "High-Performance Driving Education" courses, should not be subject to this exclusion because it is not a racing contest nor is it practice for a racing contest. Compl. ¶¶ 2-6. On the basis of this denial, Plaintiffs bring a class action alleging an illegal scheme to systematically deny otherwise eligible claims from accidents arising at High-Performance Driving Education courses. Compl. ¶¶ 6-9. Plaintiffs allege a breach of contract claim (Count I), violations of the Pennsylvania UTPCPL and other state consumer protection statutes (Count II), assert a bad faith claim (Count III), and seek a declaratory judgment as to the scope of the exclusion (Count IV).

In addition to filing suit against carrier LM General, the Subers have also filed suit against the parent company LMIC; the holding company which owns LMIC, Liberty Mutual Group Inc. ("LMG"); and a sister insurance company, also owned under the LMG/LMIC umbrella, Safeco Insurance Company of America ("Safeco"). These three Defendants all joined the Motion to Dismiss. Regarding subject matter jurisdiction, Moving Defendants argue that Plaintiff is unable to establish causation because they did not issue the relevant policy and as a matter of law cannot be held liable for policy-related injuries. Def. Br. at 4-8, ECF 11-1. They also argue that Pennsylvania Plaintiffs lack standing to bring claims on behalf of a nationwide class. Id. at 8-10. Finally, they argue that the Court lacks personal jurisdiction over the Moving Defendants because they are foreign corporations that are not subject to the Court's general or specific jurisdiction because they are not "at home" here and because Plaintiffs' claims do not arise out of Defendants' contacts with Pennsylvania. Id. at 10-14.

Plaintiffs filed responses to the motion, where they point to various correspondence as well as a website to suggest that the individual Moving Defendants had some involvement with the denial of their claims such that dismissal would be inappropriate. Pltfs. LMIC Resp., ECF 20; Pltfs. Safeco Resp., ECF 21; Pltfs. LMG Resp., ECF 22.⁴ With respect to the nationwide class issue, Plaintiffs argue that it would be inappropriate to make a class standing determination prior to a class certification motion. Pltfs. LMIC Resp. at 13-16; Pltfs. Safeco Resp. at 12-15; Pltfs. LMG Resp. at 11-14.

II. Legal Standards

A challenge to subject matter jurisdiction under Rule 12(b)(1) may be either a facial or a factual attack. A facial challenge contests "subject matter jurisdiction without disputing the facts alleged in the complaint, and it requires the court to consider the allegations of the complaint as true." Davis v. Wells Fargo, 824 F.3d 333, 346 (3d Cir. 2016) (cleaned up). Where "a factual challenge, attacks the factual allegations underlying the complaint's assertion of jurisdiction, either through the filing of an answer or "otherwise present[ing] competing facts." " Id. (quoting Constitution Party of Pa. v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014)). The nature of a factual challenge allows "a court [to] weigh and consider evidence outside the pleadings." Constitution Party of Pa., 757 F.3d at 358 (cleaned up). When a factual challenge is made, "the plaintiff will have the burden of proof that jurisdiction does in fact exist," and the court "is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). "[N]o presumptive truthfulness attaches to [the] plaintiff's allegations" in a factual challenge. Id.

When a defendant has raised a challenge to personal jurisdiction pursuant to Rule 12(b)(2), the burden shifts to the plaintiff to establish the court's jurisdiction over that defendant. Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004). Because I am not holding an evidentiary hearing, Plaintiff need only establish a prima facie prima facie case of personal jurisdiction. O'Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 316 (3d Cir. 2007). To meet that standard, Plaintiff must demonstrate "with reasonable particularity sufficient contacts between the defendant and the forum state," Mellon Bank (E.) PSFS, Nat. Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992), with the Court "required to accept the plaintiff's allegations as true, and . . . to construe disputed facts in favor of the plaintiff." Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 457 (3d Cir. 2003).

III. Discussion

A. Defendants' Causation Arguments Are Improperly Raised Under Rule 12(b)(1)

Moving Defendants, none of which directly issued Plaintiffs' policy, argue that because they are not the issuing carriers for Plaintiffs' policy, they could not have caused Plaintiffs' injuries with the result that the Plaintiff lack standing to sue them for the denial of coverage. This argument suffers from a conceptual flaw. "An analysis of standing generally focuses on whether the plaintiff is the right party to bring particular claims, not on whether the plaintiff has sued the right party. The latter question goes not to standing and jurisdiction but to the merits of the claims themselves." Davis v. Wells Fargo, 824 F.3d 333, 338 (3d Cir. 2016) (emphasis in original). In Davis, the Third Circuit reversed a district court that granted a motion to dismiss for lack of subject matter jurisdiction where the contention was that the plaintiff improperly sued the parent company of plaintiff's subsidiary insurance carrier. Id. at 346. The Court of Appeals observed that the real gist of the motion to dismiss centered on a merits question: whether the plaintiff's "claims against [parent defendant] are actually without merit because [parent defendant] has done nothing wrong." Id. at 349. It concluded that to address the argument as a jurisdictional question improperly "raises both the factual and legal burden on the plaintiff." Id. Such a motion is properly brought pursuant to Rule 12(b)(6) for failure to state a claim, which Defendants have not done here. For purposes of Rule 12(b)(1), Plaintiffs have alleged injury, causation, and remedy in that they were denied coverage, they were monetarily injured by that denial, and damages would constitute a remedy. Defendants' factual submissions regarding the Defendants' corporate structure and identity have no bearing on whether Plaintiffs have a right to bring an action related to the denial of their insurance claims. Ex. A, ECF 11-3; Ex. B, ECF 11-4. Therefore, both Defendants' facial and factual challenges to the Court's subject matter jurisdiction fail.

B. Personal Jurisdiction over the Individual Defendants

Defendants argue that the Court lacks both general and specific personal jurisdiction. Plaintiffs effectively concede Defendants' arguments as to general jurisdiction but argue that specific jurisdiction exists. To establish specific jurisdiction, a defendant must have "certain minimum contacts . . . such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). This Circuit has distilled International Shoe's standard, as later narrowed by other Supreme Court decisions, into a three-part test: "First, the defendant must have purposefully directed its activities at the forum. Second, the litigation must arise out of or relate to at least one of those activities. And third, . . . the exercise of jurisdiction [must] comport with fair play and substantial justice." Sandy Lane...