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Long v. State Farm Fire and Casualty Co.

United States District Court, M.D. Georgia, Macon Division

September 15, 2017

TONYA LONG and JASON LONG, Individually and on Behalf of All Others Similarly Situated, Plaintiffs,



         Plaintiffs Tonya and Jason Long seek relief on behalf of themselves and others similarly situated for the alleged refusal of Defendant State Farm Fire and Casualty Company to assess and pay for diminished value when its insureds claim losses covered under their State Farm homeowners' insurance policies. Doc. 1 at ¶¶ 1; 38. State Farm moves to dismiss the Longs' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) because it is barred by the policy's one-year limitation for filing suit. Doc. 6. In response, the Longs argue that State Farm has waived the limitation, which, even if not sufficiently alleged in their original complaint, is sufficiently alleged in the proposed amended complaint that they seek leave to file. Docs. 15; 16; 16-1. For the reasons discussed below, the Longs' motion for leave to amend (Doc. 16) is GRANTED, and State Farm's motion to dismiss (Doc. 6) is DENIED.

         I. BACKGROUND

         In State Farm Mutual Automobile Insurance Company v. Mabry, the Georgia Supreme Court held that when “loss” is not defined in an insurance policy, at least in automobile policies, diminished value is an element of “loss” and insurers must assess damaged property for diminished value. 274 Ga. 498, 508, 556 S.E.2d 114, 122-23 (2001). Subsequently, in Royal Capital Development LLC v. Maryland Casualty Company, the Georgia Supreme Court clarified that “loss” has a similar meaning, when not otherwise defined, in insurance policies covering real property. 291 Ga. 262, 267, 728 S.E.2d 234, 238 (2012).

         The Longs allege that State Farm failed to assess and pay for diminished value of their home as required by Mabry and Royal Capital. According to the complaint, on April 28, 2014 the Longs' home “suffered wind and/or hail damage, ” an event that was covered under their State Farm homeowners insurance policy. Doc. 1 at ¶ 20. The Longs “timely reported the . . . loss” to State Farm, and State Farm “adjusted [the] claim arising out of the loss, authorized repairs to [the] home, and subsequently paid certain repair costs.” Id. at ¶¶ 20-21. But, “[d]espite those repairs, as a result of this wind and/or hail damage to [the] property, the fair market value of [the] property was diminished.” Id. at ¶ 21. State Farm “failed to perform an assessment for diminution in the fair market value of [the] property . . . [and] failed to pay [the Longs'] diminution in value loss . . . .” Id. ¶¶ 22-24. The Longs assert that “[b]y failing to account for diminution in value as an element of loss and by failing to pay its insured the diminution in value of its property, [State Farm] breached the Policy, ” entitling them to damages and/or injunctive relief. Id. ¶¶ 25-28.[1]

         State Farm argues that the Longs' claim is barred by a contractual limitations period in the Longs' homeowners policy, which State Farm attached to its motion. Docs. 6; 6-1. The relevant provision states: “No action shall be brought unless there has been compliance with the policy provisions. The action must be started within one year after the date of loss or damage.” Doc. 6 at 2 (quoting Doc. 6-1 at 34). State Farm argues that the complaint is barred because it was filed on January 25, 2017, almost three years after the loss. Doc. 6 at 2.


         A. Motion to Dismiss Standard

         The Federal Rules of Civil Procedure require that a pleading contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). To avoid dismissal pursuant to Rule 12(b)(6), a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “At the motion to dismiss stage, all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff.” Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir. 2006) (quotation marks and citation omitted). However, “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Iqbal, 556 U.S. at 679 (quoting Fed.R.Civ.P. 8(a)(2)). “[C]onclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent dismissal.” Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002) (citations omitted). The complaint must “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555 (quotation marks and citation omitted). Where there are dispositive issues of law, a court may dismiss a claim regardless of the alleged facts. Marshall Cty. Bd. of Educ. v. Marshall Cty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993) (citations omitted).

         B. The Proposed Amended Complaint

         The Longs and State Farm agree that the one-year limitation defense is an affirmative defense. Docs. 14 at 3; 15 at 8. This is not entirely clear. Very generally, “plaintiffs are not required to negate an affirmative defense in their complaint.” La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004) (citation, quotation marks, and alterations omitted). However, Georgia law suggests that compliance with policy suit limitations is a condition precedent, suggesting in turn that it may be incumbent on an insured to plead compliance.[2] The allegations of the proposed amended complaint are, in any event, sufficient to withstand State Farm's motion to dismiss because they plausibly allege that State Farm waived the one-year limitation. Accordingly, the Court declines to decide the exact nature of the limitation defense and the Longs' pleading burden; the Court simply assumes that the Longs have the burden of pleading allegations that negate the one-year limitation.[3]

         The Longs' waiver argument has ultimately crystalized into the following: State Farm waived the limitation provision by accepting liability on the Longs' claim and making payments on it without any mention of, or adjustment for, diminished value in an attempt to “run[] out the clock on its insureds by purposefully concealing its legal and contractual duty to assess for diminution in value.” Doc. 18 at 3. The Longs argue that State Farm's acceptance of liability without any mention of diminished value was, in light of State Farm's practice of explaining all relevant coverage, calculated to lull the Longs and similarly-situated insureds into believing that their claim would be paid in full without the need to bring suit, as was State Farm's policy of remaining silent on the issue of diminished value unless diminished value were “affirmatively raised by an insured.” Id. at 6 n.2, 7. The Longs' proposed amended complaint alleges facts that plausibly support these arguments. See, e.g., Doc. 16-1 at ¶ 30 (“Despite State Farm's above-referenced policy and commitment to insureds to explain all coverages, State Farm had a practice and procedure of not raising the issue of diminished value with its insureds.”), ¶ 35 (“State Farm has an internal policy on how to avoid waiver of a contractual provision, which requires claims handlers to put an insured on notice if there is a question regarding coverage, which is done through a non-waiver agreement or a reservation-of-rights letter. However, State Farm has never entered a non-waiver agreement or sent a reservation-of-rights letter regarding diminished value.”).

         State Farm opposes the Longs' motion to amend on the sole ground that it would be futile because the claim would still be barred by the one-year limitation. Doc. 17 at 4. An amendment is futile if the complaint would be subject to dismissal as amended. Hall v. United Ins. Co. of Am.,367 F.3d 1255, 1263 (11th Cir. 2004). Because the Longs' proposed amended complaint contains allegations central to their current waiver argument and State Farm's sole argument for denying the motion to amend is futility, ...

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