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Barrett v. United Insurance Co. of America, Inc.

United States District Court, S.D. Georgia, Savannah Division

September 23, 2019

MINERVA BARRETT, executrix of the estate of Chester Barrett, and on behalf of all others similarly situated, Plaintiff,



         In this putative class action lawsuit, Plaintiff, the executrix of the estate of Chester Barrett, brings claims arising out of a life insurance policy Mr. Barrett purchased from Defendant United Insurance Company of America, Inc. ("United") on December 18, 1984. The thrust of Plaintiff s claims is that United used racially discriminatory practices in selling life insurance policies to Mr. Barrett and other African-Americans. Specifically, she contends that United charged Mr. Barrett a higher premium for the policy than United charged white customers and sold him an inferior product than those available to white customers. (Doc. 29.) This matter is before the Court on United's Motion to Dismiss Plaintiff s Amended Complaint. (Doc. 34.) In this Motion, Defendant advances numerous arguments in support of its position that Plaintiffs Amended Complaint should be dismissed. United argues that all of Plaintiffs claims are barred by the statute of limitations. Additionally, United attacks Plaintiffs standing to bring certain claims, and it contends that Plaintiffs state law allegations fail to state a claim upon which this Court can grant relief.

         For the reasons set forth below, the GRANTS IN PART and DENIES IN PART United's Motion to Dismiss, (doc. 34). The Court GRANTS United's Motion to Dismiss for lack of standing as to Plaintiffs claims that United failed to keep accurate records, allowed policies to lapse, and failed to pay death benefits. However, the Court DENIES United's Motion to Dismiss for lack of standing as to all other claims. The Court also GRANTS United's Motion to Dismiss for untimeliness as to Plaintiffs claims that Mr. Barrett paid premiums exceeding the face value of his policy. However, the Court DENIES WITHOUT PREJUDICE United's Motion to Dismiss for untimeliness as to all other claims. Further, the Court DENIES United's Motion to Dismiss for failure to state a claim as to Plaintiffs claims for money had and received, negligent misrepresentation, fraudulent inducement, and punitive damages. The Court GRANTS AS UNOPPOSED United's Motion to Dismiss for failure to state a claim as to Plaintiffs claims for breach of contract, declaratory relief, and injunctive relief. Additionally, for the reasons stated below, the Court STAYS all proceedings and deadlines in this case until further order of the Court and DIRECTS the parties to each file a status report with the Court within twenty-one days of the date of this Order.


         Chester Barrett, a now-deceased African-American man, was a resident of Liberty County, Georgia. (Doc. 29 at p. 1.) Defendant United is an Illinois insurance entity that conducts business throughout the United States, including in Georgia. (Id.) Mr. Barrett purchased a life insurance policy from United on December 18, 1984. (Id at p. 3.) That transaction and policy form the basis of this lawsuit. Mr. Barrett's policy had a face value of $5, 000 and was designated as a "WHOLE LIFE" policy "though its characteristics mirrored the Industrial Polices sold by United." (Id at p. 3; doc. 29-2.)

         Plaintiff brings this putative class action as the executrix of Mr. Barrett's estate. Generally, Plaintiff contends that Mr. Barrett, like others situated similarly to him, purchased an inferior product and paid higher premiums on this insurance policy due to United's unlawful scheme of discrimination against African-Americans. (Id at pp. 3-8.) "As part of its nationwide scheme, United targeted low income, unsophisticated and minority segments of the population, especially in the Southeastern United States, including Chester Barrett, and developed insurance products for sale to these consumers." (Id at p. 3.) Through this scheme, United designed and marketed "Industrial Life" insurance policies and policies similar to them.[2] (Id at p. 3.) These policies have a relatively low face value and their premiums (which are "designed to appear to the policyholder to be relatively modest") are collected, often in person by United agents, on a weekly, bi-weekly, or monthly basis. (Id at pp. 3-4.) According to Plaintiff, "[f]or many years, United, pursuant to its own practices and procedures, routinely, knowingly, and intentionally charged African-American individuals .. . more for the Policies than it charged similarly situated Caucasians." (Id at p. 4.) United, with discriminatory intent, took the following actions to carry out this scheme:

• issuing rate books with "overly discriminatory rates" for "negro" or "colored" individuals as opposed to "white" customers;
• issuing rate books charging African-Americans "substandard" or "standard" rates while Caucasians received lower "preferred" rates;
• assigning African-Americans to less favorable underwriting classifications resulting in higher premiums that bore "no legitimate relationship to the actual mortality risk of African-American Class Members, including Chester Barrett";
• utilizing rate books with "so-called 'socio-economic' underwriting without explicitly asking for the insured's race"; and
• establishing "subjective and prejudicial classifications bearing no legitimate relationship to the actual mortality risk of African-American Class Members."


         Plaintiff alleges that by targeting this "disadvantaged segment of the population" with "Industrial Polices and Policies mirroring Industrial Policies" (as opposed to ordinary life insurance products), United took advantage of the consumers' alleged lack of sophistication. (Id at p. 5.) United prohibited its "agents from selling ordinary life insurance products and policies to African-Americans." (Id.) Plaintiff essentially maintains that United tricked African-Americans into buying insurance policies even though these policies were a terrible bargain for the insured, particularly as opposed to traditional insurance policies that United sold to Caucasian customers. (Id. at pp. 5-8.) For instance, Plaintiff contends that the policies:

• required premium payments that, "over the normal life expectancy of Class Members, " would greatly exceed the face value of the policy;
• "were intentionally designed by United to create the illusion that they would provide valuable yet affordable death benefits" but in actuality provided "minimal and ever-declining value to the insured";
• did not provide returns on premium overpayments;
• did not provide increasing death benefits over the duration of the policies, unlike traditional whole life policies; and
• were designed to require class members "to continue making premium payments after the premiums exceed the face value of the policies or face losing all of their paid premiums without receiving any meaningful or reasonable cash value or death benefits."

(Id. at pp. 5-7.) Even after United ceased these intentionally discriminatory practices, African Americans who had purchased policies with race-based premiums, including Mr. Barrett, continued to pay the higher premiums for the inferior policies established under the prior discriminatory pricing scheme. (Id at pp. 4-5.)

         United peddled these insurance products, including Mr. Barrett's policy, through a targeted marketing scheme. (Id at pp. 4-5, 7-8.) United agents were assigned to "debit routes" and the agents "were trained to personally visit the homes of Class Members, such as Chester Barrett, residing on their routes to collect the premiums and develop a personal relationship with the Class Members that would facilitate the sale of additional Policies in the future." (Id at p. 4.) Further, Plaintiff contends that United induced customers to purchase Industrial Life policies and policies similar to them by "approving and dispersing-both by itself and through its agents-false and misleading information and sales material containing numerous misrepresentations and omissions to Chester Barrett and Class Members." (Id at pp. 7-8.) "As opposed to selling Class Members affordable versions of traditional life insurance products, " United performed no underwriting on these policies and instead sold policies with higher premiums and lower cash value than "traditional life insurance products." (Id at p. 7.)

         Plaintiff further contends that "United affirmatively and actively concealed its fraudulent design, marketing and administration of its industrial policies, as well as its racially discriminatory pricing and Policy sales and administration scheme from Chester Barrett and Class Members." (Id. at p. 10.) Specifically, United told Mr. Barrett that his life insurance policy "was a legitimate 'whole life' insurance policy with a valuable death benefit." (Id at p. 19.) Additionally, United "engaged in a systematic effort" to "eliminate and confuse the administrative records of Class Members, including [Mr.] Barrett" in an effort to prevent them from discovering United's racial discrimination. (Id at p. 10.) Thus, Mr. Barrett "could not discover, was prevented from discovering, and did not have any of the facts which might have led to the discovery of United's chicanery." (Id.) United's discriminatory practices caused Mr. Barrett to purchase an insurance policy and pay approximately $14, 649.05 in premiums for the policy. (Id at p. 13.) The policy carried a death benefit of $5, 000. (Id.)

         Mr. Barrett filed this lawsuit on September 20, 2017, in the State Court of Liberty County, (doc. 1-1), and United then removed the case to this Court, (doc. 1). Mr. Barrett passed away on August 3, 2018 at the age of ninety-seven. (Doc. 29, p. 1 n. 1.) On December 19, 2018, the Court ruled on several dispositive motions and provided an opportunity to amend the complaint. (Doc. 26.) Plaintiff Minerva Barrett, Executrix of Mr. Barrett's estate, subsequently moved for substitution as the Plaintiff and filed the Amended Complaint. (Docs. 29, 30.) Plaintiff seeks to bring this action on Mr. Barrett's behalf as well as on behalf of a class of others she describes as follows:

all persons who have, or had at the time of the policy's termination, an ownership interest in: (1) one or more Policies or Industrial Policies, issued, serviced or administered by United that were in force on or after January 1, 1970 and for which United charged African-Americans higher premiums tha[n] the premiums it charged to similarly situated Caucasians; and/or (2) one or more facially nondiscriminatory Policies and/or Industrial Policies issued, serviced or administered by United that were in force on or after January 1, 1988.

(Doc. 29, pp. 11-12.) Plaintiff brings claims for: violation of civil rights pursuant to 42 U.S.C. § 1981; money had and received; declaratory and injunctive relief; breach of contract; fraudulent inducement; negligent misrepresentation; and punitive damages. (Id at pp. 18-21.) Defendant filed the instant Motion to Dismiss all of these claims, (doc. 34), which has now been fully briefed, (docs. 35, 36).


         Under a Rule 12(b)(6) motion to dismiss, a court must "accept[] the allegations in the complaint as true and constru[e] them in the light most favorable to the plaintiff." Bel anger v. Salvation Army, 556 F.3d 1153, 1155 (11th Cir. 2009). "A complaint must state a facially plausible claim for relief, and '[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1215 (11th Cir. 2012) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action'" does not suffice. Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

         "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (internal quotation marks and citation omitted). While a court must accept all factual allegations in a complaint as true, this tenet "is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, " are insufficient. Id.

         In this case, in addition to other arguments, United contends that Plaintiffs Amended Complaint should be dismissed as untimely. Dismissal on limitations grounds is only appropriate "if it is apparent from the face of the complaint" that plaintiffs claims are time-barred. Gonsalvez v. Celebrity Cruises Inc., 750 F.3d 1195, 1197 (11th Cir. 2013). "A statute of limitations defense can support dismissal under Rule 12(b)(6) only if it is clear from the face of the complaint that the statute of limitations has run, and it appears beyond doubt that the plaintiff can prove no set of facts that toll the statute." Valencia v. Universal City Studios LLC, No. 1:14-CV-00528-RWS, 2014 WL 7240526, at *3 (N.D.Ga. Dec. 18, 2014) (citations omitted).


         I. United's Motion to Dismiss Plaintiffs Claims for Lack of Standing

         United contends that though Plaintiff alleges a "laundry list" of illegal practices committed by United, she fails to plausibly allege that Mr. Barrett suffered any injuries from many of the practices on that list. (Doc. 34, pp. 8-10.) Without an injury in fact, United maintains, Plaintiff has no standing to complain of those practices. (Id.) United argues that Plaintiff only has standing to assert two claims: (1) that Mr. Barrett paid discriminatory premiums; and (2) that he paid premiums that exceeded the face amount of his policy. (Id.)

         Article III of the United States Constitution limits the power of federal courts to adjudicating actual "cases" and "controversies." U.S. Const, art. III, § 2, cl. 1. The most significant case-or-controversy doctrine is the requirement of standing. See Georgia State Conference of NAACP Branches v. Cox, 183 F.3d 1259, 1262 (11th Cir. 1999). "In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Nat'l All, for the Mentally Ill. St. Johns Inc. v. Bd. of Cty. Comm'rs, 376 F.3d 1292, 1294 (11th Cir. 2004) (quoting Warm v. Seldin, 422 U.S. 490, 498 (1975)). A plaintiff seeking to invoke federal jurisdiction carries the burden to establish that she has standing to assert her claim. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).

         "There are at least three distinct forms of standing: taxpayer standing, individual standing, and organizational standing." Nat'l Alliance for the Mentally 111, 376 F.3d at 1294 (citations omitted). To establish standing under any of these forms a plaintiff must satisfy three requirements: "(1) injury-in-fact; (2) a causal connection between the asserted injury-in-fact and the challenged action of the defendant; and (3) that the injury will be redressed by a favorable decision." Houston v. Marod Supermarkets, Inc., 733 F.3d 1323, 1328 (11th Cir. 2013) (internal quotation marks omitted) (quoting Shotz v. Cates, 256 F.3d 1077, 1081 (11th Cir. 2001)). To meet the injury-in-fact requirement, a plaintiff must have suffered an invasion of a legally protected interest which is: (1) "concrete and particularized, " meaning the alleged injury affects the plaintiff "in a personal and individual way"; and (2) "actual or imminent, not conjectural or hypothetical." Lujan, 504 U.S. at 560, 560 n. 1 (internal quotation marks and citation omitted). To be "concrete, " an injury "must be 'de facto'; that is, it must actually exist." Spokeo, Inc. v. Robins, 578 U.S. ___, ___, 136 S.Ct. 1540, 1548 (2016). A plaintiff may not proceed in federal court without establishing these three requirements at the outset. When assessing standing "[a]t the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we presume that general allegations embrace those specific facts that are necessary to support the claim." United States v. Baxter Int'l, Inc., 345 F.3d 866, 881 (11th Cir. 2003) (quoting Nat'l Org, for Women, Inc. v. Scheidler, 510 U.S. 249, 256 (1994)).

         The Court agrees that Plaintiffs Amended Complaint alleges some practices that United employed generally without any allegation that these practices affected Mr. Barrett. Specifically, there are three areas of alleged wrongdoing discussed below that appear to have not caused Mr. Barrett any injury. Because Plaintiff has not alleged that Mr. Barrett suffered a concrete and particularized ...

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