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Stone v. State Automobile Mutual Insurance Co.

United States District Court, N.D. Alabama, Northeastern Division

February 15, 2017




         Billy Ray Stone pursues this action against State Automobile Mutual Insurance Company (“State Auto”) for breach of contract and bad faith. Doc. 1-4. Stone contends that State Auto refused or failed to pay Stone the amount due to him under his automobile insurance policy (Count I) after an accident with an uninsured or underinsured motorist, and acted in bad faith in intentionally refusing to pay an agreed upon settlement amount of $30, 000 (Count II). Id. Stone originally filed this action in the Circuit Court of Madison County, Alabama, and State Auto subsequently removed it to this court. Docs. 1; 1-4. The court has for consideration State Auto's motion for summary judgment, doc. 19, which is fully briefed, docs. 19-1; 34; 35, and ripe for review. State Auto and the individual defendants whom Stone seeks to add through his First Amended Complaint (Holly Sutton, Theresa Gad, and Earl T. Forbes), doc. 26, also filed a motion to strike, doc. 29, the amended complaint. For the reasons stated below, the motions to strike and for summary judgment are due to be granted.


         Stone filed an amended complaint, whereby Stone joined three additional parties - State Auto claims adjusters Sutton and Gad, and Wilmer & Lee, P.A. attorney Earl T. Forbes - and amended the pleadings to include three additional claims arising out of the $30, 000 settlement agreement with State Auto. Docs. 26 at 6; 29 at 2. The amended complaint includes breach of contract and bad faith claims (Counts I and II) against Sutton, Gad, and Forbes, and fraud claims (Counts III, IV, and V) against State Auto, Sutton, Gad, and Forbes. See generally doc. 26. The motion to strike is due to be granted.

         A. The Amended Complaint Violates Rule 15(a)

         “A party may amend its pleading once as a matter of course within . . . 21 days after serving it, or . . . if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier.” Fed.R.Civ.P. 15(a). “In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave.” Id. Stone is not entitled to amend his complaint as a matter of course under Rule 15(a), because he filed the amended complaint eight months after State Auto removed the case to this court, see docs. 1; 26, and well over the “21 days after service of a responsive pleading” limit, see doc. 3 - and State Auto did not file any Rule 12(b), (e), or (f) motions that would have similarly given Stone leave to amend. As such, consistent with Rule 15(a), Stone can only amend with leave of the court. In light of Stone's failure to obtain leave to amend, the amended complaint is due to be stricken under the Scheduling Order. See doc. 18 at 3 (“Unless the party's pleading may be amended as a matter of course pursuant to Fed.R.Civ.P. 15(a), the party must file a Motion for Leave to Amend.”).

         B. The New Claims Are Futile

         Even if Stone had moved to amend, the court would have denied the request on futility grounds. Although the court “should freely give leave [to amend a pleading] when justice so requires, ” Fed.R.Civ.P. 15(a), Stone's new claims fail on their merits. First, as to Counts I and II, which Stone amended to include State Auto's counsel (Forbes) and employees (Sutton and Gad), under Alabama law, “claims for breach of contract and bad faith based on an insurance contract may only be brought against a party to that contract.” Butler v. Allstate Indem. Co., No. 3:09-CV-838-WKW-WO, 2010 WL 381164, at *3 (M.D. Ala. 2010) (holding that an insurance agent is not a proper defendant for the plaintiff's breach of contract and bad faith claims); Wright v. State Farm Fire & Cas. Co., No. CIV. A. 96-A- 1663-N, 1997 WL 114902, at *3 (M.D. Ala. 1997) (citing Ligon Furniture Co. v. O.M. Hughes Ins. Co., Inc., 551 So.2d 283, 285 (Ala. 1989)) (“Thus, while an adjuster or other agent may commit [bad faith] acts . . . it is the company which is liable.”) (emphasis added); Pate v. Rollison Logging Equip., Inc., 628 So.2d 337, 343 (Ala. 1993) (insurance broker was not liable for breach of contract because he acted to place the insurance and was not a party). Therefore, because there is no assertion in the amended complaint that Forbes, Sutton, or Gad were parties to the contract between Stone and State Auto, the proposed breach of contract and bad faith claims against them are futile.

         Likewise, the fraud claims (Counts III, IV, and V) are also futile. An essential element of fraud is that the plaintiff must have reasonably relied on the alleged misrepresentation. Waddell & Reed, Inc. v. United Inv'rs Life Ins. Co., 875 So.2d 1143, 1160 (Ala. 2003), as modified on denial of reh'g (Sept. 5, 2003) (citations omitted). In fact,

[i]f the circumstances are such that a reasonably prudent person who exercised ordinary care would have discovered the true facts, the plaintiffs should not recover . . . . If the purchaser blindly trusts, where he should not, and closes his eyes where ordinary diligence requires him to see, he is willingly deceived, and the maxim applies, “volunti non fit injuria.”

Id. (internal citations and quotations omitted). Here, Stone signed a “Full and Final Release” that, among other things, obligated him to provide information regarding Medicare/Medicaid liens. Doc. 19-20 at 4-5. By signing the agreement, Stone knew and accepted his duty to investigate any Medicare liens and provide State Auto with “any and all” information requested regarding such liens. Stone has no credible basis to plead that State Auto, or any of its agents, misrepresented his responsibilities regarding Medicare liens.[1] To the contrary, the language in the agreement is clear, and a reasonably prudent person - especially one who, as was the case here, was represented by counsel - could have discovered that Stone's ability to receive his settlement check was contingent on his providing the requested information regarding potential Medicare liens.

         In conclusion, for all the aforementioned reasons, State Auto's motion to strike, doc. 29, Stone's Amended Complaint is due to be granted.


         Under Fed.R.Civ.P. 56(a), summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” To support a summary judgment motion, the parties must cite to “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations, admissions, interrogatory answers, or other materials.” Fed.R.Civ.P. 56(c). Moreover, “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the initial burden of proving the absence of a genuine issue of material fact. Id. at 323. The burden then shifts to the nonmoving party, who is required to “go beyond the pleadings” to establish that there is a ...

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