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Bowman v. American Fidelity General Agency, Inc.

United States District Court, S.D. Alabama, Northern Division

November 15, 2018

STEPHANIE BOWMAN, et al., Plaintiffs,



         This cause is before the Magistrate Judge for issuance of a report and recommendation, pursuant to 28 U.S.C. § 636(b)(1)(B) and S.D. Ala. GenLR 72(a)(2)(S), on the Defendant's motion to dismiss Plaintiffs' amended complaint (Doc. 31), Plaintiffs' response in opposition (Doc. 33), and Defendants' reply (Doc. 35). Based on the contents of these and all other relevant pleadings in this matter, as well as certain attached materials, the Magistrate Judge RECOMMENDS that Defendants' motion to dismiss Plaintiffs' amended complaint (Doc. 31) be DENIED.


         The Plaintiffs in this action are school teachers who owned/held guaranteed life insurance policies offered by Fidelity Life, [1] each of which had a long-term care rider. (Doc. 28, ¶¶ 9 & 10.) The long-term care rider was offered at no additional cost (with no health questions asked), guaranteed issue at the time the insured requested long-term coverage, was important to each Plaintiff, and, specifically, “provided for a benefit of 4% of the face value of the policy for each month of long-term care provided up to 75 months.” (Id. at ¶¶ 12-14)[2]. Each policy holder's payments were payroll deducted. (Id. at ¶ 17).

         Defendant American Fidelity obtained a list of teachers who had insurance paid for through payroll deductions and then approached educators holding Fidelity Life policies, including Plaintiffs, and offered each of them a term life policy underwritten by TexasLife Insurance Company. (Id. at ¶¶ 19-21). The TexasLife policies “did not have guaranteed premium for the life of the policy and did not have long-term care rider[s].” (Id. at ¶ 22). Plaintiff Stephanie Bowman purchased a TexasLife policy from American Fidelity Agent Randy Steele on March 6, 2015; Sabrina Scott bought such a policy from Agent Rex Bowman on March 6, 2015; Roseanne L. Wiggins purchased her TexasLife policy from Agent William Austin on February 25, 2015; Crystal Hanna bought her policy from Agent Randy Steele on March 2, 2015; and Arabella Sheehan purchased her TexasLife policy from Agent Curtis Wells on March 16, 2017 (see Id. at ¶¶ 31-33), based upon the following omissions or representations:

25. American Fidelity did not reveal to the Plaintiffs that purchasing [its] policy would cause the Plaintiffs to lose long-term care insurance.
26. American Fidelity did not reveal to the Plaintiffs that purchasing [its] policy would cause the Plaintiffs' Fidelity Life policies to be cancelled. In most cases[, the agents] told them [American Fidelity was] replacing the policies but did not indicate on the application that it was a replacement or complete the required replacement paperwork.
27. American Fidelity did not read out loud to the Plaintiffs language required by law which would have informed them about the differences between the policies they were purchasing and the policies being replaced. Had Plaintiffs been informed that the new policy did not have a long-term care rider, they would not have purchased the policies.
28. American Fidelity did not show Plaintiffs the policies they were purchasing at the time of sale or otherwise allow them to read it. Plaintiffs purchased the policies based on American Fidelity's misleading oral representations alone. Plaintiffs were asked to sign an electronic signature box on an iPad or other tablet without being shown the policies.
29. When American Fidelity recorded the sales, they cancelled the FidelityLife product. As a result, the plaintiff class has lost access to long-term care insurance.
30. For some of the Plaintiffs, American Fidelity falsely claimed that they were not replacing existing insurance. On information and belief, for these policies, American Fidelity did not file the required forms with the state insurance department that would alert the department that the policies were being cancelled to avoid detection of their fraudulent practice.

(Id. at ¶¶ 25-30). In the same month Plaintiffs purchased their policies, American Fidelity mailed them copies of those policies along with other information (id. at ¶ 34); however, Plaintiffs aver that the letters accompanying the policies did not contain language allowing them “to know that their long-term coverage had been cancelled.” (Id. at ¶ 35). Plaintiffs aver that they did not learn that their new policies lacked long-term care until November 2017 when “[a]n insurance salesman for an unrelated company informed [them] that their current policies lacked a long-term care provision.” (Id. at ¶ 36).

         The TexasLife insurance policies and paperwork relative to the five named Plaintiffs have been supplied to this Court (see Doc. 20, Exhibits 1-5), and, therefore, the contents of these documents can be considered herein. As made clear in the complaint, the policies do not have long-term care riders or guaranteed premium for the life of the policies. Additionally, for purposes of this Report and Recommendation, the application paperwork certainly reveals the embedded statement that the applicant could “have valuable rights and benefits in the policy you now have that are not in the new one[, ]” (Doc. 20, Exhibit 1, at 15; Exhibit 2, at 18; Exhibit 3, at 9; Exhibit 4, at 9 & Exhibit 5, at 16), which Defendant reads as clear direction to Plaintiffs to compare their old policies with the new ones (see, e.g., Doc. 31, at 6).

         The Plaintiffs' Amended Complaint asserts claims against American Fidelity for fraudulent misrepresentation (Doc. 28, at ¶¶ 48-51), [3] fraudulent suppression (id. at ¶¶ 52-55), [4] negligence (id. at ¶¶ 56-59), [5] and negligence per se (id. at ¶¶ 60-64)[6].


         A. Pleading Standard.

         The sufficiency of Plaintiffs' claims to proceed beyond the pleading stage, and into discovery, is governed by the plausibility standard articulated by the United States Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and further detailed in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).[7] In Twombly, the United States Supreme Court expressly abrogated the Conley v. Gibson, 355 U.S. 41 (1957) “no set of facts” pleading standard, holding that test “has earned its retirement” and “is best forgotten.” Twombly, 550 U.S. at 563, 127 S.Ct. at 1969; Simpson v. Sanderson Farms, Inc., 744 F.3d 702, 714 (11th Cir. 2014) (“[T]he Supreme Court categorically retired [the no set of facts test] in Twombly.”).

         Post Twombly, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. . . . Factual allegations must be enough to raise a right to relief above the speculative level[.]” Twombly, 550 U.S. at 555, 127 S.Ct. at 1965. The Court made clear that to satisfy the requirements of Fed.R.Civ.P. 8(a) “something beyond the mere possibility [of an entitlement to relief] must be alleged, lest a plaintiff with a largely groundless claim be allowed to take up the time of a number of other people[.]” Id. at 557-58, 127 S.Ct. at 1966 (internal quotation marks omitted; citations omitted). ‚ÄúThis necessarily requires that a plaintiff include factual allegations ...

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