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Buck v. Liberty Mutual Fire Insurance Co.

June 1, 2010

RICHARD BUCK AND ROSE BUCK, PLAINTIFFS,
v.
LIBERTY MUTUAL FIRE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Byron G. Cudmore United States Magistrate Judge

REPORT AND RECOMMENDATION

BYRON G. CUDMORE, U.S. MAGISTRATE JUDGE

Plaintiffs' residence suffered damage "caused by flooding" in December, 2007, and January, 2008. (Complaint, ¶¶ 5, 11). They pursue claims arising from the delay and denial of insurance coverage for that damage under two separate insurance policies: a homeowners policy and a flood policy. Only the homeowner's policy is at issue in the motion to dismiss before the Court. For the reasons below, the Court recommends that the motion to dismiss be granted to the extent Plaintiffs seek flood coverage under the homeowner's policy. However, the Court also recommends that Plaintiffs be given leave to file an amended complaint regarding their claim of coverage under the sump pump overflow endorsement to that policy.

Standard

To state a claim under federal notice pleading standards, the Complaint must set forth a "short and plain statement of the claim showing that the pleader is entitled to relief . . . ." Fed. R. Civ. P. 8(a)(2). Factual allegations are accepted as true and must give "'fair notice of what the . . . claim is and the grounds upon which it rests.'" EEOC v. Concentra Health Serv., Inc., 496 F.3d 773, 776-77 (7th Cir. 2007), quoting Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964 (2007)(other citation omitted). However, the "' . . . allegations, [must] show that it is plausible, rather than merely speculative, that [the plaintiff] is entitled to relief.'" Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008)(quoted and other citations omitted). "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. . . . Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009), citing Twombly, 127 S.Ct. 1955.

Background

Defendant issued two different insurance policies to Plaintiff: a homeowner's policy and a flood insurance policy. (Complaint, ¶ 3). The flood insurance policy is through the U.S. Government's National Flood Insurance Program and is governed by federal regulations. (Notice of Removal, d/e 1 ¶¶ 11, 12; National Flood Insurance Act of 1968, 42 U.S.C. § 4001 et seq.). The homeowner's policy is a standard insurance policy, with Defendant acting as a standard homeowner insurer. (d/e 12, p. 2). The present motion to dismiss regards only the homeowner's policy, not the flood policy.*fn1

According to the Complaint, Plaintiffs submitted claims under the policies for "damage caused by . . . flooding" on two separate occasions, December 11, 2007 and January 8, 2008. (Complaint, ¶ 5, 11). Defendant allegedly refused to pay, first based on a flooding exclusion, and then based on the argument that the policy was not in effect. (Complaint, ¶¶ 7-8). Defendant ultimately paid only part of Plaintiff's claims, with no explanation, and allegedly has refused to respond to inquiries or issue details of the final resolution. (Complaint, ¶¶ 13, 14, 16). The delay has caused additional damages from mold. (Complaint, ¶ 15).

On July 2, 2009, Plaintiffs filed this action in McClean County Circuit Court alleging breach of contract and unreasonable delay, and Defendant timely removed the case to federal court.

Analysis

Though the Complaint references both the flood insurance and homeowner's policies, Defendant moves to dismiss only the claims under the homeowner's policy. That policy (number H32-248-053236-407 2)*fn2 provides:

SECTION I-- EXCLUSIONS

1. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing ...


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