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Meighan v. TransGuard Insurance Company of America, Inc.

United States District Court, N.D. Iowa, Central Division

October 11, 2013

MICHAEL J. MEIGHAN, Plaintiff,
v.
TRANSGUARD INSURANCE COMPANY OF AMERICA, INC., and TRANSGUARD GENERAL AGENCY, INC., Defendants

For Michael J Meighan, Plaintiff: Jackie D Armstrong, LEAD ATTORNEY, Brown, Kinsey & Funkhouse, PLC, Mason City, IA; Travis Michael Armbrust, LEAD ATTORNEY, Brown, Kinsey, Funkhouser & Lander, PLC, Mason City, IA.

For TransGuard Insurance Company of America, Inc, Defendant: Benjamin R Merrill, LEAD ATTORNEY, Patterson Law Firm, Des Moines, IA; Michael Shelby Jones, LEAD ATTORNEY, Patterson Law Firm, LLP, Des Moines, IA.

For TransGuard General Agency, Inc, Defendant: Benjamin R Merrill, LEAD ATTORNEY, Patterson Law Firm, Des Moines, IA; Michael Shelby Jones, Patterson Law Firm, LLP, Des Moines, IA.

OPINION

MARK W. BENNETT, U.S. DISTRICT COURT JUDGE.

Page 975

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANT TGA'S MOTION TO DISMISS THE PLAINTIFF'S AMENDED COMPLAINT

TABLE OF CONTENTS

I. INTRODUCTION

A. Meighan's Original Complaint

B. Meighan's Amended Complaint

C. TGA's Motion To Dismiss The Amended Complaint

II. LEGAL ANALYSIS

A. TGA's Challenges To Personal Jurisdiction, Sufficiency Of Process, And Service Of Process

B. TGA's Challenge To The Statement Of Claims

1. Applicable Standards For Dismissal Pursuant To Rule 12(b)(6)

2. Analysis

a. Matters outside the pleadings

b. Plausibility of Meighan's allegations of joint wrongdoing

C.Another Opportunity To Replead Claims

III. CONCLUSION

Can an insured remedy his failure to allege any wrongful conduct at all by a defendant insurance agency, on claims of breach of contract and bad faith denial of claims, by the simple expedient of filing an amended complaint that alleges that the defendant insurer and defendant insurance agency individually and jointly engaged in the wrongful conduct at issue and are " jointly and severally liable" for it, and then changing all of the former references to a single defendant to mean both defendants " collectively" ? I think not.

I. INTRODUCTION

A. Meighan's Original Complaint

In his original Complaint (docket no. 2), filed May 10, 2013, plaintiff Michael J. Meighan, an independent contractor who drove semi-tractor-trailers for Mid-Seven Transportation, Inc., asserted claims of breach of contract (Count I) and bad faith denials of occupational injury insurance coverage (Count II) against defendants TransGuard Insurance Company of America, Inc., which he identified as " Transguard," and TransGuard Agency, Inc., which he identified as " TGA." Meighan

Page 976

alleged that both Transguard and TGA are incorporated and have their principal places of business out-of-state, so jurisdiction was based on diversity of citizenship. Meighan alleged that he purchased the insurance policy in question, insured by Transguard, through the National Association of Independent Truckers (NAIT), which is the group policy holder, and TGA, as Transguard's authorized agent. The original Complaint expressly alleged misconduct by Transguard, but the only references to TGA in the pleading of the claims were indirect ones that " Defendants had no reasonable basis for denying Meighan's claim when the December 1, 2011 notice was issued," and that " Defendants knew or had reason to know on December 1, 2011, that their denial was without a reasonable basis." Complaint, ¶ ¶ 34-35 (emphasis added). The insurance contract at issue was not attached to Meighan's original Complaint.

Transguard filed an Answer (docket no. 7) to Meighan's original Complaint on July 31, 2013, denying Meighan's claims and asserting certain affirmative defenses, but did not move to dismiss on the basis of any of these affirmative defenses. On July 22, 2013, however, TGA filed a Motion To Dismiss (docket no. 6), asserting lack of personal jurisdiction, insufficient process, insufficient service of process, and failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(2), (b)(4), (b)(5), and (b)(6) of the Federal Rules of Civil Procedure, respectively. In support of dismissal for lack of personal jurisdiction, TGA asserted that it does not have the necessary contacts with Iowa to support either general or specific personal jurisdiction. In support of dismissal for failure to state a claim, TGA argued that it did not issue the policy in question and that Meighan had alleged that Transguard breached the policy and denied benefits in bad faith, but had not alleged any breach of obligations by TGA as the insurance agency. In support of dismissal for insufficient process and insufficient service of process, TGA argued that, because Meighan had not alleged any tort or contract claim against it, service on the Iowa Secretary of State pursuant to IOWA CODE § 617.3 was not proper service on TGA. TGA attached an Affidavit of its Assistant Vice President in support of its motion, averring that TGA lacks contacts with Iowa, and excerpts of insurance documents for Meighan's occupational accident insurance.

On August 5, 2013, in response to TGA's Motion To Dismiss, Meighan filed an Amended Complaint (docket no. 8), as a matter of course, pursuant to Rule 15(a)(1)(B) of the Federal Rules of Civil Procedure, " to allege that the above named Defendants [identified as Transguard and TGA] individually and jointly breached the contract described herein, denied benefits in bad faith, and intentionally inflicted emotional distress upon Meighan." Amended Complaint, unnumbered second paragraph. On August 5, 2013, Meighan also filed his Resistance (docket no. 9) to TGA's Motion To Dismiss the original Complaint. In his Resistance, Meighan asserted that he had cured any deficiencies in his original Complaint by filing his Amended Complaint, which he contended included allegations that both defendants are responsible parties under all counts and causes of action. Meighan attached various documents to his Resistance to TGA's Motion To Dismiss, consisting of documents received with his insurance policy, the entire policy, and a corporate family tree of companies owned by Peter R. Kellogg, including Transguard, TGA, and NAIT.

Whether or not Meighan's Amended Complaint actually cures the deficiencies in his original Complaint, I find that

Page 977

Meighan's filing of the Amended Complaint and TGA's filing of a Motion To Dismiss Plaintiff's Amended Complaint (docket no. 10) moot TGA's original Motion To Dismiss. Therefore, TGA's July 22, 2013, Motion To Dismiss (docket no. 6) is denied as moot.

B. Meighan's Amended Complaint

As mentioned above, Meighan filed his Amended Complaint (docket no. 8) in an attempt to remedy the deficiencies in his original Complaint identified in TGA's Motion To Dismiss. More specifically, after identifying the two defendants, the Amended Complaint adds the following allegations:

3. . . . Hereinafter both TransGuard General Agency, Inc. and TransGuard Insurance Company of America, Inc. are referred to collectively as " TransGuard" ...

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