United States District Court, W.D. Arkansas, Harrison Division
OPINION & ORDER
TIMOTHY L. BROOKS JUDGE.
before the Court is a Motion to Dismiss (Doc. 6) filed by
Defendant State Farm Fire & Casualty Company ("State
Farm") on April 11, 2017. As of May 18, 2017, Plaintiffs
Jon and Donna Lee had yet to respond to the Motion. The Court
accordingly emailed Plaintiffs' counsel to inquire
whether they were conceding the Motion, and if not, whether
they had any other justification or basis for failing to file
a response. Counsel replied to the Court's email on that
same date, stated that they opposed the Motion, and indicated
both that they would file an amended complaint and would seek
leave to respond to the Motion. Plaintiff's counsel
unfortunately did neither, so the Motion remains without
response and ripe for adjudication. For the reasons stated
herein, Defendant State Farm's Motion to Dismiss (Doc. 6)
the time relevant to this case, the Lees owned a home located
at 180 Road 1419 in Mountain Home, Arkansas. On January 30,
2016, a fire damaged or destroyed the home and the Lees'
personal property located therein. At the time, the Lees had
an insurance policy with State Farm, which it represents
covered loss caused by fire. The Lees thus demanded payment
from State Farm under the terms of their policy, but State
Farm denied their claim. The Lees accordingly filed suit in
the Circuit Court of Baxter County, Arkansas, on March 21,
2017. (Doc. 1-1). Their Complaint (Doc. 3), since removed to
this Court by State Farm, claims that the fire caused a total
or partial loss to the Lees' home and personal property.
It then asserts that State Farm "breached the duty of
good faith and fair dealing by failing to honor the terms of
its policy" and "failed to exercise good faith in
performing its obligation" under the policy.
Id. at ¶¶ 20-21. The Complaint also
alleges that State Farm "has prevented, hindered, and
delayed their performance of the contract." Id.
at ¶ 22. State Farm's April 10, 2017 Answer (Doc. 4)
indicates that it denied the Lees' claim based on its
belief that the Lees were responsible for the fire in
question, and intentionally concealed and misrepresented this
fact in pursuing their insurance claim. State Farm next filed
its Motion to Dismiss (Doc. 6) a day later. The Motion
contends that the Lees' Complaint fails to state a claim
for breach of good faith and fair dealing, and seeks
dismissal of that claim.
survive State Farm's Motion to Dismiss,  the Lees'
Complaint must present "a short and plain statement of
the claim that the pleader is entitled to relief."
Fed.R.Civ.P. 8(a)(2). The intention of this is to "give
the defendant fair notice of what the ... claim is and the
grounds upon which it rests." Erickson v.
Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In
evaluating the sufficiency of the Complaint, the Court
assumes that "all factual allegations in the pleadings
are true and interpret[s] them in the light most favorable to
the nonmoving party." Bell v. Pfizer, Inc., 716
F.3d 1087, 1091 (8th Cir. 2013) (internal quotation omitted).
so, the Complaint "must contain sufficient factual
matter, accepted as true, to 'state a claim to relief
that is plausible on its face.'" Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). "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."
Id. "A pleading that offers labels and
conclusions' or 'a formulaic recitation of the
elements of a cause of action will not do.' Nor does a
complaint suffice if it tenders 'naked assertion[s]'
devoid of 'further factual enhancement.'"
Id. (quoting Twombly, 550 U.S. at 555). In
short, "the pleading standard that Rule 8 announces does
not require 'detailed factual allegations, ' but it
demands more than an unadorned, the
defendant-unlawfully-harmed-me accusation." Id.
(quoting Twombly, 550 U.S. at 555).
Lees' claim for breach of good faith and fair dealing
fails to meet Rule 8's pleading standard. As an initial
matter, Arkansas courts generally do not recognize a separate
claim for breach of good faith and fair dealing. Ark.
Research Med. Testing, LLC v. Osborne, 2011 Ark. 158, at
*6 (declining to "recognize a separate contract claim
for breach of the duty of good faith and fair dealing");
Country Corner Food & Drug, Inc. v. First State Bank
& Trust Co. of Conway, Ark., 332 Ark. 645, 655
(1998) ("The fact that every contract imposes an
obligation to act in good faith does not create a cause of
action for a violation of that obligation, and ... this court
has never recognized a cause of action for failure to act in
good faith."); see also Mountain Home Flight Serv.,
Inc. v. Baxter Cnty., Ark., 758 F.3d 1038, 1043 (8th
Cir. 2014) ("The Supreme Court of Arkansas has clarified
that Arkansas contract law does not recognize a separate
contract claim for breach of a duty of good faith and fair
dealing." (quotation marks omitted)). However, Arkansas
courts do recognize a tort for bad faith against insurance
companies. This tort applies to "an insurer who actively
engaged in dishonest, malicious, or oppressive conduct in
order to avoid its liability." Osborne, 2011
Ark. 158, at *6; see also Findley v. Time Ins. Co.,
264 Ark. 647, 654-55 (1978) ("[W]e do not reject the
possibility that an insurer may be liable in tort . . . upon
a showing that, without a good faith defense to the
insured's claim, it actively engaged in dishonest,
malicious, or oppressive conduct in order to avoid its
plaintiff can accordingly state a claim for bad faith against
her insurance provider if the factual content of her
complaint, accepted as true, plausibly alleges that the
insurer "engaged in affirmative misconduct that was
dishonest, malicious, or oppressive." Unum Life Ins.
Co. of Am. v. Edwards, 362 Ark. 624, 627 (2005). Thus,
in the specific context of fire insurance, the
Findley Court discussed with approval the case of
Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566 (1973).
The complaint in Gruenberg alleged that the
defendant insurer "conspired with the police to have the
claimant charged with arson, on the representation that he
was over-insured and thus had a motive for arson."
Findley, 264 Ark. at 650. Based in large part upon
this allegation, the California Court held that the complaint
stated a cause of action for the tort of bad faith. The case
of Toledano v. Shelter Mut. Ins. Co., 2014 WL
2557225 (W.D. Ark. June 6, 2014),  also involved a cause of
action for bad faith against a fire insurer. According to the
complaint, the insurer's investigator claimed to have
spoken with the local Fire Marshal, and reported to the
insurer that the Marshal "investigated the fire and
determined it to be arson." Id. at *3. However,
the plaintiff's associate contacted the Marshal, who told
the associate, "the fire department made no
determination as to whether the fire was arson."
Id. Nonetheless, this apparent issue of fact,
coupled with the insurer's failure to accommodate
plaintiff's language barrier, did not "rise to the
level of egregiousness required to support [p]laintiff's
bad faith claims." Id.
Lees' Complaint does not contain factual allegations
comparable to those in Gruenberg or even
Toledano. Instead, the Complaint is largely
comprised of the sort of "labels and conclusions"
and "naked assertions" disfavored by the
Twombly I Iqbal pleading standard. For example, the
Complaint asserts that State Farm "has failed to
adequately investigate Plaintiffs' claim, " (Doc. 3,
¶ 24), but fails to explain the alleged inadequacy.
State Farm also "failed to properly investigate
Plaintiffs' claim, " id. at ¶ 25, but
the reader remains in the dark about what was so improper.
State Farm "has not offered a reasonable explanation for
its refusal to pay Plaintiffs' claim, " id.
at ¶ 27, but left unsaid is why the offered explanation
is unreasonable. The Court could continue this exercise, but
will not belabor its point.
the Lees' Complaint fails to state a claim for bad faith
against State Farm. State Farm's Motion to Dismiss (Doc.
6) is therefore GRANTED. Because an amended complaint could
conceivably state a claim for bad faith, the Court's
dismissal is WITHOUT PREJUDICE.
 Though styled as a motion to dismiss,
State Farm's Motion is technically a motion for judgment
on the pleadings, because State Farm filed the Motion
after it answered the Lees' Complaint.
See Fed. R. Civ. P. 12(b), (c). Regardless, the
distinction between a motion for judgment on the pleadings
brought under Fed.R.Civ.P. 12(c) and a motion to dismiss
brought under Fed.R.Civ.P. 12(b)(6) "is purely formal,
because we review [a] 12(c) motion under the standard that
governs 12(b)(6) motions." Westcott v. City of
Omaha,901 F.2d 1486, 1488 (8th Cir. ...