United States District Court, S.D. Indiana, Indianapolis Division
H.E. McGONIGAL, INC., Plaintiff,
HARLEYSVILLE LAKE STATES INSURANCE COMPANY, and COREPOINTE INSURANCE COMPANY, Defendants.
ORDER ON DEFENDANT COREPOINTE'S MOTION TO
WALTON PRATT, JUDGE
matter is before the Court on Defendant CorePointe Insurance
Company's (“CorePointe”) Motion to Dismiss
Count IV of the Complaint for Failure to State a Claim
(Filing No. 45). Plaintiff H.E. McGonigal, Inc.
(“McGonigal”) is an Indiana car dealership
company. In January 2015, McGonigal brought this action
against CorePointe and Harleysville Lake States Insurance
Company (“Harleysville”), asserting claims for
breach of contract and breach of the duty of good faith and
fair dealing in connection with insurance policies sold by
CorePointe and Harleysville to McGonigal (Filing No.
1-1). CorePointe moves to dismiss the claim for breach
of the duty of good faith and fair dealing on the basis that
the Complaint fails to state a claim for bad faith against
CorePointe. For the reasons below, the Court GRANTS
is an Indiana car dealership company located in Kokomo,
Indiana. CorePointe is an insurance company based out of
Birmingham, Michigan, and Harleysville is an insurance
company based out of Harleysville, Pennsylvania. McGonigal
purchased insurance policies from both CorePointe and
Harleysville to cover losses incurred in its business.
about January 18, 2013, McGonigal learned that approximately
sixteen vehicles were fraudulently purchased with funds drawn
on a McGonigal account, and McGonigal received no
compensation for the vehicles. After discovering the loss,
McGonigal submitted insurance claims to both CorePointe and
Harleysville in accordance with the insurance policies'
terms. Even though McGonigal complied with the terms of the
insurance policies, and despite the loss being a loss covered
by the policies, CorePointe and Harleysville denied
January 7, 2015, McGonigal filed a Complaint in state court
against both CorePointe and Harleysville, seeking coverage
for the loss and damages for the insurers' breach of
contract and failure to act in good faith (Filing No.
1-1). On March 17, 2015, CorePointe filed its Answer to
the Complaint in state court (Filing No. 1-11). Then
on April 7, 2015, Harleysville filed its Notice of Removal,
in which CorePointe joined, thereby removing the matter to
this Court (Filing No. 1). Six days later, on April
13, 2015, Harleysville filed a Motion to Dismiss, asserting
that the Complaint failed to provide any factual basis to
support a claim of insurance bad faith (Filing No.
5). On October 26, 2015, the Court granted
Harleysville's motion to dismiss Count II of the
Complaint-the bad faith claim against Harleysville
(Filing No. 41). CorePointe then filed its Motion to
Dismiss Count IV of the Complaint on January 4, 2016,
asserting the same argument advanced by Harleysville-the
Complaint fails to provide any factual basis to support a
claim of insurance bad faith.
Rule of Civil Procedure 12(b)(6) allows a defendant to move
to dismiss a complaint that has failed to “state a
claim upon which relief can be granted.” Fed.R.Civ.P.
12(b)(6). When deciding a motion to dismiss under Rule
12(b)(6), the Court accepts as true all factual allegations
in the complaint and draws all inferences in favor of the
plaintiff. Bielanski v. County of Kane, 550 F.3d
632, 633 (7th Cir. 2008). However, courts “are not
obliged to accept as true legal conclusions or unsupported
conclusions of fact.” Hickey v. O'Bannon,
287 F.3d 656, 658 (7th Cir. 2002).
complaint must contain a “short and plain statement of
the claim showing that the pleader is entitled to
relief.” Fed.R.Civ.P. 8(a)(2). In Bell Atlantic
Corp. v. Twombly, the Supreme Court explained that the
complaint must allege facts that are “enough to raise a
right to relief above the speculative level.” 550 U.S.
544, 555 (2007). Although “detailed factual
allegations” are not required, mere “labels,
” “conclusions, ” or “formulaic
recitation[s] of the elements of a cause of action” are
insufficient. Id.; see also Bissessur v. Ind.
Univ. Bd. of Trs., 581 F.3d 599, 603 (7th Cir. 2009)
(“it is not enough to give a threadbare recitation of
the elements of a claim without factual support”). The
allegations must “give the defendant fair notice of
what the . . . claim is and the grounds upon which it
rests.” Twombly, 550 U.S. at 555. Stated
differently, the complaint must include “enough facts
to state a claim to relief that is plausible on its
face.” Hecker v. Deere & Co., 556 F.3d
575, 580 (7th Cir. 2009) (citation and quotation marks
omitted). To be facially plausible, the complaint must allow
“the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556).
Rule 12(b)(6) motion filed after an answer has been filed is
to be treated as a Rule 12(c) motion for judgment on the
pleadings and can be evaluated under the same standard as a
Rule 12(b)(6) motion.” McMillan v. Collection
Professionals, Inc., 455 F.3d 754, 756 n.1 (7th Cir.
2006). See also Alioto v. Town of Lisbon, 651 F.3d
715, 718 (7th Cir. 2011) (“The defendants styled the
[motions] Rule 12(b)(6) motions, but in reality the motions
were for judgment on the pleadings, Fed.R.Civ.P. 12(c),
because the defendants filed answers. See Fed. R.
Civ. P. 12(b) (‘A motion asserting any of these
defenses must be made before pleading if a responsive
pleading is allowed.'); Fed.R.Civ.P. 12(h)(2)(B) (a
motion for failure to state a claim may be brought in a Rule
12(c) motion). The “misstyling does not alter our
analysis.”). Where a defendant's “motion for
judgment on the pleadings challenge[s] the sufficiency of
plaintiff's complaint . . ., the standards governing
their Rule 12(c) motion are the same as those governing a
Rule 12(b)(6) motion to dismiss.” Gutierrez v.
Peters, 111 F.3d 1364, 1368 (7th Cir. 1997). Because
CorePointe filed an Answer, its Rule 12(b)(6) Motion to
Dismiss is treated as a Rule 12(c) motion for judgment on the
pleadings, but the Court still utilizes the same standards
governing 12(b)(6) motions.
asserts that CorePointe owed it a duty of good faith and fair
dealing in processing its insurance claim. Indeed, as
established in Erie Insurance Co. v. Hickman, 622
N.E.2d 515, 519 (Ind. 1993), in Indiana, insurers have a duty
to deal with their policyholders in good faith. However, as
the Indiana Supreme Court pointed out in Hickman,
“this new cause of action does not arise every time an
insurance claim is erroneously denied.” Id. at
For example, a good faith dispute about the amount of a valid
claim or about whether the insured has a valid claim at all
will not supply the grounds for a recovery in tort for the
breach of the obligation to exercise good faith. This is so
even if it is ultimately determined that the insurer breached
its contract. That insurance companies may, in good faith,
dispute claims, has long been the rule in Indiana.
Id. Therefore, under Indiana law, a plaintiff
policyholder may bring a claim for breach of the insurance
contract when an insurer erroneously denies a claim, and it
may bring a separate claim for bad faith when an insurer
breaches its duty of good faith and fair dealing. Because
these two claims are separate and an insurer can erroneously
deny a claim in good faith, a plaintiff must plead
allegations beyond just a simple breach of contract based on