United States District Court, D. Rhode Island
WILLIAM E. SMITH, Chief Judge.
the Court is Defendant's Motion to Dismiss Counts II,
III, and VI of the Amended Complaint (ECF No. 6), in response
to which Plaintiff has filed an Objection (ECF No. 7). For
the reasons stated below, Defendant's Motion is granted
in part and denied in part.
case arises out of a motor vehicle accident that occurred on
April 28, 2016. Am. Compl. ¶ 5, ECF No. 1-3. Plaintiff
claims that he obtained a policy from Defendant that included
uninsured and underinsured motorist coverage and that
Defendant has refused to pay Plaintiff the fair value of his
claim under that policy. See Am. Compl. ¶¶ 7-11.
Plaintiff asserts six counts in his Amended Complaint (ECF
No. 1-3): Breach of Contract (Count I); Breach of the
Covenant of Good Faith and Fair Dealing (Count II); Tortious
Breach of the Implied Covenant of Good Faith and Fair Dealing
(Count III); Common Law Bad Faith (Count IV); Bad Faith -
R.I. Gen. Laws § 9-1-33 (Count V); and Unfair Trade
Practices - R.I. Gen. Laws § 6-13.1-5.2 (Count VI). See
Id. Defendant has moved to dismiss Counts II, III,
and VI for failure to state a plausible claim for relief.
survive a motion to dismiss, the complaint need not set for
detailed factual allegations, but must set forth only a
plausible claim for relief. Ashcroft v. Iqbal, 556
U.S. 662, 679 (2009) (“[O]nly a complaint that states a
plausible claim for relief survives a motion to
dismiss.”); see also Flock v. U.S. Dept. of
Transp., 840 F.3d 49, 54 (1st Cir. 2016). In assessing
whether the complaint meets the plausibility standard, the
Court must “construe all factual allegations in the
light most favorable to the non-moving party.”
Wilson v. HSBC Mortgage Servs., Inc., 744 F.3d 1, 7
(1st Cir. 2014). Because this case invokes diversity
jurisdiction, the Court applies the substantive law of the
state of Rhode Island. See Artuso v. Vertex Pharm.,
Inc., 637 F.3d 1, 5 (1st Cir. 2011) (“[A] federal
court sitting in diversity must apply the substantive law of
the forum state.”) (citing Erie R.R. Co. v.
Tompkins, 304 U.S. 64, 78 (1938)).
argues that the Court should dismiss Count II because
“there is no separate, independent tort for breach of
the duty of good faith and fair dealing when a breach of
contract is alleged.” Def.'s Mot. Dismiss 7, ECF
No. 6. Even if this is true, it is not a valid basis for
dismissal under Rhode Island law. See R.I. Econ. Dev.
Corp. v. Wells Fargo Sec., LLC, 2013 R. I. Super. LEXIS
165 *97-98 (“[A] Motion to Dismiss tests the
sufficiency of the Complaint, whereas an argument that a
claim is duplicative is essentially an argument that the
Complaint contains too much.”). On a motion to dismiss,
the Court is “merely testing the sufficiency of the
Complaint, ” not considering “once count's
effect of another.” Id. at *100-101. Rather, a
defendant's arguments that claims are
“duplicative” is better suited to a motion to
strike or a motion for summary judgment. Id. at *98.
Defendant acknowledges as much in its Motion. Def.'s Mot.
7 n.1 (conceding that Rhode Island courts have refused to
dismiss claims even when they were duplicative of other
claims). Accordingly, dismissal of Count II is neither
necessary nor appropriate at this stage.
next argues that the Court should dismiss Count III because
it is duplicative of Counts IV and V, which allege bad faith
under Rhode Island common law and R.I. Gen. Laws §
9-1-33, respectively. See Def.'s Mot. Dismiss 7, ECF no.
6. Once again, redundancy is not, in itself, a sufficient
basis for dismissal at this stage. R.I. Econ. Dev. Corp.,
2013 R. I. Super. LEXIS 165 at *100. Additionally, however,
the Court notes that Count III actually alleges a claim for
bad faith refusal to pay an insurance claim, which the Rhode
Island Supreme Court has specifically recognized an
independent cause of action sounding in tort. See
Bibeault v. Hanover Ins. Co., 417 A.2d 313, 319 (R.I.
1980) (“[A]n insurer doing business in Rhode Island is
obligated to act in good faith in its relationship with its
policyholders. A violation of this duty will give rise to an
independent claim in tort[.]”); Skaling v. Aetna
Ins. Co., 799 A.2d 997, 1006 (R.I. 2002) (recognizing
the continued vitality of the common law tort of insurer bad
faith under Bibeault).
show a claim for bad faith, a plaintiff must show the absence
of a reasonable basis for denying benefits of the policy and
the defendant's knowledge or reckless disregard of the
lack of a reasonable basis for denying the claim.”
Bibeault, 417 A.2d at 319 (quotations omitted). Here,
Plaintiff alleges: that Defendant “refus[ed] to
properly compensate Plaintiff for his injuries sustained in
the underlying accident”; that Defendant owed Plaintiff
“a fiduciary-like duty” as Plaintiff's
insurance company; that Defendant's “refusal to
make adequate payments to Plaintiff was . . . without a
reasonable basis in fact or law”; and that
“Plaintiff sustained damages in excess of the . . .
policy limits as a result of Defendant's breach[.]”
Am. Compl. ¶¶ 17, 38-40. These allegations state a
plausible claim for relief under Bibeault and its progeny.
Plaintiff appears to concede that he cannot prevail on Count
VI. Count VI alleges that Defendant engaged in unfair trade
practices in violation of Deceptive Trade Practices Act, R.I.
Gen. Laws § 6-13.1-2 (“DTPA”) by failing to
properly settle Plaintiff's claim. See Am. Compl. ¶
54. The DTPA declares unlawful “[u]nfair methods of
competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce.” R.I. Gen. Laws
§ 6-13.1-2. However, this statutory cause of action does
not exist when the Defendant's challenged actions are
subject to federal or state regulation. R.I. Gen. Laws §
6-13.1-4 (“Nothing in this chapter shall apply to
actions or transactions permitted under laws administered by
the department of business regulation or other regulatory
body or officer acting under statutory authority of this
state or the United States.”); State v. Piedmont
Funding Corp., 382 A.2d 819, 822 (1978) (holding that
the plain language of the statute “clearly exempted
from the [DTPA] all those activities and businesses which are
subject to monitoring by state or federal regulatory bodies
motor vehicle insurance policy at issue here is regulated by
Rhode Island's Department of Business Regulation. See
R.I. Gen. Laws § 42-14-2 (“It shall be the
function of the department of business regulation to license,
regulate and control all areas as required by this
chapter[.]”); R.I. Gen. Laws § 42-14-4
(“Within the department of business regulation there
shall be a division of financial services that oversees the
regulation and control of banking and insurance and such
other matters within the jurisdiction of the department as
determined by the director.”) (emphasis added); R.I.
Gen. Laws § 27-7-2.1 (stating that certain policy limits
for “uninsured motorist coverage” require the
insured to “sign an advisory notice approved by the
director of business regulation”); see also 15 U.S.C.
§ 1012 (“The business of insurance, and every
person engaged therein, shall be subject to the laws of the
several States which relate to the regulation or taxation of
such business.”). Accordingly, Plaintiff's DTPA
claim against Defendant fails as a matter of law
“‘because the conduct at issue was clearly
subject to the control of governmental agencies [and
therefore] it is within the exemption provision and not
subject to the mandates of the [DTPA].'” Lynch
v. Conley, 853 A.2d 1212, 1214 (R.I. 2004) (quoting
Piedmont, 382 A.2d at 822).
reasons stated herein, the Court GRANTS Defendant's
Motion to Dismiss (ECF No. 6) as to Count VI and DENIES ...