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Mettler v. Ability Insurance Co.

United States District Court, D. South Dakota, Northern Division

September 23, 2015



CHARLES B. KORNMANN, United States District Judge.

Howard "Lance" Mettler ("Lance"), son of and attorney in fact for Howard Mettler ("Mettler"), filed a complaint against the defendants alleging breach of contract, fraud, deceit, and bad faith, and seeking punitive damages as well as attorney fees. These accusations are based upon a long-term care insurance policy purchased in 1988 by Howard Mettler through Medico Life Insurance Company ("Medico"), a policy which defendants admit Ability Insurance Company ("AIC") has assumed the responsibility to adjust, manage, and pay claims as appropriate under the policy. Plaintiff alleges that Ability paid half of what was owed under that policy to Mettler. Plaintiff contends, inter alia, that Defendants are an association of entities acting together for the purpose of providing long-term care insurance under the name Ability Insurance and also act as the alter egos or agents or both of each other.

There are three pending motions. They include a motion to dismiss by defendant TriPlus Services, Inc. ("TriPlus") for failing to state a claim at Doc. 23, a motion to dismiss by defendant TriPlus Administrative Services, Inc. ("TriPlus Administrative") for failing to state a claim at Doc. 25, and a motion to dismiss party Ability Reinsurance Holdings (Bermuda) Ltd. ("ARH") at Doc. 48. For the following reasons, all three motions should be granted.


Howard Mettler is a resident at Avera Eureka Health Care Center, a facility located in Eureka, South Dakota. Mettler bought a long-term care policy from Medico in 1988. He maintained that policy for over fifteen years, which allowed the maximum daily benefit allowed under the policy to increase to $87.50 a day. That daily benefit is designed for long-term care when that care is deemed medically necessary by the policyholder's treating physician. In July, 2009, Mettler's treating physician determined it was necessary for Mettler to be placed in the Avera Eureka Health Care Center. Mettler has resided there since.

In 2007, Medico Life Insurance Company was acquired by Ability Resources, Inc., and Medico became Ability Insurance Company ("AIC"). AIC is the entity that contracts with insureds to provide insurance. AIC and its owner, Ability Resources, have a number of related entities. Ability Resources Holdings, Inc. is the holding company for Ability Resources. Ability Resources has since changed its name to TriPlus Services, Inc. Plaintiff alleges that all the named defendants are an association of entities acting together for the purpose of providing long-term care insurance under the name "Ability Insurance" and also act as the alter egos or agents or both of each other, and that all defendants are ultimately owned and controlled by the same small group of individuals and investors. The defendants deny such allegations and maintain they are separate entities.

Ability received a claim made on behalf of Mettler for the benefits owed under the policy. Plaintiff contends that Ability only paid fifty percent of what was owed. Counsel was hired and the parties began a mediation process that failed. In July, 2014, Plaintiff states he received a check for the amount of $103, 743.75 as an "accommodation to (Mettler) and in the interest of satisfying a former valued policy holder." A complaint was filed thereafter, followed by an amended complaint including TriPlus and TriPlus Administrative as defendants. Plaintiff admits that Mettler was compensated for the due benefits but claims additional damages for money and time spent attempting to recover the contractual benefits.

The first motion, Doc. 23, contends that dismissal is proper due to failing to state a claim upon which relief may be granted. The second and third motions, Docs. 25 and 48, respectively both contend that the Court lacks personal jurisdiction over those defendants. They also contend that the plaintiff is not entitled to any relief. Plaintiff states that each defendant was either no stranger to the contract or that through the alter ego theory, each defendant can be liable for the actions of another, and that there is a claim upon which relief may be granted.


Federal Rule of Civil Procedure 9(b) requires a party that is alleging fraud or mistake to "state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally. Fed.R.Civ.P. 9(b). This particularity requirement demands a higher degree of notice than that required for other claims. U.S. ex rel. Costner v. U.S., 317 F.3d 883, 888 (8th Cir. 2003). The claim must identify, who, what, where, when, and how. Id. Rule 9(b) is to be read in the context of the general principles of the Federal Rules, the purpose of which is to simplify pleading. Thus, the particularity required by Rule 9(b) is intended to enable the defendant to respond specifically and quickly to the potentially damaging allegations. Id.

Under Federal Rule of Civil Procedure 12(b)(1), the court may dismiss an action for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). "In order to properly dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the complaint must be successfully challenged on its face or on the factual truthfulness of its averments. Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993) (quoting Osborn v. United States, 918 F.2d 724, 729 (8th Cir. 1990) (internal citations omitted.) There are two types of subject matter jurisdiction challenges under Rule 12(b)(1): "facial" attacks and "factual" attacks. Titus, 4 F.3d at 593 (8th Cir. 1993). In a facial challenge to jurisdiction, all of the factual allegations concerning jurisdiction are presumed to be true and the motion is successful if the plaintiff fails to allege an element necessary for subject matter jurisdiction. Id. By contrast, a factual attack depends upon the resolution of facts in order to determine whether subject matter jurisdiction exists. Osborn v. U.S., 918 F.2d 724, 730 (8th Cir. 1990). A court may rely upon matters outside the pleadings when considering such an attack, and the non-moving party does not receive the benefit of Rule 12(b)(6)'s safeguards. Id.

Under Federal Rule of Civil Procedure 12(b)(2), the court may dismiss an action for lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2). "To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff 'must state sufficient facts in the complaint to support a reasonable inference that [the defendants] can be subjected to jurisdiction within the state.'" Denver v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004). If jurisdiction is denied or controverted, then the plaintiff carries the burden of showing such facts exist to support jurisdiction. Id.

To defeat a motion to dismiss based on personal jurisdiction, the plaintiff need only make a prima facie showing of jurisdiction. Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 647 (8th Cir. 2003) (citation omitted). Plaintiffs prima facie showing of jurisdiction is not tested by the pleadings alone, but also "affidavits and exhibits presented with the motions and in opposition thereto." Dever, 380 F.3d at 1072. A court considering whether personal jurisdiction is proper "must view the evidence in the light most favorable to the plaintiff and resolve all factual conflicts in its favor in deciding whether the plaintiff made the requisite showing." K-V Pharm. Co. v. J. Uriach & CIA. S.A., 648 F.3d 588, 592 (8th Cir. 2011).

When reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court assumes that all facts in the complaint are true and construes any reasonable inferences from those facts in the light most favorable to the nonmoving party. Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008). In order to decide the motion to dismiss under Rule 12(b)(6), the court may consider the complaint, some materials that are part of the public record, or materials embraced by the complaint. Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999). To survive the motion to dismiss, the complaint must contain "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The factual content in the complaint must "allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Braden v. Walmart Stores, 588 F.3d 585, 594 (8th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

To establish breach of contract under South Dakota Law, a plaintiff must show (1) an enforceable promise, (2) breach of that promise, and (3) resulting damages. E.G. Weitzel v. Sioux Valley Heart Partners. 714 N.W.2d 884, 894 (S.D. 2006). A plaintiff is entitled to recover "all his detriment proximately caused by the breach, not exceeding the amount he would have gained by full performance." Bad Wound v. Lakota Cmty., Homes, Inc., 603 N.W.2d 723, 725 (S.D. 1992). Punitive damages "are not ordinarily recoverable in actions for breach of contract, because, as a general rule, damages for breach of contract are limited to the pecuniary loss sustained." Grvnberg v. Citation Oil and Gas Corp. 573 N.W.2d 493, 500 (S.D. 1997) (quoting Hoffman v. Louis Dreyfus Corp., 435 N.W.2d 211, 214 (S.D. 1989). However, the majority of jurisdictions allow punitive damages in breach of contract cases under certain circumstances, including: conversion; forgery; breach of fiduciary duty; tortious interference with business expectancy; intentional breaches accompanied by willful acts of violence, malice or oppressive conduct; fraud; and breach of covenant of good faith and fair dealing. Grvnberg. 573 N.W.2d at 500. "Punitive ...

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