MANOULA, LLC v. OHIO SECURITY INSURANCE COMPANY

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

MANOULA, LLC d/b/a CHINA )

GROVE FAMILY RESTAURANT, )

)

Plaintiff, )

)

v. ) 1:21-cv-00718

)

OHIO SECURITY INSURANCE )

COMPANY, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

Before the court is the motion of Defendant Ohio Security

Insurance Company (“Ohio Security”) to dismiss the complaint

pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 6.)

Plaintiff Manoula, LLC d/b/a China Grove Family Restaurant

(“Manoula”) filed a response in opposition (Docs. 10, 11), and

Ohio Security replied (Doc. 13). For the reasons set forth below,

the motion will be granted and the complaint will be dismissed.

I. BACKGROUND

The facts, as alleged in the complaint and viewed in the light

most favorable to Manoula, show the following:

From January 1, 2017, to January 1, 2018, Manoula was enrolled

in a Commercial Lines Policy insurance contract issued and

administered by Ohio Security. (Doc. 1-2 ¶ 4.) The policy1 obliged

1 Although Manoula’s complaint did not attach the insurance policy, the

Ohio Security to “pay for direct physical loss of or damage to

Covered Property at the premises . . . caused by or resulting from

any Covered Cause of Loss.” (Doc. 1-3 at 146.) “Covered Property”

was defined as including “personal property” and “the building or

structure described in the Declarations, including: . . .

Fixtures, including outdoor fixtures.” (Id.) Under its “Business

Income (and Extra Expense) Coverage Form,” the policy would “pay

for the actual loss of Business Income you sustain due to the

necessary ‘suspension’ of your ‘operations’ during the ‘period of

restoration.’” (Id. at 45.) The policy also covered “necessary

expenses you incur during the ‘period of restoration’ that you

would not have incurred if there had been no direct physical loss

or damage to property caused by or resulting from a Covered Cause

of Loss,” including “Extra Expense[s]” to “[m]inimize the

‘suspension’ of business if you cannot continue ‘operations’” and

“repair or replace property.” (Id. at 45-46.) Finally, the policy

prescribed that legal action must be “brought within three years

after the date on which the direct physical loss or damage

occurred.” (Id. at 165.)

On August 24, 2017, China Grove Family Restaurant sustained

damages, including business operations losses, from a water

court may consider documents submitted by the movant that were not

attached to the complaint, so long as they are expressly incorporated

in the complaint and are authentic. Goines v. Valley Cmty. Servs. Bd.,

822 F.3d 159, 165-66 (4th Cir. 2016).

intrusion event. (Doc. 1-2 ¶ 5.) Upon the discovery of the water

intrusion, Manoula notified Ohio Security and hired various third-

party contractors to determine the source of the water intrusion,

stop further damage, and remediate its effects. (Id. ¶ 6.)

Actions taken by Manoula included excavating a portion of the

parking lot and interior portions of the restaurant to ascertain

the source of the water intrusion, reconstructing those affected

areas, and taking remedial steps to prevent further damage. (Id.)

As a result of the water damage, Manoula suffered damages including

business interruption; payroll expenses to retain staff for clean-

up, shut down, and reopening; loss of perishable food products;

cost of third-party contractors to excavate and reconstruct

floors, fixtures, signs, and the parking lot; and other reasonably

necessary incidental expenses. (Id. ¶ 7.)

Following these events, Manoula filed a timely claim with

Ohio Security under the Commercial Lines Policy. (Id. ¶ 8.) When

Manoula reported the claim, Ohio Security’s representative advised

Plaintiff that the claim was “fully” covered. (Id. ¶ 16.) Ohio

Security issued an advance partial payment to Manoula for expenses

necessary to remedy the damages resulting from the water intrusion.

(Id.) However, Ohio Security later “reversed course and took a

position that only a portion of Plaintiff’s claim was ‘covered’

under the policy” and “denied responsibility for reimbursement of

expenses Plaintiff had already incurred to begin the process of

remediation.” (Id. ¶ 17.) Ohio Security then “sought to re-

classify the advance loss payment . . . to further reduce or offset

the additional amounts payable under the . . . policy based upon

Defendant’s incorrect, but more restrictive position regarding the

extent of the loss covered by the policy.” (Id. ¶ 18.)

Specifically, Ohio Security’s representative “misrepresented the

scope of the applicable coverages and improperly applied a loss

limitation of $25,000 broadly to multiple aspects of Plaintiff’s

claim that had separate coverages and coverage limits under the

policy that were not subject to the $25,000 loss limitation

applied” and “classified a portion of the loss as a second loss

incident, but still applied the restrictive policy loss limitation

of $25,000.” (Id. ¶ 19.) Finally, Ohio Security allegedly

“conducted an improper and inadequate” claim investigation and

“ignored the investigative findings of third parties regarding the

true cause of the loss” in order to apply the $25,000 loss

limitation. (Id. ¶ 20.) As a result of the claim, Ohio Security

made a partial payment to Manoula. (Id. ¶ 8.)

On June 26, 2018, Manoula sent a letter to Ohio Security

detailing the additional sums payable under the policy. (Id.

¶ 11.) On June 25, 2021, Manoula filed suit against Ohio Security

in the Rowan County Superior Court. (Id. at 1.) Ohio Security

timely removed the action to this court (Doc. 1) and subsequently

filed a motion to dismiss for failure to state a claim (Doc. 6),

alleging that Manoula’s breach of contract claim (Count I) is time-

barred and the complaint fails to plead particularized facts in

support of its Unfair and Deceptive Trade Practices claim (Count

II) (Doc. 7). The motion is now fully briefed and ready for

resolution.

II. ANALYSIS

A. Standard of Review

Federal Rule of Civil Procedure 8(a)(2) provides that a

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). A motion to dismiss pursuant to Rule 12(b)(6) is meant

to “test[] the sufficiency of a complaint” and not to “resolve

contests surrounding the facts, the merits of a claim, or the

applicability of defenses.” Republican Party of N.C. v. Martin,

980 F.2d 943, 952 (4th Cir. 1992). To survive such a motion, “a

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 Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In considering a

Rule 12(b)(6) motion, a court “must accept as true all of the

factual allegations contained in the complaint,” Erickson v.

Pardus, 551 U.S. 89, 94 (2007) (per curiam), and all reasonable

inferences must be drawn in the non-moving party’s favor, Ibarra

v. United States, 120 F.3d 472, 474 (4th Cir. 1997). With this

standard in mind, the court turns to the present motion.

B. Breach of Contract

Manoula’s first cause of action alleges breach of contract.

Ohio Security argues that Manoula’s breach of contract claim is

time-barred under the three-year suit limitation provision in the

policy or, alternatively, under the three-year statute of

limitations for insurance policies in North Carolina. (Doc. 7 at

9 & n. 7.) Ohio Security alleges that the limitation period began

to run on August 24, 2017, when Manoula sustained loss or damage

stemming from a water intrusion event. (Id. at 9.) Under Ohio

Security’s reasoning, Manoula’s claim had to be filed by August

24, 2020, and, because Manoula did not file suit until June 25,

2021, its claim is untimely. (Id.) In response, Manoula argues

that the limitation provision is void under North Carolina General

Statute § 58-3-35, which provides “No insurer . . . shall limit

the time within any suit or action . . . may be commenced to less

than the period prescribed by law.” Manoula argues its claim is

timely because the three-year statute of limitations under North

Carolina law did not begin to run until June 26, 2018, when

Manoula’s representative sent a letter demanding additional

payment for losses sustained while repairing the premises and

reopening its business, and any provision lessening the time

Manoula had a right to bring a suit would be void pursuant to § 58-

3-35. (Doc. 11 at 5-6.)

A motion to dismiss under Rule 12(b)(6) “generally cannot

reach the merits of an affirmative defense, such as the defense

that the plaintiff’s claim is time-barred.” Goodman v. Praxair,

Inc., 494 F.3d 458, 464 (4th Cir. 2007) (en banc). But a district

court may reach the merits of an affirmative defense “if all facts

necessary to the affirmative defense clearly appear on the face of

the complaint,” id. (emphasis and alteration omitted), including

where “a complaint show[s] that the statute of limitations has run

on the claim,” see Brooks v. City of Winston-Salem, N.C., 85 F.3d

178, 181 (4th Cir. 1996) (quotation omitted).

Generally, a three-year statute of limitations governs breach

of contract claims under North Carolina law. N.C. Gen. Stat. § 1–

52(1); Penley v. Penley, 332 S.E.2d 51, 62 (N.C. 1985). The

limitations period for civil actions starts running when the

plaintiff’s cause of action accrues. N.C. Gen. Stat. § 1–15;

McCutchen v. McCutchen, 624 S.E.2d 620, 623 (N.C. 2006). Accrual

is measured “from the time when the first injury was sustained”

such that “[w]hen the right of the party is once violated, even in

ever so small a degree, . . . the cause of action is

complete.” Pearce v. N.C. State Highway Patrol Voluntary Pledge

Comm., 312 S.E.2d 421, 424 (N.C. 1984); see also Christenbury Eye

Ctr., P.A. v. Medflow, Inc., 802 S.E.2d 888, 892 (N.C. 2017) (“It

is well settled that where the right of a party is once violated

the injury immediately ensues and the cause of action arises.”

(citation and quotation marks omitted)). Although “a statute of

limitations should not begin running . . . until [the] plaintiff

has knowledge that a wrong has been inflicted upon him[,] . . . as

soon as the injury becomes apparent to the claimant or should

reasonably become apparent, the cause of action is complete and

the limitation period begins to run.” Chisum v. Campagna, 855

S.E.2d 173, 188, reh’g denied, 855 S.E.2d 799 (N.C. 2021)

(citations and quotation marks omitted); see also Thurston Motor

Lines, Inc. v. Gen. Motors Corp., 128 S.E.2d 413, 415 (N.C. 1962)

(explaining that a cause of action accrues “as soon as the right

to institute and maintain a suit arises”).

A three-year statute of limitations also applies to insurance

policies “contained in [North Carolina General Statute §] 58-44-

16” pursuant to North Carolina General Statute § 1-52(12). See

N.C. Gen. Stat. § 1-52(12). While North Carolina General Statute

§ 58-44-16 covers “Fire insurance policies,” North Carolina courts

have also included homeowner’s insurance policies and similar

policies insuring real property. See Page v. Lexington Ins. Co.,

628 S.E.2d 427, 430 (N.C. Ct. App. 2006) (homeowner’s property

insurance); Marshburn v. Associated Indem. Corp., 353 S.E.2d 123,

127-28 (N.C. Ct. App. 1987) (same). Claims must be brought within

three years of the date of loss. N.C. Gen. Stat. § 58-44-16(18).

Manoula argues that the action did not accrue until Ohio

Security was in “breach of contract” following the June 26, 2018

letter demanding payment. (Doc. 11 at 5.) This argument is

unavailing. First, Manoula relies on Penley for the general

assertion that under North Carolina law, “a cause of action for

breach of contract does not accrue until there has been a breach

of the contract.” (Id.) While this is a correct statement of

law, Manoula cannot rely on this general assertion to seek to

extend the date of loss limitation within the terms of the policy.

See Quillen v. Allstate Corp., No. 1:14-CV-00015-MR-DLH, 2014 WL

6604897, at *3 (W.D.N.C. Nov. 20, 2014) (Reidinger, J.) (adopting

Memorandum and Recommendation of Howell, Mag. J.) (“Plaintiffs’

claim for breach of [an insurance] contract is governed by [North

Carolina General Statute §] 1-52(12), and Plaintiffs had three

years from the date of the loss to bring a suit against

Defendants.”); Lloyd v. Grain Dealers Mut. Ins. Co., 645 S.E.2d

230 (N.C. Ct. App. 2007) (unpublished) (“[A]n insurance policy is

a contract and its provisions govern the rights and duties of the

parties thereto. . . . Where there is no ambiguity in a policy’s

language, the courts must apply the plain meaning of the policy

language and enforce the policy as written. . . . The language in

the insurance contract was clear, an action must be brought within

three years after the date . . . [of] loss.”) (internal quotations

and citations omitted).

Next, Manoula argues that North Carolina General Statute

§ 58-44-16 only applies to fire insurance contracts. Manoula

contends that § 58-3-35 prohibits an insurer from “limit[ing] the

time within which any suit or action . . . may be commenced to

less than the period prescribed by law” pursuant to § 1–52(1).

(Doc. 11 at 5.) This is incorrect. The title of § 58-44-16 —

“Fire insurance policies; standard fire insurance policy

provisions” — is misleading; § 58-44-16 is not limited to fire

insurance policies. Instead, Ҥ 58-44-16 extends to insurance

policies covering real property for fire and non-fire losses.”

Skyline Restoration, Inc. v. Church Mut. Ins. Co., 20 F.4th 825,

831 (4th Cir. 2021) (collecting cases); see Biltmore Avenue

Condominium Ass’n Inc. v. Hanover American Insurance Co., No.

1:15CV43, 2015 WL 12731927, at *2 (W.D.N.C. Sept. 3, 2015), report

and recommendation adopted, No. 1:15-CV-43-MR-DLH, 2016 WL 406463

(W.D.N.C. Feb. 2, 2016) (applying North Carolina General Statute

§§ 1-52(12) and 58-44-16(18) to an alleged breach of a commercial

property insurance policy). Because North Carolina courts extend

North Carolina General Statute §§ 1-52(12) and 58-44-16 to real

property insurance policies, the applicable statute of limitations

period the policy may not lessen is three years from the date of

loss.

Here, the policy provided that legal action be “brought within

three years after the date on which the direct physical loss or

damage occurred.” (Doc. 1-3 at 165.) Thus, because the policy

language does not shorten the limitations period to less than three

years from the date of loss, pursuant to North Carolina General

Statute § 58-44-16, the provision is valid under § 58-3-35.

Manoula’s breach of contract claim accrued on the date of loss,

August 24, 2017. As such, Manoula was required to bring suit on

the claim by August 24, 2020, at the latest. The present suit,

filed on June 25, 2021, is therefore untimely, and the claim is

time-barred. Manoula’s breach of contract claim must accordingly

be dismissed.

C. North Carolina Unfair and Deceptive Trade Practices Act

Manoula’s second cause of action alleges that Ohio Security

engaged in one or more “unfair and deceptive acts or practices in

or affecting commerce” under North Carolina’s Unfair and Deceptive

Trade Practices Act, N.C. Gen. Stat. § 75–1.1 (“UDTPA”), and/or

Unfair Claim Settlement Practices, N.C. Gen. Stat. § 58–63–15(11)

(“Claims Act”), by: (1) misrepresenting pertinent facts and

insurance policy provisions relating to coverages under the policy

(N.C. Gen. Stat. § 58–63–15(11)(a)); (2) refusing to pay Manoula’s

claim without conducting a reasonable investigation of the water

intrusion (N.C. Gen. Stat. § 58–63–15(11)(d)); (3) not attempting

in good faith to effectuate a prompt, fair, and equitable

settlement of the claim, in which liability had become reasonably

clear (N.C. Gen. Stat. § 58–63–15(11)(f)); and/or (4) attempting

to settle the claim for less than the amount to which a reasonable

man would have believed he was entitled (N.C. Gen. Stat. § 58–63–

15(11)(h)).2 (Doc. 1-2 ¶¶ 14-24.)

In response, Ohio Security argues that Manoula has failed to

plead facts with the requisite specificity as required by Federal

Rules of Civil Procedure 9(b) and 12(b)(6), and has “merely

parrot[ed] the language of North Carolina’s unfair claim

settlement statute . . . and [the UDTPA.]” (Doc. 7 at 10, 14.)

Manoula responds, without citing any authority, that “[t]he

Complaint allegations in the case at bar provide detailed factual

allegations of Defendant’s misconduct . . . and the allegations

identify the specific portions of [the Claims Act] Defendant’s

conduct violated.” (Doc. 11 at 4.)

The UDTPA creates civil liability for any “unfair or deceptive

acts or practices in or affecting commerce.” N.C. Gen. Stat. § 75-

1.1. To sustain a UDTPA claim, a plaintiff must show that: (1)

the defendant committed an unfair or deceptive act or practice, or

an unfair method of competition, that (2) was in or affecting

commerce, which (3) proximately caused actual injury to it. A

2 Manoula also alleges generally “[t]hat the aforesaid acts and conduct

of Defendant[] amount to unfair and deceptive acts or practices in or

affecting commerce in violation of [the UDTPA.]” (Doc. 1-2 ¶ 22.)

However, it is well settled that a mere breach of contract, even if

intentional, cannot sustain a UDTPA claim without a showing of

“substantial aggravating circumstances.” Stack v. Abbott Labs., Inc.,

979 F. Supp. 2d 658, 668 (M.D.N.C. 2013) (quoting Griffith v. Glen Wood

Co., 646 S.E.2d 550, 558 (N.C. Ct. App. 2007)). “The type of conduct

that has been found sufficient to constitute a substantial aggravating

factor has generally involved forged documents, lies, and fraudulent

inducements. Id. (collecting cases).

trade practice is “unfair” if it “is immoral, unethical,

oppressive, unscrupulous, or substantially injurious to

consumers,” and it is “deceptive” if it “possesses the tendency or

capacity to mislead, or creates the likelihood of deception.”

First Atl. Mgmt. Corp. v. Dunlea Realty, Co., 507 S.E.2d 56, 63

(N.C. Ct. App. 1998) (citations and brackets omitted). The

determination whether an act or practice is unfair or deceptive

under the law is a question of law for the court. Gray v. N.C.

Ins. Underwriting Ass’n, 529 S.E.2d 676, 681 (N.C. 2000).

Although a violation of the Claims Act is actionable only by

the Commissioner of Insurance,3 the types of conduct listed in the

Claims Act can be used to support a private cause of action

pursuant to the UDTPA. Elliott v. Am. States Ins. Co., 883 F.3d

384, 396 (4th Cir. 2018). Conduct that violates the Claims Act,

even in the absence of a separate claim under that statute,

constitutes a UDTPA violation as a matter of law. Gray, 529 S.E.2d

at 683-84 (insurer’s act of failing to attempt in good faith to

effectuate prompt and fair claims settlements is a violation of

N.C. Gen. Stat. § 75–1.1 “separate and apart from any violation of

N.C.G.S. § 58–63–15(11)[f]”); Country Club of Johnston Cnty., Inc.

v. U.S. Fid. & Guar. Co., 563 S.E.2d 269, 279 (N.C. Ct. App. 2002)

3 The Claims Act creates a cause of action in favor of the Commissioner

when an insurance company commits or performs any of fourteen specified

actions with such frequency as to indicate a general business practice.

N.C. Gen. Stat. § 58-63-15(11).

(applying rule to all prohibited acts under North Carolina General

Statute § 58–63–15(11)); see also Page, 628 S.E.2d at 429. Such

conduct does not require “an additional showing of frequency

indicating a general business practice, because such conduct is

inherently unfair, unscrupulous, immoral, and injurious to

consumers.” Elliott, 883 F.3d at 396 (internal citation and

quotation marks omitted). However, “[s]imply invoking Chapter 58-

63-15(11) does not suffice to state a claim.” Neshat v. Nationwide

Mut. Fire Ins. Co., No. 5:20-CV-664-D, 2021 WL 2168906, at *4

(E.D.N.C. May 27, 2021) (citation and internal quotation marks

omitted).

In cases alleging fraud or misrepresentation, a plaintiff

“must state with particularity the circumstances constituting

fraud.” Fed. R. Civ. P. 9(b). The particularity requirements of

Rule 9(b) also apply to UDTPA claims. See Topshelf Mgmt., Inc. v.

Campbell-Ewald Co., 117 F. Supp. 3d 722, 731 (M.D.N.C. 2015)

(applying Rule 9(b) to a § 75-1.1 claim alleging fraudulent

misrepresentation); see also Packrite, LLC v. Graphic Packaging

Int’l, LLC, No. 1:17CV1019, 2020 WL 7060395, at *7 (M.D.N.C. Dec.

2, 2020) (applying Rule 9(b) to a § 75-1.1 claim alleging

fraudulent omission). Procedurally, a failure to comply with Rule

9(b) is treated as a failure to state a claim under Rule 12(b)(6).

Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 n.5

(4th Cir. 1999).

To meet the requirements of Rule 9(b), a plaintiff must

sufficiently describe “the time, place, and contents of the false

representations, as well as the identity of the person making the

misrepresentation and what he obtained thereby.” U.S. ex rel.

Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir.

2008) (quoting Harrison, 176 F.3d at 784). This minimum factual

description is “often referred to as the who, what, when, where,

and how of the alleged fraud.” Id. (citation and internal

quotation marks omitted). In cases where a fraud claim

incorporates by reference the prior allegations in the complaint,

the entire complaint is examined to determine whether the pleading

requirements of Rule 9(b) are satisfied. Adkins v. Crown Auto,

Inc., 488 F.3d 225, 232 (4th Cir. 2007). “A court should hesitate

to dismiss a complaint under Rule 9(b) if the court is satisfied

(1) that the defendant has been made aware of the particular

circumstances for which she will have to prepare a defense at

trial, and (2) that plaintiff has substantial prediscovery

evidence of those facts.” Harrison, 176 F.3d at 784.

First, Manoula contends that Ohio Security committed an

unfair claim settlement practice by “misrepresenting pertinent

facts and insurance policy provisions relating to coverages” at

issue in violation of North Carolina General Statute § 58–63–

15(11)(a). (Doc. 1-2 ¶ 21.) Manoula asserts that Ohio Security’s

representative advised it that the claim would be “fully” covered

but later “reversed course” and only paid a portion of the

expenses. (Id. ¶¶ 16-17.) The complaint also alleges Manoula’s

“representative misrepresented the scope of the applicable

coverages and improperly applied a loss limitation of $25,000.”

(Id. ¶ 19.) However, the complaint fails to identify the

individual(s) who allegedly made the misrepresentations, or any

individual recipients of the fraudulent statements. See Topshelf

Mgmt., 117 F. Supp. 3d at 726. Neither does the complaint

identify, moreover, the time or place of any misrepresentation.

The complaint only alleges that the misrepresentations were when

Manoula “first reported the claim,” during the “weeks following

the notice of claim submitted to [Ohio Security],” and “when [Ohio

Security was] investigating the loss and assessing the available

coverage.” (Doc. 1-2 ¶¶ 16-17, 19.) These allegations lack

sufficient particularity to satisfy the heightened pleading

standard for UDTPA claims under Rule 9(b). Cf. Guessford v.

Pennsylvania Nat. Mut. Cas. Ins. Co., 918 F. Supp. 2d 453 (M.D.N.C.

2013) (finding the complaint survived a motion to dismiss where

the complaint appended correspondence from the insurer that

unambiguously misrepresented the terms of the insurance contract.)

Next, Manoula contends that Ohio Security failed to

“conduct[] a reasonable investigation of the cause of the water

intrusion based upon all available information” in violation of

§ 58–63–15(11)(d). (Doc. 1-2 ¶ 21.) Simply parroting the language

of subsection (d) is not sufficient to survive a motion to dismiss.

See Universal Underwriters Ins. Co. v. Lallier, 334 F. Supp. 3d

723, 738 (E.D.N.C. 2018). “Rather, a plaintiff must identify

specific failures or how those alleged failures damaged them.”

Neshat, 2021 WL 2168906, at *5 (internal citation, quotation marks,

and alterations omitted). Here, the complaint alleges that Ohio

Security in fact conducted an investigation to “assess[] the cause

of the loss,” but it alleges in only conclusory fashion that the

investigation was “improper and inadequate.” (Doc. 1-2 ¶ 20.)

Manoula also vaguely references Ohio Security’s refusal to

consider the “investigative findings of third parties regarding

the true cause of the loss.” (Id.) Yet Manoula does not allege

any facts about the failures of the inspection, how it was

unreasonably conducted, or when Ohio Security became aware of the

“findings of third parties.” (See id.) Manoula’s complaint merely

suggests that the investigation was unreasonable because it

resulted in the application of a $25,000 policy limitation.

Manoula need not plead a prima facie case, but its claim that Ohio

Security failed to reasonably investigate lacks sufficient facts

to raise it above the speculative level. See Essentia Ins. Co. v.

Stephens, 530 F. Supp. 3d 582, 607 (E.D.N.C. 2021) (“The facts

only give rise to an inference that plaintiff possibly, rather

than plausibly, failed to reasonably investigate, meaning

defendant’s right to relief under section 58-63-15(11)(d) only

rises to a speculative level.”); see also Guessford, 918 F. Supp.

2d at 465 (finding a plausible claim defendant did not conduct a

reasonable investigation where the insurance company never

investigated the claim and stated it would not consider doing so

until plaintiff “reached maximum medical improvement” and until it

received “more information,” despite the over 1,100 pages of

medical records and billing statements supplied by plaintiff.)

Finally, Manoula contends, in conclusory fashion, that Ohio

Security did “[n]ot attempt[] in good faith to effectuate a prompt,

fair, and equitable settlement of Plaintiff’s claim after

liability had become reasonably clear,” and “[a]ttempt[ed] to

settle Plaintiff’s claim for less than the amount to which a

reasonable man would have believed he was entitled” in violation

of §§ 58–63–15(11)(f) and 58–63–15(11)(h). (Doc. 1-2 ¶ 21.) “In

order to state a claim under subsection (f), the [insured] must

plead sufficient factual allegations demonstrating that [the

insurer] did not attempt in good faith to effectuate the prompt,

fair, and equitable settlement of the claims.” Neshat, 2021 WL

2168906, at *4 (internal citation and quotation marks omitted).

An insurer “does not have a duty to settle an insured’s claim” and

“only has a duty to consider settlement of the claim in good

faith.” Blis Day Spa, LLC v. Hartford Ins. Grp., 427 F. Supp. 2d

621, 635-36 (W.D.N.C. 2006). “Moreover, a plaintiff needs to

allege that the insurer’s liability is reasonably clear to plead

an unfair and deceptive trade practice under subsection (f). A

mere disputed claim is not sufficient.” Neshat, 2021 WL 2168906,

at *4; Clear Creek Landing Home Owner's Ass’n, Inc. v. Travelers

Indem. Co. of Conn., No. 1:12cv157, 2012 WL 6641901, at *4

(W.D.N.C. Dec. 20, 2012) (unpublished) (“The fact that [the

insured] may disagree with the assessment of [the insurer] as to

the cause . . . does not transform a run of the mill insurance

dispute into a tort cognizable under Section 75-1.1.”). “A similar

standard of reasonably clear liability applies to claims under

subsection (h).” Neshat, 2021 WL 2168906, at *4 (collecting

cases).

Here, Manoula does not allege any factual basis for how Ohio

Security engaged in unfair and deceptive trade practices in

settling the claim, nor is there any factual support for the claim

that Ohio Security’s additional liability “had become reasonably

clear.” (Doc. 1-2 ¶ 21.) Instead, Manoula simply recites the

language of the statute and alleges a dispute about the amount

owed under the policy —- not bad faith by Ohio Security. The

complaint alleges a disagreement over the application of a $25,000

loss limitation and alleges that Ohio Security’s position that

water infiltrated from backed-up sewer lines was correct only

incidentally but disputes it as a primary cause (id. ¶ 20); it

does not articulate specifically how Ohio Security’s position is

unreasonable or not in good faith. Manoula has also not pleaded

any facts that Ohio Security refused to engage in settlement

negotiations in bad faith, or that Ohio Security attempted to

settle “for less than the amount to which a reasonable man would

have believed he was entitled.”4 See Neshat, 2021 WL 2168906, at

*4 (“[A] dispute about the amount owed under the policy” is not

sufficient to allege an insurer “engaged in unfair and deceptive

trade practices in settling the claim” or acted in “bad faith.”);

compare Clear Creek Landing, 2012 WL 6641901, at *4 (granting a

motion to dismiss a UDTPA claim based on subsection (f) when

“Defendant promptly inspected the damage[] . . . [and] provided

Plaintiff with a rationale for why it was not covering the entire

replacement costs,” as “the fact that Plaintiff may disagree with

the assessment of Defendant as to the cause . . . does not

transform a run of the mill insurance dispute into a tort

cognizable under Section 75–1.1. Moreover, the Complaint fails to

sufficiently allege that liability was reasonably clear.”), with

Guessford, 918 F. Supp. 2d at 464 (holding that the insured stated

4 Manoula does not allege that Ohio Security refused to settle the

insurance claim or cooperate in the appraisal process outlined in the

policy to resolve disagreements. (See Doc. 1-3 at 165 (“If we and you

disagree on the value of the property or the amount of loss, either may

make written demand for an appraisal of the loss. In this event, each

party will select a competent and impartial appraiser . . . [to resolve

the dispute.]”).) Manoula also does not allege Ohio Security made any

offer to settle the claim that was clearly unreasonable. It merely

alleges that Ohio Security made “partial payments” under the policy,

that the insurer refused to continue making payments once a loss

limitation provision of $25,000 was satisfied, and that Manoula

disagrees.

a claim where the insurer paid less than the amount of total

medical expenses, without justification, despite knowing the

actual cost of plaintiff’s medical expenses). Manoula has thus

failed to satisfy the plausibility standard to avoid a motion to

dismiss.

As Manoula has failed to plausibly allege a violation of the

Claims Act and/or the UDTPA, the UDTPA claim will accordingly be

dismissed. Because it is unclear whether the pleading deficiency

can be cured, the complaint will be dismissed without prejudice.

New v. Thermo Fisher Sci., Inc., No. 1:19CV807, 2020 WL 4572740,

at *8 (M.D.N.C. Aug. 7, 2020) (dismissing a claim without prejudice

under Rule 9(b) when the “defect can be cured by amendment”).

III. CONCLUSION

For the reasons stated,

IT IS THEREFORE ORDERED that Ohio Security’s motion to dismiss

(Doc. 6) is GRANTED and the complaint is dismissed as follows:

the breach of contract claim (Count I) is DISMISSED WITH PREJUDICE,

and the unfair trade practices claim (Count II) is DISMISSED

WITHOUT PREJUDICE.

/s/ Thomas D. Schroeder

United States District Judge

January 13, 2022