# MANOULA, LLC v. OHIO SECURITY INSURANCE COMPANY

> District Court, M.D. North Carolina · January 13, 2022

URL: https://www.frixlaw.com/law-library/cases/10253997

## Case

- **Court:** District Court, M.D. North Carolina
- **Decided:** January 13, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10253997

## How later opinions describe it (automated extraction)

- applying Rule 9(b) to a § 75-1.1 claim alleging fraudulent misrepresentation
- explaining that a cause of action accrues “as soon as the right to institute and maintain a suit arises”
- 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.

## Opinion text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10253997. Public record. Not legal advice.