UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
ANTONIO BARROS, et al.,
Plaintiffs,
v. Civil Action No. 13-00669 (TFH)
GOVERNMENT EMPLOYEES
INSURANCE COMPANY, INC.,
Defendant.
MEMORANDUM OPINION
This is the second time the Court has been asked to determine the legal viability of this
lawsuit. Antonio Barros and Jeffrey Styles (collectively “the plaintiffs”) allege in their Amended
Complaint that Government Employees Insurance Company, Inc. (“GEICO” or “the
defendant”) 1 breached an insurance contract and implied covenant of good faith by failing to
adequately compensate the plaintiffs for injuries and damages they incurred in a vehicle
collision. 2 Pending before the Court are (1) Defendant GEICO’s Motion to Dismiss Plaintiffs’
Amended Complaint [ECF No. 19] and (2) a Motion for Order of Default [ECF No. 17] that was
filed by the plaintiffs. Upon consideration of both motions, the oppositions and replies thereto,
1
The original complaint identified the defendant as Government Employees Insurance
Company, Inc., Compl. 1 [ECF No. 1], whereas the Amended Complaint identifies the defendant
solely by the acronym GEICO, Am. Compl. 1 [ECF No. 16].
2
Pursuant to a Memorandum Opinion issued by the Court on March 19, 2014, paragraphs
19-21 of the Amended Complaint have been stricken and all claims against defendants James
Beck and Amy Beck -- i.e., Counts I and IV -- have been dismissed. Mem. Op. 9, 11, 14 (Mar.
19, 2014) [ECF No. 14].
and the entire record of this case, and for the reasons set forth below, the Court will grant
Defendant GEICO’s Motion to Dismiss Plaintiffs’ Amended Complaint and deny the Motion for
Order of Default.
BACKGROUND AND PROCEDURAL POSTURE
According to the allegations in the Amended Complaint, this lawsuit stems from a
vehicle collision that occurred on or about December 10, 2012, in Fairfax, Virginia. Am. Compl.
¶¶ 6, 7. Antonio Barros reportedly was driving his vehicle westbound when a vehicle driven by
James Beck, who was under the influence of alcohol, made an interfering left turn and caused a
collision. Id. at ¶¶ 6, 7, 10. Although the Amended Complaint fails to so state, it can be inferred
from the allegations that the plaintiffs are asserting that Jeffrey Styles was a passenger in Barros’
vehicle at the time of the accident. 3 Id. at ¶¶ 8, 9. As a result of the collision, both plaintiffs
claim to have suffered injuries and lost wages for which they seek a total of about $4 million in
compensatory, punitive and other damages. Id. at ¶¶ 8, 9, 23, 24, 25, 26.
The plaintiffs contend that GECIO insured both of the vehicles that were involved in the
collision but the insurance policy covering the vehicle driven by James Beck 4 had a liability limit
in the amount of only $20,000. Id. at ¶ 17, 26, 27, 28, 38. Antonio Barros’ insurance policy, on
the other hand, allegedly contained a provision that provided protection from underinsured
3
Indeed, in their legal brief opposing the defendants’ motion to dismiss, the plaintiffs
argue that “[p]laintiff Styles . . . was clearly identified on the police report as the passenger in
[p]laintiff Barros’ vehicle . . . .” Pls.’ Opp’n to Def. GEICO’s Mot. to Dismiss Am. Compl. 2.
GEICO, however, correctly points out that “there are no facts asserted in the Complaint that
actually place [Jeffrey Styles] in a vehicle at the time of the accident.” Def.’s Mem. of P. & A.
6.
4
James Beck’s wife, Amy Beck, appears to be the insured of the insurance policy that
covered the vehicle James Beck was driving. Am. Compl. ¶¶ 27, 28, 52. For convenience,
however, the Court will refer to this policy as “James Beck’s policy.”
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motorists in the amount of up to $100,000. Id. at ¶¶ 27, 28. The Amended Complaint states,
however, that the underinsured-motorist provision in Antonio Barros’ insurance policy “does not
take effect until GEICO agrees that damages exceed” James Beck’s policy limit. Id. at ¶ 28.
While the Amended Complaint is not entirely clear, it appears to allege that, because the
plaintiffs suffered damages totaling more than $20,000 -- which would exceed James Beck’s
policy limit -- GEICO is now obligated to compensate them pursuant to the underinsured-
motorist provision in Antonio Barros’ insurance policy, and the failure to do so is a breach. Id.
at ¶¶ 24, 25, 39, 40, 41, 43. GEICO counters by asserting that the underinsured-motorist
provision in Antonio Barros’ insurance policy “is not triggered” until the plaintiffs first obtain a
judgment or settlement that exhausts the liability limits that apply to James Beck’s insurance
policy. Def. GEICO’s Mem. of Grounds & A. In Support of Mot. to Dismiss Pls.’ Am. Compl. 3
[ECF No. 19-1] (hereinafter cited as “Def.’s Mem. of P. & A.”). According to GEICO, this is a
condition precedent that cannot be satisfied because James Beck and Amy Beck were dismissed
from this lawsuit for lack of personal jurisdiction. Id. at 5. GEICO further argues that the
plaintiffs’ Amended Complaint fails to state claims for relief. Id. at 6-8. GEICO therefore
requests that the Court dismiss the plaintiffs’ Amended Complaint. Id. at 8.
Because GEICO’s motion to dismiss the Amended Complaint was filed late, the plaintiffs
moved for an “order of default.” Mot. for Order of Default ¶¶ 8, 9 [ECF No. 17]. The plaintiffs
characterize GEICO’s tardiness as willful and argue that they are prejudiced by the delay. Reply
to Def.’s Opp’n to Pls.’ Mot. for Order of Default 2-4 [ECF No. 20]. Although GEICO admits
filing late, GEICO opposes the entry of default because no cause of action has been properly
pleaded by the plaintiffs and the delay did not prejudice the plaintiffs given that this case is in the
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early stages of litigation. Def. GEICO’s Opp’n to Pls.’ Mot. for Order of Default 3-5 [ECF No.
18].
DEFENDANT GEICO’S MOTION TO
DISMISS PLAINTIFFS’ AMENDED COMPLAINT
I. Standard of Review
Turning first to GEICO’s motion to dismiss the Amended Complaint, Rule 8 of the
Federal Rules of Civil Procedure mandates that a pleading “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).
“Under the Supreme Court’s rearticulation of pleading requirements in Ashcroft v. Iqbal, 556
U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), ‘[t]o survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible
on its face.’” Rollins v. Wackenhut Servs., Inc., 703 F.3d 122, 129 (D.C. Cir. 2012) (quoting
Iqbal, 556 U.S. at 678).
Consistent with these principles, the Court employs a two-prong approach to
consideration of whether a complaint’s dismissal is warranted. Iqbal, 556 U.S. at 679. First, “a
court considering a motion to dismiss can choose to begin by identifying pleadings that, because
they are no more than conclusions, are not entitled to the assumption of truth.” Id. As the
Supreme Court has explained, “the tenet that a court must accept as true all of the allegations
contained in a complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. Thus,
“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id.
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Second, after identifying any well-pleaded factual allegations, “a court should assume
their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id.
at 679. Allegations are plausible “when the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at
678. The Court’s evaluation of the complaint to determine whether it states a plausible claim for
relief is “a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679.
II. Analysis
A. Cause of Action for Breach of Contract
Count II of the Amended Complaint advances a claim against GEICO for breach of
contract. Am. Compl. ¶¶ 37-47. To state a claim for breach of contract, the plaintiffs must
allege a contractual duty that GEICO failed to perform, among other required elements. 5 See,
e.g., Ihebereme v. Capital One, N.A., 730 F. Supp.2d 40, 47 (D.D.C. 2010) (“In the case of a
claim for breach of contract, the complaint must allege four necessary elements in order to effect
fair notice: ‘(1) a valid contract between the parties; (2) an obligation or duty arising out of the
contract; (3) a breach of that duty; and (4) damages caused by breach.’” (quoting Tsintolas
Realty Co. v. Mendez, 984 A.2d 181, 187 (D.C. 2009)); Logan v. LaSalle Bank Nat’l Ass’n, 80
5
The Court notes that neither party identified the law that they believe applies to the
interpretation of Antonio Barros’s insurance policy. Because both parties cited District of
Columbia federal and local cases in their legal briefs, the Court deems the parties to assume that
District of Columbia law applies to the interpretation of any contract GEICO entered into with
Antonio Barros; accordingly, the Court “will proceed on the same assumption.” Maljack Prods.,
Inc. v. Motion Picture Ass’n of America, Inc., 52 F.3d 373, 375 (D.C. Cir. 1995) (adopting the
assumption of the parties and the district court about what law applied to a contract).
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A.3d 1014, 1023 (D.C. 2013). “Obviously, one cannot breach a contract without breaching a
particular obligation created under the contract . . . .” Ihebereme, 730 F. Supp.2d at 47.
In this case, the Amended Complaint is devoid of any facts indicating that a contract
between GEICO and Antonio Barros sets forth a duty that GEICO has failed to perform. The
only allegations contained in the Amended Complaint that are relevant to the elements of a
breach-of-contract claim consist of the following, most of which constitute legal conclusions that
are not entitled to an assumption of truth: 6
• “Defendant Geico 7 entered into a contractual relationship with Plaintiff Antonio
Barros through the enactment of an automobile policy which is referenced by An
active policy [sic].” Am. Compl. ¶ 15.
• “Plaintiff Antonio Barros detrimentally relied on Defendant Geico to provide
uninsured/underinsured coverage if and when it was appropriate and in
accordance with the contract/policy.” Id. at ¶ 16.
• “Plaintiff Antonio Barros also carried uninsured/underinsured coverage with
Defendant Geico.” Id. at ¶ 17.
• “Defendant GEICO insures . . . Plaintiff Antonio Barros.” Id. at ¶ 27.
• “Plaintiff Antonio Barros’ policy limit is $100,000 but does not take effect until
GEICO agrees that damages exceed the policy limit of Defendants James Beck
and Amy Beck’s policy so if GEICO forces a settlement below Defendants James
Beck and Amy Beck’s policy limit, then Plaintiff Antonio Barros’ policy never
has to pay on the claim.” Id. at ¶ 28.
• “That the Plaintiff, Antonio Barros has a contractual relationship with GEICO by
virtue of being insured with GEICO and has Uninsured/Underinsured coverage
limits of $100,000.00, and Plaintiff Antonio Barros has been insured with GEICO
since 1995 and has paid substantial premiums to GEICO over that last 18 years
6
“Although in reviewing the dismissal of a complaint the court, as it must, takes ‘all the
factual allegations in the complaint as true,’ the court is ‘not bound to accept as true a legal
conclusion couched as a factual allegation.’” Mountain States Legal Found. v. Bush, 306 F.3d
1132, 1137 (D.C. Cir. 2002) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).
7
Throughout the Amended Complaint the defendant is referred to as both “Geico” and
“GEICO.” Compare Am. Compl. ¶16, with id. at ¶ 27.
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with the expectation that should he ever be in an accident and the driver at fault
not have sufficient insurance coverage to pay for Plaintiff Antonio Barros’
damages, that GEICO would provide a safety net under the policy that Plaintiff
Antonio Barros bought from GEICO as that was always the sales pitch GEICO
used with Plaintiff Antonio Barros and uses with its policy holders generally.” Id.
at ¶ 39.
• “Defendant GEICO made an absurdly low settlement offer that was a fraction of
the verifiable costs of each Plaintiff in an effort to prevent the Defendant Amy
Beck and James Beck’s policy limits from being exceeded so that GEICO would
not have to pay out a claim under Plaintiff Antonio Barros’ policy which has a
limit of $100,000, and in an effort to coerce Plaintiffs to recover from a
substantial loss of wages and numerous doctors’ bills.” Id. at ¶ 42.
• “GEICO has failed to promptly cover doctors’ bills and other costs, claims,
liabilities, and/or damages covered by Plaintiff Antonio Barros’ insurance policy
in breach of its contract . . . .” Id. at ¶ 43.
Noticeably absent from these allegations is any fact identifying a duty set forth in Antonio
Barros’s contract that GEICO is required, and failed, to perform. At best, the allegations suggest
that GEICO’s claims adjusters are engaged in an internal conspiracy to offer what the plaintiffs
subjectively characterize as an “absurdly low” settlement offer under James Beck’s insurance
policy. Id. at ¶¶ 26, 28, 29, 30. There are no allegations, however, from which the Court could
infer that a low settlement offer presented under James Beck’s insurance policy constitutes a
breach of a duty that is set forth in a contract with Antonio Barros. There also is no allegation
from which the Court could infer that the plaintiffs cannot simply reject such an offer and file
suit against James Beck, Amy Beck and/or GEICO in the proper jurisdiction to recover whatever
damages they believe they are legally entitled under James Beck’s policy. 8 Regardless, the
compensation that the plaintiffs are due under James Beck’s policy is not the subject of this
8
The Amended Complaint states that both plaintiffs are practicing attorneys who “are
members of both Federal Bars and local Bars and have been practicing law in the Washington,
DC area for approximately 20 years,” Am. Compl. ¶ 22, so they should be well equipped to
exercise whatever legal rights they feel are available to them.
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lawsuit, which alleges a breach of Antonio Barros’s contract. And it is a challenge to infer much
of anything about Antonio Barros’s contract because, with the exception of mere references to
the existence of an underinsured-motorist provision in the amount of $100,000, the Amended
Complaint fails to allege a single fact or contract provision that sets forth GEICO’s duty to
perform, in which case dismissal is warranted.
Dismissal also is inescapable in light of the Amended Complaint’s allegation that
Antonio Barros’s insurance policy “does not take effect until GEICO agrees that damages exceed
the policy limit of Defendants James Beck and Amy Beck’s policy” and, further, if there is a
settlement that falls below the liability limit of James Beck’s policy, then GEICO “never has to
pay on the claim” under Antonio Barros’s contract. Id. at ¶ 28. In other words, the plaintiffs
concede that GEICO has no duty to pay a claim under Antonio Barros’s contract until the
liability limit that applies to James Beck’s insurance policy is exhausted. This is consistent with
GEICO’s contention, which was never refuted by the plaintiffs, that the underinsured motorist
provision in Antonio Barros’s contract states: 9
9
GEICO filed a document titled “Automobile Policy Amendment: Underinsured Motorists
Coverage” as an exhibit to its legal brief opposing the plaintiffs’ motion for a default judgment
and claims that this document is the “policy from which the plaintiffs seek to recover . . . .” Def.
GEICO’s Opp’n to Pls.’ Mot. for Order of Default 4 [ECF No. 18]; id. at Ex. 1. The plaintiffs
disputed neither the accuracy nor the authenticity of the document, so the Court will deem it to
be evidence of the underinsured-motorist policy referenced by Antonio Barros in the Amended
Complaint. Moreover, because the underinsured-motorist policy is referred to in the Amended
Complaint and is central to the claims contained therein, the Court’s evaluation of the policy
does not implicate Rule 12(b)(6)’s mandate that consideration of documents outside the
pleadings requires the Court to convert a motion to dismiss to one for summary judgment. See,
Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993) (stating that
“[d]ocuments that a defendant attaches to a motion to dismiss are considered part of the
pleadings if they are referred to in the plaintiff’s complaint and are central to her claim”); accord
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We will also pay damages the insured is legally entitled to recover for bodily
injury caused by accident and arising out of the ownership, maintenance or use of
an underinsured motor vehicle. However, we will not pay until the total of all
bodily injury liability insurance available has been exhausted by payment of
judgments or settlements.
Def. GEICO’s Reply to Pls.’ Opp’n to Mot. to Dismiss Pls.’ Am. Compl. 2-3 [ECF No. 22]; Def.
GEICO’s Opp’n to Pls.’ Mot. for Order of Default Ex. 1 [ECF No. 18-1]. Consequently, GEICO
has no contractual duty to pay damages to either plaintiff in accordance with the terms of
Antonio Barros’s underinsured-motorist policy until “all bodily injury liability insurance
available has been exhausted by payment of judgments or settlements” under James Beck’s
policy. Def. GEICO’s Opp’n to Pls.’ Mot. for Order of Default Ex. 1 [ECF No. 18-1].
In their legal briefs, the parties dispute whether a Maryland case, Erie Insurance
Exchange v. Heffernan, II, 925 A.2d 636 (Md. 2007), defeats GEICO’s argument that the
plaintiffs must obtain a judgment or settlement that exhausts James Beck’s policy before
recovering underinsured-motorist benefits from Antonio Barros’s contract. Def.’s Mem. of P. &
A. 4-5; Pls.’ Opp’n to Def. GEICO’s Mot. to Dismiss Am. Compl. 6-7. GEICO first identified
the case as contradictory to its argument that, “[a]lthough there appears to be no law in the
District of Columbia on point, decisions from neighboring jurisdictions provide that an insured
must first obtain a judgment against the tortfeasor before he or she can recover underinsured
motorist benefits from the insurer.” Def.’s Mem. of P. & A. 4. The plaintiffs then seized on this
case as authoritative “[b]ecause there is no DC law on point” so “this Court will look to
Maryland law.” Pls.’ Opp’n to Def. GEICO’s Mot. to Dismiss Am. Compl. 6-7.
Dick v. Holder, ___ F. Supp.3d ___ (D.D.C. Sept. 10, 2014); Bertram v. WFI Stadium, Inc., 41
A.3d 1239, 1242 n.3 (D.C. 2012).
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The parties are incorrect that there is no District of Columbia law on point. It is well
established that, under District of Columbia law, the express terms of a contract control and will
be enforced as written unless there is an ambiguity, the terms violate a statute or public policy, or
there is fraud, duress, or mutual mistake. Smalls v. State Farm Mut. Auto. Ins. Co., 678 A.2d 32,
35 (D.C. 1996) (explaining that “[w]hen . . . contracts are clear and unambiguous, they will be
enforced by the courts as written, so long as they do not violate a statute or public policy”
(internal quotation marks omitted)); Abdelrhman v. Ackerman, 76 A.3d 883, 888 (D.C. 2013)
(“This jurisdiction has long employed an objective law of contracts, meaning that the written
language embodying the terms of an agreement will govern the rights and liabilities of the parties
[regardless] of the intent of the parties at the time they entered into the contract, unless the
written language is not susceptible of a clear and definite undertaking, or unless there is fraud,
duress, or mutual mistake” (internal quotation marks and citations omitted)). Neither party
claims that the terms of the underinsured-motorist provision in Antonio Barros’s contract are
ambiguous, violate an applicable statute or public policy, or otherwise involve fraud, duress or
mutual mistake.
Furthermore, there is no need for this Court to look to Maryland law for guidance
because applicable District of Columbia precedents, namely Conteh v. Allstate Insurance
Company, 782 A.2d 748 (D.C. 2001), and Macci v. Allstate Insurance Company, 917 A.2d 634
(D.C. 2007), stand for the proposition that District of Columbia courts will enforce insurance
policy terms that require an insured to obtain a judgment against a tortfeasor before recovering
against an insurer. The plaintiffs in both Conteh and Macci were injured in accidents involving
uninsured motorists and ultimately sued their insurers for breach of contract for failing to pay
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damages in accordance with uninsured-motorist protections provided in the plaintiffs’ own
automobile-insurance policies. Conteh, 782 A.2d at 749; Macci, 917 A.2d at 635. The
automobile-insurance policies at issue in both Conteh and Macci expressly incorporated a
Virginia statute that Virginia courts had interpreted to mean that an insured was required to
obtain a judgment against a tortfeasor before seeking to obtain the benefits of uninsured-motorist
protection provided by the policies. Conteh, 782 A.2d at 751; Macci, 917 A.2d at 636. In both
cases, the D.C. Court of Appeals enforced the insurance policies according to their express
terms, including the incorporated Virginia statute requiring the insureds to obtain judgments
against tortfeasors as a condition precedent to the recovery of contract damages from the
insurers. Conteh, 782 A.2d at 751; Macci, 917 A.2d at 636. Thus, in Conteh, the D.C. Court of
Appeals concluded that “there is no legal right, under [the Virginia statute] and the [insurance]
policy which incorporates it, to recover uninsured motorist benefits from the carrier until the
liability of the uninsured motorist has been judicially established.” 782 A.2d at 751-52
(emphasis added). Likewise, in Macci, the D.C. Court of Appeals noted that “[w]ithout a
judgment determining [the tortfeasors’] legal liability, [the plaintiff] had not fulfilled a condition
precedent to recovery under the express terms of the insurance policy” and, “[a]s a result, she
was not in a position to bring a claim against [the insurer].” 917 A.2d at 636 (emphasis added).
The Court presumes that the parties overlooked these two cases because the D.C. Court
of Appeals’ discussions about the interpretation of the Virginia statute could, upon a glance,
leave the impression that the decisions rested on Virginia law. In actuality, though, a careful
reading of both Conteh and Macci leaves no room for doubt that the D.C. Court of Appeals
enforced the contracts based on their express terms, as is the law in the District of Columbia, see
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Abdelrhman, 76 A.3d at 888. It was happenstance that the terms included provisions
incorporating the Virginia statute, thereby necessitating a discussion about the statute’s
interpretation. As applied to the instant case, both Conteh and Macci compel this Court to
enforce Antonio Barros’s contract in accordance with its express terms, which include the
condition precedent requiring the plaintiffs to exhaust the liability limits of James Beck’s
insurance policy via the payment of “judgments or settlements” before GEICO has any
obligation to compensate them pursuant to the underinsured-motorist provision.
To summarize, there is no dispute that the express terms of the underinsured-motorist
provision contained in Antonio Barros’s contract clearly state that GEICO “will not pay”
damages for bodily injury arising out of the use of an underinsured motor vehicle “until the total
of all bodily injury liability insurance available has been exhausted by payment of judgments or
settlements.” Def. GEICO’s Reply to Pls.’ Opp’n to Mot. to Dismiss Pls.’ Am. Compl. 2-3; Def.
GEICO’s Opp’n to Pls.’ Mot. for Order of Default Ex. 1. Because there has been no allegation
that the underinsured-motorist provision is ambiguous, violates a statute or policy, or otherwise
involves fraud, duress or mutual mistake, the provision will be enforced as written. Smalls, 678
A.2d at 35. As a result, GEICO has no duty to pay damages pursuant to the provision until the
plaintiffs have first exhausted all bodily injury liability available under James Beck’s insurance
policy. Given that the Amended Complaint contains no allegation indicating that the exhaustion
of liability under James Beck’s policy has occurred, no breach of contract has been properly
stated against GEICO, so Count II will be dismissed. 10
10
In their brief opposing dismissal, the plaintiffs seek to recast their cause of action
as a breach of contract by anticipatory repudiation. Pls.’ Opp’n to Def. Geico’s Mot. to Dismiss
Am. Compl. 8 (asserting that the plaintiffs have a “right to allege anticipatory breach”). There is
no allegation in the Amended Complaint, though, that indicates GEICO unequivocally and
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B. Cause of Action for Bad Faith
“Under District of Columbia law, every contract contains within it an implied covenant of
both parties to act in good faith and damages may be recovered for its breach as part of a contract
action.” Choharis v. State Farm Fire and Cas. Co., 961 A.2d 1080, 1087 (D.C. 2008). “[A] a
party to a contract may be liable for a breach of the duty of good faith and fair dealing if the
party evades the spirit of the contract, willfully renders imperfect performance, or interferes with
performance by the other party.” Murray v. Wells Fargo Home Mortg., 953 A.2d 308, 321 (D.C.
2008). At this juncture, GEICO’s duty to pay pursuant to the underinsured-motorist provision in
Antonio Barros’s insurance policy has not materialized because the plaintiffs have not complied
with the terms of the contract by first exhausting the liability limits of James Beck’s insurance
policy. GEICO cannot be deemed to be acting in bad faith by refusing to pay the plaintiffs when
GEICO has been divested of that obligation by the plaintiffs’ own failure to perform according to
the contract’s terms. There being no allegations in the Amended Complaint from which the
Court can infer that GEICO is evading the spirit of the contract, willfully rendering imperfect
performance, or interfering with performance by the plaintiffs, dismissal of the cause of action
for bad faith, which is Count III, will be granted.
positively communicated its intention not to perform Antonio Barros’s contract. Order of
AHEPA v. Travel Consultants, Inc., 367 A.2d 119, 125 (D.C. 1976) (“For a repudiation of a
contract by one party to be sufficient to give the other party the right to recover for breach, the
repudiating party must have communicated, by word or conduct, unequivocally and positively its
intention not to perform.”). The Amended Complaint contains no allegations that GEICO
intends not to comply with Antonio Barros’s underinsured-motorist provision once the liability
limit of James Beck’s automobile insurance policy has been exhausted. Put another way, the
plaintiffs have not alleged that GEICO will not perform when its contractual obligations are
actually due.
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THE PLAINTIFFS’ MOTION FOR ORDER OF DEFAULT
The plaintiffs moved the Court enter an “order of default” pursuant to Rule 55(a) of the
Federal Rules of Civil Procedure, which provides that “[w]hen a party against whom a judgment
for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown
by affidavit or otherwise, the clerk must enter the party’s default.” Because the plaintiffs
requested entry of an “order of default” versus a “default judgment,” Mot. for Order of Default at
¶ 9, and there has been no entry of default by the Clerk of the Court upon which a “default
judgment” could be premised, the Court assumes that the plaintiffs are seeking to have the Court
order the Clerk of the Court to enter a default. The plaintiffs argue that the entry of default is
warranted on the ground that GEICO failed to timely respond to the Amended Complaint. Id. at
¶ 9.
In this jurisdiction, “strong policies favor resolution of disputes on their merits.” Jackson
v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980). Consistent with this principle, the Federal Rules
of Civil Procedure provide that a default may be set aside if “good cause” has been shown for the
failure to plead or defend. See Fed. R. Civ. P. 55(c). Stated conversely, entry of default may not
be appropriate when good cause for the failure has been shown. Accordingly, the Court will not
order the Clerk of the Court to enter default if GEICO has demonstrated good cause for failing to
respond to the plaintiffs’ Amended Complaint. To determine whether good cause exists to
refuse entry of default, the Court must exercise its sound discretion and consider (1) whether the
default was willful, (2) whether the Court’s refusal to order the entry of default would prejudice
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the plaintiff, 11 and (3) whether the defense is “meritorious.” Keegel v. Key West & Caribbean
Trading Co., Inc., 627 F.2d 372, 373 (D.C. Cir. 1980).
GEICO concedes that a response to the Amended Complaint was filed late but urges that
the delay was an oversight, the product of travel, and not willful. Def. GEICO’s Opp’n to Pls.’
Mot. for Order of Default 3. As GEICO points out, the facts that it “filed a timely Answer to the
original Complaint, issued discovery requests, and participated in a conference call with the pro
se plaintiffs within days after the Court issued its March 19, 2014 Order” are evidence that
GEICO has been “actively engaged in this case since its commencement and [is] prepared fully
to defend against the plaintiffs’ allegations.” Id. GEICO also filed a motion to dismiss the
Amended Complaint within days of receiving notice of the plaintiffs’ Motion for Order of
Default.
Assessing the applicable factors, the Court need not determine whether GEICO’s failure
to timely respond to the Amended Complaint was willful because the other two factors weigh so
heavily in favor of declining to order the entry of default that the Court would deny the
plaintiffs’ motion even if willfulness was shown. The Court finds, as laid out in the analysis of
GEICO’s motion to dismiss, that GEICO has more than demonstrated a meritorious defense and
there is no prejudice to the plaintiffs because this litigation is in such an early stage of
proceedings. Because good cause has been shown to refuse the entry of default, the Court will
deny the plaintiffs’ Motion for Order of Default.
11
This factor is usually phrased in terms of “setting aside” an entered default. See, e.g.,
Mohamad v. Rajoub, 634 F.3d 604, 606 (D.C. Cir. 2011) (stating that “[i]n exercising its
discretion, the district court is supposed to consider whether . . . a set-aside would prejudice
plaintiff” (internal quotation marks omitted)). Because no default has yet been entered, the Court
will simply evaluate whether the refusal to enter default would prejudice the plaintiffs.
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CONCLUSION
For all the foregoing reasons, the Court will grant Defendant GEICO’s Motion to Dismiss
Plaintiffs’ Amended Complaint [ECF No. 19] and deny the plaintiffs’ Motion for Order of
Default [ECF No. 17]. An appropriate order will accompany this opinion.
February 2, 2015 ____________________________
Thomas F. Hogan
Senior United States District Judge
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