The opinion of the court was delivered by: R. Allan Edgar United States District Judge
Plaintiffs Renee and Stephen Cowie brought their original complaint for breach of an insurance contract in the Circuit Court of Genesee County, Michigan. Defendant State Farm Fire & Casualty Company ("State Farm") removed the action to United States District Court for the Eastern District of Michigan. Plaintiffs' original complaint stated that they were residents of Genesee County, Michigan. [Court Doc. No. 13-3, Complaint]. According to the Complaint State Farm is incorporated in Illinois, but is licensed to conduct business in Michigan. Id.
Plaintiffs' original complaint alleges that Plaintiffs owned a 24-foot Stingray boat, which was destroyed by fire in Tennessee. Plaintiffs assert that State Farm insured the boat through a boat owner's insurance policy, Policy #42-J7-2868-8 (the "Policy"), which provided for the replacement cost of the boat upon a loss caused by fire. Complaint, ¶ 5. Plaintiffs allege that they complied with their contractual obligations under the Policy, but State Farm denied the claim filed by Plaintiffs. Id. at ¶ 11. The original complaint alleges breach of contract.
State Farm moved in the Michigan district court for a transfer of venue to this court because the Plaintiffs' boat was destroyed in Chattanooga, Tennessee while they resided in Tennessee. [Court Doc. No. 13]. State Farm also issued the Policy in Tennessee. The Michigan district court granted State Farm's motion for a transfer of venue to this court. Id.
Following the transfer to this court, Plaintiffs moved to amend their complaint. [Court Doc. No. 21]. Plaintiffs sought to add a claim for bad faith failure to pay an insurance claim under Tenn. Code Ann. § 56-7-105; a claim for unfair and deceptive practices pursuant to the Tennessee Consumer Protection Act, Tenn. Code Ann. § 47-18-101 et seq. ("TCPA"); and a claim for punitive damages under Tennessee common law. Id. The proposed amended complaint incorporated the allegations of the original complaint by reference. It additionally alleged that:
Plaintiffs aver that the 24 foot 2005 Stingray Cruiser water craft suffered a loss on October 28, 2005 as covered by the policy.
That State Farm has failed and refused to honor said claim, failed and refused to honor the claim of the loss payee, all of which are in bad faith pursuant to T.C.A. § 56-7-106.
Further, plaintiffs allege that State Farm has failed to honor their claim alleging that Stephen Cowie is guilty of intentional conduct as set out in their Answer and Counter Complaint. Those allegations make no claim that Renee Cowie, an additional insured was guilty of any intentional conduct. Whereas the plaintiffs both deny any intentional conduct on behalf of Stephen Cowie, they would aver that failure to honor the claim as to Renee Cowie constitutes bad faith, constitutes bad faith as to Stephen Cowie for which State Farm should be responsible for the loss, bad faith penalty and attorney's fees. [Court Doc. No. 21-3, Proposed Amended Complaint].
On June 18, 2007 the magistrate judge issued a report and recommendation recommending that the Plaintiffs' motion to amend be granted in part and denied in part. [Court Doc. No. 30]. Because State Farm did not object to Plaintiffs' bad faith failure to pay claim pursuant to Tenn. Code Ann. § 56-7-105, the magistrate recommended that Plaintiffs' request to add that claim be granted. The magistrate recommended that Plaintiffs' other proposed claims be denied. Id.
Plaintiffs timely objected to the magistrate's report and recommendation on June 26, 2007. [Court Doc. No. 33]. They objected on the basis of a Tennessee Court of Appeals case, Gaston v. Tennessee Farmers Mutual Ins. Co. that the Tennessee state court decided after the magistrate issued his report and recommendation. 2007 WL 1775967, No. E2006-01103-COAR3-CV (Tenn. Ct. App. June 21, 2007).
On the same date that Plaintiffs filed their objections to the magistrate's report and recommendation, Plaintiffs also filed a Second Motion to Amend/Revise or in the Alternative Motion for Relief from Magistrate's Report and Recommendation, as well as a second amended complaint differing from the proposed amended complaint. [Court Doc. Nos. 34, 37]. This memorandum and order will address Plaintiffs' objections to the magistrate's report and recommendation. The court will issue a second memorandum and order addressing Plaintiffs' second motion to amend.
For the reasons expressed herein, the Court will ACCEPT the magistrate's determination that Plaintiffs' first motion to amend should be ...