O&G Indus., Inc. v. Aon Risk Servs. Ne., Inc., Civil Action No. 3:12–CV–723 (JCH).

• Citation: 922 F.Supp.2d 257
• Decision Date: 29 January 2013
• Docket Number: Civil Action No. 3:12–CV–723 (JCH).
• Court: U.S. District Court — District of Connecticut
• Parties: O & G INDUSTRIES, INC., Kleen Energy Systems, LLC, Keystone Construction and Maintenance Services, Inc., and Bluewater Energy Solutions, Inc., Plaintiffs, v. AON RISK SERVICES NORTHEAST, INC. f/k/a Aon Risk Services, Inc. of Massachusetts, Defendant.

922 F.Supp.2d 257

O & G INDUSTRIES, INC., Kleen Energy Systems, LLC, Keystone Construction and Maintenance Services, Inc., and Bluewater Energy Solutions, Inc., Plaintiffs,

v.AON RISK SERVICES NORTHEAST, INC. f/k/a Aon Risk Services, Inc. of Massachusetts, Defendant.

Civil Action No. 3:12–CV–723 (JCH).

United States District Court,

D. Connecticut.

Jan. 29, 2013.

Finley T. Harckham, Anderson, Kill & Olick, New York, NY, Dennis J. Artese, Anderson Kill & Olick P.C., New York, NY, Lee D. Hoffman, Matthew L. Stone, Pullman & Comley, Hartford, CT, Justin Reilly Clark, Davis & Clark LLC, Glastonbury, CT, for Plaintiffs.

Blair Connelly, Manasi Shanghavi, Paul A. Serritella, Latham & Watkins, New York, NY, Margaret P. Mason, Richard W. Bowerman, LeClairRyan, New Haven, CT, for Defendants.

RULING RE: MOTION TO DISMISS (DOC. NO. 24)

JANET C. HALL, District Judge.

I. INTRODUCTION

Plaintiffs O & G Industries, Inc. (“O & G”), Kleen Energy Systems, LLC (“Kleen”), Keystone Construction and Maintenance Services, Inc. (“Keystone”), and Bluewater Energy Solutions, Inc. (“Bluewater”) (collectively “Contractor Controlled Insurance Program (‘CCIP’) Participants”) bring this suit against defendant, Aon Risk Services Northeast, Inc. (“Aon”) for declaratory judgment, breach of contract, negligence, professional malpractice, and misrepresentation. The case involves a dispute over whether Aon failed to procure for the CCIP Participants insurance coverage that included defense cost coverage in excess of the CCIP policies.

Aon moved to dismiss the Complaint on July 2, 2011, pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6), for failure to state a claim for relief and lack of standing as to Kleen, Keystone, and Bluewater.

II. STANDARD OF REVIEWA. Standard of Review Under Rule 12(b)(1)

A motion to dismiss for lack of standing is made pursuant to Rule 12(b)(1). See Granite Comm., Inc. v. One Comm. Corp., 2008 WL 4793729, at *3 (D.Conn. Oct. 31, 2008) (citing Alliance for Environmental Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 88 (2d Cir.2006)). “In deciding a motion to dismiss, ‘standing cannot be inferred argumentatively from averments in the pleadings, but rather must affirmatively appear in the record.’ ” Spencer v. Kemna, 523 U.S. 1, 11, 118 S.Ct. 978, 140 L.Ed.2d 43 (1998).

A case is properly dismissed for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it. Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000). In assessing a motion to dismiss for lack of subject matter jurisdiction, the court “accept[s] as true all material factual allegations in the complaint.” Shipping Fin. Serv. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir.1998) (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). The court, however, refrains from “drawing from the pleadings inferences favorable to the party asserting [jurisdiction].” Id. (citing Norton v. Larney, 266 U.S. 511, 515, 45 S.Ct. 145, 69 L.Ed. 413 (1925)). On a motion to dismiss pursuant to Rule 12(b)(1), the plaintiff must establish by a preponderance of the evidence that the court has subject matter jurisdiction over the complaint. Makarova, 201 F.3d at 113;see also Malik v. Meissner, 82 F.3d 560, 562 (2d Cir.1996); In re Joint E. & So. Dist. Asbestos Litig., 14 F.3d 726, 730 (2d Cir.1993). Courts evaluating Rule 12(b)(1) motions “may resolve the disputed jurisdictional fact issues by reference to evidence outside the pleadings, such as affidavits.” Zappia Middle East Constr. Co. Ltd. v. Emirate of Abu Dhabi, 215 F.3d 247, 253 (2d Cir.2000).

B. Standard of Review Under Rule 12(b)(6)

Upon a motion to dismiss pursuant to Rule 12(b)(6), the court must determine whether the plaintiff has stated a legally-cognizable claim by making allegations that, if true, would show he is entitled to relief. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (interpreting Rule 12(b)(6), in accordance with Rule 8(a)(2), to require allegations with “enough heft to ‘sho[w] that the pleader is entitled to relief’ ”). The court takes the factual allegations of the complaint to be true, Hemi Group, LLC v. City of New York, 559 U.S. 1, 130 S.Ct. 983, 986–87, 175 L.Ed.2d 943 (2010), and from those allegations, draws all reasonable inferences in the plaintiff's favor, Fulton v. Goord, 591 F.3d 37, 43 (2d Cir.2009).

To survive a motion pursuant to Rule 12(b)(6), “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, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 129 S.Ct. at 1949 (2009) (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955).

The plausibility standard does not impose an across-the-board, heightened fact pleading standard. Boykin v. KeyCorp, 521 F.3d 202, 213 (2d Cir.2008). The plausibility standard does not “require[ ] a complaint to include specific evidence [or] factual allegations in addition to those required by Rule 8.” Arista Records, LLC v. Doe 3, 604 F.3d 110, 119 (2d Cir.2010); see Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (holding that dismissal was inconsistent with the “liberal pleading standards set forth by Rule 8(a)(2)”). However, the plausibility standard does impose some burden to make factual allegations supporting a claim for relief. As the Iqbal court explained, it “does not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.” Iqbal, 129 S.Ct. at 1949 (citations and internal quotations omitted). Under the Second Circuit's gloss, the plausibility standard is “flexible,” obliging the plaintiff “to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible.” Boykin, 521 F.3d at 213 (citation omitted); accord Arista Records, 604 F.3d at 120.

III. FACTUAL BACKGROUND

On or about November 30, 2007, O & G and Kleen entered into an “Engineering, Procurement and Construction Agreement (“EPC Agreement”) in connection with a construction project in Middletown, Connecticut, entitled “620 MW Combined Cycle Gas Fired Power Project. Compl. at ¶ 1, 9. Pursuant to the EPC Agreement, O & G was required, among other things, to provide insurance to protect O & G from claims arising out of its operations. Compl. at ¶ 10. The EPC Agreement required O & G to “maintain commercial general liability insurance on an occurrence basis for damages because of bodily injury, property damage, [and] personal and advertising injury;” obtain “coverage for: ... [d]efense expenses paid in addition to policy limits;” and obtain umbrella liability coverage “at minimum, with the same terms and conditions as the ... Commercial General Liability ... insurance required by [the EPC] Agreement.” Compl. at ¶ 11, 12.

The EPC Agreement allowed for the required insurance coverage to be provided under a CCIP. Compl. at ¶ 13. In addition, the EPC Agreement required O & G to indemnify and defend Kleen against liability and losses resulting from the negligence of O & G, its subcontractors, vendors, or agents. Compl. at ¶ 14. O & G entered into subcontracts with Keystone and Bluewater, under which both Keystone and Bluewater were required to participate in a CCIP for the project to the extent that O & G elected to implement one. Compl. at ¶ 15–18.

O & G entered into a Service Agreement with Aon to procure insurance for the project. Compl. at ¶ 19. Under the Service Agreement, the CCIP was to include commercial general liability and umbrella/excess liability coverage. Compl. at ¶ 20. Aon promised in the Service Agreement to:

“Develop, recommend, negotiate, and place insurance and/or risk financing programs for all CCIP Coverages; [m]arket to, and negotiate terms and conditions of, the CCIP Coverages with prospective CCIP insurers, and take such steps as [Aon] deem[ed] appropriate to implement the CCIP Coverages; [r]eview the CCIP policies placed by [Aon] to ensure that they [were] accurate as to the insurance coverage terms and policy limits that [O & G was] purchasing, and ... advise [O & G] of any errors or required changes to such policies and [p]repare ... a CCIP insurance manual describing the CCIP Coverages, administration, and claims procedures, for review by [O & G's] legal counsel.”

Compl. at ¶ 21. O & G agreed, under the Service Agreement, to “[r]eview all insurance policies procured by ARS to ensure that they are accurate as to insurance coverage terms, requirements, and policy limits, and advise ARS of any errors or desired changes to such policies.” ¹ Def.'s Mem. in Supp. Mot. to Dismiss, Ex. B, at 2. The Service Agreement stated that “there are no third party beneficiaries to this Agreement.” Id. at 9.

O & G requested that Aon procure the insurance coverage required under the EPC Agreement. Compl. at ¶ 24. Aon knew that the EPC Agreement required O & G to secure primary commercial general liability coverage with defense costs coverage outside limits and umbrella/excess liability coverage with the same terms and conditions as the primary policy. Compl. at ¶ 29.

Aon procured the CCIP for...