Am. S. Ins. Co. v. Affordable Home Improvements, Seashore Villas At Ocean Keyes Prop. Owners Ass'n, Inc.
Decision Date | 04 May 2018 |
Docket Number | Civil Action No.: 4:17-cv-02366-RBH |
Court | U.S. District Court — District of South Carolina |
Parties | AMERICAN SOUTHERN INSURANCE COMPANY, Plaintiff, v. AFFORDABLE HOME IMPROVEMENTS, SEASHORE VILLAS AT OCEAN KEYES PROPERTY OWNERS ASSOCIATION, INC., OCEAN KEYES DEVELOPMENT, LLC, KEYE CONSTRUCTION CO., INC. f/k/a PINEBLUFF CONSTRUCTION CO. INC., and KEYE COMMUNITIES, LLC, Defendants. |
Currently pending before this Court is Plaintiff's Motion to Dismiss Counterclaim of Defendants (the "Motion") filed on December 4, 2017. [ECF #25]. The Counterclaim was brought by Ocean Keyes Development, LLC ("Ocean Keyes"), Keye Construction Company, Inc. f/k/a Pine Bluff Construction Co. ("Pine Bluff"),1 and Keye Communities, LLC ("Keye Communities"). On December 18, 2017, Defendants filed their response to this Motion. [ECF #29]. On December 27, 2017, Plaintiff filed its reply. [ECF #30]. All parties have had the opportunity to extensively brief the issues raised in the Motion, and this Court has thoroughly considered all pleadings filedin this case.2 This matter is now before the Court.
Plaintiff has filed this declaratory judgment action to ascertain its rights and obligations under a policy of commercial general liability insurance issued to a company called Affordable Home Improvements for claims asserted in a construction defect lawsuit filed in state court. The underlying lawsuit is captioned Seashore Villas at Ocean Keyes Property Owners Association, Inc. v. Ocean Keyes Development, LLC et al., Civil Action Number 2015-CP-26-8308, filed in the Horry County Court of Common Pleas of South Carolina, and was brought by Seashore Villas at Ocean Keyes Property Owners Association, Inc. (the "Underlying Lawsuit"). [ECF #1-2]. According to the allegations within the Complaint, the Seashore Villas is a project consisting of twenty-two condominium buildings. Defendants Ocean Keyes and Keye Communities were apparently involved in the planning, development, and construction of the Seashore Villas project. Defendant Pine Bluff served as the general contractor throughout the construction of the project. Defendant Affordable Home Improvements was hired as a subcontractor to perform certain roofing and side work at the project. Among several other causes of action brought by the plaintiff, the plaintiff alleges that AHI's work on the project was defective and caused the plaintiff injuries and damages. [ECF #1-2, p. 24]. Plaintiff American Southern Insurance Company ("ASIC") issued a general commercial liability insurance policy to Affordable Home Improvements and is currently providing a defense to its insured in the underlying lawsuit through a reservation of rights. [ECF#25-1, p. 2].
Defendant Affordable Home Improvements ("AHI"), though properly served, has not appeared or otherwise filed a responsive pleading in the declaratory judgment action. Defendant Seashore Villas filed an Answer on October 23, 2017. [ECF #12]. Defendants Ocean Keyes, Keye Communities, and Pine Bluff (the "Ocean Keyes Defendants") filed an Answer and Counterclaim on November 13, 2018. [ECF #19]. The Ocean Keyes Defendants' counterclaim seeks a declaration to determine the coverage obligations owed by Plaintiff ASIC to Defendant AHI under the insurance policy issued by Plaintiff. The Ocean Keyes Defendants assert that the underlying construction defect lawsuit seeks damages that are covered under the policy issued by Plaintiff ASIC, and that Plaintiff's duty to defend and the duty to indemnify have been triggered in this case. [ECF #19, p. 9]. In other words, both the Complaint and Counterclaim seek the same form of relief; that is, a declaration as to applicability of the insurance policy language. While Plaintiff ASIC seeks a declaration from this Court finding that no coverage exists under the policy, the counterclaiming Defendants seek a declaration finding Plaintiff owes both a duty to defend and a duty to indemnify for the asserted claims in the underlying lawsuit.
On December 4, 2017, Plaintiff filed a Motion to Dismiss the Ocean Keyes Defendants' Counterclaim. [ECF #25]. Plaintiff argues that these Defendants have failed to state a claim upon which relief can be granted because these Defendants are not named parties covered under the insurance policy, and that a declaration regarding Plaintiff's duty to indemnify AHI for claimed damages in the underlying lawsuit is not ripe for adjudication. In response, the Ocean Keyes Defendants argue that they are third party beneficiaries to the insurance policy, and that thedetermination as to whether coverage exists under the policy for the insured subcontractor affects their rights in the Underlying Lawsuit. Moreover, the Ocean Keyes Defendants argue that Plaintiff's inclusion of them as defendants in the case is indicative of Plaintiff's acknowledgment of their interest in the outcome of this declaratory judgment action.
Iqbal, 556 at 678 (quoting Twombly, 550 U.S. at 570). When ruling on a motion to dismiss, the court "must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007).
Plaintiff ASIC argues that the Ocean Keyes Defendants have failed to set forth factual allegations sufficient to state a claim for relief because none of the counterclaiming Defendants are parties to the ASIC commercial general liability policy, and therefore, are unable to seek a declaration regarding the terms and enforcement of the insurance policy. Within their response brief, the Ocean Keyes Defendants provide, "Defendant AHI performed work on the Seashore Villas buildings as one of Ocean Keyes' and Keye Construction's sub-contractors." [ECF #29, p. 6]. The Ocean Keyes Defendants also state, . ) ." ) [ECF #29, p. 6].Further, the Ocean Keyes Defendants argue they have constitutional standing and standing pursuant to the Declaratory Judgment Act to seek a declaratory judgment against Plaintiff ASIC. The Ocean Keyes Defendants also assert that they are third party beneficiaries of the insurance policy provided by Plaintiff ASIC, should they succeed on their cross-claims against AHI.
Plaintiff ASIC principally relies upon this Court's former decision in Auto-Owners Ins. Co. v. Travelers Cas. & Sur. Co. of Am., No. 4:12-cv-3423, 2014 WL 3687338 (D.S.C. July 22, 2014), where this Court considered whether an insurance company could seek a declaration requiring another insurance company to provide a defense in an underlying lawsuit. However, the facts of that case are distinguishable from the matter currently before this Court. Auto-Owners Insurance Company was seeking a declaration that another insurance company, Travelers Casualty and Surety Company, was required to assist in the defense of an underlying lawsuit. Auto-Owners was providing a defense pursuant to a commercial general liability policy issued to a defendant in a lawsuit brought by the defendant's board of directors. Travelers had also insured the defendant pursuant to a non-profit management and organization liability insurance policy but was not providing a defense to the lawsuit. In granting summary judgment in favor of Travelers, this Court took into account the fact that Auto-Owners was not damaged by Traveler's refusal to defend the underlying lawsuit because it was a "stranger to the contract" between Auto-Owners and the insured. Howeve...
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