B.S. Ingersoll, LLC v. Great Am. Ins. Co.
| Decision Date | 07 March 2023 |
| Docket Number | Civil Action 22-771 |
| Parties | B.S. INGERSOLL, LLC v. GREAT AMERICAN INSURANCE CO. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Plaintiff B.S. Ingersoll, LLC (“Ingersoll”) has filed this action seeking a declaration that Defendant Great American Insurance Company (“GAIC”) is obligated to pay Ingersoll under the terms of a Lease Bond. Ingersoll also asserts claims against GAIC for breach of contract and bad faith. GAIC has filed a Motion to Dismiss the Complaint because Plaintiff failed to file suit within the limitations period provided in the Lease Bond (the “Lease Bond Limitations Period”). For the reasons that follow, we grant the Motion and dismiss this action without prejudice.
The Complaint alleges the following facts. On November 12, 2018 Ingersoll entered into a lease agreement (the “Lease Agreement”) with Medici 1150 N. American Street LLC (“Medici”) for the residential real property located at 1150-1156 North American Street in Philadelphia (the “Property”). On May 20, 2020, Medici and Ingersoll amended the Lease Agreement (the “Lease Amendment”). (Id. ¶ 9; Ex. B.) On July 16, 2020, pursuant to the Lease Agreement, Medici caused GAIC, the Surety, to issue the Lease Bond payable only to Ingersoll, the Obligee, in an amount up to $550,000.00 (the “Coverage Amount”) as a security deposit to insure Medici's performance of its obligations under the Lease Agreement. (Id. ¶ 11; Ex. C.) Pursuant to the Lease Agreement, the Lease Bond would be available to Ingersoll for the payment of any amount that Ingersoll had expended or become obligated to spend, or to compensate Ingersoll for any losses that it incurred in the event that Medici defaulted on its obligations under the Lease Agreement. (Id. ¶ 12; Ex. A at § 9.2.)
On January 14, 2021, Medici defaulted its obligations under the Lease Agreement by filing a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. (Id. ¶ 13.) Medici's default under the Lease Agreement triggered Ingersoll's rights under the Lease Bond. (Id. ¶ 14.) As a result of Medici's default, Ingersoll suffered damages in excess of the Coverage Amount. (Id. ¶ 15.)
The Chapter 7 Trustee of Medici's bankruptcy estate rejected the Lease Agreement and determined that the bankruptcy estate had no interest in the Lease Bond. (Id. ¶ 16.) The Chapter 7 Trustee also consented to Ingersoll collecting on the Lease Bond to recover damages suffered as a consequence of Medici's default. (Id.) On February 11, 2021, Ingersoll provided timely notice to GAIC of Medici's default under the Lease Agreement and made a claim on the Lease Bond. (Id. ¶ 17; Ex. D.) GAIC has failed to meet its obligations under the Lease Bond, even though Ingersoll has made numerous demands and provided proof of loss to GAIC. (Id. ¶ 20.) All of the events necessary to trigger the Lease Bond have occurred and GAIC is obligated to perform under the Lease Bond. (Id. ¶ 21.) GAIC's failure to perform under the Lease Bond is a breach of the terms of the Lease Bond. (Id. ¶ 22.)
The Complaint asserts three claims for relief. Count I asserts a claim for a declaratory judgment pursuant to 28 U.S.C. § 2201. Ingersoll seeks a declaration that GAIC has a duty to pay Ingersoll under the Lease Bond to compensate Ingersoll for the losses it incurred pursuant to the Lease Agreement. Ingersoll also seeks payment of its costs, including attorney's fees, in connection with the filing of this action. Count II asserts a claim for breach of contract. In connection with Count II, Ingersoll seeks monetary damages in excess of $550,000.00, together with compensatory and consequential damages, attorney's fees, and costs of litigation. Count III asserts a claim of bad faith against GAIC for refusing to pay under the Lease Bond even though it had no reasonable basis for refusing to pay. In connection with Count III, Ingersoll seeks monetary damages in excess of $550,000.00, attorney's fees, and costs of litigation.
GAIC moves to dismiss the Complaint on the ground that Ingersoll failed to file the instant lawsuit within the Lease Bond Limitations Period for filing such a suit contained in the Lease Bond. “Generally, a statute of limitations defense cannot be raised under Rule 12 because it is not one of the enumerated defenses ‘a party may assert . . . by motion' under the rule.” PG Publ'g, Inc. v. Newspaper Guild of Pittsburgh, 19 F.4th 308, 318 n.13 (3d Cir. 2021) (alteration in original) (quoting Fed.R.Civ.P. 12(b)). However, the United States Court of Appeals for the Third Circuit “permit[s] such a motion pursuant to Rule 12(b)(6) ‘if the time alleged in the statement of a claim shows that the cause of action has not been brought within the statute of limitations.'” Id. (quoting Fried v. JP Morgan Chase Co., 850 F.3d 590, 604 (3d Cir. 2017)).
When deciding a motion to dismiss pursuant to Rule 12(b)(6), we “‘consider only the complaint, exhibits attached to the complaint, [and] matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents.'” Alpizar-Fallas v. Favero, 908 F.3d 910, 914 (3d Cir. 2018) (quoting Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010)). We take the factual allegations of the complaint as true and “construe them in the light most favorable to the plaintiff.” Shorter v. United States, 12 F.4th 366, 371 (3d Cir. 2021) (citing Warren Gen. Hosp. v. Amgen, Inc., 643 F.3d 77, 84 (3d Cir. 2011)). However, we “‘are not bound to accept as true a legal conclusion couched as a factual allegation.'” Wood v. Moss, 572 U.S. 744, 755 n.5 (2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
A plaintiff's pleading obligation is to set forth “‘a short and plain statement of the claim,'” which “‘give[s] the defendant ‘fair notice of what the . . . claim is and the grounds upon which it rests.'” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) () (first quoting Fed.R.Civ.P. 8(a)(2); and then quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). The complaint must allege “‘sufficient factual matter to show that the claim is facially plausible,' thus enabling ‘the court to draw the reasonable inference that the defendant is liable for [the] misconduct alleged.'” Warren Gen. Hosp., 643 F.3d at 84 (quoting Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009)). “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, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). In the end, we will grant a motion to dismiss brought pursuant to Rule 12(b)(6) if the factual allegations in the complaint are not sufficient “‘to raise a right to relief above the speculative level.'” Geness v. Admin. Off, of Pa. Cts., 974 F.3d 263, 269 (3d Cir. 2020) (quoting Twombly, 550 U.S. at 555).
GAIC argues that we should dismiss this action because Ingersoll filed suit after the expiration of the time for filing such a suit provided in the Lease Bond. The Lease Bond Limitations Period, which is set forth in Paragraph 3 of the Lease Bond, states that “[n]o action, suit or proceeding either at law or in equity shall be maintained against the Surety unless such action, suit or proceeding is commenced within three (3) months after the termination of this bond.” (Compl. Ex. C ¶ 3.) Paragraph 6 of the Lease Bond provides that “[t]his Bond expires on 7/16/2021.” (Id. ¶ 6.) Ingersoll filed this lawsuit against GAIC on March 2, 2022, more than seven months after the Lease Bond expired pursuant to Paragraph 6.
Ingersoll argues that we should deny the Motion for several reasons. Ingersoll first argues that the Lease Bond Limitations Period does not apply in this case because it applies only when the Lease Bond is “terminated” and the lease bond was not terminated in this case. Ingersoll also argues that the Lease Bond Limitations Period did not run prior to the date on which it filed the Complaint in this action because that Limitations Period was stayed under Pennsylvania Law. Ingersoll argues as well that the Lease Bond Limitations Period is contrary to Pennsylvania Law, which prohibits contractual shortening of a limitations period that is manifestly unreasonable.[1]Ingersoll additionally argues that the Lease Bond Limitations Period should not be enforced in this case because it is unconscionable under Pennsylvania law. Ingersoll further argues that GAIC waived the Lease Bond Limitations Period through repeated representations that it would pay on the Lease Bond after the Expiration Date. We address these arguments in turn.
Ingersoll argues that the Lease Bond Limitations Period does not apply in this case because the Lease Bond was not terminated rather, it expired according to its own terms. Ingersoll relies on Hamden v. Total Car Franchising Corp., 548 Fed.Appx. 842 (4th Cir. 2013), in which the Court, applying Virginia law, construed the terms “termination” and “expiration” to mean different things in specific agreements entered into by the parties. Id. at 849. The Hamden Court examined the agreements and found, based on the uses of the terms in those agreements, that “‘termination,' as used in the agreements . . . does not encompass expiration.” Id. The Hamden Court specifically noted that a non-competition clause in one of the agreements “suggest[ed] that termination does not encompass expiration” because the clause discussed what would happen if that agreement were “terminated before its expiration date” and the other...
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