Catlin Syndicate Ltd. v. Ramuji, LLC
| Decision Date | 18 August 2017 |
| Docket Number | Case No.: 4:16-CV-1331-VEH |
| Parties | CATLIN SYNDICATE LIMITED, Plaintiff, v. RAMUJI, LLC d/b/a BUDGET INN and PEOPLES INDEPENDENT BANK, Defendants. RAMUJI, LLC and PEOPLE'S INDEPENDENT BANK, Counterclaim/Third-Party Plaintiffs, v. RANDY JONES & ASSOCIATES, INC., JON PAIR, CERTAIN UNDERWRITERS AT LLOYD'S, LONDON SUBSCRIBING SEVERALLY TO POLICY NO. ULL 20018, named as "SYNDICATE 1414 AT LLOYD'S (ASCOT UNDERWRITING LIMITED), SYNDICATE 5820 AT LLOYD'S (ANV SYNDICATES LIMITED), SYNDICATE 727 AT LLOYD'S (S.A. MEACOCH & COMPANY LIMITED), and SYNDICATE 1861 at LLOYD'S (ANV SYNDICATED LIMITED), Third-Party Defendants. |
| Court | U.S. District Court — Northern District of Alabama |
On August 16, 2016, Catlin Syndicated Limited ("Catlin") initiated a declaratory judgment action against Ramuji, LLC ("Ramuji") and Peoples Independent Bank ("PIB") concerning a commercial insurance policy issued to Ramuji by Catlin and four other underwriters at Lloyd's of London. (Doc. 1). On September 19, 2016, PIB answered the complaint, filed counterclaims against Catlin, and filed third-party claims against Jon Pair and Randy Jones & Associates, Inc. (Doc. 12).
On January 24, 2017, PIB filed amended counterclaims against Catlin and amended third-party claims against Jon Pair and Randy Jones & Associates, Inc. (Doc. 46, the "Amended Pleading").1 In the same pleading, PIB also filed new third-party claims against the four other underwriters for the policy, namely Syndicate 1414 at Lloyd's (Ascot Underwriting Ltd.); Syndicate 5820 at Lloyd's (ANV Syndicates Ltd.); Syndicate 727 at Lloyd's (S.A. Meacoch & Co. Ltd.); Syndicate 1861 at Lloyd's (ANV Syndicates Ltd.) (together, the "Added Syndicates").
According to PIB, Catlin and the Added Syndicates "are all syndicates that transact business in the marketplace known as Lloyd's of London," and all five syndicates (including Catlin) "underwrote and subscribed to risk on the commercial insurance policy issued to Ramuji by Lloyd's of London" that serves as the basis of this litigation. (Doc. 46 at 2).
PIB argues that joinder of the Added Syndicates is proper pursuant to Federal Rule of Civil Procedure 19(a)(1), which states as follows:
FED. R. CIV. P. 19(a)(1)(A-B). PIB alleges that this Court "cannot accord complete relief among the existing parties as any judgment against Catlin would not result in full payment under the Lloyd's Policy by all of the Lloyd's entities," which would potentially impair PIB's ability to protect its interests and might leave all parties subject to a substantial risk of multiple and inconsistent obligations. (Doc. 46 at 3).
Neither Catlin nor the Added Syndicates dispute PIB's characterization of the positioning of the parties in this action, nor do they oppose the joinder of the Added Syndicates as required parties pursuant to Rule 19(a)(1). The interests of Catlin and the Added Syndicates are aligned for the purposes of the claims filed by PIB against them, as all five syndicates underwrote and subscribed to the risk on the policy in question. However, despite the similarity of their interests, Catlin and the Added Syndicates separately filed Motions To Dismiss the claims brought against them by PIB. (Docs. 53 and 63, respectively).2
On February 7, 2017, PIB responded to Catlin's Motion To Dismiss, and on February 13, 2017, Catlin filed its reply. (Docs. 59, 60). On March 1, 2017, PIB responded to the Added Syndicates' Motion To Dismiss. (Doc. 64).3 Both Motions are ripe for this Court's disposition.
A Rule 12(b)(6) motion attacks the legal sufficiency of the complaint. See FED. R. CIV. P. 12(b)(6) (). The Federal Rules of Civil Procedure require only that the complaint provide "'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 103, 2 L. Ed. 2d 80 (1957) (footnote omitted) (quoting FED. R. CIV. P. 8(a)(2)), abrogated by Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S. Ct. 1955, 1965, 167 L. Ed. 2d 929 (2007); see also FED. R. CIV. P. 8(a) ().
While a plaintiff must provide the grounds of his entitlement to relief, Rule 8 does not mandate the inclusion of "detailed factual allegations" within a complaint. Twombly, 550 U.S. at 555, 127 S. Ct. at 1964 (quoting Conley, 355 U.S. at 47, 78 S. Ct. at 103). However, at the same time, "it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly, 550 U.S. at 563, 127 S. Ct. at 1969.
"[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." Iqbal, 556 U.S. at 679, 129 S. Ct. at 1950. "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. (emphasis added). Iqbal, 556 U.S. at 680, 129 S. Ct. at 1950-51.
A claim is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949. "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." Id. (quoting Twombly, 550 U.S. at 556, 127 S. Ct. at 1965).
On or about May 8, 2015, Ramuji, though Randy Jones & Associates, submitted a signed Commercial Insurance Application for commercial property coverage for its motel located in Boaz, Alabama. (Doc. 1 at 3).
Underwriters at Lloyd's of London (namely, Catlin and the Added Syndicates) issued a policy to Ramuji effective from May 9, 2015, through May 9, 2016. (See Doc. 1-4, the "Policy"). The Policy provided $1,732,136.00 in building coverage for the motel, in addition to $150,000.00 in business personal property coverage, $200,000.00 in business income with extra expense coverage, and $15,000.00 in coverage for an outdoor sign, totaling to an insurance limit of $2,097,136.00. (Doc. 1 at 4).
A fire loss occurred at the insured motel on April 2, 2016. (Id. at 6). Catlin and the Added Syndicates acknowledged Ramuji's claim, commenced an investigation, and reserved their rights under the Policy by letter dated April 7, 2016. (Id.). On April 25, 2016, three weeks after the fire loss, Ramuji requested that PIB be added to the Policy as a mortgagee "effective at inception." (Id.). Ramuji was advised that PIB could not be added retroactively as a mortgagee but could be added by endorsement effective as of the day of the request. (Id.). Accordingly, PIB was added as a mortgagee effective as of April 25, 2016. (Id. at 7). Though PIB has made a verbal request for coverage under the Policy as a mortgagee, no written claim or Proof of Loss has been tendered by PIB as of the date of the filing of the complaint. (Id.).
Based on their investigation, Catlin and the Added Syndicates determined that the Policy was subject to rescission based upon material misrepresentations in its application, including the nondisclosure of two unsatisfied and unreleased liens against Ramuji, as well as violations of Policy provisions and endorsements. (Id.). On August 16, 2016, Catlin and the Added Syndicates advised Ramuji that the Policy was subject to rescission, and they refunded Ramuji's premium (Id. at 9).
Back in 2004, PIB extended a loan to Ramuji in exchange for the execution of a mortgage on Ramuji's motel property in Boaz, Alabama. (Doc. 46 at 3). At all relevant times, PIB has been the mortgagee on the Property and is the equitable title holder to the property. Id.; see also Exhibit 1, (Doc. 46 at 27-29) ().6
Ramuji has maintained insurance on the Property since the mortgage was executed by PIB in 2004. (Id. at 3). As of August 8, 2014, PIB was listed as an "Additional interest . . . Mortgagee" on a standard "Evidence of Property Insurance" form prepared by Randy Jones & Associates, Inc. (Id. at 4).
On June 5, 2015, another "Evidence of Property Insurance" form also listed PIB as an "Additional Interest . . . Mortgagee," effective from May 9,...
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