Certain Underwriters at Lloyd's, London v. C&S Props.
| Docket Number | 4:21-CV-422-AGF |
| Decision Date | 11 January 2022 |
| Parties | CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, Plaintiff, v. C&S PROPERTIES, LLC, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Defendant Donald Cooksey's motion to dismiss the case or stay proceedings in this action for declaratory judgment on an insurance coverage dispute invoking the Court's diversity jurisdiction. ECF No. 25. For the reasons set forth below, the motion will be denied.
Defendant C&S, d/b/a D's Place, is a restaurant and bar in the City of St. Louis. In February 2018, Defendant Cooksey was a patron at D's Place when he was punched in the face by another patron, knocking him unconscious and causing serious injury. In August 2020, Cooksey filed a personal injury lawsuit against C&S in state court alleging that C&S was negligent in failing to intervene, assist, or protect him from harm. Cooksey also alleged that C&S was negligent by violating Missouri liquor laws in failing to prevent or suppress the assault. This underlying lawsuit remains pending in state court.[1] At the time of the incident, C&S carried commercial general liability insurance under a policy issued by Plaintiff Certain Underwriters at Lloyd's, London (“Lloyd's”). In April 2021, Lloyd's filed the present action for declaratory judgment against C&S and Cooksey seeking a declaration that Lloyd's has no duty to defend or indemnify C&S against Cooksey's claims in the underlying suit by virtue of policy exclusions for assault and battery, liquor liability, and punitive damages.[2]
In response, Cooksey filed the present motion to dismiss the complaint or, alternatively, to stay the proceedings on the theory that Lloyd's complaint here is not yet ripe while the underlying negligence suit remains pending in state court.[3] Cooksey also asserts that Lloyd's complaint fails to state a claim upon which relief can be granted because C&S is entitled to a defense under the policy. Though Cooksey brings his motion pursuant to Federal Rule of Civil Procedure 12(b)(6), Rule 12(b)(1) also applies insofar as Cooksey's ripeness theory challenges this Court's subject matter jurisdiction.
Rule 12(b)(1) permits a party to challenge a federal court's jurisdiction over the subject matter of the complaint. The party invoking jurisdiction has the burden of establishing it. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). Federal jurisdiction under Article III requires a case or controversy that is ripe and a plaintiff who has standing. Archdiocese of St. Louis v. Sebelius, 920 F.Supp.2d 1018, 1024 (E.D. Mo. 2013) (citations omitted). Ripeness is a question of when an action may be brought. Id.
When reviewing a motion under Rule 12(b)(1), the Court must determine whether the movant's attack on jurisdiction is “facial” or “factual.” Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). If a movant raises a factual attack, then the Court may consider matters outside the pleadings. Id. If the attack is facial, then “the court restricts itself to the face of the pleadings, and the non-moving party receives the same protections as it would defending against a motion brought under Rule 12(b)(6).” Id. Because Cooksey has not “challenge[d] the veracity of the facts underpinning subject matter jurisdiction, ” the Court construes Cooksey's motion as a facial attack subject to the standards of Rule 12(b)(6). Davis v. Anthony, Inc., 886 F.3d 674, 679 (8th Cir. 2018) (citation omitted).
The purpose of a motion to dismiss under Rule 12(b)(6) is to test the legal sufficiency of the complaint. A complaint must be dismissed for failure to state a claim when it does not plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Pleadings must include sufficient factual information to provide notice and the grounds on which the claim rests and “to raise a right to relief above a speculative level.” Twombly, 550 U.S. at 555; see also Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008). This obligation requires a plaintiff to plead “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. A complaint “must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory.” Id. at 562 (citation omitted). On a motion to dismiss, the Court accepts as true all of the factual allegations contained in the complaint and reviews the complaint to determine whether its allegations show that the pleader is entitled to relief. Id. at 555-56; Fed.R.Civ.P. 8(a)(2).
This case invokes the Court's diversity jurisdiction, and “[s]tate law controls the construction of insurance policies.” J.E. Jones Const. Co. v. Chubb & Sons, Inc., 486 F.3d 337, 340 (8th Cir. 2007). “Missouri courts read insurance contracts ‘as a whole and determine the intent of the parties, giving effect to that intent by enforcing the contract as written.'” Lafollette v. Liberty Mut. Fire Ins. Co., 139 F.Supp.3d 1017, 1021 (W.D. Mo. 2015) (citing Thiemann v. Columbia Pub. Sch. Dist., 338 S.W.3d 835, 840 (Mo. App. W.D. 2011)). “Policy terms are given the meaning which would be attached by an ordinary person of average understanding if purchasing insurance.” Vogt v. State Farm Life Ins. Co., 963 F.3d 753, 763 (8th Cir. 2020) (applying Missouri law) (quotations omitted).
Cooksey contends that Lloyd's complaint seeking declarations regarding its duties to defend and indemnify C&S in Cooksey's underlying negligence lawsuit is not ripe because that suit is still pending. Cooksey also asserts that Lloyd's has failed to state a claim under Rule 12(b)(6) because Lloyd's does have duty to defend the underlying suit given the mere possibility of liability under the policy. Cooksey urges the Court to either dismiss this action or stay proceedings pending resolution of the state court case.
As a preliminary matter, Lloyd's argues that Cooksey's present motion should be denied as procedurally deficient because Cooksey did not file a separate memorandum in support of the motion, in violation of Local Rule 4.01(A). ECF No. 28 at 5. The Court may strike or summarily deny a motion when filed “without any supporting legal arguments.” Pearlstone v. Costco Wholesale Corp., No. 4:18CV630 RLW, 2019 WL 764708, at *7 (E.D. Mo. Feb. 21, 2019) (). (emphasis in original). However, “[w]hile perhaps not in compliance with the exact requirement of Local Rule 4.01(A), it is relatively common for litigants to file combined motions and memoranda in support.” Id. Here, Cooksey's motion contains adequate legal arguments and authorities, and the Court prefers to resolve issues on their merits whenever possible.
Lloyd's also argues that Cooksey's motion improperly cites to matters outside the pleadings, such as the insurance policy and the underlying petition. ECF No. 28 at 4. Lloyd's thus asks the Court to either exclude these references and deem Cooksey's motion improper under Rule 12(b)(6) or, alternatively, treat Cooksey's motion to dismiss as a motion for summary judgment under Rule 12(d). This argument is not well-taken. Lloyd's itself references both the policy and the underlying petition in its own complaint and attaches the policy to the complaint. ECF No. 27-2. Courts may consider documents attached to the complaint and matters of public and administrative record referenced in the complaint. Owens v. General Motors Corp., 533 F.3d 913, 918 (8th Cir. 2008).
In its complaint, Lloyd's asks the Court to determine whether it must defend and indemnify C&S in the underlying negligence suit. In his present motion to dismiss, Cooksey asserts that these issues are not ripe for determination at this time. “The ripeness doctrine flows both from the ‘cases' and ‘controversies' requirement in Article III of the United States Constitution, as well as from prudential considerations for refusing to exercise jurisdiction.” Neb. Pub. Power Dist. v. MidAmerican Energy Co., 234 F.3d 1032, 1037 (8th Cir. 2000). The basic rationale of the ripeness doctrine is “to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements.” Id. A declaratory judgment action can be sustained if no injury has yet occurred, but, before a claim is ripe for adjudication, the plaintiff must face an injury that is “certainly impending.” Pub. Water Supply Dist. No. 8 of Clay Cty. v. City of Kearney, 401 F.3d 930, 932 (8th Cir. 2005).
To determine if a matter is ripe in a diversity case, the Court looks to applicable rules under Missouri substantive law. See Country Mut. Ins. Co. v. Med. Weight Loss Centers LLC, No. 4:18 CV 1560 DDN, 2019 WL 2251201, at *2 (E.D. Mo. Feb. 8, 2019). In Missouri, the duty to defend and the duty to indemnify are separate and distinct contractual obligations requiring separate analyses. Piatt v. Ind. Lumbermen's Mut. Ins. Co., 461 S.W.3d 788, 792 (Mo. 2015). An insurer's duty to defend is broader than its duty to indemnify. Spencer v. Hartford Cas., 556 S.W.3d 679, 683 (Mo. App. E.D. 2018). “Missouri law is clear that where there is no duty to defend, there is no duty to indemnify.” Sprint Lumber, Inc. v. Union Ins....
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