Clark v. Rockhill Ins. Co.
| Decision Date | 21 September 2018 |
| Docket Number | Case No: 6:18-cv-780-Orl-37KRS |
| Parties | DONALD E. CLARK and STACY L. CLARK, Plaintiffs, v. ROCKHILL INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Middle District of Florida |
This cause came on for consideration without oral argument on the following motion filed herein:
Plaintiffs, Donald E. Clark and Stacy L. Clark, filed their second amended complaint against Defendant, Rockhill Insurance Company ("Rockhill"), on July 3, 2018. Doc. No. 26.1 In theirsecond amended complaint, they allege that Rockhill issued a policy to insure their property (The Sandman Motel). Id. ¶¶ 6-7. They allege that, during the policy's effective period, the property sustained water damage that was caused by the property's failed plumbing system. Id. ¶¶ 9, 16. They allege that they notified Rockhill of the damage, but that Rockhill wrongfully denied their claim and failed to pay for all of their losses, thereby breaching the parties' contract. Id. ¶¶ 9-20, 23. They demand judgment for "all losses with interest on any overdue payments, any incidental and foreseeable consequential damages caused by Defendant's breach of contract, plus attorneys' fees and costs." Id. at 4. They attached a copy of the insurance policy (Doc. No. 26-1) and a copy of Rockhill's denial letter (Doc. No. 26-2) to the second amended complaint.
Rockhill answered the Clarks' second amended complaint on July 17, 2018. Doc. No. 29. It asserted twelve (12) affirmative defenses including: (1) the loss was not covered because it was not fortuitous (id. at 8); (2) Plaintiffs did not provide timely notice of the loss as required by thepolicy (id. at 4); (3) the loss was not covered because it commenced prior to the effective date of the policy (id. at 8); (4) all or part of the damage was excluded because the Clarks failed to protect the property from further loss (id. at 7-8); (5) the policy does not provide coverage for any repairs to property that did not sustain a direct physical loss or damage (id. at 5); and (6) all or part of the claimed damage was excluded by various provisions of the policy, including the Continuous or Repeated Seepage Exclusion; the Faulty, Inadequate or Defective Maintenance Exclusion; the Wear and Tear Exclusion; the exclusion for underground pipes, flues or drains; and the Water Exclusion (id. at 5-9). It also asserted a counterclaim against the Clarks, requesting a declaratory judgment that no payments are due to the Clarks under the policy. Id. at 10-18.2 Rockhill attached a certified copy of the insurance policy to its counterclaim. Doc. No. 29-1.
The Clarks moved to dismiss Rockhill's counterclaim, arguing that the counterclaim fails to state a claim upon which relief can be granted. Doc. No. 33. Rockhill filed a response in opposition. Doc. No. 38. The Clarks also moved to strike three of Rockhill's affirmative defenses. Doc. No. 34. I denied the Clarks' motion to strike the Eighth and Eleventh Affirmative Defenses and granted Rockhill's request to amend its Twelfth Affirmative Defense, thereby mooting the Clarks' request to strike that defense. Doc. No. 39. I required Rockhill to file an amended answer, affirmative defenses, and counterclaim that amended only its Twelfth Affirmative Defense. Id. at 5. Rockhill filed its amended answer, affirmative defenses, and counterclaim on September 19, 2018.Doc. No. 40. In the amended document, Rockhill made no changes to the counterclaim. Thus, the Clarks' motion to dismiss the counterclaim was not mooted by the filing of the amended document.
The Clarks' motion to dismiss has been referred to me, and it is now ripe for review. In this Report and Recommendation, I cite to the original iteration of Rockhill's counterclaim (Doc. No. 29), but the discussion applies equally to the counterclaim as it appears in the amended answer, affirmative defenses, and counterclaim (Doc. No. 40).
The Clarks move to dismiss Rockhill's counterclaim under Federal Rule of Civil Procedure 12(b)(6). "To survive a motion to dismiss, a [pleading] 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, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). While this pleading standard "does not require 'detailed factual allegations,' . . . it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. (quoting Twombly, 550 U.S. at 555). A pleading must contain "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 (citation omitted). Although a court must accept as true well-pled allegations, it is not bound to accept a legal conclusion couched as a factual allegation. Iqbal, 556 U.S. at 678.
The Clarks are the owners of a property located at 3810 Highway 1, Mims, Florida (the "Mims Property"). Doc. No. 29, at 10. They also are the owners of the fictitious name, The Sandman Motel. Id. at 11. Rockhill issued a policy to The Sandman Motel providing coverage for the Mims Property. Id.; Doc. No. 29-1. The policy was effective from June 30, 2016 through June 30, 2017. Doc. No. 29, at 11. On or about June 29, 2017, Rockhill was provided with notice of a water backup loss that allegedly occurred on June 29, 2017, at the Mims Property. Id. at 12.Rockhill immediately investigated the loss. Id. It determined that the reported loss was not covered under the policy. Id.
Rockhill maintains that the policy does not provide coverage for the loss and that it is not responsible under the policy for the loss. Id. First, Rockhill alleges that the loss is not covered because it was not fortuitous and the policy provides coverage only for fortuitous losses. Id. at 13. Second, it alleges that the reported loss is barred because the Clarks breached the policy by failing to provide timely notice of the loss as required by the terms of the policy. Id. It alleges that the loss occurred seven to ten months before notice was provided on June 29, 2017, and that notice was not provided until after repairs had commenced and/or been completed, thereby depriving Rockhill of a meaningful inspection and investigation of the loss. Id. Third, Rockhill alleges that the reported loss is not covered because it commenced prior to the effective date of the policy. Id. at 14. Fourth, Rockhill alleges that all or part of the reported loss is excluded because the Clarks failed to protect the Mims Property from further loss in violation of the clear and unambiguous terms of the policy. Id. Fifth, Rockhill alleges that, under the terms of the policy, any repairs to the property that did not sustain a direct physical loss or damage are not covered. Id. at 15. Finally, Rockhill contends that all or part of the reported loss is excluded and/or limited by various policy exclusions, including the Continuous or Repeated Seepage Exclusion; the Faulty, Inadequate or Defective Maintenance Exclusion; the Wear and Tear Exclusion; the exclusion for underground pipes, flues or drains; and the Water Exclusion. Id. at 15-17.
The Clarks, however, maintain that Rockhill is responsible under the policy for the reported loss. Id. at 12. Rockhill maintains that their position is incorrect. Id. at 13.
Based on these facts, Rockhill contends that an actual controversy exists between the Clarks and Rockhill as to whether the Clarks are entitled to insurance proceeds under the policy. Id. at 12.It contends that it is in doubt as to its rights and obligations under the policy. Id. at 11. Thus, it "requests this Honorable Court to enter a judicial determination of the rights, duties, and obligations of the parties under the Policy, and prays for a judgment in its favor specifically declaring that no payments are owed to Donald E. Clark and Stacy L. Clark for the Reported Loss under the Policy, and any other relief this Court deems just and proper." Id. at 17-18.
The Clarks move to dismiss Rockhill's counterclaim under Rule 12(b)(6). As an initial matter, I note that, in its counterclaim, Rockhill does not specify whether it is intending to proceed under the federal Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, or Florida's Declaratory Judgment Act, Fla. Stat. § 86.011, et seq. In this diversity case, the Court must apply federal procedural law and state substantive law. See Gasperini v. Ctr. For Humanities, Inc., 518 U.S. 415, 427 (1996). Florida's Declaratory Judgment Act is procedural and does not confer any substantive rights. Coccaro v. Geico Gen. Ins. Co., 648 F. App'x 876, 880 (11th Cir. 2016) (). Thus, the Court should construe Rockhill's counterclaim as if it were asserted under the federal Declaratory Judgment Act and apply federal law. See id. ().
The federal Declaratory Judgment Act grants federal district courts the power to "declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201. "An essential element for a declaratory judgment action is the existence of an 'actual controversy' between the parties, a term which holds the same meaning as the cases and controversies requirement of Article III to the United States Constitution." Blitz Telecom Consulting, LLC v. Peerless Network, Inc., 151 F. Supp. 3d 1294,1302 (M.D. Fla. 2015) (citing Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300...
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