Excess Risk Underwriters v. Lafayette Life Ins.

• Decision Date: 30 April 2002
• Docket Number: No. 01-4111-CIV.,01-4111-CIV.
• Citation: 208 F.Supp.2d 1310
• Parties: EXCESS RISK UNDERWRITERS, INC., a Florida corporation, Plaintiff, v. LAFAYETTE LIFE INSURANCE COMPANY, an Indiana corporation; and Robert D. Dube, individually, Defendants.
• Court: U.S. District Court — Southern District of Florida

208 F.Supp.2d 1310

EXCESS RISK UNDERWRITERS, INC., a Florida corporation, Plaintiff, v. LAFAYETTE LIFE INSURANCE COMPANY, an Indiana corporation; and Robert D. Dube, individually, Defendants.

No. 01-4111-CIV.

United States District Court, S.D. Florida.

April 30, 2002.

Gary E. Davidson, George Wentz, Coral Gables, FL, for plaintiff.

Jeane Kneale, Mark Hicks, Cindy Ebenfeld, Miami, FL, for Robert Dube, defendant.

Richard C. Smith, Edward Moss, Nadine Gardner, Miami, FL, for Lafayette Life Ins., defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

GOLD, District Judge.

THIS CAUSE is before the court upon defendant Robert D. Dube's ("Dube") motion to dismiss (DE # 22) plaintiff Excess Risk Underwriters, Inc.'s ("ERU") first amended complaint as filed against him. ERU has filed an eleven count complaint against Dube and Lafayette Life Insurance Co. ("LLIC") alleging as follows: count I, breach of the ERU-LLIC agreement (against LLIC); count II, breach of confidentiality agreement (against LLIC); count III, breach of transfer policies agreement (against LLIC); count IV, promissory estoppel (against LLIC); count V, breach of fiduciary duty (against LLIC and Dube); count VI, fraudulent inducement (against Dube); count VII, fraudulent inducement (against LLIC); count VIII, tortious interference with a contractual business relationship (against LLIC and Dube); count IX, tortious interference with prospective business relationships (against LLIC and Dube); count X, conversion (against LLIC); and count XI, civil theft (against LLIC). The court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1332 in that the parties are diverse and the amount in controversy is more than $75,000.00.

ERU claims monetary damages in an amount exceeding $35 million for LLIC's breach of contract and the defendants' tortious conduct. ERU claims that Dube induced it to enter into three related agreements with LLIC by misrepresenting LLIC's willingness to abide by the terms of the parties' contracts. Additionally, the complaint requests injunctive relief, as provided for by the parties' agreements, in order to prevent LLIC from taking threatened action that allegedly would result in irreparable harm to ERU.

The Facts¹

ERU is a Florida company engaged in the business of insurance administration. In 1997, ERU had a contractual right to the administration of certain blocks of business that previously had been under-written by American Bankers' Life Assurance Company ("ABLAC"). These blocks of business were known as the ABLAC and Trust blocks. Under its agreement with ABLAC, ERU had the exclusive right to select a new carrier for the ABLAC and Trust blocks. (1st Am. Compl. at ¶ 12).

In 1997, ERU asked LLIC whether it was interested in becoming the replacement insurer for the ABLAC and Trust blocks of business, which represented approximately $17 million in annual premiums to LLIC. Pursuant to this inquiry, Dube, who is a senior vice president of LLIC, entered into extensive negotiations with ERU regarding the relationship to be established between LLIC and ERU. (1st Am. Compl. at ¶ 15). Based upon the representations made by Dube during this negotiations period, ERU entered into an agreement with LLIC, whereby LLIC would act as the replacement issuing insurer for the ABLAC block of business and for new business brought to LLIC by ERU. (1st Am. Compl. at ¶ 17; Ex. B). The ERU-LLIC agreement, which was drafted and signed by Dube as LLIC's authorized agent, obligated LLIC to use ERU exclusively for the administration of the business. The Trust block subsequently was added and made a part of the ERU-LLIC agreement. Although LLIC did not have the capacity to write the Trust block of business, Dube promised ERU that, in return for ERU providing LLIC with a complete package of information, forms, and resources to give LLIC the capacity to write the Trust block, LLIC would use ERU as its sole and exclusive administrator of the Trust block.

In December of 1997, ERU entered into a confidentiality and nondisclosure agreement with LLIC. Under this agreement, LLIC agreed to keep confidential all information disclosed to LLIC by ERU and not to use any information disclosed to LLIC by ERU to LLIC's advantage. (1st Am. Compl. at ¶ 19).

Based upon the ERU-LLIC and nondisclosure agreements, ERU began transferring to LLIC the ABLAC and Trust blocks of business. It also transferred to LLIC a complete package of information, forms, and resources in order to provide LLIC with the capability to write the Trust block of business. ERU claims that, rather than complying with its obligations and Dube's promises to forward the policies to ERU to administer, LLIC began administering the policies itself or diverting them to a third party. (1st Am. Compl. at ¶¶ 21, 25).

In November of 1998, prior to learning that LLIC had begun to divert the administration of policies away from ERU, ERU entered into another agreement with LLIC. Dube represented to ERU that LLIC would become the sole marketing arm for the ABLAC block, the Trust block, and a pool of hospital insurance policies administered by ERU. Dube promised that all policies produced by LLIC under the agreements in force would be sent to ERU for administration as called for in the agreements. Dube also represented that LLIC would generate at least sixty-five new policies per month for ERU to administer. These representations were incorporated into the Transfer Policies agreement. (1st Am.Compl. ¶¶ 36-38). According to ERU, LLIC has failed to produce sixty-five transfer policies as promised in the agreement, and Dube and LLIC never intended to comply with their obligations.

On August 14, 2001, LLIC sent notification to ERU that, effective January 1, 2002, it was summarily terminating its relationship with ERU with the intention of recapturing the business that was being administered by ERU. (1st Am.Compl.Ex. E). The language of the termination notice indicates that LLIC expects to acquire all of the business brought to it by ERU despite the repeated promises by LLIC and Dube, and the terms of the various agreements, that the business brought to LLIC by ERU would remain with ERU and that ERU would remain the sole administrator of that business. (1st Am. Compl. at ¶ 42).

Standard for Motion to Dismiss

To warrant dismissal of a complaint under Rule 12(b)(6) of the Federal Rules of Civil procedure, it must be "clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Blackston v. Alabama, 30 F.3d 117, 120 (11th Cir.1994) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984)). Determining the propriety of granting a motion to dismiss requires courts to accept all the factual allegations in the complaint as true and to evaluate all inferences derived from those facts in the light most favorable to the plaintiff. See Hunnings v. Texaco, Inc., 29 F.3d 1480, 1483 (11th Cir.1994). The threshold of sufficiency that a complaint must meet to survive a motion to dismiss is exceedingly low. See Ancata v. Prison Health Svcs., Inc., 769 F.2d 700, 703 (11th Cir.1985) (citation omitted); Jackam v. Hospital Corp. of Am. Mideast, Ltd., 800 F.2d 1577, 1579 (11th Cir.1986). "[U]nless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," the complaint should not be dismissed on grounds that it fails to state a claim upon which relief can be granted. M/V Sea Lion v. v. Reyes, 23 F.3d 345, 347 (11th Cir.1994) (citation omitted). Nevertheless, to survive a motion to dismiss, a plaintiff must do more than merely "label" his claims. Blumel v. Mylander, 919 F.Supp. 423, 425 (M.D.Fla.1996). Moreover, when on the basis of a dispositive issue of law no construction of the factual allegations will support the cause of action, dismissal of the complaint is appropriate. Marshall County Bd. of Educ. v. Marshall County Gas Dist., 992 F.2d 1171, 1174 (11th Cir.1993).

Analysis

Dube seeks to dismiss counts V, VI, VIII, and IX of ERU's complaint, as filed against him, pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Dube's primary argument is that he cannot be held liable for breach of fiduciary duty, fraudulent inducement, or tortious interference because these claims are barred by the economic loss rule. That is, these counts do not allege torts independent of ERU's claims for breach of contract. For the reasons explained below, LLIC's motion to dismiss is granted.

I. Dube May Assert Economic Loss Rule as Defense

At the outset, it is important to note that privity is not required in order for a party to raise the economic loss rule as a defense. ERU contends that the economic loss rule cannot apply to the claims it has brought against Dube because it has no contractual claims against Dube, and Dube was not a party to a contract with ERU. This argument is erroneous for two reasons. First, although it is true that only LLIC and ERU were parties to the various agreements involved in this case, Dube signed the agreements on behalf of LLIC as the corporation's senior vice president. As such, a contractual relationship exists between the parties. See Leisure Founders, Inc. v. CUC Int'l, Inc., 833 F.Supp. 1562, 1573 (S.D.Fla. 1993) (finding that contractual relationship existed between plaintiff corporation and individual defendants who signed contract on behalf of defendant corporation, but who were not parties to contract).

Second, under Florida law, it is irrelevant that ERU has not asserted any contractual claims against Dube.² This is because "a defendant need not be in privity of contract with a plaintiff in order for the tort claims against that defendant to be dismissed under the economic loss rule, assuming the plaintiff has a contractual remedy against another party." Tai-Pan, Inc. v. Keith Marine, Inc., No....