Gov't Emps. Ins. Co. v. Saco
| Decision Date | 18 February 2014 |
| Docket Number | 12-CV-5633 (NGG) (MDG) |
| Parties | GOVERNMENT EMPLOYEES INSURANCE COMPANY, Plaintiff, v. DIANE SACO, SUZANNE KUSULAS, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Plaintiff Government Employees Insurance Company ("GEICO") brings this action against Defendants Diane Saco and Suzanne Kusulas seeking declaratory relief pursuant to 28 U.S.C. § 2201 concerning the parties' respective rights and obligations under two insurance policies issued by GEICO. The underlying dispute arises from Plaintiff's defense of its insured, Defendant Saco, in a state court tort action brought by Defendant Kusulas seeking compensation for injuries sustained in an automobile accident. Defendants separately have moved to dismiss the Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). (Kusulas Mot. to Dismiss (Dkt. 8) at 1 ("Kusulas Mot."); Saco Mot. to Dismiss (Dkt. 11) at 2 ("Saco Mot.").) For the reasons explained below, Defendants' Motions to Dismiss the Complaint are DENIED.
For the purpose of the instant motions, the Court will assume the truth of the following allegations from Plaintiff's Complaint. See Havden v. Paterson, 594 F.3d 150, 160 (2d Cir. 2010).
On February 23, 2006, Defendant Diane Saco was involved in an automobile accident when the vehicle she was driving struck a vehicle in which Defendant Suzanne Kusulas was apassenger. (Compl. ¶ 11 (Dkt. 1).) Kusulas suffered significant injuries as a result of the collision and ultimately underwent multiple spinal surgeries. In January 2007, Kusulas commenced a personal injury action against Saco in the Supreme Court for the State of New York, Kings County. See Kusulas v. Saco, Index. No. 1904/2007 (N.Y. Sup. Ct).
At the time of the accident, Saco held automobile and umbrella policies issued by GEICO, which provided a combined $1,300,000 in relevant coverage. (Compl. ¶¶ 10, 26.) Acting on behalf of its insured, GEICO retained counsel to defend Saco in the personal injury suit and undertook its own investigation into Kusulas's allegations. (Id. ¶¶ 13-14.) Saco's defense counsel informed GEICO that a reasonable settlement value for the personal injury suit was $250,000, and otherwise signaled that Kusulas would have difficulty establishing that her second surgery resulted from the February 2006 collision. (Id. ¶¶ 15-16.)
On June 16, 2010, the state court granted summary judgment in favor of Kusulas, concluding that Saco bore sole responsibility for the accident and holding her liable for Kusulas's injuries. (Id. ¶ 17.) At some point subsequent to this decision, Saco retained personal counsel to monitor the case on her behalf. (Id. ¶ 23.) Having established Saco's liability for the accident, the court proceeded with a jury trial on damages in February 2012.
Beginning in October 2011, and continuing through the damages trial, Plaintiff made a series of escalating settlement offers to Kusulas. (Id. ¶¶ 18-21, 24-25.) Each offer was declined in turn. (Id.) In a final effort to settle the case, Plaintiff tendered the full amount available under Saco's $1.3 million policies. (Id. ¶ 26.) Kusulas's counsel indicated a willingness to accept the offer but demanded pre-judgment interest that had accrued since the court's decision on summary judgment. (Id. ¶ 27.) Plaintiff did not accept Kusulas's counteroffer on the grounds that it exceeded the applicable policy limits, (Id. ¶ 28.) The jury ultimately awarded Kusulas$3,369,066.75 in compensatory damages. (Id. ¶ 29.) Saco's motion for remittitur was denied on June 12, 2012, and Saco's defense counsel filed a timely notice of appeal. (Id. ¶¶ 31-32.)
As detailed in the Complaint, Saco had demanded that Plaintiff pay the full jury award notwithstanding the fact that it exceeds the applicable policy limits, as well as compensate her for the costs associated with retaining personal counsel. (Id. ¶¶ 33-35.) Saco also accuses Plaintiff of bad faith in its conduct of the personal injury action—specifically, she asserts that her insurer should have tendered the full value of her policies earlier. (Id.)
Plaintiff filed the instant action against Saco and Kusulas on November 15, 2012, seeking declaratory relief pursuant to 28 U.S.C. § 2201 concerning the scope of its duty to indemnify Saco under the automobile and umbrella policies. (See Compl.) Specifically, Plaintiff requests a declaratory judgment stating that: (1) "[t]he policies issued to Saco by GEICO do not require that GEICO pay any sums in excess of the policy limits"; (2) "[t]he policies issued to Saco by GEICO do not require that GEICO compensate Saco for her personal attorney's fees"; and (3) "GEICO satisfied its obligations under the policies in good faith and no claim for bad faith by Saco or any potential assignee exists." (Id. ¶ 41.) Plaintiff also requests costs and any other appropriate relief. (Id.)
In accordance with the schedule set by the court, on April 30, 2013, Defendants Saco and Kusulas filed separate Motions to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). (See Kusulas Mot. to Dismiss; Saco Mot. to Dismiss.)1
To survive a motion to dismiss under Rule 12(b)(6), "a claim must contain sufficient factual matter, accepted as true, to 'state a claim for relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Plausibility "is not akin to a probability requirement," but requires "more than a sheer possibility that a defendant has acted unlawfully." Id. (internal quotation marks omitted).
In contemplating a motion to dismiss, the court must be mindful that while it "must accept as true all of the allegations contained in the complaint," that "tenet . . . is inapplicable to legal conclusions." Harris v. Mills, 572 F.3d 66, 71-72 (2d Cir. 2009) (citing Iqbal, 556 U.S. at 678). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice." Iqbal, 556 U.S. at 678. Determining whether a complaint adequately states a plausible claim for relief is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.; Harris, 572 F.3d at 72.
Likewise, when considering a motion to dismiss for lack of subject matter jurisdiction, the court "must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of the plaintiff." Natural Res. Def. Council v. Johnson, 461 F.3d 164, 171 (2d Cir. 2006). Dismissal is proper under Rule 12(b)(1) "when the district court lacks the statutory or constitutional power to adjudicate" a case. Sokolowsky v. Metro. Transp. Auth., 723 F.3d 187, 190 (2d Cir. 2013) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)). By invoking federal jurisdiction, the plaintiff bears the burden of proving the court's jurisdiction bya preponderance of the evidence. See Hamm v. United States, 483 F.3d 135, 137 (2d Cir. 2007) (quoting Luckett v. Bure, 290 F.3d 493, 496 (2d Cir. 2002)).
Where, as here, a motion to dismiss is made pursuant to both Rules 12(b)(1) and 12(b)(6), the jurisdictional motion must be considered first because if the court dismisses the complaint for lack of subject matter jurisdiction, "the accompanying defenses and objections become moot and do not need to be determined." United States ex rel. Kreindler & Kreindler v. United Techs. Corp., 985 F.2d 1148, 1156 (2d Cir. 1993) (internal quotation marks and citation omitted); see also Magee v. Nassau Cnty. Med. Ctr., 27 F. Supp. 2d 154, 158 (E.D.N.Y. 1998) ().
Defendants separately move to dismiss the instant action pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). (See Kusulas Mot.; Saco Mot.) Defendant Kusulas moves to dismiss the Complaint on the grounds (i) that the court lacks subject matter jurisdiction over Plaintiff's claims for declaratory relief (Kusulas Mot. at 3-4), and (ii) that the Complaint fails to state justiciable claims for declaratory relief (id. at 4-6). Saco incorporates the second argument into her respective motion by reference and without further exposition. (Saco Mot. at 2.) However, neither Kusulas nor Saco contest the presence of diversity jurisdiction under 28 U.S.C. § 1332. (See Compl. ¶ 4-8.) Rather, alternatively citing to Rules 12(b)(1) and 12(b)(6), Defendants challenge the justiciability of the underlying controversy and the court's ability to exercise its jurisdiction over Plaintiff's claims under the Declaratory Judgment Act ("DJA"), 28U.S.C. § 2201, which provides the relevant rule of decision.2 (Kusulas Mot. at 3-6.) For the reasons outlined below, the court concludes that it may exercise its jurisdiction over Plaintiff's justiciable claims for declaratory relief.
The Declaratory Judgment Act provides in relevant part that, "[i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . may 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(a). However, the Act does not confer an independent basis for subject matter jurisdiction. See E.R. Squibb & Sons, 241 F.3d 154, 177 (2d Cir. 2001); PDK Labs. Inc. v....
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