Handi-Craft Co. v. Travelers Cas. & Sur. Co. of America
| Decision Date | 25 April 2012 |
| Docket Number | Case No. 4:12CV63 JCH |
| Parties | HANDI-CRAFT COMPANY, Plaintiff(s), v. TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, Defendant(s). |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Plaintiff's Motion to Dismiss Defendant's Counterclaims or, in the Alternative, to Strike Defendant's Counterclaims or, in the Alternative, to Construe Defendant's Counterclaims as Affirmative Defenses Under Rule 8(c)(2), and Motion to Dismiss or Strike Defendant's Requests for Attorneys' Fees ("Motion to Dismiss," ECF No. 17) and Plaintiff's Motion to Strike Defendant's Affirmative Defenses or, in the Alternative, for More Definite Statement ("Motion to Strike," ECF No. 19), both filed on March 2, 2012. Both motions are fully briefed and ready for disposition.
Plaintiff Handi-Craft Company ("Plaintiff" or "Handi-Craft") manufactures Dr. Brown's baby bottles and other infant care products. (Complaint, ¶ 1). Plaintiff is a Missouri corporation with its principal place of business in Missouri. (Id.). Defendant Travelers Casualty and Surety Company of America ("Defendant" or "Travelers") is an insurance company and Connecticut corporation with its principal place of business in Connecticut. (Id., ¶ 2).
Plaintiff purchased a "Wrap+ Policy" of insurance ("the Policy") from Defendant in 2008. (Id., ¶ 6). The Policy had effective dates of July 1, 2008, to July 1, 2009. (Id.). On September 5, 2008, Plaintiff was served with a Complaint in a civil proceeding filed against it by Whittlestone, Inc., in the United States District Court for the Northern District of California, Case No. CV-08-04193 SBA ("the Lawsuit"). (Id., ¶ 11). Plaintiff tendered the Lawsuit to Defendant on September 16, 2008. (Id., ¶ 12). By letter dated September 22, 2008, Defendant notified Plaintiff that Defendant refused coverage for the Lawsuit. (Id., ¶ 14). Plaintiff undertook its own defense against the Lawsuit and continues to defend itself against the Lawsuit. (Id., ¶ 16).
Plaintiff demanded Defendant defend and indemnify Plaintiff in the Lawsuit on several other occasions. (Id., ¶¶ 17-28). Defendant requested Plaintiff provide additional documents to enable Defendant to "further review coverage." (Id., ¶ 21). Plaintiff made several inquiries as to the status of Defendant's coverage review, and Defendant either failed to respond or indicated its response was forthcoming. (Id., ¶¶ 25-29).
Plaintiff filed this action in this Court on January 12, 2012, on the basis of diversity jurisdiction. Plaintiff's Complaint contains the following three counts: Count I alleges breach of contract, Count II alleges vexatious refusal to pay and vexatious delay, and Count III requests a declaratory judgment that Defendant has a duty to defend and indemnify Plaintiff in the Lawsuit. Defendant filed its Answer and Counterclaim for Declaratory Relief on February 10, 2012. (ECF No. 10). Defendant's Answer contains forty-five affirmative defenses, and Defendant's Counterclaim contains the following six counts based on exclusions in the Policy: Count I asserts the Policy excludes coverage under Exclusion A.6, Count II asserts the Policy excludes coverage under Exclusion A.7, Count III asserts the Policy excludes coverage under Exclusion A.14.d, Count IV asserts the Policy excludes coverage under Exclusion B.1.a, Count V asserts the Policy excludescoverage under Exclusion B.1.c, and Count VI asserts the Policy excludes coverage under Exclusion B.2.
In ruling on a motion to dismiss, the Court must view the allegations in the Complaint in the light most favorable to Plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). A cause of action should not be dismissed for failure to state a claim unless, from the face of the Complaint, it appears beyond a reasonable doubt that Plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Jackson Sawmill Co., Inc. v. United States, 580 F.2d 302, 306 (8th Cir. 1978), cert. denied, 439 U.S. 1070 (1979).
Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure serves to eliminate actions which are fatally flawed in their legal premises and designed to fail, thereby sparing litigants the burden of unnecessary pretrial and trial activity. Stringer v. St. James R-1 Sch. Dist., 446 F.3d 799, 802 (8th Cir. 2006). As a practical matter, such dismissal should be granted only in the unusual case in which a plaintiff includes allegations that show on the face of the Complaint that there is some insuperable bar to relief. Schmedding v. Tnemec Co., Inc., 187 F.3d 862, 864 (8th Cir. 1999); see also 5B Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1357, at 565 (3d ed. 2004) ().
Rule 12(f) of the Federal Rules of Civil Procedure provides that a "court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter."2 Fed. R. Civ. P. 12(f). "Parties filing a motion to strike under Fed. R. Civ. P. 12(f) bear the burden of providing the Court any reason why this language is immaterial, impertinent, or scandalous." Simms, 2009 WL 943552 at *2 (internal citation omitted). "Although the Court enjoys 'broad discretion' in determining whether to strike a party's pleadings, such an action is 'an extreme measure.'" Airstructures Worldwide, LTD v. Air Structures Am. Techs. Inc., No. 4:09CV10, 2009 WL 792542, at *1 (E.D. Mo. Mar. 23, 2009) (quoting Stanbury Law Firm v. IRS, 221 F.3d 1059, 1063 (8th Cir. 2000)).
"A motion to strike should 'be denied if the defense is sufficient as a matter of law or if it fairly presents a question of law or fact which the court ought to hear.'" Bartoe v. Mo. Barge Line Co., No. 1:07CV165, 2009 WL 1118816, at *1 (E.D.Mo. Apr. 24, 2009) (quoting Lunsford v. United States, 570 F.2d 221, 229 (8th Cir. 1977)). "'Motions to strike under Fed. R. Civ. P. 12(f) are viewed with disfavor and are infrequently granted.'" Champion Bank v. Reg'l Dev., LLC, No. 4:08CV1807, 2009 WL 1351122, at *4 (quoting Lunsford, 570 F.2d at 229). Motions to strike affirmative defenses "should not be granted 'unless, as a matter of law, the defense cannot succeed under any circumstances.'" Champion Bank, 2009 WL 1351122, at *4 (quoting FDIC v. Coble, 720 F. Supp. 748, 750 (E.D.Mo. 1989)); Bobbitt v. Victorian House, Inc.,532 F. Supp. 734, 737 (N.D. Ill. 1982) ().
Plaintiff argues Defendant's Counterclaim should be dismissed or stricken because it is duplicative of Plaintiff's claims and Defendant's affirmative defenses. Defendant counters that the allegations in Defendant's Counterclaim contain relevant issues that are not contained in Plaintiff's Complaint.
According to Plaintiff, when a "complete identity of factual and legal issues exist between the complaint (and answer thereto) and counterclaim, and a decision on the merits of the plaintiff's claims will render the request for declaratory relief moot, then the counterclaim should be dismissed as redundant." Amwest Sur. Ins. Co. v. Concord Bank, No. 4:00CV1988SNL, 2003 WL 553229, at *4 (E.D. Mo. Feb. 4, 2003) (citing Aldens v. Packel, 524 F.2d 38, 51-52 (3rd Cir. 1975)). Plaintiff argues that such a "complete identity of factual and legal issues" exists between Plaintiff's Complaint and Defendant's Counterclaim.
The Court disagrees that a complete identity of factual and legal issues exists and that Defendant's Counterclaim is redundant of Plaintiff's claims such that a decision on Plaintiff's Complaint will render Defendant's Counterclaim moot. Defendant's Counterclaim for declaratory judgment cites specific exclusions that Defendant alleges bar coverage under the Policy, while Plaintiff's Complaint asserts Defendant breached its contract with Plaintiff, asserts Defendant's refusal to pay was vexatious and unreasonably delayed, and requests a declaration that Defendant has a general duty to defend and indemnify Plaintiff. Contrary to Plaintiff's assertions, Defendant'sCounterclaim is not a "mirror image" of the allegations in Plaintiff's Complaint. Thus, the Court will deny Plaintiff's motion to dismiss Defendant's Counterclaim. See 6 CHARLES ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE § 1406 (3d ed. 1990) (). Similarly, the Court finds Defendant's Counterclaim is not redundant under Rule 12(f) of the Federal Rules of Civil Procedure, and the Court will not strike Defendant's Counterclaim on that basis.
In the alternative, Plaintiff argues Defendant's Counterclaim should be construed as affirmative defenses under Rule 8(c)(2) of the Federal Rules of Civil Procedure. Plaintiff asserts that, under Missouri law, an insurance policy exclusion is properly viewed as an affirmative defense. Defendant counters that since the viability of a counterclaim for declaratory relief is a procedural issue, this determination is governed by federal law and not Missouri law.
In Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 674 7 (1950), the United States Supreme Court, in dictum, noted the fact "that the declaratory remedy which may be given by the federal courts may not be available in the State courts is immaterial." Some lower courts have followed the Skelly dictum in holding that a federal diversity court...
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