Huck v. Phila. Consol. Holding Corp.

• Decision Date: 19 March 2020
• Docket Number: Civil Action No. 1:19-cv-03336-SDG
• Parties: RONALD HUCK and PEGGY HUCK, individually and on behalf of all those similarly situated, Plaintiffs, v. PHILADELPHIA CONSOLIDATED HOLDING CORPORATION d/b/a PHILADELPHIA INSURANCE COMPANIES, and PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendants.
• Court: U.S. District Court — Northern District of Georgia

RONALD HUCK and PEGGY HUCK, individuallyand on behalf of all those similarly situated, Plaintiffs, v. PHILADELPHIA CONSOLIDATED HOLDING CORPORATIONd/b/a PHILADELPHIA INSURANCE COMPANIES,and PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendants.

Civil Action No. 1:19-cv-03336-SDG

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

March 19, 2020

ORDER

This matter is before the Court on Defendants Philadelphia Consolidated Holding Corporation d/b/a Philadelphia Insurance Companies and Philadelphia Indemnity Insurance Company's motion to dismiss Plaintiffs Ronald and Peggy Huck's Complaint [ECF 3]. For the reasons stated below, Defendants' motion is GRANTED and Plaintiffs' Complaint is DISMISSED WITHOUT PREJUDICE.

I. BACKGROUND

The following facts are treated as true for purposes of this motion.¹ Plaintiffs are the owners of the real property located on Falmouth Court S.E., Smyrna, Georgia.² On January 7, 2014, Plaintiffs' home suffered water and other damage.³ Plaintiffs reported the damage to Defendants, claiming their home was covered by commercial insurance policy number PHPK996169 (the "Policy").⁴ The policy was issued by Philadelphia Indemnity Insurance Company ("Philadelphia Indemnity") and lists two named insureds: Ivy Walk at Vinings Neighborhood Association, Inc. and Ivy Walk at Vinings Condominium Association, Inc. (collectively, the "Associations").⁵ Plaintiffs allege Philadelphia Consolidated Holding Corporation ("Philadelphia Holding") may be involved as the parent of Philadelphia Indemnity.⁶ Defendants accepted Plaintiffs' claim and paid certaincosts to repair the home.⁷ However, while Defendants authorized repairs to the home, Plaintiffs allege the fair market value of their home diminished due to the damage.⁸

On June 20, 2019, Plaintiffs filed their putative class action Complaint against Defendants in the State Court of Cobb County, asserting claims for: breach of contract (Count I), declaratory and injunctive relief (Count II), and attorney's fees (Count III).⁹ Generally, Plaintiffs allege Defendants breached the Policy by failing to assess or pay them for the diminished fair market value of their home after the damage.¹⁰ Plaintiffs also seek to represent a putative class of:

All individuals and entities formerly or currently insured under insurance policies issued by Defendants that provide coverage for their property located in the State of Georgia who, within the period of six years preceding the commencement of this action through the date of class certification, presented first-party claims arising from direct physical losses to their properties as a result of water damage, mold damage, fire damage, foundation damage and/or structural damage to their property but for which Defendants failed to perform a diminished-value assessment in connection with said claims.¹¹

On July 23, 2019, Defendants timely removed the action to this Court based on diversity jurisdiction.¹² On July 30, 2019, Defendants filed the instant motion to dismiss.¹³ Plaintiffs filed a response on August 27, 2019.¹⁴ Defendants filed a reply on September 24, 2019.¹⁵

II. LEGAL STANDARD

Plaintiffs' Complaint was originally filed in the Superior Court of Cobb County and removed to this Court. "The pleading standard in Georgia [state court] is lower than the standard applicable to a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Under Georgia law, fair notice of the nature of the claim is all that is required, and the elements of most claims can be pled in general terms. Pleading conclusions, rather than facts, may be sufficient to state a claim for relief." Ullah v. BAC Home Loans Serv. LP, 538 F. App'x 844, 846 (11th Cir. 2013) (citations omitted).

Federal Rule of Civil Procedure 8(a)(2), conversely, requires a pleading to contain a "short and plain statement of the claim showing that the pleader isentitled to relief." While this standard does not require "detailed factual allegations," the Supreme Court has held that "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

To withstand a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Am. Dental Ass'n v. Cigna Corp., 605 F. 3d 1283, 1289 (11th Cir. 2010) (quoting Twombly, 550 U.S. at 570). A complaint is plausible on its face when a plaintiff pleads sufficient factual content for the court to draw the reasonable inference that the defendant is liable for the conduct alleged. Id. (citing Twombly, 550 U.S. at 556). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678. A complaint must also present sufficient facts to "'raise a reasonable expectation that discovery will reveal evidence' of the claim." Am. Dental Ass'n, 605 F.3d at 1289 (quoting Twombly, 550 U.S. at 556).

At the motion to dismiss stage, "all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorableto the plaintiff." FindWhat Inv'r Grp. v. FindWhat.com, 658 F.3d 1282, 1296 (11th Cir. 2011) (quoting Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir. 2006)). This principle, however, does not apply to legal conclusions. Iqbal, 556 U.S. at 678.

III. DISCUSSION

A. Choice of Law

"In diversity cases, the choice-of-law rules of the forum state determine what law governs." Interface Kanner, LLC v. JPMorgan Chase Bank, N.A., 704 F.3d 927, 932 (11th Cir. 2013). This includes the forum state's own choice of law rules. Ferguson v. Trans World Airlines, Inc., 135 F. Supp. 2d 1304, 1308 (N.D. Ga. 2000). For contract cases, "Georgia follows the traditional rule of lex loci contractus." McGill v. Am. Trucking & Trans., Ins. Co., 77 F. Supp. 3d 1261, 1264 (N.D. Ga. 2015). Pursuant to this doctrine, "contracts are governed by the law of the place where they were 'made,' and an insurance contract is 'made' where it was delivered." Id. Here, the Policy was "made" in Georgia because it was issued and delivered to the Associations in that state.¹⁶ The parties do not dispute the applicability of Georgia law and neither has suggested that such an application would violate public policyor be prejudicial to the interests of any state. Thus, the Court will apply Georgia substantive law to Plaintiffs' claims.

B. Defendants' Motion to Dismiss

Defendants move for the dismissal of Plaintiffs' complaint on five grounds. The Court will address each ground separately.

i. Plaintiffs Have Standing Under the Policy.

Defendants contend Plaintiffs lack standing because they are not named as parties in the Policy. Georgia law states that a "person who is not a party to a contract, or an intended third-party beneficiary of a contract, lacks standing to challenge or enforce a contract under Georgia law." Haynes v. McCalla Raymer, LLC, 793 F.3d 1246, 1251 (11th Cir. 2015) (citing Haldi v. Piedmont Nephrology Assocs., P.C., 283 Ga. App. 321, 322-23 (2007)). For contracts, Georgia authorizes first-party and third-party standing. Defendants argue Plaintiffs cannot demonstrate either.

1. The Court May Consider Extrinsic Evidence Submitted by Plaintiffs.

As a threshold matter, to resolve the standing inquiry here the Court must look to documents outside the four corners of the Complaint. It is undisputed that neither Plaintiffs' names nor physical address appear in the Policy. Plaintiffs instead point to certain Conditions, Covenants and Restrictions ("CCRs") and asecurity deed they claim list their address, by lot number, as demonstrating their coverage under the Policy.

As a general rule, on a motion to dismiss, if "matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56." Fed. R. Civ. P. 12(d). See also Day v. Taylor, 400 F.3d 1272, 1275-76 (11th Cir. 2005) ("The district court generally must convert a motion to dismiss into a motion for summary judgment if it considers materials outside the complaint."). The Eleventh Circuit recognizes three exceptions to this rule.

First, conversion will not occur if the court properly takes judicial notice of attached exhibits. Second, a document attached to the pleadings as an exhibit may be considered if it is central to the plaintiff's claim and the authenticity of the document is not challenged. Third, the conversion is harmless and does not require notice if the parties, inter alia, made all arguments and submitted all the documents they would have even with sufficient notice.

Adamson v. Poorter, No. 06-15941, 2007 WL 2900576, at *2 (11th Cir. Oct. 4, 2007) (citations omitted).

The Court may take judicial notice of the CCRs and security deed because they are public documents. These documents were publicly filed, recorded, and notarized. As such, they are "capable of accurate and ready determination byresort to sources whose accuracy cannot reasonably be questioned." Bryant, 187 F.3d at 1280 (quoting Fed. R. Evid. 201(b)). This Court has held that "public records, such as recorded security deeds, are among the permissible facts that a district court may consider on a motion to dismiss, without converting the motion to one for summary judgment." Annen v. Fed. Nat'l Mortg. Ass'n, No. 1:16-cv-02177-SCJ-AJB, 2016 WL 11567870, at *3 (N.D. Ga. Nov. 16, 2016), report and recommendation adopted, No. 1:16-cv-2177-SCJ, 2016 WL 11567820 (N.D. Ga. Dec. 9, 2016). See also Hadley v. Bank of Am., N.A., No. 1:17-cv-1522-TWT-LTW, 2018 WL 4656426, at *19 (N.D. Ga. Aug. 27, 2018), report and recommendation adopted, No. 1:17-cv-1522-TWT, 2018 WL 4636629 (N.D. Ga. Sept. 26, 2018)...