McManus v. Zurich Am. Ins. Co.
| Decision Date | 21 September 2020 |
| Docket Number | Civil Action No. 19-cv-02230-PAB-SKC |
| Citation | 488 F.Supp.3d 1035 |
| Parties | Timothy J. MCMANUS, Plaintiff, v. ZURICH AMERICAN INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Colorado |
David Jeffrey Furtado, Nathanael Thomas Archuleta, Matthew J. Berman, Furtado Law PC, Denver, CO, for Plaintiff.
Jane E. Young, Nancy A. Fitzgerald, McElroy Deutsch Mulvaney & Carpenter LLP, Greenwood Village, CO, for Defendant.
This matter is before the Court on Defendant Zurich American Insurance Company's Motion to Dismiss Plaintiff Timothy J. McManus's Claims for Relief With Prejudice Pursuant to Fed. R. Civ. P. 12(b)(6) [Docket No. 17]. On October 17, 2019, plaintiff responded to defendant's motion, Docket No. 22, and defendant replied on October 30, 2019. Docket No. 25.
This matter arises out of a disputed property insurance claim. Docket No. 5 at 2, ¶ 8. Defendant Zurich American Insurance Company issued a commercial property insurance policy ("the Policy") to Swisslog USA, Inc. ("Swisslog") for property located at 10825 East 47th Avenue, Denver, Colorado 80239 ("the Property"). Id. at 3, ¶¶ 9-10. The Policy provides coverage for direct physical damage to the Property, including alterations to the physical appearance of or cosmetic damage to the Property caused by hail or wind. Id. , ¶¶ 13-15.
On or about May 8, 2017, the Property suffered direct physical loss or damage resulting from hail or wind (the "2017 storm"). Id. at 5, ¶ 33. The damage was promptly reported to defendant, id. , ¶ 39, and defendant began investigating the claim ("the Hail Claim"). Id. at 5-6, ¶¶ 41, 44. On or about April 18, 2018, the Property's roofing system sustained additional physical loss and damage resulting from a windstorm (the "2018 storm"). Id. at 7, ¶ 53. The damage resulted in functional damage to the roofing system and diminished its life span. Id. , ¶¶ 56-57. The damage was reported to defendant, which began an investigation into the claim ("the Wind Claim"). Id. , ¶¶ 58-59. Swisslog executed an assignment of the Hail Claim and the Wind Claim to plaintiff Timothy McManus, id. , ¶ 60,2 the landlord of the property. Docket No. 17-4 at 1.
Defendant retained a third-party company to investigate and determine the extent of the damages from the 2017 and 2018 storms. Docket No. 5 at 5-6, ¶¶ 41, 44; id. at 7, ¶ 51; id. at 9, ¶ 78. According to plaintiff, the estimates failed to provide for all covered losses. Id. at 8, ¶¶ 62-69. Nevertheless, on May 7, 2018, defendant issued a cash value payment to Swisslog and plaintiff for damages sustained in the 2017 storm in an amount based on the allegedly flawed third-party estimation. Id. at 9, ¶ 75.3
Plaintiff retained two outside companies to generate a report on additional damages. Id. at 11, ¶¶ 89, 92. Each company provided plaintiff an estimate of its respective evaluation, id. , ¶¶ 90, 93, and plaintiff provided these estimates to defendant. Id. , ¶¶ 91, 94. Defendant denied payment for any additional damages. Id. , ¶ 91. On May 1, 2019, the parties attempted to resolve the Hail and Wind Claims in mediation, but were unsuccessful. Id. at 11-12, ¶ 95. When it became apparent that defendant would not pay the amounts plaintiff requested, plaintiff invoked the policy's appraisal provision to have the amount of loss and damaged determined in an alternative dispute resolution process. Id. at 12, ¶ 97. Defendant did not proceed with the appraisal process. Id. , ¶ 98. Plaintiff alleges that, to date, defendant has refused to pay plaintiff the amounts he is owed under the Policy. Id. at 12-13, ¶¶ 102-03, 107-08.
On May 7, 2019, plaintiff sued defendant in the District Court for the City and County of Denver. Docket No. 1 at 2, ¶ 1. Plaintiff filed an amended complaint on August 2, 2019, Docket No. 5 at 1, and on August 6, 2019, defendant removed the case to federal court. Docket No. 1. Plaintiff raises four claims for relief: (1) a declaratory claim seeking to compel appraisal; (2) breach of contract; (3) bad faith breach of an insurance contract; and (4) unreasonable delay or denial of insurance benefits. Docket No. 5 at 15-22. On September 27, 2019, defendant filed its motion to dismiss. Docket No. 17.
To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a complaint must allege enough factual matter that, taken as true, makes the plaintiff's "claim to relief ... plausible on its face." Khalik v. United Air Lines , 671 F.3d 1188, 1190 (10th Cir. 2012) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged – but it has not shown – that the pleader is entitled to relief." Ashcroft v. Iqbal , 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks and alteration marks omitted); see also Khalik , 671 F.3d at 1190 . If a complaint's allegations are "so general that they encompass a wide swath of conduct, much of it innocent," then plaintiff has not stated a plausible claim. Khalik , 671 F.3d at 1191 (quotations omitted). Thus, even though modern rules of pleading are somewhat forgiving, "a complaint still must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory." Bryson v. Gonzales , 534 F.3d 1282, 1286 (10th Cir. 2008) (alteration marks omitted).
Defendant argues that plaintiff's claims should be dismissed because plaintiff released defendant from all claims related to the Property before he commenced this lawsuit. Docket No. 17 at 8. In the alternative, defendant argues that plaintiff's declaratory judgment claim should be dismissed because plaintiff does not have the right, under the Policy, to demand an appraisal, id. at 10, and that plaintiff's breach of contract claim should be dismissed as untimely. Id. at 11.
Defendant attaches to its motion to dismiss a Building Lease Exit and Release Agreement entered into by plaintiff and Swisslog. Docket No. 17-4.4 The release agreement serves to terminate Swisslog's tenancy at the Property and provides a "settlement of the associated responsibilities of the conditions of the premises." Id. at 1. It states:
As it relates to Zurich insurance policy claim number 5630019920 and claim number 5630014943, in consideration for each of the terms and conditions of this Agreement, ... to the extent any additional recoveries are made against the insurer for the roof loss, Swisslog will relinquish and assign any and all rights to the recovery to [plaintiff] in exchange for a full and final release of all known and unknown obligations under the above referenced Lease.
Id. at 3. According to defendant, this provision does not constitute the assignment of any claims or rights under the Policy to plaintiff; instead, defendant asserts that Swisslog assigned only the right to any "additional recoveries" received by Swisslog. Docket No. 17 at 8-9. In other words, defendant contends that the provision does not assign the right to bring claims against defendant, but only to receive any additional amounts paid by defendant in the event defendant were to remit additional payments related to the insurance claims. See Docket No. 17 at 9.5 Plaintiff does not respond to this argument directly, but generally asserts that the release agreement constitutes a valid claim assignment. See Docket No. 22 at 8-9.
In addition, defendant argues that, not only does the release agreement not assign to plaintiff Swisslog's potential claims against defendant, the release agreement specifically releases defendant from liability with respect to these potential claims. The release agreement provides:
[Plaintiff] ... hereby fully and finally release[s] and forever discharges Swisslog and its respective parents, subsidiaries and affiliated companies, heirs, assigns and successors and the respective agents, servants, employees, officers, directors, shareholders, insurers , underwriters, reinsurers, successors, and assigns of any of them ("the Swisslog released Parties"), of and from any and all right, claim, action, remedy, lien, and/or cause of action ... which they may have or may hereafter acquire, including for property damage ... including any and all claims for penalties, and any and all other loss, cost, expense or damage arising out of or in any way connected to, directly or indirectly, from the Lease agreement, now known, or hereafter discovered.
Docket No. 17-4 at 3-4 (emphasis added). Defendant asserts that, because plaintiff released Swisslog "and its ... insurers" from liability related to any and all claims arising from the lease agreement, and because the release agreement specifically references the Hail and Wind Claims, plaintiff's claims are barred. Docket No. 17 at 9. Plaintiff responds that the release agreement does not apply to defendant. Docket No. 22 at 9. Specifically, plaintiff argues that "it is clear the parties [to the release agreement] did not intend to benefit [defendant] as a contemplated party of the lease agreement" because the agreement does not name defendant or demonstrate an intent to benefit defendant. Id. at 10.
A third-party beneficiary may enforce a contract to which it is not a party if "the parties to the agreement intended to benefit the non-party, provided that the benefit claimed is a direct and not merely an incidental benefit of the contract." Parrish Chiropractic Centers, P.C. v. Progressive Cas. Ins. Co. , 874 P.2d 1049, 1056 (Colo. 1994).6 "While the intent to benefit the non-party need not be expressly recited in the contract,...
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