Owners Ins. Co. v. Brown

• Decision Date: 01 May 2020
• Docket Number: CIVIL ACTION NO.: 4:19-cv-219
• Parties: OWNERS INSURANCE COMPANY, Plaintiff, v. DR. ROBERT BROWN, CMB PARTNERS LLC, and ELAINE MORGAN, Defendants.
• Court: U.S. District Court — Southern District of Georgia

OWNERS INSURANCE COMPANY, Plaintiff, v. DR. ROBERT BROWN, CMB PARTNERS LLC,and ELAINE MORGAN, Defendants.

CIVIL ACTION NO.: 4:19-cv-219

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF GEORGIA SAVANNAH DIVISION

May 1, 2020

ORDER

Plaintiff Owners Insurance Company ("Owners") initiated this declaratory judgment action to clarify its obligations under an insurance policy held by Defendants Dr. Robert Brown ("Brown") and CMB Partners, LLC ("CMB") in relation to a separate legal proceeding.¹ (Doc. 1.) Within their Answer to Owners' Complaint, Defendants asserted counterclaims against Owners for anticipatory breach of contract (Count I) and declaratory relief (Count II). (Doc. 13, pp. 7-11.) Presently before the Court is Owners' Motion to Dismiss Count I, (doc. 15), and brief in support thereof, (doc. 15-1).² For the reasons explained more fully below, the Court GRANTS Owners' Motion to Dismiss, (doc. 15).

BACKGROUND

Brown is a Georgia citizen who has a medical practice in a building owned by CMB, a Georgia company. (Doc. 1-2, p. 2; doc. 13, p. 7.) In 2018, one of Brown's patients allegedly injured herself while exiting CMB's building and subsequently sued Defendants in the State Court of Chatham County for the injuries she sustained from the incident (at times, the "Underlying Lawsuit"). (Doc. 13, p. 8; doc. 1-2.) Defendants were allegedly insured under two policies issued by Owners. (Doc. 13, pp. 7-8.) According to Defendants, the terms of the policies provide that Owners had a duty to defend and indemnify them in the Underlying Lawsuit. (Id. at pp. 8-9.) Owners provided a defense; however, it sent two letters to CMB and Brown explaining that it was defending them under a reservation of rights to contest coverage. (Doc. 1-4, p. 1; doc. 1-6, p. 1.) Owners also disclaimed its obligation to indemnify Defendants. (Doc. 13, p. 9.) After sending the letters, Owners initiated this action to determine the parties' respective rights and duties under the policies. (Id.; see generally doc 1.)

Defendants then filed an Answer and asserted the at-issue counterclaim for anticipatory breach of contract against Owners. ³ (Doc. 13, pp. 9-10.) As part of this claim, Defendants seek "attorney's fees and litigation expenses pursuant to O.C.G.A. § 13-6-11" because of "Owner's bad faith and stubborn litigiousness." (Id. at p. 10.) Owners subsequently filed their Motion to Dismiss, (doc. 15), to which Defendants filed a Response, (doc. 17).

LEGAL STANDARD

"A motion to dismiss a counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6) is evaluated in the same manner as a motion to dismiss a complaint." Geter v. Galardi S. Enter., Inc., 43 F. Supp. 3d 1322, 1325 (S.D. Fla. 2014) (internal quotations omitted); see also W. Sur. Co. v. Steuerwald, 760 F. App'x 810, 813 (11th Cir. 2019) (per curiam) (citing Rule 12(b)(6) standards in review of counterclaim). A court must "accept[] the allegations in the complaint as true and constru[e] them in the light most favorable to the plaintiff." Belanger v. Salvation Army, 556 F.3d 1153, 1155 (11th Cir. 2009) (citing Jackson v. BellSouth Telecomm., 372 F.3d 1250, 1262 (11th Cir. 2004)). A complaint must state a facially plausible claim for relief, and "'[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.'" Wooten v. Quicken Loans, Inc., 626 F.3d 1187, 1196 (11th Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action" does not suffice. Ashcroft, 556 U.S. at 678 (internal quotations omitted).

"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. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (internal punctuation and citation omitted). While a court must accept all factual allegations in a complaint as true, this tenet "is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements," are insufficient. Id. (internal citation omitted). In addition, when a dispositive issue of law allows for no construction of the complaint's allegation to support the cause of action, dismissal is appropriate. Neitzke v. Williams, 490 U.S. 319, 326 (1989).

Owners attached several documents to its Complaint. (See docs. 1-1, 1-2, 1-3, 1-4, 1-5, 1-6.) These documents include copies of the complaint from the Underlying Lawsuit, (doc.1-2), the insurance policies, (docs. 1-3, 1-5), and Owners' reservation of rights letters, (docs. 1-4, 1-6.) In their counterclaim, Defendants reference these documents in making their allegations against Owners. (See doc. 13, pp. 7-11.) The United States Court of Appeals for the Eleventh Circuit has "held that the court may consider a[n attached document] without converting the motion into one for summary judgment if the attached document is (1) central to the plaintiff's claim and (2) undisputed." Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005) (citation omitted). "'Undisputed' in this context means that the authenticity of the document is not challenged." Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002). In addition a "document need not be physically attached to a pleading to be incorporated by reference into it; if the document's contents are alleged in a complaint and no party questions those contents, [a court] may consider such a document provided it meets the centrality requirement." Day, 400 F.3d at 1276. Here, the insurance policies, the reservation of rights letters, and the complaint from the underlying litigation are all central to Defendants' counterclaim. In addition, no party challenges the authenticity of these documents. Thus, the Court will consider these documents alongside the allegations in the counterclaim.

DISCUSSION

As noted above, Owners only moves for dismissal as to Defendants' counterclaim for anticipatory breach of contract. (Doc. 15; doc. 13, pp. 9-10.) In this diversity action, the Court must apply the choice-of-law rules of its forum state of Georgia to determine which state's substantive laws apply. Boardman Petroleum, Inc. v. Federated Mut. Ins. Co., 135 F.3d 750, 752 (11th Cir. 1998). Here, Defendants' counterclaim resounds in contract. For "contract cases, [Georgia] follows the traditional doctrine of lex loci contractus: contracts are 'governed as to their nature, validity and interpretation by the law of the place where they were made' unless the contract is to be performed in a state other than that in which it was made." Id. (quoting Gen. Tel. Co. of Se. v. Trimm, 311 S.E.2d 460, 461 (Ga. 1984)). As is relevant here, Georgia law considers "'an insurance contract [to be] made where it is delivered.'" Travelers Prop. Cas. Co. of Am. v. Moore, 763 F.3d 1265, 1271 (11th Cir. 2014) (quoting Boardman Petroleum, 135 F.3d at 752). Here, both insurance policies contain cover letters addressed to Defendants at their Georgia addresses, and there is no indication that Defendants received the policies at any other location. (Doc. 1-3, p. 1; doc. 1-5, p. 1.) Thus, Georgia law applies to Defendants' anticipatory breach of contract claim.⁴

Under Georgia law, an anticipatory breach of contract—otherwise known as an anticipatory repudiation—occurs when a party to a contract "repudiates his contractual obligation to perform prior to the time such performance is required under the terms of the contract." Coffee Butler Serv., Inc. v. Sacha, 366 S.E.2d 672, 673 (Ga. 1988) (citation omitted). "The repudiation must apply to the entire contract and must include an unqualified refusal to fulfill any future obligations under the contract." Legacy Acad., Inc. v. Doles-Smith Enter., Inc., 812 S.E.2d 72, 77 (Ga. Ct. App. 2018); see also Chaudhuri v. Fannin Reg'l Hosp., 730 S.E.2d 425, 429 (Ga. Ct. App. 2012) ("The breach which will form the basis for an anticipatory breach of contract action is an unqualified repudiation of the entire contract prior to the time for performance.") (emphasis in original) (citation omitted).

Here, Defendants have failed to make this showing. Defendants concede that Owners provided them with a defense, albeit "a qualified defense . . . under a reservation of rights." (Doc. 13, p. 9.) However, the provision of a qualified defense is, nonetheless, the provision of a defense; thus, Owners could not have repudiated "the entire contract prior to the time for performance" because it did, in fact, pay for the defense as it was allegedly obligated to do. Oconee Fed. Savs. & Loan Ass'n v. Brown, 831 S.E.2d 222, 230 (Ga. Ct. App. 2019) (citation omitted). Owners merely exercised its ability as an insurance company to "defend [a claim] under a reservation of rights," an option provided by Georgia law that "allow[s] an insurer to provide a defense to its insured while still preserving the option of litigating and ultimately denying coverage." Hoover v. Maxum Indem. Co., 730 S.E.2d 413, 416 (Ga. 2012). The Court is not aware of any Georgia case law holding that an insurer providing a defense under a reservation of rights constitutes an anticipatory repudiation. To hold so now would vitiate a method for allowing insurers to determine their contractual obligations which has previously been praised by Georgia Courts. See, e.g., Richmond v. Ga. Farm Bureau Mut. Ins. Co., 231 S.E.2d 245, 248 (Ga Ct. App. 1976) (an insurer defending under a reservation of rights is a "more desirable alternative" than the other options insurers face when deciding whether to defend a claim).

Defendants also assert that Owners "declaratory action against" them which seeks "judicial affirmation of Owners'...