Phila. Indem. Ins. Co. v. Indian Harbor Ins. Co.
| Decision Date | 22 January 2020 |
| Docket Number | 18-CV-5014 (DRH)(AYS) |
| Citation | 434 F.Supp.3d 4 |
| Parties | PHILADELPHIA INDEMNITY INSURANCE COMPANY, Plaintiff, v. INDIAN HARBOR INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
For Plaintiff: Marshall, Conway & Bradley, P.C., 45 Broadway, Suite 740, New York, New York 10006, By: Christopher T. Bradley, Esq.
For Defendants: Schnader Harrison Segal & Lewis LLP, 140 Broadway, Suite 3100, New York, New York 10005-1101, By: Bruce M. Strikowsky, Esq., Erik Kallhovd, Esq.
Plaintiff Philadelphia Indemnity Insurance Company ("Plaintiff" or "Philadelphia") commenced this action seeking declaratory, monetary, and ancillary relief against defendant Indian Harbor Insurance Company ("Defendant" or "Indian Harbor") relating to insurance coverage for certain lawsuits pending in Supreme Court, Nassau County (the "Legionella Actions"). At issue in this case is whether the "fungi or bacteria" exclusion in an insurance policy issued by Indian Harbor applies so as to relieve it of its obligations to indemnify and defend. Presently before the Court is Defendant's motion, pursuant to Rule 12(b)(6) and 12(b)(1) to dismiss the complaint. For the reasons set forth below the motion is granted in part and denied in part.
The following allegations are taken from the Complaint ("Comp."), its exhibits, and materials submitted by the parties.1
Fitness International is a health club chain with over 700 locations, including a location at 2350 Jericho Turnpike, Garden City Park, New York ("Garden City Fitness"). During the relevant period Total Swimming Pool ("Total") provided maintenance and repair to the pool and spa at Garden City Fitness pursuant to an agreement between Total and Fitness International. Indian Harbor issued a commercial general liability policy, Policy No. ESG300091001 (the "Policy"), to Total effective from July 31, 2016 to July 31, 2017. Fitness International is named as an additional insured under the Policy.
On December 30, 2016, the Nassau County Department of Health issued a Closure Order to Garden City Fitness directing it to immediately cease all pool and spa operation and close them as laboratory samples "indicated the presence of Legionella pneumophillia."
On January 3, 2017, Philadelphia, Fitness International's insurer, received a loss notice from Fitness International of potential claims alleging exposure to Legionella bacteria at the Garden City Fitness location. On January 6, 2017, Fitness International sent a letter to Indian Harbor requesting that Indian Harbor defend and indemnify Fitness International "from any claims or causes of action that may be asserted against it, and damages that it has incurred and will incur, arising from the closure order and the alleged contamination of the swimming pool and spa of the Garden City Park club." After receiving letters from counsel representing persons alleging exposure to the Legionella bacteria, Fitness International sent follow-up letter to Indian Harbor demanding that Total and Indian Harbor indemnify Fitness International from these claims. On January 27, 2017, Indian Harbor responded acknowledging that coverage may be available to Total Fitness as an additional insured but as no lawsuits had been received, there was no duty to defend. The letter also referenced the "Fungi or Bacteria" and "Pollution" exclusions contained in the Indian Harbor policy and concluded with Indian Harbor declining the request for coverage.
Between May 2017 and April 2018, five actions were filed in Supreme Court, Nassau County alleging injures arising from the exposure to the Legionella bacteria at Garden City Fitness' pool.
On June 8, 2018, Philadelphia sent a letter to Indian Harbor and Total attaching copies of the complaints in the five Legionella Actions. By letters dated July 9, 2018, Indian Harbor "reiterate[ed] the disclaimer of defense and indemnification to Fitness International and Total" citing the "Pollution" and "Fungi or Bacteria" exclusions.2
The "Fungi or Bacteria Exclusion" reads as follows:
A case may properly be dismissed for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) "when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States , 201 F.3d 110, 113 (2d Cir. 2000). A motion to dismiss a claim as unripe is properly considered a Rule 12(b)(1) motion because ripeness is jurisdictional in nature. Duane Reade Inc. v. St. Paul Fire & Marine Ins. Co. , 261 F. Supp. 2d 293, 294 (S.D.N.Y. 2003).
"In contrast to the standard for a motion to dismiss for failure to state a claim under Rule 12(b)(6), a ‘plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.’ " Mac Pherson v. State St. Bank & Trust Co. , 452 F. Supp. 2d 133, 136 (E.D.N.Y. 2006) (quoting Reserve Solutions Inc. v. Vernaglia , 438 F. Supp. 2d 280, 286 (S.D.N.Y. 2006) ), aff'd , 273 F. App'x 61 (2d Cir. 2008) ; accord Tomaino v. United States , 2010 WL 1005896, at *1 (E.D.N.Y. Mar. 16, 2010). "In resolving a motion to dismiss for lack of subject matter jurisdiction, the Court may consider affidavits and other materials beyond the pleadings to resolve jurisdictional questions." Cunningham v. Bank of New York Mellon, N.A. , 2015 WL 4104839, *1 (E.D.N.Y. July 8, 2015) (citing Morrison v. Nat'l Australia Bank, Ltd. , 547 F.3d 167, 170 (2d Cir. 2008) ).
In deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a cause of action, a court should "draw all reasonable inferences in Plaintiff['s] favor, assume all well-pleaded factual allegations to be true, and determine whether they plausibly give rise to an entitlement to relief." Faber v. Metro. Life Ins. Co. , 648 F.3d 98, 104 (2d Cir. 2011) (internal quotation marks omitted). The plausibility standard is guided by two principles. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ); accord Harris v. Mills , 572 F.3d 66, 71–72 (2d Cir. 2009).
First, the principle that a court must accept all allegations as true is inapplicable to legal conclusions. Thus, "threadbare recitals of the elements of a cause of action supported by mere conclusory statements, do not suffice." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. Although "legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. at 679, 129 S.Ct. 1937. A plaintiff must provide facts sufficient to allow each named defendant to have a fair understanding of what the plaintiff is complaining about and to know whether there is a legal basis for recovery. See Twombly , 550 U.S. at 555, 127 S.Ct. 1955.
Second, only complaints that state a "plausible claim for relief" can survive a motion to dismiss. Iqbal , 556 U.S. at 679, 129 S.Ct. 1937. Id. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 556-57, 127 S.Ct. 1955 ) (internal citations omitted); see In re Elevator Antitrust Litig. , 502 F.3d 47, 50 (2d Cir. 2007). Determining whether a complaint plausibly states a claim for relief is "a context specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ; accord Harris , 572 F.3d at 72.
"In adjudicating a Rule 12(b)(6) motion, a district court must confine its consideration ‘to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken.’ " Leonard F. v. Israel Disc. Bank of New York , 199 F.3d 99, 107 (2d Cir. 1999) (quoting Allen v. WestPoint–Pepperell, Inc. , 945 F.2d 40, 44 (2d Cir. 1991) ); see Weiss v. Village of Sag Harbor , 762 F. Supp. 2d 560, 567 (E.D.N.Y. 2011) (...
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