Raytheon Co. v. Continental Cas. Co.

• Decision Date: 14 November 2000
• Docket Number: No. CIV.A.00-11184-PBS.,CIV.A.00-11184-PBS.
• Citation: 123 F.Supp.2d 22
• Parties: RAYTHEON COMPANY, Plaintiff, v. CONTINENTAL CASUALTY COMPANY, Defendant.
• Court: U.S. District Court — District of Massachusetts

123 F.Supp.2d 22

RAYTHEON COMPANY, Plaintiff, v. CONTINENTAL CASUALTY COMPANY, Defendant.

No. CIV.A.00-11184-PBS.

United States District Court, D. Massachusetts.

November 14, 2000.

COPYRIGHT MATERIAL OMITTED

Robert S. Sanoff, Foley, Hoag & Eliot, Boston, MA, for Plaintiff.

Joseph S. Sano, Prince, Lobel & Tye LLP, Boston, MA, for Defendant.

SARIS, District Judge.

I will adopt the Report and Recommendation. No objections were filed.

REPORT AND RECOMMENDATION ON DEFENDANT'S MOTION TO DISMISS OR IN THE ALTERNATIVE FOR MORE DEFINITE STATEMENT

DEIN, United States Magistrate Judge.

I. INTRODUCTION

The plaintiff, Raytheon Company ("Raytheon"), has brought suit against its comprehensive general liability insurer, Continental Casualty Company ("CNA"), relating to CNA's handling of Raytheon's demands for insurance coverage for approximately sixty (60) separate environmental claims. The complaint sounds in four counts: breach of contract (Count I), breach of implied covenant of good faith (Count II), unfair and bad faith settlement practices in violation of Mass. Gen. Laws ch. 93A and 176D (Count III), and declaratory judgment under Mass. Gen. Laws ch. 231A (Count IV). CNA has moved to dismiss the complaint for failure to state a claim upon which relief can be granted and for failure to join necessary and indispensable parties under Fed. R.Civ.P. 12(b)(6) and 12(b)(7), respectively. In the alternative, CNA has moved for a more definite statement under Fed. R.Civ.P. 12(e). For the reasons detailed below, this court recommends that the district judge to whom this case is assigned deny the motion.

II. STATEMENT OF FACTS

When ruling on a motion to dismiss, the court must accept as true all well-pleaded facts, and the plaintiff is to be given the benefit of all reasonable inferences. See Cooperman v. Individual, Inc., 171 F.3d 43, 46 (1st Cir.1999); Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir.1989). Applying this standard to the instant case, the relevant facts are as follows:

From January 1, 1969 through at least April 1, 1990, CNA issued primary comprehensive general liability polices to Raytheon and its subsidiaries.¹ (Complaint at ¶ 3). By at least 1965, and continuing through April 1985, CNA issued to Raytheon excess comprehensive general liability policies as well. (Id. at ¶ 4). Each primary and excess insurance policy from 1965 onward is individually identified in the complaint by its CNA policy number and the period of the policy. (Id. at ¶¶ 3-4).

Since the early 1980's, Raytheon has received notice of approximately 60 separate environmental claims ("Underlying Environmental Claims"), which "involve allegations of property damages resulting from an occurrence within the policy periods of the Policies and the Excess Policies." (Id. at ¶ 5). The location of each of these Underlying Environmental Claims is individually listed in the complaint along with the public or private entity asserting the claim. (Id. at ¶ 6). Raytheon provided CNA with timely notice of each of these claims. (Id. at ¶ 7).

By letter dated August 19, 1998, CNA agreed to pay Raytheon's defense costs under a reservation of rights with respect to eleven of the Underlying Environmental Claims. These claims have been specifically identified in the complaint. (Id. at ¶ 8). At the same time, CNA denied that it had a duty to defend with respect to nine other sites, and claimed that it could not make a coverage determination with respect to a number of other sites without more information. CNA has not provided any coverage position with respect to the other environmental claims. (Id.).

Despite acknowledging its duty to defend with respect to eleven sites, and despite having been provided with documentation of defense costs, CNA made no defense cost payments for over a year. (Id. at ¶ 9). When it finally made a payment in April 2000, it paid only a fraction of the $4 million owing for defense costs relating to the eleven sites. (Id. at ¶ 10). Moreover, CNA required that Raytheon submit copies of documents that had previously been provided to CNA, and made a unilateral determination as to its pro rata share of the defense costs. (Id.).

The Complaint

In Count I for breach of contract, Raytheon alleges that each of the Underlying Environmental Claims "entails property damages resulting from an occurrence during the policy periods" of the policies and that it provided timely notice to CNA for each claim. (Id. at ¶¶ 11 and 12). Moreover, Raytheon alleges that CNA is obligated under one or more of its policies to provide Raytheon with a defense in connection with each of the Underlying Environmental Claims, and "to indemnify Raytheon with respect to all property damages incurred in connection with the Underlying Environmental Claims, at least up to the policy limits of the Policies and Excess Policies." (Id. at ¶¶ 13 and 14). Raytheon alleges that CNA breached its contracts by failing and refusing to pay the full cost of Raytheon's defense in all of the Underlying Environmental Claims and to indemnify Raytheon in connection with those claims, thereby causing Raytheon to suffer substantial injury and damage. (Id. at ¶¶ 15 and 16).

In Count II of its complaint, Raytheon asserts a claim for breach of an implied covenant of good faith. As Raytheon describes its claim:

In its conduct towards Raytheon to date, CNA has breached its duty of good faith and fair dealing, including without limitation its failure to make timely and full payment of defense costs with respect to claims where it has acknowledged a duty to defend, its failure to provide prompt coverage positions as to all of the Underlying Environmental Claims, and its failure to acknowledge defense and indemnity obligations as to each of the Underlying Environmental Claims.

(Id. at ¶ 19).

According to Count III of the complaint, the above-quoted conduct, along with other aspects of the manner in which CNA handled Raytheon's claims, violated Mass. Gen. Laws ch. 93A and 176D. Such unfair and bad faith settlement practices included, according to Raytheon:

the failure to act reasonably promptly upon communications with respect to claims arising under insurance polices, the failure to provide defense and/or indemnification for those claims which CNA has agreed to pay, the failure to provide promptly a reasonable explanation of the basis in the Policies in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement, the attempt to unilaterally pro-rate its joint and several duty to defend with respect to the Eleven Sites, and its repeated requests for copies of defense costs documentation long after such documentation has been provided.

(Id. at ¶ 23).

Finally, Raytheon is seeking a declaratory judgment under Mass. Gen. Laws ch. 231A (Count IV) for "a declaration of the rights of Raytheon and the obligations of CNA under the Policies and Excess Policies." (Id. at ¶ 29).

CNA's Motion

CNA's motion presents three basic arguments. First, CNA contends that Raytheon is obligated to plead sufficient facts with respect to each individual Underlying Environmental Claim and each Policy so that it is able to establish from the complaint alone that there is coverage for each claim, and that no exclusions in the insurance policies apply. In particular, but without limitation, CNA contends that Raytheon has the burden of pleading that the "other insurance" and pollution exclusions do not bar coverage for each claim, and that the excess policies are likely to be reached. This argument, however, seeks to impose an undue burden on the plaintiff. In addition, it misconstrues the complaint. Raytheon's complaint is not limited to the issue of whether there is a duty to defend or coverage for each Underlying Claim. Rather, Raytheon also is challenging CNA's handling of its requests for coverage, including CNA's conduct with respect to the eleven sites for which CNA agreed to provide a defense.

Second, CNA contends that Raytheon is obligated to name all other insurers who may have provided insurance for the claims as necessary parties. CNA does not know the identity of any such potential insurers. While CNA has raised arguments which could warrant dismissal at a later stage, it has not met its burden under Rule 12(b)(7) at this time. The motion to dismiss for failure to name unknown, potentially indispensable parties is premature.

Third, CNA contends that a more definite statement of Raytheon's claims is needed before it is able to file a responsive pleading. However, the information CNA is seeking is more appropriately obtained through discovery. The complaint is not so "vague or ambiguous" that CNA cannot frame a responsive pleading. Fed.R.Civ.P. 12(e).

III. DISCUSSION

A. The Rule 12(b)(6) Motion — Standard of Review

CNA has moved to dismiss all counts of the complaint under Fed.R.Civ.P. 12(b)(6) for "failure to state a claim upon which relief can be granted." A motion to dismiss under Rule 12(b)(6) tests the sufficiency of the pleadings. Thus, when confronted with a motion to dismiss the court accepts as true all well-pleaded factual averments and draws all reasonable inferences in the plaintiffs favor. Dartmouth Review, 889 F.2d at 16. "Dismissal under Fed.R.Civ.P. 12(b)(6) is only appropriate, if the complaint, so viewed, presents no set of facts justifying recovery." Cooperman, 171 F.3d at 46; Conley v. Gibson, 355 U.S. 41, 45-48, 78 S.Ct. 99, 101-103, 2 L.Ed.2d 80 (1957).

Federal Rule of Civil Procedure 8(a) requires that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Plaintiffs only are obliged to set forth in their complaint "factual allegations either direct or inferential, regarding each material element necessary to sustain recovery under some actionable legal theory." Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.1988). The Rules "do not...