Seneca Ins. Co. v. Shipping Boxes I, LLC
| Decision Date | 05 June 2014 |
| Docket Number | Civil Action No. 2:13cv651. |
| Citation | 30 F.Supp.3d 506 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | SENECA INSURANCE COMPANY, Plaintiff v. SHIPPING BOXES I, LLC, and Shipping Boxes II, LLC, Defendants. |
Kevin Thomas Streit, Robert Tayloe Ross, Midkiff Muncie & Ross PC, Richmond, VA, for Plaintiff.
C. Thomas Brown, Erik Broch Lawson, Silver & Brown PC, Fairfax, VA, for Defendants.
Before the Court is Defendants Shipping Boxes I and Shipping Boxes II's Motion to Dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). ECF No. 28. Also before the Court are Plaintiff Seneca Insurance Company's Motion for Judgment on the Pleadings as to the Amended Counterclaim, ECF No. 41, alternative Motion to Dismiss the Amended Counterclaim, ECF No. 36, and Motion to Bifurcate, ECF No. 38. Plaintiff, Defendants' insurer, seeks a declaratory judgment that it is not obligated to pay certain claims for insurance coverage lodged by Defendants. Defendant Shipping Boxes I has also filed a counterclaim for breach of contract against Plaintiff, alleging that Plaintiff has failed to pay a claim for coverage in violation of the parties' insurance contract. For the reasons stated below, Defendants' Motion to Dismiss is DENIED. Plaintiff's Motion for Judgment on the Pleadings is DENIED, its Motion to Dismiss is DENIED, and its Motion to Bifurcate is GRANTED.
Plaintiff Seneca Insurance Company filed this action pursuant to this Court's diversity jurisdiction, alleging that the amount in dispute exceeds $75,000, Plaintiff is a New York citizen, and Defendants are citizens of Virginia. Am. Compl. ¶¶ 3–6. It makes the following allegations in its Amended Complaint for Declaratory Relief. ECF No. 17. Seneca, an insurance company, issued a commercial insurance contract to Defendants Shipping Boxes I and Shipping Boxes II. Am Compl. ¶ 6. They share the same offices and members, and will be referred to collectively as “Shipping Boxes.” The insurance contract initially covered the time period of May 17, 2011 to May 17, 2012, and it was later renewed for the following year, from May 17, 2012 to May 17, 2013. Id. ¶ 8. The contract provided commercial property insurance for commercial premises in Virginia Beach, Virginia. Shipping Boxes has title to the building and leases part of it to one tenant. Id. ¶¶ 9, 12–13. Less than 10% of the available space is occupied by that tenant; the remainder is vacant. Id. ¶¶ 15–16.
In May 2013, Shipping Boxes notified Seneca of damage at the premises resulting from vandalism. Am. Compl. ¶ 17. It submitted two claims to Seneca, one for a loss occurring in August 2012 and another for a loss occurring in December 2012. Id. ¶¶ 18–19. After investigating the claims, Seneca concluded that the losses had occurred over an extended period of time as a result of multiple incidents of vandalism, beginning as early as April 2012. Id. ¶¶ 36, 38. As a result, Seneca asserts that it is not obligated to pay insurance benefits to Shipping Boxes as reimbursement for its claims. It seeks a declaration that 1) Shipping Boxes did not satisfy a condition precedent to coverage that it promptly notify Seneca of loss or damage, 2) Shipping Boxes did not satisfy a condition precedent to coverage that it maintain certain security measures at the premises, 3) at least some of the claims are excluded because the damage was caused by delay, and/or 4) at least some of the claims are excluded because they resulted from Shipping Boxes' neglect to use all reasonable means to protect the premises.
Defendant Shipping Boxes I has also filed a counterclaim which includes two breach of contract claims. In its Amended Counterclaim, ECF No. 27, it alleges, inter alia, that its delay in informing Seneca of the damage was reasonable because it promptly reported the vandalism to the police and the police directed it to stay quiet about the vandalism so that the perpetrators could be apprehended. Am. Countercl. ¶¶ 50–53. In its breach of contract claim, Shipping Boxes I alleges that Seneca breached the insurance contract by failing to pay its claims and also breached the implied covenant of good faith and fair dealing. Id. ¶¶ 79–80. In its anticipatory breach of contract claim, raised in the alternative to the first claim, Shipping Boxes I contends that Seneca has effectively cancelled the insurance contract by making clear that it does not intend to pay. Id. ¶¶ 84, 86.
On February 24, 2014, Shipping Boxes filed a Motion to Dismiss the Amended Complaint. ECF No. 28. Seneca filed an Opposition on March 6, 2014, ECF No. 33, and Shipping Boxes filed its Reply on March 10, 2014, ECF No. 35. On March 11, 2014, Seneca filed a Motion for Judgment on the Pleadings regarding Shipping Boxes I's Amended Counterclaim. ECF No. 42. It also filed an alternative Motion to Dismiss, ECF No. 36, and a Motion to Bifurcate in the further alternative, ECF No. 38. Shipping Boxes filed a joint Memorandum in Opposition on March 24, 2014, ECF No. 44, and Seneca filed a Reply on March 28, 2014, ECF No. 45. All four motions are accordingly fully briefed and ripe for disposition.
Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for dismissal of actions that fail to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). The United States Supreme Court has stated that in order “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotations omitted)). Specifically, “[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.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Moreover, at the motion to dismiss stage, the Court is bound to accept all of the factual allegations in the Complaint as true. Id. However, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Assessing the claim is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679, 129 S.Ct. 1937.
In considering a Rule 12(b)(6) Motion to Dismiss, the Court cannot consider “matters outside the pleadings” without converting the motion to a summary judgment proceeding. Fed.R.Civ.P. 12(d). Nonetheless, the Court may still “consider documents attached to the complaint, see Fed.R.Civ.P. 10(c), as well as those attached to the motion to dismiss, so long as they are integral to the complaint and authentic.” Sec'y of State for Defence v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir.2007). See also Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir.2008) ().
A Rule 12(b) motion to dismiss must be made before any required responsive pleading is filed; if not, such motion should be treated as a motion for judgment on the pleadings. Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.1999). Federal Rule of Civil Procedure 12(c) provides that “[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings.” The Court applies the same standard of review to a Rule 12(c) motion as it would to a Rule 12(b) motion. Id. at 243–44. However, in addressing a Rule 12(c) motion, the Court may consider the Answer and attached exhibits in addition to the Complaint. The Answer's factual allegations are taken as true to the extent they do not contradict the factual allegations in the Complaint. Mendenhall v. Hanesbrands, Inc., 856 F.Supp.2d 717, 724 (M.D.N.C.2012).
The parties agree that Virginia substantive law applies to the claims the parties have raised. See, e.g., Defts' Mem. in Supp. of Mot. to Dismiss (hereinafter “Shipping Boxes Mot. to Dismiss”), ECF No. 29, at 5–6; Seneca's Joint Br. Supp. Mot. for Judgment on the Pleadings, Mot. to Dismiss, and Mot. to Bifurcate (hereinafter “Seneca Joint Mot.”), ECF No. 37, at 9–10 (citing Virginia case law). Nonetheless, the Court will apply federal rules that are procedural, such as the standards for a Rule 12(b)(6) motion discussed above. Rowland v. Patterson, 852 F.2d 108, 110 (4th Cir.1988).
In its Motion to Dismiss, Shipping Boxes contends that Seneca's Amended Complaint should be dismissed in large part because of the existence of Shipping Boxes I's counterclaims for breach of contract. Therefore, the Court will first address Seneca's Motions regarding those counterclaims.
Under Virginia law, a viable breach of contract claim has three elements: “(1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant's violation or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach of obligation.” Filak v. George, 267 Va. 612, 594 S.E.2d 610, 614 (2004). Seneca contends that Shipping Boxes I has failed to show any breach of the insurance contract because it has not alleged that the insurer, Seneca, has declined or refused to pay insurance benefits. Seneca emphasizes that it has repeatedly stated that while it has substantial doubts about whether the claims are covered by the...
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