Southtrust Bank and Right v. Export Ins. Serv.

• Decision Date: 19 February 2002
• Docket Number: No. 8:01-CV-742-T-17MSS.,8:01-CV-742-T-17MSS.
• Citation: 190 F.Supp.2d 1304
• Parties: SOUTHTRUST BANK and Right Equipment Company of Pinellas County, Inc. Plaintiffs, v. EXPORT INSURANCE SERVICES, INC., a Georgia corporation and Export-Import Bank of the United States, an agency of the United States Government, Defendants.
• Court: U.S. District Court — Middle District of Florida

190 F.Supp.2d 1304

SOUTHTRUST BANK and Right Equipment Company of Pinellas County, Inc. Plaintiffs, v. EXPORT INSURANCE SERVICES, INC., a Georgia corporation and Export-Import Bank of the United States, an agency of the United States Government, Defendants.

No. 8:01-CV-742-T-17MSS.

United States District Court, M.D. Florida, Tampa Division.

February 19, 2002.

COPYRIGHT MATERIAL OMITTED

Robert L. Rocke, Jon P. Tasso, Fley & Lardner, Tampa, FL, for Plaintiffs.

Leslie III, Joughin, Wesley D. Tibbales, Akerman, Senterfitt & Eidson, P.A., Tampa, FL, Roberta M.Klosiewicz, Patricia Kerwin, Warren A. Zimmerman, U.S. Atty's Office, Tampa, FL, Bill Mays, Law Office of Bill mys, Washington, DC, for Defendants.

ORDER ON MOTION TO DISMISS

KOVACHEVICH, District Judge.

This cause comes before the Court on the Defendant, Export Insurance Service, Inc.'s (hereafter EIS) Motion to Dismiss Counts II, III, IV, and V of Plaintiffs' Amended Complaint, concerning claims for breach of contract, breach of fiduciary duty, negligence, and estoppel respectively. [Docket No. 30]. Plaintiffs subsequently filed a responsive memorandum thereto. [Docket No. 33].

STANDARD OF REVIEW

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests a complaint's adequacy to determine whether it sets forth sufficient allegations to establish a claim for relief. A district court should not dismiss a complaint for failure to state a claim solely on the pleadings "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Moreover, when deciding a motion to dismiss, a court must view the complaint in the light most favorable to the plaintiff and accept the truthfulness of well-pleaded facts. See Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975); See also: Beck v. Deloitte et al., 144 F.3d 732, 735-36 (11th Cir.1998) (quoting St. Joseph's Hospital, Inc. v. Hospital Corp. of America, 795 F.2d 948 (11th Cir.1986)).

BACKGROUND

Plaintiffs, Right Equipment Company of Pinellas County, Inc. (hereafter Right) and Southtrust Bank (hereafter Southtrust), as Right's assignee, seek to recover damages in excess of $75,000.00 from Defendants, Export-Import Bank of the United States (hereafter Export) and EIS, as Export's agent. [Docket No. 23]. The claims involve insurance coverage for overseas freight deliveries. [Docket No. 23].

Plaintiff, Southtrust, originally filed the Complaint in the Circuit Court of the Thirteenth Judicial Circuit, in and for Hillsborough County, Florida. [Docket No. 2]. Defendant, Export, filed a Notice of Removal to federal court, pursuant to 28 U.S.C. § 1441 and 28 U.S.C. § 1332 and the Notice went unchallenged. [Docket No. 1]. After Defendant, Export, filed a Motion to Dismiss, Plaintiff, Southtrust, sought leave to amend its Complaint to add Right as a Plaintiff. [Docket No. 30]. This Court granted Southtrust's Motion and Right was added as a Plaintiff. [Docket No. 20].

Plaintiffs' amended complaint alleges breach of contract and estoppel against Defendant, Export and breach of oral contract, breach of fiduciary duty, negligence, and estoppel against Defendant, EIS. [Docket No. 23]. Defendant, EIS, filed the instant Motion to Dismiss Plaintiffs' Amended Complaint under Rule 12(b)(6) on the grounds that the Plaintiffs have failed to state a claim upon which relief may be granted. [Docket No. 30]. Accordingly, the instant Motion concerns Plaintiffs' allegations against EIS for breach of oral contract, breach of fiduciary duty, negligence, and estoppel.

Plaintiffs filed a responsive memorandum to EIS' Motion to Dismiss. [Docket No. 33]. Therein, Plaintiffs addressed each of EIS' grounds for dismissal. [Docket No. 33]. At issue is whether Plaintiffs have adequately plead the elements necessary to bring causes of action for breach of oral contract, breach of fiduciary duty, negligence, and estoppel.

DISCUSSION

A. Count II — Breach of Oral Contract

"An insurance agent may be held liable for failure to provide insurance coverage pursuant to an oral contract." Robinson v. John E. Hunt & Assoc., Inc., 490 So.2d 1291, 1293 (Fla. 1st DCA 1986); Monogram Products, Inc. v. Berkowitz, 392 So.2d 1353 (Fla. 2d DCA 1980); State Farm Fire & Casualty Co. v. Hicks, 184 So.2d 685 (Fla. 2d DCA 1966). "[O]ral contracts to procure insurance and oral contracts of insurance" are enforceable as long as the oral contract can be performed within one year, so as not to implicate the Statute of Frauds. Monogram Products, Inc., 392 So.2d at 1355.

To establish a cause of action for breach of contract under Florida insurance law, a party must plead the following elements: "the subject-matter; the risk insured against; the amount of insurance; the rate of premium; the duration of the risk; and the identity of the parties." Collins v. Aetna Insurance Co., 103 Fla. 848, 850, 138 So. 369 (Fla.1931) (finding that to prove a claim for breach of oral contract, a party must prove the elements of a written contract for insurance). All of these elements essentially constitute the terms of the agreement, which "may be determined from [the parties] relation to each other [and] their previous business dealings[.]" Id.

Plaintiffs have sufficiently plead facts supporting the existence of an oral contract for insurance coverage. Right contacted EIS, as agent for Export, to inform it of insurance needs that Right anticipated for a pending overseas shipment to a Mexican client. [Docket No. 23 ¶ 7]. Right informed EIS that the transaction involved the sale of an injection molding system with various parts, invoiced in the amount of $250,000.00. [Docket No. 23 ¶ 7]. Thereafter, EIS issued Right an offer for insurance coverage, which outlined the remaining terms of the agreement. [Docket No. 23 Ex. A]. The offer outlined the Shipment Volume Limit of $225,000.00, the Claim Payment Limit of $202,500.00 and the Premium price of $18,750.00 over twelve (12) monthly installments. [Docket No. 23 Ex. A]. The offer also listed a Commitment Effective Date of November 3, 1999, and a Commitment Expiration Date of February 3, 2000. [Docket No. 23 Ex. A]. Finally, the offer represented the parties to the agreement as EIS and Right. [Docket No. 23 Ex. A]. Therefore, Plaintiffs have sufficiently alleged the terms of the oral contract.

"[A]n insurance agent may be held liable for breach of contract for failure to procure insurance coverage even though the agency has received no premium from the applicant. The applicant's agreement to accept a policy if issued is sufficient consideration for the contract since it carries with it the implied promise to pay whatever premium would be due thereon." Robinson, 490 So.2d at 1293; Duncanson v. Service First, Inc., 157 So.2d 696 (Fla. 3d DCA 1963); First National Insurance Agency, Inc. v. Leesburg Transfer & Storage, Inc., 139 So.2d 476 (Fla. 2d DCA 1962). Satisfied by the terms outlined in EIS' offer, Right called EIS to verify coverage, whereupon, two (2) of EIS' employees assured Right that any shipments between November 3, 1999, and February 3, 2000, would be covered. [Docket No. 23 ¶ 9]. Thereafter, Right commenced two overseas shipments, which constitute Right's agreement to accept the policy. [Docket No. 23 ¶ 10, 11]. While Right did not pay the insurance premium until after its first overseas shipment, the fact that Right began shipment constitutes its acceptance and implied promise to pay the premium. [Docket No. 23 ¶ 10, 13]; Robinson, 490 So.2d at 1293. Therefore, Plaintiffs have sufficiently alleged breach of oral contract.

Plaintiffs have sufficiently plead facts supporting damage as a result of EIS' breach of oral contract. Had Right known that the insurance agreement would not cover the overseas shipments, it would never have shipped the items or paid the policy premium of $6,532.47 to Export, which Export accepted and cashed. [Docket No. 23 ¶ 13, 33, Ex. C]. Moreover, Right commenced the two overseas shipments and Southtrust, as its assignee, did not receive any payment from the purchaser, Export or EIS upon demand. [Docket No. 23 ¶ 10, 11, 17-19]. Therefore, Plaintiffs have sufficiently alleged damage as a result of EIS' breach of oral contract.

Finally, the oral contract between Right and EIS may be enforceable because the Statute of Frauds is not implicated. As evidenced by EIS' offer, the insurance was a "short-term" agreement to extend from November 3, 1999, to February 3, 2000, a period of only three (3) months. [Docket No. 23 Ex. A]. The Statute is not implicated because performance can be accomplished within one year. Monogram Products, Inc., 392 So.2d at 1355. Therefore, Plaintiffs have sufficiently alleged breach of oral contract.

Accordingly, EIS' Motion to Dismiss Count II of Plaintiffs' Amended Complaint is denied.

B. Count III — Breach of Fiduciary Duty

To establish a cause of action for breach of fiduciary duty under Florida law, a party must plead the existence of a fiduciary relationship and a breach thereof, which results in damage. Moss v. Appel, 718 So.2d 199, 201-202 (Fla. 4th DCA 1998).

First, Plaintiffs have sufficiently plead facts supporting the existence of a fiduciary relationship between EIS as insurance broker and Right as insured. An insurance broker has a fiduciary relationship with an insured. Moss, 718 So.2d at 201; Beardmore v. Abbott, 218 So.2d 807 808-809 (Fla. 3d DCA 1969) (finding that an insurance counselor has a fiduciary duty to an insured because of the inherent trust and confidence that the insured places in the counselor); Randolph v. Mitchell, 677 So.2d 976 (Fla. 5th DCA 1996). EIS is an insurance brokerage specializing in export credit insurance for international trade and finance. [Docket No. 23 ¶ 5]. Hence, EIS is highly experienced in the export insurance industry, and as agent...