United States District Court, N.D. Alabama, Northeastern Division
JAMES RIVER INSURANCE COMPANY, Plaintiff/Counterclaim Defendant,
ULTRATEC SPECIAL EFFECTS, INC., et al., Defendants ULTRATEC SPECIAL EFFECTS, INC., Third-Party Plaintiff
BRITTON-GALLAGHER & ASSOCIATES, INC. AND FOUNTAIN PARKER, HARBARGER AND ASSOCIATES, LLC. Third-Party Defendants.
MEMORANDUM OPINION AND ORDER
K. KALLON, UNITED STATES DISTRICT JUDGE
River Insurance Company, Inc. filed a declaratory judgment
action pursuant to 28 U.S.C. § 2201, seeking to
establish that it has no coverage obligation related to an
explosion at Ultratec Special Effects, Inc.'s plant in
Owens, Alabama, based on an Employer's Liability
Exclusion. Doc. 1 at 11-12. In response to James River's
lawsuit, Ultratec filed a Third-Party Complaint against
Britton-Gallagher & Associates, Inc. and Fountain Parker
Harbarger and Associates, LLC, alleging various torts arising
out of the procurement of the insurance policies at issue.
See generally doc. 76. Presently before this court
is Britton-Gallagher's motion to dismiss some of
Ultratec's claims against it. See doc. 85. For
the following reasons, Britton-Gallagher's motion is due
to be granted as to the fraud and suppression claims and
denied as to the breach of contract claim.
STANDARD OF REVIEW
Rule of Civil Procedure 8(a) requires that a complaint
contain a short and plain statement of the claim showing that
the plaintiff is entitled to relief. Fed.R.Civ.P. 8(a). While
notice pleading is not intended to require the plaintiff to
specifically plead every element of a cause of action,
“it is still necessary that a complaint contain either
direct or inferential allegations respecting all the material
elements necessary to sustain recovery under some viable
legal theory.” Roe v. Aware Woman Center for
Choice, Inc., 253 F.3d 678, 683 (11th Cir. 2001)
(internal citations omitted); Seagood Trading Corp. v.
Jerrico, Inc., 924 F.2d 1555 (11th Cir. 1991). By
contrast with Rule 8(a)'s fairly liberal pleading
standard, Fed.R.Civ.P. 9(b) requires a party to “state
with particularity the circumstances constituting fraud or
mistake.” To comply with this heightened pleading
standard, a plaintiff must allege: “(1) the precise
statements, documents, or misrepresentations made; (2) the
time, place, and person responsible for the statement; (3)
the content and manner in which these statements mislead the
Plaintiff; and (4) what the defendants gained by the
alleged fraud.” American Dental Ass'n v. Cigna
Corp., 605 F.3d 1283, 1291 (11th Cir. 2010).
motion made pursuant to Federal Rule of Civil Procedure
12(b)(6) is permitted when a plaintiff has failed to state a
claim upon which relief can be granted. Fed.R.Civ.P.
12(b)(6). In a motion to dismiss, the factual allegations in
the plaintiff's complaint are taken as true and
“the court limits its consideration to the pleadings
and exhibits attached thereto.” Grossman v.
Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000);
South Florida Water Mgmt Dis. v. Montalvo, 84 F.3d
402, 406 (1996). To 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 (2009) (citing Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007)). A claim is plausible
where it “pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. Dismissal for
failure to state a claim, then, is appropriate where the
plaintiff fails to state a claim that is “plausible on
its face.” Id. This 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.
2011, Ultratec contracted with Britton-Gallagher and Fountain
Parker to procure insurance for Ultratec and its subsidiary
Ultratec Special Effects (“Ultratec HSV”) to
protect Ultratec from all liability, including claims filed
by employees of Ultratec HSV and any of Ultratec's other
subsidiaries. Ultratec expected Britton-Gallagher and
Fountain Parker to shop the relevant insurance markets and to
then inform it of all available coverage and alternatives.
Ultimately, Britton-Gallagher and Fountain Parker procured
commercial general liability insurance for Ultratec through
James River and procured worker's compensation and
employer's liability insurance through another company,
with James River providing excess insurance coverage.
February 6, 2015, an explosion at the Ultratec HSV facility
resulted in two fatalities and one serious injury. This
incident spawned three lawsuits against Ultratec and others
in the Circuit Court of Madison County, Alabama. Ultratec
submitted the defense of the lawsuits to James River under
its commercial general liability policy. James River assumed
Ultratec's defense under a reservation of rights and
subsequently filed this declaratory judgment action seeking
to establish that it owed no duty to defend or indemnify
under the policy, and to recover all costs expended for
defending the state lawsuits. According to James River, the
Employer's Liability-Exclusion Endorsement attached to
the 2014-2015 Policy excludes coverage for bodily injury
sustained by employees of Ultratec.
third-party complaint against Britton-Gallagher and Fountain
Parker. Ultratec contends primarily that James River's
position is “inconsistent with the insurance that
[Ultratec] requested and that Britton-Gallagher and Fountain
Parker promised to procure.” Doc. 76 at 6. As a result,
Ultratec has filed breach of contract and fraud claims
against these entities. Britton-Gallagher has moved to
dismiss three of the six claims Ultratec asserts against it:
breach of contract (Count I), negligent misrepresentation
(Count V), and fraudulent suppression (Count VI).
The Breach of Contract Claim (Count I)
support its motion to dismiss the breach of contract claim,
Britton-Gallagher contends that “the plain language of
the underlying contract between Ultratec and
Britton-Gallagher clearly stated that the insurance policy
issued to Ultratec would contain an employer's liability
exclusion endorsement.” Doc. 86 at 2. This contention
rests primarily on the insurance proposal, see doc.
69-1, which Britton-Gallagher represents as being the full
scope of the contractual relationship between it and
Ultratec. Based on the third-party complaint, however,
Ultratec alleges that Britton-Gallagher also made oral
representations that form part of the contract. Allegedly,
Ultratec entered into an oral contract with Britton-Gallagher
and Fountain Parker that laid out the conditions of
engagement prior to receiving the insurance proposal,
including that the two brokers purportedly would obtain
appropriate comprehensive insurance coverage for the Ultratec
entities and inform Ultratec of all policy alternatives.
See doc. 76 at 11. Britton Gallagher and Fountain
Parker purportedly breached this contract by failing to
“exercise reasonable skill, care and diligence in
procuring insurance which would not create a catastrophic gap
in coverage under the relevant policies.” Id.
at 11. Moreover, allegedly, the failure by these two agents
to identify the Employer's Liability Exclusion
Endorsement as a potential uninsured exposure breached these
agents' contractual duty to act with reasonable skill in
procuring insurance. Id. at 11-12.
Alabama law, “a contract may consist of several
communications between the parties, some in writing and some
oral, each constituting a link in the chain which comprises
the entire contract.” Lawler Mobile Homes, Inc. v.
Tarver, 492 So.2d 297, 304 (Ala. 1986). As a result, in
addition to the insurance proposal, the court must also
consider the parties' oral communications. See
Id. Therefore, because Ultratec's allegations about
the purported oral communications are sufficient at this
juncture to plead a breach of contract claim, see
Southern Medical Health Sys., Inc. v. Vaughn, 669 So.2d
98, 99 (Ala. 1995), Britton Gallagher's motion to dismiss
the contract claim is due to be denied.
Misrepresentation and Suppression Claims ...