United States District Court, N.D. Alabama, Middle Division
MEMORANDUM OPINION AND ORDER
VIRGINIA EMERSON HOPKINS, UNITED STATES DISTRICT JUDGE
INTRODUCTION AND PROCEDURAL HISTORY
August 16, 2016, Catlin Syndicated Limited
(“Catlin”) initiated a declaratory judgment
action against Ramuji, LLC (“Ramuji”) and Peoples
Independent Bank (“PIB”) concerning a commercial
insurance policy issued to Ramuji by Catlin and four other
underwriters at Lloyd's of London. (Doc. 1). On September
19, 2016, PIB answered the complaint, filed counterclaims
against Catlin, and filed third-party claims against Jon Pair
and Randy Jones & Associates, Inc. (Doc. 12).
January 24, 2017, PIB filed amended counterclaims against
Catlin and amended third-party claims against Jon Pair and
Randy Jones & Associates, Inc. (Doc. 46, the
“Amended Pleading”). In the same pleading, PIB
also filed new third-party claims against the four other
underwriters for the policy, namely Syndicate 1414 at
Lloyd's (Ascot Underwriting Ltd.); Syndicate 5820 at
Lloyd's (ANV Syndicates Ltd.); Syndicate 727 at
Lloyd's (S.A. Meacoch & Co. Ltd.); Syndicate 1861 at
Lloyd's (ANV Syndicates Ltd.) (together, the “Added
to PIB, Catlin and the Added Syndicates “are all
syndicates that transact business in the marketplace known as
Lloyd's of London, ” and all five syndicates
(including Catlin) “underwrote and subscribed to risk
on the commercial insurance policy issued to Ramuji by
Lloyd's of London” that serves as the basis of this
litigation. (Doc. 46 at 2).
argues that joinder of the Added Syndicates is proper
pursuant to Federal Rule of Civil Procedure 19(a)(1), which
states as follows:
(a) Persons Required to Be Joined if
(1) Required Party. A person who is
subject to service of process and whose joinder will not
deprive the court of subject-matter jurisdiction must be
joined as a party if:
(A) in that person's absence, the court
cannot accord complete relief among existing parties; or
(B) that person claims an interest relating
to the subject of the action and is so situated that
disposing of the action in the person's absence may:
(i) as a practical matter impair or impede
the person's ability to protect the interest; or
(ii) leave an existing party subject to a
substantial risk of incurring double, multiple, or otherwise
inconsistent obligations because of the interest.
Fed. R. Civ. P. 19(a)(1)(A-B). PIB alleges that this Court
“cannot accord complete relief among the existing
parties as any judgment against Catlin would not result in
full payment under the Lloyd's Policy by all of the
Lloyd's entities, ” which would potentially impair
PIB's ability to protect its interests and might leave
all parties subject to a substantial risk of multiple and
inconsistent obligations. (Doc. 46 at 3).
Catlin nor the Added Syndicates dispute PIB's
characterization of the positioning of the parties in this
action, nor do they oppose the joinder of the Added
Syndicates as required parties pursuant to Rule 19(a)(1). The
interests of Catlin and the Added Syndicates are aligned for
the purposes of the claims filed by PIB against them, as all
five syndicates underwrote and subscribed to the risk on the
policy in question. However, despite the similarity of their
interests, Catlin and the Added Syndicates separately filed
Motions To Dismiss the claims brought against them by PIB.
(Docs. 53 and 63, respectively).
February 7, 2017, PIB responded to Catlin's Motion To
Dismiss, and on February 13, 2017, Catlin filed its reply.
(Docs. 59, 60). On March 1, 2017, PIB responded to the Added
Syndicates' Motion To Dismiss. (Doc. 64). Both Motions are
ripe for this Court's disposition.
MOTION TO DISMISS STANDARD
12(b)(6) motion attacks the legal sufficiency of the
complaint. See Fed. R. Civ. P. 12(b)(6) (“[A]
party may assert the following defenses by motion: (6)
failure to state a claim upon which relief can be
granted[.]”). The Federal Rules of Civil Procedure
require only that the complaint provide “‘a short
and plain statement of the claim' that will give the
defendant fair notice of what the plaintiff's claim is
and the grounds upon which it rests.” Conley v.
Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80
(1957) (footnote omitted) (quoting Fed.R.Civ.P. 8(a)(2)),
abrogated by Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 556, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007);
see also Fed. R. Civ. P. 8(a) (setting forth general
pleading requirements for a complaint including providing
“a short and plain statement of the claim showing that
the pleader is entitled to relief”).
plaintiff must provide the grounds of his entitlement to
relief, Rule 8 does not mandate the inclusion of
“detailed factual allegations” within a
complaint. Twombly, 550 U.S. at 555, 127 S.Ct. at
1964 (quoting Conley, 355 U.S. at 47, 78 S.Ct. at
103). However, at the same time, “it demands more than
an unadorned, the-defendant-unlawfully-harmed-me
accusation.” Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).
“[O]nce a claim has been stated adequately, it may be
supported by showing any set of facts consistent with the
allegations in the complaint.” Twombly, 550
U.S. at 563, 127 S.Ct. at 1969.
court considering a motion to dismiss can choose to begin by
identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of
truth.” Iqbal, 556 U.S. at 679, 129 S.Ct. at
1950. “While legal conclusions can provide the
framework of a complaint, they must be supported by factual
allegations.” Id. “When there are
well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give
rise to an entitlement to relief.” Id.
(emphasis added). “Under Twombly's
construction of Rule 8 . . . [a plaintiff's] complaint
[must] ‘nudge [any] claims' . . . ‘across
the line from conceivable to plausible.'
Ibid.” Iqbal, 556 U.S. at 680, 129
S.Ct. at 1950-51.
is plausible on its face “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. at
1949. “The plausibility standard is not akin to a
‘probability requirement, ' but it asks for more
than a sheer possibility that a defendant has acted
unlawfully.” Id. (quoting Twombly,
550 U.S. at 556, 127 S.Ct. at 1965).
The Complaint and the Insurance Policy
about May 8, 2015, Ramuji, though Randy Jones &
Associates, submitted a signed Commercial Insurance
Application for commercial property coverage for its motel
located in Boaz, Alabama. (Doc. 1 at 3).
at Lloyd's of London (namely, Catlin and the Added
Syndicates) issued a policy to Ramuji effective from May 9,
2015, through May 9, 2016. (See Doc. 1-4, the
“Policy”). The Policy provided $1, 732, 136.00 in
building coverage for the motel, in addition to $150, 000.00
in business personal property coverage, $200, 000.00 in
business income with extra expense coverage, and $15, 000.00
in coverage for an outdoor sign, totaling to an insurance
limit of $2, 097, 136.00. (Doc. 1 at 4).
loss occurred at the insured motel on April 2, 2016.
(Id. at 6). Catlin and the Added Syndicates
acknowledged Ramuji's claim, commenced an investigation,
and reserved their rights under the Policy by letter dated
April 7, 2016. (Id.). On April 25, 2016, three weeks
after the fire loss, Ramuji requested that PIB be added to
the Policy as a mortgagee “effective at
inception.” (Id.). Ramuji was advised that PIB
could not be added retroactively as a mortgagee but could be
added by endorsement effective as of the day of the request.
(Id.). Accordingly, PIB was added as a mortgagee
effective as of April 25, 2016. (Id. at 7). Though
PIB has made a verbal request for coverage under the Policy
as a mortgagee, no written claim or Proof of Loss has been
tendered by PIB as of the date of the filing of the
on their investigation, Catlin and the Added Syndicates
determined that the Policy was subject to rescission based
upon material misrepresentations in its application,
including the nondisclosure of two unsatisfied and unreleased
liens against Ramuji, as well as violations of Policy
provisions and endorsements. (Id.). On August 16,
2016, Catlin and the Added Syndicates advised Ramuji that the
Policy was subject to rescission, and they refunded
Ramuji's premium (Id. at 9).
The Amended Counterclaim and Third-Party Claims
2004, PIB extended a loan to Ramuji in exchange for the
execution of a mortgage on Ramuji's motel property in
Boaz, Alabama. (Doc. 46 at 3). At all relevant times, PIB has
been the mortgagee on the Property and is the equitable title
holder to the property. Id.; see also
Exhibit 1, (Doc. 46 at 27-29) (mortgage deed between Ramuji
has maintained insurance on the Property since the mortgage
was executed by PIB in 2004. (Id. at 3). As of
August 8, 2014, PIB was listed as an “Additional
interest . . . Mortgagee” on a standard “Evidence
of Property Insurance” form prepared by Randy Jones
& Associates, Inc. (Id. at 4).
5, 2015, another “Evidence of Property Insurance”
form also listed PIB as an “Additional Interest . . .
Mortgagee, ” effective from May 9, 2015, to May 9, 2016
. (Id.). The date of the fire loss, April 2, 2016,
fell within the coverage period listed on this form.
(Id.). After the fire, PIB contacted the Jones
Agency and was told that a Proof of Claim had been filed.
(Id.). No one at the Jones Agency either told PIB
that it needed to file a Proof of Claim or otherwise
indicated that there was any problem with the claim.
(Id. at 4-5).
August 16, 2016, a letter from Promont Advisers, LLC,
“on behalf of Certain Underwriters at Lloyd's
London” informed Ramuji, with a formal copy being sent
to PIB, that insurance coverage for the loss had been denied.
(Id. at 5).
counterclaims asserted against Catlin include claims for
declaratory relief (Count I), breach of contract (Count II),
negligent and wanton procurement of insurance (Counts III and
IV), bad faith (Count V), fraud (Count VI), and conspiracy to
commit fraud. (Count VII). (Doc. 46 at 5-15). The third-party
claims asserted against the Added Syndicates include claims
for declaratory relief (Count I), breach of contract (Count
II), negligent and wanton procurement of insurance (Counts
III and IV), fraud (Counts V and VI), and conspiracy to
commit fraud. (Count VII). (Doc. 46 at 15-25).
Breach of Contract Claims
Count II of the amended counterclaims against Catlin and
Count II of the third-party claims against the Added
Syndicates, PIB pursues recovery for breach of contract.
(Doc. 46 at 6-7, 16-17). The elements of a breach of contract
claim under Alabama law are “(1) a valid contract
binding the parties; (2) the plaintiffs' performance
under the contract; (3) the defendant's nonperformance;
and (4) resulting damages.” Reynolds Metals Co. v.
Hill, 825 So.2d 100, 105 (Ala. 2002) (internal citation
omitted). In its Amended Pleading, PIB asserts both that
Catlin and the Added Syndicates directly breached a contract
with PIB and that PIB should be able to recover as a
third-party beneficiary of the insurance contract.
Alabama, recovery of proceeds under an insurance policy is
typically limited to the named insureds who are a party to
the insurance contract. This is due in part to the fact that
a contract of insurance is “a personal contract that
inures to the benefit of the party with whom it is made and
by whom the premiums are paid.” Gay v.
Hubbard, 678 So.2d 1156, 1157 (Ala. Civ. App. 1996)
(citing Dickerson v. Stewart, 473 So.2d 1078, 1080
(Ala. Civ. App. 1985)); see also Commercial Fire Ins. Co.
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