United States District Court, N.D. Alabama, Southern Division
IBRAHIM SABBAH, and SABBAH BROTHERS ENTERPRISES, INC, doing business as 14th Street BP, Plaintiffs,
NATIONWIDE MUTUAL INSURANCE COMPANY and NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Defendants.
MEMORANDUM OPINION AND ORDER
VIRGINIA EMERSON HOPKINS United States District Judge.
11, 2017, at the end of an extensive Memorandum Opinion and
Order directed towards the then pending Motion To Dismiss
(doc. 50), this Court wrote:
1. The motion to dismiss is DENIED as to the
breach of contract claims against [Nationwide Mutual Fire
Insurance Company (“NMFIC”) and Nationwide Mutual
Insurance Company (“NMIC”)] (Counts Twelve and
Thirteen), and the claims for declaratory judgment against
NMFIC and NMIC (Counts Fourteen and Fifteen).
2. As to all other counts in the Second Amended Complaint
(Counts One through Eleven), the motion is hereby
GRANTED. Counts One through Eleven in the
Second Amended Complaint are hereby DISMISSED with
No. later than May 31, 2017, the Defendants may file a new
motion to dismiss which addresse[s] ONLY:
1) whether the statute of limitations has run as to the
breach of contract claims; and 2) whether a decision that
the statute of limitations has run as to the
breach of contract claims moots the claims for declaratory
relief. . . ..
(Doc. 60 at 49-50) (emphasis in original). The
Defendants' new Motion To Dismiss is now before the
Court. (Doc. 61).
contract of insurance, like other contacts, is governed by
the general rules of contracts.” Twin City Fire
Ins. Co. v. Alfa Mut. Ins. Co., 817 So.2d 687, 691 (Ala.
2001). The statute of limitations for a breach of contract
claim is six years. Ala. Code §6-2-34(9). The Plaintiffs
argue that the Defendants breached their contract of
insurance with the Plaintiff on December 20, 2013, when
“the corporate veil was pierced and SBE and Sabbah were
found to be legally obligated to pay damages.” (Doc. 62
at 8). However, the Defendants argue that, if they breached
their contract with the Plaintiffs at all, the breach
occurred when the Defendants sent their initial disclaimers
of coverage to SBE and Sabbah on July 17, 2007, and to Sabbah
on February 23, 2009. (Doc. 61 at 4).
support of their renewed motion, the Defendants cite
Hackleburg Church of Christ v. Great Am. Ins. Companies,
Inc., 675 So.2d 1309 (Ala. Civ. App. 1995) for the
proposition that “Plaintiffs' breach of contract
claims accrued at the time of the purported breach - the
denial of coverage and refusal to pay policy
benefits.” (Doc. 61 at 4). The Hackleburg
opinion does state that “‘[t]he statute of
limitations on a contract action runs from the time a breach
occurs rather than from the time actual damage is
sustained.'” Hackleburg, 675 So.2d at 1311
(quoting AC, Inc. v. Baker, 622 So.2d 331
(Ala.1993)). However, Hackleburg dealt with a
property damage claim, made more than seven years after
damage to the property had occurred, under a policy which
otherwise covered the damage. It did not deal with the
instant scenario where an insurer disclaims
indemnity coverage under a liability insurance polic
y well before a verdict is entered against the purported
insured. Although it is certainly a piece to the puzzle,
Hackleburg offers little help to this Court in
determining whether a breach occurs at the time of the
insurer's disclaimer, or at the time it refuses to pay an
ultimate judgment against the purported
the Court notes that the Defendants, in an attempt to
buttress their citation of the rule of law from
Hackleburg, quote, without discussion, the following
language from Seybold v. Magnolia Land Co., 376 so.
2d 1083, 1085 (Ala. 1979): “The statute of limitations
begins to run when a cause of action on the contract accrues,
which is to say, when the contract is breached.” (Doc.
61 at 5). Importantly, the next line of that opinion
“Breach” consists of the failure without legal
excuse to perform any promise forming the whole or part of
the contract. 17 AmJur.2d Contracts s 441 at 897. Where the
defendant has agreed under the contract to do a particular
thing, there is a breach and the right of action is complete
upon his failure to do the particular thing he agreed to do.
17 AmJur.2d, supra.
Seybold, 376 So.2d at 1085. This additional language
suggests that the breach in the instant case did not occur
until after the refusal to pay the underlying
judgments. Certainly, the Defendants' argument seems
logical in light of the Court's findings as to
the Counts which have been dismissed on the basis of the
running of the statute of limitations. However, at this time,
and based on the arguments made in both the Defendants'
motion (doc. 61) and their reply brief (doc. 63), which this
Court also considered, the Court cannot say that the breach
of contract claims fail to state a claim upon which relief
may be granted. This finding moots the remainder of the
Defendants' motion (regarding the claims for declaratory
judgment. (See doc. 61 at 6-9).
Renewed Motion To Dismiss is DENIED.