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Monroe Guaranty Insurance Co. v. Pinnacle Manufacturing, LLC

United States District Court, N.D. Alabama, Southern Division

July 9, 2018

MONROE GUARANTY INSURANCE COMPANY, et al., Plaintiffs,
v.
PINNACLE MANUFACTURING, LLC, et al., Defendants.

          MEMORANDUM OPINION [1]

          JOHN H. ENGLAND, III UNITED STATES MAGISTRATE JUDGE.

         Plaintiffs Monroe Guaranty Insurance Company and FCCI Insurance Company (collectively “Plaintiffs”) initiated this declaratory judgment action against Defendants Pinnacle Manufacturing, LLC (“Pinnacle Mfg.”), Joby Satterfield, Jason Satterfield (collectively the “Pinnacle Defendants”), and Zach Smith to determine rights and obligations under a Commercial General Liability (“CGL”) Policy and an Umbrella Policy issued to the Pinnacle Mfg. (Doc. 1). The Pinnacle Defendants are defendants in a state court lawsuit brought by Zach Smith, Smith v. Pinnacle Manufacturing, LLC, et al., Civil Action No. CV-2017-900095, currently pending in the Circuit Court in Blount County, Alabama (the “Underlying Action”). Plaintiffs assert that the CGL and Umbrella Policies do not provide coverage for the type of damages alleged in the Underlying Action and seek a declaration from this Court that there is no coverage. (See docs. 1, 23, & 24).

         Plaintiffs filed a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) and a brief in support thereof. (Docs. 23 & 24). Upon receipt of the motion, the undersigned set a deadline for any opposition to the motion to be filed. (Doc. 25). That deadline has passed, and no opposition to the motion for judgment on the pleadings was filed. Accordingly, having considered Plaintiffs' motion and brief, as well as the applicable law, the motion for judgment on the pleadings (doc. 23), is GRANTED.

         I. Standard of Review

         Federal Rule of Civil Procedure 12(c) provides: “After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings.” “Judgment on the pleadings is appropriate where no issue of material fact remains unresolved and the moving party is entitled to judgment as a matter of law.” Mergens v. Dreyfoos, 166 F.3d 1114, 1117 (11th Cir. 1999). “When reviewing judgment on the pleadings, we must take the facts alleged in the complaint as true and view them in the light most favorable to the nonmoving party.” Id. “If upon reviewing the pleadings it is clear that the [moving party] would not be entitled to relief under any set of facts that could be proved consistent with the allegations, the court should dismiss the complaint.” Horsley v. Rivera, 292 F.3d 695, 700 (11th Cir. 2002). However, on a motion for judgment on the pleadings, the court is not allowed to consider any matter that is outside of the pleadings. If matters outside the pleadings are presented and are not excluded by the Court then the motion must be treated as one for summary judgment. Fed.R.Civ.P. 12(d).

         II. Relevant Facts

         A. The Underlying Action

         The Underlying Action is generally premised upon Pinnacle Mfg.'s termination of Smith as an independent sales agent and his alleged economic damages flowing from that termination. (See doc. 1-1). Specifically, Smith alleges he and Pinnacle Mfg. entered into an independent sales agreement in January 2015, and in December 2015, Pinnacle Mfg. sent Smith a notice of termination advising him that their agreement would be terminated effective January 29, 2016. (Id. at ¶¶ 6, 12-13). Smith further alleges Pinnacle Mfg. improperly solicited business from his customers following the termination notice and failed to pay compensation from revenues generated from his customers. (Id. at ¶¶ 18-19). Based on these factual allegations, Smith alleges six causes of action against the Pinnacle Defendants, including: Count I Intentional Interference with a Business Relationship, Count II Suppression, Count III Wantonness, Count IV Unjust Enrichment, Count V Open Account, and Count VI Breach of Contract. (Id.).

         Count I Intentional Interference with a Business Relationship alleges the Pinnacle Defendants “intentionally interfered with the business relationship between [Smith] and [Smith]'s account customers” and Smith “has incurred damages as a result of the [Pinnacle] Defendants' unlawful interference.” (Doc. 1-1 at ¶¶ 25-26).

         Count II Suppression of Material Facts alleges:

[The Pinnacle Defendants “breached their duty and defrauded [Smith] by representing that [Smith] would continue as an independent contractor for Defendant Pinnacle. Defendants suppressed the material facts of refusing to pay [Smith] for the orders and customers relationships developed by [Smith]. Said suppression of material facts and fraud were committed negligently, recklessly, wantonly and/or willfully or with the intent to defraud and deceive [Smith].
….
As a proximate cause of the fraud and suppressed material facts by Defendant, [Smith] has suffered damages. [Smith] has suffered loss of income, stress, anxiety, and emotional and mental distress.

(Doc. 1-1 at ¶¶ 30, 32).

         Count III Wantonness alleges the Pinnacle Defendants “were conscious that the Independent Sales Representative Agreement would be terminated that same day by Pinnacle and Jason Satterfield” and “failed to disclose to [Smith] that [the Pinnacle] Defendants were terminating the Independent Sales Representative Agreement.” (Doc. 1-1 at ¶¶ 35, 36). Smith alleges he was “caused to suffer damages, including loss of revenue, increased business costs and damages to reputation and character” due to the Pinnacle Defendants' wanton conduct. (Id. at ¶ 38).

         Count IV Unjust Enrichment alleges the Pinnacle Defendants “have been unjustly enriched by receiving compensation and/or financial benefit from orders and/or sales from [Smith]'s customers.” (Doc. 1-1 at ¶ 43).

         Count V Open Account alleges the Pinnacle Defendants have failed to pay the amounts owed for orders and sales from Smith's customers after January 29, 2016. (Doc. 1-1 at ¶ 48).

         Count VI Breach of Contract alleges Pinnacle Mfg. breached the Independent Sales Representative Agreement by failing to perform and pay compensation to Smith for orders known and/or reasonably anticipated or accounted for. (Doc. 1-1 at ¶ 51).

         Smith seeks compensatory and punitive damages for all counts, except Counts V and VI for which he only seeks compensatory damages. (Doc. 1-1)

         B. The Policies

         Monroe Guaranty issued a CGL Policy on an occurrence basis for the period of April 15, 2015 through April 15, 2016. (See doc. 1-2). FCCI Insurance issued the Umbrella Policy on an occurrence basis for the period of April 15, 2015 through April 15, 2016. (See doc. 1-3).

         The CGL Policy's principal form is Form CG00011207, titled “COMMERCIAL GENERAL LIABILITY COVERAGE FORM.” In pertinent part, the CGL Policy provides:

SECTION 1 - COVERAGES
COVERAGE A - BODILY INJURY AND PROPERTY
DAMAGES LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply . . . .
b. This insurance applies to "bodily injury" and "property damage" only if:
(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory" . . . .

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