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Long Excavating & Recycling, LLC v. Bates Hewett & Floyd Insurance Agency

United States District Court, M.D. Alabama, Northern Division

October 23, 2018

LONG EXCAVATING & RECYCLING, LLC, et al., Plaintiffs,
v.
BATES HEWETT & FLOYD INSURANCE AGENCY, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          DAVID A. BAKER UNITED STATES MAGISTRATE JUDGE

         Plaintiffs, Long Excavating & Recycling, LLC, Brock Cody, and Charles Stewart Long, Jr., sue Defendants, Bates Hewett & Floyd Insurance Agency, Dee Dee Germany, and Westfield Bank, FSB, for breach of contract, fraud, negligence, wantonness and/or recklessness. (Doc. 52). Before the court is Defendant Westfield Bank, FSB's Motion to Dismiss the Second Amended Complaint. (Doc. 54). Plaintiffs assert a single claim for breach of contract against Westfield Bank, FSB. (Doc. 52 at 7-10). The matter has been fully briefed by the parties, and the court heard argument on September 24, 2018. For the reasons that follow, the court grants in part and denies in part Westfield Bank, FSB's motion.

         I. Jurisdiction

         This matter was removed to this court on the basis of diversity of citizenship pursuant to 28 U.S.C. § 1332(a). The parties do not contest personal jurisdiction. Defendants sought to change venue to the Southern Division of the Middle District, but that motion was denied without prejudice. (Docs. 3, 11).

         II. Background and Statement of Facts

         On June 21, 2017, Plaintiffs initiated this action by the filing of a three-count complaint in Bullock County, Alabama Circuit Court against Defendants, Bates Hewett & Floyd Insurance Agency[1] and its agent employee, Dee Dee Germany. (Doc. 1-9). On July 28, 2017, Defendants removed the case to this court pursuant to 28 U.S.C. §§ 1332, 1441, and 1446, on the basis of diversity of citizenship and an amount in controversy exceeding $75, 000. (Doc. 1).

         Defendants moved to transfer the case to the Southern Division of the Middle District of Alabama because none of the parties reside in the Northern Division. (Doc. 3). Although Defendants acknowledge in the motion to transfer that the subject fire loss occurred in Bullock County, which is in the Northern Division, they nevertheless argue that the witnesses, documents, and conversations are located or occurred elsewhere. The court denied the motion without prejudice. (Doc. 11).

         After Defendants answered the complaint (Doc. 27), the parties jointly moved to amend their pleadings to add Westfield Bank, FSB as a party defendant, which the court granted. (Docs. 28, 29). Thereafter, Plaintiffs filed a second amended complaint on June 19, 2018. (Doc. 52). Plaintiffs allege that Brock Cody and Charles Stewart Long, Jr., are the owners and sole members of Long Recycling Excavating, LLC (“Long Excavating”), which is a logging business. (Doc. 52, ¶¶ 7, 8). Long Excavating contracted to perform logging work in Bullock County, Alabama. Id. ¶ 8. As part of the terms of the logging contract, Long Excavating was required to procure and maintain insurance coverage for its equipment and logging activities in the cutting of a timber tract in Bullock County. Id. ¶ 9. Plaintiffs, Brock Cody and Charles Long, Jr., obtained insurance coverage on behalf of Long Excavating through Bates Hewett & Floyd Insurance Agency (“Bates”), an insurance agency located in Palatka, Florida, and its agent, Defendant Dee Germany. Id. ¶¶ 10, 11. Bates brokered insurance coverage for Plaintiffs with Arch Insurance Company and/or Arch Insurance Group (“Arch”) based in Kansas City, Missouri. Id. ¶ 12. Bates also obtained financing for Plaintiffs under a Premium Finance Agreement with Defendant Westfield Bank, FSB (“Westfield”) that paid Plaintiff's entire annual insurance premium to Arch. Id. ¶ 14. In turn, Plaintiffs were to make monthly premium payments to Westfield. Id. Once insurance coverage was obtained for Long Excavating in March 2016, Plaintiffs began making the periodic insurance premium payment and engaged in logging work in Bullock County, Alabama. Id. ¶ 15.

         The insurance policy covered multiple pieces of equipment owned by Long Excavating including a 1988 John Deere Skidder Model 648D and a 2007 Hydro-Ax 2470. Id. ¶ 16. In May of 2016, Plaintiffs made an insurance claim for the 1988 John Deere Skidder that was destroyed in a fire loss, and Arch paid the claim as a covered loss. Id. ¶ 17. In April 2016, Plaintiffs added a 2013 John Deere skidder Model 748H, which increased the total monthly premium from $526.74 to $952.25. Id. ¶ 18.

         Sometime prior to July 8, 2016, Plaintiff Long Excavating failed to timely pay a monthly insurance premium payment. Id. ¶ 19. On July 8, Westfield mailed Long Excavating a Notice of Intent to Cancel Insurance due to the unpaid premium. Id. ¶ 20. Thereafter, Long Excavating made the premium payment, and Long Excavating's insurance coverage with Arch was reinstated. Id. In July 2016, Plaintiffs decided to sell the 2013 John Deere skidder and the portion of the lump sum premium payment for the John Deere skidder was returned to Westfield. Id. ¶ 21.

         Again on September 8, 2016, Plaintiff Long Excavating failed to make a timely monthly insurance premium payment, and Westfield sent a Notice of Intent to Cancel Insurance. Id. ¶ 22. The Notice of Intent to Cancel Insurance notified Long Excavating that if the outstanding premium payment was not received by September 23, 2016, Long Excavating's coverage would be canceled effective September 23, 2016. Id. Two days prior, on September 21, 2016, Westfield received $1, 572.37 payment in returned premium from Arch as a result of Plaintiffs' sale of the 2013 John Deere skidder. Id. ¶ 23. On September 23, 2016, Westfield issued a Notice of Cancellation that canceled insurance coverage for Long Excavating, effective 12:01 AM on September 23, 2016. Id. ¶ 24.

         On Friday, September 30, 2016, Brock Cody called Bates and spoke with his insurance representative Germany, who instructed Brock Cody to immediately make payment to Westfield Bank in the amount of $1, 763.72. Id. ¶¶ 25, 26. She represented that the payment would satisfy all outstanding insurance premiums for Long Excavating and would pay all future remaining premiums for Long Excavating to maintain coverage with Arch Insurance through April 2017. Id. ¶ 27. Specifically, Germany represented to Brock Cody that payment of $1, 763.72 would allow his insurance coverage with Arch Insurance to be reinstated, as it had been in the past, and that the equipment with Long Excavating would be covered. Id. ¶ 28. Brock Cody made the payment on Friday, September 30, 2016, and the payment posted on Monday, October 3, 2016. Id. ¶ 30.

         On October 3 and 7, 2016, Brock Cody spoke with Germany who assured him that the coverage will be reinstated. ¶¶ 31-35. Long Excavating continued logging operations based on Germany's representations. ¶ 36. On October 14, 2016, unbeknownst to the Plaintiffs, Germany learned that Long Excavating's insurance coverage would not be reinstated and that Long Excavating had no insurance coverage. ¶ 37. Germany failed to communicate to Brock Cody or Charles Stewart Long, Jr., that the insurance coverage for Long Excavating was not reinstated, and that as a result, Long Excavating had no insurance coverage for its equipment. ¶ 38. Germany and Bates failed to procure replacement coverage for Long Excavating. ¶ 40.

         On October 20, 2016, while engaged in logging operations, Long Excavating's 2007 Hydro-Ax Model 2470 was totally destroyed by fire. Id. ¶ 41. Brock Cody immediately made a claim to Bates for the fire loss. Id. ΒΆ 42. Thereafter, Germany communicated to Charles Long, Jr., and Brock Cody that Long Excavating's insurance coverage was not reinstated, that no replacement coverage had ...


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