United States District Court, N.D. Alabama, Southern Division
CINCINNATI INSURANCE COMPANY, Plaintiff/Counterclaim Defendant,
ATLAS HEALTHCARE, LLC; Defendant/Counterclaimant.
MEMORANDUM OPINION and ORDER DENYING MOTION FOR
PARTIAL JUDGMENT ON THE PLEADINGS
MICHAEL PUTNAM U.S. MAGISTRATE JUDGE
Pending before the court is defendant Atlas Healthcare,
LLC's (“Atlas”) motion for partial judgment
on the pleadings, filed pursuant to Federal Rule of Civil
Procedure 12(c). (Doc. 26). The motion has been fully
briefed, and, pursuant to defendant's request for oral
argument, the motion was heard on December 7, 2018.
parties have consented to the jurisdiction of the undersigned
Magistrate Judge pursuant to 28 U.S.C. § 636(c).
defendant seeks judgment on the pleadings based on the
following: (1) that the plaintiff has not sufficiently
pleaded a claim of fraud in Count One of the Complaint; (2)
that the plaintiff cannot show the requisite intent to
deceive to support the fraud claim; and (3) that the
plaintiff has not alleged material misrepresentations of
fact. The plaintiff, Cincinnati Insurance Company
(“Cincinnati”), counters that the claim relating
to the alleged fraud is pleaded with particularity as
required by Federal Rule of Civil Procedure 9(b) and is not
subject to dismissal under Rule 12.
12(c) provides that a party may move for a judgment on the
pleadings “[a]fter the pleadings are closed-but early
enough not to delay trial.” Entry of a
“[j]udgment on the pleadings is appropriate when there
are no material facts in dispute, and judgment may be
rendered by considering the substance of the pleadings and
any judicially noticed facts.” Hawthorne v. Mac
Adjustment, Inc., 140 F.3d 1367, 1370 (11th Cir. 1998).
Similar to a Rule 12(b)(6) motion to dismiss, the court must
“accept all facts in the complaint as true and view
them in the light most favorable to the nonmoving
party.” Cannon v. City of West Palm Beach, 250
F.3d 1299, 1301 (11th Cir. 2001).
action arises from a business insurance policy issued by
Cincinnati to Atlas. Atlas is a company that procures
contracts with healthcare professionals who can then be
deployed to medical facilities that require additional staff.
The policy included coverage for "Business Income (and
Extra Expense)." On July 18, 2016, the building where
Atlas was a tenant was damaged by water, and Atlas filed a
claim that included a claim for lost business income of more
than a million dollars, asserting that the damage to their
office caused Atlas to lose opportunities to recruit, hire,
and deploy medical professionals to medical
facilities. As authorized by the policy, Cincinnati
took sworn examinations under oath from two principals of
Atlas concerning the claim for loss of business income.
Cincinnati refused to pay the claim for the alleged loss of
business income and commenced this action, seeking a
declaratory judgment. Cincinnati asserts that Atlas
intentionally concealed or misrepresented material facts
relating to the business income claim (Count One), and that
Cincinnati is entitled to a declaratory judgment that it is
not liable for the lost income claim of approximately $1.7
million set forth by Atlas (Count Two). The instant motion
seeks dismissal of Count One only.
One of the complaint asserts that Atlas, "the insured,
in violation of the express provisions of the policy,
intentionally concealed or misrepresented material facts or
circumstances to the company... during the investigation of
this loss." (Doc. 1, &21). The complaint refers to a
proof of loss document filed with Cincinnati by Atlas on
December 5, 2016, which listed the amount of lost business
income as "Unknown At This Time," and further
asserts that the claim was ultimately submitted for $1, 780,
815.00, which the plaintiff asserts was a misrepresentation
of the loss, and that the claim specifically misrepresented
an alleged lost relationship with a Nebraska facility, and
misrepresented the application status of the subjects of the
claim. (Doc. 1, && 22-23). In addition, the
complaint's factual allegations name nine individuals
concerning whom the insured sought lost income, and refers to
eight other unnamed medical professionals about whom the loss
Heightened Pleading Standard of Rule 9(b)
Federal Rule of Civil Procedure 9(b), a claim of fraud must
"state with particularity the circumstances constituting
fraud." Fed.R.Civ.P. 9(b). Under Eleventh Circuit law,
the particularity required generally must include the time,
place, and person responsible for the misrepresentations, and
must refer to any documents or statements that are alleged to
be fraudulent. "In other words, the plaintiff must
allege the who, what, where, when, and how of each element,
except scienter, which can be pleaded generally."
U.S. v. Pub. Warehousing Co. K.S.C., No.
1:05-CV-2968-TWT, 2017 WL 1021745, at *3 (N.D.Ga. Mar. 16,
2017) (citing Corsello v. Lincare, Inc., 428 F.3d
1008, 1014 (11th Cir. 2005)).
case, the complaint contains sufficient factual allegations
to effectively plead fraud under Alabama law and under
Federal Rule of Civil Procedure 9(b). The complaint specifies
when Atlas made the representations about the loss of
business, and it names the particular healthcare providers
from whom Atlas represented it lost business opportunities.
The complaint alleges that Atlas represented to Cincinnati
that certain specifically-identified contracts with
healthcare providers were lost due to Atlas's inability
to communicate with the providers due to the water damage it
suffered. The allegations of the complaint are
sufficient to apprise Atlas what representations Cincinnati
contends were fraudulent, and to provide details of the
"who, what, when and where" of the
misrepresentations. The complaint also alleges that the
alleged misrepresentations were made intentionally, and,
under Rule 9, it is not necessary to allege circumstantial
facts of that state of mind. Accordingly, the motion to
dismiss on the basis that the claim is insufficiently pleaded
is due to be denied.
Intent to Deceive
Alabama law, a claim of fraudulent misrepresentation
sufficient to void an insurance policy must be premised upon
an "actual intent to deceive." Ala. Code'
27-14-28. See, e.g., Bankers Life & Cas. Co.
v. Long, 266 So.2d 780 (Ala. Civ. App.
1972). An insurance policy may be declared void,
however, if an insured intentionally makes misrepresentations
during the post-loss investigation of a claim. See,
e.g., Baker v. Travelers Ins. Co., 207
F.Supp.3d 1246, 1254 (N.D. Ala. 2016). As set forth above,
the scienter may be pleaded generally-that is, it is not
necessary to allege objective circumstantial facts from which
an inference of deceit can be drawn.
complaint alleges that the insured, "in violation of the
express provisions of the policy, intentionally concealed or
misrepresented material facts" relating to the amount of
the loss. While the insurer may find the burden of proving
such intent to deceive to be a high hurdle at trial or even
at summary judgment, the burden at the pleading stage is
merely to allege that the insured had the requisite
intent. The complaint sufficiently alleges the
intent to deceive; accordingly, the motion to dismiss on that
ground is due to be denied.
Materiality of Alleged ...