United States District Court, M.D. Alabama, Northern Division
MEMORANDUM OPINION AND ORDER
STEPHEN M. DOYLE UNITED STATES MAGISTRATE JUDGE.
the Court is Defendant Westfield Bank's
(“Westfield”) Motion to Dismiss (Doc. 71)
Plaintiffs' Third Amended Complaint (Doc. 65) as to
Plaintiffs Brock Cody's (“Cody”) and Charles
Stewart Long's (“Long”) individual claims
against Westfield. Westfield argues that Cody and Long, as
owners of Long Excavating & Recycling
(“LER”), are not parties to a Premium Finance
Agreement (“the Agreement”) between Westfield and
LER and, therefore, lack standing to bring any claims under
the Agreement. For the reasons explained more fully below,
Westfield's Motion is granted.
21, 2017, Plaintiffs initiated this action by filing a
three-count Complaint in state court against Defendants,
Bates Hewett & Floyd Insurance Agency
(“Bates”) and its agent employee, Dee Dee
Germany. (Doc. 1-9). One week later, Defendants removed the
case to this Court pursuant to 28 U.S.C. §§ 1332,
1441, and 1446, on the basis of diversity jurisdiction. (Doc.
1). After Defendants answered the Complaint (Doc. 27), the
parties jointly moved to amend their pleadings to add
Westfield as a party defendant, which this Court granted.
(Docs. 28, 29). Thereafter, Plaintiffs filed a Second Amended
Complaint. (Doc. 52). Defendants filed a Motion to Dismiss
(Doc. 54) Plaintiffs' Second Amended Complaint, which the
Court granted in part and denied in part (Doc. 64). In its
Order, the Court granted Plaintiff leave to file a third
amended complaint “to allege additional facts relating
to the standing and claims of the individual
Plaintiffs” as “potential third-party
beneficiaries of the Premium Finance Agreement.”
Id. at 7. Plaintiffs subsequently filed their Third
Amended Complaint (Doc. 65) and Westfield filed a Motion to
Dismiss (Doc. 71) Plaintiffs' Third Amended Complaint
arguing that Plaintiffs failed to allege sufficient facts to
show Cody and Long had standing to bring individual claims
under the Agreement against Westfield. Id. at 2.
their Third Amended Complaint, Plaintiffs allege that Cody
and Long are the owners and sole members of LER, which is a
logging business. (Doc. 65) at 2. LER contracted to perform
logging work in Bullock County, Alabama. Id. As part
of the terms of the logging contract, LER was required to
procure and maintain insurance coverage for its equipment and
logging activities. Id. Cody and Long obtained
insurance coverage on behalf of LER through Bates.
Id. Bates brokered insurance coverage for LER with
Arch Insurance Company (“Arch”). Id.
Bates also obtained financing for LER under a Premium Finance
Agreement with Westfield that paid LER's entire annual
insurance premium to Arch. Id. In turn, Plaintiffs
were to make monthly premium payments to Westfield.
Id. Once insurance coverage was obtained for LER in
March 2016, Plaintiffs began making the periodic insurance
premium payment and engaged in logging work. Id. at
insurance policy obtained for LER included coverage for a
2007 Hydro-Ax Model 2470 (“the Hyrdo-Ax”).
Id. On March 8, 2016, Cody obtained a loan from
PeoplesSouth Bank in his individual capacity-not as an agent
of LER-to pay a portion of the purchase cost of the Hydro-Ax.
Id. That same day, Long executed a Promissory Note
in his individual capacity-not as an agent of LER-promising
to repay Cody for the total amount of the loan. Id.
September 8, 2016, LER failed to make a timely monthly
insurance premium payment to Westfield, and Westfield sent a
Notice of Intent to Cancel Insurance to Bates. Id.
at 4. On September 23, 2016, Westfield issued a Notice of
Cancellation that canceled insurance coverage for LER,
effective 12:01 a.m. on September 23, 2016. Id.
After speaking with Bates' agent, Dee Dee Germany, who
assured him coverage would be reinstated if payment was made,
Cody made the required monthly insurance premium payment,
which posted on October 3, 2016. Id. at 4-5.
Unbeknownst to Plaintiffs, LER's insurance coverage was
not reinstated. Id. at 5. On October 20, 2016, while
engaged in logging operations, LER's Hydro-Ax was
destroyed by fire. Id. at 6. Cody immediately made a
claim to Bates for the fire loss. Id. Thereafter,
Plaintiffs learned that LER's insurance coverage was not
reinstated, that no replacement coverage had been procured,
and that there was no coverage for the October 20, 2016 loss.
Id. at 5-6.
STANDARD OF REVIEW
III of the Constitution limits the jurisdiction of the
federal courts to the consideration of ‘Cases' and
‘Controversies.'” Stalley ex rel. U.S. v.
Orlando Reg'l Healthcare Sys., Inc, 524 F.3d 1229,
1232 (11th Cir. 2008) (quoting U.S. Const. Art. III §
2). “The ‘triad of injury in fact, causation, and
redressability constitutes the core of Article III's
case-or-controversy requirement, and the party invoking
federal jurisdiction bears the burden of establishing its
existence.'” Stalley, 524 F.3d at 1232
(quoting Parker v. Scrap Metal Processors, Inc., 386
F.3d 993, 1003 (11th Cir. 2004)). “[T]he Supreme Court
has declared that the standing inquiry ‘is an essential
and unchanging part of the case-or-controversy requirement of
Article III.'” DiMaio v. Democratic Nat'l
Comm., 520 F.3d 1299, 1301 (11th Cir. 2008) (quoting
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992)). “Moreover, ‘[s]tanding is a threshold
jurisdictional question which must be addressed prior to and
independent of the merits of a party's
claims.'” Id. (quoting Bochese v. Town
of Ponce Inlet, 405 F.3d 964, 974 (11th Cir. 2005)). To
have standing, a plaintiff must allege an invasion of a
legally-protected interest which is fairly traceable to the
conduct of the defendant. Lujan, 504 U.S. at 560-61.
challenge Cody and Long's standing pursuant to Rule
12(b)(6). The 11th Circuit has held that a challenge to
third-party beneficiary status is a challenge to prudential
standing subject to Rule 12(b)(6) analysis. Newton v.
Duke Energy Fla., LLC, 895 F.3d 1270, 1274 (11th Cir.
2018) (citing Lexmark Int'l, Inc. v. Static Control
Components, Inc., 572 U.S. 118, 125 (2014)). To survive
a motion to dismiss under Rule 12(b)(6), a plaintiff need
only “state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007). While “detailed
factual allegations” are not required, mere
“labels and conclusions” or “formulaic
recitation of the elements of a cause of action” are
not enough. Iqbal, 556 U.S. at 678. “For the
purposes of a motion to dismiss[, ] we must take all of the
factual allegations in the complaint as true. . . .”
Id. (citing Twombly, 550 U.S. at 556).
for breach of contract arises under state law and federal
courts sitting in diversity apply the law of the forum state.
See Boardman Petroleum, Inc. v. Federated Mut. Ins.
Co., 135 F.3d 750, 752 (11th Cir. 1998). Under Alabama
law, “[t]o recover under a third-party beneficiary
theory [for breach of contract], the complainant must show:
1) that the contracting parties intended, at the time the
contract was created, to bestow a direct benefit upon a third
party; 2) that the complainant was the intended beneficiary
of the contract; and 3) that the contract was
breached.” Sheetz, Aiken & Aiken, Inc. v.
Spann, Hall, Ritchie, Inc., 512 So.2d 99, 101-02 (Ala.
1987). “It has long been the rule in Alabama that one
who seeks recovery as a third-party beneficiary of a contract
must establish that the contract was intended for his direct,
as opposed to incidental, benefit.” McGowan v.
Chrysler Corp., 631 So.2d 842, 848 (Ala. 1993). The
intention of the contracting parties, as disclosed by the
writing, if any, and the surrounding circumstances known to
the parties, determines the rights of the alleged third-party
beneficiary. Weninegar v. S.S. Steele & Co., 477
So.2d 949, 955 (Ala. 1985); Mut. Benefit Health &
Accident Ass'n of Omaha v. Bullard, 270 Ala. 558,
567, 120 So.2d 714, 723 (1960).
their Third Amended Complaint (Doc. 65), Plaintiffs allege
that Westfield breached the Agreement by improperly
cancelling their insurance coverage for nonpayment of
premiums. Id. at 7. Plaintiffs further aver that,
because of the insurance lapse, they suffered a complete
uninsured loss of the Hydro-Ax. Id. at 8. Brock and
Long claim standing to bring individual claims against
Westfield because they personally guaranteed financing for