United States District Court, N.D. Alabama, Northwestern Division
MEMORANDUM OPINION
Plaintiff,
the Franklin County Commission (“the
Commission”), asserts claims for breach of contract and
fraudulent suppression against defendant Lafayette Insurance
Company (“Lafayette”), arising from
Lafayette's failure to pay a claim under a policy
covering employee theft.[1] The case is before the court on
Lafayette's motion to dismiss those claims pursuant to
Federal Rule of Civil Procedure 12(b)(6), for failure to
state a claim upon which relief can be granted.[2] Upon
consideration of the complaint, Lafayette's motion,
plaintiffs' response, [3] Lafayette's reply, [4] plaintiff's
sur-reply, [5] and oral arguments of counsel, the court
concludes that the motion should be granted.
I.
STANDARD OF REVIEW
Federal
Rule of Civil Procedure 12(b) permits a party to move to
dismiss a complaint for, among other reasons, “failure
to state a claim upon which relief can be granted.”
Fed.R.Civ.P. 12(b)(6). This rule must be read together with
Rule 8(a), which requires that a pleading contain only a
“short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed.R.Civ.P.
8(a)(2). While that pleading standard does not require
“detailed factual allegations, ” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 550 (2007), it
does demand “more than an unadorned,
the-defendant-unlawfully-harmed-me accusation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citations omitted). As the Supreme Court stated in
Iqbal:
A pleading that offers “labels and conclusions”
or “a formulaic recitation of the elements of a cause
of action will not do.” [Twombly, 550 U.S., at
555]. Nor does a complaint suffice if it tenders “naked
assertion[s]” devoid of “further factual
enhancement.” Id., at 557.
To survive a motion to dismiss founded upon Federal Rule of
Civil Procedure 12(b)(6), [for failure to state a claim upon
which relief can be granted], a complaint must contain
sufficient factual matter, accepted as true, to “state
a claim for relief that is plausible on its face.”
Id., at 570. A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged. Id., at 556. The
plausibility standard is not akin to a “probability
requirement, ” but it asks for more than a sheer
possibility that a defendant has acted unlawfully.
Ibid. Where a complaint pleads facts that are
“merely consistent with” a defendant's
liability, it “stops short of the line between
possibility and plausibility of ‘entitlement to
relief.'” Id., at 557 (brackets omitted).
Two working principles underlie our decision in
Twombly. First, the tenet that a court must
accept as true all of the allegations contained in a
complaint is inapplicable to legal conclusions.
Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.
Id., at 555 (Although for the purposes of a motion
to dismiss we must take all of the factual allegations in the
complaint as true, we “are not bound to accept as true
a legal conclusion couched as a factual allegation”
(internal quotation marks omitted)). Rule 8 marks a notable
and generous departure from the hyper-technical,
code-pleading regime of a prior era, but it does not unlock
the doors of discovery for a plaintiff armed with nothing
more than conclusions. Second, only a complaint that
states a plausible claim for relief survives a motion to
dismiss. Id., at 556. Determining whether a
complaint states a plausible claim for relief will, as the
Court of Appeals observed, be a context-specific task that
requires the reviewing court to draw on its judicial
experience and common sense. 490 F.3d, at 157-158. But where
the well-pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, the complaint has
alleged - but it has not “show[n]” - “that
the pleader is entitled to relief.” Fed. Rule Civ.
Proc. 8(a)(2).
In keeping with these principles a court considering a motion
to dismiss can choose to begin by identifying pleadings that,
because they are no more than conclusions, are not entitled
to the assumption of truth. While legal conclusions
can provide the framework of a complaint, they must be
supported by factual allegations. When there are
well-pleaded factual allegations, a court should
assume their veracity and then determine whether they
plausibly give rise to an entitlement to relief.
Iqbal, 556 U.S. at 678-79 (emphasis supplied, second
and fourth alterations in original, other alterations
supplied).
II.
ALLEGATIONS OF PLAINTIFF'S COMPLAINT AND RELEVANT POLICY
LANGUAGE
Lafayette
issued policy number 60346212 (“the policy”) to
the Commission, covering employee theft during the policy
period from April 1, 2014, to the same date in calendar year
2015.[6] The policy states that:
Coverage is provided under the following Insuring Agreements
for which a Limit of Insurance is shown in the Declarations
and applies to loss that you sustain resulting directly from
an “occurrence” taking place during the Policy
Period shown in the Declarations, . . . which is
“discovered” by you during the Policy Period
shown in the Declarations or during the period of time
provided in the Extended Period To Discover Loss Condition .
. .:
1.
Employee Theft
We will
pay for loss of or damage to “money, ”
“securities” and “other property”
resulting directly from “theft” committed by an
“employee, ” whether identified or not, acting
alone or in collusion with other persons.
For the
purposes of ths Insuring Agreement, “theft” shall
also include forgery.
Doc.
no. 1-5 (Policy), at ECF 5, § A(1) (boldface emphasis in
original, ellipses supplied).[7] The policy defines the term
“occurrence” as meaning:
(1) An individual act;
(2) The combined total of all separate acts whether or not
related; or
(3) A series of acts whether or not related; committed by an
“employee” acting alone or in collusion with
other persons, during the Policy Period shown in the
Declarations . . . .
Id. at ECF 19, § F(14)(a) (ellipsis supplied).
The terms “discover” and “discovered”
...