Sabbah et al v. Nationwide Mutual Insurance Company et al

Filing 72

MEMORANDUM OPINION AND ORDER DENYING 61 Defendants' Renewed Motion to Dismiss Counts Twelve, Thirteen, Fourteen, and Fifteen of Second Amended Complaint and Supporting Memorandum of Law. Signed by Judge Virginia Emerson Hopkins on 1/25/2018. (JLC)

FILED
2018 Jan-25 AM 09:52
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
IBRAHIM SABBAH, and SABBAH
BROTHERS ENTERPRISES, INC,
doing business as 14th Street BP,
Plaintiffs,
v.
NATIONWIDE MUTUAL
INSURANCE COMPANY and
NATIONWIDE MUTUAL FIRE
INSURANCE COMPANY,
Defendants.

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) Case No.: 2:15-CV-1772-VEH
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MEMORANDUM OPINION AND ORDER
On May 11, 2017, at the end of an extensive Memorandum Opinion and Order
directed towards the then pending Motion To Dismiss (doc. 50), this Court wrote:
1.

The motion to
claims against
(“NMFIC”) and
(Counts Twelve
judgment against

dismiss is DENIED as to the breach of contract
[Nationwide Mutual Fire Insurance Company
Nationwide Mutual Insurance Company (“NMIC”)]
and Thirteen), and the claims for declaratory
NMFIC and NMIC (Counts Fourteen and Fifteen).

2.

As to all other counts in the Second Amended Complaint (Counts
One through Eleven), the motion is hereby GRANTED. Counts One
through Eleven in the Second Amended Complaint are hereby
DISMISSED with prejudice.

3.

No later than May 31, 2017, the Defendants may file a new motion
to dismiss which addresse[s] ONLY: 1) whether the statute of
limitations has run as to the breach of contract claims; and 2)

whether a decision that the statute of limitations has run as to the
breach of contract claims moots the claims for declaratory relief.
. . ..
(Doc. 60 at 49-50) (emphasis in original). The Defendants’ new Motion To Dismiss is
now before the Court. (Doc. 61).
“A contract of insurance, like other contacts, is governed by the general rules of
contracts.” Twin City Fire Ins. Co. v. Alfa Mut. Ins. Co., 817 So. 2d 687, 691 (Ala.
2001). The statute of limitations for a breach of contract claim is six years.

ALA . CODE

§6-2-34(9). The Plaintiffs argue that the Defendants breached their contract of insurance
with the Plaintiff on December 20, 2013, when “the corporate veil was pierced and SBE
and Sabbah were found to be legally obligated to pay damages.”

(Doc. 62 at 8).

However, the Defendants argue that, if they breached their contract with the Plaintiffs at
all, the breach occurred when the Defendants sent their initial disclaimers of coverage
to SBE and Sabbah on July 17, 2007, and to Sabbah on February 23, 2009. (Doc. 61 at
4).
In support of their renewed motion, the Defendants cite Hackleburg Church of
Christ v. Great Am. Ins. Companies, Inc., 675 So. 2d 1309 (Ala. Civ. App. 1995) for the
proposition that “Plaintiffs’ breach of contract claims accrued at the time of the
purported breach – the denial of coverage and refusal to pay policy benefits.” (Doc. 61
at 4).

The Hackleburg opinion does state that “‘[t]he statute of limitations on a contract

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action runs from the time a breach occurs rather than from the time actual damage is
sustained.’” Hackleburg, 675 So. 2d at 1311 (quoting AC, Inc. v. Bak er, 622 So.2d 331
(Ala.1993)). However, Hack leburg dealt with a property damage claim, made more than
seven years after damage to the property had occurred, under a policy which otherwise
covered the damage. It did not deal with the instant scenario where an insurer disclaims
indemnity coverage under a liability insurance policy well before a verdict is entered
against the purported insured. Although it is certainly a piece to the puzzle, Hackleburg
offers little help to this Court in determining whether a breach occurs at the time of the
insurer’s disclaimer, or at the time it refuses to pay an ultimate judgment against the
purported insured.1
Furthermore, the Court notes that the Defendants, in an attempt to buttress their
citation of the rule of law from Hackleburg, quote, without discussion, the following
language from Seybold v. Magnolia Land Co., 376 so. 2d 1083, 1085 (Ala. 1979): “The
statute of limitations begins to run when a cause of action on the contract accrues, which
is to say, when the contract is breached.” (Doc. 61 at 5). Importantly, the next line of
that opinion notes:
1

In a footnote, the Defendants state that their “conclusion is consistent with the decisions
of other courts,” and then cite cases decided under the laws of other states. (See doc. 61 at 5, n.
3). The Court cannot say, based merely on the Defendants’ short discussion of Hackleburg, that
these cases are, or are not, persuasive. Considering that this is the Defendants’ second shot at this
argument, the Court is disinclined to do their research for them.

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“Breach” consists of the failure without legal excuse to perform any
promise forming the whole or part of the contract. 17 Am.Jur.2d Contracts
s 441 at 897. Where the defendant has agreed under the contract to do a
particular thing, there is a breach and the right of action is complete upon
his failure to do the particular thing he agreed to do. 17 Am.Jur.2d, supra.
Seybold, 376 So. 2d at 1085. This additional language suggests that the breach in the
instant case did not occur until after the refusal to pay the underlying judgments.
Certainly, the Defendants’ argument seems logical in light of the Court’s findings as to
the Counts which have been dismissed on the basis of the running of the statute of
limitations.

However, at this time, and based on the arguments made in both the

Defendants’ motion (doc. 61) and their reply brief (doc. 63), which this Court also
considered, the Court cannot say that the breach of contract claims fail to state a claim
upon which relief may be granted. This finding moots the remainder of the Defendants’
motion (regarding the claims for declaratory judgment_. (See doc. 61 at 6-9).
The Renewed Motion To Dismiss is DENIED.
DONE and ORDERED this 25th day of January, 2018.

VIRGINIA EMERSON HOPKINS
United States District Judge

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