Frank v. Rockhill Insurance Company
Filing
50
ORDER denying 41 Plaintiff's Motion to Dismiss Defendant's Counterclaim. Plaintiff's Answer to the Counterclaim is due within FOURTEEN (14) DAYS of this Opinion and Order. Signed by Judge Sheri Polster Chappell on 10/30/2018. (LMF)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
HOWARD FRANK,
Plaintiff,
v.
Case No: 2:18-cv-162-FtM-99CM
ROCKHILL INSURANCE
COMPANY,
Defendant.
/
OPINION AND ORDER1
Before the Court is Plaintiff Howard Frank’s Motion to Dismiss Defendant’s
Counterclaim (Doc. 41) filed on July 17, 2018, which is more than four months after
Defendant filed its Counterclaim. Defendant Rockhill Insurance Co. filed a Response in
Opposition (Doc. 45) but did not object based on timeliness. While this Court does not
condone untimely filings, because Rockhill does not object and substantively responds to
the Motion to Dismiss, the matter will be decided on the merits. For the following reasons,
the Court denies Frank’s Motion.
BACKGROUND
This is an insurance coverage dispute. In January 2017, Plaintiff purchased a
homeowner’s insurance policy from Rockhill for his home located in Marco Island, Florida
1
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products they provide on their websites. Likewise, the Court has no agreements with any of these
third parties or their websites. The Court accepts no responsibility for the availability or
functionality of any hyperlink. Thus, the fact that a hyperlink ceases to work or directs the user to
some other site does not affect the opinion of the Court.
(the Policy). Eight months later, in September 2017, Hurricane Irma hit Southwest Florida
and damaged Frank’s home. The parties disagree as to the amount of damage the home
sustained. Frank claims that his property sustained $369,026.51 worth of damage but
Rockhill believes that the damage totals $39,522.23. Rockhill paid Frank $3,310.70 to
repair the damage, which was calculated by subtracting Frank’s deductible and the
recoverable depreciation specified in the Policy.
Frank then filed a one-count breach of contract case in state court asserting that
Rockhill breached the homeowner’s insurance policy when it failed to pay for all the
damages the hurricane caused to his home, attaching a copy of the insurance policy.
(Doc. 2). Rockhill removed the case to this Court, answered, and filed a one-count
Counterclaim under the federal Declaratory Judgment Act, 28 U.S.C. § 2201, requesting
a declaratory judgment that no payments are due to Frank under the Policy. (Id., p. 11 ¶
1).
In its Counterclaim, Rockhill maintains that its calculation of Frank’s damages is
correct according to certain exclusions in the Policy and Frank failed to provide proof of
loss as to any other damages. Rockhill further claims Frank’s estimate of damages is
hyper-inflated and requires unnecessary replacement of items that have no damage.
Frank now moves to dismiss the Counterclaim, arguing that the Counterclaim fails
to state a claim upon which relief can be granted, in part because it is redundant of his
breach of contract claim.
STANDARD
A motion to dismiss a counterclaim under Rule 12(b)(6) “is evaluated in the same
manner as a motion to dismiss a complaint.” Whitney Info. Network, Inc. v. Gagnon, 353
F. Supp. 2d 1208, 1210 (M.D. Fla. 2005) (citation omitted). A pleading must contain “a
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short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.
R. Civ. P. 8(a)(2). Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for
dismissal when a plaintiff fails “to state a claim upon which relief can be granted.” When
considering a motion to dismiss under Rule 12(b)(6), the reviewing court must accept all
factual allegations in the counterclaim as true and view them in a light most favorable to
the plaintiff. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This preferential standard
of review, however, does not permit all pleadings adorned with facts to survive the next
stage of litigation. The Supreme Court has been clear on this point—a district court
should dismiss a claim where a party fails to plead facts that make the claim facially
plausible. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially
plausible when the court can draw a reasonable inference, based on the facts pled, that
the opposing party is liable for the alleged misconduct. See Iqbal, 556 U.S. at 678. Thus,
“the-defendant-unlawfully harmed me accusation” is insufficient. Id. at 677.
DISCUSSION
Plaintiff moves to dismiss Rockhill’s Counterclaim on two grounds. First, Plaintiff
argues that declaratory relief is not appropriate in this case because there is no actual
controversy regarding coverage because the Policy is unambiguous. Second, Frank
argues that Defendant has an adequate remedy at law for breach of contract which
already addresses the issues raised in the Counterclaim, making the Counterclaim
redundant and unnecessary. The Court will address each argument in turn.
The Declaratory Judgment Act grants federal courts the discretion to “declare the
rights and other legal relations of any interested party seeking such declaration.” 28
U.S.C. § 2201(a). Under the Declaratory Judgment Act this Court has discretion to rule
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on an actual controversy but is “under no compulsion to exercise ... jurisdiction.” Brillhart
v. Excess Ins. Co., 316 U.S. 491, 494 (1942). The Court has “unique and substantial
discretion in deciding whether to declare the rights of litigants,” as the Act “confers a
discretion on the courts rather than an absolute right on the litigants.” Wilton v. Seven
Falls Co., 515 U.S. 277, 286-87 (1995).
Here, Rockhill brings a Counterclaim under the federal Declaratory Judgment Act.
(Doc. 3, p. 11, ¶ 1.) Thus, federal case law interpreting the federal Declaratory Judgment,
28 U.S.C. § 2201 et seq. governs and Florida law regarding the Florida Declaratory
Judgment Act is not applicable. Erie R.R. v. Tompkins, 304 U.S. 64 (1938); Hartford
Accident & Indem. Co. v. Beaver, 466 F.3d 1289, 1291 (11th Cir. 2006). Therefore, both
parties’ reliance on Florida case law in this regard and those courts’ interpretation of the
Florida Declaratory Judgment Act (Doc. 41; Doc. 45) is misplaced.
“An essential element for a declaratory judgment action is the existence of an
‘actual controversy’ between the parties, a term which holds the same meaning as the
cases and controversies requirement of Article III to the United States Constitution.” Blitz
Telecom Consulting, LLC v. Peerless Network, Inc., 151 F. Supp. 3d 1294, 1302 (M.D.
Fla. 2015) (citing Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 239-40
(1937)).
A court therefore must consider “whether the facts alleged, under all the
circumstances, show that there is a substantial controversy, between parties having
adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a
declaratory judgment.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)
(quoting Md. Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941)). “Ordinarily,
a controversy is not sufficiently immediate or real where the parties’ dispute is only
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hypothetical and not yet ripe, has been rendered moot, or where the court’s resolution of
the matter would be purely academic.” Blitz, 151 F. Supp. 3d at 1302 (citation omitted).
However, a claim for declaratory judgment should be permitted “to proceed where
declaratory relief would (1) serve a useful purpose in clarifying and settling the legal
relations in issue, and (2) terminate and afford relief from the uncertainty, insecurity, and
controversy giving rise to the proceeding.” Traturyk v. Western-Southern Life Assurance
Co., 6:15-cv-1347-Orl-40TBS, 2016 WL 727546, *3 (M.D. Fla. Feb. 24, 2016) (internal
citations omitted).
A. Actual Controversy
As explained above, under the federal Declaratory Judgment Act, there must be
an “actual controversy” between the parties that is substantial, immediate, and not
hypothetical. Frank contends that declaratory relief is not appropriate in this insurance
contract dispute because the insurance policy is clear and unambiguous.
Rockhill
responds that declaratory judgement is warranted and asserts that actual controversy
exists in this case as to the determination of the rights, duties, and obligations of all parties
under the Policy.
Here, Rockhill has established that its claim for declaratory relief against Frank
constitutes an actual controversy appropriate for judicial resolution. Specifically, Rockhill
pleads the existence of a legal relationship between the parties as well as an ongoing live
controversy with respect to contractual obligations under the Policy.
Indeed, Frank
initiated this lawsuit to allege that Rockhill had breached the Policy by denying his claim
for insurance proceeds and to demand payment under the Policy. Regarding Plaintiff’s
argument that the Policy’s terms are unambiguous, a court may issue a declaratory
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judgment based on a factual dispute, irrespective of whether the parties agree on the
meaning of a policy term.2 See Daytona Beach Riverhouse, Inc. v. Chubb Custom Ins.
Co., No. 6:13-cv-1461-Orl-22GJK, 2014 WL 12611320, *3 (M.D. Fla. Mar. 20, 2014).
Thus, the Court finds Rockhill has properly alleged an actual controversy.
B. Redundancy
Frank next argues that Rockhill’s Counterclaim for declaratory judgement will be
resolved by Frank’s claim for breach of contract, thus rendering the Counterclaim
unnecessary and subject to dismissal. In response, Rockhill contends its Counterclaim
adds value because its affirmative defenses would not determine whether their proposed
interpretation of the Policy is correct, which it seeks a declaration of in its Counterclaim.
District Courts within the Eleventh Circuit have ruled both ways on the issue of
whether to dismiss a declaratory judgment claim when other claims before the court may
provide complete relief and resolution of all disputed issues in the case. “Because the
decision to entertain a declaratory claim is discretionary, some courts dismiss claims for
declaratory relief where the plaintiff also alleges a sufficient and related breach of contract
claim. Other courts allow claims for declaratory relief to travel with a claim for breach of
contract.” Kenneth F. Hackett & Assocs., Inc. v. GE Capital Info. Tech. Sol., Inc., 744 F.
Supp. 2d 1305, 1310 (S.D. Fla. 2010) (comparing cases; internal citations omitted). See
also MedImmune, Inc., 549 U.S. at 136 (internal citation omitted) (“The Declaratory
Judgment Act provides that a court may declare the rights and other legal relations of any
interested party, not that it must do so.”). Moreover, every declaratory judgment action
In support, Plaintiff cites cases construing Florida’s Declaratory Judgment Act, which have
concluded that declaratory relief is unavailable to settle questions concerning a clear and
unambiguous contract. But as explained above, this Court applies federal law, not state law in
examining whether Rockhill has stated a declaratory judgment claim.
2
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must ultimately serve a useful purpose. See Allstate Ins. Co. v. Emp’rs Liab. Assur. Corp.,
445 F.2d 1278, 1280 (5th Cir. 1971) (citation omitted) (“The declaratory judgment remedy
is an all-purpose remedy designed to permit an adjudication whenever the court has
jurisdiction, there is an actual case or controversy and an adjudication would serve a
useful purpose.”).3 When a counterclaim for declaratory relief brings into question issues
that have already been presented by a plaintiff’s complaint and the defendant’s answer,
some courts will dismiss the counterclaim as being duplicative or redundant. See 6
Charles Alan Wright, et al., Federal Practice and Procedure § 1406 (3d ed.) (citations
omitted).
In its Answer, Rockhill asserts fifteen affirmative defenses, six of which (Aff. Def.
1, 3, 10, 11, 14, 15) are restated verbatim in Rockhill’s Counterclaim. Even so, it is not
clear that Rockhill’s Counterclaim for declaratory judgment is completely duplicative of its
affirmative defenses. As Rockhill argues, success on its affirmative defenses will merely
relieve it of liability from Frank’s breach of contract claim. Its Counterclaim, however,
asks for an affirmative declaration that its interpretation of the Policy is correct. (Doc. 45,
pp. 5-6.) Even if Rockhill prevails against Frank on his breach of contract claim, it will not
necessarily obtain such a positive declaration. See, e.g., Medmarc Cas. Ins. Co., 783 F.
Supp. 2d 1214, 1217 (S.D. Fla. 2011) (declining to dismiss counterclaim for declaratory
judgment in insurance action as redundant; quoting and adopting the rationale of
Procentury Ins. Co. v. Harbor House Club Condo. Ass’n, Inc., 652 F. Supp. 2d 552, 55657 (D. N.J. 2009)) (“In instances where the declaratory relief is based on contract
3
In Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh
Circuit adopted as precedent decisions of the former Fifth Circuit rendered prior to October 1,
1981.
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interpretation, courts are reluctant to dismiss a counterclaim for declaratory relief as
redundant even when it is a near ‘mirror image’ of the complaint because a ‘ruling adverse
to the plaintiff on plaintiff’s claim would merely result in a judgment that plaintiff was not
entitled to the relief requested; although it might logically flow from that judgment that
defendant’s interpretation of the contract was the correct one, defendants would not be
entitled to a judgment to that effect unless [they] specifically requested one.”). Moreover,
if the breach of contract claim and Defendant’s affirmative defenses are truly redundant,
then Frank will suffer no prejudice in allowing the Counterclaim to proceed alongside
Frank’s breach of contract claim. See Regions Bank v. Commonwealth Land Title Ins.
Co., No. 11-23257-CIV, 2012 WL 5410609, at *5 (S.D. Fla. Nov. 6, 2012) (“If, as plaintiff
argues, the counterclaims are truly repetitious, then plaintiff will not have to expend much
time on any additional discovery or briefing.”).
Thus, at this early stage of the case, it cannot be said that Rockhill’s Counterclaim
serves “no useful purpose.” See 6 Wright, et al., supra, § 1406 (“Thus, the safer course
for the court to follow is to deny a request to dismiss a counterclaim for declaratory relief
unless there is no doubt that it will be rendered moot by the adjudication of the main
action.”). Even if the Counterclaim were wholly redundant, this Court may exercise its
discretion by not dismissing the Counterclaim because “motions to dismiss made under
Rule 12(b)(6) only test the validity of the claim, not its redundancy; a redundant claim
should not be dismissed as long as it is valid.” Wichael v. Wal-Mart Stores, E., LP, No.
6:14-cv-579-Orl-40DAB, 2014 WL 5502442, *2 (M.D. Fla. Oct. 30, 2014). As a result,
Rockhill’s Counterclaim will not be dismissed as redundant.
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Accordingly, it is now
ORDERED:
Plaintiff’s Motion to Dismiss Defendant’s Counterclaim (Doc. 41) is DENIED.
Plaintiff’s Answer to the Counterclaim is due within FOURTEEN (14) DAYS of this
Opinion and Order.
DONE and ORDERED in Fort Myers, Florida this 30th day of October, 2018.
Copies: All Parties of Record
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