Ironshore Indemnity, Inc. v. Banyon 1030-32, LLC et al
Filing
189
ORDER granting 62 Motion for Leave to File. Clerks Notice: Filer must separately re-file the amended pleading pursuant to Local Rule 15.1, unless otherwise ordered by the Judge; denying as moot 63 Motion to Dismiss; denying 70 Motion to Adopt; granting 95 Motion to Dismiss. Signed by Judge Marcia G. Cooke on 8/29/2013. (tm)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 12-61678-Civ-COOKE/TURNOFF
IRONSHORE INDEMNITY, INC., et al.,
Plaintiffs,
v.
BANYON 1030-32, LLC, et al.,
Defendants.
__________________________________/
OMNIBUS ORDER
THIS MATTER is before me on the Insurance Companies’1 Motion for Leave to Amend
their Complaint, ECF No. 62; the Insurance Companies’2 Motion to Dismiss Trustee’s Claims
“As the Exclusive Agent for” the Non-Debtor Banyon Entities,3 ECF No. 63; the Non-Debtor
Banyon Entities’ Motion to Adopt the Complaint filed by the Trustee as the Master Complaint,
ECF No 70; Harden and Associates’ Motion to Dismiss, ECF No. 95. I have reviewed the
arguments, the record, and the relevant legal authorities. For the reasons provided, the Insurance
Companies’ Motion for Leave to Amend their Complaint, ECF No. 62, and Harden and
Associates’ Motion to Dismiss, ECF No. 95, are granted; the Non-Debtor Banyon Entities’
Motion to Adopt the Complaint filed by the Trustee, ECF No. 70, is denied, and the Insurance
Companies’ Motion to Dismiss Trustee’s Claims, ECF No. 63, is denied as moot.
1
The Insurance Companies include RLI Insurance Company, Columbia Casualty Company,
Zurich American Casualty Company, Federal Insurance Company, St Paul Fire and Marine
Insurance Company, Westchester Fire Insurance Company, and Ironshore Indemnity Inc.
2
Federal Insurance Company did not join this Motion.
3
The Non-Debtor Banyon Entities are Banyon Funding LLC, Banyon Capital, LLC, Banyon
Investments, LLC, Banyon Resources, LLC, and Banyon USVI (DEL), LLC.
I. Background
These consolidated cases arise from the Banyon Entities’4 losses in connection with their
investments in the Scott Rothstein Ponzi scheme. The parties seek to resolve the simple issues of
whether the Insurance Companies’ crime insurance policies (the “Policies”) are void ab initio as
a result of alleged Banyon Entities’ misrepresentations and omissions made during the Policies’
underwriting process and, if these Policies are valid, whether they cover the Banyon Entities’
losses.
On March 22, 2010, Federal Insurance Company (“Federal”), Zurich American Insurance
Company (“Zurich”), St. Paul Fire and Marine Insurance Company (“St Paul”), Columbia
Casualty Company (“Columbia”), Westchester Fire Insurance Company (“Westchester”), and
RLI Insurance Company (“RLI”), filed an action in the Middle District of Florida against
Banyon 1030-32, LLC (“Banyon 1030-32”), Banyon Capital, LLC (“Banyon Capital”), Banyon
Funding, LLC (“Banyon Funding”), Banyon Income Fund, LP (“Banyon Income Fund”),
Banyon Investments, LLC (“Banyon Investments”), Banyon Resources, LLC (“Banyon
Resources”), and Banyon USVI, LLC (“Banyon USVI”) seeking to rescind the Policies issued to
the Banyon Entities, or to obtain a declaration of no coverage (the “Federal Rescission Action”)
because the Banyon Entities’ underwriting submissions allegedly contained material
misrepresentations or omissions. On June 23, 2010, Ironshore Indemnity Inc. (“Ironshore”) filed
a similar action, also in the Middle District of Florida, against Banyon 1030-32, Banyon Capital,
Banyon Funding, Banyon Income Fund, Banyon Investments, LLC (Nevada), Banyon
Investments, LLC (Delaware), Banyon Resources, and Banyon USVI (the “Ironshore Rescission
Action”).
4
The Banyon Entities are the Non-Debtor Banyon Entities as well as the Debtor Banyon
Entities, i.e. Banyon 1030-32, LLC, and Banyon Income Fund, LP.
2
During the pendency of those lawsuits, creditors filed an involuntary bankruptcy petition
against Banyon 1030-32 in the Bankruptcy Court for the Southern District of Florida (case No.
10-33691-RBR). The Bankruptcy Court entered an order for relief on November 29, 2011.
Similarly, an involuntary bankruptcy petition was filed against Banyon Income Fund in the
Southern District of Florida Bankruptcy Court (case No. 11-40929-RBR). The Bankruptcy
Court entered an order for relief in the Banyon Income Fund case on January 31, 2012. Robert
C. Furr (the “Banyon Trustee”) was appointed as the Chapter 7 Trustee of the bankruptcy estates
of Banyon 1030-32 and Banyon Income Fund (the “Debtor Banyon Entities”).
After his appointment, the Banyon Trustee entered into negotiations with the Insurance
Companies. Those negotiations resulted in a procedural agreement (“Term Sheet”). Under the
terms of the Term Sheet, the parties agreed that the Insurance Companies’ pending lawsuits
against the Banyon Entities – the Ironshore Rescission Action and the Federal Rescission Action
– and the Banyon Trustee’s action against the Insurance Companies seeking coverage under the
Policies (the “Trustee Action”) would be consolidated, and venue established in the Southern
District of Florida.
To accomplish that goal, the Term Sheet provided that the Banyon Trustee would file a
complaint commencing an adversary proceeding before the Bankruptcy Court in the Southern
District of Florida and ask to withdraw the standing reference of that adversary proceeding from
the Bankruptcy Court and that the case be assigned to the District Court. To bring the pending
Ironshore Rescission Action and Federal Rescission Action before the Southern District, the
parties to the Term Sheet agreed that the plaintiffs in those respective actions would ask the
Middle District to transfer venue to the Southern District.
The insurers subsequently moved to transfer venue of the Ironshore Rescission Action
3
and Federal Rescission Action to the Southern District. The motions were granted and the
actions were transferred to the Southern District. The Ironshore Rescission Action was assigned
to me as case No. 0:12-cv-61678-MGC. The Federal Rescission Action was assigned to the
Honorable William Zloch, case No. 0:12-cv-61753-WJZ.
On September 14, 2012, the Banyon Trustee filed his complaint and motion to withdraw
the reference in the bankruptcy court. Upon the filing of the motion, the adversary Trustee
Action was sent to District Court and was assigned to the Honorable Kathleen Williams, case
No. 12-mc-61813-KMW.
In October 2012, the parties moved inter alia to consolidate the three actions. I held a
hearing on November 7, 2012 on the pending motions.
During this hearing, the parties
represented that they would be able to cooperate and file a master complaint to realign the
parties. On January 17, 2013, I agreed to the transfer of the two cases not presently before me –
the Trustee’s Action and the Federal Rescission Action, consolidated those cases with the
Ironshore Rescission Action, and granted the pending motion to withdraw the reference of the
case that was commenced as an adversary proceeding before the Bankruptcy Court.
After the consolidation, however, the parties were unable to agree on how to realign their
interests in the now consolidated action. They filed a series of motions, several of which seeking
a resolution of their disagreement regarding the issue of realignment. Specifically, the Insurance
Companies moved for leave to Amend their Complaint, ECF No. 62, and moved to dismiss the
Banyon Trustee’s claims “as the exclusive agent for” the Non-Debtor Banyon Entities, ECF No.
63. The Non-Debtor Banyon Entities moved to adopt the Banyon Trustee’s Complaint as the
Master Complaint. ECF No. 70. Additionally, Harden and Associates (“Harden”), the broker
engaged to procure crime insurance for Banyon 1030-32, moved to dismiss the Complaint filed
4
by the Banyon Trustee against it. ECF No. 95. The parties being unable to amicably decide the
realignment issue,5 I held a hearing on those motions on June 19, 2013 and took these matters
under advisement. I have considered the written and oral arguments, and will address each
Motion in turn.
II. ANALYSIS
A. The Banyon Entities’ Motion to Adopt the Complaint Filed by the Trustee as Master
Complaint.
The Debtor Banyon Entities and Non-Debtor Banyon Entities moved for the entry of an
order (1) designating the Complaint filed in the Trustee Action as the Master Complaint and (2)
completely consolidating the Trustee Action with the two other cases, i.e. the Federal Rescission
Action and the Ironshore Rescission Action. Banyon Entities’ Mot. to Adopt. 1.
1. The Designation of the Complaint Filed in the Trustee’s Action as the Master
Complaint.
The Banyon Entities argue that the Trustee’s Complaint should be adopted as the Master
Complaint for, inter alia, the following reasons: (1) the primary purpose of the consolidated
litigation is to determine whether the Policies cover their losses in the Scott Rothstein Ponzi
scheme; (2) adopting the Trustee’s Complaint as the Master Complaint is consistent with the
parties’ burden of proof at trial; and (3) the Trustee Action already includes all relevant parties.
Banyon Entities’ Mot. to Adopt. 4-9; Banyon Entities’ Reply to Mot. to Adopt. 8-10. The
Banyon Entities essentially seek to realign the parties.
A district court has the discretion to realign the parties in a civil action. Con’l Ins. Co. v.
Roberts, 8:05CV1658T17MSS, 2008 WL 4960227 (M.D. Fla. Nov. 20, 2008) (citing City of
Indianapolis v. Chase National Bank, 314 U.S. 63, 62 (1941) (finding the court should “look
5
“Life is really simple, but we insist on making it complicated.” Confucius.
5
beyond the pleadings, and arrange the parties according to their sides in the dispute”)).
“Ordinarily, the trial court extends the privilege of opening and closing the case to the party that
has the burden of proof.” L-3 Commc’ns Corp. v. OSI Sys., Inc., 418 F. Supp. 2d 380, 383
(S.D.N.Y. 2005) (citing Dishman v. Am. Gen. Assurance Co., 193 F. Supp. 2d 1119, 1128 (N.D.
Iowa 2002); Anheuser-Busch, Inc. v. John Labatt, 89 F.3d 1339, 1344 (8th Cir. 1996); Martin v.
Chesebrough-Pond’s, Inc., 614 F.2d 498, 501 (5th Cir.1980)).
This party is typically the
plaintiff, even where the plaintiff seeks only or even primarily a declaratory judgment. Id.
(citing Rowan Cos., Inc. v. Ainsworth, 50 F. Supp. 2d 588, 590-91 (W.D. La. 1999) (“There is
sound reason for placing the procedural burden of proof on the declaratory plaintiff in most cases
despite his role as the real and traditional defendant . . . After all, it is the declaratory plaintiff
who volunteers to bring the case in this forum at this time.”)).
The Banyon Entities argue that the primary purpose of the consolidated litigation is to
determine whether the Policies cover their loss in the Scott Rothstein Ponzi scheme. Banyon
Entities’ Mot. to Adopt. 7; Banyon Entities’ Reply to Mot. to Adopt. 5. The issue of coverage,
however, will only be addressed once the validity of the Policies has been ascertained.
Therefore, the issue of rescission must be addressed first and the issue of coverage will only
become relevant if the Policies are valid and enforceable.
I also note that the Insurance
Companies filed the Federal Rescission Action and the Ironshore Rescission Action on March
22, 2010 and June 23, 2010 respectively. The Insurance Companies have actively prosecuted
these actions since that time. The Trustee, on the other hand, filed his Complaint on September
14, 2012, over two years later. There never was a race to the courthouse.
The Banyon Entities also contend that adopting the Trustee’s Complaint as the Master
Complaint is consistent with the parties’ burden of proof at trial. Banyon Entities’ Mot. to
6
Adopt. 8-10. The parties agree that the Insurance Companies bear the burden of proof in their
rescission and declaration of no coverage claims and that the Banyon Entities bear the burden of
proof on their breach of contract claims. Insurance Companies’ Resp. to Mot. to Adopt. 10-11;
Banyon Entities’ Reply to Mot. to Adopt. 9-10. The Banyon Entities argue that the Insurance
Companies should not be designated as Plaintiffs because they merely seek to adjudicate their
non-liability to the natural plaintiff. The Insurance Companies, on the other hand, contend that
the logical order of the evidence is to let the Insurance Companies present their evidence on their
rescission claims and, if these claims fail, then let the Banyon Entities present their evidence on
the breach of contract claims. Insurance Companies’ Resp. to Mot. to Adopt. 11. I agree with
the Insurance Companies. The Insurance Companies bear the burden of proof on their rescission
claims. These claims are not nominal and may resolve the breach of contract claims. See Cont’l
Ins. Co., 2008 WL 4960227, at *5 (M.D. Fla. Nov. 20, 2008) (denying a motion for realignment
after the insured movant unsuccessfully argued that the insurer’s claims of fraud, unjust
enrichment, and conspiracy were analogous to defenses and an attempt to avoid payment under
the insurance policy while her own counterclaims were an attempt to enforce the insurance
policy). Thus, realignment is not proper.
Finally, the Banyon Entities argue that the Trustee Action is the only action that already
includes all relevant parties. Banyon Entities’ Mot. to Adopt. 5. Specifically, the Banyon
Entities argue that the Federal Rescission Action does not include Ironshore, National Union Fire
Insurance Company of Pittsburgh, P.A. (“National Union”), or Harden and that the Ironshore
Rescission Action does not include Federal, RLI, Columbia, Zurich, Westchester, St Paul,
National Union, or Harden. See id. All the Insurance Companies in the Ironshore Rescission
Action and the Federal Rescission Action have moved to file an Amended Consolidated
7
Complaint, thus joining all their claims in a single pleading. Insurance Companies’ Mot. for
Leave to Amend 1-3. Accordingly, only National Union, who did not file a rescission action
against the Banyon Entities, and Harden, the insurance broker, are not parties to the Rescission
Actions. The Insurance Companies, however, indicated during the oral argument that they could
add National Union to their Complaint.6 Further, for the reasons stated below, the claims against
Harden are dismissed without prejudice.
In sum, none of the Banyon Entities’ arguments warrants a realignment designating the
Banyon Trustee.
2. The Complete Consolidation of the Three Actions.
The Banyon Entities also request a complete consolidation of the three actions. Banyon
Entities’ Mot. to Adopt. 6-9. The Banyon Entities contend that the three actions involve the
same parties, arise from the same sets of facts and involve the construction of a single primary
crime insurance policy. See id.
Federal Rule of Civil Procedure 42(a) allows a court to consolidate actions if these
actions involve a common question of law or fact. Fed. R. Civ. P. 42(a). Consolidation is a
procedural device designed to promote judicial economy but cannot effect a physical merger of
the actions or the defenses of the separate parties. See, e.g., Katz v. Realty Equities Corp. of New
York, 521 F.2d 1354, 1358 (2d Cir. 1975) (citing Johnson v. Manhattan Ry. Co., 289 U.S. 479,
496-97 (1933)); see also Mayfield v. Am. Auto. Ins. Co., CIV.A. 502CV256C, 2003 WL
21250935, at *1 (N.D. Tex. May 27, 2003) (“Consolidation does not ‘merge the suits into a
single action or change the rights of the parties or make those who are parties in one suit parties
in another’; rather . . . ‘the actions maintain their separate identities.’”) (citing Frazier v.
6
If National Union does not wish to adopt the Insurance Companies’ Amended Complaint, it
shall notify the Court within five days of this Order.
8
Garrison I.S.D., 980 F.2d 1514, 1532 (5th Cir.1993); In re: Propulsid Prods. Liab. Litigation,
208 F.R.D. 133, 141 (E.D.La. 2002)).
Accordingly, the mere consolidation of the three cases does not warrant a merger of the
three cases. In their Response to the Banyon Entities’ Motion to Adopt the Complaint Filed by
the Trustee as Master Complaint, the Insurance Companies argue that the claims asserted in the
Trustee’s Complaint should be deemed compulsory counterclaims to their Complaint. Insurance
Companies’ Resp. to Mot. to Adopt. 11-13. Relying on Federal Rule of Civil Procedure 13(a)
and the first-filed doctrine, the Insurance Companies seek dismissal of the Trustee’s Complaint.
See id. The Insurance Companies argue that the Trustee’s Complaint is duplicative with the
Banyon Entities’s compulsory counterclaims. See id.
I find that both the application of the first-filed doctrine and Rule 13(a) warrant dismissal
of the Trustee’ Complaint in this case.
The first-filed doctrine gives a district court discretion to dismiss a later-filed action,
where two actions involving overlapping issues and parties are pending in two federal courts.
Manuel v. Convergys Corp., 430 F.3d 1132, 1135-36 (11th Cir. 2005). If a party objects to the
jurisdiction in the first-filed forum, said party shall carry the burden of proving “compelling
circumstances” to warrant an exception to the first-filed rule. See id. In order to determine
whether compelling circumstances exist when declaratory action is filed first, “one equitable
consideration . . . is whether the . . . action was filed in apparent anticipation of the other pending
proceeding.” See id. (citing Ven-Fuel, Inc. v. Dep’t of the Treasury, 673 F.2d 1194, 1195 (11th
Cir.1982)). Even if a court finds that a filing is anticipatory, this consideration does not mandate
dismissal. See id. (citing Ven-Fuel, 673 F.2d at 1195). Such a finding still remains one equitable
9
factor among many that a district court can consider in determining whether to hear a declaratory
judgment action. See id.
The Rescissions Actions were filed in 2010, well before the Trustee’s Action, filed in
2012. The length of time between the filing of the two actions indicates that the Rescission
Actions were not filed in anticipation of litigation, nor were they the product of a race to the
courthouse. Although the parties have agreed in the Term Sheet to the Trustee filing his
Complaint, the first-filed doctrine favors the dismissal of an action that is duplicative of an
already filed action.
Further, courts have interpreted Rule 13(a) to permit dismissal of the second-filed action
when this second action should have been brought as a counterclaim in the first-filed action.
Kerr Corp. v. N. Am. Dental Wholesalers, Inc., SACV 11-0313 DOC CWX, 2011 WL 4965111,
at *3-4 (C.D. Cal. Oct. 18, 2011) (finding that a court may consolidate two actions and realign
the parties when a party failed to bring a compulsory counterclaim); Internet Law Library, Inc. v.
Southridge Capital Mgmt. LLC, 208 F.R.D. 59, 63 (S.D.N.Y.2002) (finding that when a party
institutes a second action based upon a compulsory counterclaim in a still pending action, courts
can consolidate the two actions and realign the parties). Federal Rule of Civil Procedure 13(a)
states that a counterclaim is compulsory where it “arises out of the transaction or occurrence that
is the subject matter of the opposing party’s claim.” Fed. R. Civ. P. 13(a).
The claims asserted in the Trustee’s Complaint are compulsory counterclaims in the
Rescission Actions. The claims in the three actions stem from the same transactions, i.e. the
Policies. None of the parties denies that the actions arise out of the same transactions since they
all have advocated for a merger of the three actions. Since I find that the Banyon Entities’
10
claims are compulsory counterclaims in the Rescission Actions, the Trustee’s Action should be
dismissed.
The Banyon Entities’ Motion to Adopt the Complaint Filed by the Trustee as Master
Complaint is, therefore, denied. The Banyon Trustee’s Complaint is dismissed as duplicative
with its compulsory counterclaims to the rescission Actions. The Insurance Companies shall
remain the Plaintiffs in this case.
B. The Insurance Companies’ Motion for Leave to Amend their Complaint.
The Insurance Companies filed a Motion for Leave to Amend their Complaint arguing
that they have received additional documentation regarding the Rothstein Ponzi scheme since the
filing of the first Complaint and that they wish to remedy the issues raised in the Motion to
Dismiss filed by the Banyon Entities. Insurance Companies’ Mot. for Leave to Amend 1-3, ECF
62; Banyon Entities’ Mot. to Dismiss, ECF No. 22. The Banyon Entities filed a Response and
argued that the Motion should be denied because the Trustee’s Complaint should serve as the
master complaint in these consolidated proceedings and because the Insurance Companies’
claims are duplicative and redundant with the Insurance Companies’ defenses to the Trustee’s
Complaint. Banyon Entities’ Resp. to Mot. for Leave to Amend 1-10, ECF No. 94. The
Insurance Companies filed a Reply. Insurance Companies’ Reply to Mot. for Leave to Amend
1-7, ECF 99.
The Banyon Entities’ arguments in opposition to the Motion have been addressed above.
Since I have determined that these Actions should proceed with the Insurance Companies’
Complaint, the Motion for Leave to Amend is granted. The Insurance Companies, including
National Union, shall file their Amended Complaint within thirty days of the date of this order.
11
C. The Insurance Companies’ Motion to Dismiss Trustee’s Claims “As the Exclusive
Agent for” the Non-Debtor Banyon Entities.
The Insurance Companies7 argue that the Trustee’s claims “as the exclusive agent”
should be dismissed because the Trustee has no standing to sue as an agent of the Non-Debtor
Banyon Entities. Insurance Companies’ Mot. to Dismiss Trustee’s Claim 1-10. The Insurance
Companies do not dispute the Trustee’s standing to pursue direct claims on behalf of the Debtor
Banyon Entities, but they contend that the Trustee lacks standing to pursue claims on behalf of
the Non-Debtor Banyon Entities who are not named in the Complaint. See id. 4.
In their Amended Complaint, the Insurance Companies name all of the Banyon Entities.
Accordingly, all the Banyon Entities, including the Non-Debtor Companies, are now named in
the pleadings. I have dismissed the Trustee’s Complaint as redundant with its compulsory
counterclaims. The Insurance Companies’ Motion to Dismiss the Trustee’s Claims “as the
Exclusive Agent for” the Non-Banyon Entities is, therefore, now moot.
D. Harden’s Motion to Dismiss.
Harden moved to dismiss without prejudice the Trustee’s claims of negligent failure to
procure insurance coverage filed against Harden arguing, among other things, that these claims
have not accrued yet. Harden’s Mot. to Dismiss 1-9. The Banyon Trustee filed a Response and
contends that an abatement or a stay, rather than dismissal without prejudice, is the appropriate
remedy. Banyon Entities’ Resp. to Harden’s Mot. to Dismiss 1-6. Harden did not file a reply
but Harden and the Banyon Trustee presented their arguments during the hearing on the Motions.
A claim against an insurance agent for negligence does not accrue until the underlying
action between the insured and the insurance company is final. Blumberg v. USAA Cas. Ins. Co.,
7
The Insurance Companies who moved to dismiss the Trustee’s claims are St Paul, RLI,
Columbia, Westchester, Ironshore, and Zurich.
12
790 So. 2d 1061, 1065 (Fla. 2001). In this case, the parties agree that the claims against Harden
will only accrue if and when the Insurance Companies prevail and no insurance coverage is
found to exist.
In that respect, the claims against Harden are both premature, while the
underlying rescission action is ongoing, and contingent on the outcome of said litigation.
The parties, however, dispute whether the applicable remedy is an abatement or a stay, or
a dismissal. Harden’s Mot. to Dismiss 1-6; Banyon Entities’ Resp. to Harden’s Mot. to Dismiss
1-8. Courts have been divided on the issue. See, e.g., Blumberg v. USAA Cas. Ins. Co., 790 So.
2d 1061, 1065 n.2 (Fla. 2001) (“The proper remedy for premature litigation ‘is an abatement or
stay of the claim for the period necessary for its maturation under the law.’”); Sperling v. Banner
Life Ins. Co., 10-22289-CIV-HUCK, 2010 WL 4063743, at *3-4 (S.D. Fla. Oct. 14, 2010)
(finding that abatement was the proper remedy and remanding the case to state court because the
claim against the insurance agent destroyed diversity); Steele v. Mid-Continent Cas. Co., 0760789-CIV, 2007 WL 3458543 (S.D. Fla. Nov. 14, 2007) (same); but see, e.g., Essex Ins. Co. v.
Rodgers Bros. Servs., Inc., 8:05-CV-648T27TBM, 2006 WL 2356036, at *1-2 (M.D. Fla. Aug.
11, 2006) (dismissing without prejudice the claims against the insurance agents as premature);
Looney v. Protective Life Ins. Co., 8:07-CV-1020T-17TBM, 2007 WL 2669190, at *4 (M.D. Fla.
Sept. 6, 2007)(same); Great Am. Assur. Co. v. Sanchuk, LLC, 8:10-CV-2568-T-33AEP, 2012
WL 195526, at *7 (M.D. Fla. Jan. 23, 2012) (same).
At least one Judge in this District noted that Florida law is not clear on the proper remedy
to adopt when the court is faced with a motion to dismiss rather than a motion to remand for
improper joinder. Sperling, 10-22289-CIV-HUCK, 2010 WL 4063743, at *3 (noting that Florida
law is unclear regarding whether a premature negligence claim against an insurance agent should
be abated or stayed or, rather, dismissed without prejudice and finding that abatement may be
13
proper when a court is faced with a motion to remand, while refusing to express an opinion on
the proper remedy to adopt when the court is ruling on a motion to dismiss).
Further, several courts have found that claims that are both premature and contingent
should be dismissed rather than abated.
See Looney, 8:07-CV-1020T-17TBM, 2007 WL
2669190, at *4 (“When the mere passage of time is insufficient to cure the premature element of
the action, as it is here, dismissal without prejudice is appropriate”); see also Mobro Marine Inc.,
3:11-CV-622-J-12JBT, 2011 WL 6328255, at *4 (M.D. Fla. Dec. 15, 2011) (dismissing without
prejudice the claims against the insurance agent for failure to procure insurance coverage,
because the claims would not accrue, if at all, until the underlying action would be resolved).
Considering all the circumstances of this case, I find that the claims against Harden
should be dismissed without prejudice. The underlying litigation may last for an extended period
of time, while Harden has no role in its adjudication. Ultimately, the claims against Harden may
never ripen. Additionally, judicial economy favors the dismissal of these claims. Parties should
not be encouraged to file claims that may never ripen. Filing these claims forces the insurance
agent to file a response and prompts the parties to litigate what is the appropriate remedy pending
adjudication of the underlying action. This is a waste of the court’s and the parties’ resources.
Accordingly, I will grant Harden’s Motion to Dismiss. All claims against Harden are dismissed
without prejudice.
III. CONCLUSION
For the foregoing reasons, it is ORDERED and ADJUDGED as follows:
1.
The Non-Debtor Banyon Entities’ Motion to Adopt the Complaint filed by the
Trustee as the Master Complaint, ECF No 70, is DENIED. The Complaint filed
by the Banyon Trustee is DISMISSED.
14
2.
The Insurance Companies’ Motion for Leave to Amend their Complaint, ECF No.
62, is GRANTED. The Insurance Companies shall file an Amended Complaint
within thirty days of the date of this order.
3.
The Insurance Companies’ Motion to Dismiss Trustee’s Claims “As the Exclusive
Agent for” the Non-Debtor Banyon Entities, ECF No. 63, is DENIED as moot.
4.
Harden’s Motion to Dismiss, ECF No. 95, is GRANTED. The claims against
Harden are DISMISSED without prejudice.
DONE and ORDERED in chambers, at Miami, Florida, this 29th day of August 2013.
Copies furnished to:
William C. Turnoff, U.S. Magistrate Judge
Counsel of record
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