Valley Forge Insurance Company et al v. Olem Shoe Corporation et al

Filing 40

ORDER granting 23 Motion to Dismiss Counterclaim. Signed by Judge Marcia G. Cooke on 8/18/2011. (tm)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 11-20626-Civ-COOKE/TURNOFF
VALLEY FORGE INSURANCE
COMPANY, et al.,
Plaintiffs
vs.
OLEM SHOE CORPORATON, et al.,
Defendants.
_________________________________/
ORDER GRANTING PLAINTIFFS’ MOTION TO DISMISS
THIS MATTER is before me on the Plaintiffs’ Motion To Dismiss Defendant
Washington Shoe Company’s Counterclaim. (ECF No. 23). I have reviewed the parties’
arguments, the record, and the relevant legal authorities. For the reasons set forth below, the
Plaintiffs’ Motion is granted.
I. BACKGROUND
This is a declaratory judgment action that Plaintiffs Valley Forge Insurance Company
(“Valley Forge”) and Continental Casualty Company (“Continental”) initiated against
Defendants Olem Shoe Corporation (“Olem Shoe”) and Washington Shoe Corporation
(“Washington Shoe”) seeking a declaration that Plaintiffs have no duty to indemnify their
insured, Olem Shoe, for counterclaims that Washington Shoe asserted against Olem Shoe for
copyright infringement.1 See Olem Shoe Corp. v. Washington Shoe Co., Case No. 09-23494-Civ
(S.D. Fla.) (the “underlying suit”). This Court has diversity jurisdiction over this action.
Washington Shoe has filed a counterclaim seeking a declaration that Valley Forge and

1

Although Washington Shoe is not an insured, Plaintiffs named it in this action because it is a necessary
party. Plaintiffs also named Washington Shoe as a defendant in this action to ensure that is bound by any
judgment this Court may render.

Continental have a duty to indemnify Olem Shoe in the underlying suit. (ECF No. 16). Valley
Forge and Continental have moved to dismiss this counterclaim on the ground that Washington
Shoe lacks standing.
II. LEGAL STANDARD
A complaint “must contain … a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A plaintiff must articulate “enough facts to
state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007) (abrogating Conley v. Gibson, 355 U.S. 41 (1957)). “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.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).
Detailed factual allegations are not required, but a pleading “that offers ‘labels and conclusions’
or ‘a formulaic recitation of the elements of a cause of action will not do.’” Id. (quoting
Twombly, 550 U.S. at 555). “[O]nly a complaint that states a plausible claim for relief survives a
motion to dismiss.” Id. at 1950.
When considering a motion to dismiss under Rule 12(b)(6), the court must accept all of
the plaintiff’s allegations as true and construe them in the light most favorable to the plaintiff.
Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008).
III. ANALYSIS
Plaintiffs argue that Washington Shoe has no standing to bring a counterclaim for
declaratory judgment because Florida law prevents parties other than the insured from bringing a
cause of action against an insurer before first obtaining a settlement or verdict. Washington Shoe
argues that Washington state law governs the present action rather than Florida law.

2

A federal court sitting in diversity will apply the conflict-of-law rules of the forum state.
Grupo Televisa, S.A. v. Telemundo Commc’ns Grp., Inc., 485 F.3d 1233, 1240 (11th Cir. 2007)
(citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). Florida is the forum
state for the present action, so Florida’s conflict-of-law rules will govern.
“Under Florida law, a court makes a separate choice of law determination with respect to
each particular issue under consideration.” Trumpet Vine Invs., N.V. v. Union Capital Partners I,
Inc., 92 F.3d 1110, 1115 (11th Cir. 1996); see also State Farm Mut. Auto. Ins. Co. v. Roach, 945
So. 2d 1160, 1163 (Fla. 2006) (“we apply different choice of law rules to different areas of the
law”). With regard to contract claims, Florida has “long adhered to the rule of lex loci
contractus.” State Farm Mut. Auto. Ins. Co., 945 So. 2d at 1163. Under that rule, as applied to
insurance contracts, “the law of the jurisdiction where the contract was executed governs the
rights and liabilities of the parties.” Id. (citing Sturiano v. Brooks, 523 So. 2d 1126, 1129 (Fla.
1988)).
Valley Forge and Continental issued and delivered the insurance policies to the insured
(Olem Shoe) in Florida. (Am. Compl., ECF No. 3, Exs. A & B). As Florida is the loci
contractus, Florida law governs this dispute. Florida’s “Nonjoinder of Insurers” statute provides,
in relevant part:

It shall be a condition precedent to the accrual or maintenance of a cause of action
against a liability insurer by a person not an insured under the terms of the
liability insurance contract that such person shall first obtain a settlement or
verdict against a person who is an insured under the terms of such policy for a
cause of action which is covered by such policy.

Fla. Stat. § 627.4136(1). Because Washington Shoe is not an insured, it has no standing to
assert a cause of action against an insurance company until it obtains a settlement or verdict
against an insured. See Colony Ins. v. Total Contracting & Roofing, Inc., No. 10-23091, 2010

3

WL 5093663, at *2 (S.D Fla. Dec. 8, 2010). Thus, Florida law bars Washington Shoe from
bringing any claim against either Valley Forge or Continental at this time. Washington Shoe’s
counterclaim, therefore, is dismissed.
In the alternative, Washington Shoe requests that this Court to treat the counterclaim as
an affirmative defense. Under Rule 8(c)(2) of the Federal Rules of Civil Procedure, “[i]f a party
mistakenly designates a defense as a counterclaim, or a counterclaim as a defense, the court
must, if justice requires, treat the pleading as though it were correctly designated, and may
impose terms for doing so.” Washington Shoe was not mistaken in designating its claim as a
counterclaim. It expressly pleaded that its counterclaim raises a case and controversy.
Additionally, Washington Shoe fails to provide any case law to support its contention that its
request for a declaration that Plaintiffs have a duty to indemnify an insured can constitute an
affirmative defense. If Washington Shoe believes it must amend its Answer and Affirmative
Defenses to include a general denial or to assert additional affirmative defenses it believes are
applicable here, it may seek leave to do so. Washington Shoe’s motion to designate its
counterclaim as an affirmative defense is denied.
IV. CONCLUSION
For the foregoing reasons, it is ORDERED and ADJUDGED that Plaintiffs’ Motion to
Dismiss Defendant’s Counterclaim (ECF No. 23) is GRANTED. Washington Shoe’s
Counterclaim is dismissed without prejudice.
DONE and ORDERED in chambers at Miami, Florida, this 18th day of August 2011.

4

Copies furnished to:
William C. Turnoff, U.S. Magistrate Judge
Counsel of record

5