Mid-Continent Casualty Company v. JWN Construction, Inc. et al

Filing 61

ORDER granting 37 Plaintiff's Motion to Dismiss Counterclaim. Signed by Judge Robin L. Rosenberg on 9/29/2017. (nkl)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 9:17-CV-80286-ROSENBERG/HOPKINS
MID-CONTINENT CASUALTY COMPANY,
Plaintiff,
v.
JWN CONSTRUCTION, INC. et al.,
Defendants.
/
ORDER GRANTING PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIM
THIS CAUSE is before the Court on Plaintiff Mid-Continent Casualty Company’s
(“MCC”) Motion to Dismiss Defendant JWN Construction, Inc.’s (“JWN”) Counterclaim for
Declaratory Relief [DE 37]. The Court has carefully considered MCC’s Motion, JWN’s
Response [DE 44], and MCC’s Reply [DE 46], and is otherwise fully advised in the premises.
For the reasons set forth below, MCC’s Motion is GRANTED and JWN’s Counterclaim for
Declaratory Relief [DE 28] is DISMISSED WITHOUT PREJUDICE.
I.

BACKGROUND

On March 7, 2017, MCC filed a Complaint for Declaratory Relief [DE 1] against JWN,
Underwriters at Lloyd’s, London a/s/o Dr. Michael Flax (“Lloyd’s”), and Michael D. Flax
(“Flax”). In its Complaint, MCC alleges that in January of 2008, Flax and JWN entered into a
contract pursuant to which JWN would serve as “general contractor/developer” for the
construction of a home in Vero Beach, Florida. See DE 1, Complaint ¶¶ 12–13. MCC further
alleges that, about a year-and-a-half after construction was completed, Flax discovered water
intrusion and other damage that, according to Flax, were caused by construction defects. See id.
¶¶ 14–15. On April 30, 2013, Flax and Lloyd’s filed suit in state court against JWN for the

damage allegedly caused by these defects. See id. ¶¶ 16–19; DE 1-2 (Flax’s and Lloyd’s Third
Amended Complaint). MCC is currently defending JWN in that action, subject to a complete
reservation of rights. See DE 1, Complaint ¶ 20.
MCC filed the instant action for declaratory relief to determine the scope of MCC’s
obligations, if any, to defend and indemnify JWN in the state court action under the terms of four
insurance policies issued to JWN. See id. ¶¶ 1, 8–11; DE 1-1 (insurance policies issued by MCC
to JWN). In its Complaint, MCC asserts that it has no such obligations in light of the definitions
of “occurrence” (Count I) and “property damage” (Count II) in the policies, the timing of the
alleged damage (Count III), and the applicability of certain exclusions (Count IV). See DE 1,
Complaint ¶¶ 22–41.
On April 19, 2017, JWN filed its Answer, Affirmative Defenses, and Counterclaim for
Declaratory Relief [DE 28] in the instant action. JWN’s Counterclaim alleges only the following:
1. The clear and unambiguous terms of the Policies set forth in Composite
Exhibit A to the Plaintiff’s Complaint clearly provide coverage for the claims
against Counter Plaintiff JWN CONSTRUCTION, INC. set forth in the Third
Amended Complaint, a copy of which is attached to the Counter Defendant’s
Complaint as “Exhibit “B”, and the allegations in that Third Amended
Complaint give rise to a duty to defend Counter Plaintiff in that lawsuit.
Counter Plaintiff therefore respectfully requests that this Court issue a
declaratory judgment in its favor finding that the claims fall within the
coverage of the Policies set forth in Composite Exhibit A of the Complaint.
2. In the alternative, if this Court finds the policy ambiguous and/or illusory in
nature, it is respectfully requested that this Court issue a declaratory judgment
in Counter Plaintiff’s favor on the grounds that the terms of the policy must be
construed against the Counter Defendant and in Counter Plaintiff’s favor since
several portions of the Policies clearly provide coverage to Counter Plaintiff
in its capacity as a named insured and the exclusions for losses are
inconsistent with the clear language extending coverage, such that these
inconsistent provisions would render the insurance coverage entirely illusory.
Accordingly, the Policies attached to the Complaint in Composite Exhibit A
must be construed in favor of coverage.

2

3. Counter Plaintiff further requests any other relief as may be just, including
attorney’s fees pursuant to Florida Statute 627.428.
II.

LEGAL STANDARD

“A motion to dismiss a counterclaim pursuant to Federal Rule of Civil Procedure
12(b)(6) is evaluated in the same manner as a motion to dismiss a complaint.” Geter v. Galardi
S. Enterprises, Inc., 43 F. Supp. 3d 1322, 1325 (S.D. Fla. 2014) (internal quotation marks and
citation omitted). To adequately plead a claim for relief, Rule 8(a)(2) requires “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
Under Rule 12(b)(6), a motion to dismiss should be granted only if the plaintiff is unable to
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). “A claim has facial plausibility when the pleaded factual
content allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (citing Twombly, 550 U.S. at
556). When determining whether a claim has facial plausibility, “a court must view a complaint
in the light most favorable to the plaintiff and accept all of the plaintiff’s well-pleaded facts as
true.” Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1066 (11th Cir. 2007).
However, the court need not take allegations as true if they are merely “threadbare
recitals of a cause of action’s elements, supported by mere conclusory statements.” Iqbal, 556
U.S. at 663. “Mere labels and conclusions or a formulaic recitation of the elements of a cause of
action will not do, and a plaintiff cannot rely on naked assertions devoid of further factual
enhancement.” Franklin v. Curry, 738 F.3d 1246, 1251 (11th Cir. 2013). “[I]f allegations are
indeed more conclusory than factual, then the court does not have to assume their truth.”
Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012). In sum, “[t]he plausibility
standard ‘calls for enough fact to raise a reasonable expectation that discovery will reveal

3

evidence’ of the defendant’s liability.” Miyahira v. Vitacost.com, Inc., 715 F.3d 1257, 1265 (11th
Cir. 2013) (quoting Twombly, 550 U.S. at 556).
Under the Declaratory Judgment Act, “any court of the United States, upon the filing of
an appropriate pleading, may declare the rights and other legal relations of any interested party
seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C.
§ 2201(a). This language “only gives the federal courts competence to make a declaration of
rights; it does not impose a duty to do so.” Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d
1328, 1330 (11th Cir. 2005) (citing Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494
(1942)). Thus, courts retain broad discretion over whether or not to exercise jurisdiction under
the Declaratory Judgment Act. Evanston Ins. Co. v. Gaddis Corp., No. 15-CIV-60163, 2015 WL
2070386, at *2 (S.D. Fla. May 4, 2015) (citing Knights Armament Co. v. Optical Sys. Tech., Inc.,
568 F. Supp. 2d 1369, 1374 (M.D. Fla. 2008)); see also MedImmune, Inc. v. Genentech, Inc., 549
U.S. 118, 136 (2007) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995)) (noting that
the Declaratory Judgment Act “confer[s] on federal courts unique and substantial discretion in
deciding whether to declare the rights of litigants”).
In addition to exercising such discretion to decline jurisdiction, courts may dismiss a
counterclaim for declaratory judgment as redundant. See Evanston, 2015 WL 2070386, at *2
(citing Medmarc Cas. Ins. Co. v. Pineiro & Byrd PLLC, 783 F. Supp. 2d 1214, 1217 (S.D. Fla.
2011)). When deciding whether to dismiss such a counterclaim as redundant, “courts consider
whether the declaratory judgment serves a useful purpose. To determine whether the declaratory
judgment serves a useful purpose, courts should consider whether resolution of plaintiff’s claim,
along with the affirmative defenses asserted by defendants, would resolve all questions raised by
the counterclaim.” Medmarc, 783 F. Supp. 2d at 1217 (internal quotation marks and citations

4

omitted). However, “[e]ven [where] the counterclaim [is] wholly redundant, this Court may
exercise its discretion by not dismissing the counterclaim.” Id.
III.

DISCUSSION

In the Motion presently before the Court, MCC argues that JWN’s Counterclaim fails to
state a claim upon which relief can be granted and is redundant. The Court concludes that JWN’s
Counterclaim fails to state a claim upon which relief can be granted. Accordingly, the Court does
not reach MCC’s argument that JWN’s Counterclaim should be dismissed as redundant.
In paragraph 1 of its Counterclaim, JWN alleges that “[t]he clear and unambiguous terms
of the Policies set forth in Composite Exhibit A to the Plaintiff’s Complaint clearly provide
coverage for the claims against Counter Plaintiff JWN CONSTRUCTION, INC. set forth in the
Third Amended Complaint,” and that “the allegations in that Third Amended Complaint give rise
to a duty to defend Counter Plaintiff in that lawsuit.” See DE 28 at 7, Counterclaim ¶ 1. While
JWN refers broadly to “[t]he clear and unambiguous terms of the Policies” and the “claims” and
“allegations” contained in the Third Amended Complaint, JWN does not specify which policy
terms allegedly provide coverage 1 or which factual allegations give rise to a duty to defend under
those terms. To the contrary, JWN does not provide any factual support for its conclusory
assertion that MCC has a duty to defend JWN under the terms of the policies issued by MCC.
In paragraph 2 of its Counterclaim, JWN alleges that “if this Court finds the policy
ambiguous and/or illusory in nature . . . the terms of the policy must be construed against the
Counter Defendant and in Counter Plaintiff’s favor.” See DE 28 at 7, Counterclaim ¶ 2. JWN
further alleges that “several portions of the Policies clearly provide coverage to Counter Plaintiff

1

The Court notes that there are four separate insurance policies, which together span more than 230 pages in length.
See DE 1-1. Neither MCC nor this Court can be expected to guess which of the many terms contained in these
policies form the basis of JWN’s Counterclaim.

5

in its capacity as a named insured and the exclusions for losses are inconsistent with the clear
language extending coverage, such that these inconsistent provisions would render the insurance
coverage entirely illusory.” See id. Once again, JWN does not specify which policy terms
allegedly provide coverage or set forth any factual support for its claim.
The Court notes that the deadline for amended pleadings was June 2, 2017. See DE 19.
However, the Court will permit JWN to file an amended counterclaim for declaratory relief. To
the extent JWN intends to file an amended counterclaim for declaratory relief, JWN should be
mindful not only of the necessity for additional factual support, but of the possibility that this
Court may dismiss its amended counterclaim as redundant if it does not serve a useful purpose—
that is, if the resolution of MCC’s claims, along with the affirmative defenses asserted by JWN,
would resolve all questions raised by the counterclaim. See Medmarc Cas. Ins. Co. v. Pineiro &
Byrd PLLC, 783 F. Supp. 2d 1214, 1217 (S.D. Fla. 2011). If the policy terms on which JWN’s
amended counterclaim is based are identical to those on which MCC’s claims are based, the
Court fails to see how that amended counterclaim would not be redundant, even with the addition
of JWN’s request for attorney’s fees pursuant to Fla. Stat. § 627.428, as such a request may be
made without asserting a counterclaim.
IV.

CONCLUSION

For the foregoing reasons, it is ORDERED AND ADJUDGED as follows:
1.

Plaintiff Mid-Continent Casualty Company’s Motion to Dismiss Defendant JWN
Construction, Inc.’s Counterclaim for Declaratory Relief [DE 37] is GRANTED.

2.

JWN’s Counterclaim for Declaratory Relief [DE 28] is DISMISSED WITHOUT
PREJUDICE.

6

3.

JWN may file an amended counterclaim for declaratory relief by no later than
October 4, 2017. MCC shall file a response to any such amended counterclaim
by no later than October 10, 2017.

DONE AND ORDERED in Chambers, West Palm Beach, Florida, this 29th day of
September, 2017.

_______________________________
ROBIN L. ROSENBERG
UNITED STATES DISTRICT JUDGE

Copies furnished to:
Counsel of record

7