Cedar Plantation Condominium Association, Inc. v. American Modern Select Insurance Company

Filing 18

RULING granting 8 American Modern's Motion to Lift Stay and Motion to Dismiss for Failure to State a Claim. Signed by Judge James J. Brady on 10/31/2012. (JDL)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
CEDAR PLANTATION
CONDOMINIUM ASSOCIATION,
INC.
CIVIL ACTION
VERSUS
NO. 10-699-JJB
AMERICAN MODERN SELECT
INSURANCE COMPANY
RULING ON DEFENDANT’S MOTION TO LIFT THE STAY AND DISMISS
This matter is before the Court on a Motion to lift the stay and dismiss by
Defendant, American Modern Select Insurance Company (“American Modern”).
(Doc. 8).

Plaintiff, Cedar Plantation Condominium Association, Inc., (“Cedar

Plantation) filed an opposition (Doc. 12) to which Defendant has filed a reply.
(Doc. 16). Oral argument is not necessary. This Court’s jurisdiction exists
pursuant to 28 U.S.C. § 1332. For the following reasons, the Defendant’s motion
is GRANTED.
I.
Cedar Plantation is the owner of a condominium complex located in Baton
Rouge, Louisiana and American Modern insured the complex. (Doc. 1-2 at p. 1).
On September 1, 2008, Hurricane Gustav hit the Gulf Coast and as a result,
Cedar Plantation’s complex was damaged. (Id.) Within thirty days of the
hurricane, Cedar Plantation contacted American Modern and reported the
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damage. (Id. at p. 2) American Modern denied coverage and refused to pay
under the policy in what Cedar Plantation believes was bad faith. (Id.) Cedar
Plantation then filed suit against the American Modern and this case was
removed from 19th Judicial District Court of East Baton Rouge on October 12,
2010. (Doc. 1).
In November 2010, the lawsuit was stayed upon consent of both parties
until the appraisal process invoked by the Cedar Plantation could be completed.
(Doc. 6).

The appraisal process concluded upon the rendition of the umpire’s

final award on January 18, 2011. (Doc. 8-1 at p. 1-2). The award composed of
determining both the actual-cost value (“ACV”) and the replacement-cost value
(“RCV”). (Id.). Upon rendition of the final award, American Modern issued Cedar
Plantation a supplemental payment for the full ACV. (Id.).
American Modern then filed its motion to lift the stay and dismiss pursuant
to Fed. R. Civ. P. 12(b)(6) and/or 12(b)(1). (Doc. 8-1).
II.
In its motion to dismiss, American Modern contends that the umpire’s final
award constitutes a binding extra-judicial determination of the insurance claim
and that everything owed on the award has already been paid by American
Modern. (Doc. 8-1) Specifically, American Modern states that Cedar Plantation
cannot state a claim for the recovery of additional proceeds over and above the
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amount determined by the umpire, and that any such claim should be dismissed
pursuant to Fed. R. Civ. P. 12(b)(6). (Id.).
As for the RCV remaining on the award, American Modern states that the
policy requires that the lost or damaged property actually be repaired and
replaced before RCV is owed, and even then RCV is recoverable only to the
extent that the cost of those repairs exceeds the ACV paid on the claim. (Doc. 23).

American Modern contends that despite numerous requests, Cedar

Plantation has been unable or unwilling to furnish any documentation or evidence
that the cost of repairs exceeds the ACV that American Modern has already paid
on this claim. American Modern points out that if repairs have been completed
and the cost of those repairs does not exceed the ACV already paid on the claim,
then Cedar Plantation is not entitled to RCV. (Doc. 8-1).

Further, if repairs

remain ongoing, then this action is not ripe to because nothing further is owed at
this time. (Id.).
In its opposition, Cedar Plantation argues that the appraisal has not
resulted in the settlement of the dispute between the parties and a claim still
exists. (Doc. 12). Cedar Plantation states that the estimated property damage is
in excess of $1,000,000 and that the repair process is ongoing and is presently
incomplete.1 (Id.).

Cedar plantation argues that because there was no

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Cedar cites previous counsel’s “medical issues beyond his control” and subsequent withdrawal from this case as
adversely affecting its capability to fully implement repairs to the property.

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completion date imposed by either the umpire or any insurance policy provision,
it should not be hurried to complete repairs. (Id.). To expedite the repairs, Cedar
Plantation stated that they are willing to submit a projected completion date to the
Court in which they must have the repairs complete or risk losing the RCV award.
(Id.). Cedar Plantation urges that the stay should remain in place until this date,
unless the repairs are completed ahead of schedule. (Id.).
Additionally, Cedar Plantation argues that a 12(b)(6) motion must not be
granted “unless it appears beyond doubt that the plaintiff can prove no set of
facts in support of his claim which would entitle him to relief.” Conley v. Gibson,
355 U.S. 41, 45 (1957). (Doc. 12 at 3). Here, Cedar Plantation claims it can
support its contention that the RCV exceeds ACV thus the motion should be
denied. Cedar Plantation also argues that American Modern’s 12(b)(1) motion is
without merit because the Court has proper jurisdiction under 28 U.S.C.
§1332(a). (Doc. 12). In addition, Cedar Plantation states that its “bad faith” claims
have not been acknowledged and remain viable.
In its reply, American Modern states that “they are willing to give plaintiff
additional time to complete the repairs. Indeed, the parties (through their
counsel) are working to establish a mutually acceptable deadline for completion
of all repair work, following which the plaintiff’s claim for RCV would expire.”
(Doc. 16 at 1).

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American Modern also reiterates its position that the RCV claim has not
yet accrued because RCV is only recoverable if repairs have been made, and
then only if those repairs exceed the ACV paid on the claim. (Doc. 16). American
Modern argues that its 12(b)(1) motion to dismiss for lack of subject matter
jurisdiction has nothing to do with diversity jurisdiction, but is an issue of standing
and ripeness, two “essential components of federal subject matter jurisdiction.”
Sample v. Morrison, 406 F.3d 310, 312 (5th Cir. 2005).
American Modern argues that Cedar Plantation’s remaining allegations fail
to state a claim. American Modern urges that the “bad faith” claims are stock
allegations that are mere recitals of the bad faith statutes and there are no factual
allegations, just conclusory assertions of wrong doing. (Id.). American Modern
also claims that the allegations of bad faith are entirely implausible because the
policy does not provide coverage for the “additional living expenses” that Cedar
Plantation alleges it has been deprived of and that a condo association is not
entitled to “mental anguish damages.” (Id. at 5).
III.
Persuant to Fed. Rule Civ. P. 12(b)(1) on a motion to dismiss for lack of
subject matter jurisdiction, the court may rely on (1) the complaint alone,
presuming the allegations to be true, (2) the complaint supplemented by
undisputed facts, or (3) the complaint supplemented by undisputed facts and by
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the court’s resolution of the undisputed facts. Den Norske Stats Oljeselskap As
v. HeereMac Vof, 241 F.3d 420, 424 (5th Cir. 2001).

Proponents have the

burden of proving the existence of subject matter jurisdiction. Kokkonen v.
Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994).
Pursuant to Fed. Rule Civ. P. 12(b)(6), on a motion to dismiss for failure to
state a claim, the court accepts all well-pleaded, non-conclusory facts in the
complaint as true. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009).
“To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

“[A]

formulaic recitation of the elements of a cause of action will not do.” Twombly,
550 U.S. at 555.
A complaint that pleads facts merely consistent with a defendant’s liability
“stops short of the line between possibility and plausibility.” Id. at 557. When
well-pleaded factual allegations populate the complaint, “a court should assume
their veracity and then determine whether they plausibly give rise to an
entitlement to relief.” Iqbal, 129 S.Ct. at 1950. Courts may consider not only the
complaint itself, but also documents attached to the complaint or documents
incorporated into the complaint by reference. Tellabs, Inc. v. Makor Issues &
Rights, Ltd., 551 U.S. 308, 322-23 (2007). The facts in the complaint are viewed
collectively, not scrutinized in strict isolation. Tellabs, 551 U.S. at 322-23.
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IV.
Here, the Court finds that the insurance policy itself allows for American
Modern’s motion to dismiss to be granted. While Cedar Plantation is correct that
the Court has diversity jurisdiction under 28 U.S.C. §1332(a), the court is
persuaded by American Modern’s argument that Cedar Plantation’s claim is not
sufficiently ripe. “Ripeness separates those matters that are premature because
the injury is speculative and may never occur from those that are appropriate for
judicial review.” United Transportation v. Foster, 205 F.3d 851, 857 (5th Cir.
2000). Here, the policy states that RCV is only recoverable if repairs have in fact
been made, and then only if the cost of those repairs exceeds the ACV paid on
the claim. (Doc. 2-3).

This is not disputed by the parties. Cedar Plantation

acknowledged that the repairs have not been completed, therefore, American
Modern correctly argues that Cedar Plantation’s potential claim for RCV is not yet
ripe. (Doc. 12 & 16).
The Court follows Madison at Lakewood East Apartments, LLC v.
Landmark American Insurance Company, 2009 WL 2391236 (E.D. La. July 30,
2009), where the court held that “the insured was ‘not entitled to replacement
cost value of the loss until it provides satisfactory proof that it had repaired or
replaced the property.’” (citations omitted). The court in Madison also stated that
“the issue of the amount of replacement value that the insurer should pay Plaintiff
if and when Plaintiff replaces the subject premises is not of ‘sufficient immediacy
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and reality to warrant’ determination by the court in the present proceeding.” Id.
at p. 4.
The Court is also persuaded by American Modern’s argument that Cedar
Plantation fails to state a claim upon which relief can be granted on the other
allegations.

In its response to the motion, Cedar Plantation incorrectly cites

Conley v. Gibson regarding the granting of a 12(b)(6) motion. (Doc. 12 at 3).
This rule quoted above was abrogated by Bell Atlantic Corp. v. Twombly and
further distinguished by Ashcroft v. Iqbal.

Here, Cedar Plantation has not

provided any factual content as to its allegations of “bad faith” and as such has
failed to establish a “facially plausible” claim upon which it can recover.
V.
Accordingly, American Modern’s 12(b)(1) motion to dismiss for lack of
subject matter jurisdiction is granted based on Cedar Plantation’s claim for RCV
not being sufficiently ripe. (Doc. 8).

American Modern’s 12(b)(6) motion to

dismiss for failure to state a claim is granted because Cedar Plantation has failed
to establish a facially plausible claim upon which it can recover. For these
reasons, American Modern’s Motion to lift the stay and dismiss is GRANTED.

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Signed in Baton Rouge, Louisiana, on October 31st, 2012.





JAMES J. BRADY, DISTRICT JUDGE
MIDDLE DISTRICT OF LOUISIANA

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