State Auto Property and Casualty Insurance Company v. Evanston Insurance Company

Filing 31

MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that Defendant Evanston Insurance Company's Motion to Dismiss 9 is DENIED. IT IS FURTHER ORDERED that within ten (10) days of the date of this Order, the parties shall submit a proposed scheduling plan for any discovery and filing of motions for summary judgment. MOTION to Dismiss Case filed by defendant Evanston Insurance Company. Signed by District Judge John A. Ross on 7/25/17. (KKS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

STATE AUTO PROPERTY AND
CASUALTY INSURANCE COMPANY,
Plaintiff,
v.
EVANSTON INSURANCE COMPANY,
Defendant.

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No. 4:16-CV-1290-JAR

MEMORANDUM AND ORDER
This matter is before the Court on Defendant Evanston Insurance Company’s
(“Evanston”) fully briefed motion to dismiss Plaintiff State Auto Property and Casualty
Company’s (“State Auto”) Petition for Declaratory Action (Doc. 9). For the reasons set forth
below, Evanston’s motion will be denied.
This matter arises out of a coverage dispute between State Auto and Evanston regarding
whether Evanston must defend Buff Enterprises, LLC (“Buff Enterprises”) and Jordan Pea
(“Pea”) in a pending products liability personal injury action in the Circuit Court of St. Clair
County, Illinois, styled Catherine Bauer v. 1st Phorm International, LLC, Buff Enterprises, and
Jordan Pea, Case No. 13-L-390 (“underlying lawsuit”). Specifically, State Auto is defending
Buff Enterprises and Jordan Pea in the underlying lawsuit as insureds under a Business Owners
Policy issued to Buff Enterprises, and Evanston is defending 1st Phorm International, LLC (“1st
Phorm”) under a general liability policy (“Evanston policy”) issued to 1st Phorm.
In its Petition for Declaratory Judgment, State Auto alleges that the Additional InsuredVendors endorsement (“Vendors endorsement”) of the Evanston policy provides coverage to
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Buff Enterprises and Jason Pea with respect to the sale of 1st Phorm’s products, but that
Evanston has declined to defend them in the Bauer lawsuit. (Petition for Declaratory Judgment
(“Pet.”), Doc. No. 5 at ¶¶ 6, 8). State Auto claims that Buff Enterprises and Pea tendered the
defense of the underlying lawsuit to Evanston, but Evanston declined, and continues to decline,
coverage. State Auto alleges that the Evanston policy provides coverage to Buff Enterprises and
Pea. State Auto further alleges it has provided Buff Enterprises and Pea with a defense to the
underlying lawsuit and is entitled to contribution from Evanston for its share of defense costs
incurred. (Id. at ¶¶ 11-13).
In its motion to dismiss, Evanston argues there is no coverage for Buff Enterprises and
Pea because (1) they did not sell any product; (2) their acts allegedly caused or contributed to
Bauer’s injury; and (3) they relabeled the products. (Doc. 5).

In response, State Auto argues

that Evanston cannot avoid its duty to defend Buff Enterprises and Pea unless it can prove that
there is no possibility of coverage. (Doc. 13 at 3). It argues that Evanston cannot prevail because
the Petition for Declaratory Judgment has alleged facts that give rise to a claim potentially within
the Evanston policy. (Id.).
The purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim is to test the
sufficiency of the plaintiff’s petition. Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir.
2001). In ruling on a motion to dismiss, the Court “accept[s] the allegations contained in the
complaint as true and draw[s] all reasonable inferences in favor of the nonmoving party.” Cole v.
Homier Dist. Co., Inc., 599 F.3d 856, 861 (8th Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009)).
The court tests the sufficiency of a petition for declaratory judgment not by determining
whether plaintiff is entitled to the relief prayed for, but by asking whether it is entitled to a

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declaration of rights or status on the facts pleaded. State ex rel. Petti v. Goodwin-Raftery, 190
S.W.3d 501, 504 (Mo. Ct. App. 2006); Farm Fire & Cas. Co. v. Alberici, 852 S.W.2d 388, 389
(Mo. Ct. App. 1993). The petition alone is considered (id.), and it must state facts which support
the plaintiff’s allegations and demonstrate a justiciable controversy (Goodwin-Raftery, 190
S.W.3d at 504). The Court accepts as true “all of the well-pleaded facts and their concomitant
reasonable inferences, ignoring all conclusions.” Teat v. Director of Revenue, 806 S.W.2d 754,
757 (Mo. Ct. App. 1991).
Upon review of the Petition and memoranda pertaining to the present motion to dismiss,
the Court finds that dismissal is not appropriate at this time. At the motion to dismiss stage, the
only issue before the Court is whether the petition states a cause of action that is plausible on its
face. Here, State Auto sets forth the provisions of the Evanston policy that it claims provides
coverage to Buff Enterprises and Pea in the underlying lawsuit. Accepting all as true the facts in
the Petition, it is plausible that the provisions of the Evanston policy could provide coverage to
Buff Enterprises and Pea.
Furthermore, State Auto properly alleged that Buff Enterprises and Pea claimed there was
coverage and that they tendered the defense of the underlying action. The Petition alleged that
Evanston refused coverage and that State Auto disagrees with Evanston’s interpretation of the
policy. See generally Alberici, 852 S.W.2d at 389. Upon these averments, State Auto stated a
claim sufficient for the Court to declare the rights of the parties in light of the Evanston policy.
Such a declaration might, of course, include a finding that Evanston has no duty to defend Buff
Enterprises or Pea in the underlying action.
In the motion to dismiss and response thereto, the parties argue the merits of whether the
Evanston policy provides coverage to Pea and Buff Enterprises in the underlying lawsuit.

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However, those considerations are more appropriate for a motion for summary judgment. The
Court does not, at this stage, determine whether State Auto is entitled to the relief sought.
Accordingly,
IT IS HEREBY ORDERED that Defendant Evanston Insurance Company’s Motion to
Dismiss [9] is DENIED.
IT IS FURTHER ORDERED that within ten (10) days of the date of this Order, the
parties shall submit a proposed scheduling plan for any discovery and filing of motions for
summary judgment.
Dated this 25th day of July, 2017.

JOHN A. ROSS
UNITED STATES DISTRICT JUDGE

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