Loop Lofts Apartments, LLC v. Wright National Flood Insurance Company et al

Filing 31

MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that Defendants Stephen Butz and Michael Butz's Motion to Dismiss, Doc. 23 , is GRANTED. Count Two of Plaintiff's Complaint is DISMISSED as to Defendants Stephen Butz and Michael Butz. IT IS FURTHER ORDERED that Plaintiff may file a First Amended Complaint no later than Monday, October 16, 2023. If Plaintiff does not file a First Amended Complaint, this action as to Defendants Stephen Butz and Michael Butz will be dismissed. Signed by District Judge Matthew T. Schelp on 09/29/2023. (KCD)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
LOOP LOFTS APARTMENTS, LLC,
Plaintiff,
vs.
WRIGHT NATIONAL FLOOD
INSURANCE COMPANY, et al.,
Defendants.

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Case No. 4:23-cv-00699-MTS

MEMORANDUM AND ORDER
This matter is before the Court on Defendants Stephen Butz and Michael Butz’s Motion
to Dismiss, Doc. [23], in which they seek the dismissal of the single claim against them in
Plaintiff’s Complaint or, in the alternative, a more definite statement. For the reasons explained
below, the Court will grant the Motion to Dismiss, dismiss Plaintiff’s claim against Defendants
Stephen Butz and Michael Butz, and provide Plaintiff leave to file a First Amended Complaint.
I.

Background
The St. Louis area experienced historic flash flooding during the week of July 25, 2022,
flooding that Plaintiff alleges caused over three million dollars in damages to three buildings it
just had purchased. Fortunately for Plaintiff, it had insurance coverage on each of the three
buildings through Defendant Wright National Flood Insurance Company (“Wright Flood”).
Unfortunately for Plaintiff, even though it has performed all of its conditions precedent to its
contracts of insurance with Wright Flood, Plaintiff has yet to receive full payments for the
damages it says were covered under the insurance policies. Accordingly, in Count One, Plaintiff
brings a breach of contract claim against Wright Flood.

Plaintiff alleges that its problems go a step further. Enter Count Two. Though it has
sustained over three million dollars in damages, each building only had coverage for five
hundred thousand dollars. Because of this shortfall, in Count Two, Plaintiff brings a claim for
negligence against Defendant Stephen Butz, Defendant Michael Butz, and Defendant Norbert A.
Butz Insurance Agency, Inc. Plaintiff alleges that these three Defendants collectively “agreed to
procure insurance for Plaintiff in such sum as to fully protect Plaintiff from any loss.” Doc. [3]
¶ 22. Plaintiff further alleges that these three Defendants collectively “represented to Plaintiff”
that coverage was in place, which led to Plaintiff closing on the purchase of the three properties.
Id. ¶ 24.

Only after the loss did Defendant Stephen Butz, Defendant Michael Butz, and

Defendant Norbert A. Butz Insurance Agency, Inc. collectively “advise[]” Plaintiff that they had
made a “mistake” on the application. Id. ¶ 26.
II.

Legal Standard
The notice pleading standard of Federal Rule of Civil Procedure 8(a)(2) requires that a
plaintiff’s pleading contain “a short and plain statement of the claim showing that the pleader is
entitled to relief.” If the plaintiff fails to adequately plead, Rule 12(b)(6) allows a party to move
to dismiss a purported claim that “fail[s] to state a claim upon which relief can be granted.” To
survive a Rule 12(b)(6) 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.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (internal quotations and citation omitted). The factual content of the
plaintiff’s allegations must “allow[] the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Cole v. Homier Distrib. Co., 599 F.3d 856, 861 (8th Cir.
2010) (quoting Iqbal, 556 U.S. at 678). “Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. “Nor does a

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complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id.
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 557 (2007)).
A court “must liberally construe a complaint in favor of the plaintiff,” Huggins v. FedEx
Ground Package System, Inc., 592 F.3d 853, 862 (8th Cir. 2010), and must grant all reasonable
inferences in favor of the nonmoving party, Lustgraaf v. Behrens, 619 F.3d 867, 872–73 (8th Cir.
2010). Although courts must accept all factual allegations within the complaint as true at the
motion to dismiss stage, courts are not bound to take as true “a legal conclusion couched as a
factual allegation.” Iqbal, 556 U.S. at 677–78; accord Twombly, 550 U.S. at 555. Indeed,
“[c]ourts should dismiss complaints based on ‘labels and conclusions, and a formulaic recitation
of the elements of a cause of action.’” Hager v. Ark. Dep’t of Health, 735 F.3d 1009, 1013 (8th
Cir. 2013) (citing Twombly, 550 U.S. at 555).
III.

Discussion
Plaintiff brings a single claim against Defendant Stephen Butz and Defendant Michael
Butz for negligent failure to procure insurance.1 “Missouri courts have long held that a broker or
agent who undertakes to procure insurance for another for compensation owes a duty of
reasonable skill, care, and diligence in obtaining the requested insurance.” Busey Truck Equip.,
Inc. v. Am. Fam. Mut. Ins. Co., 299 S.W.3d 735, 738 (Mo. Ct. App. 2009) (Cohen, J.); see also,
e.g., Harris v. A. P. Nichols Inv. Co., 25 S.W.2d 484, 487 (Mo. Ct. App. 1930). To plead a claim
of negligent failure to procure insurance, a plaintiff must plead facts showing that (1) the agent
agreed to procure, for compensation, insurance from the insurance company, (2) the agent failed
to procure the agreed upon insurance and, in so doing, failed to exercise reasonable care and
diligence, and (3) as a result, the plaintiff suffered damages. Busey Truck, 299 S.W.3d at 738;

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As noted previously, Plaintiff also brings this claim against Defendant Norbert A. Butz Insurance Agency,
Inc. That Defendant did not join the instant Motion to Dismiss.

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see also Bucksaw Resort, LLC v. Mehrtens, 414 S.W.3d 39, 43 (Mo. Ct. App. 2013); 30 Mo.
Practice Series: Ins. Law & Practice § 2:11 (2d ed.).
Here, Defendants Stephen Butz and Michael Butz argue that Plaintiff has failed to
plausibly allege that they “agreed to procure, for compensation, insurance for [Plaintiff] from
Wright [Flood].” The Court agrees. At least on this Count as to Defendants Stephen Butz and
Michael Butz, Plaintiff’s Complaint has two faults: (1) the allegations are exclusively collective
and (2) they are conclusory.2 Plaintiff brings Count Two against Stephen Butz and Michael Butz
along with Norbert A. Butz Insurance Agency, Inc. Plaintiff alleges that Stephen Butz, Michael
Butz, and Norbert A. Butz Insurance Agency, Inc. “own and operate an insurance agency using
the fictitious name of Crawford Butz & Associates Insurance Agency.” Doc. [3] ¶ 3. Plaintiff
further alleges that Stephen Butz and Michael Butz are “listed” as 50-50 co-owners of the
fictitious name “Crawford Butz & Associates Insurance Agency.” Id. ¶ 21.
Plaintiff makes all of its other allegations pertaining to Stephen Butz and Michael Butz
collectively. The Complaint defines Defendants “Stephen Butz, Michael Butz[,] and Norbert A.
Butz” “collectively as ‘Butz’” and then proceeds to make a formulaic recitation of the elements,
broadly stating what “Butz” did or failed to do. See, e.g., Doc. [3] ¶ 22 (“Butz agreed to procure
insurance”); id. ¶ 24 (“Butz represented to Plaintiff” that coverage was in place); id. ¶ 26 (“Butz
advised” that a mistake had been made on the application “by the Defendants Butz”); id. ¶ 28
(“Butz failed to provide” the agreed upon insurance).

In opposition to the Motion to Dismiss, Plaintiff writes that “the Court must accept the allegations contained
in the Complaint as true.” Doc. [28] at 4 (citing U.S. ex rel. Joshi v. St. Luke’s Hosp., Inc., 441 F.3d 552, 555
(8th Cir. 2006)). That statement is less than wholly accurate. See, e.g., Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (“[T]he tenet that a court must accept as true all of the allegations contained in a complaint is
inapplicable to legal conclusions.”); id. at 679 (“When there are well-pleaded factual allegations, a court
should assume their veracity.” (emphasis added)); id. at 681 (“[T]he allegations are conclusory and not entitled
to be assumed true.”).
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Plaintiff’s exclusively collective pleading does not survive a motion to dismiss after Iqbal
and Twombly. As the United States Court of Appeals for the Seventh Circuit has explained,
Iqbal and Twombly hold that a complaint must be dismissed unless it contains a
plausible claim. A contention that “the defendants looted the corporation”—
without any details about who did what—is inadequate. Liability is personal. An
allegation that someone looted a corporation does not propound a plausible
contention that a particular person did anything wrong. The Rules of Civil
Procedure set up a system of notice pleading. Each defendant is entitled to know
what he or she did that is asserted to be wrongful. A complaint based on a theory
of collective responsibility must be dismissed.
Bank of Am., N.A. v. Knight, 725 F.3d 815, 818 (7th Cir. 2013); accord Martinez v. City of N.
Richland Hills, 846 F. App’x 238, 243 (5th Cir. 2021) (per curiam).
Plaintiff’s “non-specific reference to [Butz] as a collective group does not obviate
[Plaintiff’s] obligation to plead facts that would plausibly impose liability on each Defendant
individually.” See Smith v. Bank of Am., N.A., 4:13-cv-0333-ODS, 2013 WL 4735632, at *4
(W.D. Mo. Sept. 3, 2013). While it is permissible to plead against defendants collectively at
times, it somewhere must be “clearly alleged how each of them is liable under that count.” See
United States v. Genesis Glob. Healthcare, 4:18-cv-00128-RSB, 2023 WL 3656925, at *6 (S.D.
Ga. May 25, 2023) (denying motion to dismiss where complaint collectively pleaded in places
but elsewhere also adequately alleged “factual allegations concerning each [d]efendant’s role”).
Amplifying the conclusion that Count Two does not survive a motion to dismiss after
Iqbal and Twombly is the Complaint’s formulaic recitation of the elements and its naked
assertions devoid of factual enhancement. See Iqbal, 556 U.S. at 678 (quoting Twombly, 550
U.S. at 557). Plaintiff, of course, had no requirement to plead specific facts; the issue here is
Plaintiff failed to provide any factual enhancement at all related to integral elements necessary to
state a claim to relief that is plausible on its face. Twombly, 550 U.S. at 570 (“[W]e do not
require heightened fact pleading of specifics, but only enough facts to state a claim to relief that

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is plausible on its face.”); Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (“Specific
facts are not necessary[.]”); Gregory v. Dillard’s, Inc., 565 F.3d 464, 473 (8th Cir. 2009) (en
banc) (“While a plaintiff need not set forth detailed factual allegations or specific facts that
describe the evidence to be presented, the complaint must include sufficient factual allegations to
provide the grounds on which the claim rests.” (internal quotations and citations omitted)).
For example, Plaintiff’s allegations that Defendants Stephen Butz and Michael Butz,
along with Norbert A. Butz Insurance Agency, Inc., “agreed to procure insurance for Plaintiff,”
Doc. [3] ¶ 22, may “get[] the complaint close to stating a claim, but without some further factual
enhancement it stops short of the line between possibility and plausibility of ‘entitle[ment] to
relief.’” Twombly, 550 U.S. at 557 (quoting DM Research, Inc. v. College of Am. Pathologists,
170 F.3d 53, 56 (1st Cir. 1999) (“[T]erms like ‘conspiracy,’ or even ‘agreement,’ are border-line:
they might well be sufficient in conjunction with a more specific allegation—for example,
identifying a written agreement or even a basis for inferring a tacit agreement, . . . but a court is
not required to accept such terms as a sufficient basis for a complaint”)); accord Iqbal, 556 U.S.
at 680–81 (finding allegation that the defendants “‘knew of, condoned, and willfully and
maliciously agreed to subject [the plaintiff]’ to harsh conditions of confinement” were “bare
assertions” that were “not entitled to the assumption of truth”).
CONCLUSION
Plaintiff’s Complaint has not “nudged” its claim against Defendants Stephen Butz and
Michael Butz for negligent failure to procure insurance “from conceivable to plausible.” See
Iqbal, 556 U.S. at 680; Twombly, 550 U.S. at 570.
Accordingly,

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IT IS HEREBY ORDERED that Defendants Stephen Butz and Michael Butz’s Motion
to Dismiss, Doc. [23], is GRANTED. Count Two of Plaintiff’s Complaint is DISMISSED as to
Defendants Stephen Butz and Michael Butz.
IT IS FURTHER ORDERED that Plaintiff may file a First Amended Complaint no
later than Monday, October 16, 2023. If Plaintiff does not file a First Amended Complaint, this
action as to Defendants Stephen Butz and Michael Butz will be dismissed.
Dated this 29th day of September 2023.

MATTHEW T. SCHELP
UNITED STATES DISTRICT JUDGE

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