Kansas City African Market, Inc. v. Mount Vernon Fire Insurance Company

Filing 19

ORDER denying 10 plaintiff's Motion to Dismiss. Signed on 11/26/12 by Chief District Judge Fernando J. Gaitan, Jr. (Enss, Rhonda)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
KANSAS CITY AFRICAN MARKET, INC.,
Plaintiff,
v.
MOUNT VERNON FIRE INSURANCE
COMPANY,

Defendant.

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) Case No. 12-1103-CV-W-FJG
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ORDER
Currently pending before the Court is plaintiff=s Motion to Dismiss Defendant=s
Counterclaim (Doc. # 10).
I. BACKGROUND
Defendant, Mount Vernon Fire Insurance Company (AMount Vernon@) issued a
policy of property and liability insurance coverage to plaintiff. On May 12, 2011, a fire
occurred in the building occupied by plaintiff=s business. Plaintiff made a claim for
damages for business loss and contents coverage under the policy. Defendant has not
paid plaintiff=s claim, because defendant asserts that plaintiff has refused to provide
certain requested supporting documentation. On July 25, 2012, plaintiff filed suit in
Jackson County Circuit Court, alleging breach of contract, vexatious refusal to pay and
vexatious delay. Defendant removed the case to this Court and filed its Answer and a
Counterclaim for Declaratory Judgment, seeking a declaration that there is no coverage
under the insurance policy due to the insured=s concealment and/or misrepresentation
of a material fact, failure to comply with the policy loss provisions and breach of
contract. Plaintiff moves to dismiss the counterclaim arguing that it fails to state a claim
because it is Anothing more than defendant=s contention that it should prevail with

regard to plaintiff=s claim.@ (Motion to Dismiss, p. 2).
II. STANDARD
To survive a motion to dismiss under 12(b)(6), Aa 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. 662,129 S.Ct. 1937, 1949, 173 L.Ed.2d 868
(2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974
(2007)). AA pleading that offers >labels and conclusions= or >a formulaic recitation of the
elements of a cause of action will not do.= 550 U.S. at 555, 127 S.Ct. at 1965. Nor does
a complaint suffice if it tenders >naked assertion[s]= devoid of >further factual
enhancement.=@ Iqbal, 129 S.Ct. at 1949 (quoting Twombly 550 U.S. at 557, 127 S.Ct.
at 1966). ADetermining whether a claim is plausible is a >context-specific task that
requires the reviewing court to draw on its judicial experience and common sense.=@
Hamilton v. Palm, 621 F.3d 816, 818 (8th Cir. 2010) (quoting Iqbal 129 S.Ct. at 1950).
Under Fed. R. Civ. P. 12(b)(6) we must accept the plaintiff=s factual allegations as true
and grant all reasonable inferences in the plaintiff=s favor. Barry v. Time Ins. Co., No.
CIV 11-4018-KES, 2011 WL 2566129, *2 (D.S.D. June 28, 2011). AThe issue is not
whether the plaintiff will ultimately prevail but whether he is entitled to present evidence
to support his claims.@ Richardson v. Hellmuth, Obata & Kassabaum, Inc., No.
4:11CV1227 CDP, 2011 WL 4635183, *2 (E.D.Mo. Oct. 4, 2011), (citing Scheuer v.
Rhodes, 416 U.S. 232, 236 (1974)).
III. DISCUSSION
Plaintiff argues that there is a complete identity of factual and legal issues
between the defendant=s counterclaim and plaintiff=s claim and the counterclaim is
merely redundant of plaintiff=s claim. Plaintiff argues that defendant is asking the Court
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to declare that it has a valid defense to plaintiff=s claim, and this is not a proper basis for
a declaratory relief.
Defendant argues that its counterclaim is seeking a judicial determination that
plaintiff did not comply and/or materially breached the provisions of the insurance policy.
Defendant states that plaintiff is seeking money damages for breach of contract, as
well as statutory penalties for vexatious refusal to pay. Thus, defendant argues that the
counterclaim is not a complete mirror image of plaintiff=s claim and should not be
dismissed.
In Fidelity National Title Insur. Co. v. Captiva Lake Investments, 788 F.Supp.2d
970 (E.D.Mo. 2011), the Court considered a motion to dismiss defendant=s
counterclaims. Plaintiff had issued a policy of title insurance to a bank. The bank made
two loans to a development company for the development of a condominium
subdivision. The loan policy was to insure the priority status of the bank=s deed of trust
for the loans. The bank subsequently transferred all of its interest in the title insurance
policy to the defendant. The defendant then made a claim on the policy and demanded
indemnification for pending mechanic=s liens. Defendant also submitted a claim for
coverage for unmarketability of title, alleging that the title company=s refusal to provide
coverage for the mechanic=s liens had caused a prospective purchaser to change their
mind regarding the property. Plaintiff asserted that it was not obligated to provide
coverage for the mechanic=s liens and asserted four claims for declaratory judgment.
Defendant asserted counterclaims for declaratory judgment, breach of contract arising
from the failure to defend as to the mechanic=s liens, tortious interference, and breach of
contract for failure to indemnify as to the unmarketability of the property. As in the
instant case, the plaintiff argued that the counterclaims were redundant and that the

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defendant could achieve the relief it sought by successfully defending against plaintiff=s
claims. The Court stated:
[i]f it cannot be determined early in the litigation if the counterclaim is
identical to the complaint, >the safer course for the court to follow is to
deny a request to dismiss a counterclaim for declaratory relief unless there
is no doubt that it will be rendered moot by the adjudication of the main
action=.
Id. at 973 (quoting Richmond v. Centurion Exteriors, Inc., 2010 WL 3940592, *1 (M.D.
Tenn. Oct. 6, 2010) and Pettrey v. Enterprise Title Agency, Inc., 2006 WL 3342633 *3
(N.D.Ohio Nov. 17, 2006)). The Court determined that plaintiff was seeking a
declaration that the policy does not provide coverage and that defendant was seeking in
the counterclaim a declaration that the policy does provide coverage and also that
plaintiff was obligated to indemnify it for damages. The Court found that the
counterclaim was not wholly redundant of the plaintiff=s complaint and denied the motion
to dismiss. Id.
Similarly, in Handi-Craft Company v. Travelers Casualty & Surety Co., No.
4:12CV63 JCH, 2012 WL 1432566 (E.D.Mo. Apr. 25, 2012), the Court also considered
whether the defendant=s counterclaim should be dismissed as duplicative. In that case
the plaintiff purchased an insurance policy from defendant. Plaintiff was subsequently
sued and tendered the suit to the insurance company. However, the insurance
company refused coverage of the suit. Plaintiff eventually sued the insurance company
for breach of contract, vexatious refusal to pay and vexatious delay and requested a
declaratory judgment that defendant had a duty to defend and indemnify. Defendant
filed an Answer and Counterclaim for Declaratory Relief, based on various exclusions in
the policy. The Court found that defendant=s counterclaim was not a mirror image of
the complaint, because the counterclaim cited specific exclusions that the defendant

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claimed barred coverage under the policy, while the plaintiff=s complaint asserted
breach of contract and vexatious refusal to pay. Id. at * 3.
In the instant case, the Court also finds that the defendant=s counterclaim is not a
mirror image of plaintiff=s petition. The petition asserts that defendant breached the
contract and vexatiously refused to pay. However, the counterclaim requests a
declaration of no coverage due to plaintiff=s failure to comply with various duties after
the loss occurred, such as cooperating in the investigation, accurately listing inventory,
providing information and documentation and executing a sworn Proof of Loss
statement. Defendant also alleges that plaintiff materially misrepresented the value
and amount of its inventory which was damaged and/or destroyed. Additionally,
defendant seeks recovery of money it has paid in an effort to secure plaintiff=s
cooperation in providing the necessary information and documentation. Defendant is
also seeking recovery of its costs and expenses under Missouri law, including attorneys=
fees. Thus, because the claims are distinct from the claims raised in plaintiff=s petition,
the Court finds that the counterclaim is not redundant of plaintiff=s petition. Therefore,
the Court hereby DENIES plaintiff=s Motion to Dismiss (Doc. # 10).

S/ FERNANDO J. GAITAN, JR.
Fernando J. Gaitan, Jr.
Chief United States District Judge

Date: November 26, 2012
Kansas City, Missouri

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