Momentive Specialty Chemicals, Inc. et al v. Chartis Specialty Insurance Company et al
Filing
84
ORDER granting in part and denying in part 72 Motion for Judgment on the Pleadings; For the foregoing reasons, defendant Williss motion for judgment on the pleadings (Doc. 72) is DENIED with respect to plaintiffs claim for negligent misrepresentation and GRANTED with respect to plaintiffs claim for declaratory judgment. Signed by Judge James L Graham on 12/18/12. (ds)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Momentive Specialty Chemicals, Inc., et al.,
Case No. 2:11-cv-583
Plaintiffs,
v.
Judge Graham
Chartis Specialty Insurance Company, et al.,
Magistrate Judge Deavers
Defendants.
OPINION AND ORDER
This matter is before the court on a motion for judgment on the pleadings pursuant to Federal
Rule of Civil Procedure 12(c), filed by defendant Willis North America Inc. (Willis). Plaintiffs
Momentive Specialty Chemicals, Inc. (Momentive) and Momentive Quimica de Brasil Ltda
(Momentive Brazil) bring this action against two insurance brokers, Willis and Aon Risk Services
Northeast, Inc. (Aon), and an insurance company (Chartis Specialty Insurance Co.). The dispute
concerns insurance coverage following the explosion of a tanker ship containing methanol, one-third
of which had been ordered by Momentive Brazil. Plaintiff’s amended complaint asserts eight
counts: Three counts for declaratory relief, one against each defendant (counts 1, 3, and 6); three
counts for breach of contract (counts 2, 4, and 7); and counts for negligence against Willis and Aon
(counts 5 and 8). See doc. 70 at 20-28. Willis seeks dismissal of plaintiffs’ third and fifth counts
for declaratory relief and negligence. Doc. 72.
I.
Factual Background
On November 15, 2004, a Chilean tanker ship, Vicuña, carrying 15,000 tons of methanol
exploded in Paranaguá Bay, Brazil. Doc. 70 at 9. An estimated 291,000 liters of fuel oil spilled into
the bay. Doc. 70 at 9. Momentive has since faced claims for damages from fishermen, who allege
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that their livelihood has been affected by the spill, and claims from an environmental group alleging
that the spill damaged wildlife in the bay. Doc. 70 at 9-12. In addition, a Brazilian environmental
agency, the Environmental Institute of Parana, has imposed fines on Momentive. Doc. 70 at 12-13.
According to plaintiffs, Momentive entered into two insurance brokerage agreements prior
to the accident. In May of 2000, Momentive contracted with Willis as its worldwide insurance
broker. Doc. 70 at 4-5. In August, 2004, “Aon was appointed as Momentive’s ‘exclusive insurance
representative and consultant/broker (both internal and domestic)’ except with respect to policies
effective July 1, 2004, which had been placed by Willis.” Doc. 70 at 6. Plaintiffs allege that a
December 15, 2000 agreement obligated Willis to, inter alia, “[a]ssist and consult . . . on all matters
of risk management and insurance” and “[a]ssume immediate responsibility for handling claim and
coverage issues with all existing and prior insurance companies.” Doc. 70 at 4. Plaintiffs allege that
the agreement also indemnified Momentive agaisnt any claim, liability, or loss arising out of services
performed under the agreement. Doc. 70 at 5. Plaintiffs allege that the agreement between
Momentive and Willis was in effect at the time of the accident “with respect to all of Plaintiff’s
policies in effect from July 1, 2004 to July 1, 2005, which were placed by Willis.” Doc. 70 at 5.
On November 16, 2004, the day following the accident, a Momentive Brazil manager notified
a Willis representative in Brazil of the explosion. That same day, Adair Dinarte da Rocha, another
Willis representative, replied by email that “We are providing notice to the Insurance Co. Ask to
keep informed about the subject.” Doc. 70 at 14. In the following months, representatives of the
two companies continued to communicate. In August 2005, Richard Shock, Momentive’s Director
of Risk Managment, e-mailed Janice Hackett, a Willis representative: “Per your discussion
yesterday, please get as much back ground [sic] as possible regarding this insurance matter. What
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coverages responded and the amounts of payments.” Doc. 70 at 14. According to plaintiffs, Willis
never followed through on Dinarte da Rocha’s representation that “[w]e are providing notice to the
Insurance Co.” or its contractual duty to handle claim and coverage issues. Doc. 70 at 15.
Momentive alleges that it relied on Dinarte da Rocha’s representation, and that the insurance
company subsequently denied coverage for the accident on the grounds of late notice. Doc. 70 at
15, 16.
II.
Legal Standard
A motion for judgment on the pleadings pursuant to Rule 12(c) should 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, 45-46 (1957). See also
Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. 1998) (“The standard of review applicable to
motions for ‘judgment on the pleadings’ under Fed. R. Civ. Pro. 12(c) is the same de novo standard
applicable to motions to dismiss under Rule 12(b)(6).”). All well-pleaded allegations must be taken
as true and must be construed most favorably toward the non-movant. Scheuer v. Rhodes, 416 U.S.
232, 236 (1974). A motion for judgment on the pleadings is directed solely to the complaint and any
exhibits attached to it. Roth Steel Prods. v. Sharon Steel Corp., 705 F.2d 134, 155 (6th Cir. 1983).
The merits of the claims set forth in the complaint are not at issue on a motion for judgment on the
pleadings. Consequently, a complaint will be dismissed pursuant to Fed. R. Civ. P. 12(c) if there
is no law to support the claims made, or if the facts alleged are insufficient to state a claim, or if on
the face of the complaint there is an insurmountable bar to relief. See Rauch v. Day & Night Mfg.
Corp., 576 F.2d 697, 702 (6th Cir. 1978); Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir. 1976). The
court “need not accept as true legal conclusions or unwarranted factual inferences.” Morgan v.
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Church’s Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987) (citations omitted).
III.
Analysis
In a prior order, the Court dismissed two of three causes of action brought against defendant
Aon. Doc. 56. The Court dismissed plaintiff’s claims for negligence and declaratory judgment
against Aon. Regarding negligence, the Court held that “[b]ecause Momentive’s claims against Aon
are purely economic ones, the economic loss doctrine bars the negligence claim against Aon.” Doc.
56 at 8.
The Court further considered whether plaintiffs had stated a claim for negligent
misrepresentation and held that plaintiffs had not.
The complaint did not allege a false
representation by Aon or that plaintiffs had relied on such a representation. Doc. 56 at 10.
Regarding declaratory judgment, the Court held that plaintiffs “seek[] little more than a declaration
as to the obligations required pursuant to either the contract between the parties or the alleged special
relationship between them. . . . This is not a sufficiently active controversy for which the court
should exercise its declaratory judgment powers.” Doc. 56 at 11.
Willis seeks dismissal of plaintiffs negligence and declaratory judgment counts for the same
reasons that the Court dismissed similar counts against Aon. Doc. 72. However, since the Court’s
order dismissing two of the three Counts against Aon, plaintiffs have amended their complaint and
it is the amended complaint that must be examined in consideration the present motion. See doc.
70.
Negligence
Willis argues that plaintiffs’ negligence claim must be dismissed for the same reasons that
the Court dismissed the negligence claim against Aon–because plaintiff alleges only economic losses
and the economic loss doctrine prevents a negligence suit premised on economic damages alone.
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See doc. 56 at 7. Plaintiffs do not argue to the contrary. They have only alleged economic losses
and so may not sustain a negligence claim against defendant Willis. See Corporex Dev. & Constr.
Mgmt., Inc. v. Shook, Inc., 835 N.E.2d 701, 704 (Ohio 2005).
Plaintiffs do, however, argue that the negligence count should be construed as one for
negligent misrepresentation. In Ohio, “[t]he elements of negligent misrepresentation are as follows:
‘One who, in the course of his business, profession or employment, or in any other transaction in
which he has a pecuniary interest, supplies false information for the guidance of others in their
business transactions, is subject to liability for pecuniary loss caused to them by their justifiable
reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or
communicating the information.” Delman v. City of Cleveland Heights, 534 N.E.2d 835, 838 (Ohio
1989) (quoting the Restatement (Second) of Torts § 552(1), at 126-27 (1965)). Plaintiffs’ allegations
satisfy these elements. Plaintiffs allege that Adair Dinarte da Rocha told Momentive by email that
“We are providing notice to the Insurance Co.” Doc. 70 at 14. Plaintiffs allege that this statement
was false and that Willis never provided notice to the insurance company. Doc. 70 at 15. Plaintiffs
allege that they relied on Dinarte da Rocha’s statement and did not notify the insurance company,
and that coverage was subsequently denied for lack of notice. Doc. 70 at 16.
Though the amended complaint includes allegations that state a claim for negligent
misrepresentation, Willis argues that plaintiffs may not state such a claim because their complaint
does not explicitly include a count labeled “negligent misrepresentation.” True, most of the relevant
allegations appear to be related to the section labeled “FIFTH CAUSE OF ACTION (Negligence
against Willis).” Yet, the labeling of plaintiffs’ fifth cause of action as “negligence” does not
preclude the complaint from stating a claim for negligent misrepresentation. It would have been
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prudent practice for plaintiffs, had they wished to assert a claim for negligent misrepresentation, to
clearly identify allegations that support such a claim. But a notice pleading system does not require
the recitation of linguistic formulae. Instead, plaintiffs need only provide a “short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). When
considering a motion under Rule 12(b)(6) to dismiss a pleading for failure to state a claim, a court
must determine whether the complaint “contain[s] 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) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Here, allegations that state a claim for
negligent misrepresentation are clearly included in plaintiffs’ complaint.
That the relevant
allegations do not appear in a formal count labeled “negligent misrepresentation” does not change
the fact that plaintiffs have stated such a claim.
Declaratory Judgment
Willis argues that plaintiffs’ declaratory relief claim should be dismissed for the same reasons
that the Court dismissed a similar claim against Aon–because plaintiffs seek “little more than a
declaration as to the obligations required pursuant to either the contract between the parties or the
alleged special relationship between them.” Doc. 56 at 11. Indeed, plaintiffs’ third count seeks
simply a declaration of “the parties’ rights, duties and obligations.” Doc. 70 at 22. But the only
rights, duties and obligations that plaintiffs identify as in need of clarification are those that are
necessary to their other counts against Willis–for negligent misrepresentation and breach of contract.
Plaintiffs assert that the court should declare that defendant Willis had a contractual relationship with
plaintiffs and was responsible for procuring and administering plaintiffs’ insurance policies. Doc.
76 at 4. Yet, plaintiffs identify no controversy related to these issues other than the controversies
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inherent in plaintiffs’ other claims. Resolution of plaintiffs’ negligent misrepresentation and breach
of contract claims would resolve the very issues for which plaintiffs seek a declaration. In such a
situation, there is no controversy sufficiently active and immediate to justify a declaratory judgment.
See Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941) (“Basically, the
question . . . is whether the facts alleged, under all the circumstances, show that there is a substantial
controversy, between parties having adverse legal interests, of sufficient immediacy and reality to
warrant the issuance of a declaratory judgment.”).
IV.
Conclusion
For the foregoing reasons, defendant Willis’s motion for judgment on the pleadings (Doc.
72) is DENIED with respect to plaintiffs’ claim for negligent misrepresentation and GRANTED with
respect to plaintiffs’ claim for declaratory judgment.
IT IS SO ORDERED.
S/ James L Graham
James L. Graham
UNITED STATES DISTRICT JUDGE
Date: December 18, 2012
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