McCarty et al v. National Union Fire Insurance Company Of Pittsburgh, PA et al
Filing
24
ENTRY AND ORDER GRANTING MOTION FOR JUDGMENT ON THE PLEADINGS 20 OF DEFENDANT ADMINISTRATORS FOR THE PROFESSIONS OF DELAWARE, INC. AND TERMINATING THIS CASE. Signed by Judge Thomas M. Rose on 5-19-2016. (de)
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON
DAVID C. MCCARTY, et al.,
Plaintiffs,
:
Case No. 3:15-cv-247
:
Judge Thomas M. Rose
v.
:
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA, et al.,
:
:
Defendants.
______________________________________________________________________________
ENTRY AND ORDER GRANTING MOTION FOR JUDGMENT ON THE
PLEADINGS (DOC. 20) OF DEFENDANT ADMINISTRATORS FOR THE
PROFESSIONS OF DELAWARE, INC. AND TERMINATING THIS CASE
______________________________________________________________________________
This case is before the Court on the Motion for Judgment on the Pleadings (Doc. 20) of
Defendant Administrators for the Professions of Delaware, Inc. (“Administrators”) pursuant to
Fed. R. Civ. P. 12(c). For the reasons discussed below, the Court GRANTS the Motion for
Judgment on the Pleadings. As the Court’s ruling dismisses all of the Plaintiffs’ remaining
claims, the Court also directs the Clerk to TERMINATE this action on the Court’s docket.
I.
BACKGROUND
Plaintiffs David McCarty and Cynthia McCarty (the “McCartys”) retained Plaintiff
Miguel Pedraza, Esq.,1 (“Pedraza”) as their attorney in a lawsuit brought by Gary R. Gorby &
Associates, LLC (“Gorby”) in the Common Pleas Court for Clark County, Ohio. (Doc. 4, ¶ 1011.) In the lawsuit, filed on December 11, 2007, Gorby alleged that the McCartys breached a
contract for the purchase of an insurance agency. Gary R. Gorby & Assoc., L.L.C. v. McCarty,
2011-Ohio-1983, ¶ 2 (Ct. App. 2nd District). Pedraza represented to the McCartys that he had
1
Pedraza was realigned as a Plaintiff in this action pursuant to the Court’s November 23, 2015 Entry and Order.
(Doc. 11.)
prepared an Answer and Counterclaim in response to Gorby’s Complaint, but Pedraza had not
done so. (Doc. 4, ¶ 16.) As a result, on February 22, 2010, the Common Pleas Court entered
default judgment against the McCartys and in favor of Gorby in the amount of $69,896.00 in
actual damages, $65,000.00 in punitive damages, and $21,363.79 in attorney fees, plus interest
and costs. (Id. at ¶ 17.)
On January 4, 2011, the McCartys filed a legal malpractice action against Pedraza in
Clark County Common Pleas Court for breach of his professional responsibilities in the Gorby
lawsuit. (Id. at ¶ 18.) On January 27, 2015, the McCartys obtained a final judgment against
Pedraza in the legal malpractice action in the amount of $275,825.29. (Id. at ¶ 29.)
On June 11, 2015, the McCartys filed the Complaint in this case in Clark County
Common Pleas Court.
(Doc. 1-1.)
The McCartys named as Defendants Administrators,
National Union Fire Insurance Company of Pittsburgh, PA (“National Union), American
International Group (“AIG”), and Pedraza. (Id.) On July 9, 2015, Defendants National Union
and Administrators removed the case to this Court pursuant to 28 U.S.C. § 1332 (diversity
jurisdiction). (Doc. 1.) On July 16, 2015, National Union and Administrators filed a motion to
realign Pedraza, who had been named a Defendant, as a Plaintiff. (Doc. 5.) On the same day,
AIG filed a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6). (Doc.
6.) On July 31, 2015, the McCartys filed a motion to remand the case to Clark County Common
Pleas Court. (Doc. 8.) On November 23, 2015, the Court granted the motion to realign Pedraza
as a Plaintiff, granted AIG’s motion to dismiss, and denied the McCartys’ motion to remand.
(Doc. 11.) Administrators and National Union were the only remaining defendants at that point.
The Complaint alleges that on February 1, 2010, Pedraza continued his legal malpractice
insurance with National Union through Administrators, which provided “marketing,
underwriting, billing, collections and/or data processing services to or for the benefit of National
Union.” (Doc. 4, ¶ 4, 6, 8.) Pedraza’s insurance policy had a retroactive effective date of
February 21, 1992 and expiration date of February 21, 2011. (Id. at ¶ 8.).
The McCartys allege that National Union and Administrators had “both actual and
constructive notice” (id. at ¶ 21) of their claims against Pedraza based on the following facts:
Plaintiffs filed the legal malpractice action against Pedraza on January 4,
2011 (id. at ¶ 18);
The docket for the legal malpractice action was publicly available (id. at ¶
19);
National Union and Administrators “had access to and was [sic] able to
review the docket of the Clark County Clerk of Courts” (id. at ¶ 20); and
By letter dated December 8, 2011, the McCartys’ counsel directly notified
Administrators of their legal malpractice action (id. at ¶ 23, Ex. D).
The McCartys allege that National Union and Administrators have a duty to provide coverage for
the judgment against Pedraza in the legal malpractice action, but have unlawfully refused to do
so. (Id. at ¶ 26-27.)
On July 16, 2015, National Union filed an Answer (Doc. 7) to the Complaint; and on
December 21, 2015, National Union filed the Motion for Judgment on the Pleadings (Doc. 12).
National Union argued that it was entitled to judgment on the pleadings because the legal
malpractice action against Pedraza was not timely reported to National Union in accordance with
the terms of Pedraza’s insurance policy. (Id. at 1.) On March 23, 2016, the Court granted
National Union’s Motion for Judgment on the Pleadings because National Union did not have
actual or constructive notice of the malpractice action “merely by virtue of its filing in a publicly
available docket.” (Doc. 19 at 9.) At this point, Administrators is the only remaining defendant.
On March 28, 2016, Administrators filed a Motion for Judgment on the Pleadings. (Doc.
20.) Just as National Union argued, Administrators argues that it is entitled to judgment on the
pleadings because the legal malpractice action was not timely reported under the policy.
II.
STANDARD OF REVIEW
When considering a Rule 12(c) motion for judgment on the pleadings, all well-pleaded
allegations must be taken as true and construed most favorably toward the non-movant.
Trzebuckowski v. City of Cleveland, 319 F.3d 853, 855 (6th Cir. 2003). Although a court must
accept well-pleaded allegations, it “need not accept as true legal conclusions or unwarranted
factual inferences.” Morgan v. Church’s Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987).
Detailed factual allegations are not required, but a party’s “obligation to provide the ‘grounds’ of
his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). Thus, a complaint will not withstand a motion to dismiss if it offers only “naked
assertion[s]” without “further factual enhancement.” Twombly, 550 U.S. at 557.
The Supreme Court further held that the factual allegations in 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) (quoting Twombly, 550 U.S. at 570). “A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.”
Id. (citing
Twombly, 550 U.S. at 556). In sum, “a civil complaint only survives a motion to dismiss if it
‘contain[s] sufficient factual matter, accepted as true, to state a claim to relief that is plausible on
its face.’” Courie v. Alcoa Wheel & Forged Prods., 577 F.3d 625, 629 (6th Cir. 2009) (alteration
in original) (quoting Iqbal, 556 U.S. at 678).
III.
ANALYSIS
As did National Union, Administrators contends that, under Pedraza’s policy, a claim against
the insured must be reported no later than sixty days after the policy period ended or before the
end of the extending reporting period, if applicable.2 Administrators concedes that the complaint
against Pedraza was filed within the policy period. Administrators argues that the McCartys’
claim against the policy was not reported in accordance with its provisions and therefore
Administrators cannot be liable. (Doc. 12 at 6.)
In response, the McCartys argue that the Complaint’s allegation that Administrators “had
both actual and constructive notice of Plaintiffs’ claims against Pedraza when Plaintiffs filed the
Legal Malpractice Action” (Doc. 4, ¶ 21) is sufficient to withstand dismissal at the pleading
stage. (Doc. 21 at 3.) The McCartys’ therefore conclude—as they did in response to National
Union’s motion for judgment on the pleadings (Doc. 13)—that the Complaint’s allegations state
a claim under the policy (Doc. 21).
The Court previously found that Ohio law is the applicable law in this case. (Doc. 19 at 6).
Therefore, under Ohio law, the interpretation of insurance contracts is a question of law. Leber
v. Smith, 70 Ohio St.3d 548, 553, 639 N.E.2d 1159 (1994). A court must enforce the clear and
unambiguous language of a contract according to the plain and ordinary meaning of the words
used. Cincinnati Indemn. Co. v. Martin, 85 Ohio St.3d 604, 605, 607, 710 N.E.2d 677 (1999).
The pertinent part of the Insuring Agreement states:
DECLARATIONS
***
2 POLICY PERIOD
Inception Date: 02/21/2010
Expiration Date: 02/21/2011
A.M. at the address stated in Item 1 above.
2
It is undisputed that no extended reporting period applied under Pedraza’s policy. (Doc. 4, Ex. A at 14).
12:01
***
1.
INSURING AGREEMENT
(a)
Coverage
(1)
Coverage for Loss
This policy will pay on the behalf of the Insured
any Loss arising from a Claim first made against
the Insured during the Policy Period or, if
applicable, the Extended Reporting Period and
reported to the Insurer pursuant to the terms of this
policy for any Wrongful Act committed or omitted
by an Insured, on or after the Retroactive Date,
whenever or wherever such Wrongful Act has been
committed by the Insured in the rendering or
failing to render Legal Services for others.
***
4.
CONDITIONS
***
(f)
Notice of Claim and Claim Reporting Procedures
(1)
Notice hereunder shall be given in writing to the addressee
and at the address identified in Item 7 of the Declarations.
Notice shall include and reference this policy number as
indicated in the Declarations. If mailed, the date of mailing
shall constitute the date that such notice was given and
proof of mailing shall be sufficient proof of notice.
(2)
For all coverage under this policy:
(i)
before coverage will apply, notice in writing
of a Claim made against an Insured must
be given to the Insurer as soon as
practicable after notice of such Claim is
reported to the Insured, but in all events no
later than either:
(A)
sixty (60) days after the end of the
Policy Period; or
(B)
the end of any applicable Extended
Reporting Period.
(Doc. 7-1). The policy’s language is clear and unambiguous. In order for there to be coverage
of the claim, written notice must be provided to Administrators and notice must be provided
during one of the referenced periods. Notice should be given “as soon as practicable,” but “no
later than either” sixty days after the end of the Policy Period or the end of the Extended
Reporting Period. The sixty day period following the end of the Policy Period was February 21,
2011 to April 22, 2011. Administrators did not receive written notice until December 8, 2011.
This written notice was not timely under Pedraza’s policy.
The Complaint’s allegation that Administrators “had both actual and constructive notice”
of the claim against Pedraza when the McCartys filed their legal malpractice action is a legal
conclusion that the Court is not obliged to accept on a Rule 12(c) motion. Church’s Fried
Chicken, 829 F.2d at 12. This legal conclusion is based on the argument—also alleged in the
Complaint and the Plaintiffs’ Response in Opposition (Doc. 13) to National Union’s Motion for
Judgment on the Pleadings (Doc. 12)—that Administrators had notice of the legal malpractice
action because the Clark County Clerk’s docket is publicly available. Thus, the McCartys argue
that Administrators had an obligation to continuously review the dockets of Ohio courts to
determine if there were any claims against Pedraza. The McCartys do not cite to any provision
of Pedraza’s policy that imposes such an obligation on Administrators. On the contrary, the
policy clearly provides that written notice must be sent to the insurer “as soon as practicable” but
not later than the time periods stated in the policy. The Court rejects the McCartys’ argument
that Administrators had actual or constructive notice of their legal malpractice action merely by
virtue of its filing in a publicly available docket. See Harwell v. State Farm Mutual Auto Ins.
Co., 896 S.W.2d 170, 174 (Tex. 1995); KPFF, Inc. v. California Union Ins. Co., 56 Cal.App.4th
963, 977, 66 Cal.Rptr.2d 36, 45 (1st Dist. 1997). As a result, Administrators cannot be liable
under Pedraza’s policy and the Complaint fails to state a claim against it. See U.S. v. A.C. Strip,
868 F.2d 181, 187 (6th Cir. 1989); Elkins v. American Int’l Spec. Lines Ins. Co., 611 F.Supp.2d
752, 762 (S.D. Ohio 2009); Hedmond v. Admiral Ins. Co., 2003 WL 21791589, at *4 (Ohio App.
10th Dist. Aug. 5, 2003).
IV.
CONCLUSION
For the reasons stated above, the Court GRANTS Administrator’s Motion for Judgment
on the Pleadings (Doc. 20). The claims against Administrators are DISMISSED. As the Court’s
ruling dismisses all of the Plaintiffs’ remaining claims, this case shall be TERMINATED on the
Court’s docket.
DONE and ORDERED in Dayton, Ohio, this Thursday, May 19, 2016.
s/Thomas M. Rose
________________________________
THOMAS M. ROSE
UNITED STATES DISTRICT JUDGE
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