BITCO General Insurance Corporation v. Wynn Construction Company Inc et al
ORDER granting 12 plaintiff's Motion to Dismiss Wynn Construction Co., Inc.'s Counterclaim and dismissing Wynn's counterclaim [docket no. 11] (as more fully set out).. Signed by Honorable Vicki Miles-LaGrange on 8/11/2017. (ks)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
BITCO GENERAL INSURANCE
WYNN CONSTRUCTION CO., INC.,
and NABHOLZ CONSTRUCTION
Case No. CIV-17-462-M
Before the Court is plaintiff’s Motion to Dismiss Wynn Construction Co., Inc.’s
Counterclaim, filed June 5, 2017. On June 28, 2017, defendant Wynn Construction Co., Inc.
(“Wynn”) filed its response, and on July 5, 2017, plaintiff filed its reply.
On May 15, 2017, Wynn filed its Answer and Counterclaim. Through its counterclaim,
Wynn is alleging a breach of contract claim and a bad faith claim against plaintiff. Plaintiff now
moves, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss Wynn’s counterclaim in
Standard for dismissal
Regarding the standard for determining whether to dismiss a claim pursuant to Federal
Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted, the
United States Supreme Court has held:
To survive a 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. 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. The plausibility standard is not akin to a “probability
requirement,” but it asks for more than a sheer possibility that a
defendant has acted unlawfully. Where a complaint pleads facts that
are merely consistent with a defendant’s liability, it stops short of
the line between possibility and plausibility of entitlement to relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations omitted). Further,
“where the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged - but it has not shown - that the pleader is entitled to relief.”
Id. at 679 (internal quotations and citations omitted). Additionally, “[a] pleading that offers labels
and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does
a complaint suffice if it tenders naked assertion[s] devoid of further factual enhancement.” Id. at
678 (internal quotations and citations omitted). A court “must determine whether the complaint
sufficiently alleges facts supporting all the elements necessary to establish an entitlement to relief
under the legal theory proposed.” Lane v. Simon, 495 F.3d 1182, 1186 (10th Cir. 2007) (internal
quotations and citation omitted). Finally, “[a] court reviewing the sufficiency of a complaint
presumes all of plaintiff’s factual allegations are true and construes them in the light most favorable
to the plaintiff.” Hall v. Bellmon, 935 F.2d 1106, 1109 (10th Cir. 1991).
Plaintiff asserts that Wynn’s counterclaim fails to state a legally cognizable claim for relief
under Oklahoma law since plaintiff has provided a defense to Wynn in the arbitration proceeding
initiated by defendant Nabholz Construction Services (“Nabholz”) against Wynn pursuant to a
reservation of plaintiff’s rights to investigate and determine its coverage obligations and Wynn has
not become legally obligated to pay any damages to Nabholz. Specifically, plaintiff asserts that it
has defended Wynn in the arbitration proceeding pursuant to a reservation of rights and continues
to provide a defense. Plaintiff, thus, asserts that there has been no breach of the duty to defend.
Additionally, plaintiff asserts that it cannot possibly have breached a contractual duty to indemnify
because the insurance contract requires indemnity only for those sums that the insured becomes
legally obligated to pay as damages and Wynn has not alleged that it has become legally obligated
to pay any damages to Nabholz in the arbitration proceeding or otherwise. Plaintiff, thus, asserts
that there has been no breach of the duty to indemnify. Plaintiff, therefore, contends that because
it has fulfilled its contractual obligations to Wynn and exercised its rights permitted under
Oklahoma law, Wynn cannot state a claim for breach of contract or breach of the duty of good
faith and fair dealing.
Wynn asserts that it has stated a viable counterclaim for both breach of contract and bad
faith. Wynn contends that plaintiff’s provision of its defense to Wynn was conditional and that
after seven years of providing a defense, Wynn is entitled to an unconditional defense. Wynn
further contends that an insurer can be liable for bad faith even when the insured does not prevail
on its breach of contract claim.
Breach of contract claim
In order to recover on its breach of contract claim, Wynn must show: (1) the formation of
a contract; (2) breach of that contract; and (3) damages as a direct result of the breach. See Dig.
Design Grp., Inc. v. Info. Builders, Inc., 24 P.3d 834, 843 (Okla. 2001). Having carefully reviewed
Wynn’s counterclaim, and presuming all of Wynn’s factual allegations are true and construing
them in the light most favorable to Wynn, the Court finds that Wynn has failed to set forth
sufficient factual allegations to state a breach of contract claim. Specifically, the Court finds that
Wynn has not set forth any facts showing there was any breach of the insurance policies by
plaintiff. Instead, the facts alleged show that plaintiff has provided, and continues to provide, a
defense to Wynn in the arbitration proceeding, albeit under a reservation of rights. As plaintiff is
providing a defense to Wynn, the Court finds there can be no breach of any duty to defend under
the insurance policies. Additionally, Wynn has alleged no facts showing it has become legally
obligated to pay any damages to Nabholz in the arbitration proceeding or otherwise. Therefore,
the Court finds there can be no breach of any duty to indemnify under the insurance policies.
Accordingly, the Court finds that Wynn’s counterclaim for breach of contract should be dismissed.
Bad faith claim
Under Oklahoma law, a bad faith claim must be based upon an insurer’s wrongful denial
of a claim, failure to pay, failure to defend, etc. See Vining v. Enter. Fin. Grp., Inc., 148 F.3d
1206, 1214 (10th Cir. 1998) (“the tort of bad faith must be based upon an insurer’s wrongful denial
of a claim”); Duensing v. State Farm Fire and Cas. Co., 131 P.3d 127, 137 (Okla. Civ. App. 2005)
(“Tort liability may be imposed only where there is a clear showing that the insurer, unreasonably
and in bad faith, withholds payment of the claim of its insured.”). In its counterclaim, Wynn does
not allege any wrongful denial of its claim, any failure to pay or indemnify, nor any failure to
defend. Accordingly, the Court finds that Wynn has failed to state a bad faith claim and said claim
should be dismissed.
For the reasons set forth above, the Court GRANTS plaintiff’s Motion to Dismiss Wynn
Construction Co., Inc.’s Counterclaim [docket no. 12] and DISMISSES Wynn’s counterclaim
[docket no. 11].
IT IS SO ORDERED this 11th day of August, 2017.
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