L.R. Costanzo Company, Inc. v. Ohio Casualty Insurance Company et al

Filing 13

MEMORANDUM and ORDER denying 8 Motion to Dismiss Signed by Honorable James M. Munley on 6/11/10 (sm, )

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA L.R. COSTANZO COMPANY, INC., Plaintiff : No. 3:10cv774 : : (Judge Munley) : : v. : : OHIO CASUALTY INSURANCE : COMPANY; and : AMERICAN FIRE & CASUALTY : INSURANCE COMPANY, : Defendants : ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
M E M O R AN D U M B e fo re the court is Defendant Ohio Casualty Insurance Company's motion to dismiss. Having been fully briefed, the matter is ripe for disposition. B a c k g ro u n d T h is case arises form a dispute over insurance coverage between plaintiff and d e fe n d a n ts . Plaintiff, a construction company, served as the general contractor for a building erected in Tobyhanna Township, Pennsylvania around 2001 for the P o c o n o Mountain Regional Police Commission ("PMRPC"). (Complaint (hereinafter "C o m p lt.") Exh. A to Notice of Removal (Doc. 1) at ¶ 4). In 2009, plaintiff received n o tic e that this building had begun to suffer water leakage problems. (Id. at ¶ 5). The party complaining about the building alleged that the leaking was the result of im p ro p e r installation of insulation, improper ventilation and the use of non-

conforming products in the construction. (Id. at ¶¶ 5-7). The PMRPC filed suit a g a in s t plaintiff in the Court of Common Pleas of Monroe County, Pennsylvania on S e p te m b e r 20, 2009. (Id. at ¶ 8). That lawsuit raises claims of negligence, breach o f contract, breach of warranty and breach of the duty of good faith against the p la in tiff here. (Id. at ¶¶ 9-10). Plaintiff alleges that defendants provided plaintiff with insurance coverage th ro u g h a general liability insurance policy. (Id. at ¶ 3). W h e n served with the M o n ro e County complaint, plaintiff tendered that document to the defendants. (Id. at ¶ 13). Plaintiff requested that defendants retain counsel and appear in court to d e fe n d that case. (Id.). Defendants refused to do so. (Id. at ¶ 13). Plaintiff then filed the instant complaint in the Court of Common Pleas of L a c k a w a n n a County, Pennsylvania. The complaint raises two counts. Count I a lle g e s bad faith, contending that defendants did not conduct a reasonable in ve s tig a tio n of the claims at issue and unreasonably refused to defend plaintiff in th e Monroe County action. Count II raises a breach of contract claim, contending th a t defendants refused to comply with the terms of the insurance contract by re fu s in g to supply plaintiff with a defense. Defendants then removed the case to this court. (See Doc. 1). After re m o vin g the case, defendants file the instant motion to dismiss. The parties then b rie fe d the issues, bringing the case to its present posture. Jurisdiction

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Plaintiff is a Pennsylvania corporation with its principal place of business in th a t Commonwealth. Defendants are Ohio corporations with their principal places of b u s in e s s in that state. The amount in controversy exceeds $75,000. The court th e re fo re has jurisdiction pursuant to 28 U.S.C. § 1332. The court is sitting in d ive rs ity, and therefore the substantive law of Pennsylvania shall apply. Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d Cir. 2000) (citing Erie R.R. v. T o m p k in s , 304 U.S. 64, 78 (1938)). Legal Standard D e fe n d a n t seeks dismissal of the complaint pursuant to Federal Rule of Civil P ro c e d u re 12(b)(6). W h e n a defendant files a motion pursuant to Rule 12(b)(6), all w e ll-p le a d e d allegations of the complaint must be viewed as true and in the light m o s t favorable to the non-movant to determine whether "under any reasonable re a d in g of the pleadings, the plaintiff may be entitled to relief." Colburn v. Upper D a rb y Township, 838 F.2d 663, 665-66 (3d Cir. 1988) (citing Estate of Bailey by O a re v. County of York, 768 F.3d 503, 506 (3d Cir. 1985), (quoting Helstoski v. G o ld s te in , 552 F.2d 564, 565 (3d Cir. 1977) (per curiam)). The court may also c o n s id e r "matters of public record, orders, exhibits attached to the complaint and ite m s appearing in the record of the case." Oshiver v. Levin, Fishbein, Sedran & B e rm a n , 38 F.3d 1380, 1384 n.2 (3d Cir. 1994) (citations omitted). The court does n o t have to accept legal conclusions or unwarranted factual inferences. See CurayC ra m e r v. Ursuline Acad. of W ilm in g to n , Del., Inc., 450 F.3d 130, 133 (3d Cir. 2006)

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(citing Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997)). The federal rules require only that plaintiff provide "`a short and plain s ta te m e n t of the claim showing that the pleader is entitled to relief,'" a standard w h ic h "does not require `detailed factual allegations,'" but a plaintiff must make "`a s h o w in g , rather than a blanket assertion, of entitlement to relief' that rises `above the s p e c u la tiv e level.'" McTernan v. City of York, 564 F.3d 636, 646 (3d Cir. 2009) (q u o tin g Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). The "c o m p la in t must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (q u o tin g Twombly, 550 U.S. at 570). Such "facial plausibility" exists "when the p la in tiff pleads factual content that allows the court to draw the reasonable inference th a t the defendant is liable for the conduct alleged." Id. D is c u s s io n D e fe n d a n t Ohio Casualty seeks dismissal of both counts of plaintiff's c o m p la in t. The court will address each in turn. A. Breach of Contract D e fe n d a n t first argues that the complaint should be dismissed because p la in tiff has not specifically pled that a contract of insurance existed between the p a rtie s . Defendant points out that plaintiff has not appended any contract between th e parties to the complaint and has not pled specifically that such a contract existed. The exhibits to the complaint indicate that the insurance policy was between 4

American Fire & Casualty Company, not between Ohio Casualty and plaintiff. As s u c h , defendant argues, plaintiff cannot make out a claim on this issue. In Pennsylvania, "[t]hree elements are necessary to plead properly a cause of a c tio n for breach of contract: "`(1) the existence of a contract, including its essential te rm s , (2) a breach of duty imposed by the contract and (3) resultant damages.'" W illia m s v. Nationwide Mut. Ins. Co., 750 A.2d 881, 884 (Pa. Super. Ct. 2000) (q u o tin g Corestates Bank, Nat'l Assn. v. Cutillo, 723 A.2d 1053, 1057 (Pa. Super. Ct. 1 9 9 9 )). Defendant apparently agrees that plaintiff has pled properly the second and th ird elements of a breach-of-contract claim, but contends that the complaint does n o t sufficiently allege the existence of an insurance contract between plaintiff and D e fe n d a n t Ohio Casualty. P la in tiff alleges that "[a]t all times relevant hereto, the above named D e fe n d a n ts provided Costanzo with a General Liability Insurance Policy No. B K A (0 8 )5 3 -5 1 -5 0 -5 0 ." (Complt. at ¶ 3). The plaintiff thus alleges the existence of a n insurance contract between the parties. Defendant, however, insists that exhibits attached to the complaint d e m o n s tra te that the insurance policy did not involve Ohio Casualty. The insurance c o n tra c t is attached as an exhibit to the complaint, and defendant contends that the c o n tra c t is between plaintiff and American Fire. (See Exh. A to Notice of Removal (D o c . 1)). Some evidence indicates, however, that Ohio Casualty participated in the w ritin g of the policy. Ohio Casualty-Pennsylvania is listed as the "servicing office" on

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this policy. The logos of both Ohio Casualty and American Fire head each page of th e policy. (Id.). Moreover, plaintiff submits copies of bills paid on the policy in q u e s tio n as exhibits to its brief in opposition to plaintiff's motion. (See Exh. A to B rie f in Opposition (Doc. 11)). The bill comes from Ohio Casualty, not American F ire . (Id.). The insured is instructed to make the check payable to Ohio Casualty In s u ra n c e Company. (Id.). T h e court finds that plaintiff's allegations­supported by exhibits to the c o m p la in t­ s u ffic ie n tly allege that a contract of insurance existed between Ohio C a s u a lty and plaintiff at the time in question. Further discovery may reveal that Ohio C a s u a lty Insurance Company had no role in writing the policy in question, or that a n o th e r name should be substituted in the caption for Ohio Casualty Insurance C o m p a n y1 , but the court here considers a motion to dismiss, rather than a motion p re s e n te d after discovery has occurred. The allegations in the complaint are s u ffic ie n t to raise a claim against Ohio Casualty Insurance Company. As the in s u ffic ie n c y of this allegation was the only basis for defendant's motion to dismiss th is claim, the court will deny the motion on those grounds. B. Bad Faith D e fe n d a n t Ohio Casualty also contends that plaintiff's bad faith claim should

Defendant suggests that plaintiff is confusing Ohio Casualty Group, which includes both American Fire and Ohio Casualty Insurance Company as subsidiaries, with Ohio Casualty Insurance Company. In that case, discovery may reveal that the proper defendant would be Ohio Casualty Group. At this point, however, the allegations in the complaint are sufficient to name both American Fire and Ohio Casualty Insurance. 6

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be dismissed. As with the breach of contract claim, Ohio Casualty argues that p la in tiff cannot prevail on this claim because no insurance contract existed between th e parties. For the same reasons that the court will deny the motion on plaintiff's b re a c h of contract claim, the court will deny the motion on the bad faith claim. Plaintiff has sufficiently alleged that a contract of insurance existed between the p a rtie s . The discovery process will provide a means to explore this claim. C o n c lu s io n F o r the reasons stated above, the court will deny the defendant's motion. An a p p ro p ria te order follows.

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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA L.R. COSTANZO COMPANY, INC., Plaintiff : No. 3:10cv774 : : (Judge Munley) : : v. : : OHIO CASUALTY INSURANCE : COMPANY; and : AMERICAN FIRE & CASUALTY : INSURANCE COMPANY, : Defendants : ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
ORDER AN D NOW, to wit, this 11th day of June 2010, Defendant Ohio Casualty In s u ra n c e Company's motion to dismiss (Doc. 8) is hereby DENIED. B Y THE COURT:

s / James M. Munley JUDGE JAMES M. MUNLEY U N IT E D STATES DISTRICT COURT

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