Campmed Casualty & Indemnity Company, Inc. v. Specialists On Call, Inc. et al
MEMORANDUM OPINION AND ORDER - It is therefore ORDERED that Plaintiff Campmed Casualty & Indemnity Company, Inc.s Rule 12(b)(6) Motion to Dismiss Defendant Specialists on Call, Inc.s Original Counterclaim (Dkt. 25 ) is hereby GRANTED IN PART AND DE NIED IN PART. It is further ORDERED that Plaintiffs Rule 12(b)(6) Motion to Dismiss Dr. Leonard DaSilvas Original Counterclaim (Dkt. 26 ) is hereby GRANTED IN PART AND DENIED IN PART. The Court strikes the waiver affirmative defense asserted in Defe ndant Specialists on Call, Inc. and Defendant Dr. Leonard DaSilvas answers (Dkt. #12: Dkt. #19). Also, the Courtstrikes the demand for a jury determination of all costs and attorneys fees. The affirmative defense of estoppel asserted in both Defendants answers is allowed to stand. It is further ORDERED that Defendant Leonard DaSilva, M.D.s Motion to Strike Campmeds Reply Brief and Amended Reply Brief (Dkt. 34 ) is hereby DENIED. Signed by Judge Amos L. Mazzant, III on 1/26/2017. (baf, )
United States District Court
EASTERN DISTRICT OF TEXAS
CAMPMED CASUALTY & INDEMNITY
SPECIALISTS ON CALL, INC.,
LEONARD DASILVA, M.D.; LINDA
BANK, TOMMIE BANK
Civil Action No. 4:16-CV-00452
MEMORANDUM OPINION AND ORDER
Pending before the Court are Plaintiff Campmed Casualty & Indemnity Company, Inc.’s
Rule 12(b)(6) Motion to Dismiss Defendant Specialists on Call, Inc.’s Original Counterclaim
(Dkt. #25) and Plaintiff’s Rule 12(b)(6) Motion to Dismiss Dr. Leonard DaSilva’s Original
Counterclaim (Dkt. #26). Being that the two motions are nearly identical, the Court will address
the two motions together. After reviewing the relevant pleadings, the Court determines the
motions should be granted in part and denied in part.
This is an insurance coverage dispute arising out of a personal injury lawsuit styled:
Linda and Tommie Bank v. Leonard DaSilva, MD and Specialists on Call, Inc., No. 416-043432014 (416th District Ct., Collin County, Tex. Oct. 30, 2015) (the “Bank Lawsuit”). Plaintiffs in
the underlying suit allege that Specialist on Call, Inc. (“SOC”) and Dr. Leonard DaSilva (“Dr.
DaSilva”) misdiagnosed Linda Bank and failed to maintain an effective system for a correct
diagnosis and treatment recommendation.
Campmed Casualty & Indemnity Company, Inc. (“Campmed”) issued a claims-made
insurance liability policy (the “Policy”) to SOC for the policy period covering November 16,
2012 to November 15, 2013. The Policy provides that Campmed has the right and duty to
defend and indemnify the insured in any suit seeking damages related to policy-covered injury.
Under the Policy terms, a claim for damages against the insured must be first made during the
policy period or an Extended Reporting Period. A claim is first made at the earlier of the
following: (1) when notice of such claim is received by the insured and reported to Campmed in
writing; or (2) when a claim is made directly to Campmed in writing. The Extended Reporting
Period allows a claim received by the insured during the policy period and reported to Campmed
within thirty days after the end of the policy period to be considered reported within the policy
period. For the Extended Reporting Period, the insured must notify Campmed in writing of an
intent to purchase the Extended Reporting Period within thirty days after the end of the policy
period or the date the policy is terminated, whichever is earlier. It is undisputed that SOC did not
purchase an Extended Reporting Period.
On November 15, 2013, Plaintiffs in the Bank Lawsuit made a demand on SOC for
alleged injuries and damages sustained by Linda Bank. On December 2, 2013, SOC wrote to
Campmed and attached a copy of the demand letter. Three days later, Campmed’s claims
adjuster, Marian McTague (“McTague”), advised SOC that Campmed would cover this case and
had retained outside counsel to represent SOC in responding to the demand. On January 7, 2014,
Mctague again confirmed that there was coverage for the demand.
In October 2015, the Bank Lawsuit was filed against SOC and Dr. DaSilva. SOC
provided notice to Campmed of the Bank Lawsuit. On October 26, 2015, Campmed issued a
letter to SOC acknowledging its retention of MacDonald Devin, P.C. as defense counsel to
represent SOC in the Bank Lawsuit. In that letter, Campmed represented to SOC that there was
coverage for the lawsuit up to the one-million-dollar limit.
However, on June 21, 2016,
Campmed issued a letter denying coverage for the Bank Lawsuit. Campmed asserts SOC’s
claim for damages with respect to Bank’s injury was not first made within the policy period
because SOC did not purchase an Extended Reporting Period.
On June 29, 2016, Campmed filed its complaint seeking a declaratory judgment to
establish that it does not have a duty to defend or indemnify SOC and Dr. DaSilva in the
underlying lawsuit (Dkt. #1).
On August 15, 2016, SOC filed an answer to Campmed’s
complaint (Dkt. #12), and Dr. DaSilva did the same on September 6, 2016 (Dkt. #19). On
September 14, 2016, Campmed filed identical 12(b)(6) motions to dismiss against SOC and Dr.
DaSilva (Dkt. #25; Dkt. #26). SOC filed a response on September 27, 2016 (Dkt. #29). Dr.
DaSilva’s response adopted and incorporated the entirety of SOC’s response (Dkt. #30). On
October 12, 2016, Campmed filed a reply to both SOC and Dr. DaSilva (Dkt. #31) and amended
such reply the next day (Dkt. #32).1 On October 17 and 18, 2016, SOC and Dr. DaSilva filed
identical sur-replies (Dkt. #35; Dkt. #37).
The Federal Rules of Civil Procedure require that each claim in a complaint include a
“short and plain statement . . . showing that the pleader is entitled to relief.” Fed. R. Civ. P.
Dr. DaSilva moves to strike Campmed’s reply and amended reply as being untimely filed per Local Rule CV-7(f)
(Dkt. #34). Pursuant to Federal Rule of Civil Procedure 12(f), a court may strike a pleading that contains
“redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). Deciding whether to strike all or
a portion of a pleading lies within the Court’s sound discretion. In re Beef Indus. Antitrust Litig., 600 F.2d 1148,
1168 (5th Cir. 1979). Here, SOC and Dr. DaSilva’s responses were filed on September 27, 2016. The Local Rules
require Campmed’s reply to be filed on October 7, ten days “from the date the response is served.” Local Rule CV6(a). Campmed filed its reply on October 12 and its amended reply on October 13. The Court therefore finds that
Campmed’s reply and amended reply were untimely, filed without the Court’s prior permission, and thus subject to
be striken at the Court’s discretion. However, the Court finds no reason to exercise its discretion to strike these
pleadings. Dr. DaSilva has not asserted that Campmed’s pleadings involve “redundant, immaterial, impertinent, or
scandalous matter[s].” Fed. R. Civ. P. 12(f). Instead, Dr. DaSilva argues only that the pleadings were untimely.
The Court is not convinced by this argument, especially because the Court cannot discern any prejudice by allowing
Campmed’s pleadings to stand. Therefore, the Court DENIES Dr. DaSilva’s motion to strike Campmed’s reply and
amended reply (Dkt. #34).
8(a)(2). Each claim must include enough factual allegations “to raise a right to relief above the
speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
A Rule 12(b)(6) motion allows a party to move for dismissal of an action when the
complaint fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).
When considering a motion to dismiss under Rule 12(b)(6), the Court must accept as true all
well-pleaded facts in plaintiff’s complaint and view those facts in the light most favorable to the
plaintiff. Bowlby v. City of Aberdeen, 681 F.3d 215, 219 (5th Cir. 2012). The Court may
consider “the complaint, any documents attached to the complaint, and any documents attached
to the motion to dismiss that are central to the claim and referenced by the complaint.” Lone
Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). The Court
must then determine whether the complaint states a claim for relief that is plausible on its face.
‘“A claim has facial plausibility when the plaintiff pleads factual content that allows the [C]ourt
to draw the reasonable inference that the defendant is liable for the misconduct alleged.’”
Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009)). “But where the well-pleaded facts do not permit the [C]ourt to infer more than the mere
possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader
is entitled to relief.’” Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).
In Iqbal, the Supreme Court established a two-step approach for assessing the sufficiency
of a complaint in the context of a Rule 12(b)(6) motion. First, the Court should identify and
disregard conclusory allegations, for they are “not entitled to the assumption of truth.” Iqbal,
556 U.S. at 664. Second, the Court “consider[s] the factual allegations in [the complaint] to
determine if they plausibly suggest an entitlement to relief.” Id. “This standard ‘simply calls for
enough facts to raise a reasonable expectation that discovery will reveal evidence of the
necessary claims or elements.’” Morgan v. Hubert, 335 F. App’x 466, 470 (5th Cir. 2009)
(citation omitted). This evaluation will “be a context-specific task that requires the reviewing
[C]ourt to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.
Thus, “[t]o 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.”’ Id. at 678
(quoting Twombly, 550 U.S. at 570).
Campmed seeks to dismiss under Rule 12(b)(6) two of the five affirmative defenses
asserted by SOC and Dr. DaSilva (collectively, “Defendants”). See Dkt. #12 a p. 4–5 (listing
SOC’s affirmative defenses in its answer); Dkt. #19 at p. 3 (listing Dr. DaSilva’s affirmative
defenses in his answer). Campmed also seeks to dismiss Defendants’ pleas for recovery of their
declaratory action fees and a jury determination of such fees.
A Rule 12(b)(6) motion is not proper to dismiss a defendant’s affirmative defense. The
proper procedure requires a motion to strike pursuant to Rule 12(f).
Instead of requiring
Campmed to replead, the Court will construe its Rule 12(b)(6) motions to dismiss as Rule 12(f)
motions to strike an affirmative defense. See Huffman v. Remstar Int’l, Inc., No. 4:08-cv-157,
2009 WL 1445967, at *1 (E.D. Tex. May 21, 2009) (construing a motion to dismiss an
affirmative defense under Rule 12(b)(6) as a motion to strike under Rule 12(f)).
“Although motions to strike a defense are generally disfavored, a Rule 12(f) motion to
dismiss a defense is proper when the defense is insufficient as a matter of law.”
Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1057–58 (5th Cir.
1982). The Court has discretion to strike an insufficient defense or “redundant, immaterial,
impertinent, or scandalous matter” acting either sua sponte or upon a party’s motion. Fed. R.
Civ. P. 12(f). When determining whether the affirmative defense asserted by defendant is
sufficient as a matter of law, the Court may consider: (1) whether the defenses are applicable;
and (2) whether the defenses are sufficiently pleaded as to give plaintiff fair notice. See Kaiser
Aluminum, 677 F.2d at 1061 (striking an antitrust defense as insufficient as a matter of law
because it did not apply to plaintiff’s underlying action); Woodfield v. Bowman, 193 F.3d 354,
362 (5th Cir. 1999) (requiring an affirmative defense to be pleaded “with enough specificity or
factual particularity to give the plaintiff ‘fair notice’ of the defense that is being advanced”).
Under Woodfield, the “fair notice” pleading requirement is met if a defendant “sufficiently
articulated the defense so that the plaintiff was not a victim of unfair surprise.” 193 F.3d at 362.
Campmed argues Defendants cannot allege waiver and estoppel to extend coverage
where none existed. Further, Campmed states that Defendants have not pled the necessary
elements for estoppel or waiver (Dkt. #25 at pp. 1–3; Dkt. #26 at pp. 1–3). Defendants respond
that it is not trying to insure a risk not contemplated by the Policy terms. Instead, Defendants
have alleged that Campmed should be estopped from justifying a denial of coverage due to
Campmed’s waiver of a notice provision requiring receipt of a claim within the policy period
(Dkt. #29 at p. 2).
Waiver and estoppel are often used interchangeably, but the two should be recognized
and applied as distinct legal doctrines. Emp’rs Commercial Union Ins. Co. of Am. v. Great Am.
Ins. Co., 200 S.E.2d 560, 563 (Va. 1973). Waiver “is the voluntary, intentional abandonment of
a known legal right, advantage, or privilege.” Cowan v. Psychiatric Assocs., 387 S.E.2d 747,
749 (Va. 1990) (quoting Fox v. Desse, 362 S.E.2d 699, 707 (1987)). On the other hand, estoppel
exists when the conduct of one party has induced the other party to take a position that would
result in harm if the first party’s acts were repudiated.” Dominick v. Vassar, 367 S.E.2d 487, 489
(Va. 1988). Here, the doctrine of waiver is inapplicable. The elements of waiver include
“knowledge of the facts basic to the exercise of the right and the intent to relinquish that right.”
Emp’rs Commercial Union, 200 S.E.2d at 563. To support their claim of waiver, Defendants
focus on the representations in their answer made by Campmed and McTague, Campmed’s
claims adjuster (Dkt. #29 at p. 11). The Court finds no facts alleged that suggest Campmed
voluntarily and intentionally abandoned its right to receive notice of a claim within the policy
period. Thus, the Court strikes the affirmative defense of waiver from Defendants’ answers.
Next, the Court considers Defendants’ defense of estoppel. A party who relies upon
estoppel must prove by “clear, precise and unequivocal evidence” “(1) a representation,
(2) reliance, (3) a change in position, and (4) detriment.” Dominick, 367 S.E.2d at 489. The
general rule in Virginia is that coverage under an insurance policy cannot be extended by waiver
or estoppel to include risks not covered by the policy’s terms. Blue Cross & Blue Shield v.
Wingfield, 391 S.E.2d 73, 74–75 (Va. 1990) (quoting Sharp v. Richmond Life Ins. Co.,
183 S.E.2d 132, 135 (Va. 1971)).
The only exception to this rule is “where an insurer
unconditionally defends an action brought against its insured.” Norman v. Ins. Co. of N. Am.,
239 S.E.2d 902, 908 (Va. 1978). Based on the allegations in Defendants’ answers, the Court
finds that the exception applies. Campmed acknowledges in its October 26, 2015 letter that it
would retain counsel to represent Defendants in the Bank Lawsuit. There were no conditions
attached to the letter. Further, Defendants have adequately pleaded facts that support its estoppel
defense and place Campmed on fair notice. Thus, the Court refuses to strike this affirmative
The Court also strikes Defendants’ demand for a jury determination of all costs and
reasonable attorneys’ fees incurred in this action pursuant to § 38.2-209(A) of the Code of
Virginia. The Supreme Court of Virginia maintains that a judge, not a jury, decides the award of
attorney’s fees and cost to the insured when an insurer breaches an insurance contract in bad
faith. REVI, LLC v. Chi. Title Ins. Co., 776 S.E.2d 808, 812 (Va. 2015). Accordingly, the Court
strikes such demands from Defendants’ answers.
It is therefore ORDERED that Plaintiff Campmed Casualty & Indemnity Company,
Inc.’s Rule 12(b)(6) Motion to Dismiss Defendant Specialists on Call, Inc.’s Original
Counterclaim (Dkt. #25) is hereby GRANTED IN PART AND DENIED IN PART.
It is further ORDERED that Plaintiff’s Rule 12(b)(6) Motion to Dismiss Dr. Leonard
DaSilva’s Original Counterclaim (Dkt. #26) is hereby GRANTED IN PART AND DENIED
The Court strikes the waiver affirmative defense asserted in Defendant Specialists on
Call, Inc. and Defendant Dr. Leonard DaSilva’s answers (Dkt. #12: Dkt. #19). Also, the Court
strikes the demand for a jury determination of all costs and attorneys’ fees. The affirmative
defense of estoppel asserted in both Defendants’ answers is allowed to stand.
It is further ORDERED that Defendant Leonard DaSilva, M.D.’s Motion to Strike
Campmed’s Reply Brief and Amended Reply Brief (Dkt. #34) is hereby DENIED.
SIGNED this 26th day of January, 2017.
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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