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American Home Assurance Co. and National Union Fire Insurance Co. v. Arrow Terminals

December 7, 2011

AMERICAN HOME ASSURANCE CO. AND NATIONAL UNION FIRE INSURANCE CO. OF PITTSBURGH, PA, PLAINTIFFS,
v.
ARROW TERMINALS, INC., EVERETTE AVENUE TOWNHOMES, LLC, AND KEITH WILLETT, DEFENDANTS.



ORDER

This matter comes before the Court pursuant to Plaintiff National Union's Motion to Dismiss Defendant Keith A. Willett's Counterclaim against National Union Fire Insurance Co. of Pittsburgh, PA (Doc. # 23), filed on August 15, 2011. Defendant/Counter Plaintiff Keith Willett filed a Response to the Motion on August 29, 2011 (Doc. # 28). National Union filed a Reply in support of its Motion on September 12, 2011 (Doc. # 33). For the reasons that follow, the Court grants the Motion.

I. Background and Procedural History

This suit arises from the presence of allegedly defective drywall manufactured in China in townhomes developed by Defendant Everette Townhomes and in a townhome purchased by Willett. (Doc. # 1 at ¶ 12). The drywall was installed by nonparty Harrell's Drywall, Inc., which purchased the material from Defendant Arrow Terminals. (Id. at ¶ 13). Based upon scientific testing, Everette determined that the drywall interacts with HVAC coils, certain electrical components and other materials such that it interferes with the ability to reside in or sell the townhomes. (Id.). Willett's townhome was completed in September 2008, and he discovered problems relating to the defective drywall after taking possession. (Id. at ¶¶ 20-21).

In 2010, Everette filed suit against Arrow in state court alleging property damage related to the presence of the defective drywall and asserting claims for negligence and civil conspiracy. (Id. at ¶¶ 12, 14). In July 2010, Willett also filed suit against Arrow in state court alleging claims of products liability and breach of implied warranty of merchantability. (Id. at ¶¶ 19, 24).

Plaintiff American Home Assurance insured Arrow from April 1, 2006, through April 1, 2008, under Policies Nos. E060206 and E060207 (the "American Home Policies"). The American Home Policies provided comprehensive marine liability, marine terminals operator's liability (MTOL) and warehouseman's legal liability coverage in the amount of $10,000,000.00 per occurrence and in the aggregate for property damage. National Union insured Arrow from April 1, 2008, through April 1, 2009, under Policy No. E060208 (the "National Union Policy"), providing similar coverage.

American Home and National Union filed suit in this Court on June 9, 2011, seeking a declaratory judgment with regard to their respective insurance coverage obligations under the American Home Policies and National Union Policy. (Id. at 1). In Count I, Plaintiffs allege that there is no coverage afforded Arrow under the policies. (Id. at ¶¶ 37-39). In Count II, Plaintiffs assert that the cost to repair, replace, remove and/or discard the defective drywall does not constitute property damage under the policies. (Id. at ¶¶ 40-45).

Count III alleges that coverage for the defective drywall itself is excluded, and Count IV alleges that coverage for damaged property is also excluded under the health hazard and/or pollution exclusions in the policies. (Id. at ¶¶ 46-54, 55-62). Counts V and VI allege that there is no coverage for property damage that was expected or intended or for civil conspiracy. (Id. at ¶¶ 63-67, 68-71).

Counts VII through IX assert that there is no coverage under the Personal and Advertising Injury, MTOL or warehouseman's legal liability coverage. (Id. at ¶¶ 73-76, 77-81, 82-87). Count X alleges that there is no coverage for property damage that occurred outside the policies' effective period. (Id. at ¶¶ 88-94). Finally, in the alternative, Plaintiffs argue that any coverage afforded by the policies is in excess of other insurance (Count XI). (Id. at ¶¶ 95-97).

On July 26, 2011, Willett filed his Answer, Affirmative Defenses and Counterclaim against National Union. (Doc. # 18). Willett seeks a declaratory judgment that National Union has a duty to indemnify Arrow for damages that occurred during the policy period but do not constitute property damage (Count I) and a duty to indemnify Arrow for damages because the policies' exclusions are inapplicable (Count II). (Id. at ¶¶ 128-135, 136-145).

National Union filed its Motion to Dismiss Willett's Counterclaim on August 15, 2011. (Doc. # 23). Willett filed his response to the Motion on August 29, 2011 (Doc. # 28), and National Union filed a Reply in support of its Motion on September 12, 2011 (Doc. # 33). The Motion is ripe for this Court's review.

II. Legal Standard

A motion to dismiss a counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6) is evaluated in the same manner as a motion to dismiss a complaint. Whitney Info. Network, Inc. v. Gagnon, 353 F. Supp. 2d 1208, 1212 (M.D. Fla. 2005). On a motion to dismiss, this Court accepts as true all the allegations in the counterclaim and construes them in the light most favorable to the counter-claimant. Jackson v. Bellsouth Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004). Further, this Court favors the counter-claimant with all reasonable inferences from the allegations in the counterclaim. Stephens v. Dep't of Health & Human Servs., 901 F.2d 1571, 1573 (11th Cir. 1990) ("On a motion to dismiss, the facts stated in [the counterclaim] and all reasonable inferences therefrom are taken as true.").

However, the Supreme Court explains that: While a [counterclaim] attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.

Bell Atl. Corp v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations and citations omitted). A plausible claim for relief must include "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). Courts are not "bound to accept as true a ...


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