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Zurich American Insurance Co. v. Southern-Owners Insurance Co.

United States District Court, M.D. Florida, Jacksonville Division

March 30, 2017




         THIS CAUSE is before the Court on Defendant, Southern-Owners Insurance Company's Motion to Dismiss Zurich American Insurance Company's Second Amended Complaint for Failure to State a Cause of Action (Doc. 49; Motion), filed on September 1, 2016. Plaintiff, Zurich American Insurance Company (Plaintiff or ZAIC), filed a response on September 15, 2016. See Plaintiff, Zurich American Insurance Company's, Response to Defendant, Southern-Owners Insurance Company's, Motion to Dismiss Zurich's Second Amended Complaint [sic] (Doc. 51; Response). Thereafter, Defendant, Southern-Owners Insurance Company (Defendant or SOIC), filed a reply on October 18, 2016.[1] See Defendant, Southern-Owners Insurance Company's Reply to Plaintiff, Zurich's Response to Defendant's Motion to Dismiss (Doc. 54; Reply). Pursuant to a Court order entered on January 30, 2017, directing the parties to submit supplemental briefs to address whether ZAIC's claim for declaratory relief presents a claim or controversy appropriate for judicial action, see Order (Doc. 61; Order), ZAIC and SOIC each filed supplemental briefs on February 9, 2017, see Defendant Southern-Owners Insurance Company's Supplemental Brief Per January 30, 2017 Court Order (Doc. 64; SOIC Supplemental Brief), and Plaintiff, Zurich American Insurance Company's Supplemental Briefing on Count I of its Complaint (Doc. 65; ZAIC Supplemental Brief). Accordingly, this matter is ripe for review.

         I. Background

         This dispute between two insurers arises from an underlying premises liability action, Case No. 2012-CA-13359 (Underlying Action), filed by Charles McMillan (McMillan) in the Circuit Court, Fourth Judicial Circuit, In and For Duval County Florida. See Plaintiff, Zurich American Insurance Company's Second Amended Complaint (Doc. 42; Second Amended Complaint), Ex. D: McMillan's Second Amended Complaint in the Circuit Court, Fourth Judicial Circuit, in and for Duval County, Florida, Case No. 2012-CA-13359 (Underlying Complaint). In the Underlying Action, McMillan asserted negligence claims against Catamount Constructors, Inc. (Catamount) and Duval Concrete Contracting, Inc. (Duval; collectively, Underlying Defendants). See generally Underlying Complaint. ZAIC “resolved the Underlying Action on behalf of Catamount.” See Second Amended Complaint ¶ 19. In the instant action, ZAIC seeks a declaration that SOIC owed a duty to defend and indemnify Catamount in the Underlying Action, and also brings claims for equitable subrogation or, in the alternative, common law contribution against SOIC, based on the following facts as alleged in the Second Amended Complaint and the attached exhibits. See generally id.

         A. The Subcontract Between Catamount and Duval

         Catamount served as the general contractor for a construction project in which it contracted to furnish and install a complete gravel/sand sub-base package (the project) at the Dr. Pepper West Point Trade Center, a distribution warehouse, located at 2300 Pickettville Road, Jacksonville, Florida 32220 (the Site). See Second Amended Complaint ¶¶ 6-7; Ex A: Subcontract Agreement Between Catamount and Duval (Subcontract) at 1.

         On April 12, 2012, Catamount and Duval executed the Subcontract, whereby Duval agreed to “furnish[ ] all labor, materials, tools, equipment and insurance necessary to” complete the project. See Second Amended Complaint ¶ 7. The terms of the Subcontract required Duval to maintain liability insurance naming Catamount as an additional insured, and providing primary coverage, for any liability arising from Duval's work. Id. at ¶ 8; Subcontract at ¶ 11, Attachment C. Specifically, the Subcontract provides:

Paragraph 11. Insurance. Subcontractor shall comply with the insurance requirements as set forth in ATTACHMENT “C” prior to commencing work on the above referenced Project.
Attachment C: Subcontract Agreement Insurance Requirements Subcontractor hereby agrees to maintain throughout the progress of the Work and to provide evidence of coverage for the following insurance:
Commercial General Liability
General aggregate for this project 2, 000, 000
Products/Completed Operations aggregate 1, 000, 000
Personal and Advertising Injury 1, 000, 000
Each occurrence 1, 000, 000
Coverages to be included: Contractual liability, Explosion, Collapse and Underground (XCU), Independent Contractors Coverage, Personal Injury (Agreements A, B, and C), including coverage for suits brought by employees of sub-subcontractors.
Coverage shall be written on an occurrence basis. Subcontractor's insurance shall be primary. Completed operations coverage shall remain in effect for at least two (2) years after substantial completion of the project. Catamount Constructors, Inc.-Atlanta shall be added and endorsed as a named additional insured on the policy.

         (emphasis supplied). Accordingly, Duval agreed to have Catamount named as an additional insured under its commercial general liability policy.

         B. Duval's Policy with SOIC

         As per the Subcontract, Duval purchased a commercial general liability policy from SOIC, effective from June 15, 2011, through June 15, 2012, see Second Amended Complaint ¶ 9, Ex B: Southern-Owners Insurance Company's Certified General Liability Insurance Policy No. 072322-78005160-11 (SOIC Policy), with a blanket additional insured endorsement, see SOIC Policy, Endorsement CGL 55372 (1-07) (Endorsement). The Endorsement provides that “[a] person or organization is an Additional Insured, only with respect to liability arising out of “your work” for that Additional Insured by or for you [Duval]… If required in a written contract or agreement.” See Endorsement. The SOIC Policy defines “your work” as “(1) [w]ork or operations performed by you [Duval] or on your behalf; and (2) [m]aterials, parts or equipment furnished in connection with such work or operations.” See SOIC Policy, Definitions. The Endorsement specifies that the “insurance is primary for the Additional Insured, but only with respect to liability arising out of ‘your work' for that Additional Insured by or for you. Other insurance available to the Additional Insured will apply as excess insurance and not contribute as primary insurance to the insurance provided by this endorsement.” See Endorsement. Accordingly, ZAIC alleges Catamount is an additional insured under the SOIC Policy. See Second Amended Complaint ¶¶ 15, 23-24.

         C. Catamount's Policy with ZAIC

         ZAIC issued a commercial insurance policy to Catamount, effective from March 1, 2012 through March 1, 2013. See Second Amended Complaint, Ex C: Zurich American Insurance Company's Policy No. GLA 5490400-00 (ZAIC Policy). The ZAIC Policy provided excess insurance “over [a]ny other primary insurance available to you [Catamount] covering liability for damages arising out of the premises or operation, or the products and completed operations, for which you have been added as an additional insured by attachment of an endorsement.” See ZAIC Policy, Commercial General Liability Form, Section IV - Commercial General Liability Conditions, 4. Other Insurance. ZAIC alleges that “[p]ursuant to the terms and conditions of the Subcontract and the terms and conditions of the SOIC Policy and the ZAIC Policy, SOIC [wa]s the primary insurer for Catamount, and the ZAIC Policy [wa]s … excess to the SOIC [P]olicy.” See Second Amended Complaint ¶ 26.

         D. The Underlying Complaint

         In the Underlying Complaint, McMillan alleged that on May 30, 2012, he “slipped and fell due to an accumulation of debris as he walked … towards a port-o-let[2] where Defendant Catamount had begun construction work and established a construction site, ” and where “Duval had previously begun concrete cutting.” See Underlying Complaint ¶¶ 28, 37. McMillan alleged that “[t]he accumulation of debris … was a defectively dangerous condition and/or the causes and/or origins thereof were created by and/or known to … [the Underlying Defendants], or had existed for a sufficiently long period of time that … [the Underlying Defendants], in the exercise of reasonable care, should have known of.” Id. at ¶ 30. McMillan claimed that Catamount and Duval, “for themselves or by and through their respective agents, employees or servants acting within the course and scope of their respective employments and authorities, ” caused McMillan's injuries by breaching their duties of care. Id. at ¶¶ 31-32, 40-41. Specifically, the Underlying Defendants allegedly breached their duties by: (1) “failing to properly instruct” their employees and agents “as to the proper care and maintenance” of the [S]ite; (2) “failing to provide reasonable and adequate warnings of the actually or constructively known dangerous condition(s)”; (3) “failing to operate or maintain the premises in a reasonably safe condition”; and (4) “failing to maintain” the area where McMillan slipped by “failing to provide a safe, slip-free walkway surface.” Id. at ¶¶ 31, 40

         E. Catamount's Request for a Defense

         ZAIC initially assumed Catamount's defense because it “was not aware at that time that Catamount was a primary insured under the SOIC Policy.” See Second Amended Complaint ¶ 15. On April 15, 2014, pursuant to the Subcontract, ZAIC tendered the defense and indemnity of Catamount to Duval and requested that Duval notify its insurer. See Second Amended Complaint ¶ 16, Ex. E: Letter dated April 15, 2014, from Tom Finch, Claim Specialist, with Zurich American Insurance Company to Duval Concrete Contracting (First Request). After ZAIC learned that SOIC issued a commercial general liability policy to Duval, ZAIC made a second tender to Duval, and a first tender to SOIC, on June 22, 2015. See Second Amended Complaint ¶ 17, Ex. F: Letter dated June 22, 2015 from Michele Mecca, MCU Specialist With Zurich American Insurance Company to O'Hara Law Firm, Southern-Owners Insurance Company and All Lines Insurance Agency, Inc. (Second Request). SOIC denied the Second Request on July 30, 2015. See Second Amended Complaint ¶18, Ex. G: Letter dated July 30, 2015 from Mark F. Shannahan, AIC, with Southern-Owners Insurance Company to Michele Mecca, with Zurich American Insurance Company (SOIC Denial).

         F. The Instant Action

         Shortly after receiving the SOIC Denial, ZAIC initiated this action by filing a complaint on August 21, 2015. See Plaintiff, Zurich American Insurance Company's Complaint for Declaratory Judgment (Doc. 1; Initial Complaint). ZAIC filed its first amended complaint on September 14, 2015. See Plaintiff, Zurich American Insurance Company's Amended Complaint for Declaratory Judgment (Doc. 5; Amended Complaint). After ZAIC “resolved the Underlying Action on behalf of Catamount” for a confidential amount, see Second Amended Complaint ¶ 19, it sought leave to drop McMillan as a defendant and file a second amended complaint, see Plaintiff's Corrected Motion for Leave to File Second Amended Complaint and to Drop Party Defendant Charles McMillan (Doc. 27), which the Court granted on August 15, 2016, see Clerk's Minutes (Doc. 43). Accordingly, ZAIC filed the Second Amended Complaint on August 16, 2016. See Second Amended Complaint. In Count I of the Second Amended Complaint, ZAIC seeks a declaration pursuant to 28 U.S.C. § 2201 that SOIC, as Catamount's primary insurer, had a duty to defend and indemnify Catamount in the Underlying Action. Id. at 7-9. ZAIC also seeks reimbursement for all defense costs and indemnity payments made in resolving the Underlying Action from SOIC on a theory of equitable subrogation (Count II), id. at 9-10, or in the alternative, on a theory of common law contribution (Count III), id. at 10-11. SOIC moves to dismiss all three Counts of the Second Amended Complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure (Rule(s)). See generally Motion. Specifically, SOIC argues that Count I should be dismissed because in the Underlying Action, McMillan sued Catamount for an uncovered injury. Id. at 15-20. Additionally, SOIC argues that Count II of the Second Amended Complaint should be dismissed because ZAIC fails to plead all of the requisite elements. Id. at 21-22. Finally, SOIC submits that Count III of the Second Amended Complaint should be dismissed because Florida law does not recognize common law contribution claims. Id. at 22-23.

         II. Standard of Review

         SOIC seeks to dismiss Counts I, II, and III of the Second Amended Complaint pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Id. at 1. In ruling on a motion to dismiss, the Court must accept the factual allegations set forth in the complaint as true.[3] See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 n.1 (2002); see also Lotierzo v. Woman's World Med. Ctr., Inc., 278 F.3d 1180, 1182 (11th Cir. 2002). In addition, all reasonable inferences should be drawn in favor of the plaintiff. See Omar ex. rel. Cannon v. Lindsey, 334 F.3d 1246, 1247 (11th Cir. 2003) (per curiam). Nonetheless, the plaintiff must still meet some minimal pleading requirements. Jackson v. Bellsouth Telecomm., 372 F.3d 1250, 1262-63 (11th Cir. 2004) (citations omitted). Indeed, while “[s]pecific facts are not necessary[, ]” the complaint should “‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Further, the plaintiff must allege “enough facts to state a claim that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). 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[.]” Twombly, 550 U.S. at 555 (internal quotations omitted); see also Jackson, 372 F.3d at 1262 (explaining that “conclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent dismissal”) (internal citation and quotations omitted). Indeed, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions[, ]” which simply “are not entitled to [an] assumption of truth.” See Iqbal, 556 U.S. at 678-79. Thus, in ruling on a motion to dismiss, the Court must determine whether the complaint contains “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).

         Although Rule 12(b)(6) is the appropriate vehicle through which to review the sufficiency of Counts II and III of the Second Amended Complaint, SOIC's challenge to Count I is more appropriately viewed as an attack on the Court's subject matter jurisdiction pursuant to Rule 12(b)(1). See Vandenbrink v. Voneschen, 542 F.App'x 728, 729 (11th Cir. 2013) (vacating a dismissal for failure to state a claim and remanding with instructions to dismiss for lack of subject matter jurisdiction because the complaint presented a “controversy not ripe for judicial review.”);[4] United States ex rel. Body v. Blue Cross & Blue Shield of Ala., Inc., 156 F.3d 1098, 1101 n.7 (11th Cir. 1998) (treating a district court's summary judgment ruling that disposed of a case due to a lack of subject matter jurisdiction as a dismissal under Rule 12(b)(1)); Hendrix v. Poonai, 662 F.2d 719, 722 (11th Cir. 1981) (affirming a dismissal for lack of subject matter jurisdiction where the complaint did not present a live controversy under Article III of the United States Constitution or the Declaratory Judgment Act); Am. Safety Indem. Co. v. Fairfield Shopping Ctr., LLC, No. 2:12-cv-02415-SGC, 2014 WL 6607940, at *2 n.2 (N.D. Ala. Nov. 20, 2014) (noting that although the defendant moved to dismiss under Rule 12(b)(6), its argument that no justiciable controversy existed was “actually challenge to the court's subject matter jurisdiction.”). Although SOIC did not initially argue that the Court lacks subject matter jurisdiction, “[i]t is well settled that a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking.” Fairfield Shopping Ctr., 2014 WL 6607940 at *5; see also Wendy's Int'l, Inc. v. City of Birmingham, 868 F.2d 433, 435 (11th Cir. 1989) (vacating a district court's summary judgment award on the basis of its sua sponte inquiry into whether the dispute at issue ripened into a case or controversy); Provident Life & Accident Ins. Co. v. Transamerica-Occidental Life Ins. Co., 850 F.2d 1489, 1490 n.3 (11th Cir. 1988) (stating that the parties' failure to address whether the case presented a live controversy did “not ‘preclude th[e] court from uncovering fatal jurisdictional defects.'”) (citation omitted). Moreover, in SOIC's Supplemental Brief, SOIC asserts that the Court should dismiss Count I of the Second Amended Complaint for lack of subject matter jurisdiction. See SOIC Supplemental Brief at 2-6. Accordingly, the Court will first review SOIC's challenge to Count I of the Second Amended Complaint for declaratory judgment pursuant to Rule 12(b)(1).

         A challenge to a complaint under Rule 12(b)(1) may require a different standard of review than a challenge under Rule 12(b)(6) depending on whether the attack is “facial” or “factual.” See Morrison v. Amway, Corp., 323 F.3d 920, 924 n.5 (11th Cir. 2003) (citing Lawrence v. Dunbar, 919 F.2d 1525, 1528-29 (11th Cir. 1990)).

If the challenge is facial, “the plaintiff is left with safeguards similar to those retained when a Rule 12(b)(6) motion to dismiss for failure to state a claim is raised.” [Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir. 1981)[5]. Accordingly, “the court must consider the allegations in the plaintiff's complaint as true.” A “facial attack” on the complaint “require[s] the court merely to look and see if [the] plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion.” [Lawrence, 919 F.2d 1525 at 1529] (quoting Menchacha v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir. 1980)). “Factual attacks, ” on the other hand, challenge “the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits are considered.” Id. Furthermore, in Williamson, the former Fifth Circuit held that “[t]he district court has the power to dismiss for lack of subject matter jurisdiction on any of three separate bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.” Williamson, 645 F.2d at 413.

McElmurray v. Consol. Gov't of Augusta-Richmond Cnty., 501 F.3d 1244, 1251 (11th Cir. 2007). In the Motion, SOIC's challenge focuses on the allegations in the Second Amended Complaint and the attached exhibits. Accordingly, the Court views this as a facial attack, and affords ZAIC the same protections to which it would be entitled under Rule 12(b)(6). That is, the Court will limit the scope of its review to the allegations contained in ...

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