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Heritage Properties, Inc. v. Ironshore Specialty Insurance Co.

United States District Court, S.D. Mississippi, Northern Division

January 22, 2018

HERITAGE PROPERTIES, INC. PLAINTIFF
v.
IRONSHORE SPECIALTY INSURANCE COMPANY, ET AL. DEFENDANTS

          ORDER

          DANIEL P. JORDAN, III CHIEF UNITED STATES DISTRICT JUDGE.

         Defendants ask the Court to dismiss this breach-of-contract case under Federal Rule of Civil Procedure 12(b)(6). Because Plaintiff has stated a plausible claim for breach of the duty of good faith and fair dealing, Defendants' Motion to Dismiss [11] is denied in part without prejudice. The motion is otherwise granted for the reasons that follow.

         I. Facts and Procedural History

         Plaintiff Heritage Properties, Inc. (“Heritage”) manages several multi-family residential properties, including one owned by Carleton Holdings, LLC (“Carleton”), in Hinds County, Mississippi. At all relevant times, Heritage was insured under a commercial general liability policy issued by Defendant Ironshore Specialty Insurance Company (“Ironshore”).

         On August 22, 2016, Kate Speed, a tenant of the complex owned by Carleton and managed by Heritage, sued both entities. She alleged that she “was exposed to mold and hazardous substances and conditions on the subject premises that proximately caused her emotional and bodily injury.” Underlying Compl. [11-1] ¶ 7. Upon receipt of the lawsuit, Heritage placed its insurance agent on notice of the claim, which notified the broker, which in turn notified Defendant RSG Underwriting Managers, LLC/WKFC Underwriting Managers (“WKFC”) on August 31, 2016. “WKFC acknowledged receipt of the claim on behalf of . . . Ironshore . . . and then assigned the claim administration to [D]efendant[] York Risk Services Group (‘York').” Compl. [1] ¶ 12.

         On September 6, 2016, York sent an Acknowledgement of Assignment to Heritage and WKFC. “Thereafter, neither Heritage, nor the agent . . . nor the broker . . . nor . . . []WKFC[] heard anything further until January 24, 2017[, ] when Heritage learned that a default judgment had been taken against [it.]” Compl. [1] ¶ 14. When asked by Heritage about the default, York initially said that it sent a letter denying coverage for the claims in the underlying lawsuit in September 2016. York said that “the certified letter was unclaimed and returned to [it, so] the certified copy was then sent [to Heritage via] regular mail” on October 12, 2016. Id. ¶ 21. York later “admitted” that “the disclaimer letter was sent out to Heritage . . . but it was sent regular mail and not certified mail on [September 9, 2016.]” Id. ¶ 28.

         Aggrieved, Heritage filed this lawsuit on July 31, 2017, against Ironshore, York, and WKFC. It asserts claims for breach of the duty of good faith and fair dealing, fraud and negligent misrepresentation, breach of contract, and conspiracy arising out of the handling of the underlying lawsuit. Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). The matters raised in Defendants' motion have been fully briefed, and the Court has personal and subject-matter jurisdiction.

         II. Standard

         In considering a motion under Rule 12(b)(6), the “court accepts ‘all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'” Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004) (quoting Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999) (per curiam)). But “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To overcome a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 555 (citations and footnote omitted).

         Ordinarily, in considering a motion to dismiss under Rule 12(b)(6), the Court “must limit itself to the contents of the pleadings, including attachments thereto.” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). An exception to this rule exists for “matters of public record” of which the Court may take judicial notice. Norris v. Hearst Tr., 500 F.3d 454, 461 n.9 (5th Cir. 2007). And “[d]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim.” Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004). Here, Defendants attached to their motion the insurance policy, which is part of the pleadings under Causey, and the complaint and default judgment in the underlying lawsuit, of which the Court may take judicial notice. And Heritage has submitted copies of the email correspondence referenced in the Complaint, which are also part of the pleadings under Causey. The documents submitted are properly before the Court on Defendants' Rule 12(b)(6) motion.

         III. Analysis

         Defendants assert that Ironshore had no duty to defend Heritage in the underlying litigation under the insurance policy and therefore they did not breach the contract or the duty of good faith and fair dealing. They argue that Heritage has not pleaded that it relied upon any false statement, resulting in injury, such that its fraud claims fail as a matter of law. And they say Heritage's civil-conspiracy claim likewise provides no basis for liability. The Court will address the claims in turn.

         A. Breach of Contract and of the Duty of Good Faith and Fair Dealing

         Defendants insist that Heritage's claims for breach of contract and of the duty of good faith and fair dealing fail because Ironshore had no duty to defend Heritage in the underlying lawsuit. “The general rule in Mississippi is that an insurer's duty to defend hinges on the allegations in the underlying complaint.” Am. States Ins. Co. v. Natchez Steam Laundry, 31 F.3d 551');">131 F.3d 551, 553 (5th Cir. 1998). “Accordingly, to determine whether an insurance company has a duty to defend its insured, the Court ‘must look at the facts alleged in the complaint, together with the policy.'” Leaf River Cellulose, LLC v. Mid-Continent Cas. Co., No. 2:11-CV-54-KS-MTP, 2012 WL 1906529, at *3 (S.D.Miss. May 25, 2012) (quoting Auto. Ins. Co. v. Lipscomb, 75 So.3d 557, 559 (Miss. 2011)). “Only if the pleadings state facts which bring the injury within the coverage of the policy is the insured required to defend.” Shelter Mut. Ins. Co. v. Brown, 345 F.Supp.2d 645, 648-49 (S.D.Miss. 2004). Importantly, the Court “look[s] ‘not to the particular legal theories' pursued by the plaintiff, ‘but to the allegedly tortious conduct underlying' the suit.” Evanston Ins. Co. v. Neshoba Cty. Fair Ass'n, Inc., 442 F.Supp.2d 344, 346 (S.D.Miss. 2006) (quoting Ingalls Shipbuilding v. Fed. Ins. Co., 410 F.3d 214, 225 (5th Cir. 2005)).

         In this case, the insurance policy obligated Ironshore to defend Heritage from any suit seeking “damages because of ‘bodily injury' or ‘property damage' to which this insurance applies.” Policy [11-2] at 5. It made clear, though, that Ironshore “will have no duty to defend the insured against any ‘suit' seeking damages for ‘bodily injury' or ‘property damage' to which this insurance does ...


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