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Pennsylvania National Mutual Casualty Insurance Co. v. Tate Andale, Inc.

United States District Court, D. Maryland

April 19, 2018

TATE ANDALE, INC., Defendant.


          A. David Copperthite United States Magistrate Judge

         Plaintiff/Counterclaim Defendant. Pennsylvania National Mutual Casualty Insurance Company ("Plaintiff"), moves this Court to dismiss the counterclaims of Defendant/Counterclaim Plaintiff, Tate Andale, Inc. ("Defendant"), for breach of contract (Count II) and statutory failure to act in good faith (Count III) (the "Motion to Dismiss") (ECF No. 32). After considering the Motion to Dismiss and the responses thereto (ECF Nos. 34-35), the Court finds that no hearing is necessary. See Loc.R. 105.6 (D.Md. 2016). For the reasons stated herein, the Court GRANTS IN PART and DENIES IN PART Plaintiffs Motion to Dismiss.


         When reviewing a motion to dismiss, this Court accepts as true the facts alleged in the challenged complaint. See Aziz v. Alcolac, Inc., 658 F.3d 388, 390 (4th Cir. 2011). Defendant, [1]a corporation that designs and manufactures a variety of industrial products, including industrial strainers and filters, "used asbestos-containing materials in its[] industrial processes and/or products." ECF Nos. 1 at 3 & 22 at 8. On October 17. 2016, Defendant wrote a letter to Plaintiff which claimed that Plaintiff and its predecessors issued six insurance policies providing commercial liability coverage to Defendant effective from September 20, 1958 to March 9, 1964 and that under these policies, Plaintiff was obligated to indemnify Defendant for asbestos claims by third parties. ECF Nos. 1 at 3 & 22 at 11-12. On December 6, 2016, Defendant sent Plaintiff a correspondence alleging that it had settled multiple asbestos-related claims within the coverage of the alleged policies for $1, 720, 000, plus SI.606, 106 in defense costs, and demanding that Plaintiff "immediately acknowledge and fulfill its coverage obligations." ECF No. 1 at 4 (record citation omitted). Plaintiff responded that it had searched its business records and did not find anything to support Defendant's claim that Plaintiff issued any commercial liability insurance policies to Defendant. Id. Defendant then provided copies of "secondary evidence" purported to support its position, including an insurance schedule, a claim notice, and a February 18, 1994 letter, but not a copy of the alleged policies because Defendant does not possess a copy. ECF No. 22 at 9 (record citation omitted).

         In this lawsuit, the parties contest the existence of commercial liability insurance policies and their applicability to Defendant's alleged asbestos litigation. Plaintiff seeks a declaratory judgment that Defendant is not entitled to any insurance benefits, coverage, or indemnity from Plaintiff because it "has not established the existence of any commercial liability insurance policy issued by [Plaintiff] for its benefit, or that, if issued, that the alleged terms, conditions, limitations, exclusions, definitions, warranties, and coverage limits of any such alleged policy(ies) would provide coverage to | Defendant] for the losses it claims." ECF No. 1 at 5-6. Through its counterclaim. Defendant asserts claims for a declaratory judgment "that Plaintiff[] owes (Defendant] coverage under certain insurance policies issued to [Defendant] for bodily injury claims brought by third parties, arising from alleged exposure to asbestos, in whole or in part, between 1958 and 1964." breach of contract, and failure to act in good faith pursuant to § 3-1701 of the Courts & Judicial Proceedings Article of the Maryland Code (“CJ"). ECF No. 22 at 6, 14. Plaintiff has moved to dismiss Defendant's breach of contract and failure to act in good faith counterclaims, citing this Court's lack of subject matter jurisdiction and Defendant's failure to state a claim (ECF No. 32).

         Procedural Background

         On March 9, 2017, Plaintiff filed this lawsuit against Defendant, seeking a declaratory judgment that Plaintiff did not issue any commercial liability policy of insurance to Defendant and that if any policy existed. Defendant was not entitled to coverage under such policy, plus a reservation of rights count (ECF No. 1). On May 12. 2017. Defendant filed a motion to dismiss Plaintiffs reservation of rights count (ECF No. 8). Upon reviewing the motion and the responses thereto (ECF Nos. 12-13), on February 6, 2018. the Court granted Defendant's motion, dismissing the reservation of rights count of Plaintiffs complaint. ECF No. 21.

         On February 21, 2018, Defendant filed an answer and counterclaim (ECF No. 22).[2] The counterclaim included a claim for breach of contract and statutory failure to act in good faith pursuant to CJ § 3-1701. Plaintiff filed its Motion to Dismiss on March 14, 2018 (ECF No. 32). On March 28. 2018, Defendant opposed the Motion to Dismiss (ECF No. 34). and on April 11. 2018. Plaintiff filed a reply (ECF No. 35). Accordingly, the Motion to Dismiss is fully briefed.

         Standard of Review

         A. Standard for Motion to Dismiss for Lack of Subject Matter Jurisdiction

         A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction challenges a court's authority to hear the matter brought by a complaint. See Davis v. Thompson, 367 F.Supp.2d 792, 799 (D.Md. 2005). The plaintiff bears the burden of proving, by a preponderance of the evidence, the existence of subject matter jurisdiction under Rule 12(b)(1). Demetres v. E. W. Constr., Inc., 776 F.3d 271, 272 (4th Cir. 2015); Lovern v. Edwards, 190 F.3d 648. 654 (4th Cir. 1999). A 12(b)(1) motion should only be granted if the "material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Ferdinand-Davenport v. Children's Guild, 742 F.Supp.2d 772, 777 (D.Md. 2010) (quoting Evans v. B.F. Perkins Co.. a Div. of Standex Int'l Corp., 166 F.3d 642, 647 (4th Cir. 1999)).

         A challenge to jurisdiction under Rule l2(b)(1) may proceed either as a facial challenge, asserting that the allegations in the complaint are insufficient to establish subject matter jurisdiction, or a factual challenge, asserting "that the jurisdictional allegations of the complaint are not true." Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009) (citation omitted). In a facial challenge, a court will grant a motion to dismiss for lack of subject matter jurisdiction "where a claim fails to allege facts upon which the court may base jurisdiction." Davis, 367 F.Supp.2d at 799 (citation omitted). Where the challenge is factual, however, "the district court is entitled to decide disputed issues of fact with respect to subject matter jurisdiction." Kerns, 585 F.3d at 192. The court, therefore, "may regard the pleadings as mere evidence on the issue and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Velasco v. Gov't of Indonesia, 370 F.3d 392. 398 (4th Cir. 2004).

         B. Standard for Motion to Dismiss for Failure to State a Claim

          The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint, not to "resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." King v. Rubenstein,825 F.3d 206, 214 (4th Cir. 2016) (quoting Edwards v. City of Goldsboro,178 F.3d 231, 243-44 (4th Cir. 1999)). A complaint must contain "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbah556 U.S. 662, 678 (2009) (quoting Bell All. Corp. v. Twombly,550 U.S. 544, 570 (2007)). Facial plausibility exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. An inference of a mere possibility of misconduct is not sufficient to support a plausible claim. Id. at 679. As stated in Twombly. "[f]actual allegations must be enough to raise a right to relief above the speculative level." 550 U.S. at 555. "A pleading that offers 'labels and conclusions' or "a formulaic recitation of the elements of a cause of action will not do." Nor does a complaint suffice if it tenders "naked assertions' devoid of "further factual enhancement.'" Iqbal, 556 U.S. at ...

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