United States District Court, D. Maryland
PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY, Plaintiff,
TATE ANDALE, INC., Defendant.
David Copperthite United States Magistrate Judge
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.
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, 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).
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).
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.
February 21, 2018, Defendant filed an answer and counterclaim
(ECF No. 22). 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 for Motion to Dismiss for Lack of Subject Matter
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)).
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).
Standard for Motion to Dismiss for Failure to State a
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