United States District Court, D. Maryland
JOHNSON SEWER AND DRAIN CONTRACTORS, INC., et al.
NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY
Catherine C. Blake United States District Judge
before the court is defendant Nationwide Property and
Casualty Insurance Company's ("Nationwide")
Motion to Dismiss Complaint, seeking dismissal of both counts
of plaintiffs' Johnson Sewer and Drain Contractors, Inc.,
U.S. Heating & Air, LLC, and Johnson Properties, LLC
complaint. On November 28, 2018, the court heard oral
argument in this matter. For the reasons stated below, the
court will grant the motion.
AND PROCEDURAL HISTORY
(collectively, "Johnson") are affiliated companies
owned by the same principal owners whose operations are
consolidated for the purposes of insurance coverage. Johnson
maintains an insurance policy through Nationwide, including a
commercial automobile policy and a workers' compensation
policy. The parties have renewed the insurance policy
annually since at least 2013. The workers' compensation
policy identifies the Michael D. Frankos Agency as
Johnson's insurance agent. ECF 9-4 at p. 10. The
workers' compensation policy includes a subrogation
clause entitled "Recovery From Others" which states
"[w]e have your rights, and the rights of persons
entitled to the benefits of this insurance, to recover our
payments from anyone liable for the injury. You will do
everything necessary to protect those rights for us and to
help us enforce them." ECF 9-4 at p. 18.
about April 30, 2013, Robert Stacey, a Johnson employee, was
struck from behind by a United States Postal Service
("USPS") truck while driving a Johnson-owned
vehicle in Delaware and acting within the scope of
Johnson's business. As a result, Mr. Stacey sustained
injuries and the vehicle was damaged. While the extent of Mr.
Stacey's injuries is not clear from the record, it
appears that Mr Stacey has undergone spinal surgery as a
result of injuries sustained from the accident.
reported the accident to Mr. Frankos, who initiated claims
under the workers' compensation policy and the commercial
automobile policy. USPS acknowledged full liability for the
accident. Nationwide consequently compensated Johnson
pursuant to the insurance policies for the expenses related
to both claims. Nationwide, via Mr. Frankos, informed Johnson
that it intended to assert its subrogation rights pursuant to
the commercial automobile policy against USPS based on
USPS's assumption of full liability for the accident.
After asserting its subrogation rights for the damages to
Johnson's vehicle, Nationwide resolved the automobile
claim in 2014 with little to no impact on Johnson's
premiums or the commercial automobile policy overall.
2014, Johnson requested that Nationwide similarly assert its
subrogation rights for the workers' compensation claim,
and Mr. Frankos represented to Johnson that Nationwide
intended to do so. Between 2014 and April 2015, Johnson
repeatedly requested that Nationwide assert its subrogation
rights, and Mr. Frankos repeatedly assured Johnson that it
would do so. Despite the repeated requests and
assurances, Nationwide failed to assert its subrogation
rights against USPS' regarding the workers'
compensation claim by April 30, 2015,  and accordingly,
the Federal Tort Claims Act's ("FTCA") statute
of limitations period expired, precluding Nationwide from
seeking compensation from USPS for payments pursuant to the
workers' compensation claim. The workers'
compensation claim for Mr. Stacey's extensive medical
expenses therefore continued to be paid from Johnson's
workers' compensation policy without reimbursement from
USPS. Beginning in 2014, Johnson's premiums started to
rise due to the increase in Johnson's experience rating,
which increased at least in part due to Mr. Stacey's
ongoing, non-subrogated workers' compensation claim.
Additionally, Johnson claimed that it lost business due to
commercial customers' unwillingness to contract with
Johnson due to Johnson's increasing experience risk
April 27, 2018, Johnson filed suit against Nationwide,
alleging that 1) Nationwide breached its contract with
Johnson when it failed to pursue its subrogation rights
against USPS, thus violating the implied covenant of good
faith and fair dealing; and, in the alternative, 2) pursuant
to the doctrine of promissory estoppel, Johnson had relied to
its detriment on Mr. Frankos's repeated assurances of
Nationwide's intention to pursue its subrogation rights.
Nationwide filed its motion to dismiss on June 12, 2018.
survive a motion to dismiss, the factual allegations of a
complaint "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)." Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 555 (2007) (internal citations omitted). "To
satisfy this standard, a plaintiff need not
'forecast' evidence sufficient to prove the elements
of the claim. However, the complaint must allege sufficient
facts to establish those elements." Walters v.
McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citation
omitted). "Thus, while a plaintiff does not need to
demonstrate in a complaint that the right to relief is
'probable/ the complaint must advance the plaintiffs
claim 'across the line from conceivable to
plausible/" Id. (quoting Twombfy, 550
U.S. at 570). A court may consider a statute of limitations
defense on a motion to dismiss only "where the defense
is apparent from the face of the complaint." Wright
v. U.S. Postal Service, 305 F.Supp.2d 562, 563 (D. Md.
premised its motion to dismiss on three primary arguments.
First, Nationwide contended that the state of Maryland has
assigned the Maryland Insurance Administration
("MIA") exclusive jurisdiction to resolve the
dispute, thereby precluding the court from adjudicating
Johnson's claims. Second, Nationwide argued that Johnson
filed its complaint after the statute of limitations period
for Johnson to file suit had expired. Third, Nationwide
asserted that it had not breached its contract with Johnson
because no specific contractual provision obligated
Nationwide to pursue its subrogation rights, and because the
existence of the worker's compensation policy precludes
Johnson's claim that the quasi-contractual doctrine of
promissory estoppel obligated Nationwide to assert its
subrogation rights. While the court does not find all of
Nationwide's arguments persuasive,  nonetheless it
will dismiss both counts of the complaint for the reasons
Breach of contract
claim that Nationwide breached the terms of the worker's
compensation policy by failing to pursue subrogation against
USPS, which allegedly constituted a violation of the implied
covenant of good faith and fair dealing, will be dismissed
because 1) the parties' agreement did not obligate
Nationwide to seek subrogation; 2) the good-faith covenant
cannot be used to imply or insert additional obligations into
a contract; and 3) Johnson's ability to enjoy the
benefits of the workers' compensation policy was not
frustrated by Nationwide's failure to seek subrogation.
While Johnson claimed that the workers' compensation
policy's subrogation clause should be understood to
obligate Nationwide to seek subrogation in good ...