United States District Court, D. Maryland
L. Hollander United States District Judge.
contract case, Baltimore Scrap Corporation ("Baltimore
Scrap"), a scrap metal recycling business, has filed
suit against Executive Risk Specialty Insurance Company
("Executive Risk") and RLI Insurance Company
("RLI"), alleging that defendants wrongfully denied
insurance coverage "for a series of thefts that occurred
at one of its scrap yards." ECF 1 (the
"Complaint"), ¶ 1. The Complaint asserts claims
for breach of contract against RLI (Count I) and Executive
Risk (Count II), Id. ¶¶ 31-44. Plaintiff
has appended to the Complaint a copy of the Executive Risk
Policy (ECF 1-1) as well as the RLI Policy (ECF
October 11, 2018, Executive Risk moved to dismiss Count II of
the Complaint, pursuant to Fed.R.Civ.P. 12(b)(6). ECF
The motion is supported by memorandum of law (ECF 16-1)
(collectively, the "Motion") and an exhibit. ECF
16-2 (Denial Letter, dated May 1, 2015). According to
Executive Risk, plaintiffs claim is subject to Maryland's
three-year statute of limitations, set forth in Md. Code
(2013 Repl. Vol., 2018 Supp.), § 5-101 of the Courts and
Judicial Proceedings Article ("C.J."). Because
plaintiff did not file suit until September 5, 2018,
i.e., more than three years after Executive Risk
denied coverage on May 1, 2015, Executive Risk maintains that
plaintiffs suit is time-barred.
opposes the Motion, asserting that the Court should not
consider the Denial Letter of May 1, 2015 (ECF 16-2) in
ruling on the Motion, ECF 18 at 3-4. Alternatively, plaintiff
argues that "its cause of action for breach of contract
did not accrue on May 1, 2015." Id. at 7.
Executive Risk has replied. ECF 19.
hearing is necessary to resolve the Motion. Local Rule 105.6.
For the reasons that follow, I shall grant the Motion (ECF
Scrap "purchases scrap metal from industry, government,
auto salvage yards, demolition contractors, and farms, as
well as from the general public." Id. ¶ 7.
The Complaint lays out one of the ways in which Baltimore
Scrap purchases scrap from a customer, id. ¶ 8:
"[A]n individual drives into the facility, has his or
her vehicle weighed upon entry, receives instructions to drop
the metal being purchased by Baltimore Scrap at a particular
area of the scrapyard, and then returns to have the vehicle
weighed again." Id. Then, "the customer
receives a ticket with a value that is based upon the type of
material in the load and the weight difference of their
vehicle at departure." Id. The ticket is
"scanned by the customer at an ATM-like machine onsite,
in exchange for cash." Id.
October 24, 2014, a Baltimore Scrap employee "discovered
that a regular customer, Kenneth Grimes, entered the yard
with a loaded truck, had the .truck weighed by the company
scales, but then instead of dropping the metal within the
yard, proceeded to drive out a back gate." Id.
at 9. About 30 minutes later, Mr. Grimes "returned to
the yard through the back gate with an empty truck."
Id. When Mr. Grimes "attempt[ed] to weigh-out
with the empty truck" to receive compensation for the
scrap, the employee "escorted" Mr. Grimes "off
the premises." Id.
reviewing footage from "security cameras [that] were
first installed at the yard in July 2014," Baltimore
Scrap discovered that "over a period of three months,
Mr. Grimes entered the yard 23 times with a full truck, and
after having the truck weighed, drove out a back gate on the
property without unloading scrap." Id. ¶
10. Each time, he "returned to the yard, and had his
truck weighed again so that he was being paid for scrap that
he was stealing from the yard." Id. In each
instance, Mr, Grimes signed a "slip on behalf of his
employer, Otis Elevator[.]" Id. ¶
11. The Complaint asserts that "over the course
of those 23 transactions," Grimes "was paid
approximately S23, 000 for material he did not leave at the
yard." Id. Further, "Otis Elevator has
confirmed that it did not receive any money from Mr. Grimes
for the Baltimore Scrap tickets, and had no knowledge of Mr.
Grimes's activity." Id.
result of the employee's discovery, the State of Maryland
charged Mr. Grimes with a theft offense, and he was
subsequently convicted. ECF 1, ¶ 12. As a part of his
sentence, the court ordered payment of restitution, which
plaintiff claims has since been paid.
Baltimore Scrap "reviewed all of its records for payment
for Mr. Grimes from the time that he was hired by his
employer, Otis Elevator, in 2011." Id. ¶
13. According to the Complaint, "the tickets reflected
payments for Otis Elevator's scrap," but "Otis
Elevator disclosed that they never received cash on any
Baltimore Scrap tickets from Mr. Grimes." Id.
In total, Baltimore Scrap claims that it "discovered
approximately $200, 000 worth of scrap that Mr. Grimes stole
out the back door of the property .. .." Id.
"Baltimore Scrap brought a civil suit for fraud against
Mr. Grimes." Id. ¶ 15. The Complaint
asserts, id. ¶ 16: "On March 7, 2016, a
Baltimore Circuit Court jury found Mr. Grimes liable for
fraud, and a judgment was entered against him in the amount
of $196, 081.05 plus costs" (the "Grimes
Loss"). And, "Mr. Grimes has begun making small
payments on the judgment." Id. In pursuing
legal action against Mr. Grimes, Baltimore Scrap avers that
it has "incurred legal costs in excess of $55, 000 .,
.." Id. ¶ 17.
relevant times, Baltimore Scrap "was covered under a
comprehensive insurance program," including a
"Crime Policy with Executive Risk" (ECF 1-1) and a
"Commercial Property Coverage Policy with RLI" (ECF
1-2). ECF 1, ¶ 18. The Executive Risk Policy "had a
policy period of October 1, 2014 through October 1,
2016." ECF 1, ¶ 23. It included, inter
alia, the "Crime Coverage Part," which
provided "Premises Coverage" under "Insuring
Clause (B)." ECF 1-1 at 3-4.
provision states, in relevant part, that Executive Risk
"shall pay" Baltimore Scrap "for direct loss .
. . resulting from: (1) Robbery, Safe Burglary, or unlawful
taking of Money or Securities committed by a Third Party; or
(2) actual destruction or disappearance of Money or
Securities, within or from the Premises . . . ."
Id. at 4. Coverage also included "(3) loss of
or damage to Property which results from Robbery or attempted
Robbery within the Premises;... committed by a Third
in the Section titled "Exclusions," the Executive
Risk Policy contains the following provision in Exclusion
(A)(l 1), id. at 10:
Voluntary Exchange or Purchase
loss due to an Insured knowingly having given or surrendered
Money, Securities or Property in any exchange or purchase
with a Third Party, not in collusion with an Employee,
provided that this Exclusion (A)(ll) shall not apply to
otherwise covered loss....
Executive Risk Policy defines "Third Party" as
"a natural person other than: (A) an Employee; or (B) a
natural person acting in collusion with an Employee."
Id., at 8. And, "Robbery" is defined as
"the unlawful taking of Money, Securities or Property
from the custody of an Employee or other person (except a
person acting as a watchman, porter or janitor) duly
authorized by an Organization to have custody of such Money,
Securities or Property, by violence or threat of violence,
committed in the presence and cognization of such Employee or
other person." Id..
the Policy, "Theft" is defined as "the
unlawful taking of Money, Securities or Property to the
deprivation of: (A) an Insured, solely for the purposes of
Insuring Clause (A), Employee Theft Coverage; or (B) a
Client, solely for the purposes of Insuring Clause (I),
Client Coverage." Id., Insuring Clause (A)
provides that Executive Risk "shall pay ... for direct
loss of Money, Securities or Property sustained by"
Baltimore Scrap "resulting from Theft or Forgery
committed by an Employee acting alone or in collusion with
others." Id. at 4. And, Insuring Clause (I)
states that Executive risk "shall pay" Baltimore
Scrap "for direct loss of Money, Securities or Property
sustained by a Client resulting from Theft or Forgery
committed by an Employee not in collusion with such
Client's employees." Id. at 5.
Executive Risk Policy also includes an "Expense
Coverage" provision. Id. It requires Executive
Risk to pay Baltimore Scrap for "Investigative Expenses
resulting from any direct loss covered under Insuring Clauses
maintains that "the Grimes Loss necessarily constitutes
a loss" under both policies. ECF 1, ¶ 26. Further,
plaintiff asserts that it submitted timely notice of the
Grimes Loss to both insurers. Id. ¶ 28.
However, according to plaintiff, the insurers have wrongfully
denied coverage for the Grimes Loss." Id.
facts are included, infra.
defendant may test the legal sufficiency of a complaint by
way of a motion to dismiss under Rule 12(b)(6). In re
Birmingham, 846 F, 3d 88, 92 (4th Cir. 2017); Goines
v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th
Cir. 2016); McBurney v. Cuccinelli, 616 F.3d 393,
408 (4th Cir. 2010), aff'd sub nom. McBurney v.
Young, 569 U.S. 221 (2013); Edwards v. City of
Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). A Rule
12(b)(6) motion constitutes an assertion by a defendant that,
even if the facts alleged by a plaintiff are true, the
complaint fails as a matter of law "to state a claim
upon which relief can be granted."
a complaint states a claim for relief is assessed by
reference to the pleading requirements of Fed.R.Civ.P.
8(a)(2). That rule provides that a complaint must contain a
"short and plain statement of the claim showing that the
pleader is entitled to relief." The purpose of the rule
is to provide the defendants with "fair notice" of
the claims and the "grounds" for entitlement to
relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544,
survive a motion under Rule 12(b)(6), a complaint must
contain facts sufficient to "state a claim to relief
that is plausible on its face." Twombly, 550
U.S. at 570; see Ashcroft v. Iqbal, 556 U.S. 662,
684 (2009) ("Our decision in Twombly expounded
the pleading standard for 'all civil actions' ..
.." (citation omitted)); see also Paradise Wire
& Cable Defined Benefit Pension Fund Plan v. Weil,
918 F.3d 312, 317 (4th Cir. 2019); Willner v. Dimon,
849 F.3d 93, 112 (4th Cir. 2017). But, a plaintiff need not
include "detailed factual allegations" in order to
satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555.
Moreover, federal pleading rules "do not countenance
dismissal of a complaint for imperfect statement of the legal
theory supporting the claim asserted." Johnson v.
City of Shelby, Miss., 574 U.S.___, 135 S.Ct. 346, 346
(2014) (per curiam).
mere '"naked assertions' of wrongdoing" are
generally insufficient to state a claim for relief.
Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir.
2009) (citation omitted). The rule demands more than bald
accusations or mere speculation. Twombly, 550 U.S.
at 555; see Painter's Mill Grille, LLC v. Brown,
716 F.3d 342, 350 (4th Cir. 2013). If a complaint provides no
more than "labels and conclusions" or "a
formulaic recitation of the elements of a cause of
action," it is insufficient. Twombly, 550 U.S.
at 555. Put another way, "an unadorned,
the-defendant-unlawfully-harmed-me accusation" does not
state a plausible claim for relief. Iqbal, 556 U.S.
at 678. Rather, to satisfy the minimal requirements of Rule
8(a)(2), the complaint must set forth "enough factual
matter (taken as true) to suggest" a cognizable cause of
action, "even if... [the] actual proof of those facts is
improbable and... recovery is very remote and unlikely."
Twombly, 550 U.S. at 556 (internal quotation marks
reviewing a Rule 12(b)(6) motion, a court "must accept
as true all of the factual allegations contained in the
complaint" and must "draw all reasonable inferences
[from those facts] in favor of the plaintiff." E.I
du Pont de Nemours & Co. v. Kolon Indus., Inc., 637
F.3d 435, 440 (4th Cir. 2011) (citations omitted); see
Reyes v. Waples Mobile Home Park Ltd. P'ship, 903
F.3d 415, 423 (2018); Semenova v. Md. Transit
Admin.,845 F.3d 564, 567 (4th Cir. 2017); Houck v.
Substitute Tr. Servs., Inc.,791 F.3d 473, 484 (4th Cir.
2015); Kendall v. Balcerzak,650 F.3d 515, 522 (4th
Cir. 2011), cert, denied,565 U.S. 943 (2011). But,
a court is not required to accept legal conclusions drawn
from the facts. See Papasan v. Attain,478 U.S. 265,
286 (1986). "A court decides whether [the pleading]
standard is met by separating the legal conclusions from the
factual allegations, assuming the truth of only the factual
allegations, and then determining whether those ...