United States District Court, W.D. Louisiana, Lafayette Division
ORDER AND RULING
B. WHITEHURST UNITED STATES MAGISTRATE JUDGE.
the Court is a Motion To Dismiss (Punitive Damages) filed by
filed by United Fire and Casualty Company (“United
Fire”) [Rec. Doc. 163], a Memorandum in Opposition
filed by Youngsville II Housing LLLP
(“Youngsville”) [Rec. Doc. 168], United
Fire's Reply [Rec. Doc. 173] and Youngsville's
Sur-reply [Rec. Doc. 176]. For the following reasons, United
Fire's motion will be denied.
background and procedural history of this action have been
set forth previously and will not be repeated at length. It
is sufficient to note that United Fire issued a Commercial
General Liability (CGL) policy (“the Policy”) to
Page Properties & Construction L.L.C.
(“Page”). Page contracted with Bob Morrow
Construction Company (“BMCC”), a general
contractor for Youngsville, to perform roofing work at
Youngsville's Somerset Apartments. Under the provisions
of the subcontract between Page and BMCC, Page was required
to name Youngsville and BMCC as additional insureds on the
Policy. The Court has held in prior rulings on summary
judgment that Alabama substantive law applies to the
contracts and the allegations in the plaintiffs complaint are
sufficient to find that United Fire is obligated to defend
Youngsville, its additional insured under the Policy,
regardless of the ultimate liability of the Insured.
and its CGL insurer, Ironshore Specialty Insurance Company
(“Ironshore”) filed a Cross-claim against United Fire
on April 21, 2018, and an Amended Cross-claim on July 30,
2018. R. 43, 148. Youngsville alleges in its Amended
Cross-claim: Prior to August 25, 2016, Youngsville notified
United Fire of this law suit and tendered its demand and
coverage position to United Fire's counsel. R. 148,
¶9. On December 12, 2016, Plaintiff filed an Amended
Complaint asserting that her injuries arose from the
Insured's negligence and Youngsville informed counsel for
United Fire of its intent to file a Cross-claim on the
insurance, defense and indemnity issues on April 12, 2017.
Id. at ¶¶ 10, 11. Based on United
Fire's counsel's response that “there was no
contractual relationship between Youngsville and [its
insured], ” Youngsville submitted United Fire's
contracts with the insured by April 27, 2017. Id. at
¶¶ 11, 12. United Fire refused to defend
Youngsville without any determination as to whether there was
a lawful basis to do so. Id. at ¶ 14 (erroneously
labeled as a second ¶ 11). Youngsville
contended that United Fire breached its contract to defend it
in this lawsuit, which caused and continues to cause
Youngsville substantial litigation expense and monetary loss.
Id. at ¶¶ 19, 20 (erroneously labeled
as a second ¶¶ 16, 17). Youngsville further
contended that it is entitled to punitive damages under
Alabama based on United Fire's alleged breach of its duty
to defend Youngsville. Id. at ¶ 18.
Fire filed the instant motion to dismiss pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure on September
20, 2018. R. 167. In ruling on a motion to dismiss,
the court generally “must not go outside the
pleadings.” Scanlan v. Texas A&M Univ.,
343 F.3d 533, 536 (5th Cir.2003). However, the court may
consider documents attached to a motion to dismiss that
“are referred to in the plaintiffs complaint and are
central to the plaintiffs claim.” Id. Here,
United Fire has attached a number of exhibits to its motion.
R. 163, 3-22. In addition to a copy of the Ironshore
Policy, the attached documents primarily reflect billing
invoices submitted by Youngsville to Ironshore for payment of
defense of this action. As the Amended Cross-claim references
United Fire's alleged refusal to defend Youngsville under
the Policy as well as Youngsville's resulting litigation
expenses and monetary loss and are, in fact, central to the
Cross-claim, the Court finds these documents do not require
that this motion be converted to a motion for summary
judgment under Rule 56. Moreover, the Court does not rely on
these documents in this ruling.
Contentions of the Parties
motion to dismiss, United Fire contends that the Court's
ruling on Youngsville's motion for summary judgment
“is not final and can be changed at any time prior to
final judgment” because “the  Court is free to
reconsider and reverse its decision for any reason it deems
sufficient” under Rule 54(b). R. 163-2, p.1. On
that basis, United Fire asserts that it does not owe any
defense cost or other damages to Youngsville until a final
judgment is rendered. Thus, it further asserts, Youngsville
has no right to recover any costs of defense, nor any
punitive damages for United Fire failing to pay defense
costs. United Fire also contends that because Ironshore,
Youngsville's insurer, has actually paid
Youngsville's defense costs pursuant to the Ironshore
policy, Ironshore is subrogated to any rights Youngsville may
have against United Fire for defense costs paid to date and
therefore Youngsville's claim against United Fire is
unenforceable. Finally, United Fire asserts that Louisiana
law applies to the claim for punitive damages and an award
for punitive damages is not authorized for insurance claims
under La. C.C. art. 3546.
argues that Ironshore's payments of defense costs to
Youngsville under its policy with Youngsville is a collateral
source which cannot be used by United Fire to reduce its
damages or defeat its claim for breach of contract against
United Fire. Youngsville further argues that it will continue
to suffer monetary loss as a result of United Fire's
refusal to pay defense costs pursuant to the Policy. Finally
it argues that Alabama rather than Louisiana law governs its
entitlement to punitive damages, and under Alabama law
punitive damages are recoverable for an insurer's bad
faith conduct towards its insurer.
Motion To Dismiss Standard
12(b)(6) motion is not the proper vehicle for the resolution
of factual disputes. In deciding a Rule 12(b)(6) motion to
dismiss, the Court limits its review to the face of the
pleadings. See Spivey, 197 F.3d 772, 774
(5th Cir. 1999).To survive a Rule 12(b)(6) motion
to dismiss, the plaintiffs must plead enough facts “to
state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 547 (2007)). A claim is facially plausible when the
plaintiff pleads facts that allow the court to “draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 129 S.Ct. at 1949.
A court must accept all well-pleaded facts as true and must
draw all reasonable inferences in favor of the plaintiff.
Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232-33
(5th Cir.2009. But the Court is not bound to accept as true
legal conclusions couched as factual allegations.
Iqbal, 129 S.Ct. at 1949-50.
legally sufficient complaint must establish more than a
“sheer possibility” that plaintiffs' claim is
true. Iqbal, 129 S.Ct. at 1949-50. It need not
contain detailed factual allegations, but it must go beyond
labels, legal conclusions, or formulaic recitations of the
elements of a cause of action. Twombly, 550 U.S. at
555. In other words, the face of the complaint must contain
enough factual matter to raise a reasonable expectation that
discovery will reveal evidence of each element of the
plaintiffs' claim. Lormand, 565 F.3d at 255-57.
If there are insufficient factual allegations to raise a
right to relief above the speculative level,
Twombly, 550 U.S. at 555, or if it is apparent from
the face of the complaint that there is an insuperable bar to
relief, Jones v. Bock, 549 U.S. 199, 215 (2007);
Carbe v. Lappin, 492 F.3d 325, 328 & n. 9 (5th
Cir.2007), the claim must be dismissed.
provides that defenses, cross-claims, and counterclaims must
be filed in accordance with Rules 12 and 13. See
Fed. R. Civ. P 14(a). Under the definition of Rule 7, a
third-party complaint, like an original complaint, is a
pleading whose form is prescribed by Rule 8. See
Fed. R. Civ. P. 7. Thus, a cross-claim is subject to the same
liberal rules of construction as an original complaint. At
this stage, the Court must accept as true, the allegations
contained in the “complaint” before it─ the
Amended Cross-claim filed by Youngsville.