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Seneca Ins. Co. v. Shipping Boxes I, LLC

United States District Court, E.D. Virginia, Norfolk Division

June 6, 2014

SENECA INSURANCE COMPANY, Plaintiff,
v.
SHIPPING BOXES I, LLC, and SHIPPING BOXES II, LLC, Defendants

Decided June 5, 2014

Page 507

For Seneca Insurance Company, Plaintiff, Counter Defendant: Kevin Thomas Streit, Robert Tayloe Ross, LEAD ATTORNEYS, Midkiff Muncie & Ross PC, Richmond, VA.

For Shipping Boxes I, LLC, Shipping Boxes II, LLC, Defendants: C. Thomas Brown, Erik Broch Lawson, LEAD ATTORNEYS, Silver & Brown PC, Fairfax, VA.

For Shipping Boxes I, LLC, Counter Claimant: C. Thomas Brown, Erik Broch Lawson, LEAD ATTORNEYS, Silver & Brown PC, Fairfax, VA.

Page 508

MEMORANDUM OPINION & ORDER

Raymond A. Jackson, United States District Judge.

Before the Court is Defendants Shipping Boxes I and Shipping Boxes II's Motion to Dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). ECF No. 28. Also before the Court are Plaintiff Seneca Insurance Company's Motion for Judgment on the Pleadings as to the Amended Counterclaim, ECF No. 41, alternative Motion to Dismiss the Amended Counterclaim, ECF No. 36, and Motion to Bifurcate. ECF No. 38. Plaintiff. Defendants' insurer, seeks a declaratory judgment that it is not obligated to pay certain claims for insurance coverage lodged bye Defendants. Defendant Shipping Boxes I has also filed a counterclaim for breach of contract against Plaintiff, alleging that Plaintiff has failed to pay a claim for coverage in violation of the parties' insurance contract. For the reasons stated below, Defendants' Motion to Dismiss is DENIED. Plaintiff's Motion for Judgment on the Pleadings is DENIED, its Motion to Dismiss is DENIED, and its Motion to Bifurcate is GRANTED.

I. FACTUAL AND PROCEDURAL HISTORY

Plaintiff Seneca Insurance Company filed this action pursuant to this Court's diversity jurisdiction, alleging that the amount in dispute exceeds $75,000, Plaintiff is a New York citizen, and Defendants are citizens of Virginia. Am. Compl. ¶ ¶ 3-6. It makes the following allegations in its Amended Complaint for Declaratory Relief. ECF No. 17. Seneca, an insurance company, issued a commercial insurance contract to Defendants Shipping Boxes I and Shipping Boxes II. Am Compl. ¶ 6. They share the same offices and members, and will be referred to collectively as " Shipping Boxes." The insurance contract initially covered the time period of May 17, 2011 to May 17, 2012, and it was later renewed for the following year, from May 17, 2012 to May 17, 2013. Id. ¶ 8. The contract provided commercial property insurance for commercial premises in Virginia Beach, Virginia. Shipping Boxes has title to the building and leases part of it to one tenant. Id. ¶ ¶ 9, 12-13. Less than 10% of the available space is occupied by that tenant; the remainder is vacant. Id. ¶ ¶ 15-16.

In May 2013, Shipping Boxes notified Seneca of damage at the premises resulting from vandalism. Am. Compl. ¶ 17. It submitted two claims to Seneca, one for a loss occurring in August 2012 and another for a loss occurring in December 2012. Id. ¶ ¶ 18-19. After investigating the claims, Seneca concluded that the losses had occurred over an extended period of time as a result of multiple incidents of vandalism, beginning as early as April 2012. Id. ¶ ¶ 36, 38. As a result, Seneca asserts that it is not obligated to pay insurance benefits to Shipping Boxes as reimbursement for its claims. It seeks a declaration that 1) Shipping Boxes did not satisfy a condition precedent to coverage that it promptly notify Seneca of loss or damage, 2) Shipping Boxes did not satisfy a condition precedent to coverage that it maintain certain security measures at the premises, 3) at least some of the claims are excluded because the damage was caused by delay, and/or 4) at least some of the claims are excluded because they resulted from Shipping Boxes' neglect to use all reasonable means to protect the premises.

Page 509

Defendant Shipping Boxes I has also filed a counterclaim which includes two breach of contract claims. In its Amended Counterclaim, ECF No. 27, it alleges, inter alia, that its delay in informing Seneca of the damage was reasonable because it promptly reported the vandalism to the police and the police directed it to stay quiet about the vandalism so that the perpetrators could be apprehended. Am. Countercl. ¶ ¶ 50-53. In its breach of contract claim, Shipping Boxes I alleges that Seneca breached the insurance contract by failing to pay its claims and also breached the implied covenant of good faith and fair dealing. Id. ¶ ¶ 79-80. In its anticipatory breach of contract claim, raised in the alternative to the first claim, Shipping Boxes I contends that Seneca has effectively cancelled the insurance contract by making clear that it does not intend to pay. Id. ¶ ¶ 84, 86.

On February 24, 2014, Shipping Boxes filed a Motion to Dismiss the Amended Complaint. ECF No. 28. Seneca filed an Opposition on March 6, 2014, ECF No. 33, and Shipping Boxes filed its Reply on March 10, 2014, ECF No. 35. On March 11, 2014, Seneca filed a Motion for Judgment on the Pleadings regarding Shipping Boxes I's Amended Counterclaim. ECF No. 42. It also filed an alternative Motion to Dismiss, ECF No. 36, and a Motion to Bifurcate in the further alternative, ECF No. 38. Shipping Boxes filed a joint Memorandum in Opposition on March 24, ...


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