United States District Court, E.D. Virginia, Richmond Division
GREAT AMERICAN INSURANCE COMPANY, Plaintiff/Counterclaim Defendant,
GRM MANAGEMENT, LLC, and SN HOLDINGS, LLC, Defendants/Counterclaim Plaintiffs.
M. HANNAH LAUCK, District Judge.
Before the Court are Defendants/Counterclaim Plaintiffs GRM Management, LLC ("GRM") and SN Holdings, LLC's ("SN") (collectively, "Defendants") Motion to Dismiss the Complaint and Plaintiff/Counterclaim Defendant Great American Insurance Company's ("Great American") Motion to Dismiss the Counterclaim, Motion to Bifurcate, and Motion for Judgment on the Pleadings. (ECF Nos. 11, 20, 23, 25.) The Court heard oral argument and these matters are ripe for disposition. The Court exercises jurisdiction pursuant to 28 U.S.C. § 1332.
For the reasons that follow, the Court will:
(1) Deny GRM and SN's Motion to Dismiss the Complaint (ECF No. 11);
(2) Grant in part and deny in part Great American's Motion for Judgment on the Pleadings and, to the extent applicable, its Motion to Dismiss (ECF Nos. 20, 25); and,
(3) Grant Great American's Motion to Bifurcate (ECF No. 23).
I. Standards of Review
A. Motion to Dismiss For Failure to State Claim for Relief: Rule 12(b)(6)
"A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citing 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1356 (1990)). In considering a motion to dismiss for failure to state a claim, a plaintiffs well-pleaded allegations are taken as true and the complaint is viewed in the light most favorable to the plaintiff. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993); see also Martin, 980 F.2d at 952. This principle applies only to factual allegations, however, and "a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
The Federal Rules of Civil Procedure "require only a short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to give the defendant fair notice of what the... claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (omission in original) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Plaintiffs cannot satisfy this standard with complaints containing only "labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Id. (citations omitted). Instead, a plaintiff must assert facts sufficient "to raise a right to relief above the speculative level, " id. (citation omitted), stating a claim that is "plausible on its face, " id. at 570, rather than merely "conceivable." Id. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp., 550 U.S. at 556). Therefore, in order for a claim or complaint to survive dismissal for failure to state a claim, the plaintiff must "allege[ ] facts sufficient to state all the elements of [his or] her claim." Bass v. E.I. DuPont de Nemours & Co., 324 F.3d 761, 765 (4th Cir. 2003) (citing Dickson v. Microsoft Corp., 309 F.3d 193, 213 (4th Cir. 2002); Iodice v. United States, 289 F.3d 270, 281 (4th Cir. 2002)).
"If, on a motion under Rule 12(b)(6)..., matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56, " and "[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed.R.Civ.P. 12(d); see Laughlin v. Metro. Washington Airports Auth., 149 F.3d 253, 260-61 (4th Cir. 1998); Gay v. Wall, 761 F.2d 175, 177 (4th Cir. 1985). However, "a court may consider official public records, documents central to plaintiff's claim, and documents sufficiently referred to in the complaint [without converting a Rule 12(b)(6) motion into one for summary judgment] so long as the authenticity of these documents is not disputed." Witthohn v. Fed. Ins. Co., 164 F.App'x 395, 396-97 (4th Cir. 2006) ( citing Alternative Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001); Phillips v. LCI Int'l, Inc., 190 F.3d 609, 618 (4th Cir. 1999); Gasner v. Cnty. of Dinwiddie, 162 F.R.D. 280, 282 (E.D. Va. 1995)).
Great American and Defendants attached the insurance contract to the Complaint and Counterclaim. ( See Compl. Ex. 1; Countercl. Ex. A.) Additionally, Great American attached sixteen (16) letters to its Answer to Defendants' Counterclaim. The Court will consider the insurance contract and sixteen letters because the documents are central to the claims, sufficiently referred to in the Complaint and Counterclaim, and neither party contests their authenticity. See Witthohn, 164 F.App'x at 396-97 (citations omitted).
B. Motion for Judgment on the Pleadings: Rule 12(c)
Federal Rule of Civil Procedure 12(c) allows a party to move for judgment on the pleadings after the pleadings are closed but "within such time as not to delay the trial." See Fed.R.Civ.P. 12(c). Courts apply the same standard that is applied to Rule 12(b)(6) motions to Rule 12(c) motions for judgment on the pleadings. See, e.g., Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir. 1999) (applying Rule 12(b)(6) standard of review to a Rule 12(c) motion); see also Burbach Broad Co. of Del. v. Elkins Radio Corp., 278 F.3d 401, 406 (4th Cir. 2002) (stating that in a Rule 12(c) motion, all facts asserted in the complaint must be taken as true and all reasonable factual inferences must be drawn in favor of the nonmoving party). When reviewing a Rule 12(c) motion, however, a court may consider all pleadings, including answers and attached exhibits, instead of reviewing only the complaint. See Seneca Ins. Co. v. Shipping Boxes I, LLC, ___ F.Supp.2d ___, No. 2:13cv651, 2014 WL 2567158, at *3 (E.D. Va. June 6, 2014); Mendenhall v. Hanesbrands, Inc., 856 F.Supp.2d 717, 724 (M.D. N.C. 2012). Rule 12(c) allows a court to take the answer's factual allegations as true to the extent the allegations have not been denied or do not conflict with the factual allegations in the complaint. Id. Under Rule 12(c), a court may consider documents incorporated by reference without converting the motion to summary judgment if the documents are central to the claim and not in dispute. Mendenhall, 856 F.Supp.2d at 724. A court shall grant a motion for judgment on the pleadings under Rule 12(c) where "it appears to a certainty that the nonmoving party cannot prove any set of facts in support of its claim that would entitle it to relief." Shooting Point, L.L.C. v. W.M. Cumming, 238 F.Supp.2d 729, 735 (E.D. Va. 2002).
C. Motion to Bifurcate: Rule 42(b)
"For convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims." Fed.R.Civ.P. 42(b). The decision whether to bifurcate "is within the sound discretion of the trial judge." Bowie v. Sorrell, 209 F.2d 49, 51 (4th Cir. 1953).
II. Procedural and Factual Background
A. Procedural History
On April 24, 2014, Great American filed its Complaint for Declaratory Judgment. On July 15, 2014, GRM and SN filed their Answer, Counterclaim, and Motion to Dismiss. (ECF Nos. 10-11.) On August 12, 2014, Great American filed its Motion to Dismiss the Counterclaim, Motion to Bifurcate, and Motion for Judgment on the Pleadings. (ECF Nos. 20, 23, 25.) On October 27, 2014, the Court heard oral argument on the four pending motions.
B. Summary of Allegations in Great American's Complaint
1. The Policy at Issue
Great American's declaratory judgment action concerns a business insurance policy ("the Policy") issued by Great American to GRM and SN. The Policy provides insurance for a hotel property, The Richmond Magnuson Grand Hotel and Convention Center, owned by SN and operated by GRM in ...