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Empire Fire & Marine Insurance Co. v. Pandt-Brown

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

February 26, 2018

EMPIRE FIRE & MARINE INSURANCE COMPANY, Plaintiff,
v.
GLENDA PANDT-BROWN and JACK GUEMPLE, Defendants.

          UNITED STATES MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

          ROBERT J. KRASK UNITED STATES MAGISTRATE JUDGE

         This matter comes before the Court on a motion to dismiss filed by defendant Jack Guemple. ECF No. 11. This motion was referred to the undersigned by order dated January 11, 2018, pursuant to 28 U.S.C. § 636(b)(1)(B) and Federal Rule of Civil Procedure 72(b). ECF No. 19. For the reasons stated herein, the Court RECOMMENDS that the motion to dismiss be DENIED.

         I. PROCEDURAL HISTORY

         On August 11, 2017, Empire Fire & Marine Insurance Company ("Empire") filed this action against Jack Guemple ("Guemple") and Glenda Pandt-Brown ("Pandt-Brown"). Compl., ECF No. 1. Empire seeks a declaratory judgment pursuant to 28 U.S.C. § 2201 and Rule 57 of the Federal Rules of Civil Procedure, defining the rights and legal relations between the parties in connection with an underlying lawsuit in the Circuit Court for the City of Portsmouth. Id. at 2. On December 8, 2017, Guemple filed a motion to dismiss for failure to state a claim and for lack of jurisdiction with an accompanying memorandum. ECF Nos. 11-12. Empire filed an opposition to the motion to dismiss on December 22, 2017, with an accompanying memorandum. ECF Nos. 14-15. On January 5, 2018, Guemple replied to Empire's opposition. ECF No. 18. On January 24, 2018, after determining that Guemple asserted a new argument in his reply, the Court ordered Empire to file a sur-reply. ECF No. 20. Empire did so on February 1, 2018. ECF No. 21.

         II. FACTUAL HISTORY

         Taking the facts in the complaint as true, on September 15, 2015, Pandt-Brown rented an automobile from Enterprise Rent-a-Car Co. ("Enterprise") in Jamaica, New York. Compl. ¶ 13. Pandt-Brown elected to purchase supplemental liability protection in connection with her rental, which was provided by Empire. Id. That same day, Pandt-Brown was involved in an automobile collision with Guemple, causing injuries. Id. at ¶ 21. It is uncontested that Pandt-Brown was under the influence of alcohol at the time of the collision.[1] Id. at ¶ 17; ECF No. 12 at 1-2.

         Guemple filed suit against Pandt-Brown on June 20, 2016 in the Circuit Court for the City of Portsmouth, seeking punitive and compensatory damages. Compl. ¶ 23; ECF No. 1-1. According to Guemple's brief, Empire defended the action in circuit court. ECF No. 12 at 2. Guemple further states that sometime during that suit, Pandt-Brown left the country and has not since been located. Id. On August 11, 2017, while the underlying suit was still pending, Empire filed this action, nearly 14 months after the commencement of the state tort suit. ECF No. 1. Ultimately, the jury in the state tort suit returned a verdict in favor of Guemple for $1, 600, 000.00.[2] ECFNo. 12 at 2.

         The agreement between Pandt-Brown and Enterprise is comprised of an "Agreement Summary" sheet, and a "Rental Agreement Jacket." ECF Nos. 21-1, 2l-2.[3] The agreement summary states that "Enterprise purchases no third-party insurance covering this rental, but provides its renters and authorized drivers with minimum liability coverage, as required by" New York law. ECF No. 21-1. The agreement summary also informs the renter that, if desired, he or she "may purchase Supplemental Liability Coverage from Enterprise at an additional cost." Id. Under a section titled "acknowledgement of the entire agreement," the agreement summary requests, in all capital letters, that the renter affirm that she "ha[s] read and agree[s] to the terms and conditions on this rental agreement summary and the rental agreement jacket, incorporated herein by reference (collectively, the 'agreement')." Id. Pandt-Brown initialed above this section and signed below it. Id.

         Section 3(b)(3) of the rental agreement jacket states that the renter shall pay "Owner, its affiliates or agents amounts as set forth on the Rental Agreement Summary for: ... The Optional Accessories, services and/or products charges for those items accepted by Renter." ECF No. 21-2 at 2. Section 17 of the rental agreement jacket is titled "Optional Supplemental Liability Protection," and directs the renter to the supplemental liability policy if the renter elected to purchase that policy. Id. at 4-5. The policy is attached at the end of the agreement, and specifies Empire as the insurance carrier. Id. at 6-8.

         The policy "provides excess auto liability insurance" for losses involving "bodily injury" and "property damage" caused by accidents involving the rental vehicle. Id. at 6. Section V of the policy, titled "[e]xclusions," states:

This insurance does not apply to:
L. Punitive or exemplary damages.
M. "Loss" arising out of an "accident" which occurs while the operator of the "Rental Vehicle" is under the influence of alcohol or drugs, or other substances unless used as prescribed by a physician.

Id. at 6-7.

         On November 19, 2015, Empire sent a reservation of rights letter to Pandt-Brown informing her that she may not be entitled to supplemental liability coverage due to the possibility that she was under the influence of alcohol at the time of the accident. ECF No. 1-3. The letter cites section V.M. of the policy. Id. On March 7, 2016, Empire sent Pandt-Brown another letter, informing her that it was denying and disclaiming any coverage for the accident, because Pandt-Brown was determined to have been operating the rental vehicle under the influence of alcohol. ECF No. 1-4. That letter also cites section V.M. Id. On November 17, 2016, Empire sent Pandt-Brown a letter informing her that it had received notice of a summons and complaint in the underlying tort case, and that it was still disclaiming any coverage due to section V.M. ECF No. 1-5. These letters are all attached to the complaint.

         III. STANDARD OF REVIEW

         A. Rule 12(b)(6) Standard of Review

         Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss complaints, or claims within complaints, upon which no relief can be granted. Fed.R.Civ.P. 12(b)(6); Sonnier v. Diamond Healthcare Corp., 114 F.Supp.3d 349, 354 (E.D. Va. 2015). In order to survive a motion to dismiss, the complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). This pleading standard requires that the complaint state a claim for relief that is "plausible on its face." Bell Ail. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In essence, "[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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Ascertaining whether a complaint states a plausible claim for relief is a "context-specific task" that requires the court to "draw on its judicial experience and common sense." Id. at 679.

         A motion to dismiss pursuant to Rule 12(b)(6) challenges "the sufficiency of a complaint; it does not resolve disputes over factual issues, the merits of a claim, or the applicability of a defense." SunTrust Mortg., Inc. v. Simmons First Nat'l Bank, 861 F.Supp.2d 733, 735 (E.D. Va. 2012) (citing Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992)). Therefore, "[i]n ruling on a 12(b)(6) motion, a court 'must accept as true all of the factual allegations contained in the complaint' and 'draw all reasonable inferences in favor of the plaintiff" Kensington Volunteer Fire Dep't, Inc. v. Montgomery Cty., Md., 684 F.3d 462, 467 (4th Cir. 2012) (quoting E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011)). The factual allegations, however, "cannot be mere speculation, and must amount to more than 'a sheer possibility that a defendant has acted unlawfully.'" Brach v. Conflict Kinetics Corp., 221 F.Supp.3d 743, 747 (E.D. Va. 2016) (quoting Iqbal, 556 U.S. at 678). In addition, "legal conclusions, elements of a cause of action, and bare assertions devoid of further factual enhancement fail to constitute well-pled facts for Rule 12(b)(6) purposes." Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009) (citing Iqbal, 556 U.S. at 678).

         A district court must "consider documents incorporated into the complaint and documents attached to a motion to dismiss that are integral to and relied on in the complaint," which it can do without converting a Rule 12(b)(6) motion into a motion for summary judgment. Lewis v. Newton, 616 Fed.Appx. 106, 106 (4th Cir. 2015) (quoting Cozzarelli v. Inspire Pharms. Inc., 549 F.3d 618, 625 (4th Cir. 2008); Zak v. Chelsea Therapeutics Jnt'l Ltd, 780 F.3d 597, 606-07 (4th Cir. 2015)).

         B. Declaratory Judgment Standard

         The Declaratory Judgment Act gives federal courts the power to "declare the rights and other legal relations of any interested party seeking such a declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201. A declaratory judgment has the force and effect of a final judgment. Id. Section 2201 does not in itself confer jurisdiction. There are three requirements ...


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