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Huntington Ingalls Inc. v. Travelers Indemnity Co.

United States District Court, E.D. Virginia, Newport News Division

October 29, 2019

HUNTINGTON INGALLS INCORPORATED, Plaintiff,
v.
THE TRAVELERS INDEMNITY COMPANY, Defendant.

          OPINION AND ORDER

          MARK S. DAVIS CHIEF UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on a Motion to Dismiss Count Three of Plaintiff's First Amended and Supplemental Complaint ("Amended Complaint"), filed by Defendant Travelers Indemnity-Company ("Travelers") pursuant to Federal Rule of Civil Procedure 12(b) (6) . Mot. to Dismiss, ECF No. 34. After examining the briefs and the record, the Court determines that oral argument is unnecessary because the facts and legal contentions are adequately presented, and oral argument would not aid in the decisional process. Fed.R.Civ.P. 78(b); E.D. Va. Loc. R. 7(J). For the reasons stated below, Defendant's Motion to Dismiss Count Three of Plaintiff's Amended Complaint is GRANTED.

         I. FACTUAL AND PROCEDURAL BACKGROUND[1]

         A. Factual Background

         Since the late 1800s, Plaintiff's Newport News Shipbuilding Division ("NNS"), under various names, has "operated as a company in Newport News, Virginia, specializing in the design, construction, overhaul and repair of ships for the U.S. Navy and commercial customers." Am. Compl. ¶ 2, ECF No. 33. In 1968, NNS became a wholly-owned subsidiary of Tenneco, Inc., before becoming a wholly owned subsidiary of Tenneco InterAmerica, Inc.-which itself was a wholly owned subsidiary of Tenneco, Inc.-in 1986. Id. ¶¶ 8-9. Through various subsequent changes in name and ownership, NNS came to its current name and status as a division of Huntington Ingalls Inc., which is itself a subsidiary of Huntington Ingalls Industries, Inc. Id. ¶¶ 10-16.

         From 2001 to 2015, NNS was party to numerous "lawsuits and/or claims alleging asbestos exposure at or from the Newport News Shipyard or on ships or submarines built by NNS" (the "Asbestos Lawsuits") . Id. ¶ 18. As part of a search for historical liability insurance policies, many of which had been "lost from [NNS's] files," NNS came to understand that Travelers had provided liability insurance coverage for NNS during the 1970s and 1980s. Id. ¶¶ 22-25. NNS thus initiated discussions with Travelers regarding potential coverage for the Asbestos Lawsuits. Id. ¶ 26.

         Travelers "confirmed the existence of primary insurance policies" from the 1970s and 1980s that were issued to Tenneco, Inc., the parent corporation of NNS during that time period, but did not disclose the existence of policies naming NNS as the insured. Id. ¶¶ 27-28. In various communications, Travelers represented to NNS that coverage was limited to the policies issued to NNS's parent and that there was no coverage under any Travelers policy for NNS prior to August 1, 1973. Id. ¶¶ 28-32.

         In November of 2017, NNS located an insurance schedule that referenced a different Travelers policy number (No. T-EX-952171-71, the "1971-1973 Policy”). Id. ¶ 35. On November 14, 2017, after receiving a request from NNS, Travelers provided NNS with a copy of the 1971-1973 Policy, which identified "Newport News Shipbuilding and Dry Dock Company" as the "Named Insured." Id. ¶¶ 36-37. Following the filing of its complaint in the instant case, NNS identified an additional Travelers policy that denotes "Newport News Shipbuilding and Dry Dock Company" as the "Named Insured" (policy number T-EX-972408-73, the "1973-1974 Policy"). Id. ¶¶ 47-48. NNS claims that both the 1971-1973 Policy and the 1973-1974 Policy provide "extremely valuable" coverage relating to the Asbestos Lawsuits. Id. ¶¶ 39, 49.

         NNS alleges that Travelers had knowledge and possession of the 1971-1973 Policy at the time of its prior discussions with NNS regarding coverage relating to the Asbestos Lawsuits and that Travelers "has not thoroughly reviewed its records for information relating to policies for NNS." Id. ¶¶ 42, 47. Furthermore, according to NNS, Travelers "owed a duty of good faith and fair dealing to NNS, and was in a superior position to know the existence and terms of the insurance policies that it had sold." Id. ¶ 34. NNS claims that it accepted and reasonably relied upon Travelers' representations regarding coverage, as NNS did not request payment under any policy that identified "Newport News Shipbuilding and Dry Dock Company" as the "Named Insured" prior to its discovery of the 1971-1973 Policy in November of 2017. Id.

         B. Procedural Background

         On November 21, 2018, Plaintiff filed suit against Defendant in this Court (the "Complaint") . Compl., ECF No. 1. The Complaint included four counts: (1) Breach of Contract; (2) Failure to Act in Good Faith; (3) Constructive Fraud; and (4) Declaratory Judgment. Id. ¶¶ 48-70. On January 9, 2019, Defendant filed a Motion to Dismiss Counts Two and Three of the Complaint pursuant to Fed.R.Civ.P. 12(b)(6). Mot. to Dismiss, ECF No. 18.

         On June 17, 2019, Plaintiff filed the Amended Complaint, Am. Compl., ECF No. 33, which also included four counts: (1) Breach of Contract; (2) Failure to Act in Good Faith; (3) Constructive Fraud; and (4) Declaratory Judgment. Id. ¶¶ 54-78. On June 28, 2019, Defendant filed the instant Motion to Dismiss Count Three of the Amended Complaint pursuant to Fed.R.Civ.P. 12(b) (6), as well as a memorandum in support of its motion. Mot. to Dismiss, ECF No. 34; Def.'s Memo., ECF No. 35. On that same day, Defendant withdrew its prior Motion to Dismiss Counts Two and Three of the Complaint, ECF No. 18. Def.'s Withdrawal, ECF No. 37. On July 12, 2019, Plaintiff filed a Memorandum in Opposition to Defendant's June 28, 2019 Motion to Dismiss, Pl.'s Memo., ECF No. 38 (the "Memorandum in Opposition"), to which the Defendant responded on July 18, 2019. Def.'s Reply, ECF. No. 39.

         II. STANDARD OF REVIEW

         The Rule 12(b)(6) standard of review permits dismissal when a complaint fails "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A complaint fails to state a claim if it does not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) . Though a complaint need not be detailed, the "[f]actual allegations must be enough to raise a right to ...


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