United States District Court, E.D. Virginia, Newport News Division
OPINION AND ORDER
S. DAVIS CHIEF UNITED STATES DISTRICT JUDGE.
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
FACTUAL AND PROCEDURAL BACKGROUND
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.
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.
"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.
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.
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.
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.
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.
STANDARD OF REVIEW
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