Opinion
No. 07-959-B.
November 13, 2007.
MEMORANDUM OF DECISION AND ORDER ON PLAINTIFF'S MOTION TO DISMISS COUNTERCLAIM
The plaintiff, National Fire and Marine Insurance Company (National Fire), brought this action against AT Equipment, Inc., alleging breach of contract and unjust enrichment in that National Fire did not pay the additional premium owed on an insurance policy purchased by AT Equipment. AT Equipment has filed a counterclaim against National Fire seeking declaratory relief and alleging promissory estoppel, breach of contract, mistake of fact, misrepresentation, and violation of G.L. c. 93A. AT Equipment also filed a third-party complaint against Insurance Professionals of New England, Inc. and the Quaker Insurance Agency of Massachusetts, Inc. The case is now before this court on National Fire's Motion to Dismiss Counterclaim filed by AT Equipment. For the reasons that follow, the plaintiff's Motion to Dismiss Counterclaim is ALLOWED.
BACKGROUND
Taking the contents of the complaint and the inferences that may be drawn therefrom as true, the facts are as follows:
National Fire is an insurance company located in Omaha, Nebraska. AT Equipment is a corporation that is engaged in the business of selling and/or renting construction equipment and is located in Worcester, Massachusetts.
AT Equipment hired Insurance Professionals to act as broker for the purchase of several insurance policies. Insurance Professionals arranged to have Quaker Insurance as agent, and they obtained general liability insurance for AT Equipment from National Fire. The General Insurance Application included a section titled "Schedule of Hazards." That section stated that the "Premium Basis" for Contractor's Equipment was $10,300 and for Machinery and Equipment, $92,700. Alex Topolewski, the President of AT Equipment, signed the application with those figures, although he was not aware at the time that those numbers indicated that AT Equipment had annual sales of those amounts, when in fact they were much higher.
AT Equipment purchased the National Fire commercial general liability policy. The initial policy year was August 19, 2003, through August 19, 2004. The second policy year was from August 19, 2004, through August 19, 2005. The premium paid was $5,610, which was based on estimated annual revenues of $10,300 for Contractor's Equipment and $92,700 for Machinery and Equipment.
In December 2005, National Fire notified AT Equipment that it was conducting an audit of AT Equipment's revenues during the year August 19, 2004, through August 19, 2005. During the audit, National Fire concluded that during that year AT Equipment had rentals of contractor's equipment in the amount of $338,298 and parts in the amount of $1,268,827.30. AT Equipment's premium for the year ending August 19, 2005, was recalculated to be $107,905, an additional $102,405 over the amount originally paid by AT Equipment. The premiums charged by National Fire are considerably higher than those charged by other insurers. The policy issued to AT Equipment states that the initial policy premium paid is only a deposit, and the actual owed premium may increase or decrease depending on the results of an audit.
After conducting the audit, National Fire canceled AT Equipment's remaining policy with them for failure to cooperate with the audit. AT Equipment never filed any claims under that policy.
DISCUSSION
In considering a motion to dismiss, "the allegations of the [counterclaim], as well as such inferences as may be drawn therefrom in the [counterclaim-]plaintiff's favor, are to be taken as true."Nader v. Citron, 372 Mass. 96, 98 (1977). The defendant is entitled to judgment pursuant to Rule 12(b)(6) when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. The court is "not to consider the unlikelihood of the Plaintiff's ability to produce evidence to support otherwise legally sufficient complaint allegations." Brum v. Town of Dartmouth, 44 Mass. App. Ct. 318, 322 (1998) (citing Mmoe v.Commonwealth, 393 Mass. 617, 619-620 (1985)). Furthermore, in deciding this motion to dismiss, this court will consider uncontested documents of record. See Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43, 45 n. 4 (2004).
Counts II, III, IV, and V of the counterclaim shall be dismissed because a party that signs an unambiguous contract is assumed to have read and understood the contract, and an insurance policy is a type of contract. Cormier v. Central Massachusetts Chapter of the Nat'l Safety Council, 416 Mass. 286, 289 (1993); Commonwealth v. Litwinsky, 65 Mass. App. Ct. 1122 (2006). The gravamen of AT equipment's argument is that even though they signed the contract and accepted the insurance policy, another party was negligent by not warning them of "the significance of AT Equipment's sales on the rates and that [National Fire] had especially high rates. . . ." The policy clearly states that the original payment is merely a deposit premium that may be increased or decreased pending an audit. This was admittedly clearly stated in the terms and conditions of the policy and must be enforced.
Count VI, alleging violation of G.L. c. 93A, must be dismissed as it is based on Count V, which has been dismissed.
Count I, seeking declaratory relief, will be dismissed for several reasons: A ruling on these issues will not result in economic benefit to AT Equipment and the relief sought is addressing allegations of past harm. See Boston's Children First v. Boston School Comm., 183 F. Supp. 2d 382 (D. Mass. 2002). Moreover, some portions of the requested declaratory relief rest on disputed questions of fact. See Ralph's Wonder, Inc. v. Comm. of Rev., 19 Mass. App. Ct. 928 (1984) (stating that where the case does not reduce to an issue of law without dispute as to the facts, maintenance of declaratory action is disfavored). Finally, this court has discretion to refuse declaratory relief where it would not terminate the controversy. Bd. of Selectment of Truro v.Outdoor Advertising Bd., 346 Mass. 754 (1964). Here, this court has dismissed all claims brought by AT Equipment against National Fire, so the only remaining controversy will be handled in National Fire's main case.
ORDER
For the reasons discussed above, it is ORDERED that plaintiff's Motion to Dismiss Counterclaim be ALLOWED.