Opinion
C. A. No. S08C-05-028-RFS.
Submitted: December 29, 2009.
Decided: January 21, 2010.
Upon Defendants' Motion for Judgment on the Pleadings.
GRANTEDMichael L. Sensor, Esquire, Perry Sensor, Wilmington, Delaware, Attorney for Plaintiffs.
Michael R. Smith, Esquire, Griffin Hackett, P.A., Georgetown, Delaware, Walter D. Willson, Esquire, (pro hac vice), Wells, Marble Hurst, PLLC, Ridgeland, MS, Attorneys for Defendants.
MEMORANDUM OPINION
Defendants Assurant, Inc., t/d/b/a Assurant Solutions and Assurant Specialty Property (hereafter "Assurant"), and American Security Insurance Company ("ASIC") have moved for judgment on the pleadings ("the motion"). Plaintiffs Joseph and Catherine Jadczak ("Jadczak") oppose the motion. They argue that the Court should convert the motion into one for summary judgment and deny it, alleging the existence of material issues of fact for jury determination. After consideration, judgment on the pleadings is granted.
BACKGROUND
This case was filed because of the lack of enough insurance to cover a fire loss. Jadczak purchased property in Eagle Crest, Sussex County, Delaware. A home and aircraft hangar were built on the property. On May 29, 2006, a fire destroyed the hanger. At that time, Homesite Insurance Company ("Homesite") insured the property. The limit available for their residence was $622,000.00. However, the coverage for the hangar was 10% of the limit of the house, $62,200, because it was considered to be a separate structure. A suit filed by Jadczak against Homesite was settled in the Federal District Court for the lower limit.
Thereafter, because greater losses were claimed, Jadczak sued Assurant and ASIC in this suit vaguely alleging these defendants "placed", i.e. ordered, the Homesite policy which left them underinsured. Jadczak alleged another party, AIG Marketing, Inc. ("AIG"), was involved in the process but AIG was dismissed on statute of limitations grounds.
LEGAL STANDARDS
Jadczak filed an Amended Complaint which was answered by Assurant and ASIC. Consequently, this matter is decided under Super. Ct. R. 12(c), which provides:
. . . After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the Court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all materials made pertinent to such a motion by Rule 56.
Rule 12(b)(6) principles apply because Defendants do not seek affirmative relief such as entering judgment on a counterclaim or cross-claim. Consequently, all well-pleaded allegations of fact from the Amended Complaint are accepted as true; all reasonable inferences are construed in favor of them; conclusory and unfounded allegations are insufficient; strained interpretations of the allegations are rejected. Factual allegations made on information and belief and denied in a sworn answer are not presumed to be true. Plaintiffs must show a reasonably conceivable set of facts, capable of proof to support a claim; the Amended Complaint will survive the motion for judgment on the pleadings if it contains "enough facts to plausibly suggest" that Assurant and ASIC had a legal duty to advise Jadczak about the differences in limits for the house and hangar in the Homesite policy or to provide Jadczak with insurers who offered policies with higher coverages. The Amended Complaint fails these tests as there is no basis to show Defendants placed the policy for Plaintiffs, nor had any duty to Plaintiffs.
Reid v. Spazio, 970 A.2d 176, 182-184 (Del. 2009);Velocity Express, Inc. v. Office Depot, Inc., 2009 WL 406807 at *3 (Del. Super.); Bancroft v. City of Mount Vernon, 2009 WL 4277268 at *5 (S.D.N.Y.)
Grobow v. Perot, 539 A.2d 180, 187 (Del. 1988) ("upon a motion to dismiss, only well-pleaded allegations of fact must be accepted as true; conclusory allegations of fact or law not supported by allegations of specific fact may not be taken as true".)
In re Seneca Investments LLC v. Michael P. Tierney, 970 A.2d 259, 262 (Del. Ch. 2008); Bancroft,supra.
71 C.J.S. 2d `627.
In re Seneca Investments LLC., supra.
Assurant and ASIC are charged with negligence. A plaintiff must show the relationship between the parties created a legal obligation. As discussed by Superior Court Judge Toliver:
Negligence is the failure of one person or entity to meet a duty of care owed another which results in injury or loss to the latter. It obviously requires a threshold determination that such a duty exists. . . .
. . . There is a distinction to be drawn between the duty of care and the conduct being measured against it in determining whether one is legally responsible for his acts or omissions toward another, i.e., the standard of care. . . . Delaware courts have recognized:
[i]t is better to reserve `duty' for the problem of the relation between individuals which imposes upon one a legal obligation for the benefit of the other, and to deal with particular conduct in terms of a legal standard of what is required to meet the obligation. . . . The distinction between the duty to prevent harm and how that is to be measured is well established. Duty establishes the obligation; the conduct is evaluated by a legal standard of what is necessary to satisfy the obligation.
Lee v. Choice Hotels International, Inc., 2009 WL 1800592 at *4 (Del. Super.)
By saying Defendants "placed" the policy in the sense of ordering it, then Plaintiffs seek to impose a duty of an insurance agent upon Defendants. Normally, an insurance agent has the obligation to use reasonable care, diligence and judgment in procuring insurance requested by an insured; there is no duty to advise an insured on specific insurance matters merely because of the agency relationship; generally, it is the duty of an insured to advise the agent of the insurance he or she wants, including the limits of the policy to be issued; if an agent holds himself or herself out as an insurance counselor or specialist and receives compensation in addition to the premium, then there is an expanded or greater duty; mere requests by an insured for "sufficient coverage" or the "best policy" do not create an expanded duty.
Sinex v. Wallis, 611 A.2d 31, 33-34 (Del. Super.);Kaercher v. Sater, 155 P.3d 437, 441 (Colo. App. 2006)
Concerning Homesite, Assurant, and ASIC, the Amended Complaint alleges in paragraph 5:
At all times relevant herein, plaintiffs were the named insureds under a contract of insurance issued by Homesite Insurance Company ("Homesite") under policy number 30318103 with effective dates of August 16, 2005 to August 16, 2006 ("the Policy").
Paragraph 6 alleges that:
Upon information and belief, the Policy was placed by defendant AIG Marketing, Inc. and/or defendant ASIC through defendant Assurant and/or defendant ASIC at the time plaintiffs applied for or qualified for a mortgage on the property which they purchased. The Policy was ultimately placed with AIG Insurance Company or one of its member insurers, which subsequently transferred the policy to Homesite when AIG ceased writing homeowners' insurance policies in the state of Delaware.
Paragraph 28 charges:
The employees, agents, and/or servants of defendants Assurant, ASIC, and AIG Marketing or each of them, were negligent in that they:
(a) Failed to underwrite, obtain, and/or place an insurance policy which was adequate to insure the interests of plaintiffs and their mortgage company in the premises and the structures located therein;
(b) Failed to inspect the insurance policy after it was placed to ensure that it was adequate to insure the interests of plaintiffs and their mortgage company in the premises, the structures located thereon, and the personal property contained within the structures;
(c) Failed to exercise reasonable diligence, care, and judgment in procuring and/or placing the insurance coverage requested by plaintiffs and/or their mortgage company;
(d) Failed to inspect plaintiffs' premises to ensure that the insurance policy which they procured and/or placed was sufficient to insure plaintiffs' and their mortgage company's interest therein; and
(e) Failed to advise plaintiffs and/or their mortgage company of the need to obtain additional insurance coverage to insure the hangar, inasmuch as the hangar was considered an "Other Structure" under the Homesite policy and was therefore not fully insured by "Coverage B — Other Structures" "Section I — Property Coverages" of the Policy.
The answers of Assurant and ASIC include affidavits that deny any duty owed to Plaintiffs.
Assurant denied paragraphs 6 and 28 and one of its Vice Presidents swore:
3. I have reviewed the Amended Complaint in this case.
4. I am familiar with a public company known as Assurant, Inc. Assurant, Inc. is a Delaware corporation with its shares traded on the New York Stock Exchange under the symbol AIZ, and whose principal place of business is in New York, New York.
5. Assurant is a holding company with a separate corporate existence from its subsidiaries.
6. Assurant does not do business with the Plaintiffs in this case.
7. Assurant is not an insurance company. Assurant has never developed, sold, underwritten, issued, administered, or marketed insurance in Delaware or in any other state, including the insurance products at issue in the Amended Complaint in this case. Assurant has never charged, collected, or contracted to collect insurance premiums from any resident of Delaware or elsewhere.
8. Assurant is not an adjusting company. Assurant has never adjusted insurance claims in Delaware or in any other state.
9. Assurant did not and does not sell services or goods to any person in the State of Delaware or elsewhere.
10. Assurant Specialty Property is a service mark owned by Assurant, Inc. The Assurant Specialty Property service mark is descriptive of certain insurance services provided by American Security Insurance Company, and/or certain of its affiliated companies.
11. Assurant Solutions is a service mark owned by Assurant, Inc. The Assurant Solutions service mark is descriptive of certain insurance services provided by American Security Insurance Company, and/or certain of its affiliated companies.
12. Assurant, Inc. does not operate under the service mark Assurant Specialty Property or Assurant Solution
Likewise, ASIC denied paragraphs 6 and 28 and in an accompanying affidavit, a hazard operations manager swore:
3. I have reviewed the Amended Complaint in this case.
4. ASIC had no involvement with the placement, issuance, or underwriting of the insurance policy identified in Plaintiffs' Amended Complaint.
5. ASIC has conducted a thorough review of its records and has concluded that is has never issued a policy of any kind to the Plaintiffs.
6. ASIC has never placed, issued or underwritten any policy of insurance in conjunction with or on behalf of AIG and/or Homesite, including the policy identified in Plaintiffs' Amended Complaint.
Applying these principles, the Amended Complaint fails to provide a plausible factual basis to show Defendants placed the policy, nor to establish a duty against Defendants. Paragraph 6 states a vague and conclusory allegation that the Homesite policy was placed by them. It does not allege that Plaintiffs paid a premium or had requested the Defendants to place a policy with any direction for particular limits or had any relationship with them. Nor are Defendants charged as being Plaintiffs' counselors or specialists. At oral argument, Plaintiffs argued that Defendants must have gratuitously assumed to render services but that is an unsupported and strained argument. Under the pleadings, Defendants did not have an expanded legal duty to procure a policy with specified limits. No allegations are made to this end, and one is left with the impression that a claim is being made out of whole cloth to try to attempt recovery for losses beyond the Homesite limits. The parties are legal strangers to one another as is further supported by the verified answers.
Riedel v. IC1 Americas Inc., 968 A.2d 17, 26-27 (Del. 2009)
Plaintiff have asked that the motion be converted into one for summary judgment. Defendants oppose this request. There is authority for the proposition that the party opposing a motion to dismiss cannot put in extraneous matters in the hope to avoid an adverse decision. There is no principled reason to have a different rule for a motion for judgment on the pleadings. Cases should be decided under recognized standards to avoid excessive litigation costs and fishing expeditions. One Superior Court decision allowed for conversion on a discretionary basis, but it is inapposite. A significant question concerned a statute of limitations problem arising from judicially-imposed stays which could be judicially noted.
Sabovcik v. Castillo, 2009 WL 1285889 at *3, *4 (N.D.Ind.) (This Court agrees with the City of Chicago that the affidavit must be excluded and declines to turn the defendants' motion to dismiss into one for summary judgment); Thompson v. Ill. Dept. of Prof'l Regulation, 300 F3d 750, at 754 (7th Cir. 2002)
Bancroft, supra at *8 ("Plaintiffs are not allowed to file complaints to "find out the truth"; rather, they have to have some basis in fact for alleging that the "truth" is what they believe it to be.").
Mergenthaler v. Asbestos Corporation of America, 500 A.2d 1357, 1361 fn. 5 (Del. Super. 1985)
If the decision to convert or not is discretionary, such discretion should not be exercised here. Defendants did not have a reasonable opportunity to respond to the assertions of Plaintiffs and to present material germane to a summary judgment motion. I have excluded all the extraneous materials submitted by Plaintiffs. On the state of the pleadings, viewing well-pleaded allegations as true (those with a sufficient basis) and drawing reasonable inferences in favor of Plaintiffs, Defendants cannot be seen as owing any duty. The allegations in Paragraph 6 are merely conclusory; they offer no plausible basis in fact to show Defendants either placed the policy or had a duty. The allegations in paragraph 28 simply show the ways the alleged duty was breached; they do not in themselves support the notion that a duty existed. In this posture, no material issues of fact are raised.
CONCLUSION
Considering the foregoing, judgment on the pleadings is entered in favor of Defendants and against Plaintiffs.
IT IS SO ORDERED.