Aspen Am. Ins. Co. v. Tasal, LLC

508 F.Supp.3d 1179

ASPEN AMERICAN INSURANCE COMPANY, Plaintiff,

v.TASAL, LLC, and Shahab Karmely, Defendants.

Case No. 6:20-cv-875-Orl-40DCI

United States District Court, M.D. Florida, Orlando Division.

Signed November 16, 2020

Jacqueline Louise Goldman, Steven E. Goldman, Goldman & Hellman, Ft. Lauderdale, FL, for Plaintiff.

Benjamin C. Hassebrock, Daniel Litman Gross, Stephen A. Marino, Jr., Ver Ploeg & Marino, PA, Miami, FL, for Defendants.

ORDER

PAUL G. BYRON, UNITED STATES DISTRICT JUDGE

This cause is before the Court on Defendants Tasal, LLC and Shahab Karmely's Motion to Dismiss (Doc. 54 (the "Motion ")). Upon consideration, the Motion is due to be granted.

I. BACKGROUND

On or around January 11, 2020, Tasal, LLC ("Tasal ") and Shahab Karmely (collectively, "Defendants ") applied for a marine insurance policy with Plaintiff Aspen American Insurance Company ("Aspen ") for a 2019 45-foot Vanquich VQ 45 (hereinafter, the "Vessel "). (Doc. 44, ¶ 8; Doc. 55, ¶ 8). Aspen issued a Marine Insurance Policy (the "Policy "), which names Captain Kim Boxer as the only declared "Operator" of the Vessel and includes a forum selection clause directing all coverage disputes to be decided pursuant to New York law.¹ (Doc. 44-2, pp. 2, 25).

Shortly thereafter, the Vessel, operated by Doug Koch, collided with a Government Cut Jetty. (Doc. 44, ¶ 15; Doc. 55, ¶ 15). Defendants presented a claim to Aspen under the Policy, seeking reimbursement of the Vessel's full value. (Doc. 44, ¶ 16). Aspen denied coverage and filed its Complaint in this Court on May 21, 2020, seeking a declaratory judgment that Defendants lack coverage under the Policy. (Doc. 3).

On June 5, 2020, Aspen voluntarily dismissed its claims against Mr. Karmely without prejudice. (Docs. 9, 10). Tasal then filed its Answer, asserting a counterclaim against Aspen for breach of contract and alleging that Mr. Koch stole the Vessel. (Doc. 20). Aspen filed its Answer to Tasal's counterclaim, asserting the affirmative defense of fraud. (Doc. 23). Specifically, Aspen addressed Tasal's contention that Mr. Koch operated the Vessel without Defendants’ permission or knowledge:

Mr. Koch was a personal friend of Shahab Karely and was also a business associate who had directly and personally assisted Mr. Karmely in purchasing, documenting, and insuring the vessel which is the subject of this litigation. Mr. Koch had operated the vessel on numerous occasions prior to February 23, 2020 with the knowledge and the consent of Mr. Karmely. Mr. Koch had operated the vessel on numerous occasions prior to February 23, 2020 with the knowledge and consent of Mr. Boxer. Mr. Koch was operating the vessel on February 23, 2020 with the knowledge [sic] and consent of both Mr. Karmely and Mr. Boxer.

(Id. ¶ 6). Aspen further alleged that Mr. Koch contacted Captain Boxer on February 23, 2020 "in order to inform him of his intention to operate the vessel later that same morning, and in order to obtain the combination to a security gate/fence which was required in order to obtain direct access to the vessel at its dock on the Miami River." (Id. ¶ 7). Aspen states that Captain Boxer provided Mr. Koch with the security code. (Id. ¶ 8). Aspen argues that after learning of the incident, Mr. Karmely, realizing that the terms of the Policy barred coverage, "decided to accuse his friend and business associate of theft as part of a fraudulent attempt obtain [sic] coverage for the incident." (Id. ¶ 9).

On September 14, 2020, Aspen, with the Court's permission, filed an Amended Complaint, adding two causes of action against Tasal and Mr. Karmely: (1) Count II, Fraud Under the Policy; and (2) Count III, Fraud Under New York Law. (Docs. 31, 35, 44). Defendants moved to dismiss Counts II and III (Doc. 54), and Aspen responded in opposition (Doc. 69). The matter is now ripe for review.

II. STANDARD OF REVIEW

A 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)(1). Thus, to survive a motion to dismiss made pursuant to Rule 12(b)(6), the complaint "must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A claim is plausible on its face when the plaintiff "pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. To assess the sufficiency of factual content and the plausibility of a claim, courts draw on their "judicial experience and common sense" in considering: (1) the exhibits attached to the complaint; (2) matters that are subject to judicial notice; and (3) documents that are undisputed and central to a plaintiff's claim. See id. ; Parham v. Seattle Serv. Bureau, Inc. , 224 F. Supp. 3d 1268, 1271 (M.D. Fla. 2016).

Though a complaint need not contain detailed factual allegations, mere legal conclusions or recitation of the elements of a claim are not enough. Twombly , 550 U.S. at 555, 127 S.Ct. 1955. Moreover, courts are "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Iqbal , 556 U.S. at 679, 129 S.Ct. 1937. Courts must also view the complaint in the light most favorable to the plaintiff and must resolve any doubts as to the sufficiency of the complaint in the plaintiff's favor. Hunnings v. Texaco, Inc. , 29 F.3d 1480, 1483 (11th Cir. 1994) (per curiam).

In sum, courts must (1) ignore conclusory allegations, bald legal assertions, and formulaic recitations of the elements of a claim; (2) accept well-pled factual allegations as true; and (3) view well-pled allegations in the light most favorable to the plaintiff. Iqbal , 556 U.S. at 679, 129 S.Ct. 1937.

In addition to Rule 8 ’s plausibility standard, parties asserting fraud claims must satisfy Rule 9's particularity standard: "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice intent, knowledge, and other conditions of a person's mind may be alleged generally." FED. R. CIV. P. 9(b) ; see Iqbal , 556 U.S. at 686–87, 129 S.Ct. 1937 ; Carvelli v. Ocwen Fin. Corp. , 934 F.3d 1307, 1317–18 (11th Cir. 2019). " ‘[P]ursuant to Rule 9(b), a plaintiff must allege: (1) the precise statements, documents, or misrepresentations made; (2) the time, place and person responsible for the statement; (3) the content and manner in which these statements misled [him]; and (4) what the defendants gained by the alleged fraud.’ " Wilding v. DNC Servs. Corp. , 941 F.3d 1116, 1128 (11th Cir. 2019) (quoting Am. Dental Ass'n v. Cigna Corp. , 605 F.3d 1283, 1291 (11th Cir. 2010) ). Bare allegations of reliance on alleged fraudulent statements, without supporting details, are insufficient under Rule 9(b). Id.

III. DISCUSSION

As a preliminary matter, the Court notes that Count II of Aspen's Amended Complaint—"Fraud Under the Policy"—is not a recognized cause of action.² The Court therefore only examines the adequacy of Count III, "Fraud Under New York Law," under Rules 8(a) and 9(b).

Under New York law, a party properly pleads a fraud claim if it demonstrates: (1) a material misrepresentation of a fact; (2) knowledge of its falsity; (3) intent to induce reliance; (4) justifiable reliance by the plaintiff; and (5) causation of injury (i.e. , damages). See Trahan v. Lazar , 457 F. Supp. 3d 323, 350 (S.D.N.Y. 2020) (citing Fin. Guar. Ins. Co. v. Putnam Advisory Co. , 783 F.3d 395, 402 (2d Cir. 2015)) (applying New York law) ; Carlson v. Am. Intern. Grp., Inc. , 30 N.Y.3d 288, 67 N.Y.S.3d 100, 89 N.E.3d 490, 503–04 (2017) (quoting Eurycleia Partners, LP v. Kissel, LLP , 12 N.Y.3d 553, 883 N.Y.S.2d 147, 910 N.E.2d 976, 979 (2009) ).

Here, Defendants argue that Aspen fails to properly allege the third, fourth, and fifth elements of fraud. (Doc. 54, pp. 6–8). The Court addresses each element in turn.

A. Intent to Induce Reliance

Defendants assert that Aspen presents "conclusory allegations" and that Defendants’ "allegedly fraudulent actions were those of a reasonable and practical insured." (Doc. 54, p. 7). Aspen counters that it alleged "specific facts which demonstrate Defendants’ ‘motive and opportunity.’ " (Doc. 69, p. 12). Aspen also argues that Defendants ignore its allegations that Defendants knew coverage was unavailable unless Mr. Koch stole the Vessel. The Court agrees.

To properly allege an intent to induce reliance under Rule 9(b), the plaintiff must plead a factual basis that " ‘give[s] rise to a strong inference of fraudulent intent.’ " Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Secs., LLC , 797 F.3d 160, 176 (2d Cir. 2015) (quoting Lerner v. Fleet Bank, N.A. , 459 F.3d 273, 290 (2d Cir. 2006) ). The plaintiff can establish a strong inference of fraudulent intent " ‘(a) by alleging facts to show that defendants had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness.’ " Duran v. Henkel of Am., Inc. , 450 F. Supp. 3d 337, 353 (S.D.N.Y. 2020) (quoting Lerner , 459 F.3d at 290–91 ). In determining whether the plaintiff has pled a strong inference, the court considers " ‘the complaint in its entirety’ " and assesses the " ‘plausible opposing inferences.’ " Id. (quoting Loreley Fin. , 797 F.3d at 177 ). If the inference of fraudulent intent is " ‘cogent and at least as compelling as any opposing inference one could draw from the facts alleged,’ then it is sufficiently strong." Id. (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd. , 551 U.S. 308, 324, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) ; ...