Assure Re Intermediaries, Inc. v. W. Surplus Lines Agency, Inc.

ASSURE RE INTERMEDIARIES, INC. (f/k/a ASSURE MANAGEMENT GROUP, INC.), Plaintiff, v. WESTERN SURPLUS LINES AGENCY, INC., Defendant.

No. 1:20-CV-189-H

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS ABILENE DIVISION

June 11, 2021

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART WESTERN SURPLUS'S AMENDED MOTION TO DISMISS

Before the Court is Western Surplus Lines Agency, Inc.'s Motion to Dismiss Assure Re Intermediaries, Inc.'s claims against it under Federal Rule of Civil Procedure 12(b)(6). Dkt. No. 16. Having considered the motion, the parties' briefing, and the applicable law, the Court finds that Western Surplus's motion should be granted in part and denied in part. Because the Court declines to consider factual allegations not contained in the First Amended Complaint as judicial admissions, the Court finds that Assure Re has adequately stated claims for breach of contract, anticipatory repudiation, money had and received, and quantum meruit. Accordingly, the defendant's motion to dismiss with respect to those claims is denied. However, the Court grants the motion as to the declaratory judgement and unjust enrichment claims because those claims are redundant in light of the other claims in this suit. Finally, the Court denies the defendant's original motion to dismiss (Dkt. No. 6) as moot.

1. Factual Background¹

A. Assure Re's Business Relationship with Western Surplus

Plaintiff Assure Re Intermediaries, Inc. is a broker of insurance and reinsurance products. Dkt. No. 8 ¶ 2. In this role, Assure Re assists insurers in finding insurance agencies (known as managing general agencies (MGAs)) to market, underwrite, adjudicate claims, and manage insurance products on the insurer's behalf. Id. Western Surplus is an MGA with whom Assure Re has worked. Id. ¶ 3.

B. The 2011 OG Program Agreement

Beginning in 2011, Western Surplus sought to offer an insurance product, known as the OG Program, that was specifically directed to businesses using vehicles in the oil and gas industry. Id. ¶¶ 5-6. Western Surplus approached BMS Intermediaries, Inc. to locate an insurer for the OG Program and to negotiate the terms of the agreement that would govern the relationship between Western Surplus and the insurer. Id. ¶ 7.

Plaintiff alleges that Western Surplus and BMS entered into a contract for the OG Program, which is referred to as the 2011 OG Program Agreement. Id. ¶¶ 7-9. Under this contract, the parties agreed that if BMS located an insurer for the OG Program, Western Surplus would pay BMS 0.5% of all premiums it received under the OG Program for as long as such insurance was offered or premiums were collected, payable out of its commission as the MGA. Id. ¶¶ 7-9. While BMS was working to locate an insurer for the OG Program, Assure Re acquired BMS's business accounts, which included the Western Surplus account and rights to payment under the 2011 OG Program Agreement. Id. ¶ 13.

Relying on the terms of the 2011 OG Program Agreement, Assure Re brokered an agreement between Western Surplus and Hudson Insurance Company. Id. ¶¶ 15-17. On September 1, 2011, Western Surplus and Hudson entered into an agreement—the Program Administrator Agreement for the Oil and Gas Program (OG PAA)—whereby Western Surplus would act as the MGA and Hudson would provide the requisite insurance under the OG Program. Id. ¶ 16. Once Western Surplus and Hudson entered into the OG PAA, Assure Re's work under the 2011 OG Program Agreement was complete. Id. ¶ 17.

Assure Re claims that the OG Program has generated hundreds of millions of dollars in premiums, resulting in Western Surplus earning millions of dollars in commissions. Id. ¶ 19. Per the terms of the 2011 OG Program Agreement, Western Surplus paid 0.5% of its commissions to Assure Re between 2011 and June 2019. Id. ¶¶ 22, 28. In total, Western Surplus made more than 20 payments of between $30,000 and $50,000 to Assure Re under this agreement. Id. ¶¶ 7, 29.

C. The 2013 Auto Program Agreement

In 2013, the parties entered into a similar contract for Western Surplus's auto business, which is referred to as the 2013 Auto Program Agreement. Id. ¶¶ 32-54. The terms of the 2013 Auto Program Agreement largely mirrored the 2011 OG Program Agreement. Id. ¶ 34. As it had done with the OG Program, Assure Re brokered a deal with Hudson on Western Surplus's behalf for the Auto Program. Id. ¶¶ 38-40.

In November 2014, Western Surplus and Hudson entered into a Program Administrator Agreement for the Auto Program (Auto PAA), whereby Western Surplus agreed to act as the MGA to the Auto Program, and Hudson agreed to provide the requisite insurance. Id. ¶ 40. Once Western Surplus and Hudson entered into the Auto PAA, AssureRe had completed all of its obligations owed to Western Surplus under the 2013 Auto Program Agreement. Id. ¶ 42.

As soon as Western Surplus began collecting premiums under the Auto Program, it paid Assure Re 0.5% of those premiums pursuant to the 2013 Auto Program Agreement. Id. ¶ 47. In total, Western Surplus made more than 15 payments of approximately $30,000 to Assure Re under this agreement. Id. ¶ 51.

D. Western Surplus's Alleged Breach of Contract

Accordmg to Assure Re, in July 2019, Western Surplus unilaterally ceased making any payments to Assure Re as owed under the 2011 OG Program Agreement and the 2013 Auto Program Agreement, despite continuing to collect premiums related to both programs. Id. ¶ 55. Plaintiff asserts that Western Surplus has continued to receive commissions and payouts from the OG PAA and Auto PAA; yet, it has failed to pay Assure Re monies owed pursuant to the 2011 and 2013 agreements since July 2019. Id. ¶ 30.

2. Procedural History

Based on the above factual allegations, Assure Re filed its Original Complaint on September 9, 2020 asserting various claims arising out of the two agreements. Dkt. No. 1. Western Surplus moved to dismiss plaintiff's Origmal Complaint for failure to state a claim. Dkt. Nos. 6-7. In response, Assure Re filed its First Amended Complaint (FAC) asserting claims against the defendant for breach of contract, anticipatory repudiation, quantum meruit, unjust enrichment, money had money received, and declaratory judgment. Dkt. No. 8. Western Surplus filed an amended motion to dismiss requesting that the Court dismiss Assure Re's FAC for failure to state a claim and asking the Court to exercise its discretion to dismiss the declaratory judgment claim as duplicative. Dkt. Nos. 16-17.

Western Surplus's amended motion to dismiss largely relies on alleged inconsistencies between the FAC (Dkt. No. 8) and the Original Complaint (Dkt. No. 1) or between the FAC and Assure Re's statements in related lawsuits involving different parties. See Dkt. No. 16 at 7-8. Defendant complains that Assure Re made certain admissions of fact in its Original Complaint and in other lawsuits that its FAC omits or contradicts, and it asks the Court to consider those admissions in resolving this motion. Western Surplus also argues that plaintiff's equitable claims should fail because plaintiff seeks improper damages. Id. at 7. In response, Assure Re attempts to dissuade the Court from considering statements from the superseded complaint or other lawsuits in resolving the motion to dismiss. Dkt. No. 20 at 12-16. Additionally, Assure Re argues that its declaratory-judgment request is not duplicative because it seeks a declaration setting forth the defendant's future payment obligations—which plaintiff claims will not be resolved by its other claims. Id. at 29-30. The amended motion to dismiss is now fully briefed and ripe for disposition.

3. Legal Standards

A. Rule 12(b)(6) Legal Standard

"To survive a motion to dismiss, a complaint must contain sufficient factual matter which, when taken as true, states 'a claim to relief that is plausible on its face.'" Innova Hosp. San Antonio, Ltd. P'ship v. Blue Cross & Blue Shield of Ga., Inc., 892 F.3d 719, 726 (5th Cir. 2018) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In resolving a motion to dismiss, the Court must "accept all well-pleaded facts as true and view those facts in the light most favorable to the plaintiff." Richardson v. Axion Logistics, L.L.C., 780 F.3d 304, 306 (5th Cir. 2015) (quoting Bustos v. Martini Club, Inc., 599 F.3d 458, 461 (5th Cir. 2010)) (internal quotations omitted). But the Court does not "accept as true conclusoryallegations, unwarranted factual inferences, or legal conclusions." Gentilello v. Rege, 627 F.3d 540, 544 (5th Cir. 2010) (quoting Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th Cir. 2005)). A motion to dismiss pursuant to Rule 12(b)(6) "is viewed with disfavor and is rarely granted." Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (internal citation omitted).

B. Scope of Pleadings to Be Considered

In determining whether to grant a motion to dismiss for failure to state a claim, a district court is generally limited to considering the complaint, its proper attachments, documents incorporated into the complaint by reference, and matters of which judicial notice may be taken under Federal Rule of Evidence 201. Walker v. Beaumont Indep. Sch. Dist., 938 F.3d 724, 735 (5th Cir. 2019). Here, Western Surplus asks the Court to take judicial notice of proceedings currently pending in other courts and consider plaintiff's statements in those cases as binding judicial admissions in this case. Dkt. No. 16 at 11, 14, 17. Additionally, the defendant asks the Court to consider alleged inconsistencies between the FAC and the Original Complaint in determining whether to dismiss the FAC. Accordingly, the Court must first determine whether it may consider these other pleadings and proceedings at this stage.

i. The Court takes judicial notice of the related lawsuits, but it declines to consider any statements from those proceedings as binding judicial admissions in this case.

Western Surplus asks the Court to take judicial notice of the following pleadings in other lawsuits...