Hartford Ins. Co. of the Midwest v. Dana Transp. Inc.

HARTFORD INSURANCE COMPANY OF THE MIDWEST,and HARTFORD CASUALTY INSURANCE COMPANY, Plaintiffs, v. DANA TRANSPORT INC., GREAT WEST CASUALTY COMPANY,AXIS SURPLUS INSURANCE COMPANY,and AMERICAN GUARANTY AND LIABILITY INSURANCE COMPANY, Defendants.

Civ. No. 16-9091 (KM) (JBC)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

August 23, 2017

OPINION

KEVIN MCNULTY, U.S.D.J.:

The plaintiffs, Hartford Insurance Company of the Midwest, and Hartford Casualty Insurance Company ("Hartford"), brought this action against Dana Transport Inc. ("Dana Transport") and three insurance companies,¹ seeking a declaratory judgment and reformation of an insurance contract between Hartford and Dana Transport. Essentially, Hartford seeks a declaration of non-coverage. If Hartford is not liable, the other insurance companies would potentially have a correspondingly greater obligation to indemnify. Now before the Court are two dispositive motions: (1) Axis Surplus Insurance Company's motion to dismiss the complaint for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6), and for lack of subject matter jurisdiction, pursuant to Fed. R.Civ. P. 12(b)(1);² and (2) Hartford's motion for judgment on the pleadings, pursuant to Fed. R. Civ. P. 12(c).

For the reasons stated below, Axis's motion to dismiss will be GRANTED IN PART and ADMINISTRATIVELY TERMINATED IN PART, and Hartford's motion for judgment on the pleadings will be DENIED.

I. BACKGROUND

A. Dana Transport's Indemnity Coverage

The allegations of the Complaint are taken as true for purposes of this motion. According to the Complaint, Hartford has issued annual commercial auto liability insurance policies to Dana Transport, a New Jersey corporation, providing coverage each year from 2008 through 2014. (Compl. ¶¶ 8, 16)³ The policies issued for 2008, 2009, and 2011 contain an endorsement (Endorsement Form HA 99 03 01 87) that expressly excludes from coverage claims for loss arising out of autos with a gross vehicle weight greater than20,000 pounds (the "heavy-vehicle exclusion"). (Id. ¶ 16). The policies issued for 2010, 2012, 2013, and 2014 do not contain that heavy-vehicle exclusion. (Id.)

This allegedly was a mistake; it was the intent of Dana Transport and Hartford that the 2010, 2012, 2013, and 2014 policies, like the others, would contain a heavy-vehicle exclusion. (Id. ¶ 21) Dana Transport did not pay Hartford a premium commensurate with coverage for heavy vehicles. (Id. ¶ 22) For the 2012 policy year, Dana Transport obtained indemnity coverage up to $20 million for vehicles weighing more than 20,000 pounds from three other insurance companies. (Id. ¶ 23) In its Answer, Dana Transport agrees that "the Hartford 2012 Policy was not intended to provide insurance coverage to Dana for 'autos' weighing above 20,000 pounds." (ECF no. 16, ¶¶ 30, 32, 41)

B. Louisiana Civil Actions against Dana Transport

In two consolidated cases in the United States District Court for the Middle District of Louisiana⁴ (the "Underlying Actions"), Dana Transport has been named as a defendant. (Compl. ¶ 12) The plaintiffs in the Underlying Actions allege that, on October 17, 2012, they were injured on a Louisiana highway when they were struck by an 18-wheeler tractor-trailer owned by Dana Transport. (Id. ¶ 13) The tractor-trailer weighed over 20,000 pounds. (Id. ¶ 31)

The plaintiffs sued Dana Transport, Hartford, and several other insurers, as well as others. (Id. ¶ 13) In the Underlying Actions, Great West, as primary insurer, is defending Dana Transport. (Id. ¶ 33) Dana Transport's policies with Axis and AGLIC provide excess liability coverage. (Id. ¶¶ 34-35) On November 8, 2016, "in an oral ruling on summary judgment motions," the court in the Underlying Actions "found that the Hartford 2012 Policy . . .clear[ly] and unambiguous[ly provided coverage], and declined to consider any extrinsic evidence." (Id. ¶ 28)

C. This Action

A month later, on December 8, 2016, Hartford filed the two-count Complaint in this action.

In Count 1, Hartford seeks a declaratory judgment from this Court that "that there is no coverage afforded Dana Transport under the Hartford 2012 Policy" for the Underlying Actions. (Compl. ¶ 38) According to Hartford, such a declaration is necessary because, "[t]he rights and status and other legal relations and obligations of Hartford and Dana Transport, Great West, Axis and AGLIC are uncertain and insecure, and the entry of a declaratory judgment by this court will terminate the uncertainty and controversy which has given rise to this proceeding." (Id.)

In Count 2, Hartford seeks "a declaration reforming the Hartford 2010, 2012, 2013, and 2014 Policies to include the exclusion for autos or trucks with a gross vehicle weight greater than 20,000 pounds (Endorsement Form HA 99 03 01 87) and declaring that there is no coverage under the Hartford 2012 Policy" for the Underlying Actions. (Compl. ¶ 41)

On January 17, 2017, Dana Transport answered the Complaint. (ECF no. 16) On January 20, 2017, Axis filed its motion to dismiss the Complaint. (ECF no. 21) Soon thereafter, Great West and AGLIC moved to join Axis's motion. (ECF nos. 23, 29) On February 21, 2017, Hartford filed a motion for judgment on the pleadings together with its opposition to Axis's motion to dismiss. (ECF no. 33)

The motion to dismiss and the motion for judgment on the pleadings are now before the Court.

II. DISCUSSION AND ANALYSIS

A. 12(b)(6) Motion to Dismiss All Claims Involving the Hartford 2012 Policy

Axis first moves to dismiss Count 1 and the portion of Count 2 that relates to the Hartford 2012 Policy on several grounds, including res judicata/claim preclusion and collateral estoppel/issue preclusion. Both of these affirmative defenses may, in a proper case, serve as the basis for a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). Great W. Min. & Mineral Co. v. ADR Options, Inc., 882 F. Supp. 2d 749, 760 (D.N.J. 2012), aff'd, 533 F. App'x 132 (3d Cir. 2013).

1. Rule 12(b)(6) Standard

Fed. R. Civ. P. 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if it fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under Rule 12(b)(6), a court must take all allegations in the complaint as true and view them in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501, 95 S. Ct. 2197 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998); see also Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).

Fed. R. Civ. P. 8(a) does not require that a complaint contain detailed factual allegations. Nevertheless, "a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955 (2007). Thus, the factual allegations must be sufficient to raise a plaintiff's right to relief above a speculative level, such that it is "plausible on its face." See id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). A claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liablefor the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a 'probability requirement' ... it asks for more than a sheer possibility." Iqbal, 556 U.S. at 678.

The United States Court of Appeals for the Third Circuit has explicated the Twombly/Iqbal standard on several occasions. See, e.g., Argueta v. U.S. Immigration & Customs Enforcement, 643 F.3d 60, 70-73 (3d Cir. 2011); Santiago v. Warminster Twp., 629 F.3d 121, 129-30 (3d Cir. 2010). In doing so, it has provided a three-step process for analyzing a Rule 12(b)(6) motion:

To determine whether a complaint meets the pleading standard, our analysis unfolds in three steps. First, we outline the elements a plaintiff must plead to a state a claim for relief. See [Iqbal, 556 U.S.] at 675; Argueta, 643 F.3d at 73. Next, we peel away those allegations that are no more than conclusions and thus not entitled to the assumption of truth. See Iqbal, 556 U.S. at 679; Argueta, 643 F.3d at 73. Finally, we look for well-pled factual allegations, assume their veracity, and then "determine whether they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at 679; Argueta, 643 F.3d at 73. This last step is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012).

"In deciding a Rule 12(b)(6) motion, a court must consider only the complaint, exhibits attached to the complaint, matters of the public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents." Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010); see also In re Asbestos Products Liability Litigation (No. VI), 822 F.3d 125, 134 & n.7 (3d Cir. 2016); Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006) ("In evaluating a motion to dismiss, we may consider documents that are attached to or submitted with the complaint, and any matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, and items appearing in the record of the case.").

2. Declaratory Judgment as to Coverage under Hartford 2012 Policy for the Underlying Actions (Count 1)

Axis argues that Hartford's claim for declaratory relief must be dismissed on grounds of collateral estoppel, or issue preclusion....