Kramer v. Nat'l Fire Ins. Co. of Hartford

KARIN KRAMER and ON POINT ACUPUNCTURE& WELLNESS INC.; 185 DEVONSHIRE ST. STE 201 LLC, Plaintiffs, v. NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, Defendant.

No. 18-CV-4848 (KMK)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

August 22, 2019

OPINION & ORDER

Appearances

Karin Kramer

Peoria, IL

Pro Se Plaintiff

Seth G. Park, Esq.

CNA Coverage Litigation Group

New York, NY

Counsel for Defendant

KENNETH M. KARAS, District Judge:

Pro se Plaintiffs On Point Acupuncture & Wellness, Inc. ("On Point"), 185 Devonshire St. Ste. 201 LLC ("185 Devonshire St."), and Karin Kramer ("Kramer") (collectively "Plaintiffs"), bring this Action against Defendant National Fire Insurance Company of Hartford ("Defendant" or "NFICH"), alleging improper denial of insurance coverage. (Compl. (Dkt. No. 1).)¹, ² Before the Court is Defendant's Motion To Dismiss, pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject-matter jurisdiction, and alternatively pursuant to Rule 12(b)(6) for failure to state a claim. (Not. of Mot. (Dkt. No. 14).) For the reasons stated below, Defendant's Motion is granted.

I. Background

A. Factual Background

The facts recounted below are taken from Plaintiffs' Complaint and the documents attached thereto, as well as a letter submitted by Plaintiff in Opposition to Defendant's request to file a Motion, (Letter from Karin Kramer to Court ("Pls.' Letter") (Dkt. No. 11)), and are assumed to be true for purposes of resolving the Motion.³

Plaintiffs allege that On Point and 185 Devonshire St. are entities registered in the state of Massachusetts, and that Kramer is the owner of the property and the business, and an officer and manager of On Point. (Compl. 6.) On Point is a corporation organized under the General Laws of the Commonwealth of Massachusetts. (Affidavit of Seth G. Park, Esq. ("Park Aff.") Ex. 18 (On Point Corporate Annual Report) (Dkt. No. 16)).⁴

Plaintiffs allege that both the business and the property are insured. (Compl. 6.) On Point maintained a "CNA Connect" insurance policy with Defendant for the policy period June 25, 2015 to June 25, 2016, under policy number 6011547042 ("the Policy"). (Park Aff. Ex. 1 (Defendant Policy Number 6011547042 ("the Policy")).) The Policy provided Business Owners Special Property insurance coverage as well as Business Owners (Commercial) General Liabilityinsurance coverage. On Point is the only named insured on the Policy and, as stated on the Policy's Declarations Page, "[t]he Named Insured is a Corporation." (Id.)

This Action arises out of several claims for insurance coverage submitted to Defendant. Plaintiffs allege that Defendant has breached its "duty to defend" and "duty to indemnify," deprived Plaintiffs of "access to [] liability insurance coverage," and failed to provide "a legally sufficient explanation" for denying coverage. (Compl. 5.)⁵

The first claim was for bodily injuries and property damage resulting from "an assault and battery, theft and vandalism of the company auto," that Kramer suffered on September 26, 2015. (Id. at 6.) Kramer alleges she suffered bodily injury and the theft of her laptop along with valuable records, "such as lease etc." and "financial documents," that were stolen with her bag. (Id. at 6-7.) According to Kramer's "Work Injury Statement," Kramer went to a 7-Eleven in Brookline, Massachusetts, to mail work letters and bills, and to get quarters and stamps. (Compl Ex. U at 125 (Work Injury Statement) (Dkt. No. 1-1).)⁶ She alleges that there was a verbal altercation with three men inside the 7-Eleven, that they followed her out to her car, and that they attacked her. (Id.) Notably, in the Police Report that Kramer submits, the Boston Police Officer who arrived on the scene stated that he "spoke to the woman, later identified as Karin C. Kramerwho was sitting on the sidewalk in a puddle of blood with blood all over her face. . . . She appeared to be intoxicated and [had] a strong odor of alcoholic beverage. She stated that she just left a bar, but she did not remember what bar she visited . . . . She stated that she was on her way to her car, but she did not remember what happened after that." (Compl. Ex. V at 6 (Police Report) (Dkt. No. 1-2).) Other witnesses on the scene stated that they saw Kramer chasing a group of two or three men, and at least one of the men physically assaulting Kramer. (Id.) Kramer alleges she filed this claim as an "insured employee and insured manager," for harms she suffered "in the course of employment," and that the claim was denied because she, as the owner and manager of On Point, was not covered under Defendant's policy. (Compl. 7, 17.)

Plaintiffs allege that they defaulted on loans taken out on the 185 Devonshire St. property as a result of Defendant's refusal to provide coverage for the September 26, 2015 incident. (Id. at 7.) Kramer alleges that on August 15, 2017, she alerted Defendant's claims handler "of the default status of the property insured [at] 185 Devonshire St." (Id. at 6.) Kramer further alleges that she submitted default judgments and demand letters for payments due on 185 Devonshire St. to Defendant when she filed the claim. (See id. at 7, Exs. A, B (Dkt. No. 1-1).). Kramer submits incomplete portions of an insurance policy at Exhibits E through K to the Complaint in support of these assertions. (See Compl. Exs. E-K (Dkt. No. 1-1).) She also cites several California and Ninth Circuit cases in which insurers were found to have breached their duty to defend a case where an insured party subsequently defaulted on loans. (Compl. 8.)

Separately, Kramer alleges that as a result of the September 26, 2015 incident, she became the victim of identity theft. (Id. at 14.) She submits police incident reports, as well as IRS forms and bank statements that allegedly show her identity was stolen. (Compl Ex. U at 90-125 (Dkt. No. 1-1).) Kramer alleges that there was an "IRS flag" that a filing in her name wasmade in a foreign country. (Compl. 14.) Plaintiffs allege that under Defendant's "Identity Recovery Coverage," Defendant had an obligation to allow Kramer to select her own attorney and to investigate the identity theft, but failed to do so. (Id. at 14.)

Kramer also alleges that the Policy was "ambiguous," and that the factual contentions in her claim placed the claim within the Policy's coverage. (Id. at 14, 17.) Kramer alleges that Defendant failed to investigate her bodily injury and identity theft claims and wrongly denied her coverage. (Id. at 17.) Kramer alleges that Defendant agreed to pay for the stolen laptop, but not for medical bills related to the bodily injuries she sustained, and that the incident exacerbated prior musculoskeletal injuries she had. (Id.)⁷

The second claim related to a lawsuit Ashley Ledford ("Ledford"), a former On Point employee, brought against On Point for "fiduciary practices, negligent hiring and patient safety violations." (Id. at 8-9.) Plaintiffs submit a letter dated February 5, 2016, from counsel for Ledford, stating that Ledford was bringing suit against Kramer and On Point for, among other things, fraud and retaliatory wrongful termination. (Compl. Ex. L (Dkt. No. 1-1).) Ledford was an acupuncturist and massage therapist at On Point, and she alleged that she was fired in retaliation for filing a Worker's Compensation claim and for raising issues about patient safety. (Id.) Plaintiffs excerpt portions of an "Employment Practices Liability Coverage Form," and a section of that form titled "Extended Reporting Period." (Compl. at 9-10, Ex. M1 (Dkt. No. 1-1).) Plaintiffs allege that Defendant denied the claim related to Ledford because "there [was] nocoverage because the claim was reported out of the extended reporting time period." (Compl. at 10, Ex. Q at 34 (Ledford Denial Letter) (Dkt. No. 1-1).) The Denial Letter states that the "claim was not reported to the Company until 06/23/2017, in excess of 11 months after the Policy expired and was non-renewed. As this claim was not reported as soon as practicable, but in no event later than 90 days after the end of the policy period, there is no coverage for this matter and neither indemnity nor defense will be provided." (Ledford Denial Letter.) Kramer further alleges that Defendant "canceled the coverage," that "[t]here was no option to add coverage for an extended reporting coverage by the insured," that the claim was actually "made in the coverage contract time period," and that "an insurer has a duty to defend all claims whether reported out o[f] the time period." (Compl. 10.)

The third claim related to a lawsuit involving Crystal Meyers ("Meyers"), a former On Point employee. (Compl. 11-14.) By letter dated February 5, 2016, Meyers responded to a "cease and desist" demand from On Point by asserting a counter-claim against Kramer and On Point for "unfair and deceptive trade practices, . . . tortious interference with advantageous relationships, fraud, invasion of privacy, appropriation of name, breach of fiduciary duty, intentional infliction of emotional distress, defamation, identity theft, and other claims." (Compl. Ex. R at 50 ("Meyers Letter") (Dkt. No. 1-1).) Plaintiffs assert that Defendant should have covered Plaintiffs' defense in the Meyers action under the "Business Liability Coverage [R]elated to Personal and Advertising Injury" and "Fiduciary Liability" portions of the policy. (Compl. 11-13.) On July 6, 2017, Defendant denied Plaintiffs' coverage because the claim was not reported while the coverage was still in effect, and therefore the policy had terminated so that no coverage was available, and because various policy exclusions barred coverage for the claim. (Compl. Ex. T at 79 (Meyers July Denial Letter (Dkt. No. 1-1).) Additionally, on October 12,2017, Defendant denied Kramer's claim because the policy did not cover the types of allegations raised by Meyers. (Compl. Ex. T at 84 (Meyers October Denial Letter) (Dkt. No. 1-1).)

B. Procedural Background

On June 1,...