Match Grp. v. Beazley Underwriting Ltd.

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MATCH GROUP, LLC, Plaintiff, v. BEAZLEY UNDERWRITING LIMITED, Defendant.

No. 22 Civ. 4629

United States District Court, S.D. New York

May 25, 2023

OPINION AND ORDER

LORINA G. SCHOFIELD, UNITED STATES DISTRICT JUDGE

Plaintiff Match Group, LLC brings this insurance action against Defendant Beazley Underwriting Limited. The First Amended Complaint (the “Complaint”) asserts claims of breach of contract and equitable estoppel. Defendant moves to dismiss under Federal Rule of Civil Procedure 12(b)(6). For the reasons below, the motion is granted in part and denied in part.

I. BACKGROUND

The following facts are taken from the Complaint and documents incorporated by reference in it. See Bellin v Zucker, 6 F.4th 463, 473 (2d Cir. 2021). The alleged facts are assumed to be true for purposes of this motion. See Int'l Code Council, Inc. v. UpCodes Inc., 43 F.4th 46, 53 (2d Cir. 2022).

Plaintiff formerly Match.com, L.L.C., is a subsidiary of InterActiveCorp (“IAC”). Defendant is a foreign entity engaged in the business of selling insurance, investigating claims and issuing policies that cover policyholders and activities located in New York.

A. Insurance Policy

On November 16, 2015, Defendant sold a liability coverage policy (the “Policy”) to IAC, the named insured under the policy, for the period beginning August 20, 2015, and ending August 20, 2016, at 12:01 A.M. (the “Policy Period”). The Policy provides coverage for:

Damages and Claims Expenses . . . which the Insured shall become legally obligated to pay because of liability imposed by law or Assumed Under Contract resulting from any Claim first made against any Insured during the Policy Period or Optional Extension Period (if applicable) and reported to [Defendant] during the Policy Period.

The Policy defines “Claim” as, among other things, “a written demand received by any Insured for money or services, including the service of a suit or institution or arbitration proceedings [or] a threat or initiation of a suit seeking injunctive relief.” The notice provision provides that:

Claims made against any Insured must be reported no later than (i) the end of the Policy Period, (ii) sixty (60) days after the expiration date of the Policy Period in the case of Claims first made against the Insured during the last sixty (60) days of the Policy Period, [or] (iii) the end of the Optional Extension Period (if applicable) ....

The Policy also includes an Optional Extension Period, which may be purchased “[i]n the event of the termination of th[e] Insurance for any reason except the non-payment of premium.” If purchased, the option extends the period to report a claim “first made against any Insured and reported to [Defendant] during the Optional Extension Period” by thirty days after termination. Section XIX states that “all Insureds agree that this Policy embodies all agreements between [Defendant] and the Insured relating to this Policy . . . the terms of this Insurance [shall not] be waived or changed, except by endorsement issued to form a part of this policy signed by [Defendant].” The self-insured retention under the Policy as applicable here is $1,000,000.

The Policy defines “Insured” to include “any Subsidiaries of the Named Insured.” Match.com, L.L.C. and Tinder, Inc. were both subsidiaries of IAC at the time the Policy was issued. In July 2017, after the end of the Policy Period, Tinder, Inc. merged with Match Group, Inc. -- a parent company of Plaintiff.

B. Previous Dealings

Defendant has issued liability policies covering IAC and its subsidiaries, including Tinder, Inc. and Match.com, L.L.C., since 2008. During this time, Defendant and the insureds reached several explicit and implicit mutual understandings about these policies. For example, Defendant and the insureds understood that minor matters did not constitute “Claims.” The insureds had no obligation to provide Defendant with notice of such matters -- regardless of whether any of their insurance policies required otherwise -- unless and until the insureds determined that the matters were substantially likely to develop into significant legal proceedings. Consistent with this understanding, the insureds did not notify Defendant of every potential claim, complaint, grievance or other assertion against them. The insureds reported only matters that they determined were substantially likely to develop into significant legal proceedings.

This mutual understanding was discussed by Defendant, the insureds, and the insureds' representatives and brokers during one or more insurance renewal meetings that pre-dated the issuance of the Policy. Defendant was also reminded of this mutual understanding during regularly scheduled meetings attended by, among other persons, Defendant's outside counsel and representatives of the insureds. Neither Defendant nor its counsel indicated a desire to deviate from such course. Defendant did not expect to be notified of every demand or matter asserted against the insureds.

C. Underlying Litigation

On February 16, 2016, counsel for John Mellesmoen sent a letter to (a) Joey Levin, the CEO of IAC, (b) Gregg J. Winiarski, the then-Executive Vice President and General Counsel of IAC, (c) Greg Blatt, the then-Chairman and CEO of Match Group, Inc. and (d) Sean Rad, the then-CEO of Tinder, Inc., notifying them of “potential legal claims” Mellesmoen allegedly had against Tinder, Inc. (the “Letter”).

The Letter alleged that, during a meeting at a shopping mall, Mellesmoen presented Rad with product and marketing ideas, for which Mellesmoen was promised compensation. The Letter further alleged that Tinder, Inc. later used Mellesmoen's ideas without compensating him, and that Rad began to avoid communicating with Mellesmoen.

IAC viewed the allegations in the Letter as frivolous and responded to Mellesmoen by letter, explaining why his assertions were meritless and not to be taken seriously. Neither IAC nor any other insured considered the Letter a “Claim” because, at that time, the insureds determined it was unlikely that Mellesmoen would initiate a formal claim or lawsuit against any insured. Neither IAC nor any other insured provided notice to Defendant of the Letter.

On August 18, 2016, during the last sixty days of the Policy, the insureds received notice that Mellesmoen had filed a lawsuit the day before against IAC, Tinder, Inc. and Rad in California state court (the “Lawsuit”). On Friday, August 19, 2016, IAC provided notice of the Lawsuit to Marsh USA Inc., its insurance broker, via e-mail. On Sunday, August 21, 2016, a Marsh employee responded that she would handle it. At 8:42 A.M. on Monday, August 22, 2016, Marsh provided Defendant with notice of the Lawsuit.

On August 23, 2016, Defendant confirmed receipt of the notice, stated it was evaluating coverage and requested a call. Defendant did not mention late notice then or during the call.

Over the next several weeks, the insureds kept Defendant apprised of updates in the Lawsuit during regularly scheduled calls with Defendant's outside counsel. Throughout the fall of 2016, Defendant indicated to the insureds that it was continuing to investigate whether and to what extent the Policy may cover the Lawsuit. On November 21, 2016, Defendant proposed that it further defer its coverage decision until a ruling was issued on the underlying defendants' demurrer. Defendant requested that the insureds continue to keep Defendant updated on the status of the matter. In February 2017, the insureds reported that the underlying defendants' demurrer was unsuccessful. On March 31, 2017, Defendant denied coverage on late notice grounds.

The Lawsuit was litigated for several years before it settled in July 2021. Plaintiff incurred charges of approximately $3,315,000 defending against the Lawsuit. On September 17, 2021, Plaintiff sent a demand letter to Defendant, explaining the bases for coverage under the Policy and requesting that Defendant provide full and prompt coverage for the defense and indemnity costs that Plaintiff had incurred in the Lawsuit. On November 14, 2021, Defendant responded with a denial letter.

II. STANDARD

On a motion to dismiss, a court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in favor of the non-moving party but does not consider “conclusory allegations or legal conclusions couched as factual allegations.” Dixon v. von Blanckensee, 994 F.3d 95, 101 (2d Cir. 2021).^[1] To withstand a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Kaplan v. Lebanese Canadian Bank, SAL, 999 F.3d 842, 854 (2d Cir. 2021) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678; accord Dane v. UnitedHealthcare Ins. Co., 974 F.3d 183, 189 (2d Cir. 2020). It is not enough for a plaintiff to allege facts that are consistent with liability; the complaint must “nudge[ ] [plaintiff's] claims across the line from conceivable to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); accord Bensch v. Est. of Umar, 2 F.4th 70, 80 (2d Cir. 2021). To survive dismissal, “plaintiffs must provide the grounds upon which their claim rests through factual allegations sufficient to raise a right to relief above the speculative level.” Rich v. Fox News Network, LLC, 939 F.3d 112, 121 (2d Cir. 2019) (cleaned up).

New York law governs this dispute because the Policy includes a New York choice of law provision, and the parties' submissions assume that New York law applies. See In re Snyder, 939 F.3d 92, 100 n.2 (2d Cir. 2019) (“[I]mplied consent is . . ....