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DeFeo v. Blackboard Insurance Co.

United States District Court, D. South Carolina, Florence Division

July 16, 2019

JAMES DEFEO; and COASTAL ELITE, LLC, d/b/a WOK ON THE BEACH, Plaintiffs,
v.
BLACKBOARD INSURANCE COMPANY; and YORK RISK SERVICES GROUP, INC. Defendants.

          ORDER

          R. BRYAN HARWELL CHIEF UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Defendant York Risk Services Group, Inc.'s (“York”) motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. ECF No. 6. For the reasons set forth below, the Court grants York's motion to dismiss, and dismisses with prejudice Plaintiffs' claim for breach of contract as to York.

         Factual Allegations and Procedural Background

         This case arises out of an insurer's refusal to pay a claim made under a policy by its insured. See, generally, ECF No. 1-2 (“Compl.”). Plaintiff James DeFeo is a citizen and resident of Horry County, South Carolina. Id. ¶ 1. Plaintiff Coastal Elite, LLC, d/b/a Wok on the Beach (“Coastal Elite, ” collectively with James DeFeo, “Plaintiffs”) is a South Carolina corporation with its principal place of business in Horry County, South Carolina. Id. ¶ 2. Wok on the Beach is a restaurant in Horry County, South Carolina. Id. ¶¶ 2, 10. Defendant Blackboard Insurance Company (“Blackboard ”) i s a D e l a w a r e corporation with its principal place of business in New York. Id. ¶ 3, ECF No. 1 ¶ 4. Blackboard is “engaged in the writing of insurance . . . .” Compl. ¶ 3. York is a Pennsylvania company, with its principal place of business in Pennsylvania. ECF No. 1 ¶ 5. York provides claims review and loss mitigation services to insurers doing business in South Carolina. Compl. ¶ 4.

         On August 20, 2018, Blackboard[1] issued a business insurance policy to Coastal Elite. Compl ¶ 7, ECF No. 4-1 at 1. The policy ran from August 20, 2018 to August 20, 2019, and provided coverage for, inter alia, loss of income, spoilage, and equipment breakdown. Compl. ¶¶ 7-8, ECF No. 4-1. Plaintiffs made the first premium payment approximately August 20, 2018. Compl. ¶ 8.

         On September 11, 2018, in preparation for the anticipated landfall of Hurricane Florence, the Governor of South Carolina issued a mandatory evacuation. Id. ¶ 9. Hurricane Florence made landfall in Horry County approximately three days later. Id. Due to the evacuation, Plaintiffs closed Wok on the Beach on September 11, 2018; they did not reopen until September 25, 2018, when power was restored, debris cleaned up, equipment repaired, and the restaurant made safe for staff and customers. Id. ¶ 10. On September 26, 2018, Plaintiffs submitted a claim under the policy to Blackboard for, inter alia, loss of income, spoilage, equipment breakdown, and advertising. Id. ¶ 11. On October 4, 2018, the claim was denied. Id. Plaintiffs allege the denial was without basis. Id.

         On April 9, 2019, Plaintiffs filed the instant lawsuit in the Court of Common Pleas for Horry County, South Carolina. Compl. In their Complaint, Plaintiffs brought causes of action against both Blackboard and York for breach of contract and bad faith refusal to pay first party benefits under an insurance policy. Id. Both claims arose out of the denial of Plaintiff's claim for benefits. See Id. On May 31, 2019, Blackboard removed the action to this Court. ECF No. 1.

         On June 7, 2019, York filed a motion to dismiss seeking dismissal of Plaintiffs' breach of contract cause of action as to York. ECF No. 6. Plaintiffs responded on July 5, 2019, ECF No. 15, and York replied on July 12, 2019, ECF No. 16. Accordingly, this matter is now ripe before the Court.

         Legal Standard

         “A motion filed under Rule 12(b)(6) challenges the legal sufficiency of a Complaint . . . considered with the assumption that the facts alleged are true[.]” Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009) (citations omitted). The Court measures legal sufficiency by determining whether the Complaint meets the Rule 8 standards for a pleading. Id. Rule 8 requires, in pertinent part, that a claim for relief contain a “statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a). “Each allegation must be simple, concise, and direct.” Fed.R.Civ.P. 8(d)(1).

         When reviewing a motion under Rule 12(b)(6), the Court must “accept all well-pleaded allegations in the plaintiff's Complaint as true and draw[] all reasonable factual inferences from those facts in the plaintiff's favor[.]” Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999). However, the Court need not accept as true allegations that are contradicted by exhibits to the Complaint. Veney v. Wyche, 293 F.3d 726, 730 (4th Cir. 2002) (citation omitted). To survive a Rule 12(b)(6) motion to dismiss, the plaintiff's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the Complaint.” Id. at 563. A Complaint need not assert “detailed factual allegations”; however, it must contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action” will not suffice. Id. at 555 (citations omitted). Furthermore, “a 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 (2009) (quoting Twombly, 550 U.S. at 570). A claim has “facial plausibility” where the pleading “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         Discussion

         York moves pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss Plaintiffs' breach of contract cause of action as to York. ECF No. 6. In support of its motion, York argues it is not liable for breach of contract as it was not a party to the insurance contract. Id. In response, Plaintiffs first note their allegations regarding York in their bad faith failure to pay benefits cause of action. ECF No. 15 at 1-4. Plaintiffs next advance they will file a motion to amend the Complaint to add a negligence cause of action against York. Id. at 2. Plaintiffs argue they have alleged enough negligence and bad faith on the part of York to overcome York's motion to dismiss, and the Court should deny York's motion to allow the parties to conduct discovery on the novel issue of whether York owes a duty of good faith and fair dealing to Coastal Elite. Id. at 1-4.

         As a preliminary matter, the Court notes Plaintiffs state they will be filing a motion to amend their Complaint to add a negligence claim against York. Id. at 2. However, no such motion has been filed. Rule 15(a)(2) of the Federal Rules of Civil Procedure directs that leave to amend “shall be freely give[n] . . . when justice so requires.” Leave to amend should be denied only when the amendment would prejudice the opposing party, the moving party has acted in bad faith, or the amendment would be futile. Johnson v. Orowheat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986). Leave to amend is properly denied where the requested leave to amend is not accompanied by a motion to amend or a proposed amended Complaint. See Cozzarelli v. Inspire Pharms., Inc., 549 F.3d 618, 630-31 (4th Cir. 2008) (finding no abuse of discretion by district court in denying leave to amend where plaintiffs requested leave ...


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