United States District Court, S.D. Ohio, Western Division
The Connor Group, A Real Estate Investment Firm, LLC, Plaintiff,
Certain Underwriters at Lloyds, London Subscribing to Policy No. B128413102W16, et al., Defendants.
ENTRY AND ORDER GRANTING MOTION OF DEFENDANTS CERTAIN
UNDERWRITERS AT LLOYD'S, LONDON AND ASPEN SPECIALTY
INSURANCE COMPANY TO DISMISS WITHOUT PREJUDICE THE ACTION OF
PLAINTIFF, THE CONNOR GROUP FOR FAILURE TO STATE A CLAIM
PURSUANT TO FED. R. CIV. P. 12(b)(6), DOC. 11, AND
TERMINATING THIS CASE
M. ROSE UNITED STATES DISTRICT JUDGE
this Court is a motion to dismiss for failure to state a
claim under Federal Rule of Civil Procedure (F.R.C.P.)
12(b)(6). Plaintiff The Connor Group (“Connor
Group”) seeks a declaratory judgment regarding
Defendants' liability under the insurance policies agreed
to by the parties. Defendants Certain Underwriters at
Lloyd's, London (“Lloyd's”) and Aspen
Specialty Insurance Company (“Aspen”) have filed
a motion to dismiss the action for failure to state a claim
in accordance with F.R.C.P. 12(b)(6). Doc. 11.
Connor Group is a real estate investment firm headquartered
in Miamisburg, Ohio. Doc. 1, ¶ 2. Connor Group, through
its corporate affiliates and investor members, owns Villages
of Addison Apartments in Dallas, Texas as tenants in common.
Doc. 1, ¶ 14. Lloyd's is an insurance underwriting
organization located in London, England, however they
stipulated in their insurance policy agreement with Connor
Group that service of process may be served upon them in the
state of New York. Doc. 1, ¶ 3. Aspen is an insurance
company incorporated in the state of North Dakota with its
principle place of business in the state of Connecticut. Doc.
1, ¶ 4.
owners of Villages of Addison Apartments, Connor Group
purchased commercial property insurance policies from
Lloyd's (Policy No. B128413102W16) and Aspen (Policy No.
PRAG48V16), both of which were in effect from February 26,
2016 to February 27, 2017. Doc. 1, ¶¶ 7-8. Connor
Group's policy with Lloyd's provides coverage for
damage to their real and personal property while the Aspen
policy provides coverage for buildings and business property.
Doc. 1, ¶¶ 9-10. The policies each contained a $5,
000, 000 limit per occurrence and make their respective
insurers responsible for 50% of the overall risk. Doc. 1,
¶¶ 11-12. Furthermore, the policies stipulated the
presence of a $500, 000 deductible for each occurrence for
which a claim is based upon. Doc 1-1 PageID 17. On December
28, 2016, Connor Group submitted an insurance claim for
property damage that allegedly had occurred as a result of a
hail storm on March 23, 2016. Doc. 1, ¶¶ 16, 18. On
November 21, 2016, Connor Group sold the property in question
to Advenir at Addison LLC (“Advenir”) and
subsequently assigned the insurance claim to them on February
9, 2017. Doc. 1, ¶¶ 17, 21. The claim was
eventually assigned back to Connor Group by Advenir on July
20, 2017 (Doc. 1, ¶ 22) in consideration for Connor
Group's release of $500, 000 in escrow funds to Advenir.
Doc. 1, ¶ 23; Doc. 1-4 PageID 215.
the initial filing of the insurance claim, Lloyd's and
Advenir appointed York Risk Services Group
(“York”) as a claims adjuster, who then
contracted United Building Sciences (“UBS”) to
inspect the property. Doc. 1, ¶ 19. The property was
inspected January 3 and 4, 2017 and was re-inspected on
January 25, 2017 at the request of Connor Group. Doc. 1-5
PageID 218. A representative of Needham Roofing
(“Needham”) was present on behalf of Advenir at
the re-inspection. Doc. 1-8 PageID 261. Connor Group and
Advenir both dispute many of the findings that York and UBS
made during their investigations of the property.
See Doc. 1-9.
UBS' finding that the roof damage was “likely
caused by multiple storms” (Doc. 1-8 PageID 265), York
cited multiple incidences of hail from the time when Connor
Group acquired the property in 2014, noting that such
incidents would count as separate occurrences pursuant to the
policies and each be subject to the $500, 000 deductible
under said policies. Doc. 1-5 PageID 224. Additionally, York
reported the possibility that the roof had “inherent
defects” that contributed to the ultimate damage that
occurred. Id. York subsequently pointed out that the
insurance policies did not cover latent or pre-existing
defects in the property. Id. Furthermore, York told
Connor Group that hail damage was found only on the south and
west portions of the roof of the property, and that the
policies did not cover replacement of the north and east
portions following a finding of no damage therein.
Id. During re-inspection of the property, Needham
identified possible incidences of hail damage on the north
and east slopes of the roof. Doc. 1-9 PageID 268. In its
report, UBS noted this and argued that these incidences were
“anomalies” appearing to be “scrapes,
scuffs, blisters, and mechanical impact” separate from
hail damage. Doc. 1-8 PageID 264. UBS estimated the
replacement cost value of the damage to be $618, 880.22 with
an actual cash value of $421, 311.47. Doc. 1-6 PageID 228;
Doc. 1-8 PageID 265. In regards to this, Advenir informed
York that Needham had estimated the cost to replace the
shingles of the entire property at $1.567 Million, and that
UBS' price estimate was insufficient to cover the repairs
sought by Advenir as the future owners of the property. Doc.
1-9 PageID 269. In spite of these discrepancies, Lloyd's
and Aspen notified Connor Group of the aforementioned
coverage and adjustment issues related to the claim (Doc. 11
at p. 2; Doc. 1, ¶ 26), which precipitated Connor
Group's present action.
the estimated coverage allocation provided by Defendants,
Plaintiff Connor Group seeks a declaratory judgment that
Lloyd's and Aspen are obligated to provide insurance
coverage for the full replacement of the roof and that only
one deductible may be applied to such coverage. Doc. 1 PageID
7-8. Plaintiff further claims that Defendants' refusal to
cover the roof's replacement cost constitutes a breach of
contract for which they have suffered damages in the form of
loss of insurance proceeds, attorneys' fees, and loss of
escrow funds. Id. at PageID 9. Plaintiff further
alleges that Defendants acted in bad faith by failing to
properly investigate its insurance claim and ultimately
withholding payment under the insurance policies.
Id. at ¶¶ 48-49. Accordingly, Plaintiff
asks the Court to order the aforementioned declaratory
judgment, along with enjoining Defendants from delaying or
denying payment under the policies, awarding pre and
post-judgment interest, as well as Plaintiff's costs and
attorney fees related to the present action Id. at
PageID 11. Additionally, Plaintiff seeks punitive damages in
regards to the claim of bad faith on the part of Defendants.
response to Plaintiff's complaint, Defendants Lloyd's
and Aspen filed a motion to dismiss for failure to state a
claim under F.R.C.P. 12(b)(6), which is currently before the
Court. At issue in the present motion to dismiss for failure
to state a claim is the enforceability of the forum selection
clause within the insurance policies given the presence of an
additional service of suit clause within the aforementioned
policies. The forum selection clause in question states that
“The parties irrevocably submit to the jurisdiction of
the Courts of the State of New York” (Doc. 1-1 PageID
49), while the service of suit clause states that in the
event of a refusal to pay a claim, the insurer “will
submit to the jurisdiction of a Court of competent
jurisdiction within the United States.” Id. at
PageID 32). These endorsements are expressly provided within
Connor Group's insurance policy with Lloyd's and is
additionally incorporated into their insurance policy with
Aspen. See Doc. 1-2 PageID 206. Plaintiff argues
that the provisions of the service of suit clause supersede
those of the forum selection clause and thus make Defendants
amenable to suit anywhere in the United States. Defendants
argue that the provisions of the service of suit clause do
not serve to preclude the enforceability of the forum
selection clause within the insurance policies and thus the
instant action must be dismissed as against the express
requirements of the forum selection clause.
Motion to Dismiss
motion to dismiss based upon a forum selection clause is to
be assessed under Rule 12(b)(6) if that forum selection
clause is valid and enforceable. Langley v. Prudential
Mortg. Capital Co., LLC, 546 F.3d 365, 366 (6th Cir.
2008). Accordingly, the Sixth Circuit has allowed the use of
Rule 12(b)(6) as a way to enforce motions to dismiss in cases
where a forum selection clause limits jurisdiction to a state
court. May v. Ticketmaster Entm't, LLC, No.
3:10-cv-00760, 2010 WL 4024257, at *4 (M.D. Tenn. 2010). In
evaluating a motion to dismiss for failure to state a claim
under Rule 12(b)(6), “the court only needs to determine
whether the forum selection clause is enforceable and
applicable; if it is, then the suit should be
dismissed.” Id. Furthermore, the Court must
“accept as true all of the well-pleaded allegations of
the complaint, construing those allegations in the light most
favorable to the plaintiff.” Rossborough Mfg. Co.
v. Trimble, 301 F.3d 482, 489 (6th Cir. 2002).
Additionally, there is no requirement that a complaint must
include “detailed factual allegations, ” only
that its statement of the grounds for entitlement to relief
must rise above the level of a “formulaic recitation of
the elements of the cause of action.” Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555 (2007).
issue first in the Lloyd's and Aspen insurance policies
is whether the forum selection clause is enforceable given
the presence of the service of suit clause. Before this Court
can analyze whether the forum selection clause on its face is
enforceable, it must first determine whether it is
enforceable together with the ...