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Certain Underwriters at Lloyds London Subscribing to Policy No. HMPL18-0164 and HMPL 17-0158 v. KG Administrative Services, Inc.

United States District Court, N.D. Ohio, Eastern Division

December 12, 2019

CERTAIN UNDERWRITERS AT LLOYDS LONDON SUBSCRIBING TO POLICY NO. HMPL 18-0164 AND HMPL 17-0158, PLAINTIFF,
v.
KG ADMINISTRATIVE SERVICES, INC., et al., DEFENDANTS.

          MEMORANDUM OPINION

          HONORABLE SARA LIOI UNITED STATES DISTRICT JUDGE

         Before the Court is the motion for judgment on the pleadings filed by plaintiff Certain Underwriters at Lloyds London Subscribing to Policy No. HMPL 18-0164 and HMPL 17-0158 (“Underwriters” or “plaintiff”). (Doc. No. 16 [“Mot.”].) Defendant KG Administrative Services, Inc. (“KG”)[1] filed a memorandum in opposition (Doc. No. 34 [“Opp'n”]), and Underwriters filed a reply (Doc. No. 35 [“Reply”]).[2] For the reasons set forth herein, Underwriters' motion is granted.

         I. Legal Standard

         Fed. R. Civ. P. 12(c) provides that “[a]fter the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” The standard of review for a motion for judgment on the pleadings is the same as for a motion to dismiss for failure to state a claim for relief under Rule 12(b)(6). JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 581 (6th Cir. 2007). “‘For purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment.'” Id. at 581 (quoting S. Ohio Bank v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 479 F.2d 478, 480 (6th Cir. 1973)). The district court, however, “need not accept as true legal conclusions or unwarranted factual inferences.” Mixon v. Ohio, 193 F.3d 389, 400 (6th Cir. 1999) (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)).

         In considering a Rule 12(c) motion, the allegations in the pleadings are the Court's primary focus. Still, the Court may also consider “‘other materials that are integral to the [pleadings], are public records, or are otherwise appropriate for the taking of judicial notice.'” Campbell v. Nationstar Mortg., 611 Fed.Appx. 288, 291 (6th Cir. 2015) (quoting Ashland, Inc. v. Oppenheimer & Co., 648 F.3d 461, 467 (6th Cir. 2011)). The Federal Rules of Evidence permit the Court to take judicial notice of a fact that “is not subject to reasonable dispute because it: (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b). “The court[] may take judicial notice on its own[.]” Fed.R.Evid. 201(c)(1). The court may take judicial notice of a fact at any stage of the proceedings. See Livingston Christian Sch. v. Genoa Charter Twp., 858 F.3d 996, 1008 (6th Cir. 2017) (citing Fed.R.Evid. 201, Advisory Comm. Notes (f)).

         II. Discussion

         A. Background

         Underwriters commenced this action on May 31, 2019, seeking rescission and declaratory judgment with respect to an errors and omissions coverage certificate of insurance that it issued to KG (the “Lloyd's Policy”). (Compl. ¶¶ 1, 9; Answer ¶ 9.)[3]

         KG is a third-party administrator of self-funded health benefit plans. (Compl. ¶ 3; Answer ¶ 3.) Underwriters alleged that KG was hired by the various other defendants to administer their self-funded health benefit plans (Compl. ¶¶ 4-7), but KG denies those allegations (Answer ¶¶ 4-7). The other defendants have sued KG in district courts elsewhere (see Compl. ¶¶ 14, 18, 23; Answer ¶¶ 14, 18, 23), or have made a demand against KG (Compl. ¶ 31; Answer ¶ 31). KG has requested coverage under the Lloyd's Policy, and Underwriters is providing a defense to KG for the lawsuits under a complete reservation of rights. (Compl. ¶¶ 12-13; Answer ¶¶ 12-13).

         In light of these complaints/demands, Underwriters claims it is entitled to rescission of the Lloyd's Policy, and a declaratory judgment, based on the language of the Policy and the undisputed facts set forth below.

         On December 28, 2018, KG submitted a renewal application to Underwriters - which KG claims “speaks for itself[]” (Answer ¶ 34) - for a claims-made and reported certificate of insurance for those claims that are first made against the insured and reported in writing during the policy period. (Compl. ¶ 34 & Doc. No. 1-9 [“Renewal Application”].)

         The Renewal Application contained the following language:

The Applicant's failure to report to the Underwriters any claim made against it during the current certificate term, or act, omission or circumstances which the Applicant is aware of which may give rise to a claim before the expiration of the current certificate may create a lack of coverage for each Applicant who had a basis to believe that any such act, error, omission or circumstance might reasonably be expected to be the basis of a claim.

(Id. ¶ 36 (quoting Renewal Application at 151 ¶ 3).) The Renewal Application also stated:

The certificate applied for provides coverage on a claims made and reported basis and will apply only to claims that are first made against the Applicant and reported in writing to the Underwriters during the certificate of insurance period. Claims expenses are within and reduce the limit of liability.

(Id. ¶ 37 (quoting Renewal Application at 151 ¶ 4).) KG asserts that this language “speaks for itself.” (Answer ¶¶ 36-37.)

         On January 11, 2019, KG's President, Robert C. Frazier, Jr., executed a ...


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