Entrepraneur Dream Team v. Certain Interested Underwriters of Lloyd's Insurance Company

CourtDistrict Court, E.D. Virginia
DecidedAugust 31, 2023
Docket3:22-cv-00529
StatusUnknown

This text of Entrepraneur Dream Team v. Certain Interested Underwriters of Lloyd's Insurance Company (Entrepraneur Dream Team v. Certain Interested Underwriters of Lloyd's Insurance Company) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Entrepraneur Dream Team v. Certain Interested Underwriters of Lloyd's Insurance Company, (E.D. Va. 2023).

Opinion

FINO RT HTHE EU ENAITSETDE RSNTA DTIESTS RDIICSTT ROIFC VT ICROGUINRITA Richmond Division

ENTREPRANEUR DREAM TEAM, ) Plaintiff, ) ) v. ) Civil Action No. 3:22CV529 (RCY) ) CERTAIN INTERESTED ) UNDERWRITERS OF LLOYD’S ) INSURANCE COMPANY, ) Defendants. ) )

MEMORANDUM OPINION

This matter is before the Court on Defendant’s Motion to Dismiss Plaintiff’s Amended Complaint, Plaintiff’s Motion Seeking Leave to File Second Amended Complaint, the Magistrate Judge’s Report and Recommendation (“R&R”), and the Defendant’s Objection to the same. The matters have been fully briefed, and the Court dispenses with oral argument because the facts and legal contentions are adequately presented in the materials before the Court, and oral argument would not aid in the decisional process. E.D. Va. Loc. Civ. R. 7(J). For the reasons stated herein the Court will overrule the Defendant’s Objection, adopt the R&R, grant Defendant’s Motion to Dismiss Plaintiff’s Amended Complaint, and conditionally grant the Motion Seeking Leave to File Second Amended Complaint. I. PROCEDURAL HISTORY

On July 28, 2022, Plaintiff Entrepraneur [sic] Dream Team (“Plaintiff” or “Entrepraneur”) filed its Complaint against Defendant Certain Interested Underwriters of Lloyd’s Insurance Company (“Defendant” or “Lloyd’s Insurance”), alleging Breach of Contract (Count One), Breach of Implied Covenant of Good Faith and Fair Dealing (Count Two), and Bad Faith (Count Three). (ECF No. 1.) On October 26, 2022, Defendant filed a Motion to Dismiss for Failure to State a Claim (ECF No. 4). Then, on November 9, 2022, Plaintiff filed an Amended Complaint as a matter of course under Federal Rule of Civil Procedure 15(a)(1) (ECF No. 7). The Amended Complaint restated the three aforementioned counts, but also added claims of Actual Fraud (Count Four), and Constructive Fraud (Count Five). (Id. at 9–11.) 1 On November 23, 2022, Defendant filed the pending Motion to Dismiss Plaintiff’s Amended Complaint (ECF No. 9). On December 14, 2022, Plaintiff filed an Unopposed Motion Seeking an Extension to File Memorandum in Opposition to the Motion to Dismiss (ECF No. 11), which the Court granted and allowed Plaintiff until December 21, 2022, to respond to Defendant’s Motion to Dismiss. (ECF No. 12.) On December 21, 2022, Plaintiff filed the also-pending Motion Seeking Leave to File Second Amended Complaint (“Motion for Leave,” ECF No. 13), to which

it attached the Proposed Second Amended Complaint (ECF No. 13-1). On May 10, 2023, the case was reassigned to the undersigned. On May 15, 2023, the Court referred both the pending Motion to Dismiss and the Motion for Leave to Magistrate Judge Summer L. Speight for a Report and Recommendation. (See Referral Order, ECF No. 21.) On July 7, 2023, Magistrate Judge Speight returned her R&R (ECF No. 31). On July 20, 2023, Defendant filed its Objections to the R&R (ECF No. 32). Plaintiff filed its Response to the Objection on August 8, 2023 (ECF No. 37), and Defendant filed its Reply on August 15, 2023 (ECF No. 40). II. STATEMENT OF FACTS2

From November 8, 2017, until August 14, 2018, Entrepraneur owned a residence located 3012 Ballantine Boulevard, Norfolk, Virginia 23509 (the “Residence”). (Am. Compl. ¶ 5.)

1 The Court employs the pagination assigned to the parties’ submissions by the CM/ECF docketing system. 2 The Court accepts as true and recites the well-pleaded factual allegations set forth in the Amended Complaint, as is required at the Motion to Dismiss stage. See Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). Entrepraneur’s ownership of the Residence “was subject to the lien of a deed of trust . . . that secured a note that evidenced a mortgage loan,” which was held by Anchor Assets V, LLC (“Anchor”). (Id. ¶ 6.) Entrepraneur also purchased an insurance policy with Lloyd’s (“Insurance Policy,” ECF No. 9-3.), in which Lloyd’s insured the Residence for “casualty, including fire,” from November 8, 2017, to November 8, 2018. (Am. Compl. ¶ 7.) The insurance policy provided that no lawsuit could be brought against Lloyd’s unless “the action is started within two years after the date of loss.” (Insurance Policy 45.)3 On July 28, 2018, there was a fire at the Residence (“July 28, 2018 fire”) that severely damaged the Residence and reduced its value. (Am. Compl. ¶ 11.) On August 1, 2018, Entrepraneur made a claim to Lloyd’s seeking payment as a result of the fire. (Id. ¶ 12.) The Insurance Policy had a $180,000 coverage limit. (Id. ¶ 18.)

On August 14, 2018, the Residence entered foreclosure. (Id. ¶ 13.) In July 2018, Entrepraneur was aware that the Residence was in the initial stages of a foreclosure, but did not know the date of the foreclosure until after the foreclosure occurred. (Id. ¶ 14.) Prior to the foreclosure, Entrepraneur spent $19,497.19 towards partial repairs of the Residence due to the July 28, 2018 fire, but the repairs were not completed because the foreclosure resulted in Entrapraneur’s loss of ownership over the Residence. (Id. ¶ 15.) Entrapraneur also lost $177,000 due to the Residence’s value depreciating as a result of the July 28, 2018 fire. (Id. ¶ 16.) Lloyd’s has yet to make a payment on the aforementioned insurance claim. (Id. ¶ 19.) Cardinal Associates, Inc. (“Cardinal Associates”) “was an insurance agency that acted as

agent for Lloyd’s Insurance as to the insurance policy.” (Id. ¶ 10.) Cardinal Associates acted through its president, Christopher Caldwell (“Caldwell”). (Id.) “Acting as agent for Lloyd’s Insurance, Cardinal Associates, through Caldwell, represented to Entrepraneur that Lloyd’s

3 Even though the Insurance Policy was attached to the Motion to Dismiss rather than the Complaint, the Court considers the Insurance Policy because it is “integral to the complaint and authentic.” Philips v. Pitt County Memorial Hosp., 572 F.3d 176, 180 (4th Cir. 2009). Insurance had paid $177,000 in insurance proceeds to Anchor.” (Id. ¶ 20.) Such representation was false, but Entrepraneur relied on the representation and did not learn of the falsity of the representation until “late 2021.” (Id. ¶¶ 21–22.) Lloyd’s did not make a payment to Anchor because it believed “it had no reason to pay Anchor as a result of the fire because of the foreclosure.” (Id. ¶ 23.) Lloyd’s never informed Entrepraneur of that position. (Id. ¶ 36.) After Entrepraneur learned that Caldwell’s representation was incorrect, Entrepraneur informed Lloyd’s that it was entitled to payment as a result of the loss generated by the July 28, 2018 fire. (Id. ¶ 37.) In response, Lloyd’s repeatedly questioned the basis for Entrepraneur’s right to the payment and stated that ownership of the Residence at the time off the fire was not a “full response to the question.” (Id. ¶ 38.) On July 26, 2022, Lloyd’s, for the first time, indicated a suspicion that

Entrepraneur was the cause of the July 28, 2018 fire. (Id. ¶ 41.) III. STANDARD OF REVIEW

“The Federal Magistrates Act requires a district court to ‘make a de novo determination of those portions of the [magistrate judge's] report or specified proposed findings or recommendations to which objection is made.’” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310, 315 (4th Cir. 2005) (quoting 28 U.S.C. § 636(b)(1)) (alteration in original).

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Entrepraneur Dream Team v. Certain Interested Underwriters of Lloyd's Insurance Company, Counsel Stack Legal Research, https://law.counselstack.com/opinion/entrepraneur-dream-team-v-certain-interested-underwriters-of-lloyds-vaed-2023.