Milestone v . Fire Equipment 13-CV-198-SM 12/13/13 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Milestone Engineering & Construction, Inc., Plaintiff
v. Case N o . 13-cv-198-SM Opinion N o . 2013 DNH 171 Fire Equipment, Inc., and Everest Indemnity Ins. Co., Defendants
O R D E R
Plaintiff, Milestone Engineering & Construction, Inc.
(“Milestone”), brings this suit against Fire Equipment, Inc.
(“Fire Equipment”) and its liability insurer, Everest Indemnity
Insurance Company (“Everest”). Before the court is Everest’s
motion to dismiss the sole count against it for failure to state
a claim, document n o . 1 7 .
Standard of Review
A motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) will be denied where the complaint alleges “facts
sufficient to establish a ‘claim to relief that is plausible on
its face.’” Gray v . Evercore Restructuring L.L.C., 544 F.3d 3 2 0 ,
324 (1st Cir. 2008) (quoting Trans–Spec Truck Serv., Inc. v .
Caterpillar Inc., 524 F.3d 315, 320 (1st Cir. 2008)). In
assessing plausibility, the court must “isolate and ignore statements in the complaint that simply offer legal labels and
conclusions” and accept as true all “non-conclusory” and “non-
speculative” facts, “drawing all reasonable inferences in the
pleader’s favor.” Schatz v . Republican State Leadership Comm.,
669 F.3d 5 0 , 55 (1st Cir. 2012).
Discussion
Milestone subcontracted with Fire Equipment for the
installation of a fire suppression system at the offices of
Milestone’s customer, Lindt & Sprungli (USA) Inc. (“Lindt”). In
the performance of its subcontracted services, Fire Equipment
allegedly damaged Lindt’s IBM server and related equipment.
Milestone compensated Lindt for the damage. Milestone brought
this suit against Fire Equipment for breach of contract, breach
of implied warranty, and negligence seeking reimbursement for the
money it paid to Lindt. Milestone named Fire Equipment’s
liability insurer, Everest, as an additional defendant.
In the sole count against Everest, the amended complaint
alleges that Everest “furnished a liability insurance policy” to
Fire Equipment promising “to indemnify [Fire Equipment] against
and pay for all damages for which” Fire Equipment has become
“liable as a result of its operations.” Am. Cmplt., doc. n o . 1 1 ,
at 3-4. The complaint alleges that Milestone is “an intended
2 third party beneficiary” of that insurance policy. The complaint
also alleges that “Everest has conceded liability, although not
the amount of damages.” Id. at 4 .
Although not entirely clear from the complaint or
Milestone’s brief, it appears that Milestone is asserting that it
may sue to enforce Everest’s promise to pay because it has third-
party beneficiary status for two reasons: (1) it is an “intended”
third-party beneficiary; and (2) Everest has admitted Fire
Equipment’s liability. Everest argues that the claim must be
dismissed because Milestone does not plausibly allege either of
these circumstances.
A. Milestone as Intended Beneficiary of the Insurance Policy
A third-party is a beneficiary of a contract where the
parties to the contract “intended [it] to have that right.”
Brooks v . Trustees of Dartmouth College, 161 N.H. 685, 697 (2011)
(internal quotation marks and citation omitted). Importantly,
the “fact that a third party is to receive some benefit through
the performance of the contract does not make that party a third-
party beneficiary.” Id. at 698.
As noted, the only allegation in the amended complaint
regarding third-party beneficiary status is the general statement
3 that Milestone is “an intended third party beneficiary” of the
insurance contract. Am. Cmplt., doc. n o . 1 1 , at 4 . Assuming,
without deciding, that “New Hampshire . . . treat[s] third-party
beneficiary status as a question of fact,” Contour Design, Inc.
v . Chance Mold Steel Co., Ltd., 794 F. Supp. 2d 315, 325 (D.N.H.
2011) (Laplante, J . ) , Milestone’s allegation falls short.1
Everest submitted the insurance policy as an exhibit to its
motion, and because the policy is “central to plaintiff[‘s]
claim” against Everest, the “court may properly consider [it]
. . . without converting defendant[‘s] motion into one for
summary judgment.” Miller v . Nationstar Mtg., LLC, 2012 WL
3639055, at *1 (D.N.H. Aug. 1 4 , 2012) (internal quotation marks
and citation omitted). Nothing in the policy suggests that
Everest and Fire Equipment intended Everest’s contractual
promises to be enforceable by and for the benefit of Milestone,
or in general by tort claimants such as Milestone. That i s , the
insurance contract does not support the amended complaint’s
general allegation that Milestone is an intended third-party
beneficiary. See Animal Hosp. of Nashua, Inc. v . Antech
1 Most courts “treat third-party beneficiary status as a question of law.” Contour, 794 F. Supp. 2d at 325. The issue, however, is unsettled in New Hampshire. Id. Even if this court were to treat third-party beneficiary status as a legal question, the court cannot accept Milestone’s conclusory allegation as true because bare legal allegations must be “ignore[d].” Schatz, 669 F.3d at 5 5 .
4 Diagnostics, 2012 WL 1801742, at *4 (D.N.H. May 1 7 , 2012) (on
motion to dismiss, “general allegation” may be undermined by
“contradict[ory] ... specific factual allegations”) (citing
Carrol v . Xerox Corp., 294 F.3d 2 3 1 , 243 (1st Cir. 2002)).
The amended complaint does not plausibly allege that
Milestone is an intended third-party beneficiary of the insurance
contract.
B. Everest’s Alleged Admission of Liability
Milestone argues that it has third-party beneficiary status
on the alternative ground that Everest has conceded Fire
Equipment’s liability, relying on Shaheen v . Preferred Mutual
Ins. Co., 668 F. Supp. 716, 718 (D.N.H. 1987). In Shaheen,
plaintiffs sued their alleged tortfeasor’s indemnity insurer
claiming, among other things, that the insurer had breached its
obligation of good faith and fair dealing to the insured when it
failed to settle plaintiffs’ claims. The court held that
plaintiffs could maintain a direct action under a third-party
beneficiary theory if they could properly allege that there had
been “an explicit admission of [the insured’s] liability or a
judicial determination of same.” Id. at 719. Finding that
plaintiffs had not alleged either of these circumstances, the
5 court dismissed the claim. See id. at 718-19 (relying on Burke
v . Fireman’s Fund Ins., Co., 120 N.H. 365, 367 (1980)).
Everest does not quarrel with the proposition that Milestone
may bring a direct action under the policy if Everest conceded
Fire Equipment’s liability to Milestone. It argues, however,
that the amended complaint does not plausibly alleged that
conversion.
The amended complaint simply declares that “Everest has
conceded liability, although not the amount of damages.” Am.
Cmplt., doc. n o . 1 1 , at 4 .
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Milestone v . Fire Equipment 13-CV-198-SM 12/13/13 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Milestone Engineering & Construction, Inc., Plaintiff
v. Case N o . 13-cv-198-SM Opinion N o . 2013 DNH 171 Fire Equipment, Inc., and Everest Indemnity Ins. Co., Defendants
O R D E R
Plaintiff, Milestone Engineering & Construction, Inc.
(“Milestone”), brings this suit against Fire Equipment, Inc.
(“Fire Equipment”) and its liability insurer, Everest Indemnity
Insurance Company (“Everest”). Before the court is Everest’s
motion to dismiss the sole count against it for failure to state
a claim, document n o . 1 7 .
Standard of Review
A motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) will be denied where the complaint alleges “facts
sufficient to establish a ‘claim to relief that is plausible on
its face.’” Gray v . Evercore Restructuring L.L.C., 544 F.3d 3 2 0 ,
324 (1st Cir. 2008) (quoting Trans–Spec Truck Serv., Inc. v .
Caterpillar Inc., 524 F.3d 315, 320 (1st Cir. 2008)). In
assessing plausibility, the court must “isolate and ignore statements in the complaint that simply offer legal labels and
conclusions” and accept as true all “non-conclusory” and “non-
speculative” facts, “drawing all reasonable inferences in the
pleader’s favor.” Schatz v . Republican State Leadership Comm.,
669 F.3d 5 0 , 55 (1st Cir. 2012).
Discussion
Milestone subcontracted with Fire Equipment for the
installation of a fire suppression system at the offices of
Milestone’s customer, Lindt & Sprungli (USA) Inc. (“Lindt”). In
the performance of its subcontracted services, Fire Equipment
allegedly damaged Lindt’s IBM server and related equipment.
Milestone compensated Lindt for the damage. Milestone brought
this suit against Fire Equipment for breach of contract, breach
of implied warranty, and negligence seeking reimbursement for the
money it paid to Lindt. Milestone named Fire Equipment’s
liability insurer, Everest, as an additional defendant.
In the sole count against Everest, the amended complaint
alleges that Everest “furnished a liability insurance policy” to
Fire Equipment promising “to indemnify [Fire Equipment] against
and pay for all damages for which” Fire Equipment has become
“liable as a result of its operations.” Am. Cmplt., doc. n o . 1 1 ,
at 3-4. The complaint alleges that Milestone is “an intended
2 third party beneficiary” of that insurance policy. The complaint
also alleges that “Everest has conceded liability, although not
the amount of damages.” Id. at 4 .
Although not entirely clear from the complaint or
Milestone’s brief, it appears that Milestone is asserting that it
may sue to enforce Everest’s promise to pay because it has third-
party beneficiary status for two reasons: (1) it is an “intended”
third-party beneficiary; and (2) Everest has admitted Fire
Equipment’s liability. Everest argues that the claim must be
dismissed because Milestone does not plausibly allege either of
these circumstances.
A. Milestone as Intended Beneficiary of the Insurance Policy
A third-party is a beneficiary of a contract where the
parties to the contract “intended [it] to have that right.”
Brooks v . Trustees of Dartmouth College, 161 N.H. 685, 697 (2011)
(internal quotation marks and citation omitted). Importantly,
the “fact that a third party is to receive some benefit through
the performance of the contract does not make that party a third-
party beneficiary.” Id. at 698.
As noted, the only allegation in the amended complaint
regarding third-party beneficiary status is the general statement
3 that Milestone is “an intended third party beneficiary” of the
insurance contract. Am. Cmplt., doc. n o . 1 1 , at 4 . Assuming,
without deciding, that “New Hampshire . . . treat[s] third-party
beneficiary status as a question of fact,” Contour Design, Inc.
v . Chance Mold Steel Co., Ltd., 794 F. Supp. 2d 315, 325 (D.N.H.
2011) (Laplante, J . ) , Milestone’s allegation falls short.1
Everest submitted the insurance policy as an exhibit to its
motion, and because the policy is “central to plaintiff[‘s]
claim” against Everest, the “court may properly consider [it]
. . . without converting defendant[‘s] motion into one for
summary judgment.” Miller v . Nationstar Mtg., LLC, 2012 WL
3639055, at *1 (D.N.H. Aug. 1 4 , 2012) (internal quotation marks
and citation omitted). Nothing in the policy suggests that
Everest and Fire Equipment intended Everest’s contractual
promises to be enforceable by and for the benefit of Milestone,
or in general by tort claimants such as Milestone. That i s , the
insurance contract does not support the amended complaint’s
general allegation that Milestone is an intended third-party
beneficiary. See Animal Hosp. of Nashua, Inc. v . Antech
1 Most courts “treat third-party beneficiary status as a question of law.” Contour, 794 F. Supp. 2d at 325. The issue, however, is unsettled in New Hampshire. Id. Even if this court were to treat third-party beneficiary status as a legal question, the court cannot accept Milestone’s conclusory allegation as true because bare legal allegations must be “ignore[d].” Schatz, 669 F.3d at 5 5 .
4 Diagnostics, 2012 WL 1801742, at *4 (D.N.H. May 1 7 , 2012) (on
motion to dismiss, “general allegation” may be undermined by
“contradict[ory] ... specific factual allegations”) (citing
Carrol v . Xerox Corp., 294 F.3d 2 3 1 , 243 (1st Cir. 2002)).
The amended complaint does not plausibly allege that
Milestone is an intended third-party beneficiary of the insurance
contract.
B. Everest’s Alleged Admission of Liability
Milestone argues that it has third-party beneficiary status
on the alternative ground that Everest has conceded Fire
Equipment’s liability, relying on Shaheen v . Preferred Mutual
Ins. Co., 668 F. Supp. 716, 718 (D.N.H. 1987). In Shaheen,
plaintiffs sued their alleged tortfeasor’s indemnity insurer
claiming, among other things, that the insurer had breached its
obligation of good faith and fair dealing to the insured when it
failed to settle plaintiffs’ claims. The court held that
plaintiffs could maintain a direct action under a third-party
beneficiary theory if they could properly allege that there had
been “an explicit admission of [the insured’s] liability or a
judicial determination of same.” Id. at 719. Finding that
plaintiffs had not alleged either of these circumstances, the
5 court dismissed the claim. See id. at 718-19 (relying on Burke
v . Fireman’s Fund Ins., Co., 120 N.H. 365, 367 (1980)).
Everest does not quarrel with the proposition that Milestone
may bring a direct action under the policy if Everest conceded
Fire Equipment’s liability to Milestone. It argues, however,
that the amended complaint does not plausibly alleged that
conversion.
The amended complaint simply declares that “Everest has
conceded liability, although not the amount of damages.” Am.
Cmplt., doc. n o . 1 1 , at 4 . Contending that the allegation is
plausible, Milestone submitted an email as an addendum to its
brief which purports to establish Everest’s concession. See doc.
n o . 1 5 . Everest says the email is taken out of context. As
noted, in ruling on a motion for judgment on the pleadings, the
court may consider materials outside the pleadings that are
central to the complaint without converting the motion to one for
summary judgment. See Miller, 2012 WL 3639055, at * 1 . The email
was not made part of the complaint and is not central to i t .
Under these circumstances, the court will not consider the email,
or for that matter, Everest’s proffered explanation regarding the
context of the email. What is left, then, is the amended
complaint’s unadorned allegation that Everest has conceded
liability.
6 The court must accept the allegation as true for purposes of
the present motion. It is not a bare legal conclusion, nor is it
a circumstantial fact giving rise to inferences, the
reasonableness of which the court must assess. Everest may press
its argument that the allegation “mischaracterizes the factual
background in this case” on a motion for summary judgment, or at
trial, but not at this procedural juncture. Milestone is
reminded, of course, of its obligation under Rule 11 to allege
only those “factual contentions [that] have evidentiary support.”
Fed. R. Civ. P. 11 (b)(3).
For these reasons, the amended complaint states a claim
against Everest.
Conclusion
Everest’s motion to dismiss, doc. n o . 1 7 , is denied.
SO ORDERED.
Steven J. McAuliffe Jnited States District Judge
December 13, 2013
cc: Frank P. Spinella, Jr., Esq. Elsabeth D. Foster, Esq. Michael P. Johnson, Esq. Gillian A . Woolf, Esq.