Northend Investors, LLC v. Southern Trust Insurance Co.

256 F. Supp. 3d 781, 2017 U.S. Dist. LEXIS 88638
CourtDistrict Court, W.D. Tennessee
DecidedJune 9, 2017
DocketNo. 1:16-cv-01137-STA-egb
StatusPublished
Cited by1 cases

This text of 256 F. Supp. 3d 781 (Northend Investors, LLC v. Southern Trust Insurance Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Northend Investors, LLC v. Southern Trust Insurance Co., 256 F. Supp. 3d 781, 2017 U.S. Dist. LEXIS 88638 (W.D. Tenn. 2017).

Opinion

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S PARTIAL MOTION TO DISMISS AND GRANTING ITS MOTION TO BIFURCATE

S. THOMAS ANDERSON, CHIEF UNITED STATES DISTRICT JUDGE

Before the Court is Defendant Southern Trust Insurance Company’s Motion to Dismiss Punitive Damages and All Costs Claims, filed on September 26, 2016. (ECF No. 24.) Plaintiff Northend Investors, LLC (“Northend”) has responded in opposition (ECF No. 29), and Defendant has filed a reply brief (ECF No. 37), making the matter ripe for adjudication. Defendant has also moved, in the alternative, to bifurcate punitive damages issues at trial. (ECF No. 34.) Plaintiff has not responded to this motion. For the reasons discussed below, Defendant’s partial motion to dismiss is GRANTED IN PART AND DENIED IN PART and its alternative motion to bifurcate is GRANTED.1

I. BACKGROUND

The following facts are gleaned from Plaintiffs amended complaint, which the Court accepts as true for the purposes of the instant motion. (See ECF No. 11; see also Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974).) Plaintiff owned a commercial building in Lexington, Tennessee, containing warehouse and office space, and leased the premises to a third party. Plaintiff purchased a three-year policy from Defendant, a. Georgia corporation, insuring the premises against direct physical loss or damage. On February 4, 2015, an accidental fire occurred on the premises, causing physical damage. Plaintiff timely reported the loss, which had occurred during the policy term, to Defendant, which then sent an adjuster to inspect the property. The adjuster observed extensive smoke damage, specifically to the vinyl-backed ceiling and wall insulation, and suggested that Defendant consider hiring an electrical contractor and an “environmentalist/hygienist” to further investigate the extent of the damage. (EOF No. 11 at 4.) Another inspector who surveyed the damage determined that the insulation needed to be replaced.and other significant restoration work was required.

Defendant concluded that a professional cleaning of the warehouse would be sufficient to remedy the damage caused by the fire. Plaintiff disagreed, insisting that significant repairs were needed. The parties, through representatives, communicated extensively regarding this dispute and the cost of cleaning the premises. Plaintiff eventually hired its own experts to survey the damage; they determined that significant restorative work was necessary, as soot had accumulated in the wall cavities and conduits inside the building. On December 3, 2015, Plaintiff submitted to De[784]*784fendant a sworn proof of loss statement formalizing its claim, with an estimate of $2,570,070.39. To date, Defendant has made no payments to Plaintiff.

On April 29, 2016, Plaintiff filed suit in the Circuit Court of Henderson County, Tennessee at Lexington, alleging breach of contract and statutory bad faith, and requesting compensatory damages, punitive damages, and costs. (ECF No. 1-1.) Defendant removed the case to this Court on diversity grounds on June 6, 2016 (ECF No. 1), and Pláintiff filed an amended complaint soon after (ECF No. 11). Defendant now moves to dismiss the claims for punitive damages, attorney’s fees, and costs, averring that Tennessee law limits Plaintiffs potential recovery.

II. LEGAL STANDARD

A defendant may move to dismiss a claim “for failure to state a claim upon which relief can be granted” under Federal Rule of Civil Procedure 12(b)(6). When considering a Rule 12(b)(6) motion, the Court must treat all of the well-pleaded allegations of the pleadings as true and construe all of the allegations in the light most favorable to the non-moving party. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Saylor v. Parker Seal Co., 975 F.2d 252, 254 (6th Cir. 1992). However, legal conclusions .or unwarranted factual inferences need not be accepted as true. Morgan v. Church’s Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987). “To avoid dismissal under Rule 12(b)(6), a complaint must contain either direct or inferential allegations with respect to all the material elements of the claim.” Wittstock v. Mark A. Van Sile, Inc., 330 F.3d 899, 902 (6th Cir. 2003). Under Federal Rule of Civil Procedure 8, a complaint need only contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Although this standard does not require “detailed factual allegations,” it does require more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see also Reilly v. Vadlamudi, 680 F.3d 617, 622 (6th Cir. 2012) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). In order to survive a motion to dismiss, the plaintiff must allege facts that, if accepted as true, are sufficient “to raise a right to relief above the speculative level” and to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 555, 570, 127 S.Ct. 1955. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

III. ANALYSIS

“In a diversity action involving an insurance contract, a federal court applies the substantive law of the forum state.” Talley v. State Farm Fire & Cas. Co., 223 F.3d 323, 326 (6th Cir. 2000) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)). This Court must apply state law in accordance with the decisions of the state’s highest court, in this case, the Tennessee Supreme Court. Talley, 223 F.3d at 326. If the court has not spoken on a particular issue, this Court must attempt to anticipate how it would rule. In re Dow Corning Corp., 419 F.3d 543, 549 (6th Cir. 2005).

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256 F. Supp. 3d 781, 2017 U.S. Dist. LEXIS 88638, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northend-investors-llc-v-southern-trust-insurance-co-tnwd-2017.