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L.R. Costanzo Co., Inc. v. Ohio Casualty Insurance Co.

June 11, 2010

L.R. COSTANZO COMPANY, INC., PLAINTIFF
v.
OHIO CASUALTY INSURANCE COMPANY; AND AMERICAN FIRE & CASUALTY INSURANCE COMPANY, DEFENDANTS



The opinion of the court was delivered by: Judge Munley

MEMORANDUM

Before the court is Defendant Ohio Casualty Insurance Company's motion to dismiss. Having been fully briefed, the matter is ripe for disposition.

Background

This case arises form a dispute over insurance coverage between plaintiff and defendants. Plaintiff, a construction company, served as the general contractor for a building erected in Tobyhanna Township, Pennsylvania around 2001 for the Pocono Mountain Regional Police Commission ("PMRPC"). (Complaint (hereinafter "Complt.") Exh. A to Notice of Removal (Doc. 1) at ¶ 4). In 2009, plaintiff received notice that this building had begun to suffer water leakage problems. (Id. at ¶ 5). The party complaining about the building alleged that the leaking was the result of improper installation of insulation, improper ventilation and the use of non- conforming products in the construction. (Id. at ¶¶ 5-7). The PMRPC filed suit against plaintiff in the Court of Common Pleas of Monroe County, Pennsylvania on September 20, 2009. (Id. at ¶ 8). That lawsuit raises claims of negligence, breach of contract, breach of warranty and breach of the duty of good faith against the plaintiff here. (Id. at ¶¶ 9-10).

Plaintiff alleges that defendants provided plaintiff with insurance coverage through a general liability insurance policy. (Id. at ¶ 3). When served with the Monroe County complaint, plaintiff tendered that document to the defendants. (Id. at ¶ 13). Plaintiff requested that defendants retain counsel and appear in court to defend that case. (Id.). Defendants refused to do so. (Id. at ¶ 13).

Plaintiff then filed the instant complaint in the Court of Common Pleas of Lackawanna County, Pennsylvania. The complaint raises two counts. Count I alleges bad faith, contending that defendants did not conduct a reasonable investigation of the claims at issue and unreasonably refused to defend plaintiff in the Monroe County action. Count II raises a breach of contract claim, contending that defendants refused to comply with the terms of the insurance contract by refusing to supply plaintiff with a defense.

Defendants then removed the case to this court. (See Doc. 1). After removing the case, defendants file the instant motion to dismiss. The parties then briefed the issues, bringing the case to its present posture.

Jurisdiction

Plaintiff is a Pennsylvania corporation with its principal place of business in that Commonwealth. Defendants are Ohio corporations with their principal places of business in that state. The amount in controversy exceeds $75,000. The court therefore has jurisdiction pursuant to 28 U.S.C. § 1332. The court is sitting in diversity, and therefore the substantive law of Pennsylvania shall apply. Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d Cir. 2000) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938)).

Legal Standard

Defendant seeks dismissal of the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). When a defendant files a motion pursuant to Rule 12(b)(6), all well-pleaded allegations of the complaint must be viewed as true and in the light most favorable to the non-movant to determine whether "under any reasonable reading of the pleadings, the plaintiff may be entitled to relief." Colburn v. Upper Darby Township, 838 F.2d 663, 665-66 (3d Cir. 1988) (citing Estate of Bailey by Oare v. County of York, 768 F.3d 503, 506 (3d Cir. 1985), (quoting Helstoski v. Goldstein, 552 F.2d 564, 565 (3d Cir. 1977) (per curiam)). The court may also consider "matters of public record, orders, exhibits attached to the complaint and items appearing in the record of the case." Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994) (citations omitted). The court does not have to accept legal conclusions or unwarranted factual inferences. See CurayCramer v. Ursuline Acad. of Wilmington, Del., Inc., 450 F.3d 130, 133 (3d Cir. 2006) (citing Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997)).

The federal rules require only that plaintiff provide "'a short and plain statement of the claim showing that the pleader is entitled to relief,'" a standard which "does not require 'detailed factual allegations,'" but a plaintiff must make "'a showing, rather than a blanket assertion, of entitlement to relief' that rises 'above the speculative level.'" McTernan v. City of York, 564 F.3d 636, 646 (3d Cir. 2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). The "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). Such "facial plausibility" exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the conduct alleged." Id.

Discussion

Defendant Ohio Casualty seeks dismissal of both counts of plaintiff's complaint. The court ...


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