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Nbl Flooring, Inc., On Behalf of Itself and All Others Similarly v. Trumball Insurance Co.

August 1, 2012


The opinion of the court was delivered by: Rufe, J.

Memorandum Opinion and Order

In 2007 and 2008, Plaintiff NBL Flooring, Inc., a carpet installation contractor, purchased workers' compensation insurance policies ("Policies") issued by Defendants Trumbull Insurance Co. ("Trumball") and Trumball's parent company, the Hartford Financial Services Group, Inc. ("HFSG"). The Policies described the process for calculating the premiums due, which involved multiplying a rate by a "premium basis." *fn1 Plaintiff paid estimated premiums in advance for these Policies, because "the precise amount of the premium could not be determined until after the end of the year, because the calculation depended on the number of employees and other covered individuals during the year." *fn2 The Policies required Plaintiff to submit to audits by Defendants after the policy period ended, so that accurate final premiums could then be determined.

Plaintiff alleges that Defendants breached their contractual obligations to Plaintiff by including remuneration Plaintiff made to certain independent contractors in the premium basis used to calculate the final premiums. Plaintiff also alleges that Defendants breached their obligation to conduct an audit in good faith. As a result, Plaintiff alleges Defendant improperly charged NBL thousands of dollars in additional premiums. In the alternative, Plaintiff alleges unjust enrichment, in that Defendants have benefitted by charging and collecting workers' compensation premiums in excess of amounts due and owing. Plaintiff also includes a fraud count, claiming that Defendants made false or misleading statements about the amounts due and owing under the contract, and falsely claimed that they had conducted proper audits.

HFSG seeks dismissal of the breach of contract claims against it, arguing that it is neither Plaintiff's insurer nor a party to the Policies at issue. Both HFSG and Trumbull seek dismissal of the fraud claim, arguing that the fraud claim is barred by the gist of the action doctrine. Finally, both Defendants argue that the unjust enrichment claims should be dismissed, as any relationship between the parties is governed by a written contract.

Standard of Review

A motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) is reviewed under substantially the same legal standard as a 12(b)(6) motion. *fn3 Dismissal for failure to state a claim is appropriate where a plaintiff's "plain statement" does not possess enough substance to show that plaintiff is entitled to relief. *fn4 Something more than a mere possibility of a claim must be alleged; the plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." *fn5 Accordingly, the complaint must set forth "direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory." *fn6 But courts are not bound to accept as true legal conclusions couched as factual allegations. *fn7 In evaluating a Rule 12(c) motion, a court will treat well-pleaded facts in the complaint as true. *fn8 The Court may also consider any authentic written instruments on which the complaint is based if attached to the pleadings or the briefing on the motion. *fn9


1. Count I - Breach of Contract Claim against HFSG Under Pennsylvania law, a defendant is liable for breach of contract only if it is a party to that contract. *fn10 To determine whether an entity is a party to an insurance policy, the Court must consider two factors: "1) the extent to which the company was identified as the insurer on the policy documents; and 2) the extent to which the company acted as the insurer." *fn11 The second factor is given significantly greater weight. *fn12

HFSG argues that although Trumball is a subsidiary of HFSG, HFSG itself is not the insurer and is not a party to the Policies. In fact, HFSG argues, it is merely a holding company which does not issue any insurance policies.

Plaintiff alleges that references to "The Hartford" occur throughout the Policies and their attachments, demonstrating that HFSG is a party to the policies. The Information Page for the Policies clearly indicates that Trumbull is the insurer. However, the Important Notice page of the Policies, which is provided to employees, states that "The Hartford" is the employer's workers' compensation insurance carrier, and provides an address for "The Hartford" which is different from the one provided for Trumbull on the Information Page. In addition, the cover page of the Policies prominently displays "The Hartford" and the stag logo, making no reference to Trumbull. In addition, the Policy Adjustment Notice states that if a refund was owed to Plaintiff because the estimated premium was too high, "The Hartford" would mail the refund check.

Although HFSG correctly notes that the relevant insurance policies do not define "The Hartford" to mean HFSG or otherwise identify HFSG as a party to the contract, neither do they preclude such a connection. Plaintiff sets forth plausible evidence from which one can infer that HFSG may be "The Hartford," which in turn may be a party to the Policies. *fn13 The Court finds this issue is not ripe for resolution on the pleadings, and will allow discovery regarding HFSG's relationship to the Policies. If appropriate, HFSG may renew its argument that it is not a party to the contract on a full factual record at a later point in the litigation. Accordingly, the Court will deny Defendants' Motion for Judgment on the Pleadings as to Count I.

2. Count II - Fraud Claim Against HFSG and Trumbull Count II of the Complaint alleges that Defendants committed fraud. Defendants argue that Plaintiff's fraud claims should be dismissed as barred by the gist of the action doctrine. *fn14

The gist of the action doctrine precludes a plaintiff from recasting what is essentially a breach of contract claim as a tort claim (e.g., fraud or negligence). *fn15 In a contract action, duties are imposed by the contract. *fn16 In a tort action, including a fraud action, duties are imposed by law or social policy. *fn17 Where the allegations arise from an existing contract between the parties or the duties allegedly breached are created by or grounded in the contract, the doctrine will bar a tort claim. *fn18
First, Plaintiff alleges that "[i]n connection with the sale of insurance to Plaintiff . . . Defendants supplied false, misleading, inaccurate and incomplete information about the amounts due and owing for workers' compensation insurance . . . ." *fn19 Plaintiff provides no context for these allegations and does not plead fraud with particularity as required by Federal Rule of Civil Procedure 9(b). *fn20 The Court cannot discern when the "false, misleading, inaccurate and incomplete" statements were made, the content of the statements, or whether the statements were ...

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