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Agrotors, Inc. v. ACE Global Markets

United States District Court, M.D. Pennsylvania

February 24, 2014

AGROTORS, INC., Plaintiff,


CHRISTOPHER C. CONNER, Chief District Judge.

This action arises out of defendant Ace Global Markets' ("AGM") declination of insurance coverage for damages to plaintiff Agrotors, Inc.'s ("Agrotors") helicopter. Presently before the court is AGM's motion (Doc. 5) to dismiss Counts II-IV of Agrotors' complaint. For the reasons that follow, the court will grant the motion in part and deny it in part.

I. Background[1]

At all times relevant to the complaint, Agrotors owned a Bell helicopter, Model Number 212, Serial Number 30920, FAA Registration Number N8530F ("the helicopter"). (Doc. 1 ¶ 4). AGM issued to Agrotors an Aviation Hull War & Perils Insurance Policy and an Aircraft Insurance Policy with effective dates of September 27, 2008 to September 27, 2009. (Doc. 1-1, Ex. A). Under the terms of the policy, AGM was required to pay for all repairs, replacement, accidental loss of or damage to the helicopter. (Doc. 1 ¶ 6).

On January 3, 2009, the helicopter was being transported by land from Queretaro, Mexico, to the United States border entry at Nuevo Laredo, Mexico, with a final destination of Dallas, Texas. (Id. ¶ 11). In Nuevo Laredo, Mexican authorities seized the helicopter in response to false allegations that a third party owned the helicopter. (Id. ¶¶ 12-14). Thereafter, Agrotors learned that the helicopter was missing most, if not all, of its internal components. (Id. ¶ 16). On June 15, 2009, Agrotors provided AGM with a "Notice of Claim" related to these events and requested full indemnification by AGM, including reimbursement for all legal fees incurred to obtain possession of the helicopter. (Id. ¶ 18).

AGM failed to respond to Agrotors' claim until May 31, 2012, when it issued a declination of coverage. (Id. ¶ 19). Due to AGM's failure to respond, Agrotors attempted to mitigate its losses by repairing and subsequently selling the helicopter in February 2011. (Id. ¶¶ 22-23).

On June 14, 2013, Agrotors filed a complaint, alleging breach of contract (Count I), insurance bad faith (Count II), common law fraud and misrepresentation (Count III), and promissory estoppel (Count IV). (Doc. 1). AGM filed the instant partial motion (Doc. 5) to dismiss on August 16, 2013. The motion is fully briefed and ripe for disposition.[2]

II. Standard of Review

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the dismissal of complaints that fail to state a claim upon which relief may be granted. FED. R. CIV. P. 12(b)(6). When ruling on a motion to dismiss under Rule 12(b)(6), the court must "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine, whether under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Gelman v. State Farm Mut. Auto. Ins. Co. , 583 F.3d 187, 190 (3d Cir. 2009) (quoting Phillips v. County of Allegheny , 515 F.3d 224, 233 (3d Cir. 2008)); see also Kanter v. Barella , 489 F.3d 170, 177 (3d Cir. 2007) (quoting Evancho v. Fisher , 423 F.3d 347, 350 (3d Cir. 2005)).

Federal notice and pleading rules require the complaint to provide "the defendant fair notice of what the... claim is and the grounds upon which it rests." Phillips , 515 F.3d at 232 (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555 (2007)). To test the sufficiency of the complaint in the face of a Rule 12(b)(6) motion, the court must conduct a three-step inquiry. See Santiago v. Warminster Twp. , 629 F.3d 121, 130-31 (3d Cir. 2010). In the first step, the court must "tak[e] note of the elements a plaintiff must plead to state a claim." Id . (quoting Ashcroft v. Iqbal , 556 U.S. 662, 675 (2009)). Next, the factual and legal elements of a claim should be separated; well-pleaded facts must be accepted as true, while mere legal conclusions may be disregarded. Id .; see also Fowler v. UPMC Shadyside , 578 F.3d 203, 210-11 (3d Cir. 2009). Once the court isolates the well-pleaded factual allegations, it must determine whether they are sufficient to show a "plausible claim for relief." Iqbal , 556 U.S. at 679 (citing Twombly , 550 U.S. at 556); Twombly , 550 U.S. at 555 (requiring plaintiffs to allege facts sufficient to "raise a right to relief above the speculative level"). 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. When the complaint fails to present a prima facie case of liability, courts should generally grant leave to amend before dismissing a complaint. See Grayson v. Mayview State Hosp. , 293 F.3d 103, 108 (3d Cir. 2002); Shane v. Fauver , 213 F.3d 113, 116-17 (3d Cir. 2000).

III. Discussion

AGM seeks to dismiss Counts II, III, and IV of Agrotors' complaint on the grounds that the bad faith claim (Count II) is time barred, the fraud and misrepresentation claim (Count III) is barred by the "gist of the action" and economic loss doctrines, and the promissory estoppel claim (Count IV) is barred because the complaint alleges the requisite elements of a contract. (Doc. 6). The court will address each issue in turn.

A. Count II: Bad Faith

Count II of Agrotors' complaint sets forth a claim for insurance bad faith pursuant to 42 Pa. C.S.A. § 8371.[3] Such a claim is subject to a two year statute of limitations pursuant to 42 Pa. C.S.A. § 5524. Ash v. Continental Ins. Co. , 932 A.2d 877, 885 (Pa. 2007). The statute of limitations accrues for a bad faith claim when the right to institute and maintain a lawsuit arises. Haugh v. Allstate Ins. Co. , 322 F.3d 227, 231 (3d Cir. 2003). However, pursuant to the discovery rule, the ...

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