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United Financial Casualty Co. v. A.M. Skier Agency, Inc.

United States District Court, M.D. Pennsylvania

May 13, 2014

UNITED FINANCIAL CASUALTY COMPANY, Plaintiff,
v.
A.M. SKIER AGENCY, INC., et al., Defendants.

MEMORANDUM AND ORDER

THOMAS M. BLEWITT, Magistrate District Judge.

I. Background.

On May 9, 2013, Plaintiff, United Financial Casualty Company ("United"), filed a Complaint against original Defendants, A.M. Skier Agency, Inc. (referred to herein as "AM Skier"), AMSkier Partners, Inc., and Kimberly Latsch, an employee of AM Skier. (Doc. 1). This case arises out of an insurance Producer Agreement (the "Agreement") between Plaintiff and A.M. Skier Agency, Inc. Pursuant to the Agreement, Defendant AM Skier was authorized to provide insurance products for Plaintiff. The Agreement was attached to Plaintiff's Complaint as Exhibit 1. (Doc. 1-1).

This Court's jurisdiction over this case is based on diversity.[1] See 28 U.S.C. §1332.

Plaintiff's Complaint centers around "a breach of the Agreement in relation to a loss paid under a policy underwritten by Defendants that is alleged to not be in conformance with the underwriting guidelines of the Agreement." (Doc. 24, p. 1, ¶ 2). Plaintiff alleges that under the Agreement, Defendant AM Skier was not authorized to submit to Plaintiff any insurance application "for any class of risk not specified in the Underwriting Requirements." Further, Plaintiff avers that the "Underwriting Requirements, which Defendant[] possessed, delineated unacceptable risks for hired auto-coverage and employer's non-owned liability coverage under a commercial auto policy, ' including restaurant/pizza/fast-food delivery.'"

Plaintiff also alleges that Defendant Latsch improperly, and without its knowledge, annually provided a commercial insurance policy from May 25, 2007, through May 25, 2011, to Settlers Inn, Ltd. ("Settlers Inn"), and that Settlers Inn was within the prohibited category of "restaurant/pizza/fast-food delivery" business pursuant to the Underwriting Requirements. Plaintiff avers that Defendant Latsch incorrectly represented to Settlers Inn that its policy had hired auto-coverage and employer's non-owned liability coverage. Plaintiff then avers that on May 11, 2011, Colleen Stevens, an employee of Settlers Inn, during her scope employment, was involved in a motor vehicle accident with Joseph Hussey in Wayne County, PA. Since Defendants represented to Plaintiff that the policies they issued to Settlers Inn had hired auto-coverage and employer's non-owned liability coverage, Plaintiff settled Hussey's claims against Settlers Inn and Stevens for $122, 500.00. Plaintiff also states that it incurred attorney's fees and costs in the amount of $21, 128.00 related to Hussey's claim.

Additionally, Plaintiff alleges that the Agreement it had with AM Skier had an Indemnification Clause in Article X(B), which provided that AM Skier would indemnify, defend, and hold Plaintiff harmless for all losses that Plaintiff sustained due to AM Skier's negligence, wrongful acts, errors or omissions, or due to AM Skier's failure to comply with the provisions of the Agreement or the Underwriting Requirements. Pursuant to this Indemnification Clause, Plaintiff tendered a demand for indemnity related to Hussey's claim and Defendants refused to pay Plaintiff. (See ¶'s 10-33 of the Complaint, Doc. 1).[2]

On June 25, 2013, Defendants jointly filed a Motion to Dismiss Plaintiff's Complaint. (Doc. 9). On March 5, 2014, the Court granted, in part, and denied, in part, Defendants' Motion. (Docs. 17 & 18). Specifically, the Court denied Defendants' Motion to Dismiss Count II of Plaintiff's Complaint (Plaintiff's Equitable Subrogation claim), and the Court granted Defendants' Motion with respect to Count III (Plaintiff's Fraud claim) on the basis of the "gist of the action" doctrine and dismissed this claim with prejudice. Thus, Plaintiff is now proceeding on its Count I (Breach of Contract claim), and Count II (Equitable Subrogation claim).

On March 18, 2014, Defendants filed their Answer to the remaining Counts of Plaintiff's Complaint with Affirmative Defenses, and Defendant/Counterclaim Plaintiff AM Skier filed a Counterclaim against Plaintiff/Counterclaim Defendant United. (Doc. 21 & Doc. 21, ¶'s 51-56, respectively).[3] Basically, AM Skier asserted a Counterclaim for contractual indemnification against Plaintiff United under Article X(A) of the Agreement.

On March 31, 2014, Plaintiff filed a Motion to Dismiss the Counterclaim of Defendant AM Skier under Fed.R.Civ.P. 12(b)(6). (Doc. 24). Plaintiff United's Motion to Dismiss the Counterclaim of Defendant AM Skier was ripe for review.

On April 24, 2014, the Court issued a Memorandum and Order and granted Plaintiff United's Motion to Dismiss Defendant AM Skier's Counterclaim.[4] (Docs. 31 & 32). The Court also found it would be futile and prejudicial to Plaintiff United to grant Defendant AM Skier leave to amend its Counterclaim. Thus, the Court dismissed Defendant AM Skier's Counterclaim against Plaintiff United with prejudice. See Phillips v. County of Allegheny, 515 F.3d 224, 245 (3d Cir.2008(("If a complaint is subject to a Rule 12(b)(6) dismissal, a district court must permit a curative amendment unless such an amendment would be inequitable or futile.")(citation omitted).

On April 28, 2014, Defendant AM Skier filed a Motion for Reconsideration of the Court's Doc. 32 Order only insofar as the Court dismissed its Counterclaim with prejudice. (Doc. 34). Defendant AM Skier seeks the Court to allow it to amend its Counterclaim against Plaintiff United. Defendant AM Skier states that it will request as damages from Plaintiff the expenses and attorney's fees it incurs as a result of the claims brought by the third parties, namely, the Hussey claim, and not based only on the claims between it and Plaintiff under the Agreement. Plaintiff United filed its Response to Defendant AM Skier's Motion for Reconsideration on May 5, 2014, and correctly pointed out that Defendant AM Skier failed to submit its proposed Amended Counterclaim. (Doc. 35). Defendant AM Skier filed its reply brief in support of its Motion for Reconsideration on May 12, 2014, with an attached Exhibit, namely, its proposed Amended Counterclaim against Plaintiff United.[5] (Docs. 40 & 40-1).

II. Discussion.

The Court stated in DiFrancesco v. Aramark Corp., 2006 WL 1118096 ...


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