United States District Court, E.D. Pennsylvania
Paul Fire and Marine Insurance Company (“St.
Paul”) insured companies against asbestos claims in the
1980s. R&Q Reinsurance Company (“R&Q”)
reinsured St. Paul's insurance policies. R&Q sued St.
Paul for declaratory judgment, alleging that St. Paul's
egregiously late notice absolved R&Q of payment under the
policies and that one of the reinsurance contractual
relationships was never legally formed. St. Paul
counterclaimed, alleging it did not receive payments from
R&Q under the reinsurance policies. Presently before the
Court is R&Q's motion for judgment on the pleadings
in which R&Q argues that St. Paul did not adequately
plead the formation of the contract in its counterclaims. The
Court disagrees with R&Q's argument and will deny the
Paul insures the Walter E. Campbell Company, Inc. against
thousands of asbestos-related injury lawsuits. (Countercls.
¶ 8.) In December 1979, St. Paul and R&Q (through
INA Reinsurance Company, R&Q's predecessor in
interest) entered into the Facultative Reinsurance Binding
Authority Agreement (“BAA”), which established a
framework for R&Q to reinsure St. Paul's insurance
policies with Campbell. (Am. Answer ¶ 6.) Pursuant to
the BAA, R&Q and St. Paul would enter into facultative
reinsurance contracts (“FRC”) that reinsured St.
Paul's Campbell policies for discrete date ranges.
(Id. at 8.) Facultative reinsurance contracts
reinsure liability “arising under a particular policy,
” as opposed to treaty reinsurance contracts, which
cover an entire type of risk from a particular insurance
company. (Countercls. ¶ 11.)
covered “commercial umbrella liability” insurance
policies issued by St. Paul. (Compl. Ex. A, at 2.) The BAA
provided that each cession “shall attach and become
effective concurrently with the [St. Paul's]
policy.” (Id.) The BAA did not cover certain
classes of insurance policies, including “[a]ny policy
covering any risks not reported within 90 days of its
effective date.” (Id.) St. Paul would inform
R&Q of a covered policy with a “cession statement,
” which contained policy limits, effective dates, and
other information pertinent to the reinsurance of the policy.
(Id. ¶ 3.) R&Q in turn had fifteen days
from receipt of the cession statement to terminate coverage
of that individual policy. (Id.)
motion for judgment on the pleadings concerns one facultative
reinsurance contract, FRC No. 29550, and an underlying
Campbell policy, No. 581XD4769 (“*4769”). (Mem.
Law Supp. Mot. J. on Pleadings 2.) St. Paul pleaded the
existence of FRC No. 29550 and alleged that it reinsured the
liability of *4769. (Countercls. ¶ 13.) St. Paul also
pleaded the existence of a second pair of contracts, FRC No.
33366 and another Campbell policy, No. 581XD7801
(“*7801”). (Id. ¶¶ 12-13) But,
St. Paul did not plead the existence of a cession statement
connecting *4769 to FRC No. 29550, nor did St. Paul plead the
existence of a cession statement connecting FRC No. 33366 to
STANDARD OF REVIEW
the close of pleadings but without delaying trial, “a
party may move for judgment on the pleadings.”
Fed.R.Civ.P. 12(c). Failure to state a claim upon which
relief can be granted may be raised in a motion for judgment
on the pleadings. Fed.R.Civ.P. 12(h)(2)(B). “When a
Rule 12(c) motion alleges [Counterclaim Plaintiff's]
failure to state a claim upon which relief can be granted as
here, [courts] analyze the motion under the same standard as
a Rule 12(b)(6) motion to dismiss.” Ober v.
Brown, 105 F. App'x 345, 346 (3d Cir. 2004) (citing
Turbe v. Gov't of V.I., 938 F.2d 427, 428 (3d
Cir. 1991)). “There is no material difference in the
applicable legal standards” between a Rule 12(c) motion
for failure to state a claim and a Rule 12(b)(6) motion to
dismiss. Spruill v. Gillis, 372 F.2d 218, 223 n.2
(3d Cir. 2004).
reviewing a motion for judgment on the pleadings, a district
court must accept as true all well-pleaded allegations and
draw all reasonable inferences in favor of the nonmoving
party. See Powell v. Weiss, 757 F.3d 338, 341 (3d
Cir. 2014). A court need not, however, credit “bald
assertions” or “legal conclusions” when
deciding a motion for judgment on the pleadings. See
Anspach ex rel. Anspach v. City of Phila., Dep't of Pub.
Health, 503 F.3d 256, 260 (3d Cir. 2007); see also
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
allegations [in the counterclaims] must be enough to raise a
right to relief above the speculative level.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To
survive a motion for judgment on the pleadings, the
counterclaims must include “enough facts to state a
claim to relief that is plausible on its face.” See
Id. at 570. Although the federal rules impose no
probability requirement at the pleading stage, the
Counterclaim Plaintiff must present “enough facts to
raise a reasonable expectation that discovery will reveal
evidence of the necessary element[s]” of a cause of
action. Phillips v. Cnty. of Allegheny, 515 F.3d
224, 234 (3d Cir. 2008).“A claim has facial
plausibility when the [Counterclaim Plaintiff] pleads factual
content that allows the court to draw the reasonable
inference that the [Counterclaim Defendant] is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678.
Simply reciting the elements will not suffice. Id.
(holding that pleading labels and conclusions without further
factual enhancement will not survive motion to dismiss);
see also Phillips, 515 F.3d at 233.
Third Circuit Court of Appeals has directed district courts
to conduct a two-part analysis when faced with a motion for
judgment on the pleadings. First, the legal elements and
factual allegations of the claim should be separated, with
the well-pleaded facts accepted as true but the legal
conclusions disregarded. See Fowler v. UPMC
Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). Second,
the court must make a commonsense determination of whether
the facts alleged in the counterclaims are sufficient to show
a plausible claim for relief. Id. at 211. If the
court can only infer the mere possibility of misconduct, the
counterclaims must be dismissed because it has alleged-but
has failed to show-that the pleader is entitled to relief.
contends that St. Paul did not plead the existence of a
contractual relationship between FRC No. 29550 and *4769
because St. Paul did not plead the existence of a cession
statement connecting the two contracts. In order to state a
claim for breach of contract, the plaintiff must first allege
“the existence of a contract, including its essential
terms.” Ware v. Rodale Press, Inc., 322 F.3d
218, 225 (3d Cir. 2003) (quoting CoreStates Bank, N.A. v.
Cutillo, 723 A.2d 1053, 1058 (Pa. Super. Ct.
1999)). However, “[a counter claimant] is
not required to attach the subject contract to the
[counterclaims] or plead its terms verbatim in order to state
a claim.” Jones v. Select Portfolio Servicing,
Inc., 2008 U.S. Dist. LEXIS 33284, at *10 (E.D. Pa. Apr.
Paul adequately pleaded the existence of a contractual
relationship between FRC No. 29550 and *4769 despite not
attaching either contract to their counterclaims. Attached to
R&Q's complaint are the only documents attached to
any of the pleadings: the BAA, FRC No. 33366, and the cession
statement linking FRC No. 33366 with *7801. (Compl. Ex. A.)
St. Paul asserted that “[FRC No. 29550] reinsures
liability under [*4769]” and that “[t]he limits
of [FRC No. 29550] are identical to the limits of [FRC No.
33366].” (Countercls. ¶ 13.) ...