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ABC Capital Investments, LLC v. Nationwide Rentsure

United States District Court, E.D. Pennsylvania

December 17, 2019



          JOHN R. PADOVA, J.

         Plaintiff ABC Capital Investments, LLC (“ABC”), a property management company, initiated this action against Defendants Nationwide Rentsure Rent Protection Association, Inc. (“Rentsure”) and Nationwide Eviction, LLC, after Defendants allegedly breached contracts designed to protect ABC against the risks posed by tenants who failed to make rent payments. Rentsure thereafter filed a Third-Party Complaint against Nationwide Court Systems, LLC (“NCS”), a company with whom Rentsure had contracted to assist in the administration of services to ABC.

         Rentsure has filed a Motion for Partial Judgment on the Pleadings, asking that we enter judgment in its favor on four of the five Counts of ABC's Complaint (Counts II-V), as well as on ABC's claims for certain damages. Nationwide Eviction and NCS have joined in Rentsure's Motion, with Nationwide Eviction asking that we enter judgment in its favor on the same claims in the Complaint on which Rentsure seeks judgment and with NCS asking that judgment be entered in its favor on Rentsure's claims against it in the Third-Party Complaint. For the following reasons, we grant Rentsure's Motion in part and deny it in part, grant Nationwide Eviction the same essential relief that we grant to Rentsure, and deny NCS's request for relief in its entirety.

         I. BACKGROUND

         The Complaint alleges that ABC “manage[s] properties, including the renting out of properties and the subsequent collection of rent from tenants on behalf of their Clients.” (Compl. ¶ 1.) Both Rentsure and Nationwide Eviction are Colorado companies that are licensed to sell and hold insurance policies, and the two companies “acted in concert to provide insurance coverage for . . . ABC.” (Id. ¶¶ 2-4.) The relationship among the three companies began in the Fall of 2016, when Rentsure and Nationwide Eviction began marketing their insurance products to ABC in Pennsylvania. (Id. ¶ 10.) In or around January 1, 2017, ABC and Defendants entered into a series of insurance policies for properties managed by ABC.[1] (Id. ¶ 9.) “The purpose of [the policies] was to insure and protect [ABC] against tenants failing to pay rent or failing to vacate properties after defaulting on rent or the expiration of their lease.” (Id.) The insurance “covered three months of rent prior to eviction and three months after eviction to cover the period that tenants failed to pay rent and the time it takes to find new renters.” (Id. ¶ 11.)

         Pursuant to the parties' agreements, ABC “began entering properties into insurance agreements with Defendants through a web-based portal controlled by [Rentsure and Nationwide Eviction].” (Id. ¶ 12.) The insurance agreements were referred to as “Certificates of Benefit.” (Id.) According to Defendants' representative, Sky Mikesell, a Certificate of Benefit would be issued “once the initial invoice is paid for each batch of properties put in [to the portal].” (Id. ¶ 12 and Ex. B.)

         “Shortly after entering into these policies, [ABC] began hav[ing] trouble contacting [Rentsure and Nationwide Eviction] . . . through . . . Mikesell.” (Id. ¶ 13.) Defendants “failed to provide hardcopies of the insurance policies to [ABC], ” “failed to properly provide receipts and confirmations of payments, ” and “began to mention claim requirements and restrictions that had previously not been discussed nor been made known to [ABC].” (Id.) When ABC questioned Defendants' requirement that a walk-through of a property be done before a rent payment could be made, Mikesell responded:

The move-in inspection requirement has been part of the certificate of benefit since the very beginning. All requirements of the program are in the certificate of benefit. I have been in discussions with the insurer for a few months with suggested adjustments to the certificate of benefit but as of now it remains the same.
If you would like to set up a time to review the cer[t]ificate of benefit again by phone I would do that with you t[o] make sure this is still a fit for you and your company.

(Id. Ex. D.)

         In spite of ABC's payment of “tens and tens of thousands of dollars of premium, ” Defendants “began to deny a number of claims put forth by [ABC] for properties that were insured under policies that had been properly paid for, . . . citing requirements and restrictions that had never previously been mentioned or brought to [ABC's] knowledge.” (Id. ¶¶ 14-15.) Defendants “then started ignoring other claims [that ABC] made through their web portal.” (Id. ¶ 14.)

         On July 31, 2017, Defendants sent ABC a “Notice of Pending Membership Termination, ” which “notified [ABC] that the Membership protecting . . . properties [listed in the Notice] will be terminated effective 8/15/17” based on ABC's “Failure to Pay Membership Dues.” (Id. Ex. E, at 5-10.) According to the Complaint, on August 16, 2017, Rentsure and Nationwide Eviction sent a termination notice to ABC. (Id. ¶ 16.)

         The Complaint contains five counts against both Rentsure and Nationwide Eviction: (1) Breach of Contract (Count I), (2) Unjust Enrichment (Count II), (3) Bad Faith (Count III), (4) Civil Conversion (Count IV), and (5) Fraud (Count V). ABC seeks damages in excess of $125, 000. In their Answers, Rentsure and Nationwide Eviction generally deny the allegations of the Complaint. Rentsure's Third-Party Complaint against NCS contains twelve counts, including claim of negligence, breach of contract, implied indemnity, equitable indemnity, express indemnity, contribution, declaratory relief, duty to defend, unjust enrichment, conversion, and accounting.


         Under Federal Rule of Civil Procedure 12(c), “[a]fter the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). Rule 12(c) motions based on the theory that the plaintiff has failed to state a claim are reviewed under the same pleading standards that apply to motions to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Revell v. Port Auth., 598 F.3d 128, 134 (3d Cir. 2010) (citation omitted); Spruill v. Gillis, 372 F.3d 218, 223 n.2 (3d Cir. 2004). When considering a motion to dismiss pursuant to Rule 12(b)(6), we “consider only the complaint, exhibits attached to the complaint, [and] matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents.”[2]Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010) (citing Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)). We take the factual allegations of the complaint as true and draw all reasonable inferences in favor of the plaintiff. DelRio-Mocci v. Connolly Props., Inc., 672 F.3d 241, 245 (3d Cir. 2012) (citing Warren Gen. ...

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