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TN Metro Holdings I, LLC v. Commonwealth Ins. Co.

United States District Court, S.D. New York

September 30, 2014

TN METRO HOLDINGS I, LLC, et. al, Plaintiffs,
v.
COMMONWEALTH INSURANCE COMPANY, Defendant

For Plaintiff: Pincus David Carlebach, Esq., Law Offices of David Carlebach, New York, NY.

For Defendant: Dawn Marie Brehony, Esq., Theodore Alred Mottola, Esq., Chauson Miller, PC, New York, NY.

Page 406

ORDER

KENNETH M. KARAS, UNITED STATES DISTRICT JUDGE.

Plaintiffs TN Metro Holdings I, LLC; TN Metro Holdings III, LLC; TN Metro Holdings IV, LLC; TN Metro Holdings V, LLC; TN Metro Holdings VI, LLC; TN Metro Holdings VII, LLC; TN Metro Holdings VIII, LLC; TN Metro Holdings IX, LLC; and TN Metro Holdings X, LLC, (collectively " Plaintiffs" or " TN Metro" ), by their counsel, have filed this Action against Commonwealth Insurance Company (" Commonwealth" ) alleging breach of contract and unjust enrichment, and have now filed a Motion To Amend their Complaint to allege an additional claim of fraud. For the reasons stated below, Plaintiffs' Motion is denied.

I. BACKGROUND

A. Factual Background[1]

Plaintiffs are nine Tennessee Limited Liability Companies that own real property in Tennessee (the " Tennessee Properties" ) and that share a principal place of business in New Rochelle, New York. ( See Am. Compl. ¶ 1, 5-10.) On January 24, 2007, Plaintiffs signed an Interest of Purchase and Sale Agreement with Green Realty Development Company, LLC, (" Green Realty" ) to purchase all of the properties at issue. ( Id. ¶ 12.) This purchase occurred on April 24, 2007, but the transaction took " took two days to close and continued from April 24, 2007 to April 25, 2007." ( Id.) Plaintiffs allege that, by virtue

Page 407

of the sale, they became assignees and beneficiaries of insurance policy US6703 issued by Commonwealth (the " Policy" ). ( Id. ¶ ¶ 14, 37.) Section 8.1 of the Sales Agreement provides that:

If [TN Metro] has elected not to terminate this Agreement in the event of a damage to the Real Properties as set forth in this paragraph, [TN Metro] shall proceed to the closing, and shall pay the full purchase price less the amount of any deductible under [Green Realty's] insurance policy, and [Green Realty] shall assign to [TN Metro] and [TN Metro] shall have a right to make the claim for and to retain any casualty insurance proceeds under the casualty insurance policies in effect with respect to the Real Properties on account of such damage or destruction.

( Id. ¶ 38.) On April 24, 2007, while the transaction was closing, the properties at issue were damaged by a severe hail storm. ( Id. ¶ 13.) On May 9, 2007, the princip[al] of Green Realty " was hit by a car and incapacitated in a comatose state for several months." ( Id. ¶ 18.) As a result of this accident, " Plaintiffs were unable to obtain the necessary assignment, power of attorney, or authority to submit claims to the insurance carriers . . . until November 2007." ( Id. ¶ 19.) The TN Metro entities began to submit their claims to Commonwealth on November 15, 2007, ( id.), and included the Sale Agreement, which described the transfer of Green Realty's stock and membership interest in the insured properties, ( id. ¶ 21).

After Plaintiffs submitted their claims, Commonwealth's " representatives repeatedly advised Plaintiffs that the compensation checks were being processed." ( Id. ¶ 22.) Indeed, according to Plaintiffs, Green Realty gave approval to Commonwealth to send payments to Plaintiffs' counsel. ( Id.) Follow-up telephone inquiries, however, produced no checks. ( Id.) Instead, Commonwealth questioned the condition of the Tennessee Properties at the time of sale, ( id. ¶ 23), and suggested that the damage might have been caused by additional storms between the sale and the filing of the insurance claims, ( id. ¶ 25). According to Plaintiffs, the delays in compensation were problematic because they could not repair the damage and therefore rent out the units. ( Id. ¶ 24.) This, in turn, prevented Plaintiffs from making their debt payments. ( Id.) On June 4, 2008, " approximately a year and a half after submission of the claims," Defendant's agent sent Green Realty a letter, stating that " Defendant may not approve the claim as it is still under investigation," and making clear that " only damages incurred to the [properties at issue] prior to April 25, 2007 could potentially be covered" under the policy. ( Id. ¶ 27.)

In an October 30, 2008 report, Defendant's adjuster made the following notes: " No impact on sale? Insured made whole by the sale? Confirm no assignment? Any financial loss?" ( Id. ¶ 34.) According to Plaintiffs, these notes " illustrate [Commonwealth's] intent to find a theory for nonpayment of the claim because the impact of the sale, whether the insured was made whole by the sale, and whether any financial loss was incurred by Plaintiff[s] is entirely irrelevant to Defendant's contractual duties to pay for the damaged Properties." ( Id. ΒΆ 35) In particular, Plaintiffs contend that the adjuster's notes " reveal ...


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