United States District Court, S.D. New York
OPINION & ORDER
S. ROMAN United States District Judge.
Emerald Town Car of Pearl River, LLC ("Emerald" or
the insured) brings this action against its insurance
provider, Defendant Philadelphia Indemnity Insurance Company
("Philadelphia" or the insurer), and its insurance
broker, Defendant Capacity Coverage Company of New Jersey,
Inc. ("Capacity" or the broker), for an alleged
premature cancellation of a business automobile insurance
policy covering Emerald's car service business and the
ensuing shutdown of that business allegedly caused by the
cancellation. Defendants have each submitted motions pursuant
to Federal Rule of Civil Procedure 12(b)(6) to dismiss
Plaintiffs allegations for failure to state a claim upon
which relief may be granted. For the following reasons,
Philadelphia's motion to dismiss is DENIED and
Capacity's motion is GRANTED.
Facts Alleged 
Emerald was a limited-liability company based in New York
between December 16, 1999 and February 9, 2015 operating a
“for-hire car service” with approximately eleven
drivers on staff. (Am. Compl. ¶¶ 1, 13.) As part of
Emerald's operations, it was required to have insurance
coverage for its fleet of approximately nine vehicles.
(Id. ¶¶ 13-14.) Defendant Philadelphia is
alleged to be a Pennsylvania corporation that provides
insurance, and Defendant Capacity is alleged to be a New
Jersey corporation operating as an insurance broker.
(Id. ¶¶ 2, 6, 15, 22.) Emerald was a
client of Capacity and utilized its brokerage and policy
services to communicate with Emerald's insurer,
Philadelphia. (Id. ¶¶ 15-16.)
February 2014, the parties entered into negotiations for
insurance coverage that would indemnify Emerald and its
customers in the event of loss due to bodily injury or
property damage. (Id. ¶ 17.) Defendants
acknowledged Emerald's insurance needs and agreed to
provide adequate coverage in that regard, and Emerald paid
for such coverage. (Id. ¶¶ 18-19.) As a
result, Defendants provided Emerald with a one-year term
policy covering its business property and operations
effective from March 1, 2013 through March 1, 2014.
(Id. ¶¶ 19, 22.) In March, a renewal
policy (No. PHPK1138483) for the next year was issued by
Philadelphia through Capacity effective between March 1, 2014
to March 1, 2015. (Id. ¶ 23.) Pursuant to the
“agreement” between Emerald and Defendants,
Emerald sent its premium payment directly to Philadelphia,
while Capacity handled the other aspects of the policy, such
as submitting and receiving notices. (Id.
November 13, 2014, Philadelphia allegedly mailed a notice of
cancellation for nonpayment of the policy premium.
(Id. ¶¶ 28-29.) The notice stated $1,
653.80 was overdue and that cancellation would be avoided if
the overdue premium was paid within fifteen days of November
13. (Id. ¶¶ 30-31.) Otherwise, the policy
would be cancelled on December 2, 2014. (Id.
on December 1, Emerald received correspondence directly from
Philadelphia indicating $3, 496.04 was due on the policy by
December 21. (Id. ¶ 34.) Emerald confirmed the
amount due with a Philadelphia representative by phone who
also confirmed it was not due until December 21.
(Id. ¶ 35.) Similarly, on December 9,
Defendants reported to the New York State Department of Motor
Vehicles that the policy was effective until December 29, as
confirmed by the agency's records from December 10, 2014.
(Id. ¶¶ 37-38.)
these representations, on December 15, Philadelphia informed
Emerald that the policy had been cancelled on December 2.
(Id. ¶¶ 39-40.) That day, Capacity
informed Emerald via email that the cancellation occurred
when the $1, 653.80 was not received prior to December 1.
(Id. ¶ 41.) Philadelphia confirmed the
cancellation with Emerald by telephone later that afternoon.
(Id. ¶ 42.) Capacity confirmed with Emerald the
reason for the cancellation on December 17 and provided
Emerald with a copy of the November 13 notice of potential
cancellation, which Emerald had not previously received.
(Id. ¶¶ 33, 44.) Capacity also relayed to
Emerald that Philadelphia had decided not to reinstate the
policy. (Id. ¶ 46.) Emerald asked Capacity to
find replacement insurance. (Id. ¶ 47.)
result of Capacity's and Philadelphia's statements to
Emerald, believing it no longer had business automobile
insurance, Emerald was forced to shut down its operations,
transfer its clients to other car service providers,
liquidate its fleet of automobiles (beginning on December 28,
2014 and completed by January 4, 2015), terminate its
employees, and shutter its business office. (Id.
¶¶ 49-54.) On January 14, 2015, after Emerald was
out of business, Capacity informed Emerald that Philadelphia
had reinstated the insurance policy. (Id. ¶
filed for dissolution with the State of New York on February
9, 2015. (Id. ¶ 56.)
The Policy (No. PHPK1138483)
did not attach a copy of the policy to its complaint, though
it specifically references it throughout its allegations.
Defendant Capacity has provided a copy of the policy with its
motion papers. (See Scher Decl., Ex. B
(“Policy”).) The Policy's relevant provisions
support Plaintiff's allegations that the term of the
policy was for March 1, 2014 through March 1, 2015, and that
Emerald was the responsible party for making the premium
payments. Additionally, the cancellation provision allows
Philadelphia to cancel the policy, as relevant here, 15 days
after providing notice of cancellation for non-payment. The
Policy indicates that the insurer would mail the insured a
copy of the notice at its last known address.
action was removed from New York state court to this Court on
February 12, 2016. (See Notice of Removal, ECF No.
1.) On May 16, 2016, Plaintiff filed an amended complaint,
which is the operative complaint in this action. (Am. Compl.,
ECF No. 17.) Defendants' respective motions to dismiss
were fully briefed as of August 11, 2016.
ON A MOTION TO DISMISS
Rule 12(b)(6), the inquiry is whether the complaint
“contain[s] sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)); accord Hayden v.
Paterson, 594 F.3d 150, 160 (2d Cir. 2010). “While
legal conclusions can provide the framework of a complaint,
they must be supported by factual allegations.”
Id. at 679. To survive a motion to dismiss, a
complaint must supply “factual allegations sufficient
‘to raise a right to relief above the speculative
level.'” ATSI Commc'ns, Inc. v. Shaar Fund,
Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting
Twombly, 550 U.S. at 555). The Court must take all
material factual allegations as true and draw reasonable
inferences in the non-moving party's favor, but the Court
is “‘not bound to accept as true a legal
conclusion couched as a factual allegation, '” or
to credit “mere conclusory statements” or
“[t]hreadbare recitals of the elements of a cause of
action.” Iqbal, 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 555).
determining whether a complaint states a plausible claim for
relief, a district court must consider the context and
“draw on its judicial experience and common
sense.” Id. at 662. “Plausibility . . .
depends on a host of considerations: the full factual picture
presented by the complaint, the particular cause of action
and its elements, and the existence of alternative
explanations so obvious that they render plaintiff's
inferences unreasonable.” Fink v. Time Warner
Cable, 714 F.3d 739, 741 (2d Cir. 2013) (citation
omitted). A claim is facially plausible when the ...