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Emerald Town Car of Pearl River, LLC v. Philadelphia Indemnity Insurance Co.

United States District Court, S.D. New York

April 12, 2017


          OPINION & ORDER

          NELSON S. ROMAN United States District Judge.

         Plaintiff 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.[1] For the following reasons, Philadelphia's motion to dismiss is DENIED and Capacity's motion is GRANTED.


         I. Facts Alleged [2]

         Plaintiff 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.)

         In 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. ¶¶ 26-27.)

         On 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. ¶¶ 28-29.)

         Nevertheless, 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.)

         Despite 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.)

         As a 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. ¶ 55.)

         Emerald filed for dissolution with the State of New York on February 9, 2015. (Id. ¶ 56.)

         II. The Policy (No. PHPK1138483)

         Plaintiff 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.

         III. Procedural History

         This 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.


         Under 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).

         In 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 ...

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