DeFeo v. Blackboard Insurance Company
4:19-cv-01583
D.S.C.Jul 16, 2019Background
- Plaintiffs James DeFeo and Coastal Elite, LLC (Wok on the Beach) purchased a business insurance policy from Blackboard Insurance for Aug 20, 2018–Aug 20, 2019.
- Plaintiffs closed the restaurant for a mandatory evacuation before Hurricane Florence, lost income, and submitted a claim on Sept 26, 2018; Blackboard denied the claim on Oct 4, 2018.
- Plaintiffs sued Blackboard and York Risk Services Group, Inc., alleging breach of contract and bad faith refusal to pay benefits; Blackboard removed the case to federal court.
- York moved to dismiss under Rule 12(b)(6) the breach of contract claim asserted against it, arguing York was not a party to the insurance contract.
- Plaintiffs sought leave to amend to add negligence claims against York in response, but did not file a motion or proposed amended complaint.
- The court considered the insurance policy (attached to the record) and dismissed the breach of contract claim against York with prejudice and denied leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether York can be liable for breach of an insurance contract | York participated in claim handling and thus can be held to have breached the policy | York was not a party to the insurance contract and so cannot be sued for breach | York cannot be sued for breach; dismissal with prejudice |
| Whether leave to amend should be granted to add negligence claims against York | Plaintiffs asked to amend to add negligence and asserted discovery could resolve duty issues | York opposed dismissal; argued procedural defects and lack of contract privity | Leave to amend denied because no motion or proposed amended complaint was filed |
| Whether the court may consider the insurance policy attachment on Rule 12(b)(6) review | N/A (policy is integral to the claim) | N/A (defendants relied on the policy to show York not a contracting party) | Court considered the policy as integral and relied on it to resolve the motion |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must state a plausible claim)
- Francis v. Giacomelli, 588 F.3d 186 (Rule 12(b)(6) challenges legal sufficiency of complaint)
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (courts may consider documents incorporated by reference on 12(b)(6))
- Murphy v. Jefferson Pilot Commc’ns. Co., 657 F. Supp. 2d 683 (insurance policy is contract between insurer and insured)
- Coakley v. Horace Mann Ins. Co., 656 S.E.2d 17 (South Carolina: contractual privity required for breach of contract claim)
- Hennes v. Shaw, 725 S.E.2d 501 (elements of breach of contract under South Carolina law)
- Cozzarelli v. Inspire Pharms., Inc., 549 F.3d 618 (leave to amend denied where no motion or proposed amended complaint filed)