Garcia v. Certain Underwriters at Lloyd's, London
1:16-cv-00635
S.D. Ala.Apr 13, 2017Background
- Felipe Garcia owned a commercial warehouse insured by Certain Underwriters at Lloyd’s, London (Lloyd’s).
- A tornado damaged the warehouse on December 25, 2012; Garcia submitted a claim and Lloyd’s denied coverage in May 2013.
- Garcia filed suit in state court in November 2016 asserting breach of contract and bad faith; the case was removed to federal court.
- Lloyd’s moved to dismiss, arguing (1) the policy’s two‑year suit limitation bars the breach claim and (2) Alabama’s two‑year statute bars the bad faith claim; Lloyd’s later contended noncompliance with Rule 9(c).
- Garcia conceded the bad faith claim is time‑barred under Alabama law but argued the breach claim is timely under Alabama’s six‑year contract statute and that policy provisions shortening the period are void under Ala. Code § 6‑2‑15.
- The magistrate judge considered the policy and denial letter (central to the complaint) and recommended: dismiss bad faith claim; deny dismissal of breach claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bad faith claim is timely | Concedes it is untimely | Denial in May 2013 started limitations | Dismissed — bad faith barred by 2‑year rule |
| Whether breach of contract claim is time‑barred by policy's 2‑year suit clause | Six‑year contract statute governs; contractual shortening void under Ala. Code § 6‑2‑15 | Policy's 2‑year suit limitation bars suit filed in 2016 | Denied — contractual limitation void; 6‑year statute controls |
| Whether failure to plead compliance with policy conditions precedent warrants dismissal (Fed. R. Civ. P. 9(c)) | Implied compliance alleged; not raised in initial briefing | Raised for first time in reply: failure to allege compliance | Not considered — argument waived because raised first in reply |
| Whether documents outside the complaint may be considered on 12(b)(6) | Policy and denial are referenced and central | — | Court considered policy and denial as integral to the pleadings |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim to survive dismissal)
- Hackleburg Church of Christ v. Great Am. Ins. Cos., 675 So. 2d 1309 (Ala. Civ. App. 1995) (breach occurs when insurer refuses to pay; six‑year statute governs contract actions)
- Turner v. Westhampton Court, LLC, 903 So. 2d 82 (Ala. 2004) (contractual shortening of statutory limitation period is void under Ala. Code § 6‑2‑15)
- Shoreline Towers Condominium Owners Ass’n v. Zurich Am. Ins. Co., 196 F. Supp. 2d 1210 (S.D. Ala. 2002) (Alabama law: bad faith claims subject to a two‑year limitations period)