Opinion
CASE NO. 09-20610-CIV-KING
04-25-2011
AERO TECHNOLOGIES, LLC, a Florida Corporation, Plaintiff, v. LOCKTON COMPANIES INTERNATIONAL, LIMITED, an International Corporation, LLOYD'S OF LONDON, an International Entity a.k.a. Society of Lloyd's, a.k.a. Corporation of Lloyd's, AEROCALIFORNIA, S.A. DE C.V., SEGUROS INBURSA, S.A., et al., Defendants.
cc: Counsel for Plaintiff Edward Randall Nicklaus Nicklaus & Hyatt 4651 Ponce de Leon Blvd., Suite 200 Coral Gables, FL 33136 305.460.9888 edwardn@nicklauslaw.com Nicholas Frank Van Valen Nicklaus & Hyatt 4651 Ponce De Leon Boulevard Suite 200 Coral Gables, FL 33146 305-460-9888 Fax: 460-9889 Email: nicholasv@nicklauslaw.com Dale Jay Spurr Nicklaus & Hyatt 4651 Ponce De Leon Boulevard Suite 200 Coral Gables, FL 33146 Email: DaleS@nicklauslaw.com Counsel for Defendants Lyle Eric Shapiro Richman Greer, P.A. 201 Biscayne Blvd., Suite 1000 Miami, FL 33131 305.373.4030 lshapiro@richmangreer.com Melissa Fernandez Richman Greer Weil Brumbaugh Mirabito & Christensen 201 S Biscayne Boulevard Suite 1000 Miami, FL 33131 305-373-4000 Fax: 373-4099 Email: mfemandez@richmangreer.com
ORDER OF DISMISSAL
THIS CAUSE comes before the Court upon Defendant Lockton Company International Limited's ("Lockton") Motion to Dismiss (DE #22), filed May 29, 2009. The Court is fully briefed on the matter. The Court initially referred the Motion to Dimiss to Magistrate Judge Ted E. Bandstra (DE #22), who issued a Report and Recommendation (DE #60) on October 16, 2009, recommending the case be dismissed as to all defendants for improper venue. The Court adopted the R&R and dismissed Plaintiff's claims against all defendants on November 25, 2009 on the sole ground that venue was improper. (DE #66). Plaintiff appealed, and on January 26, 2011, the United States Court of Appeals for the Eleventh Circuit reversed this Court's dismissal for improper venue as to Defendant Lockton only. (DE #78). Defendant's Motion to Dismiss (DE #22) raised additional arguments not considered by this Court prior to the dismissal for improper venue, which are now ripe for determination.
Plaintiff Aero Technologies, LLC filed its Response to Defendant's Motion to Dismiss (DE #31) on June 25, 2009 and Defendant subsequently issued a Reply to Plaintiff's Response (DE# 41) on July 10, 2009.
I. FACTS
This is an insurance dispute. Plaintiff Aero Technologies, LLC is the owner of nine jet engines that were confiscated by the Mexican government in 2008. Plaintiff leased the engines to a Mexican Airline, Aero California, S.A. ("AeroCal"), and the engines were in AeroCal's possession when they were confiscated. Mexican authorities have refused to provide any information to Plaintiff regarding if or when the engines will be returned, and have denied Plaintiff access to the engines for preventative maintenance or the upkeep of federally-required maintenance logs. The confiscation has thus rendered the engines a total loss to Plaintiff.
AeroCal was originally a defendant in this case (DE #15). The claims against Aerocal were dismissed upon the R&R of Magistrate Judge Ted E. Bandstra, and Plaintiff did not appeal the dismissal as to AeroCal. (DE #78).
The general terms of the lease agreement between Plaintiff and AeroCal required AeroCal to secure specified levels of insurance prior to delivery of the leased engines, which were valued collectively at $4,385,000.00. (DE #15-1). To that end, AeroCal bought two insurance policies, numbered 30003807 and 30003790, from Seguros Inbursa, S.A. ("Inbursa"). Id. The policies "cover[ed] the insured's fleet of aircraft, including attached aircraft engines and aircraft engine spares." DE #15 at ¶9. Aerocal was listed as the insured on the Inbursa policies. (DE #15-1, 15-2). The policies covered "All Risks" and "War and Related Perils," including government confiscation. Id.
Inbursa subsequently secured reinsurance policies from Underwriters at Lloyd's ("Lloyd's") to cover its liability to AeroCal in the event of loss or damage to the leased engines. (DE #15 at ¶10-11). The reinsurance policies contained a "cut-through" provision, allowing the insured to collect recoverable benefits directly from the reinsurer in the event the primary insurer fails to pay. Id. ¶ 14. Defendant Lockton brokered the reinsurance contracts between Inbursa and Lloyd's. Id. ¶ 10. According to the Complaint, Lockton provided Plaintiff with six certificates of insurance evidencing issuance of the policies. Id. The certificates list Plaintiff as a "contract party (as Lessor"). Id.
The operative pleading that Defendant Lockton seeks to dismiss is the Second Amended Complaint. (DE #15). However, for the sake of brevity, the Second Amended Complaint will simply be referred to as the Complaint.
Plaintiff alleges that the Inbursa and Lloyd's "policies in question, with the certificates, cover the insureds including the Plaintiff as a contract party, for loss or damage under all-risks coverage and allied perils coverage, including governmental confiscation." Id. at ¶14. Plaintiff has not been compensated for the loss of the engines, despite repeated attempts to obtain acknowledgment of coverage and payment of benefits from defendants Inbursa, Lloyd's, and Lockton. Plaintiff has asserted claims against Defendant Lockton for breach of contract, breach of fiduciary duty, and negligence.
II. LEGAL STANDARD
For the purposes of a motion to dismiss, the factual allegations and inferences in the Plaintiff's Complaint must be accepted as true and construed in the light most favorable to the Plaintiff. Young Apartments, Inc. v. Town of Jupiter, 539 F.3d 1027, 1037 (11th Cir. 2008). A motion to dismiss does not test the merits of a case, but only requires that "the plaintiff's factual allegations, when assumed to be true, "must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).
However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Thus, courts determining the sufficiency of a complaint engage in a two-pronged analysis: "(1) eliminate any allegations in the complaint that are merely legal conclusions; and (2) where there are well-pleaded factual allegations, 'assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.'" Am. Dental Assoc. v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010) (quoting Iqbal, 129 S.Ct. at 1950). The complaint may be dismissed if the facts as pled do not state a claim to relief that is plausible on its face. Twombly, 550 U.S. at 570. More simply, dismissal is appropriate if the plaintiff has not "nudged [its] claims across the line from conceivable to plausible." Id.
III. ANALYSIS
Defendant Lockton moves to dismiss on the ground that Plaintiff has failed to state a claim upon which relief can be granted. More specifically, Defendant LCIL argues that Plaintiff has not adequately alleged its claims of breach of contract, breach of fiduciary duty, and negligence.
Lockton originally moved to dismiss on three grounds: lack of personal jurisdiction, insufficiency of service of process, and failure to state a claim upon which relief can be granted. (DE #22). The Court severed out Defendant's service of process and personal jurisdiction arguments (DE# 84), for which Plaintiff requested discovery and supplemental briefing. (DE #83). The Court now considers Defendant's Motion to Dismiss (DE #22) solely on the ground that Plaintiff has failed to state a claim upon which relief can be granted.
Counts III, IV, and V, respectively.
A. Count III: Breach of Contract
Plaintiff seeks to hold Lockton liable for the failure by Inbursa and Lloyd's to pay Plaintiff's claims under its insurance policies with Inbursa and Lloyd's. Specifically, Plaintiff claims: "Defendant Lockton, by virtue of Defendants Underwriters at Lloyd's and Inbursa's failure to pay under the policies is now the insurer for all losses claimed herein." (DE #15 ¶ 32). Plaintiff alleges that Lockton, the insurance broker, breached the insurance policies by failing to pay Plaintiff's claims. (DE #15 ¶ 31) ("Defendant Lockton breached the contract by failing to pay claims benefitting Plaintiff."). Defendant argues that as an insurance broker it has no ability or obligation to satisfy claims allegedly due under insurance policies underwritten by other parties. Defendant further argues that it was not a contracting party to the reinsurance policies and therefore can have no liability under them. Plaintiff did not address these arguments in its Response to Defendant's Motion to Dismiss (DE #31).
Insurance brokers are generally not liable for breach of the insurance contracts they broker. First Automotive Serv. Corp. v. First Colonial Ins. Co., Case No. 3:07-cv-682-J-32TEM, 2008 WL 816973, at *5 (M.D. Fla. 2008) ("An agent for a disclosed insurer is not liable to the insured on the insurance contract.") Under Florida law, an authorized agent acting for a disclosed principal may not be held personally liable to the other contracting party, in the absence of circumstances showing that personal responsibility was intended to be incurred. Richard Bertram, Inc. v. Sterling Bank & Trust, 820 So. 2d 963, 965 (Fla. 4th DCA 2002) ("The [agent]'s acts are the acts of the principal."). Further, "it is generally recognized that an agent acting within the course and scope of its agency relationship with a disclosed principal is not liable for the debts or obligations of the principal arising from contracts which the agent may negotiate or execute on behalf of such disclosed principal." Sussman v. First Fin. Title Co. of Fla., 793 So. 2d 1066, 1068 (Fla. 4th DCA 2001); see Phillip Schwartz, Inc. v. Gold Coast Graphics, Inc., 623 So. 2d 819, 820 (Fla. 4th DCA 1993) (finding principal is disclosed when the contracting party knows the identity of the principal). Plaintiff has not alleged that Lockton's principal, Lloyd's, was undisclosed. See DE #15. In addition, there are no allegations here that there was any express agreement that Lockton would be liable for breaches by Inbursa and Lloyd's. See Richard Bertram, Inc., 820 So. 2d at 965 (finding agent could not be held personally liable for breach of contract by principal in absence of express agreement to assume liability).
Accordingly, Lockton, as the insurance broker, can not be liable for breach of contract of the insurance policies issued by Inbursa and Lloyd's. See id.
B. Counts IV and V - Breach of Fiduciary Duty and Negligence
Plaintiff asserts claims for breach of fiduciary duty and negligence against Defendant Lockton for Lockton's failure to procure adequate levels of insurance. Lockton argues that Plaintiff has failed to meet pleading requirements and to satisfy a condition precedent applicable to suits by third-party beneficiaries to insurance policies. Plaintiff argues in opposition that the law regarding third-party beneficiaries is inapposite because Plaintiff is "the party in interest and an additional insured to the contracts of insurance." (DE #31 at 9).
As an initial matter, the Complaint alleges that Lockton only brokered the reinsurance policies with Lloyd's. (DE #15 ¶ 10). Nonetheless, Plaintiff claims in both Counts IV and V that Lockton is liable for "all losses recoverable under all policies of insurance issued by Underwriters at Lloyd's and Inbursa." Id. ¶¶ 37, 42. Because Lockton did not procure any insurance with Inbursa and did not agree to procure any insurance with Inbursa, Lockton may not be held liable for failure to procure adequate insurance under the Inbursa policies.
Secondly, Plaintiff is not "an additional insured" under the policies, as it claims. AeroCal is the sole party listed as the "insured" on the policies themselves. (DE #15-2, 15-3, 15-10). AeroCal is the sole party listed as the "insured" on six certificates of insurance issued by Lockton evidencing the procurement of the Lloyd's reinsurance policies. (DE #15- 4, 15-5, 15-6, 15-7, 15-8, 15-9). Plaintiff is mentioned as a "contracting party" in the certificates of insurance, but the "contract" that is referenced is the lease agreement between Plaintiff and AeroCal, not any of the insurance contracts. Id. (defining "contract" as "General Terms Aircraft Engine Lease Agreement dated as of 20th March 2007 between AERO CALIFORNIA S.A. DE C.V. (as Lessee) and AERO TECHNOLOGIES, LLC (as Lessor)"). Id. These terms are included in a section of the certificates defining terms to be used in an Airline Finance/Lease Agreement Endorsement ("the Endorsement"). Id. The Endorsement, in turn, provides that the insurer, Lloyd's, acknowledges the existence of the lease agreement, but "the Insured accepts responsibility for the Engine under the Lease Agreement." (DE #15-11). A separate Endorsement exists for each engine. Id. The "insured" is again listed as AeroCal in the Endorsements. Id. Nothing in the language of the policies, the certificates of insurance, or the Endorsements supports Plaintiff's position that it is an "additional insured" under the policies. At best, these documents explain Plaintiff's status as lessor of the insured engines and suggest that it is an intended third party beneficiary of the policies. Accordingly, the law applicable to third-party beneficiaries to insurance contracts is directly on point and controls here.
1. Pleading Requirements for Third-Party Beneficiaries
Third parties seeking to recover from an insurance broker for the failure to secure adequate insurance must meet certain pleading requirements. Specifically, the third party must allege that it is a third party beneficiary to both the insurance policy and the contract to procure insurance. Rihon v. Wilson, 415 So. 2d 94, 96 (Fla. 4th DCA 1982); Hamer v. Kahn, 404 So. 2d 847, 849-50 (holding plaintiff must allege third party beneficiary status to contract to procure insurance to bring direct action against insurance agent). Here, Plaintiff argues that, "Lockton's recognition of Plaintiff's [lease agreement] with [AeroCal] in its brokering of the policies and certificates of insurance at issue in this case is itself proof of Plaintiff's status as a legally recognized beneficiary when the procurement of these policies took place." (DE #31 at 10). However, the Complaint is devoid of any allegations that Plaintiff is a third party beneficiary of any agreement between AeroCal and Lockton to procure insurance on AeroCal's behalf. Rather, the Complaint alleges only that Plaintiff is a third party beneficiary of the insurance contracts themselves. (DE #15 ¶ 17). The claims against Lockton are subject to dismissal on this basis. Rihon, 415 So. 2d at 96 (affirming dismissal where plaintiff "only alleges that he is a third party beneficiary of the insurance policy [and not] a beneficiary of whatever contract existed between the insurance agent and [the insured] to procure the policy").
2. Condition Precedent to Suits by Third-Party Benficiaries
In addition, Plaintiff has failed to satisfy a condition precedent to bringing this action against Lockton as a broker. "Before a third party may seek to recover against an insurance broker, the third party must first be successful in its action against the customer who did not have adequate insurance." Commercial Ins. Consultants, Inc. v. Frenz Enters., 696 So. 2d 871, 872 (Fla. 5th DCA 1997). In order to proceed against Lockton, therefore, Plaintiff must first obtain a judgment against AeroCal and then be unable to collect on the judgment. Robinson v. John E. Hunt & Assoc., Inc., 490 So. 2d 1291, 1293 (Fla. 1st DCA 1986) (noting that third party beneficiary may not seek to recover against broker until she is successful in action against insured); Hamer v. Kahn, 404 So. 2d at 850 (explaining plaintiff must obtain judgment against insured before suing insurance agent). There are no allegations in this Complaint that Plaintiff has obtained a judgment against the insured, AeroCal. Plaintiff has failed to comply with this condition precedent to bringing its claims against Lockton.
3. The Merits of Plaintiff's Negligence and Breach of Fiduciary Duty Claims
Finally, even if Plaintiff had met the prerequisites to suit outlined above, the claims for breach of fiduciary duty and negligence would fail on the merits. In Counts IV and V, Plaintiff seeks to recover against Lockton for failure to obtain adequate insurance. However, in another section of the Complaint, Plaintiff alleges that the insurance was adequate to cover Plaintiff's claimed losses and that Inbursa and Lloyd's simply refused to pay. (DE #15 ¶ 14) ("Each policy would cover the loss or confiscation as described herein of these engines for all damages resultant."). Furthermore, it is clear from the face of the policies themselves, which are attached as exhibits to the Complaint, that losses as a result of government confiscation are covered.
Although Plaintiff pled in the Complaint that Lockton "fail[ed] to properly place appropriate levels and coverages of insurance on the leased engines," that allegation is a legal conclusion the Court need not accept as true. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950(2009). Furthermore, as explained below, the insurance policies directly contract Plaintiff's allegation. "Conclusory allegations and unwarranted deductions of fact are not admitted as true, especially when such conclusions are contradicted by facts disclosed by a document appended to the complaint. If the appended document . . . reveals facts which foreclose recovery as a matter of law, dismissal is appropriate." Morton v. Suntrust Mortgage, Inc., Case No. 10-cv-2594-TWT-RGV, 2010 WL 5055822, at *5 n.7 (N.D. Ga. Nov. 5, 2010) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).
The Lloyd's reinsurance policies explicitly state that they indemnify Inbursa against losses for which it is responsible as a result of "war risks and allied perils including confiscation." (DE #15-10 at 1). Moreover, the underlying Inbursa policies likewise cover the risk of confiscation. Policy number 30003790 provides that it is a "Aviation Hull War and Related Perils Policy" which covers losses from:
Confiscation, nationalization, seizure, restraint, appropriation, requisition for title or use by of or under orders of any Government (whether civil, military, or de facto) or public or local authority. . . . This policy covers claims from . . . occurrences while the aircraft is outside the control of the insured by reason of any of the risks aforementioned[, including government confiscation.](DE #15-3). Policy number 30003807 similarly provides that it applies to "All Risks on the Ground or During Anchorage." (DE #15-2). The policy explains: "The following are covered: Material damages that the aircraft may suffer for whatever reason and/or the loss of same, while the aircraft is on the ground, anchored or in flight." Id. Accordingly, the policies demonstrate that adequate levels of insurance were procured to cover Plaintiff's claimed losses. Plaintiff's claims for breach of fiduciary duty and negligence must be dismissed because they amount to no more than a "formulaic recitation of the elements of a cause of action," that are directly contradicted by Plaintiff's own allegations and the exhibits to Plaintiff's Complaint. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007).
IV. CONCLUSION
After careful consideration and being fully advised by the briefs and memoranda of counsel, it is hereby
ORDERED, ADJUDGED, and DECREED as follows:
1. Defendant Lockton Companies International Limited's Motion to Dismiss (DE #22) be, and the same is, hereby GRANTED.
2. This case is DISMISSED.
3. The Clerk shall CLOSE this case.
4. All other pending motions are DENIED AS MOOT.
DONE and ORDERED in Chambers at the James Lawrence King Federal Justice Building and United States Courthouse, Miami, Florida, this 25th day of April, 2011.
/s/_________
JAMES LAWRENCE KING
UNITED STATES DISTRICT JUDGE
cc:
Counsel for Plaintiff Edward Randall Nicklaus Nicklaus & Hyatt 4651 Ponce de Leon Blvd., Suite 200 Coral Gables, FL 33136 305.460.9888 edwardn@nicklauslaw.com Nicholas Frank Van Valen Nicklaus & Hyatt 4651 Ponce De Leon Boulevard Suite 200 Coral Gables, FL 33146 305-460-9888 Fax: 460-9889 Email: nicholasv@nicklauslaw.com Dale Jay Spurr Nicklaus & Hyatt 4651 Ponce De Leon Boulevard Suite 200 Coral Gables, FL 33146 Email: DaleS@nicklauslaw.com Counsel for Defendants Lyle Eric Shapiro Richman Greer, P.A. 201 Biscayne Blvd., Suite 1000 Miami, FL 33131 305.373.4030 lshapiro@richmangreer.com Melissa Fernandez Richman Greer Weil Brumbaugh Mirabito & Christensen 201 S Biscayne Boulevard Suite 1000 Miami, FL 33131 14 305-373-4000 Fax: 373-4099 Email: mfemandez@richmangreer.com