Bits & Pieces

Berkley Mid-Atlantic Group, LLC v. G.F. Hoch Co., Inc.

United States District Court,

W.D. Pennsylvania.



G.F. HOCH COMPANY, INC., et al., Defendants.


Civil Action No. 13–372.

Nov. 20, 2013.



CATHY BISSOON, District Judge.

*1 For the reasons that follow, Defendants’ Motion to Dismiss (Doc. 9) will be denied, without prejudice to Defendants renewing their arguments on summary judgment.




In this diversity action, Plaintiffs are a group of affiliated companies that provide insurance (at times, collectively, “the Insurer”), and Defendants are insurance agents (“the Agent”) who sold Plaintiffs’ policies. See generally Compl. (Doc. 1–1) at ¶¶ 1–17. The Complaint references, in passing, an “Agency Agreement” entered between the parties in December 2007, but the terms of the parties’ agreement(s) are not referenced in the Complaint. Compare id. at ¶ 16 with remainder of Compl.


Beginning in 2009, the Agent sold the Insurer’s policies to a trucking company located in Pennsylvania (“the Insured”). See id. at ¶¶ 19–20. Over the course of two-plus policy years, the Insurer provided through the Agent commercial motorist insurance for the Insured, including a “reduced underinsured motorist[, or UIM,] coverage limit” of $50,000. See generally id. at ¶¶ 20–30, 32–40. The Insurer alleges that, for each coverage period, the Agent erroneously failed to secure from the Insured (or retain) “a valid written request” for reduced UIM, as purportedly required under Pennsylvania statute. See id. at ¶¶ 31, 36, 41 & 48.


During the final coverage period, an employee of the Insured was injured in a motor vehicle accident involving an underinsured driver. See id. at ¶¶ 42–43. The employee made a UIM claim under the Insurer’s policy, and, according to the Complaint, the Insurer was required to provide full UIM coverage ($1 million) because it did not possess a written request for reduced coverage. See id. at ¶ 48. The Insurer settled the underlying claim for $900,000, and it now seeks recovery from the Agent under theories of professional negligence (Count I) and common law indemnity (Count II). Id.


In its Motion to Dismiss, the Agent argues that the Insurer’s negligence claim is barred by the economic loss doctrine, and it argues that the common law indemnity claim fails under the substantive laws of Pennsylvania. See Defs.’ Br. (Doc. 10) at 5–7; id. at 7–11.



As a threshold matter, the Court must determine which state’s law should apply. Regarding choice-of-law, the Agent–Defendants have presumed that either Pennsylvania or Ohio law applies, and the Insurer–Plaintiffs firmly state that Pennsylvania law controls. Compare Defs.’ Br. at 4–5 with Pls.’ Opp’n Br. (Doc. 11) at 4–5. Given the parties’ agreement regarding the potential application of Pennsylvania law, the Court will apply the law of this forum-state. See In re Columbia Gas Sys. Inc., 50 F.3d 233, 240 n. 10 (3d Cir.1995) (where “the parties do not make an issue of choice of law, [the Court has] no obligation to make an independent determination of what rule would apply if they had made an issue of the matter”) (citation to quoted source omitted).FN1


FN1. As referenced above, Defendants’ opening brief stated that the laws of either Pennsylvania or Ohio applied. Although their reply brief attempts to shift position, see Doc. 12 at 1 (arguing that Ohio law controls), it is inappropriate for Defendants to raise new arguments in reply, and, even more so for a litigant to abandon prior affirmative statements to the Court once they appear unfavorable. Even had Defendant consistently urged for an application of Ohio law, however, the Court agrees with the choice-of-law analyses in Plaintiffs’ briefing, and Pennsylvania law would have been applied in any event. See Pls.’ Opp’n Br. at 4–5 (applying Pennsylvania choice-of-law rules to conclude, among other things, that Pennsylvania has most significant contacts and governmental interests in this case).


*2 Turning to the substance of Defendants’ Motion, Pennsylvania’s economic loss doctrine (at times, “ELD”) provides that “no cause of action exists for negligence that results solely in economic damages unaccompanied by physical or property damage.” Azur v. Chase Bank, USA, Nat’l Ass’n, 601 F.3d 212, 222 (3d Cir.2010) (citation to quoted source omitted).FN2 As often observed, the precise contours of the Pennsylvania ELD are, at times, blurry, and harmonizing the various state and federal court decisions can be challenging, if not impossible. In many instances, the doctrine’s application is strongly influenced by the context in which it is presented, and blending the various tests can easily result in apples-to-oranges comparisons. Compare, e.g., Azur at 223 (interpreting Pa. Supreme Court’s decision in Bilt–Rite Contractors, Inc. v. The Architectural Studio, 866 A.2d 270 (2005) as creating “narrow” exception to ELD, under Restatement (2d) Section 552, for negligent misrepresentations made by businesses providing information to non-contracting parties for pecuniary gain) with, e.g., Bilt–Rite, 866 A.2d at 288 (stating in dicta that “Pennsylvania has long recognized that purely economic losses are recoverable in a variety of tort actions including … professional malpractice actions”). The Court takes the law as it finds it, however, and the undersigned is charged with applying the doctrine in the specific context of this case.


FN2. Given that the Pennsylvania Supreme Court has not definitively established the parameters of the economic loss doctrine, this Court will rely on the federal and state law decisions that it believes best predict how the Supreme Court would rule in this case.


The Insurer characterizes its claims as sounding in “professional negligence,” and it argues that such claims categorically are exempted from the economic loss doctrine. See Pls.’ Opp’n Br. at 7–8. Although some court decisions may appear to have painted with such a broad brush (whether advertently or inadvertently), the undersigned is not convinced that the line is so clearly drawn. Cf., e.g., Rapidigm, Inc. v. ATM Mgmt. Servs., LLC, 63 Pa. D. & C.4th 234, 241–42 (Pa.Comm.Pl. Jul. 10, 2003) (noting that Pennsylvania courts have allowed professional negligence actions to be maintained only against certain licensed professionals, and opining that “[t]he decision of whether to restrict professional negligence actions to traditionally-recognized professions or to allow these actions to be brought against any providers of services requiring special skill and training depends on whether parties contracting with service providers should receive the protections of tort law or whether their rights should be governed solely by the terms of their agreement”).


Rather than deal in generalities, this Court will focus on the Insurer’s specific claims, namely the purported negligence of an insurance agent/broker. Under Pennsylvania law:


[F]or ordinary negligence purposes, the relationship between an insurance broker and client is an arm’s length relationship…. In the context of an insurance transaction, … an insurance broker is not under an affirmative duty to … advise a client regarding the extent of coverage[, but] an insurance broker may be held liable if he/it affirmatively undertakes such duties and then negligently performs, or if a special relationship is present between the parties…. Moreover, a plaintiff acquires a cause of action … where the broker neglects to procure insurance, … does not follow instructions …, or if the policy is void or materially defective through the agent’s fault.


*3 Allegrino v. Conway E & S, Inc., 2010 WL 3 943 939, *8 (W.D.Pa. Oct. 6, 2010) (citations, internal quotations and alterations omitted).


The question that remains, though, is whether the aforementioned claims, and Plaintiffs’ claims here, flow from duties imposed on insurance professionals as a matter of policy, or whether they flow from a contractual relationship between the parties. See In re Asousa P’ship, 2005 WL 775429, *4 (E.D.Pa.Bankr.Feb. 2, 2005) (allowing similar claims to survive dismissal at 12(b)(6) stage because claims “stem[med] from a duty of care imposed by law upon professionals, rather than from a contract between the parties”); see also, e.g., ITP, Inc. v. OCI Co., Ltd., 865 F.Supp.2d 672, 681–82 (E.D.Pa. Mar. 26, 2012) (“special relationship” and fiduciary-type claims may proceed, independent of contractual obligations, where “the larger social policies embodied in the law of torts rather than the terms of the contract … are what underlie [the] claim”) (citing and quoting Bohler—Uddeholm America, Inc. v. Ellwood Group, Inc., 247 F.3d 79, 105 (3d Cir.2001)). Indeed, this inquiry would appear more appropriately framed under the “gist-of-the-action” test commonly applied in Pennsylvania. See Bohler–Uddeholm, 247 F.3d at 104 n. 11 (ELD was developed “in the context of … products liability tort claims,” and “[t]he ‘gist-of-the-action’ test is a better fit for … non-products liability case[s]”).


Whether the Insurer’s allegations sufficiently invoke “duties imposed as a matter of social policy,” as opposed to “duties imposed by mutual consensus” through contract, is one that the Court currently is not equipped to answer. See eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 14–15 (Pa.Super.2002).FN3 The Court cannot properly address these issues because, first, the Agent–Defendants have not framed their arguments under the gist-of-the-action test, and, second, the parties have offered little information or analysis regarding the contractual relationship(s) existing between them. In examining whether claims flow from contract as opposed to policy, for example, courts have considered: (a) whether the claims arise from a contract between the parties; (b) whether the duties allegedly breached were created and grounded in the contract itself; (c) whether the liability stems from a contract; or (d) whether the tort claim essentially duplicates a breach of contract claim or its success is wholly dependent on the terms of the contract. Morris v. Wells Fargo Bank N.A., 2012 WL 3929805, *11 (W.D.Pa. Sept. 7, 2012) (citing eToll ); cf. also, e.g., Murphy Architectural Grp. v. Snyder Moore Agencies Inc., 2009 WL 7268750 (un-paginated) (Pa.Comm.Pl. Nov. 5, 2009) (dismissing claim against insurance broker because, “while the gist of [the] action could well be argued to be negligent performance of the duty imposed, such negligence would not be actionable absent the professional relationship between [the] parties arising out of the contractual relationship”).FN4


FN3. Cf., e.g., id. at 22–23 (rejecting claim of special relationship between “parties to an arms length business contract” based on one’s “specialized expertise, skill and experience in the field”; “[i]f parties to routine arms length commercial contracts … were held to have a ‘special relationship,’ virtually every breach of such a contract would support a tort claim”) (citation to quoted source and other sources omitted); cf. also id. (noting that “[m]ost commercial contracts for professional services involve one party relying on the other party’s superior skill or expertise in providing that particular service,” and requiring, for purposes of fiduciary duty claim, that “the relationship go [ ] beyond mere reliance on superior skill, and into a relationship characterized by overmastering influence[,] … weakness, dependence, or trust, justifiably reposed”) (citation and internal quotations omitted).


FN4. Defendants appear to have attached to their Motion papers a nearly illegible copy of the 2007 Agency Agreement. See Doc. 9–2 at pgs. 19 through 33. Neither side clarifies or meaningfully analyzes its contents, however, nor does either party contemplate whether there may (or may not) exist other sources of mutual consensus. Even were the Court able to read the parties’ 2007 written agreement, it will not attempt to analyze their contractual relationship(s) in a vacuum.


*4 Given that the Court has been provided little understanding regarding the parties’ contractual relationship(s), and given that the Agent–Defendants have not demonstrated that the Insurer–Plaintiffs’ cannot, under any plausible reading of the Complaint, assert claims based on policy rather than contract, Defendants’ request for dismissal cannot be granted at this time. Denial of the Motion, however, is made without prejudice to renewal of Defendants’ arguments on summary judgment, when a fuller picture is presented.


Next is Defendants’ request for dismissal of Plaintiffs’ common law indemnity claim.FN5 Under Pennsylvania law:


FN5. At the onset, the Court notes that a ruling in Defendants’ favor under the ELD or gist-of-theaction test would extend to Plaintiffs’ indemnity claim. See Waynesborough Country Club of Chester County v. Diedrich Niles Bolton Architects, Inc., 2008 WL 687485, *8 (E.D.Pa. Mar. 11, 2008) (extending ELD to claim for common law indemnity); see also Longport Ocean Plaza Condo., Inc. v. Robert Cato & Assocs., Inc., 2002 WL 436742, *7 (E.D.Pa. Mar. 18, 2002) (holding same because common law indemnity is “a right that depends on [the charged] party’s status as a tortfeasor”).


[Common law] indemnity … [is an] equitable remedy that shifts the entire responsibility for damages from a party who, without any fault, has been required to pay because of a legal relationship to the party at fault…. Common law indemnity is not a fault-sharing mechanism that allows a party, whose negligence was minor, to recover from the tortfeasor whose negligence was dominant. It is a fault-shifting mechanism that comes into play [only] when a defendant held liable by operation of law seeks to recover from a defendant whose conduct actually caused the loss.

City of Wilkes–Barre v. Kaminski Bros., Inc., 804 A.2d 89, 92 (Pa.Commw.2002) (internal citations and footnotes omitted).


In seeking dismissal, Defendants argue that the Plaintiff–Insurers misread the Pennsylvania Motor Vehicle statute that the Insurers believe required them to provide coverage in the absence of a “valid written request” for reduced UIM coverage. See Defs.’ Br. at 8–10. Plaintiffs have made colorable arguments to the contrary, and, in any event, the Court does not believe that this issue properly should be resolved under Rule 12(b) (6). All that is required of Plaintiffs at this stage is to state plausible claims for relief, and, for the reasons stated in their opposition brief, the Court finds that they survive this low threshold. Defendants’ Motion, therefore, is denied without prejudice to renewal on summary judgment.


The Court must note, however, that Pennsylvania law will not permit common law indemnification if Plaintiffs are found to have been even the slightest bit negligent regarding the procurement of written request(s) for reduced UIM coverage. See legal standards cited above. Although it seems questionable whether the Plaintiff–Insurers can convince the Court or a factfinder that it had no duty in this regard, and that they are completely innocent of even the slightest breach, these observations do not form a basis for dismissal under Rule 12(b)(6).


Consistent with the discussions above, the Court hereby enters the following:



Defendants’ Motion to Dismiss (Doc.9) is DENIED without prejudice to the renewal of their arguments on summary judgment.



Conagra Foods, Inc. v. YRC Worldwide, Inc.

United States District Court,

D. Nebraska.

CONAGRA FOODS, INC., a Delaware corporation, Plaintiff,


YRC WORLDWIDE, INC., a Delaware corporation, Defendant.


No. 8:13CV293.

Nov. 21, 2013.


Brian T. McKernan, McGrath, North Law Firm, Omaha, NE, for Plaintiff.


Matthew F. Heffron, Brown, Brown Law Firm, Omaha, NE, Thomas C. Martin, William D. Bierman, Nowell, Amoroso Law Firm, Hackensack, NJ, for Defendant.




*1 This matter is before the Court on the Motion to Dismiss (Filing No. 7) submitted by Defendant YRC Worldwide, Inc. (“YRC”), and the Motion to Remand (Filing No. 9) submitted by Plaintiff ConAgra Foods, Inc. (“ConAgra”). For the reasons discussed below, the Motion to Dismiss will be denied, and the Motion to Remand will be granted.



For purposes of the pending motions, the Court accepts as true all well-pled facts in the Complaint (Filing No. 1–1), although the Court need not accept ConAgra’s conclusions of law. The following is a summary of the facts presented in the Complaint:


ConAgra and YRC entered into a contract carrier agreement on or about September 20, 2008 (Exhibit A to the Complaint, hereafter the “Agreement”), through which YRC agreed to provide certain motor contract carriage services to ConAgra. Under the Agreement, YRC warranted that it would not ship food products using equipment that had been used for transportation of hazardous materials. On or about November 14, 2011, YRC delivered to ConAgra foodstuffs that were loaded along with hazardous materials, breaching the Agreement and causing ConAgra to incur damages in the amount of $66,865.74.


ConAgra sued YRC in the District Court of Douglas County, Nebraska, on August 2, 2013, presenting a single claim for breach of contract. YRC removed the action to this Court on September 18, 2013, invoking the Court’s federal subject matter jurisdiction, and asserting that ConAgra’s claim is governed exclusively by the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706. YRC then moved to dismiss the Complaint, pursuant to Fed.R.Civ.P. 12(b)(6), asserting that the Carmack Amendment preempts and bars ConAgra’s state-law claim for breach of contract.


ConAgra moved to remand its action to state court, asserting that both parties waived the applicability of the Carmack Amendment in the Agreement, and that YRC also waived its right to challenge ConAgra’s choice of venue in Nebraska state court. ConAgra seeks an award of attorney fees incurred in seeking remand and in responding to the Motion to Dismiss, asserting that there was no reasonable basis for either.


In opposition to the Motion for Remand and in further support of its Motion to Dismiss, YRC submitted a Brief (Filing No. 19) and attached an Index of Evidence to the Brief FN1 (Filing Nos. 19–1, 19–2). YRC now contends that ConAgra’s claim should be presented as seven separate claims, five of which should be severed and remanded to state court for separate trials on each claim. YRC further contends that the two remaining “claims” should be dismissed by this Court, because they are preempted by the Carmack Amendment. YRC asserts that it did not waive application of the Carmack Amendment in the Agreement, because the Agreement is ambiguous and contradictory. YRC notes that it does not object to ConAgra receiving leave to amend its Complaint to assert the two “claims” under the Carmack Amendment.


FN1. Counsel is referred to NECivR 7.1(a)(2)(B) regarding submission of evidentiary materials.



Fed.R.Civ.P. 56

*2 YRC has presented matters outside the pleadings in support of its Motion to Dismiss, asking the Court to consider a 30–page index of evidence. Under Fed.R.Civ.P. 12(d), if the Court considers such materials in connection with the Motion to Dismiss, it must treat YRC’s Motion as one for summary judgment under Fed.R.Civ.P. 56, and must afford ConAgra a reasonable opportunity to present all material that is pertinent to the motion. The Court will decline to consider YRC’s evidentiary submissions in support of its Motion to Dismiss.


Fed.R.Civ.P. 12(b)(6)

Turning to the standard of review applicable to a motion to dismiss for failure to state a claim upon which relief can be granted (Fed.R.Civ.P. 12(b)(6)), it is recognized that a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). “[A]lthough a complaint need not include detailed factual allegations, ‘a plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.’ “ C.N. v. Willmar Pub. Sch., Indep. Sch. Dist. No. 347, 591 F.3d 624, 629–30 (8th Cir.2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “Instead, the complaint must set forth ‘enough facts to state a claim to relief that is plausible on its face.’ “ Id. at 630 (citing Twombly, 550 U.S. at 570).


“ ‘A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ “ Ritchie v. St. Louis Jewish Light, 630 F.3d 713, 716 (8th Cir .2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009)). “ ‘Courts must accept … specific factual allegations as true but are not required to accept … legal conclusions.’ “ Outdoor Cent., Inc. v., Inc., 643 F.3d 1115, 1120 (8th Cir.2011) (quoting Brown v. Medtronic, Inc., 628 F.3d 451, 459 (8th Cir.2010)). “A pleading that merely pleads ‘labels and conclusions,’ or a ‘formulaic recitation’ of the elements of a cause of action, or ‘naked assertions’ devoid of factual enhancement will not suffice.” Hamilton v. Palm, 621 F.3d 816, 817–18 (8th Cir.2010) (quoting Iqbal, 556 U.S. at 678). The complaint’s factual allegations must be “sufficient to ‘raise a right to relief above the speculative level.’ “ Williams v. Hobbs, 658 F.3d 842, 848 (8th Cir.2011) (quoting Parhurst v. Tabor, 569 F.3d 861, 865 (8th Cir.2009)).


When ruling on a defendant’s motion to dismiss, a judge must rule “on the assumption that all the allegations in the complaint are true,” and “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.’ “ Twombly, 550 U.S. at 555 & 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). The complaint, however, must still “include sufficient factual allegations to provide the grounds on which the claim rests.” Drobnak v. Andersen Corp., 561 F.3d 778, 783 (8th Cir.2009).


*3 “Two working principles underlie … Twombly. First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”   Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). “Second, only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 1950 (citing Twombly, 550 U.S. at 556). “Determining whether a complaint states a plausible claim for relief will … be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id.


Motion to Remand

“All doubts about federal jurisdiction should be resolved in favor of remand to state court.” In re Prempro Prods. Liab. Litig., 591 F.3d 613, 620 (8th Cir.2010).



“As master of the complaint, a state plaintiff can generally avoid removal to federal court by alleging only state law claims.” Johnson v. MFA Petroleum Co., 701 F.3d 243, 247 (8th Cir.2012) (citing Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987)). “Under the well pleaded complaint rule, a federal question must appear on the face of the plaintiff’s complaint in order to create federal question jurisdiction.” Id. (citing Caterpillar, 482 U.S. at 392). “If the plaintiff’s action is brought under state law, the case may not be removed under federal question jurisdiction even if federal law were to provide a defense, and ‘even if both parties concede that the federal defense is the only question truly at issue.’ “ Id. (citing Caterpillar, 482 U.S. at 393). “The rule that a federal defense does not create federal jurisdiction includes the defense of preemption.” Id. “Complete preemption only applies where a federal statute ‘so completely pre-empt[s] a particular area that any civil complaint raising this select group of claims is necessarily federal.’ “ Id . (alteration in original) (citing Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987)). “For a statute to provide federal question jurisdiction under this exception it must have ‘extraordinary preemptive power,’ a conclusion courts are reluctant to reach.” Id. (citing Metro Life, 481 U.S. at 65).


Even when an action presents a federal question, removal is not mandated where state courts have concurrent jurisdiction. The “deeply rooted presumption in favor of concurrent state court jurisdiction is, of course, rebutted if Congress affirmatively ousts the state courts of jurisdiction over a particular federal claim.” Tafflin v. Levitt, 493 U.S. 455, 459 (1990). “ ‘[I]f exclusive jurisdiction be neither express nor implied, the State courts have concurrent jurisdiction whenever, by their own constitution, they are competent to take it.’ “ Id. (quoting Claflin v. Houseman, 93 U.S. 130, 136 (1876).


*4 ConAgra brought its claim for breach of contract. It is the “master of the claim.” The removability of the action is determined from the face of the Complaint, which presents a plausible claim for relief and reveals no federal subject matter jurisdiction. The Court will not consider YRC’s potential defenses when evaluating the merits of ConAgra’s Motion for Remand. Even if YRC is correct that some portion of ConAgra’s claim should be preempted by the Carmack Amendment, YRC has not demonstrated that the state court lacks concurrent jurisdiction over such a claim. To the contrary, 49 U.S.C. § 14706(d)(1) provides:


A civil action under this section may be brought against a delivering carrier in a district court of the United States or in a State court. Trial, if the action is brought in a district court of the United States is in a judicial district, and if in a State court, is in a State through which the defendant carrier operates.


It is YRC’s burden to establish this Court’s federal question jurisdiction, and the propriety of the removal. It has not met that burden.






1. Defendant YRC Worldwide, Inc.’s Motion to Dismiss (Filing No. 7) is denied;


2. Plaintiff ConAgra Foods, Inc.’s Motion to Remand (Filing No. 9) is granted in part, as follows:


This action is remanded to the District Court of Douglas County, Nebraska, for further proceedings, and


3. Plaintiff’s request for an award of attorney fees, also presented in Filing No. 9, is denied.


DATED this 21st day of November, 2013.

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