2020 WL 4724759
United States District Court, N.D. Georgia, Atlanta Division.
TEAMONE CONTRACT SERVICES, LLC doing business as TeamOne Logistics, LLC, Plaintiff,
AMERICAN GUARANTEE & LIABILITY INSURANCE COMPANY, Defendant.
CIVIL ACTION FILE NO. 1:19-CV-3891-TWT
Attorneys and Law Firms
William Thomas Lacy, Jr., Lindsey & Lacy, PC, Peachtree City, GA, for Plaintiff.
Brandon Gossett, Scott Fain Bertschi, Clyde & Co. Us., LLP, Atlanta, GA, for Defendant.
ORDER AND OPINION
THOMAS W. THRASH, JR., United States District Judge
*1 This is a breach of contract action. It is before the Court on the Defendant’s Motion to Dismiss [Doc. 15]. For the reasons set forth below, the Court DENIES the Defendant’s Motion to Dismiss [Doc. 15].
This insurance coverage dispute arises out of an auto accident which occurred on May 2, 2018, involving a tractor-trailer operating under the DOT number of United Parcel Service, Inc. and driven by a staffing services worker supplied by TeamOne. See Am. Compl., at ¶ 9. TeamOne is a workforce solutions company focused on the transportation and logistics industry. It provides drivers to UPS pursuant to a Master Staffing Services Agreement between UPS and TeamOne. Id. at ¶ 8. TeamOne supplied UPS with the driver operating the truck at the time of the auto accident. Id. The auto accident allegedly killed Jeff Whitlock and Jarett Whitlock and seriously injured Stuart Hamilton. Id. at ¶¶ 9-10. The injured parties or their representatives sued TeamOne and UPS, along with the driver. Id. at ¶ 10. All three actions remain pending. Id. at ¶ 11. UPS’s insurance carrier is defending UPS and TeamOne in each of the underlying actions. Def.’s Motion to Dismiss, at 5.
The Master Staffing Services Agreement required UPS to “provide and maintain on each vehicle operated by … Drivers supplied by [TeamOne], Automobile Public Liability and Property Damage insurance with coverage in an amount as required by the Motor Carrier Act of 1980.” Def.’s Motion to Dismiss, Ex. A, at 6. The agreement requires that such insurance name TeamOne and its staffed drivers as additional insureds “with respect to liability resulting from the ownership, custody, maintenance, use or operation of the vehicles.” Id. The agreement also states that UPS will not seek recovery from its insurance carrier if “such bodily injury (including death) or property damage was related to a breach by Provider of this Agreement, including without limitation a breach with regard to the hiring and qualifications of the Driver.” Id.
As required by the Master Staffing Services Agreement, TeamOne also maintains its own insurance, which allegedly provided coverage during the time frame of the accident. Am. Compl., at ¶ 12. Zurich American Insurance Company issued a Staffing Services Package Policy, policy number PRA 9699004-06 and PRA 9699004-05, to TeamOne including both professional liability and commercial general liability coverage. Id. American Guarantee and Liability Insurance Company, a subsidiary of Zurich American, issued an Automobile Liability Policy, policy number PRA 4677320-05, and Commercial Umbrella Policies, policy number UMB 9467332-05, to TeamOne. Id. Zurich American denied coverage under the Commercial General Liability Policy pursuant to the Auto Liability Exclusion. Id. at ¶ 14. Zurich also denied the direct claims of the plaintiffs of the underlying actions under the Staffing Professional Liability Policy pursuant to the Bodily Injury Exclusion. Id. at ¶ 15.
American Guarantee initially agreed to defend TeamOne under a reservation of rights under the Automobile Liability Policy, specifically the Non-Owned Business Automobile Liability Provision. Id. at ¶ 13. But American Guarantee then disclaimed coverage under the Business Auto Liability Policy, refusing to defend TeamOne under a reservation of rights. Id. at ¶ 20. American Guarantee claims that TeamOne’s provision of transportation and training services to UPS did not satisfy the definition of the non-owned auto coverage under the business auto policy. Id.
*2 On October 16, 2019, TeamOne filed its Amended Complaint alleging that American Guarantee breached its contract with TeamOne by failing to defend TeamOne in the pending actions under the business auto insurance policy. Id. at ¶¶ 25-28. American Guarantee moves to dismiss TeamOne’s Amended Complaint, arguing that TeamOne has not alleged any damages for its breach of contract claim because UPS’s insurer is already defending TeamOne in the underlying actions.
II. Legal Standard
A complaint should be dismissed under Rule 12(b)(6) only where it appears that the facts alleged fail to state a “plausible” claim for relief. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009); Fed. R. Civ. P. 12(b)(6). A complaint may survive a motion to dismiss for failure to state a claim, however, even if it is “improbable” that a plaintiff would be able to prove those facts; even if the possibility of recovery is extremely “remote and unlikely.” Bell Atlantic v. Twombly, 550 U.S. 544, 556 (2007). In ruling on a motion to dismiss, the court must accept the facts pleaded in the complaint as true and construe them in the light most favorable to the plaintiff. See Quality Foods de Centro America, S.A. v. Latin American Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir. 1983); see also Sanjuan v. American Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994) (noting that at the pleading stage, the plaintiff “receives the benefit of imagination”). Generally, notice pleading is all that is required for a valid complaint. See Lombard’s, Inc. v. Prince Mfg., Inc., 753 F.2d 974, 975 (11th Cir. 1985), cert. denied, 474 U.S. 1082 (1986). Under notice pleading, the plaintiff need only give the defendant fair notice of the plaintiff’s claim and the grounds upon which it rests. See Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing Twombly, 550 U.S. at 555).
American Guarantee contends that TeamOne’s Amended Complaint should be dismissed because UPS’s insurer is already defending TeamOne in the underlying actions, and thus TeamOne has not, and cannot, allege damages. Def.’s Motion to Dismiss, at 7. TeamOne concedes that any discussion about American Guarantee’s breach of its duty to indemnify is premature and that TeamOne is not bringing a bad faith claim at this stage. Pl.’s Resp., at 9. TeamOne clarifies in its Response that “the current complaint alleges one count of breach of contract for AGLIC’s decision to withdraw its defense of TeamOne under the Business Auto Liability Policy” and “[w]hether TeamOne adequately pleaded its breach of contract count is the only issue currently before the court.” Id. at 1-2.
To state a claim for breach of contract under Georgia law, TeamOne must show: (1) a valid contract, (2) a material breach of its terms, and (3) damages arising from that breach. See Frone v. JP Morgan Chase & Co., 695 F. App’x 468, 470 (11th Cir. 2017). When an insurer breaches the duty to defend, “the insured is entitled to receive only what it is owed under the contract – the cost of defense.” McGregor v. Columbia Nat’l Ins. Co., 680 S.E.2d 559, 562 (Ga. App. 2009). Damages from a carrier’s failure to defend its insured are well defined in Georgia law and include defense costs and “additional damages traceable to its refusal to defend.” Leader Nat’l Ins. Co. v. Kemp & Son, 380 S.E.2d 458, 459 (Ga. 1989). American Guarantee argues that TeamOne does not adequately allege any damages because UPS’s defense counsel is currently incurring all defense costs. Def.’s Motion to Dismiss, at 5.
*3 But TeamOne contends that it adequately alleged its ongoing damages in the Amended Complaint which states: “Defendant’s breach has caused, and will continue to cause TeamOne harm as TeamOne will now have to provide for its own defense and/or indemnity or face contribution claims from UPS for the cost of providing a defense of the Underlying Litigation.” Am. Compl., at ¶ 27. TeamOne argues that it clearly alleges that American Guarantee’s denial puts TeamOne in jeopardy for defense costs and possible indemnity costs as well as nominal damages which attach to every breach of contract action. Pl.’s Resp., at 3. American Guarantee contends that TeamOne’s argument of damages are wholly speculative since no contribution claim has been asserted against TeamOne and TeamOne has not actually incurred any fees in defending the underlying actions. Def.’s Reply, [Doc. 20] at 2. American Guarantee argues that if none of those events happen, TeamOne will suffer no loss. Id. But the ongoing harm, although incapable of calculation at this point, has sufficiently been alleged. TeamOne has put American Guarantee on notice as to what it will be claiming as damages.
Although the Master Services Agreement required the addition of TeamOne as an additional insured under UPS’s policy, the obligation has a clear exception for bodily injury claims, including death, related to a breach by TeamOne of the Master Services Agreement based on the hiring and qualifications of the driver. Pl.’s Resp., at 5-6. Depending on the terms of the insurance contract between TeamOne and UPS’s insurer, TeamOne could be in jeopardy of defense costs for the underlying actions. It is too early in the litigation to determine if all defense costs are covered by UPS’s insurance carrier.
Although TeamOne has yet to introduce evidence of its damages in terms of a specific monetary amount, that is not required at this stage. TeamOne did allege that it will suffer harm as a result of American Guarantee’s actions and has adequately pleaded the damages it claims flow from American Guarantee’s decision to deny its alleged duty to defend TeamOne under its insurance policy. The question of whether these claims are valid is not appropriate at this stage in the proceedings, where the Court looks only to the face of the pleadings to determine whether the complaint is subject to dismissal. Iqbal, 556 U.S. at 678.
For the reasons stated above, the Defendant’s Motion to Dismiss [Doc. 15] is DENIED.
SO ORDERED, this 21 day of July, 2020.
Slip Copy, 2020 WL 4724759