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The Continental Insurance Co. v. Daikin Applied Americas Inc.

United States District Court, D. Minnesota

January 30, 2018

The Continental Insurance Co., Plaintiff,
v.
Daikin Applied Americas Inc., Defendant.

          Andrea E. Reisbord, Esq., and Jeanne H. Unger, Esq., Bassford Remele; and Patrick Florian Hofer, Esq., Clyde & Co U.S. LLP, counsel for Plaintiff.

          Douglas L. Skor, Esq., John M. Bjorkman, Esq., and Monica Detert, Esq., Larson King, LLP; and Michael Lamar Jones, Esq., Henry & Jones, LLP, counsel for Defendant.

          MEMORANDUM OPINION AND ORDER

          DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE.

         INTRODUCTION

         The plaintiff-insurer filed suit for breach of contract and seeking a declaratory judgment against the defendant-insured. The insured answered and counterclaimed. The plaintiff moved the Court to dismiss certain counterclaims and defenses. For the reasons discussed below, the Court denies the plaintiff's motion.

         BACKGROUND

         Plaintiff The Continental Insurance Co. filed suit alleging breach of contract and seeking a declaration that it was not liable to insure Defendant Daikin Applied Americas, Inc. From 1973 until 1982, Continental contracted to insure McQuay-Perfex, Inc., a predecessor to Daikin. On September 24, 2013, Daikin notified Continental that Daikin had been named a defendant in mass tort asbestos litigation. In April 2014, Continental told Daikin that it was searching for policies and requested additional information. Then in June 2014, Continental notified Daikin that it had received notice of only one of the lawsuits, instead of the twenty-three cases incorporated into the mass litigation. Finally on June 8, 2015, Continental agreed to defend the asbestos suits with a reservation of rights.

         Between September 24, 2013 and June 8, 2015, Daikin incurred approximately $680, 000 in attorney fees and costs. After Continental agreed to defend Daikin, Continental sent a check for $645, 346.37. Daikin asked for the money to be wired, and Continental then sent $256, 183.61, because Continental determined the remainder was unrecoverable as pre-tender costs.

         After Continental filed suit, Daikin answered and counterclaimed for breach of contract and declaratory judgment. Continental has moved to dismiss: (1) Daikin's defense that Continental waived its claim for breach of contract; (2) Daikin's breach-of-contract defense that Continental breached the implied covenant of good faith and fair dealing; and (3) Daikin's claim for breach of contract based on a conflict of interest.

         DISCUSSION

         I. Legal Standard

         In deciding a motion to dismiss under Rule 12(b)(6), a court assumes all facts in the complaint to be true and construes all reasonable inferences from those facts in the light most favorable to the complainant. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). In doing so, however, a court need not accept as true wholly conclusory allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th Cir. 1999), or legal conclusions drawn by the pleader from the facts alleged, Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). A court deciding a motion to dismiss may consider the complaint, matters of public record, orders, materials embraced by the complaint, and exhibits attached to the complaint. See Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999).

         To survive a motion to dismiss, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although a complaint need not contain “detailed factual allegations, ” it must contain facts with enough specificity “to raise a right to relief above the speculative level.” Id. at 555. As the Supreme Court reiterated, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” will not pass muster under Twombly. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). In sum, this standard “calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [the claim].” Twombly, 550 U.S. at 556.

         I. Waiver and ...


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