First Mercury Insurance Company v. First Florida Building Corporation

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

FIRST MERCURY INSURANCE

COMPANY,

Plaintiff,

v. Case No: 8:20-cv-01929-CEH-AAS

FIRST FLORIDA BUILDING

CORPORATION, FIRST FLORIDA,

LLC and GILBERTO SANCHEZ,

Defendants.

/

ORDER

This matter comes before the Court upon Plaintiff’s Motion to Dismiss

Defendant Gilberto Sanchez’s Counterclaim for Declaratory Judgment [Doc. 49] and

Defendant Gilberto Sanchez’s Response in Opposition [Doc. 52]. Plaintiff argues that

dismissal is warranted as the allegations in Defendant’s Counterclaim are redundant

and serve no useful purpose. The Court, having considered the motion and being fully

advised in the premises, will DENY Plaintiff’s Motion to Dismiss.

I. BACKGROUND

On September 24, 2019, Gilberto Sanchez filed an action in the Thirteenth

Judicial Circuit in and for Hillsborough County, Florida (Sanchez v. The Apartments at

Grady Square, LLC et al., Case No. 19-CA-009816), to recover for injuries he allegedly

sustained during the course of his employment—with First Florida Building

Corporation (“FFBC”)—on or about March 21, 2016, when he allegedly fell over 43

feet onto concrete after falling through a 43-foot hole, that was hidden and unsecured

with loose boards covering it, on the roof of a construction site. [Doc. 1-1 ¶¶ 3, 26-27,

41, 78-81]. In that action, Sanchez named a host of defendants, including his

employer, FFBC; the owner of the property, The Apartments at Grady Square, LLC;

and developers or contractors on the project including The Richman Group of Florida,

Inc., Florida Construction Services, Inc., and ZE Construction, LLC. Id. ¶¶ 3, 9, 14,

20, 23. On January 15, 2020, Sanchez amended the Complaint to name additional

defendants, including another contractor, First Florida, LLC (“FFLLC”). Id. at p. 62,

p. 64 ¶ 393.

FFBC was insured by First Mercury Insurance Company (“First Mercury”)

under a Commercial General Liability insurance policy (“Policy”), “effective January

1, 2016 to January 1, 2017 with limits of $1,000,000 per occurrence and $2,000,000

general aggregate.” [Doc. 1 ¶ 23]. On August 19, 2020, First Mercury filed an initial

Complaint for Declaratory Judgment against FFBC and FFLLC in order to clarify its

obligations under the Policy. [Doc. 1]. On December 11, 2020, First Mercury filed a

Second Amended Complaint [Doc. 44]. There, it included specific language from the

Policy in order to define the scope of the coverage and the agreement. Id. ¶¶ 35-37. It

then requested that the Court enter a declaratory judgment that it owes no duty to

defend or indemnify FFBC and FFLLC in connection with the Underlying Action,

and it sought an award of its costs and any other relief that the Court considers

appropriate. Id. at p. 12.

In support of its requested relief, First Mercury alleges that Sanchez’s injuries

are not the result of an “occurrence,”—as that word is defined in the Policy—because

the complaint in the Underlying Action describes the roof conditions as “inherently

dangerous” and “virtually certain to cause injury to Sanchez.” Id. ¶¶ 40-46. It also

alleges that the injuries sustained by Sanchez fall under the “Expected or Intended

Injury Exclusion” for the same reasons. Id. at ¶¶ 47-51. Additionally, First Mercury

asserts that the injuries have already been compensated for under a workers’

compensation policy, and the Policy excludes coverage for “[a]ny obligation of the

insured under a workers’ compensation, disability benefits or unemployment

compensation law or any similar law.” Id. ¶¶ 52-57. Lastly, First Mercury alleges that

the Employer’s Liability Exclusion applies, as the Policy excludes coverage for bodily

injury to an insured’s employee: “[a]rising out of and in the course of employment by

the insured” or “[p]erforming duties related to the conduct of the insured’s business.”

Id. ¶¶ 58-61.

On December 22, 2020, Defendant Sanchez answered the Complaint and also

filed a counterclaim seeking declaratory relief against First Mercury. [Doc. 47]. In his

Counterclaim, Sanchez seeks a declaration that First Mercury is obligated to defend

or indemnify its insureds in connection with the Underlying Action. Id. at p. 10 ¶ 20.

Sanchez further claims that he is entitled to indemnity under the Policy and “damages

in an amount to be proven at trial, the costs of this action, post-judgment interest, and

any other relief this court deems equitable, just, and proper.” Id. at p. 10 ¶¶ 1, 2.

On January 5, 2021, First Mercury moved to dismiss Sanchez’s Counterclaim,

pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure, on the basis that it is

redundant and serves no useful purpose [Doc. 49]. First Mercury asserts that the

Court’s rulings on the first four Counts of its Complaint for Declaratory Judgment

would “completely resolve this coverage dispute.” Id. at p. 2. First Mercury contends

that because the Counterclaim is a “mirror image” of its Complaint for Declaratory

Judgment, it should be dismissed. Id. In response, Sanchez argues that dismissal is

unwarranted because his Counterclaim seeks affirmative relief that was not requested

or addressed in First Mercury’s action, that is, a determination of the amount of

indemnity afforded by First Mercury’s Policy. [Doc. 52 at pp. 1, 2.].

II. LEGAL STANDARD

“A motion to dismiss a counterclaim under Fed. R. Civ. P. 12(b)(6) is evaluated

in the same manner as a motion to dismiss a complaint.” Whitney Info. Network, Inc. v.

Gagnon, 353 F. Supp. 2d 1208, 1210 (M.D. Fla. 2005). On a motion to dismiss

pursuant to Rule 12(b)(6), the Court accepts as true all the allegations in the complaint

and construes them in a light most favorable to the plaintiff. Michel v. NYP Holdings,

Inc., 816 F.3d 686, 694 (11th Cir. 2016). However, legal conclusions “are not entitled

to the assumption of truth” and “conclusory allegations, unwarranted factual

deductions or legal conclusions masquerading as facts will not prevent dismissal.”

McArdle v. City of Ocala, 418 F. Supp. 3d 1004, 1006 (M.D. Fla. 2019) (first quoting

Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009), then quoting Davila v. Delta Air Lines, Inc.,

326 F.3d 1183, 1185 (11th Cir. 2003)). When considering a motion to dismiss, the

court ordinarily will not look beyond the four corners of the complaint. Wilchombe v.

TeVee Toons, Inc., 555 F.3d 949, 959 (11th Cir. 2009). “Dismissal is warranted pursuant

to Rule 12(b)(6) of the Federal Rules of Civil Procedure if, assuming the truth of the

factual allegations of the counterclaim, there is a dispositive legal issue that precludes

relief.” United States v. 8 Luxury Vehicles, 88 F. Supp. 3d 1332, 1334 (M.D. Fla. 2015).

III. ANALYSIS

“Since its inception, the Declaratory Judgment Act has been understood to

confer on federal courts unique and substantial discretion in deciding whether to

declare the rights of litigants.” Smith v. Casey, 741 F.3d 1236, 1244 (11th Cir. 2014)

(quoting Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995)). A declaratory judgment

“serves to clarify the legal relations and is not for the purpose of making factual

determinations.” Medmarc Cas. Ins. Co. v. Pineiro & Byrd PLLC, 783 F. Supp. 2d 1214,

1216 (S.D. Fla. 2011); UFP E. Div., Inc. v. Old Dominion Ins. Co., No. 3:19-CV-1113-

MMH-MCR, 2020 WL 4756820, at *13 (M.D. Fla. June 5, 2020) (“[T]he purpose of

the Declaratory Judgment Act is to clarify the legal relations at issue and to settle

controversies prior to a legal breach of duty or contract.”). In this case, Sanchez’s

Counterclaim seeks a declaration that the Policy obligates First Mercury to indemnify

FFBC and FFLLC for liability in connection with the Underlying Lawsuit. [Doc. 47

at p. 10].

First Mercury contends that the Counterclaim is a redundant “mirror-image” of

the Complaint and should be dismissed as a resolution of the issues in the Complaint

and in Sanchez’s Affirmative Defenses will resolve all the issues in the Counterclaim.

[Doc. 49 at p. 2]. Upon review, the Court disagrees. First Mercury seeks a declaration

that it owes no duty to indemnify and pay Sanchez in the Underlying Action. [Doc.

44 at p. 12]. Sanchez’s Counterclaim seeks a declaration that First Mercury owes a

duty to indemnify and pay Sanchez, in addition to seeking a declaration that Sanchez

is entitled to damages in an amount to be proven at trial. [Doc. 47 at p. 10 ¶¶ 1, 2]. The

relief sought by Sanchez is not completely identical. A resolution of First Mercury’s

Complaint and Sanchez’s Affirmative Defenses will not resolve all questions raised by

the Counterclaim—namely, whether Sanchez is entitled to damages in an amount to

be proven at trial.

Additionally, the court in Medmarc has explained that:

In instances where the declaratory relief is based on contract

interpretation, courts are reluctant to dismiss a

counterclaim for declaratory relief as redundant even when

it is a near ‘mirror image’ of the complaint, because a ‘ruling

adverse to the plaintiff on plaintiff's claim would merely

result in a judgment that plaintiff was not entitled to the

relief requested; although it might logically flow from that

judgment that defendant's interpretation of the contract was

the correct one, defendants would not be entitled to a

judgment to that effect unless [they] specifically requested

one.’

783 F. Supp. 2d at 1217. As such, a ruling adverse to First Mercury’s interpretation of

the Policy does not automatically confer a ruling that Sanchez’s interpretation of the

Policy is correct. Sanchez is not entitled to a judgment to that effect unless it is

specifically requested. First Mercury’s argument therefore lacks foundation or merit,

and the motion is due to be denied.

“Moreover, even if the counterclaim is completely redundant, a court may still

exercise its discretion by not dismissing the counterclaim.” Clark v. Rockhill Ins. Co.,

No. 6:18-CV-780-RBD-KRS, 2018 WL 4926487, at *7 (M.D. Fla. Sept. 21,

2018), report and recommendation adopted sub nom., 2018 WL 4924348 (M.D. Fla. Oct.

10, 2018). See also Travelers Indem. Co. of Ill. v. Royal Oak Enterprises, Inc., 429 F. Supp.

2d 1265, 1270 (M.D. Fla. 2004) (“The motion is due to be denied with respect to the

dismissal of counts one, two and three. That these counts duplicate Travelers' request

for declaratory relief does not warrant their dismissal.”), aff'd, 171 F. App'x 831 (11th

Cir. 2006)); Frank v. Rockhill Ins. Co., No. 2:18-CV-162-FTM-99CM, 2018 WL

5619325, at *3 (M.D. Fla. Oct. 30, 2018) (“Moreover, if the breach of contract claim

and Defendant's affirmative defenses are truly redundant, then Frank will suffer no

prejudice in allowing the Counterclaim to proceed alongside Frank's breach of contract

claim.”); Perez v. Wells Fargo N.A., 774 F.3d 1329, 1339 n.10 (11th Cir. 2014) (“Because

the counterclaim related to the same subject matter as Perez's complaint, and a ruling

on the complaint would necessarily create law of the case for purposes of the issues

raised in the counterclaim, it would make little sense to decide the claims at issue in

the complaint without simultaneously considering the claims at issue in the

counterclaim.”); but see Sprint Sols., Inc. v. 4 U Cell, LLC, No. 2:15-CV-605—PAM--

CM, 2016 WL 1244528, at *3 (M.D. Fla. Mar. 30, 2016) (“A number of courts have

dismissed counterclaims that contain repetitious issues already before the court by way

of the complaint or affirmative defenses.”). Plaintiff has not demonstrated any harm

or prejudice in allowing the Counterclaim to proceed. This further swings the

pendulum in favor of denying the motion to dismiss.

Accordingly, it is hereby ORDERED:

1. The Motion to Dismiss Defendant Gilberto Sanchez’s Counterclaim

for Declaratory Judgment [Doc. 49] is DENIED.

DONE AND ORDERED in Tampa, Florida on September 14, 2021.

Chak De AinJ ands Na Pula st yl □□

Charlene Edwards Honeywell

United States District Judge

Copies to:

Counsel of Record and Unrepresented Parties, if any