The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
HITHE PROPERTIES, LLC CIVIL ACTION
VERSUS No. 23-5232
VELOCITY RISK SECTION I
UNDERWRITERS, LLC ET AL.
ORDER & REASONS
Before the Court is defendants Independent Specialty Insurance Company’s
and Certain Underwriters at Lloyd’s London’s (collectively, “defendants”) motion1 to
dismiss the claims against them pursuant to Federal Rule of Civil Procedure 12(b)(6)
or, alternatively, to stay the proceedings. No opposition has been filed.2 For the
reasons set forth below, the Court grants the motion to dismiss.
I. FACTUAL BACKGROUND
Hithe Properties, LLC (“plaintiff”) filed a complaint alleging breach of contract
and bad faith insurance claim handling against defendants Velocity Risk
Underwriters, LLC (“Velocity”), Independent Specialty Insurance Company, and
Certain Underwriters at Lloyd’s, London.3 Plaintiff asserts that defendants issued a
policy bearing the policy number 2021-803640-01 (“the policy”) pursuant to which
plaintiff was entitled to coverage.4 On October 20, 2023, the Court granted Velocity’s
1 R. Doc. No. 13.
2 The motion was set for submission on December 6, 2023. Therefore, pursuant to
Local Rule 7.5, plaintiff’s response was due on November 28, 2023.
3 R. Doc. No. 1-1, at 1,3.
4 Id. ¶ 6.
motion to dismiss, finding that plaintiff had not asserted a claim for relief against
Velocity.5
The remaining defendants now move to dismiss plaintiff’s complaint pursuant
to Rule 12(b)(6) because plaintiff failed to fulfill a contractual condition before filing
suit by failing to sit for an examination under oath.6 If the complaint is not dismissed,
defendants argue that it should be stayed while plaintiff’s representative’s
examination under oath is taken.7
II. LEGAL STANDARDS
Rule 12(b)(6) allows for dismissal of a complaint for “failure to state a claim
upon which relief can be granted.” “To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation and internal
quotations omitted). A claim is facially plausible “when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a
probability requirement, but it asks for more than a sheer possibility that a defendant
has acted unlawfully.” Culbertson v. Lykos, 790 F.3d 608, 616 (5th Cir. 2015) (citation
and internal quotations omitted).
“[T]he face of the complaint must contain enough factual matter to raise a
reasonable expectation that discovery will reveal evidence of each element of the
5 R. Doc. No. 7.
6 R. Doc. No. 13, at 1.
7 Id.
plaintiffs’ claim.” Hi-Tech Elec., Inc v. T&B Constr. & Elec. Servs., Inc., No. 15-3034,
2017 WL 615414, at *2 (E.D. La. Feb. 15, 2017) (Vance, J.) (citing Lormand v. US
Unwired, Inc., 565 F.3d 228, 255–57 (5th Cir. 2009)). A complaint is insufficient if it
contains “only labels and conclusions, or a formulaic recitation of the elements of a
cause of action.” Whitley v. Hanna, 726 F.3d 631, 638 (5th Cir. 2013) (citation and
internal quotations omitted). The complaint “must provide the defendant with fair
notice of what the plaintiff's claim is and the grounds upon which it rests.” Dura
Pharms., Inc. v. Broudo, 544 U.S. 336, 346 (2005) (internal quotations omitted).
In considering a motion to dismiss, a court views the complaint “in the light
most favorable to the plaintiff, accepting as true all well-pleaded factual allegations
and drawing all reasonable inferences in the plaintiff's favor.” Lovick v. Ritemoney
Ltd., 378 F.3d 433, 437 (5th Cir. 2004). The Court may consider “the complaint, its
proper attachments, ‘documents incorporated into the complaint by reference, and
matters of which a court may take judicial notice.’” Randall D. Wolcott, M.D., P.A. v.
Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (quoting Dorsey v. Portfolio Equities, Inc.,
540 F.3d 333, 338 (5th Cir. 2008)).
“Dismissal under [R]ule 12(b)(6) is a judgment on the merits and is typically
with prejudice, meaning the plaintiff is precluded from bringing the same claims
again.” Williams v. Am. Com. Lines, Inc., No. 21-30609, 2022 WL 1652778, at *1 (5th
Cir. May 24, 2022).
III. ANALYSIS
For purposes of deciding the present motion to dismiss, the Court considers
plaintiff’s complaint as well as the policy because it is incorporated into the complaint
by reference. See Randall D. Wolcott, M.D., P.A., 635 F.3d at 763.
Pursuant to Louisiana law, “[a]n insurance policy is a contract between the
parties and should be construed by using the general rules of interpretation of
contracts set forth in the Louisiana Civil Code.” Cadwallader v. Allstate Ins. Co., 848
So. 2d 577, 580 (La. 2003). While the general standard for interpretation is the intent
of the parties, “[w]hen the words of a contract are clear and explicit and lead to no
absurd consequences, no further interpretation may be made in search of the parties’
intent.” In re Katrina Canal Breaches Litig., 495 F. 3d 191, 207 (5th Cir. 2007)
(quoting La. Civ. Code art. 2046). Accordingly, “[i]f the policy wording at issue is clear
and unambiguously expresses the parties’ intent, the insurance contract must be
enforced as written.” Id. (quoting Cadwallader, 848 So. 2d at 580).
One of the duties imposed on plaintiff by the contract in the event of loss or
damage is to “[c]ooperate with [defendants] in the investigation or settlement of the
claim.”8 Defendants have the right to “examine any insured under oath, while not in
the presence of any other insured and at such times as may be reasonably required,
about any matter relating to this insurance or the claim, including an insured's books
and records.”9 The policy further provides that no “legal action, claim, demand or
8 R. Doc. No. 1-2, at 39.
9 Id.
suit” shall be brought against defendants pursuant to the policy unless “[t]here has
been full compliance with all terms and conditions.”10
The policy is unambiguous. Pursuant to the clear terms of the policy, plaintiff
cannot bring an action against defendants unless it cooperates with the investigation
or settlement of the claim, including through having their representative submit to
an examination under oath.
Defendants state that they made multiple requests for plaintiff’s
representative to submit to examinations under oath and provide requested
documents.11 The examinations were scheduled for March 16, 2023, April 14, 2023,
and May 8, 2023.12 Despite assurances from plaintiff’s counsel that plaintiff’s
representative would appear for the examinations, defendants contend that plaintiff’s
representative never appeared.13 On August 24, 2023, plaintiff commenced this
action by filing its complaint.14
“Louisiana courts have not permitted an insurer to escape liability when the
noncompliance with a cooperation clause has been minor, but rather have found that
the failure to cooperate precludes recovery when the insured engages in a ‘protracted,
willful, and apparently bad faith refusal’ to comply with a cooperation clause.”
Johnson v. State Farm Mut. Auto. Ins. Co., No. CIV.A. 12-1607, 2013 WL 2156328, at
*9 (E.D. La. May 17, 2013) (Brown, J.). “Louisiana appellate court cases seem to
10 Id. at 35.
11 R. Doc. No 13-1, at 1.
12 Id.
13 Id. at 2.
14 R. Doc. No. 1-1.
advise that an insurer may be relieved of liability if the extended and willful breach
of a cooperation clause is both material and prejudicial to the insurer.” Jd. “But courts
have found that an insured's claims are not subject to dismissal when the insured has
a ‘reasonable explanation’ for failing to submit to an [examination under oath].”
Beasley v. GeoVera Specialty Ins. Co., No. CIV.A. 13-395, 2015 WL 2372328, at *4
(E.D. La. May 15, 2015) (Fallon, J.).
Plaintiff has failed to comply with the clear and explicit terms of the policy.
Defendants made multiple requests of plaintiff, and plaintiff filed this action before
complying with the requests, in violation of plaintiff's contractual duties. Plaintiffs
failure to comply is prejudicial to defendants because it impairs their ability to
conduct a coverage investigation and issue a coverage decision. Significantly,
plaintiff did not respond to defendants’ motion and has not offered a reasonable
explanation or any explanation for failing to submit to an examination under oath.
IV. CONCLUSION
Accordingly,
IT IS ORDERED that defendants’ motion to dismiss pursuant to Rule 12(b)(6)
is GRANTED. Plaintiffs complaint is DISMISSED WITH PREJUDICE.
New Orleans, Louisiana, December 18, 2023.
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UNITED STATES DISTRICT JUDGE