The opinion
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
MARK MAGI, et al.,
Plaintiffs,
Civil Action No. 20-8881 (ZNQ) (JBD)
v.
OPINION
WILLIAM RICH, et al.,
Defendants.
QURAISHI, District Judge
THIS MATTER comes before the Court upon a partial Motion to Dismiss Count II of the
Third Amended Third-Party Complaint (“TATPC”) filed by Third-Party Defendant Markel
American Insurance Company (“Markel”) (the “Motion”). (ECF No. 111.) Markel filed a brief in
support of the Motion (“Moving Br.”, ECF No. 111-1) with a police report as Exhibit A in support
of the Moving Br. (ECF No. 111-2.) Defendant, Third-Party Plaintiff William Rich (“Rich”)
opposed the Motion (“Opp’n Br.”, ECF No. 118) and submitted a string of exhibits in opposition
to the Motion. (ECF Nos. 118-1–118-12.) Markel filed a reply brief in further support of the
Motion. (“Reply Br.,” ECF No. 125.)
The Court has carefully considered the parties’ submissions and decides the Motion
without oral argument pursuant to Federal Rule of Civil Procedure 78(b) and Local Civil Rule
78.1. For the reasons set forth below, Markel’s partial Motion to Dismiss will be GRANTED.
I. BACKGROUND AND PROCEDURAL HISTORY
Defendant Rich is being sued based on his involvement in a boating accident that occurred
on November 3, 2019. (See Compl., ECF No. 1.) Rich has sought to pursue third-party claims
against various parties, including his insurance company, Markel. On January 31, 2023, the Court
granted Markel’s Motion to Dismiss Count II—Rich’s breach of contract claim against Markel—
ruling that the Complaint did not plausibly plead that a valid contract existed between Rich and
Markel at the time the boating accident occurred on November 3, 2017. (ECF Nos. 79 & 80.) The
Court determined that, as pled, the policy at the center of the lawsuit did not provide coverage
prior to the effective date listed on its face: November 7, 2017. (ECF No. 79.) Accordingly, the
Court dismissed Count II of Rich’s Second Amended Third-Party Complaint (“SATPC”) and
granted Rich leave to either file a final Third-Party Complaint or continue to pursue his remaining
claims from the SATPC.
By the Court’s deadline, Rich elected to further amend his Complaint and filed his TATPC.1
(ECF No. 81.) The TATPC again asserts a breach of contract claim against Markel notwithstanding
the undisputed fact that the underlying accident occurred after the effective date identified on the
face of the Policy. The current Motion seeks to again dismiss that claim.
II. LEGAL STANDARD
A complaint may be dismissed under the Federal Rule of Civil Procedure 12(b)(6) for
failure to state a claim upon which relief can be granted. When considering a motion to dismiss
1 Notwithstanding the Court’s clear instruction to Rich to either file a final Amended Third Party Complaint or stand
on his Second Amended Third Party Complaint, he filed a new Amended Third Party Complaint but captioned it as
his Second Amended Third Party Complaint. (ECF No. 81.) This is incorrect. It’s clear from the docket that Rich
has already filed an initial Third Party Complaint (ECF No. 20), a First Amended Third Party Complaint (ECF No.
30), and a Second Amended Third Party Complaint (ECF No. 47), which was accepted by the Court (ECF No. 79).
Accordingly, the operative pleading now before the Court is Rich’s fourth Complaint and is properly designated his
Third Amended Third Party Complaint. The Clerk’s Office will be instructed to update the description of docket entry
number 81 accordingly.
under FRCP 12(b)(6), a district court must accept as true the plaintiff’s well-pleaded factual
allegations and “construe the complaint in the light most favorable to the plaintiff.” Fowler v.
UPMC Shadyside, 578 F. 3d 203, 210 (3d Cir. 2009) (citation omitted). A court, however, may
ignore legal conclusions or factually unsupported accusations that merely state, “the defendant
unlawfully harmed me.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). In the end, a
court must determine whether “the facts alleged in the complaint are sufficient to show that the
plaintiff has a ‘plausible claim for relief.’ ” Fowler, 578 F.3d at 211 (quoting Iqbal, 556 U.S. at
679). A facially plausible claim “allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. at 210 (quoting Iqbal, 556 U.S. at 678).
A district court is not “compelled to accept unsupported conclusions and unwarranted
inferences,” Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (quoting Schuylkill Energy
Res., Inc. v. Pa. Power & Light Co., 113 F.3d 405, 417 (3d Cir.1997)), or “a legal conclusion
couched as a factual allegation,” when analyzing a motion to dismiss. Id. (quoting Papasan v.
Allain, 478 U.S. 265, 286 (1986).
As a general matter, a district court ruling on a motion to dismiss may not consider matters
extraneous to the pleadings. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d
Cir. 1997) (quoting Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 944 (3d Cir. 1985)).
Thus, “courts generally consider only the allegations in the complaint, exhibits attached to the
complaint, matters of public record, and documents that form the basis of a claim.” Lum v. Bank
of Am., 361 F.3d 217, 222 (3d Cir. 2004) (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d
at 1426.))
III. JURISDICTION
The Court has original jurisdiction over this case under 28 U.S.C. § 1331(1) based on the
maritime claims asserted in the TATPC. The Court exercises supplemental jurisdiction over the
parties’ related, non-maritime claims under 28 U.S.C. § 1367.
IV. DISCUSSION
Count II of the TATPC again alleges a breach of contract claim against Markel. (ECF No.
81 ¶¶ 53–61.) In relevant part, this newest version of Count II recites:
53. Third Party Plaintiff William Rich re-alleges and reincorporate
the allegations set forth in the preceding paragraphs as if fully set
forth herein.
54. On September 13, 2019, Sea Insure Agency, through Duncan
Brown, contacted MAIC and indicated that a policy of insurance
was to be issued between MAIC and Rich, with an effective date of
September 13, 2019.
55. The policy MAIC was to issue was Markel Helmsman Yacht
policy MHY00000511474 to William Rich. (Exhibit C)
56. Pursuant to the terms of the above Policy, MAIC was to provide
insurance coverage, including liability coverage and
indemnification, attorneys fees and costs of defense, to William
Rich for claims made against him for bodily injury caused by a
boating accident.
57. Although notice of a claim was timely provided to MAIC, and
the defense of this action tendered, MAIC has denied coverage.
58. Notwithstanding that William Rich complied with all of the
prerequisites and conditions precedent to be covered by a policy of
insurance with MAIC, and notwithstanding that Sea Insure Agency
indicated that MAIC was to bind a policy of insurance with an
effective date of September 13, 2019, MAIC is alleging that the
policy did not take effect on September 13, 2019, but took effect
after the accident on November 7, 2019.
59. MAIC breached the contract of insurance with William Rich that
was created through its agent, Sea Insure Agency.
60. Pursuant to Fed R. Civ P. 14 and 20, Plaintiff hereby impleads
MAIC as the provider of liability insurance and the commonality of
interest with defendant William Rich as operator of his vessel.
61. Although the defendant, Third Party Plaintiff, William Rich,
denies all liability, in the event that there is a verdict, judgment,
settlement, or arbitration award in favor of either of the plaintiffs
against William Rich, that William Rich is entitled to contribution
and a judgment of full indemnity from Third Party defendant MAIC.
(TATPC ¶¶ 53–61.)
In its Motion, Markel argues that the TATPC lacks any allegation that either SIA or Markel
ever represented to Rich that an insurance policy would be bound with an effective date of
September 13, 2019. (Moving Br. at 10.) It argues that the TATPC concedes Rich was not even
aware that SIA had communicated with maritimepg.com on September 13, 2019. (Id.)
Markel insists that its insurance policy was not effective until November 7, 2019, the
effective date listed on the Policy and the date Rich’s credit card information for payment of the
insurance policy premium was provided for the first time in their email exchanges on November
7, 2019. (Moving Br. at 15; Exhibit K.)
In Opposition, Rich argues that because this is an admiralty matter, federal law is to be
applied to his breach of contract claim, “with resort to state law in the absence of well-established
federal admiralty rule. (Opp. at 9–10.) Under either law, Rich contends that a marine insurance
contract can be binding even if the actual policy is never issued. (Id. at 10–11.) In such situations,
the terms of the insurance policy are those contained in the standard form policy usually issued by
the company at the time. (Id. at 11.)
Rich argues and alleges that SIA agreed to provide him with insurance, and Markel is bound
by SIA’s agreement because SIA is Markel’s agent that was acting within the scope of SIA’s
apparent authority. (Id. at 13; TATPC ¶¶ 15, 29, 59.)2 According to Rich, the terms of that policy
2 For reasons that are not clear, Rich argues for the first time in his opposition that an “oral policy of insurance was
created” because “all the material terms of the policy of insurance were agreed to between MAIC and William Rich.”
(Opp. at 12.) Rich cites no supporting allegations from the TATPC for the existence of an oral agreement, nor could
the Court find any.
are the same ones that were later issued by Markel in writing, minus the effective date. (Opp. at
12; TATPC ¶ 41.) He argues, in the alternative, that an agreement to provide coverage should be
found under New Jersey’s “reasonable expectation” doctrine because he provided the final
information sought be SIA and, although he did not pay the premium, SIA instructed him not to
pay a premium, but to instead wait until he was invoiced. (Opp. at 16–21.) As evidence of the
reasonableness of his own belief that coverage had gone into effect, Rich cites the email from
Brown to maritimepg.com. (Opp. at 21.) If Brown, as agent for SIA, believed coverage should
be issued, Rich’s expectation was almost certainly reasonable. (Id.)
On reply, Markel maintains that the Policy had an effective date of November 7, 2019.
(Reply at 4.) It distinguishes the cases relied upon by Rich for the proposition that an insurance
agreement can be binding without an actual policy. (Reply at 5.) According to Markel, “SIA never
actually procured a policy prior to the incident”, “[n]or did it ever agree to bind the policy or tell
Rich that such a policy was bound.” (Reply at 8.) Even if SIA had done so, Markel denies that it
is responsible for the acts or contracts made by SIA because “there is a dispute as to whether SIA
is the agent of MAIC . . . 3.” (Id. at 7–8). Either way, Markel insists that the Policy as an oral or
written contract did not exist at the time of the boating accident on November 3, 2019. Markel
cites the exhibits attached to the TATPC, including the email from SIA to Rich as clearly showing
that a condition for Markel to even consider a binding policy is the submission of a completed
application and payment of the insurance premium to Markel. (Id. (emphasis added); Exhibit B to
the SATPC.)
3 The Court construes Markel’s argument that there is a dispute as to whether SIA acted as Markel’s agent as
highlighting a legal dispute between the parties as to SIA’s status. Were SIA’s status as agent merely a factual issue,
given the posture of the motion to dismiss, the Court would be bound by the factual allegations asserted by the TATPC.
As set forth below, this is not the case.
To establish a prima facie claim for breach of contract, a plaintiff must show “(1) a contract
[existed] between the parties; (2) a breach of that contract; (3) damages flowing therefrom; and (4)
that the party stating the claim performed its own contractual obligations.” Frederico v. Home
Depot, 507 F.3d 188, 203 (3d Cir. 2007); Goldfarb v. Solimine, 245 N.J. 326, 338 (2021). The
parties’ dispute on this Motion centers, as it has previously, on the first element: whether a contract
existed between the parties. The TATPC does not allege that Markel directly entered into a contract
with Rich. It instead now alleges that SIA, acting as agent for Markel4, created the contract which
in turn binds Markel as principal. This implicates whether the TATPC plausibly pleads that SIA
was acting as an agent for Markel.
In New Jersey, “[a]n agency relationship is created ‘when one person (a principal)
manifests assent to another person (an agent) that the agent shall act on the principal’s behalf and
subject to the principal’s control, and the agent manifests assent or otherwise consents so to act.’ ”
Verify Smart Corp. v. Bank of Am., N.A., Civ. No. 17-4248, 2021 WL 2549335, at *8 (D.N.J. June
17, 2021) (quoting N.J. Lawyers’ Fund for Client Protection v. Stewart Title Guar. Co., 203 N.J.
208, 220 (2010)). This assent is given in the form of actual authority, exhibited by a principal’s
words or conduct, or apparent authority, which occurs when “a third party reasonably believes the
actor has authority to act on behalf of the principal and that belief is traceable to the principal’s
manifestations.” Id.
Unfortunately, the TATPC’s allegation that SIA is the agent of Markel is little more than a
bald legal conclusion. See Ferrante v. Amgen, Inc., Civ. No. 13-7344, 2014 WL 1092555, at *3
4 This is giving the Third Amended Third-Party Complaint its most generous reading. It is in fact remarkably
inconsistent as to the role played by SIA. At points, the TATPC does allege that SIA is the “insurance agent for MAIC”
(TATPC ¶¶ 12, 29, 59, ). However, at another point it alleges that MAIC is SIA’s “agents, servants or employees.” At
still other points, the TATPC alleges that SIA is “the agent and/or broker for MAIC.” (TATPC ¶ 68). Notwithstanding
this purported connection between SIA and Markel, the TATPC also separately alleges that SIA is “the insurance
agent/broker for William Rich.” (TATPC ¶¶ 73, 77).
(D.N.J. Mar. 18, 2014). As set forth above, the Court need not accept bare legal conclusions on a
motion to dismiss. See also Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007). The TATPC
lacks any specificity as to whether SIA was exercising actual authority or apparent authority and
is devoid of factual allegations to support either notion. In the absence of such facts, the Court
cannot find that Count II states a plausible claim.*> Accordingly, the Motion to Dismiss will be
GRANTED.
The Court is aware that it has already cautioned Rich that the TATPC would be his final opportunity
to plead a breach of contract claim against Markel, and that dismissal with prejudice would be warranted.
However, given that the TATPC has pled a coherent, if not plausible, claim, the Court finds it would not be
futile to afford Rich one additional opportunity. Accordingly, Rich will be granted leave to file a Fourth
Amended Third-Party Complaint, limited to amendments to remedy the defects identified herein, within 30
days. Should a Fourth Amended Third-Party Complaint fail to state a claim, it is unlikely that further leave
will be granted. Prior to filing a Fourth Amended Third-Party Complaint, the Court encourages him to
revisit the entirety of his pleading to clarify the role(s) that he is alleging SIA played in the circumstances
that led to this suit.
V. CONCLUSION
For the reasons stated above, the Court will GRANT Third-Party Defendant Markel
American Insurance Company’s Partial Motion to Dismiss Count IT of the Second Amended Third-
Party Complaint without prejudice. An appropriate Order will follow.
Date: December 26, 2023 ;
Sede
ZAHID N. QURAISHI
UNITED STATES DISTRICT JUDGE
5 The Court does not reach Rich’s argument regarding his reasonable expectation of insurance coverage because it
too requires a finding that SIA was acting as Markel’s agent.