# C and C Wine and Spirits Inc v. Pennsylvania National Mutual Casualty Insurance Company

> District Court, W.D. Tennessee · June 7, 2023

URL: https://www.frixlaw.com/law-library/cases/10441389

## Case

- **Court:** District Court, W.D. Tennessee
- **Decided:** June 7, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

C AND C WINE AND SPIRITS, INC. and )
HOYT HAYES CONSTRUCTION, INC., )
as Assignee, )
)
Plaintiff, )
) Case No. 2:23-cv-01024-JPM-jay
v. )
)
PENNSYLVANIA NATIONAL MUTUAL )
CASUALTY INSURANCE COMPANY, )
)
Defendant. )
)

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS

This cause is before the Court on Defendant Pennsylvania National Mutual Insurance
Company’s (“Penn” or “Defendant”) Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure. (ECF No. 9.) For the reasons set forth below, Defendant’s Motion to
Dismiss is GRANTED.
I. BACKGROUND
a. Factual Background
Plaintiff is a corporation with its principal place of business in Jackson, Tennessee. (ECF
No. 1-1 ¶ 3). Defendant is a Pennsylvania corporation with its principal place of business in
Harrisburg, Pennsylvania. (Id. ¶ 3; see also ECF No. 1 ¶ 5.)
A fire took place at C and C Wine and Spirits (“C and C”),1 located at 2644 North Highland
Avenue, Jackson, Tennessee 38305 on October 26, 2019. (ECF No. 1-1 ¶ 7.) C and C had an
insurance contract with Defendant, and it filed an insurance claim. (Id.) Following the fire, C and
C assigned the insurance claim to Plaintiff.2 (Id.) Plaintiff submitted a Proof of Loss to Defendant

along with other “documents, invoices, and photographs.” (Id.) Defendant has been actively
engaged in investigations between the date of the fire and today. (Id.)
Plaintiff has submitted to the Court an additional Statement of Facts along with its
Response to the instant Motion, although this is a Motion to Dismiss and not a Motion for
Summary Judgment. (ECF No. 15 at PageID 184.) These “facts” are not properly before the
Court. Plaintiff has not sought to amend its Complaint. “Ordinarily, when the omission of a
critical allegation in a complaint is highlighted by a defendant's motion to dismiss, the appropriate
method for adding new factual allegations is to request leave to amend the complaint in
conjunction with responding to the motion to dismiss.” Bishop v. Lucent Techs., Inc., 520 F.3d
516, 521 (6th Cir. 2008). The Court will not consider Plaintiff’s additional statement of facts, as

it was pleaded improperly.
b. Procedural Background
Plaintiff initially filed the Complaint in the instant case in the Chancery Court of Madison
County, Tennessee at Jackson on September 16, 2022. (ECF No. 1-1.) Defendant removed the
suit to federal court on the basis of diversity on February 6, 2023. (ECF No. 1 at PageID 1–2.)
The case was reassigned to Judge Jon P. McCalla for all further proceedings on March 13, 2023.
(ECF No. 16.)

1 C and C is also occasionally styled “C&C Wine and Spirits” in the pleadings. (ECF No. 1-1 at PageID 9.) The
Court styles the company’s name in the manner consistent with the caption.
2 The Parties agree that C and C, having assigned all its interest to Plaintiff, does not have standing to bring suit and
is neither a proper nor a necessary party to the instant matter. (ECF No. 15 at PageID 189.)
As previously noted, Defendant filed the instant Rule 12(b)(6) Motion to Dismiss on
February 9, 2023. (ECF No. 9.) Defendant’s Motion was accompanied by a Memorandum of
Law (ECF No. 9-1), a copy of the insurance policy at issue (ECF No. 9-2), and a copy of the
document assigning the insurance claim. (ECF No. 9-3.) Plaintiff filed a Response on March 13,

2023. (ECF No. 15.) Defendant filed a Reply on March 28, 2023. (ECF No. 21.) Defendant’s
Reply was accompanied by a copy of its proof of loss request (ECF No. 21-1), a copy of its claim
denial (ECF No. 21-2), and a copy of its claim payments. (ECF No. 21-3.)
II. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) allows dismissal of a complaint that “fail[s] to
state a claim upon which relief can be granted.” A Rule 12(b)(6) motion permits the “defendant
to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged
in the complaint is true.” Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993) (citing Nishiyama
v. Dickson Cnty., 814 F.2d 277, 279 (6th Cir. 1987)). A motion to dismiss only tests whether the
plaintiff has pled a cognizable claim and allows the court to dismiss meritless cases which would

waste judicial resources and result in unnecessary discovery. Brown v. City of Memphis, 440 F.
Supp. 2d 868, 872 (W.D. Tenn. 2006).
When evaluating a motion to dismiss for failure to state a claim, the Court must determine
whether the complaint alleges “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) (citing Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570 (2007)). If a court decides that the claim is not plausible, the case
may be dismissed at the pleading stage. Iqbal, 556 U.S. at 679. “[A] formulaic recitation of the
elements of a cause of action will not do.” Twombly, 550 U.S. at 555. The “[f]actual allegations
must be enough to raise a right to relief above [a] speculative level.” Ass’n of Cleveland Fire
Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Twombly, 550 U.S. at
555). A claim is plausible on its face if “the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal,
556 U.S. at 678 (citing Twombly, 550 U.S. at 556).

A complaint need not contain detailed factual allegations. Twombly, 550 U.S. at 570. A
plaintiff without facts who is “armed with nothing more than conclusions,” however, cannot
“unlock the doors of discovery.” Iqbal, 556 U.S. at 678-79; Green v. Mut. of Omaha Ins. Co., No.
10-2487, 2011 WL 112735, at *3 (W.D. Tenn. Jan. 13, 2011), aff’d, 481 F. App’x 252 (6th Cir.
2012). A court “need not accept as true legal conclusions or unwarranted factual inferences.”
Morgan v. Church’s Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987). “While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.” Iqbal, 556
U.S. at 679. A court is “not bound to accept as true a legal conclusion couched as a factual
allegation.” Twombly, 550 U.S. at 555.
While consideration of a motion to dismiss under Rule 12(b)(6) is generally confined to

the pleadings, “documents attached to the pleadings become part of the pleadings and may be
considered on a motion to dismiss.” Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508
F.3d 327, 335 (6th Cir. 2007) (citing Fed. R. Civ. P. 10(c)); see also Koubriti v. Convertino, 593
F.3d 459, 463 n.1 (6th Cir. 2010). Even if a document is not attached to a complaint or answer,
“when a document is referred to in the pleadings and is integral to the claims, it may be considered
without converting a motion to dismiss into one for summary judgment.” Commercial Money
Ctr., 508 F.3d at 335–36; see also Garton v. Crouch, 2022 WL 275519 (M.D. Tenn. 2022) (citing
Brent v. Wayne Cyt. Dep’t of Human Servs., 901 F.3d 656, 694 (6th Cir. 2018)) (“[I]t has long
been the rule that a court may consider, not only the Complaint and exhibits attached to it, but also
exhibits attached to a defendant's motion to dismiss, ‘so long as they are referred to in the
Complaint and are central to the claims contained therein.’”).
III. ANALYSIS
a. Documents Attached to the Pleadings

Defendant attaches a number of documents to the instant Motion, and to its Reply. (See
ECF Nos. 9-2–3; see also ECF Nos. 21-1–3.) The Court’s opinion will reference the insurance
policy (ECF No. 9-2), the copy of the proof of loss (ECF No. 21-1), the copy of the claim denial
(ECF No. 21-2), and the estimated settlement checks (ECF No. 21-3). The insurance policy, the
proof of loss, and the insurance claim are directly referenced in the Complaint and integral to
Plaintiff’s claims, so the Court may consider them. (ECF No. 1-1 ¶ 7); see also Commercial Money
Ctr., 508 F.3d at 335–36. The settlement checks are not referenced in Plaintiff’s pleadings, but
they are integral to Defendant’s claims. That Defendant has already paid over $1.7 million to
Plaintiffs inevitably impacts the Court’s understanding of the amount of coverages and Plaintiff’s
recovery rights. (ECF No. 21-3.) “While documents integral to the complaint may be relied upon,

even if they are not attached or incorporated by reference, it must also be clear that there exist no
material disputed issues of fact regarding the relevance of the document.” Ouwinga v. Benistar
419 Plan Servs., Inc., 694 F.3d 783, 797 (6th Cir. 2012) (citing Mediacom Se. LLC v. BellSouth
Telecomms., Inc., 672 F.3d 396, 400 (6th Cir. 2012)). Plaintiff has not pleaded any fact that
conflicts with the existence of these settlement checks or their validity, and therefore the Court
may consider them. (See generally ECF No. 1-1.)
b. The Statute of Limitations
The question of the date of accrual of a cause of action is a question of law. See Best Choice
Roofing & Home Improvement, Inc. v. Best Choice Roofing Savannah, LLC, 446 F.Supp.3d 258,
274 (M.D. Tenn. Mar. 9, 2020) (citation omitted). The choice of law rule of the forum state applies
in a federal diversity action. Montgomery v. Wyeth, 580 F.3d 455, 459 (6th Cir. 2009). The
insurance policy at issue in the instant case was issued in Tennessee. (See ECF No. 9-2.)
Tennessee follows the common law rule of lex loci contractus, whereby contracts are presumed to

be governed by the law of the state in which they are executed. Williams v. Smith, 465 S.W.3d
150, 153 (Tenn. Ct. App. 2014). The Court therefore applies Tennessee law in interpreting the
insurance policy at issue.
“Insurance contracts are subject to the same rules of construction and enforcement as apply
to contracts generally.” McKimm v. Bell, 790 S.W.2d 526, 527 (Tenn. 1990) (internal citations
omitted). Under Tennessee law, interpretation of a written contract is a legal, not a factual, issue.
Brandt v. Bib Enters., Ltd., 986 S.W.2d 586, 592 (Tenn. Ct. App. 1998). An insurer’s rights and
a policyholder’s rights “are governed by their contract of insurance.” Merrimack Mut. Fire Ins.
Co. v. Batts, 59 S.W.3d 142, 148 (Tenn. Ct. App. 2001). In the instant case, the Parties agreed to
an insurance contract that set out a two-year limitations period in which to bring suit. (ECF No.

9-1 at PageID 94.) “[A] contractually agreed limitations period in an insurance policy is valid and
enforceable in Tennessee.” Certain Underwriter's at Lloyd's of London v. Transcarriers Inc., 107
S.W.3d 496, 499 (Tenn. Ct. App. 2002).
Insurance policies may require the insured to file proof of loss with the insurer, or they may
require a proof of loss only upon request. Insurance policies may also include a period of time
after a proof of loss is submitted, during which period the insurer cannot be sued while it evaluates
the claim, called an “immunity period.” If an insurance policy does not require the insured to file
a proof of loss with the insurer, the insured party’s cause of action accrues when the insurer denies
the claim. Das v. State Farm Fire & Cas. Co., 713 S.W.2d 318, 322–24 (Tenn. Ct. App. 1986).
The acceptance of a claim during the immunity period had the same effect as a denial for the
purpose of triggering the contractual limitations period. Daniel v. Allstate Ins. Co., No. W2014-
01965-COA-R3-CV, 2015 WL 1578553, at *4 (Tenn. Ct. App. Apr. 6, 2015). This is because an
insurer’s decision to accept or deny a claim “acts as a waiver of its immunity from suit, and the

contractual limitations period begins to run.” Id. The insurance policy at issue in the instant case
only required a proof of loss upon the request of the insurer. (ECF No. 9-2 at PageID 94.)
Defendant requested a Proof of Loss from Plaintiff on February 11, 2020. (ECF No. 21-1.)
However, Defendant had already tendered three estimated settlement checks to Defendant on
November 14, 2019. (ECF No. 21-3.) The tendering of the settlement checks acted as a waiver
of Defendant’s immunity from suit, and it was from November 14, 2019, that the statute of
limitations began to run. See Daniel, 2015 WL 1578553.
The instant case is analogous to the Daniel case, decided by the Tennessee Court of
Appeals. See Daniel v. Allstate Ins. Co., No. W2014-01965-COA-R3-CV, 2015 WL 1578553
(Tenn. Ct. App. Apr. 6, 2015). In Daniel, a home was damaged by fire, and the insurer submitted

an estimate and tendered a settlement check to the insured parties, as in this case. Id. at *1.
Plaintiffs sent the insurer a letter over a year later, claiming that they were owed additional money.
Id. at *2. The plaintiffs’ contract with the insurer stated that any “suit or action must be brought
within one year after the inception of loss or damage.” Id. at *1. In both this case and that case,
therefore, the suit for allegedly unpaid claims was brought after the contractual limitations period
had run when counted from the date of loss or the date of payment of an estimated settlement. The
initial question in that case, as in the instant case, was from what date the limitations period ran.
The Daniel court held that the insurer’s choice to grant or deny a claim ends the settlement
period, and that is when the contractual limitations period began to run. Id. at *4. The Daniel
court determined that the insurer ended the settlement period on the date that it tendered a
settlement check to the plaintiffs. Id. This was true even though the tendered settlement check
was for an estimated value of the damages and the insurer offered to re-evaluate the amount of its
payment to the Daniel plaintiffs after the contractual limitations period had expired. Id. at *1–2.

This Court is bound to follow Tennessee law and conclude that the statute of limitations
began to run on the date Defendant tendered its estimated settlement check to Plaintiff, on
November 14, 2019, because this was an acceptance of Plaintiff’s insurance claim and therefore
the date that Defendant waived its immunity from suit. Id. at *4. This is true even though the
tendered settlement check was for an estimated value of the damages, and the insurer continued to
investigate Plaintiff’s claim. See generally id. The contractual statute of limitations in the instant
case was two years. (ECF No. 9-1 at PageID 94.) Plaintiff’s claim is therefore time barred as of
November 14, 2021.
c. Equitable Estoppel
Plaintiff contends that it was in settlement negotiations with Defendant, and that Defendant

was still investigating the insurance claims, until several weeks before this case was filed. (ECF
No. 15 at PageID 188). Plaintiff therefore argues that Defendant is estopped from raising the
statute of limitations. (Id. at PageID 188.)
The party asserting equitable estoppel bears the burden of proof. Redwing v. Catholic
Bishop for the Diocese of Memphis, 363 S.W.3d 436, 460-61 (Tenn. 2012). Under Tennessee
law, the three elements of equitable estoppel are
(1) Conduct which amounts to a false representation or concealment of material
facts, or, at least, which is calculated to convey the impression that the facts are
otherwise than, and inconsistent with, those which the party subsequently attempts
to assert; (2) Intention, or at least expectation that such conduct shall be acted upon
by the other party; (3) Knowledge, actual or constructive of the real facts.
Osborne v. Mountain Life Ins. Co., 130 S.W.3d 769, 774 (Tenn. 2004) (quoting Consumer Credit
Union v. Hite, 801 S.W.2d 822, 825 (Tenn. Ct. App. 1990)). “The doctrine of equitable estoppel
applies only when the defendant engages in misconduct.” Redwing, 363 S.W.3d 436, 460 (Tenn.
2012) (citing B & B Enterprises of Wilson Cnty., LLC v. City of Lebanon, 318 S.W.3d 839, 848

(Tenn. 2010)).
The Tennessee Supreme Court has set out a series of examples of situations in which
Tennessee courts have invoked the doctrine of equitable estoppel, none of which is analogous to
the instant case. Id. at 460–61 (collecting cases). However, “[t]he focus of an equitable estoppel
inquiry ‘is on the defendant's conduct and the reasonableness of the plaintiff's reliance on that
conduct.’” Id. at 461 (quoting Hardcastle v. Harris, 170 S.W.3d 67, 85 (Tenn. Ct. App. 2004)).
This is a fact-based and case-specific inquiry into “whether the defendant's conduct is sufficiently
unfair or misleading to outweigh the public policy favoring the enforcement of statutes of
limitations.” Id. (citing Hardcastle, 170 S.W.3d at 85).
In the instant case, Plaintiff’s pleadings are far from sufficient to establish that Defendant’s

conduct amounted to misconduct, let alone conduct so unfair or misleading as to outweigh the
public policy interest in enforcing statutes of limitations. Id. Plaintiff has not pleaded that
Defendant attempted to mislead it. (See generally ECF No. 1-1; see also ECF No. 15.) Plaintiff
has not pleaded that Defendant represented that it would not pursue a statute of limitations defense.
(Id.) In fact, Defendant gave Plaintiff notice that the statute of limitations was running. (ECF No.
21-2 at PageID 227.) Construing the facts in the light most favorable to the Plaintiff, it has not
made any assertion that Defendant “engaged in misconduct.” Redwing, 363 S.W.3d at 460.
Plaintiff asserts that Defendant “induced [it] to believe that Penn was going to pay the outstanding
claims pursuant to the policy of insurance.” (ECF No. 15 at PageID 186.) Plaintiff argues that
Defendant continued to investigate Plaintiff’s insurance claims, and negotiate with Plaintiff
regarding those claims, through at least 2022. (Id. at PageID 185.) However, “[i]f limitations
periods were to toll merely because further negotiation, inspections, and adjustments occur, it
would defeat the purpose of the limitations period.” Murphy v. Allstate Indem. Co., 2014 WL

1024165, at *3 (E.D. Tenn. Mar. 17, 2014). Defendant’s continuing investigation of Plaintiff’s
claim is not a misleading inducement not to bring suit. The public policy interest favors allowing
insurers to negotiate, investigate, and adjust their estimates after tendering payouts.
To allow a full year's renewal of the one[-]year time limitation from the termination
of renewed investigation or discussion would have a chilling effect upon [renewals
of investigations or negotiations of denials of liability by insurance companies].
The most amiable and agreeable insurer would be most reluctant to renew
investigation or discussion if the result would be a renewal of the entire year
allowed for bringing suit.
Das, 713 S.W.2d at 324. Public policy also favors the predictability of a concrete, predictable
limitations period that all parties may rely upon. See Hardcastle, 170 S.W.3d at 84 (citing Brown
v. Hipshire, 553 S.W.2d 570, 571 (Tenn. 1977)) (“Statutes of limitations are favored because they
promote the timely pursuit of legal rights by suppressing stale claims”). Construing the facts
pleaded in the light most favorable to the Plaintiff, Defendant’s actions in continuing to investigate
Plaintiff’s claims and continuing to negotiate with Plaintiff, without any pleading indicating that
such investigations and negotiations were not undertaking in good faith, cannot be understood to
be actions amounting to misconduct.
“Once the clock on the limitations period started ticking, Plaintiffs had a series of choices
regarding whether to keep negotiating, whether to invoke certain provisions of the contract, and,
particularly as the limitations period drew to a close, whether to file a law[]suit.” Murphy, 2014
WL 1024165, at *4. Under Tennessee law, Plaintiff missed its window to sue Defendant if it felt
that the estimated settlement check did not fully pay out its claims.
IV. CONCLUSION
For each of the reasons set forth above, Defendant’s Motion to Dismiss is GRANTED.
SO ORDERED, this 7th day of June, 2023.
/s/ Jon P. McCalla
JON P. McCALLA
UNITED STATES DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10441389. Public record. Not legal advice.