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Standard Contractors, Inc. v. National Trust Insurance Co.

United States District Court, M.D. Georgia, Valdosta Division

September 26, 2014



HUGH LAWSON, Senior District Judge.

This case is before the Court on Defendant's Motion to Dismiss. (Doc. 3). For the reasons discussed below, the Court grants Defendant's motion.


On January 30, 2013, Plaintiff Standard Contractors, Inc. ("SCI") entered into a subcontract with Marteen, Inc., a general contractor hired to renovate the indoor pool facility at Moody Air Force Base. (Doc. 1-1 ¶ 6). SCI agreed to provide all labor, equipment and materials required for the project. (Id.) SCI then subcontracted the design and installation of the pool to Aqua Designs Systems, Inc. ("Aqua Designs"). ( Id. at ¶¶ 7-8). SCI and Aqua Designs finalized the pool renovation project on December 21, 2012. ( Id. at ¶ 9).

SCI received notification on March 31, 2013 that there was a significant drop in the water level of the pool. ( Id. at ¶ 21). Upon investigation, SCI discovered extensive damage to the pool, the pool's recirculation system, and the concrete decking on both sides of the pool. ( Id. at ¶ 22). According to SCI, Aqua Designs omitted numerous parts that were vital to the recirculation system and specifically required by the design plan. ( Id. at ¶¶ 10-12). SCI further alleges that Aqua Designs installed an oversized impeller that caused excessive water pressure in the recirculation system. ( Id. at ¶¶ 13-15). The combination of the missing parts and the oversized impeller compromised the piping system and lead to the demise of the pool project. ( Id. at ¶¶ 16-20).

SCI submitted a claim to Defendant National Trust Insurance Company ("National Trust") on April 9, 2013, seeking coverage for the Loss under a commercial general liability ("CGL") policy. ( Id. at ¶ 23, 25). National Trust acknowledged receipt of the claim on April 11, 2013. ( Id. ¶ 26; Doc. 1-2, Ex. C). In its preliminary assessment of the claim, National Trust indicated that there may not be coverage under the CGL policy but agreed to investigate the matter subject to a reservation of rights. (Id.) On May 9, 2013, National Trust, citing various provisions contained in the insurance policy, confirmed that there was no coverage of the claim. ( Id. at ¶ 27; Doc. 1-1, Ex. D). The insurance company again asserted a reservation of rights and instructed SCI that if "any of the facts change, or any new allegations are raised, or if a lawsuit is filed, you should immediately notify us and we will further evaluate the new information." (Doc. 1-2, Ex. D). y a letter dated June 21, 2013, SCI contested the denial of coverage, made a demand for coverage, and placed National Trust on notice of a potential bad faith claim under O.C.G.A. § 33-4-6. (Doc. 1-1, ¶¶ 28-29; Doc. 1-2, Ex. E).

Fearing exposure to contract and tort claims by Marteen, Inc. and the United States Air Force, SCI entered into a mitigation agreement with Aqua Designs on July 2, 2013 to repair the damage to the pool and the surrounding areas. (Doc. 1-1, ¶¶ 30, 33). SCI and National Trust continued to communicate about the disputed claim, but National Trust never changed its position regarding coverage of the alleged loss. ( Id. at ¶¶ 35-39; Doc. 1-2, Ex. F-G) SCI completed the repair project in late November 2013. ( Id. at ¶ 40).

SCI sent another demand for coverage to National Trust on December 11, 2013, demanding $431, 507.90 for the cost of repairing the pool. ( Id. at ¶ 41; Doc. 1-2, Ex. H). National Trust did not accept the demand. SCI thereafter filed a complaint against National Trust in the State Court of Lowndes County, Georgia, alleging breach of contract and bad faith failure to pay pursuant to O.C.G.A. § 33-4-6.[1] National Trust removed the case to this Court and now moves to dismiss SCI's Complaint on grounds that SCI fails to state a claim against National Trust for which relief can be granted.


When examining a motion to dismiss, the court shall accept "all well-pleaded facts... as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff." Bryant v. Avado Brands, Inc. , 187 F.3d 1271, 1273 n. 1 (11th Cir. 1999) The court must dismiss the complaint if, "on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action." Marshall Cnty. Bd. of Educ. v. Marshall Cnty. Gas Dist. , 992 F.2d 1171, 1174 (11th Cir. 1993) (citing Executive 100, Inc. v. Martin County , 992 F.2d 1536, 1539 (11th Cir. 1991) and Bell v. Hood , 327 U.S. 678, 682 (1946)). Accordingly, to avoid dismissal under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face.'" Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570 (2007)).

Georgia law recognizes that "[a]n insurance policy is simply a contract, the provisions of which should be construed as any other type of contract.'" Taylor Morrison Serv., Inc. v. HDI-Gerling America Ins. Co. , 293 Ga. 456, 459 (2013) (quoting Hunnicut v. Southern Farm Bureau Life Ins. Co. , 256 Ga. 611, 612 (1987)). Contract disputes are well suited for adjudication by the court "because construction of a contract is ordinarily a matter of law.'" Maxum Indemnity Co. v. Jimenez , 318 Ga.App. 669 (2012) (quoting Nationwide Mut. Fire Ins. Co. v. Somers , 264 Ga.App. 421, 423 (2003)). The parties do not dispute the facts of the underlying insurance claim at issue in this case. Rather, the question is whether or not the CGL policy covers the claim.


National Trust contends that SCI's breach of contract claim fails as a matter of law under the express terms of the CGL policy. According to National Trust, SCI has not plead any facts establishing that National Trust has a duty to defend or to indemnify SCI for the loss SCI sustained as a result of Aqua Designs' faulty workmanship. SCI counters with the argument that National Trust's denial of coverage constitutes an anticipatory breach of the contract. Further, SCI argues that National Trust's imposition of a precondition of a judicial finding of liability prior to the attachment of the duty to indemnify is contrary to law and breaches of the implied covenant of good faith and fair dealing. Upon careful review of the Complaint and the insurance policy, the Court finds that the insurance agreement between ...

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