Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_07-cv-00142/USCOURTS-alsd-1_07-cv-00142-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

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IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

RSUI GROUP, INC., etc., )

 )

Plaintiff, )

 )

v. ) CIVIL ACTION 07-0142-WS-B

 )

WILLIS OF ALABAMA, INC., etc., )

 )

Defendant. )

ORDER

This matter is before the Court on the defendant’s motion to dismiss or, in the

alternative, for summary judgment. (Doc. 13). The parties have submitted briefs and

evidentiary materials in support of their respective positions, (Docs. 13, 21, 22), and the

motion is ripe for resolution. After carefully considering the parties’ briefs and other

relevant materials in the file, the Court concludes that the motion is due to be denied.

BACKGROUND

According to the amended complaint, the defendant issued a binder for

commercial property coverage to the insured, Indies House, on December 23, 2005. The

plaintiff insurer had repeatedly told the defendant to include in the binder an exclusion for

a particular cabinet-finishing building, but the defendant issued the binder to the insured

without the exclusion. On January 14, 2006, the cabinet-finishing building and its

contents were damaged by fire. Although the actual policy contained the exclusion, the

binder delivered to the insured did not, and in consequence the plaintiff was obligated

under the binder to pay the claim, in the amount of approximately $210,000. The

amended complaint alleges that the defendant breached a contract to issue a binder with

the exclusion and that it negligently issued a binder without the exclusion. (Doc. 12). 

The defendant argues that the plaintiff’s claims are barred by Alabama’s

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Kirwin has been limited by Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1969

(2007), but not in a manner relevant to the pending motion. At any rate, the parties have

requested the Court to employ the Kirwin standard. (Doc. 13 at 3; Doc. 21 at 2).

2

See 668 So. 2d at 535 (suit against insured to recover money paid to insured);

Weaver v. American National Bank, 452 So. 2d 469, 474 (Ala. 1984) (suit against creditor

to recover money paid to creditor); Clifton v. Curry, 10 So. 2d 51, 53 (Ala. App. 1942)

(suit against lessor’s agent to recover money paid to lessor’s agent). 

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“voluntary payment” rule. It also argues that it cannot be liable for breach of contract

because it was not in a contractual relationship with the plaintiff and that it cannot be

liable for negligence because it owed no duty to the plaintiff. 

DISCUSSION

“A motion to dismiss [for failure to state a claim] may be granted only when a

defendant demonstrates beyond doubt that the plaintiff can prove no set of facts in

support of his claim which would entitle him to relief.” Kirwin v. Price Communications

Corp., 391 F.3d 1323, 1325 (11th Cir. 2004) (internal quotes omitted). “When

considering [such] a motion to dismiss, all facts set forth in the plaintiff’s complaint are to

be accepted as true and the court limits its consideration to the pleadings and the exhibits

attached thereto.” Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000)

(internal quotes omitted).1

I. Voluntary Payment. 

The defendant’s argument is based on Mt. Airy Insurance Co. v. Doe Law Firm,

668 So. 2d 534 (Ala. 1995). According to the defendant, Mt. Airy holds that, except in

the subrogation context, “a party may not recover money it has voluntarily paid.” (Doc.

13 at 3). Both Mt. Airy and the cases it cites, however, involve a plaintiff’s suit to recover

money the plaintiff paid to the defendant.

2

 The plaintiff here, in contrast, paid no money

to the defendant but paid it to a third party, allegedly in consequence of the defendant’s

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The defendant’s ipse dixit that the “different relationships” at issue in Mt. Airy

“make no difference” to the analysis, (Doc. 13 at 4 n.3), falls far short of establishing the

accuracy of the assertion.

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wrongdoing. The defendant’s authorities do not address this situation.

Nor is there any obvious reason why the Alabama courts would apply the Mt. Airy

rule in this situation. According to the amended complaint, the defendant’s blunder

legally obligated the plaintiff to honor the insured’s claim; it would make little sense to

hold that a party with an inescapable obligation, wrongfully created by another, to pay an

innocent third party forfeits all right to be made whole by the wrongdoer if he honors that

obligation. Whether or not Alabama actually recognizes such a principle, the defendant

has not met its burden on motion to dismiss of establishing that the principle exists.3

The defendant could not prevail even were the Court to apply Mt. Airy. According

to the defendant, the rule applies only if the plaintiff had “full knowledge of the facts”

and only if payment to the third party occurred “without [the defendant’s] consent.” 

(Doc. 13 at 3, 4; Doc. 22 at 4). Neither element is established by the amended complaint

and, on motion to dismiss, the deficiency cannot be supplied by outside evidence. At any

rate, the defendant’s briefs cite no evidence of either proposition.

Trying another tack, the defendant argues that “courts typically do not permit

indemnification or contribution unless the plaintiff’s payment was compelled by a court

order or judgment.” (Doc. 13 at 4). Assuming this is so, the defendant has not explained

the relevance of the principle to this action. According to the defendant’s own authority,

an implied contract of indemnity arises only if the plaintiff has paid a third party when the

defendant is the one liable, or primarily liable, to the third party. Allstate Insurance Co.

v. Amerisure Insurance Cos., 603 So. 2d 961, 963 (Ala. 1992). Here, it is the plaintiff, as

the insurer, that was primarily liable to the insured, thanks to the binder; the defendant is

not liable to the insured but may be liable directly to the plaintiff for issuing the incorrect

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Contribution as well applies when the defendant is directly liable to a third party,

although Alabama does not allow for contribution among joint tortfeasors. E.g.,

SouthTrust Bank v. Jones, Morrison, Womack & Dearing, P.C., 939 So. 2d 885, 900 (Ala.

Civ. App. 2005). 

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binder.4 At any rate, the plaintiff’s claim is not for indemnity or contribution, but for

negligence and breach of contract. 

II. Negligence.

The defendant argues that it had no duty to the plaintiff. This argument depends

on the following points: (1) the defendant is an independent insurance broker; and (2) it

was hired by the insured to broker its insurance. The defendant concludes that, given

these circumstances, Alabama law precludes the imposition on it of a duty in favor of the

plaintiff. (Doc. 13 at 5-6; Doc. 22 at 6-7). 

The threshold difficulty with the defendant’s position is that it depends on facts

that lie beyond the complaint. Nor has the defendant submitted any evidence to establish

these points.

Even could it be assumed on motion to dismiss that the defendant was acting as an

“independent insurance broker,” the defendant has not shown that this status necessarily

eliminates any duty to the plaintiff. Indeed, the defendant cites no Alabama cases

discussing the circumstances under which a duty to act non-negligently may arise. In

general, “[t]he existence of a duty is determined by a number of factors, including (1) the

nature of the defendant’s activity; (2) the relationship between the parties; and (3) the

type of injury or harm threatened. [citations omitted] The key factor is whether the injury

was foreseeable by the defendant.” Pritchett v. ICN Medical Alliance, Inc., 938 So. 2d

933, 937 (Ala. 2006) (internal quotes omitted) (emphasis in original). That test appears

favorable to the plaintiff here.

The amended complaint alleges that the defendant issued the binder pursuant to the

plaintiff’s request, and that the plaintiff’s request was for a binder excluding coverage of

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the cabinet-finishing building. The amended complaint also alleges that issuing a binder

without the exclusion obligated the plaintiff to assume coverage for the fire damage to

that building. It would thus appear that the harm the plaintiff sustained was not merely a

foreseeable consequence of negligent performance in issuing the binder but was precisely

the harm that would naturally flow from such conduct. Whatever arguments might be

made as to why the Pritchett test of duty does not apply or is not satisfied, the defendant

has advanced none. 

Instead, the defendant argues that an independent insurance broker is the agent of

the insured and that, as such, it owes a duty of care to the insured. The defendant’s

unarticulated but necessary assumption is that its duty to the insured negates any duty to

the plaintiff. No law is cited to support this unlikely proposition. Even if an independent

insurance broker cannot be an agent of the insurer, that rules out only a duty to the insurer

based on agency; it does not rule out a duty to the insurer established through other

means, including the Pritchett formulation.

III. Breach of Contract.

The defendant argues that it could not have been in a contractual relation with the

plaintiff. The argument depends upon the same factual predicate as its argument

concerning duty and thus fails because that factual predicate is not established by the

amended complaint (or any proffered evidence). The argument also depends on the same

unsupported assumption the defendant invoked in opposition to the negligence claim —

that the existence of a contractual relation with the insured negates a contractual relation

with the insurer – and it is flawed for the reasons previously stated. It may be that the

defendant’s (asserted) agency relation with the insured rendered it improper for the

defendant to enter a contractual relation with the insurer, but the defendant cites no

authority and provides no explanation for the facially implausible conclusion that its

relation with the insured rendered it legally impossible to enter a contract with the

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These include at least the following:

November 28, 2005 e-mail to the defendant: “In order for us to offer a renewal, the

following applies at Loc. 2 (Haleyville) [:] Exclude the Building housing the

Cabinet Finishing operation ....”

November 28, e-mail response from the defendant: “Thanks for ... the information

below. AMY, please let us know your final pricing based on the terms as outlined 

 below.”

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plaintiff. 

The defendant also argues that, assuming that it entered a contract with the

plaintiff to issue the binder, that contract did not require it to include an exclusion for the

cabinet-finishing building. Because the document on which the defendant relies for this

proposition is not part of the complaint, the defendant cannot prevail on this argument on

motion to dismiss.

Recognizing this, the defendant requests the Court to convert its motion to one for

summary judgment. The Court has discretion whether to do so, e.g., Jones v. Automobile

Insurance Co., 917 F.2d 1528, 1531-32 (11th Cir. 1990), but the defendant offers no

reason why the Court should exercise its discretion in favor of conversion. Accordingly,

the Court declines to convert the motion to dismiss into one for summary judgment.

Nor could the defendant prevail even were the Court to convert the motion. The

entirety of its evidence consists of an affidavit attaching a quote “presented to insured,

Indies House, by [the plaintiff’s agent].” The quote, which does not mention an exclusion

for the cabinet-finishing building, states that “[t]his constitutes entire quote.” (Doc. 13,

Exhibit A). There is no evidence, however, that this quote given the insured constitutes

even part, much less all, of the contract with the defendant concerning issuance of a

binder. Certainly the plaintiff has presented multiple communications informing the

defendant that coverage would not include, and the binder must exclude, the cabinetfinishing building,5

 and the defendant has not offered to explain why these have no

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December 22, 2005 e-mail from the defendant: “What we need also: ... Either your

binder OR give us written permission (by return email) to issue an ACORD binder

in our office.”

December 23, 2005, 8:24 a.m. e-mail response to the defendant: “Your office can

issue an necessary binders [sic] and/or certificates, just send us a copy of what you

issue for our file.”

December 23, 2005, 11:32 a.m. e-mail to the defendant: “Jim wanted me to make

mention again that certain buildings at location 2 are going to be excluded. This

was our requirement for staying on the account. The excluded buildings are:

Cabinet Assembly and Finishing Building ....”

(Doc. 12, Exhibit B at 4-5, 7-8). Because these documents are attachments to the

complaint, they can be considered on motion to dismiss. There may, of course, be even

more documents, as well as verbal communications, relevant to determining the content

of the parties’ agreement.

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relevance to establishing the terms of the parties’ alleged contract. 

CONCLUSION

For the reasons set forth above, the defendant’s motion to dismiss or, in the

alternative, for summary judgment is denied.

DONE and ORDERED this 29th day of August, 2007.

s/ WILLIAM H. STEELE

UNITED STATES DISTRICT JUDGE

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