Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_13-cv-00700/USCOURTS-almd-2_13-cv-00700-0/pdf.json

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

---

IN THE UNITED STATES DISTRICT COURT 

FOR THE MIDDLE DISTRICT OF ALABAMA 

NORTHERN DIVISION 

FEDERAL NATIONAL MORTGAGE ) 

ASSOCIATION, ) 

 ) 

 Plaintiff, ) 

 ) 

v. ) 

 ) 

GNM II, LLC, et al., ) 

 ) 

 Defendants. ) 

 ) 

_______________________________ ) Case No. 2:13-cv-700-WC 

 ) 

GNM II, LLC, a limited liability ) 

company, ) 

 ) 

 Third-Party Plaintiff, ) 

 ) 

v. ) 

 ) 

TRAVELERS’S CASUALTY ) 

INSURANCE CO. OF ) 

AMERICA, ) 

 ) 

 Third-Party Defendant. ) 

MEMORANDUM OPINION AND ORDER 

Before the court is Third-Party Defendant Travelers’s Casualty Insurance 

Company of America’s (“Travelers”) Motion to Dismiss the Third-Party Complaint 

(Doc. 21). Plaintiff Federal National Mortgage Association (“Fannie Mae”) brought this 

action naming as Defendants GNM II, LLC (“GNM”), Rockingham Family Limited 

Partnership, and Lawrence Deovlet. Compl. (Doc. 1). The Complaint alleges breach of 

Case 2:13-cv-00700-WC Document 31 Filed 04/17/14 Page 1 of 14
2 

contract and guarantees. Compl. (Doc. 1) at 5-6. Defendant GNM then filed an Answer 

to the Complaint and a Third-Party Complaint (Doc. 6), naming Travelers as a ThirdParty Defendant. The Third-Party Complaint listed the following causes of action: 

(Count 1) Breach of Contract; (Count 2) Breach of Fiduciary Duty; (Count 3) Breach of 

Implied Covenant of Good Faith and Fair Dealing; (Count 4) Negligence; and (Count 5) 

Indemnity. (Doc. 6) at 21-27. 

Upon consideration of Travelers’s Motion to Dismiss the Third-Party Complaint, 

the court finds that the Motion (Doc. 21) is due to be GRANTED. 

I. STANDARD OF REVIEW 

Travelers filed the instant Motion to Dismiss pursuant to Federal Rule of Civil 

Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. In 

deciding a Rule 12(b)(6) motion to dismiss, the court must accept all well-pleaded factual 

allegations in a complaint as true and take them in the light most favorable to plaintiff. 

Erickson v. Pardus, 551 U.S. 89, 94 (2007); Christopher v. Harbury, 536 U.S. 403, 406 

(2002). “To survive dismissal, the complaint’s allegations must plausibly suggest that the 

[plaintiff] has a right to relief, raising that possibility above a speculative level; if they do 

not, the plaintiff’s complaint should be dismissed.” James River Ins. Co. v. Ground 

Down Eng’g, Inc., 540 F.3d 1270, 1274 (11th Cir. 2008) (citing Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 555-56 (2007)); see also Edwards v. Prime Inc., 602 F.3d 1276, 

1291 (11th Cir. 2010). The former rule—that “[a] complaint should be dismissed only if 

it appears beyond doubt that the plaintiffs can prove no set of facts which would entitle 

Case 2:13-cv-00700-WC Document 31 Filed 04/17/14 Page 2 of 14
3 

them to relief,” La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004)—

has been retired by Twombly. See James River Ins. Co., 540 F.3d at 1274. Thus, the 

court engages in a two-step approach: “When there are well-pleaded factual allegations, 

a court should assume their veracity and then determine whether they plausibly give rise 

to an entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). The court need 

not accept as true legal conclusions or mere conclusory statements. Id.

II. DISCUSSION 

This third-party action stems from two checks issued by Travelers to GNM for 

lost business income and debris removals after a fire destroyed property owned by 

GNM, insured by Travelers, and mortgaged by Fannie Mae. GNM filed a claim with 

Travelers for the loss, and Travelers issued payments under the policy. Some of these 

payments were made payable to GNM and Fannie Mae, as well as other parties not 

relevant to this third-party action, but one check for lost business income and one for 

debris removal after the fire were made payable only to GNM. It is those checks that 

are the subject of this third-party action. 

 A. Breach of Contract 

Travelers contends that GNM has failed to state a claim for which relief can be 

granted regarding the breach of contract claim. Mot. (Doc. 21) at 7-12. Under both 

Alabama and California contract law,1

 to succeed on a breach of contract claim, a 

 1

 “A federal court sitting in diversity will apply the conflict-of-laws rules of the forum state.” 

Grupo Televisa, S.A. v. Telemundo Commc’ns Grp., Inc., 485 F.3d 1233, 1240 (11th Cir. 2007) (citing 

Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). Because this case is brought under 

diversity jurisdiction and this court sits in Alabama, Alabama conflict-of-laws rules will apply. “[T]he 

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plaintiff must establish the following elements: (1) existence of a valid contract; (2) 

performance under the contract by a plaintiff; (3) a defendant’s breach; and (4) resulting 

damages. Shaffer v. Regions Fin. Corp., 29 So. 3d 872, 880 (Ala. 2009); Oasis W. 

Realty, LLC v. Goldman, 250 P.3d 1115, 1121 (Cal. 2011). 

GNM’s breach of contract claim is twofold. First, GNM argues that Travelers 

breached its contract by failing to pay the appropriate loss payee, Fannie Mae, as required 

by the insurance policy. (Doc. 6) at 22. Second, GNM argues that Travelers breached its 

contract with GNM by failing to provide GNM with a defense against the claims asserted 

in this suit by Fannie Mae. Id. Each argument is discussed below. 

i. Failure to Pay Loss Payee 

GNM alleges that Travelers breached its contract with GNM because Travelers 

did not list Fannie Mae as a payee on two specific checks issued by Travelers, one check 

for business income lost by GNM and the other for debris removal after the fire. 

Travelers moves to dismiss this claim because Travelers has fully paid GNM under the 

insurance policy and, thus, GNM cannot argue “that Travelers did not perform under its 

contract with GNM.” Mot. (Doc. 21) at 8. GNM responds that “Fannie Mae’s name was 

 

court must characterize the legal issue and determine whether it sounds in torts, contracts, property law, 

etc.,” to “determine[] the choice of law rule that the forum state applies to that particular type of issue.” 

Grupo Televisa, S.A., 485 F.3d at 1240 (citing Acme Circus Operating Co., Inc. v. Kuperstock, 711 F.2d 

1538, 1540 (11th Cir.1983)). 

Breach of contract sounds in contract law, and “in Alabama, contract claims are governed by the 

laws of the state where the contract was made.” SE Prop. Holdings, LLC v. Sandy Creek II, LLC, 954 F. 

Supp. 2d 1322, 1335 (S.D. Ala. 2013) (citing Cherry, Bekaert & Holland v. Brown, 582 So.2d 502, 506 

(Ala. 1991)). Here, the contract was “made” in either California or Alabama. However, a court “need not 

resolve [a] choice of law problem [when] the relevant law in both states is essentially in harmony,” Scott 

v. Prudential Sec., Inc., 141 F.3d 1007, 1012 (11th Cir. 1998). The court finds it unnecessary to 

determine whether Alabama or California contract law will apply because the result would be the same. 

Case 2:13-cv-00700-WC Document 31 Filed 04/17/14 Page 4 of 14
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supposed to be on any/all checks issued under the Business Owner’s policy by Travelers 

as Fannie Mae and GNM were to be ‘jointly paid’ on the ‘Covered Property’.” GNM’s 

Resp. (Doc. 24) at 8. Travelers asserts that GNM’s argument fails based on the terms of 

the insurance policy because Travelers was only required to pay a loss payee for “covered 

property,” which does not include payment for business income and debris removal. 

(Doc. 25) at 8. 

Indeed, the insurance policy states,2

 “For Covered Property in which both you and 

a Loss Payee . . . have an insurable interest, we will . . . [p]ay any claim for loss or 

damage jointly to you and the Loss Payee.” (Doc. 21-1) at 15 (emphasis added). Per this 

term of the insurance agreement, Travelers was only obligated to jointly pay GNM and 

Fannie Mae for “covered property.” The policy defines “Covered property” as follows: 

A. COVERAGE 

1. Covered Property 

Covered Property, as used in this Coverage Form, means the type of 

property described in this Paragraph A.1. . . . 

a. Building . . . . 

b. Business Personal Property . . . . 

 

(Doc. 21-1) at 18. “Building” is explained to include the structure itself and personal 

property within that structure. Id. “Business Personal Property” includes the personal 

 2

 “Ordinarily, we do not consider anything beyond the face of the complaint and documents 

attached thereto when analyzing a motion to dismiss. Brooks v. Blue Cross & Blue Shield of Fla., Inc., 

116 F.3d 1364, 1368 (11th Cir. 1997). This court recognizes an exception, however, in cases in which a 

plaintiff refers to a document in its complaint, the document is central to its claim, its contents are not in 

dispute, and the defendant attaches the document to its motion to dismiss.” Financial Sec. Assurance, 

Inc. v. Stephens, Inc., 500 F.3d 1276, 1284 (11th Cir. 2007) (citing Harris v. Ivax Corp., 182 F.3d 799, 

802 n.2 (11th Cir. 1999). In the present case, GNM stated that it had attached the copy of the insurance 

contract, but it appears it inadvertently failed to do so. In any regard, GNM referenced the document in 

its complaint, it is central to its claim, its contents are not in dispute, and Travelers attached it to the 

Motion to Dismiss. Accordingly, the court has considered the contract in making its determination. 

Case 2:13-cv-00700-WC Document 31 Filed 04/17/14 Page 5 of 14
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property used by the business. Id. Neither paragraph A.1.a nor A.1.b include any 

coverage for business income or debris removal. Thus, business income and debris 

removal are not included as “covered property” under the terms of the insurance policy, 

and Fannie Mae, as a loss payee, was not entitled to joint payment. GNM correctly cites 

to the sections of the policy that do provide coverage for Business Income ((Doc. 21-1) at 

19) and Debris Removal ((Doc. 21-1) at 22); however, GNM ignores the structure of the 

policy. As addressed above, the policy explicitly states that covered property only 

includes “the type of property described in this Paragraph A.1.” Business income 

coverage is set out in Paragraph A.3.a and debris removal coverage is set out in 

Paragraph A.6.c. (Doc. 21-1) at 19, 22. Thus, neither of these paragraphs fit the 

definition of “covered property,” and GNM’s breach of contract claim for failure to pay a 

loss payee is due to be dismissed. 

ii. Failure to Provide a Defense 

Travelers also moves to dismiss the breach of contract claim for failure to provide 

a defense to GNM. Travelers argues this claim should be dismissed because “Travelers 

owes no duty to defend GNM” in the instant action as it is not covered by the duty to 

defend terms of the policy. Mot. (Doc. 21) at 9-12. In GNM’s policy with Travelers, 

Travelers had “the right and duty to defend the insured against any ‘suit’ seeking [bodily 

injury or property] damages. . . . This insurance applies to ‘bodily injury’ and ‘property 

damage’ only if . . . [t]he ‘bodily injury’ or ‘property damage’ is caused by an 

‘occurrence’.” (Doc. 21-1) at 77 (emphasis added). “Property damage” is defined in the 

Case 2:13-cv-00700-WC Document 31 Filed 04/17/14 Page 6 of 14
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policy as “physical injury to tangible property, including all resulting loss of use of that 

property . . . or [l]oss of use of tangible property that is not physically injured.” (Doc. 21-

1) at 91. The policy defines an “occurrence” as “an accident.” (Doc. 21-1) at 90. 

Travelers claims the duty to defend was not triggered here, and thus could not 

have been breached, for two reasons: first, “Fannie Mae’s Complaint does not allege 

bodily injury or property damage”; and second, any damage was not caused by an 

“occurrence” or accident. Mot. (Doc. 21) at 12. GNM did not respond regarding 

whether an occurrence or accident caused the alleged harm; rather, GNM argues that 

“Fannie Mae is suing GNM as to ‘property damage’ . . . inasmuch as Fannie Mae is suing 

for the tangible property of lost business income, and for that money to allow for removal 

of tangible physical property in the form of debris removal.” GNM’s Resp. (Doc. 24) at 

12. 

Fannie Mae’s Complaint alleges breach of a promissory note and loan agreement, 

as well as guarantees, by GNM and such a suit does not seek damages caused by an 

occurrence or accident. Travelers’s duty to defend would have been triggered only if

alleged damages were caused by an occurrence or accident, and therefore, the court finds 

that Travelers does not have a duty to defend GNM here. The court finds it unnecessary 

to determine whether lost business income or debris removal are included in the policy’s 

definition of physical property because, in any event, the lack of an occurrence or 

accident prevents the triggering of the duty to defend. Thus, Plaintiff’s breach of contract 

Case 2:13-cv-00700-WC Document 31 Filed 04/17/14 Page 7 of 14
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claim for failure to provide a defense is due to be dismissed.3

B. Breach of Fiduciary Duty 

Travelers contends that GNM has failed to state a claim for which relief can be 

granted regarding the breach of fiduciary duty claim. 4 Mot. (Doc. 21) at 12-13. In order 

to succeed on a breach of fiduciary duty claim, a plaintiff must establish the following 

elements: (1) existence of a fiduciary relationship between the parties that creates a duty; 

(2) a breach of that fiduciary duty; and (3) damages caused by the breach. Regions Bank 

v. Lowrey, 101 So. 3d 210, 219 (Ala. 2012). 

Travelers asserts that GNM’s claim fails to satisfy even the first element because 

“under Alabama law, Travelers does not have a fiduciary relationship with GNM.” Mot. 

(Doc. 21) at 13. Travelers points to a decision from our sister court, which held that “the 

Alabama Supreme Court has expressly declined to find a fiduciary relationship between 

insurance companies . . . and their customers in the context of the purchase of casualty, 

health, or life insurance and attempts to collect under those policies.” Sayer v. Lincoln 

 3

 GNM appears to concede this point by stating, “Besides, the ‘failure to defend’ portion of 

Travelers’ breach is referenced in one sentence of the [Third-Party Complaint]. Travelers’ primary 

breach of contract stems from its failure to properly jointly pay the loss payees under the Policy.” GNM’s 

Resp. (Doc. 24) at 12-13 (internal citations omitted). 

4

 In Alabama, breach of fiduciary duty is a tort claim. Systrends, Inc. v. Grp. 8760, LLC, 959 So. 

2d 1052, 1075 (Ala. 2006). Under Alabama’s choice of law doctrine, torts are governed by the law where 

harm occurred: 

The principle that governs which state’s substantive law applies to tort claims in a 

conflict-of-laws analysis is well settled . . . . [A]n Alabama court will determine the 

substantive rights of an injured party according to the law of the state where the injury 

occurred.” 

Ex parte U.S. Bank Nat. Ass’n, No. 1120904, 2014 WL 502370, *9 (Ala. Feb. 7, 2014) (quoting Fitts v. 

Minnesota Min. & Mfg. Co., 581 So. 2d 809, 820 (Ala. 1991)). Here, the harm occurred in Alabama, so 

Alabama law will apply. 

Case 2:13-cv-00700-WC Document 31 Filed 04/17/14 Page 8 of 14
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Nat’l Life Ins. Co., No. 7:05-cv-1423-EDP, 2006 WL 6253201, at *6 (N.D. Ala. Oct. 12, 

2006) (citing Nat’l Ins. Ass’n v. Sockwell, 829 So. 2d 111, 141 (Ala. 2002); King v. Nat’l 

Found. Life Ins. Co., 541 So. 2d 502, 505-06 (Ala. 1989); Quick v. State Farm Mut. Auto. 

Ins. Co., 429 So. 2d 1033, 1035 (Ala. 1983) (Tobert, C.J. concurring specially); 

Metropolitan Life Ins. Co. v. James, 191 So. 352, 355 (Ala. 1939)); see also Maloof v. 

John Hancock Life Ins. Co., 60 So. 3d 263 (Ala. 2010) (finding no fiduciary duty 

between insured and insurance company and its agents); Guinn v. Am. Integrity Ins. Co., 

568 So. 2d 760, 763 (Ala. 1990) (same). 

In response, GNM asserts that “the facts in Sayer, and the legal conclusion 

determined therein, has [sic] absolutely no bearing on the instant litigation” because, 

GNM argues, this case does not deal with purchasing insurance or an attempt to collect 

under an existing policy. GNM’s Resp. (Doc. 24) at 14-15. Rather, GNM argues that 

this case “deals with Travelers’s failure to adequately, and ‘jointly,’ pay under the 

Policy.” Id. The court finds no merit in GNM’s argument. A lawsuit over an alleged 

“failure to adequately, and jointly, pay” under an existing policy is clearly an attempt to 

collect under the insurance policy. Therefore, Sayer, as well as the cases on which it 

relies, would apply in this case. GNM has not and cannot establish a fiduciary 

relationship between Travelers (an insurance company) and GNM (a customer of 

Travelers), and GNM’s breach of fiduciary duty claim is due to be dismissed. 

Even if the court found Sayer to be inapplicable, which it does not, GNM has still 

not established the existence of a fiduciary relationship. GNM cites no Alabama 

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10 

authority and pleads no set of facts to show special circumstances or a confidential 

relationship such that could give rise to a fiduciary duty. GNM does point the court to a 

Louisiana case in an attempt to establish that “an insurer is deemed a fiduciary of its 

insured.” GNM’s Resp. (Doc. 24) at 13 (citing Pareti v. Sentry Indem. Co., 536 So. 2d 

417 (La. 1988)). The court cannot find a fiduciary relationship exists in this case based 

on the holding of a Louisiana court when this tort action is governed by Alabama law. 

Systrends, 959 So. 2d at 1075. GNM has failed to plead the existence of a fiduciary 

relationship between the parties that creates a duty. Thus, GNM’s breach of fiduciary 

duty claim is due to be dismissed. 

 C. Breach of Implied Covenant of Good Faith and Fair Dealing/Bad Faith5

 

Travelers contends that GNM has failed to state a claim for which relief can be 

granted regarding the bad faith claim.6

 Mot. (Doc. 21) at 14-15. In order to succeed on a 

bad faith claim, a plaintiff must establish the following elements: “([1]) a breach of 

insurance contract, ([2]) the refusal to pay claim, ([3]) the absence of arguable reason, 

([4]) the insurer’s knowledge of such absence—with a conditional fifth element: ‘([5]) if 

the intentional failure to determine the existence of a lawful basis is relied upon, the 

plaintiff must prove the insurer’s intentional failure to determine whether there is a 

 5

 Count Three of GNM’s Third-Party Complaint was for a breach of implied covenant of good 

faith and fair dealing. The court will interpret this to be a claim for the tort of bad faith. See Chavers v. 

Nat’l Sec. Fire & Cas. Co., 405 So. 2d 1, 4 (Ala. 1981) (“Every contract contains an implied in law 

covenant of good faith and fair dealing . . . Breach of the covenant provides the injured party with a tort 

action for ‘bad faith’ . . . .”) (internal citations omitted). 

6

 In Alabama, a claim for breach of implied covenant of good faith and fair dealing/bad faith is a 

tort claim. Brechbill, 2013 WL 5394444, *9. Here, the alleged harm occurred in Alabama; therefore, 

Case 2:13-cv-00700-WC Document 31 Filed 04/17/14 Page 10 of 14
11 

legitimate or arguable reason to refuse to pay the claim.’” State Farm Fire & Cas. Co. v. 

Brechbill, No. 1111117, 2013 WL 5394444, *9 (Ala. Sept. 27, 2013) (quoting Nat’l Sec. 

Fire & Cas. Co. v. Bowen, 417 So. 2d 179, 183 (Ala. 1982)). 

Travelers argues that this claim fails because, for the reasons discussed in the 

breach of contract section, GNM cannot show a breach of an insurance contract. Mot. 

(Doc. 21) at 14-15. GNM reasserts that there was a breach of the insurance contract. 

GNM’s Resp. (Doc. 24) at 15-16. As discussed in section II.A above, the court finds that 

GNM has failed to state a claim for breach of contract. Thus, a claim of bad faith for the 

alleged breach cannot stand. 

D. Negligence

Travelers contends that GNM has failed to state a claim for which relief can be 

granted regarding the negligence claim.7

 Mot. (Doc. 21) at 15-16. Travelers argues that 

Alabama “‘has consistently refused to recognize a cause of action for the negligent 

handling of insurance claims.’” Mot. (Doc. 21) at 15-16 (quoting Kervin v. So. Guar. Ins. 

Co., 667 So. 2d 704, 706 (Ala. 1995)). GNM responds that, “[w]hile it is true that 

Alabama does not provide for a cause of action for negligent investigation of a claim (per 

[Kervin]), Alabama does recognize general negligence claims against insurance 

companies.” GNM’s Resp. (Doc. 24) at 17 (citing Waters v. Am. Cas. Co., 73 So. 2d 524 

(Ala. 1953)). The court is unconvinced by GNM’s argument. 

 

Alabama law applies to this claim. 

7

 In Alabama, negligence is a tort claim. Davis v. Hanson Aggregates Se., Inc., 952 So. 2d 330, 

335 (Ala. 2006). Here, the alleged harm occurred in Alabama, so Alabama law will apply. 

Case 2:13-cv-00700-WC Document 31 Filed 04/17/14 Page 11 of 14
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First, Waters, the authority to which GNM points, holds that “a liability insurer 

may be liable to its insured beyond the policy limits for the insurer’s negligence . . . in 

failing to settle claims against its insured within policy limits when a judgment greater 

than the policy limits is later obtained against the insured.” Turner Ins. Agency v. Cont’l 

Cas. Ins. Co., 541 So. 2d 471, 472 (Ala. 1989) (citing Waters, 73 So. 2d at 254). Those 

facts are inapplicable to the case at hand, as there has not been any failure to settle within 

policy limits or a judgment greater than the policy limits obtained against GNM. 

Second, Kervin does not limit its holding to the investigation of claims as GNM 

asserts. Rather, Kervin states clearly that no cause of action is recognized in Alabama for 

“the negligent handling of insurance claims,” Kervin, 667 So. 2d at 706 (emphasis 

added), and the Kervin decision does not stand alone. See Pate v. Rollison Logging 

Equipment, Inc., 628 So. 2d 337, 345 (Ala. 1993) (The Alabama Supreme Court “has 

consistently refused to recognize a cause of action for the negligent handling of insurance 

claims.”); Chavers v. National Security Fire & Casualty Co., 405 So. 2d 1, 5 (Ala. 1981) 

(“[W]e have expressly rejected any cause of action based upon an insurer’s negligence in 

handling direct claims. . . . We reaffirm this position.”); Calvert Fire Ins. Co. v. Green, 

180 So. 2d 269 (1965).8

 GNM’s claims against Travelers are centered on the manner in 

 8

 “This refusal to recognize causes of action for the negligent and wanton handling/adjusting of 

insurance claims has evolved principally because of the recognition that the insured is not left without a 

remedy inasmuch as the insurer can still be sued for breach of contract and, as well, for the tort of bad 

faith.” St. John’s Deliverance Temple v. Frontier Adjusters, CA 11-0624-KD-C, 2012 WL 629056, at 

*10 (S.D. Ala. Feb. 27, 2012); see also Cofield v. Allstate Indem. Co., 1:12-cv-02100-HGD, 2014 WL 

310447 (N.D. Ala. Jan. 28, 2014); Morton v. Travelers Ins., 2:13-cv-01603-RDP, 2013 WL 6441805 

(N.D. Ala. Dec. 9, 2013); Rogers v. Hartford Life & Acc. Ins. Co., CIV.A. 12-0019-WS-B, 2012 WL 

887482 (S.D. Ala. Mar. 15, 2012) reconsideration denied, CIV.A. 12-0019-WS-B, 2012 WL 2395194 

Case 2:13-cv-00700-WC Document 31 Filed 04/17/14 Page 12 of 14
13 

which Travelers handled the insurance claims made by GNM. Thus, based on Kervin and 

its progeny, Alabama does not recognize a negligence cause of action here, and GNM’s 

negligence claim is due to be dismissed. 

E. Indemnity 

GNM’s Third-Party Complaint alleges that Travelers owes GNM noncontractual 

indemnity9

 as a result of “the negligence and carelessness, nondelegable duties, or 

tortuous conduct of Travelers.” (Doc. 6) at 26. Travelers moves to dismiss contending 

that GNM has failed to state a claim for which relief can be granted. Mot. (Doc. 21) at 

16-17. “‘The basis for indemnity is restitution, and the concept that one person is 

unjustly enriched at the expense of another when the other discharges liability that it 

should be his responsibility to pay.’” N. Ala. Elec. Co-op. v. New Hope Tel. Co-op., 7 So. 

3d 342, 345 (Ala. 2008) (quoting Amerada Hess Corp. v. Owens-Corning Fiberglass 

Corp., 627 So. 2d 367, 370 (Ala. 1993)). GNM argues that “Travelers would be unjustly 

enriched for its own fault in failing to . . . ‘jointly” pay[]’” GNM and Fannie Mae for the 

lost business income and debris removal. GNM’s Resp. (Doc. 24) at18. However, 

GNM’s argument fails because, as set out in Section II.A, Travelers was only obligated to 

jointly pay GNM and Fannie Mae for “covered property,” which did not include lost 

business income and debris removal. There can be no claim for indemnity based on “the 

 

(S.D. Ala. June 22, 2012); Butler v. Allstate Indem. Co., Inc., 3:09-cv-838-WKW, 2010 WL 381164 

(M.D. Ala. Jan. 25, 2010). 

9

 In Alabama, noncontractual indemnity is a tort claim. Precision Gear Co. v. Cont’l Motors, 

Inc., 1110786, 2013 WL 3481949, at *4 (Ala. July 12, 2013). Here, the harm occurred in Alabama, so 

Alabama law will apply. 

Case 2:13-cv-00700-WC Document 31 Filed 04/17/14 Page 13 of 14
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negligence and carelessness . . . of Travelers,” ((Doc. 6) at 26), where Travelers properly 

paid GNM under the terms of the insurance policy. Thus, GNM’s indemnity claim is due 

to be dismissed. 

III. CONCLUSION 

For the reasons discussed above, it is ORDERED that Travelers’ Motion to 

Dismiss (Doc. 21) is GRANTED. 

Done this 17th day of April, 2014. 

 

 /s/ Wallace Capel, Jr. 

 WALLACE CAPEL, JR. 

 UNITED STATES MAGISTRATE JUDGE 

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