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SKI Chalet Village Owners Club, Inc. v. Employers Mutual Casualty Co.

United States District Court, E.D. Tennessee

November 22, 2016




         This civil action is before the Court on defendant's Motion to Dismiss for Failure to State a Claim [Doc. 8]. Plaintiff filed a response [Doc. 11] and defendant replied [Doc. 12]. For the reasons contained herein, the Court will grant defendant's motion to dismiss.

         I. Background

         The dispute in this action arises over an insurance policy contract entered into by plaintiff, Ski Chalet Village Owners Club, Inc., and defendant, Employers Mutual Casualty Company. The policy covered three recreational facilities owned and managed by plaintiff [Doc. 1 p. 2]. The facility relevant to the present litigation is known as “Chalet Village North Clubhouse, ” and is identified within the insurance policy as Location No. 002 (“Location 2”) [Id.].

         The insurance policy at issue provides affirmative coverage on the swimming pool situated in Location 2 [Id.]. The policy, however, contains a number of exclusions and limitations, both with respect to the property covered, and to the cause of the property loss. Notably, the policy contains the following provisions:

2. Property Not CoveredCovered Property does not include:

Land (including land on which the property is located), water, growing crops or lawns;

B. Exclusions1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

b. Earth Movement

(2) Landslide, including any earth sinking, rising or shifting related to such event;

(4) Earth sinking (other than sinkhole collapse), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface.

g. Water

(2) Mudslide or mudflow;

This exclusion applies regardless of whether any of the above . . . is caused by an act of nature or is otherwise caused . . . . [Doc. 1-A].

         Plaintiff alleges that in October 2015, plaintiff's representatives learned that one of Location 2's pools was suffering an “uncharacteristic water loss” [Doc. 1 p. 3]. While conducting an investigation into the cause of the water loss, plaintiff's representatives further learned that the “ground supporting the pool on the lower side of the structure had partially dropped or shifted” [Id.]. Plaintiff subsequently learned that the ground movement had resulted from the water loss, which stemmed from a ruptured pipe servicing the pool [Id.]. The ruptured pipe had discharged significant amounts of water and “jeopardize[ed] the structural integrity of the pool” [Id.]. An inspection by defendant's agent indicated that the plumbing pipe failure “most likely occurred due to cold weather/frozen water in the pipes” [Id. at p. 5].

         As a result of the damage, plaintiff asserts that it was forced to take “immediate extensive measures” to “restore the structural integrity of the pool” [Id. at p. 3]. In its complaint, plaintiff details the measures that it took to sustain the pool, by “reinforcing the pool by the excavation of saturated soil and construction of a deeply embedded, large concrete block retaining wall and placement of backfill and rock” [Id. at p. 4]. Plaintiff avers that these measures were necessary to prevent collapse of the pool [Id.].

         Plaintiff alleges that it submitted its claim through defendant's agent on November 3, 2015 [Id. at p. 3]. Plaintiff further alleges that when it received no response from defendant, it retained counsel and again contacted defendant [Id. at p. 5]. On January 6, 2016, plaintiff received correspondence from defendant indicating that there would be no coverage provided for the relevant damages. [Id.]. Plaintiff subsequently initiated the present suit.

         II. Standard of Review

         Federal Rule of Civil Procedure 8(a) sets out a liberal pleading standard. To survive a motion to dismiss, a complaint need only contain a “short and plain statement of the claim showing that the pleader is entitled to relief, ‘in order to give [the opposing party] fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Detailed factual allegations are not required, but a party's “obligation to provide the ‘grounds' of his entitle[ment] to relief' requires more than labels and conclusions.” Id. at 555.

         In deciding a Rule 12(b)(6) motion to dismiss, a court must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, draw all reasonable inferences in favor of the plaintiff, and determine whether the complaint contains “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007) (citation omitted). “A claim has facial plausibility when the plaintiff pleads the 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. “Determining whether a complaint states a plausible claim for relief will [ultimately] . . . be a context-specific task that requires th[is Court] to draw on its judicial experience and common sense.” Id. at 679. When considering a 12(b)(6) motion, the Court “may consider the complaint and any exhibits attached thereto . . .” Basset v. National Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008).

         III. Analysis

         Plaintiff brings claims for breach of the insurance contract, and also for statutory and common law bad faith. Defendant moves to dismiss all claims. The Court will first address the ...

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