In Manago v. Auto-Owners Ins. Co., No.:2:16-CV-267-RL-JEM, 2018 WL 1704465 (N.D. Ind. April 9, 2018) (Martin, USMJ), the plaintiff policyholder filed a motion to strike certain affirmative defenses raised by her first-party insurance carrier. The plaintiff claimed coverage and also bad faith. However, this article will focus on the affirmative defenses which the carrier raised against the coverage claim in particular, and the Magistrate Judge's rulings finding them legally sufficient in this case.
As you read through this article, bear in mind what the plaintiff-policyholder "had to know," at least in the eyes of the Magistrate Judge. The issue consistently in question here was whether the insurance carrier had pled enough facts in its affirmative defenses in this particular case.
The insurance carrier in this case affirmatively defended against the plaintiff's coverage claim and against that part of the plaintiff's claim for attorney's fees in particular, with these generalized statements:
Defendant’s first affirmative defense is a statement that the complaint “fails to state a claim upon which relief can be granted.” The eighth is similar, but focuses solely on attorney’s fees, reading, “Plaintiff’s prayer for attorney’s fees and costs fails to state a claim upon which relief may be granted because Plaintiff is not entitled to recover attorney’s fees to establish or contest insurance coverage.”
Since at one time the Federal Rules of Civil Procedure previously authorized a generalized statement that the complaint fails to state a claim upon which relief can be granted, the U.S. Magistrate Judge deciding these issues ruled that the carrier's defense to a coverage claim was legally sufficient and would not be stricken. Manago v. Auto-Owners Ins. Co., No.:2:16-CV-267-RL-JEM, 2018 WL 1704465, at *1 (N.D. Ind. April 9, 2018).
By the same token, or by a parity of reasoning if you prefer, the Magistrate Judge ruled that the very similar generalized statement that the plaintiff's particular claim for attorney's fees did not state a claim was similarly legally sufficient.
In that case, the carrier also raised certain exclusions in the policy, which the plaintiff contended were not sufficiently alleged as affirmative defenses because they were raised only as conclusions without facts.
The Magistrate Judge disagreed with the plaintiff and denied the plaintiff's motion to strike the following defenses which included an exclusion in this case for freezing pipes in Indiana:
- There is no coverage for the claims alleged in Plaintiff’s complaint under the [carrier's] Policy because the claims are excluded under the Policy’s express exclusion of coverage for damages caused by or contributed to by any power, heating, or cooling failure or interruption.
- There is no coverage for the claims alleged in Plaintiff’s complaint under the [carrier's] Policy because the claims are excluded under the Policy’s express exclusion of coverage for any loss caused by or contributed to by the freezing of plumbing systems while the building is vacant or unoccupied when the insured does not shut off the water supply and drain the systems and appliances.
- There is no coverage for the claims alleged in Plaintiff’s Complaint under the [carrier's] Policy because the claims are excluded under the Policy’s express exclusion of coverage for any loss caused by or contributed to by the freezing of plumbing systems while the building is unoccupied when the insuredfails to maintain heat in the building.
While certain facts in these affirmative defenses are not specifically pled, the defenses themselves contain sufficient detail to put Plaintiff on notice as to what facts Defendant will seek to prove in its defense. These defenses will therefore not be stricken.
Manago v. Auto-Owners Ins. Co., No.:2:16-CV-267-RL-JEM, 2018 WL 1704465, at *3 (N.D. Ind. April 9, 2018).
The Magistrate Judge was by no means done. The plaintiff's motion to strike the carrier's affirmative defense simply that the plaintiff had other insurance was also denied. Far from being conclusory, in the eyes of the Magistrate Judge, this affirmative defense was legally sufficient to put the plaintiff on notice of the facts that the carrier would prove in support of this defense. The carrier alleged that the plaintiff had no coverage from the defendant “'to the extent that the insured has other valid and collectable insurance or other insurance available to the insured'[.]” This defense was sufficient for the Magistrate Judge because the plaintiff would be in a position to know whether she had other insurance:
Given that the existence or identity of any additional policy of insurance held by the insured is a fact more likely to be in Plaintiff’s control than in Defendant’s, the Court finds that this affirmative defense is sufficiently pled.
Manago v. Auto-Owners Ins. Co., No.:2:16-CV-267-RL-JEM, 2018 WL 1704465, at *3 (N.D. Ind. April 9, 2018).
Those who have knowledge already, at least in the eyes of the Court, are not likely to be successful in such cases by arguing that allegations assuming their knowledge are conclusions only, and nothing more. As in this case, a Magistrate Judge quite possibly will be convinced in such a case that mere conclusions are legally sufficient affirmative defenses under the circumstances.
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