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Founders Insurance Co. v. Billy's Bar & Grill, LLC

United States District Court, N.D. Texas, Dallas Division

October 23, 2019

FOUNDERS INSURANCE COMPANY, Plaintiff,
v.
BILLY'S BAR & GRILL, LLC, et al., Defendants.

          MEMORANDUM OPINION AND ORDER DENYING MOTION TO DISMISS OR TRANSFER

          BARBARA M. G. LYNN CHIEF JUDGE.

         Before the Court is Defendant Matthew Kunkle's Motion to Dismiss or Transfer. (ECF No. 21). For the reasons stated below, the Motion is DENIED.

         I. Factual and Procedural Background

         Plaintiff Founders Insurance Company is an insurance company whose citizenship, place of incorporation, and principal place of business are all outside Texas. (ECF No. 1 ¶ 3). Defendant Billy's Bar & Grill, LLC (“BB&G”) was a limited liability company formed under the laws of Texas, before it forfeited its charter on February 21, 2014. (Id. ¶ 4, Ex. B). Plaintiff was the former insurer of BB&G until the policy was allegedly cancelled on September 5, 2011. (Id. ¶¶ 1, 12). This insurance coverage dispute stems from a September 30, 2011, incident in which an intoxicated Kunkle was allegedly injured when he crashed his motorcycle after drinking at BB&G. (Id. ¶ 16).

         Defendant Joe Polanco is an individual who resides, is a citizen of, and formerly conducted business in Texas. (Id. ¶ 5). Defendant Matthew Kunkle is an individual who resides in and is a citizen of Texas. (Id. ¶ 7). Laurie Kinser is an individual who was terminated as a Defendant on May 29, 2018, when the Court granted Plaintiff and Kinser's Joint Motion to Dismiss with Prejudice. (See ECF Nos. 13-14).

         On February 14, 2018, Plaintiff filed its Complaint and Request for Declaratory Judgment under Federal Rule of Civil Procedure 57 and 28 U.S.C. §§ 2201 and 2202. (See ECF No. 1). Plaintiff requests a declaratory judgment that the Liquor Liability Policy No. LLTX000892 (the “Founders Policy”), which lists BB&G as the named insured, was cancelled effective September 5, 2011. (Id. ¶¶ 1, 12). Kinser is listed as an additional insured party on the Founders Policy. (Id., Ex. A at 4, 6-7). Plaintiff also seeks a declaratory judgment that it had and has no duty to defend or indemnify any Defendant for claims in a related Collin County suit by Kunkle, arising from injuries Kunkle allegedly incurred in the September 30, 2011, motorcycle crash. (Id. ¶ 2). On September 3, 2013, Kunkle filed suit in Collin County, Texas, against BB&G, Polanco, Kinser, and others not named as defendants in this case (the “Collin County suit”). (Id. ¶ 16, Ex. C at 6; see also Matthew Kunkle v. Billy's Bar & Grill, LLC, et al., No. 219-03508-2013 (219th Dist. Ct., Collin County, Tex. Sept. 3, 2013). That suit is still pending. (Id.)

         Plaintiff alleges the following facts. On October 1, 2013, Plaintiff received a fax from one of Kunkle's attorneys, with a copy of Kunkle's petition in the Collin County suit. (ECF No. 1 ¶ 19). In an October 3, 2013, telephone conversation with that attorney, Plaintiff told him that the Founders Policy did not cover the motorcycle crash, and that Plaintiff had provided the relevant policy documents to Kunkle's prior counsel, including the notice of policy cancellation. (Id. ¶ 20).

         On February 21, 2014, BB&G forfeited its charter to the Texas Secretary of State. (Id. ¶ 4, Ex. B).

         On August 21, 2017, Kinser's attorney sent Plaintiff, in a fax and email, a second notice of Kinser's claim under the Founders Policy, seeking a defense and indemnity on Kunkle's claims against her in the Collin County suit. (Id. ¶ 26, Ex. C). Kinser alleged that she was an additional insured under the Founders Policy, and attached a copy of Kunkle's petition in the Collin County suit. (Id.) The documents Kinser submitted to Plaintiff therefore showed that the motorcycle crash was outside the coverage period. (Id.)

         On September 7, 2017, Plaintiff notified Kinser that it declined her claim for a defense and indemnity, because the Founders Policy was not in effect on September 30, 2011, the date of the incident resulting in Kunkle's injuries. (Id. ¶ 27). Plaintiff requested that Kinser provide the information she relied upon in making the August 21, 2017, claim, but received no response. (Id.)

         Kunkle is not an insured or named beneficiary in the Founders Policy. (Id. ¶ 28, Ex. A). Kunkle moves to dismiss Plaintiffs claims under Federal Rules of Civil Procedure 12(b)(6) and 12(b)(3), or, in the alternative, to transfer this case to the Eastern District of Texas under 28 U.S.C. § 1404(a) or 1406(a). (ECF No. 21).

         II. Legal Standard

         A. Motion to Dismiss Under Fed.R.Civ.P. 12(b)(6)

         When ruling on a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court must take the allegations of the complaint as true, resolving ambiguities or doubts regarding sufficiency of the claim in favor of the plaintiff. Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993). A pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). This pleading standard does not require “detailed factual allegations, ” but it does demand more than an unadorned accusation devoid of factual support. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To survive a motion to dismiss, a complaint must contain sufficient facts to state a claim for relief that is plausible on its face. Twombly, 550 U.S. at 570. A court must accept all factual allegations as true, but it is not bound to accept as true “a legal conclusion couched as a factual allegation.” Id. at 555. When the facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has stopped short of showing that the pleader is plausibly entitled to relief. Iqbal, 556 U.S. at 678.

         District courts may only consider the pleadings, and their attachments, when deciding a Rule 12(b)(6) motion. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). A court may also consider and take judicial notice of matters of public record, including filings establishing litigation in another court. See Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017-18 (5th Cir. 1996); see also Fed. R. Evid. 201(f); Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007); SB Int'l, Inc. v. Jindal, No. 3:06-CV-1174-G, 2007 WL 1411042, at *1 (N.D. Tex. May 14, 2007). Thus, this Court may consider the Founders Policy and Defendant Kunkle's petition in the Collin County suit, both of which Plaintiff attached to its Complaint. (ECF No. 1, Ex. A, C at 6-15).

         Under the Erie doctrine, “federal courts sitting in diversity apply state substantive law and federal procedural law.” Nat'l Liab. & Fire Ins. Co. v. R & R Marine, Inc., 756 F.3d 825, 834 (5th Cir. 2014). Because the issue of standing affects the parties' substantive rights, Texas law governs. See id.

         B. ...


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