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Steadfast Insurance Co. v. Forsyth International, Inc.

United States District Court, D. Massachusetts

September 30, 2014

STEADFAST INSURANCE COMPANY, As Subrogee of The Museum of Fine Arts, Plaintiff,
v.
FORSYTH INTERNATIONAL, INC. d/b/a THE FORSYTH INSTITUTE and FORSYTH DENTAL INFIRMARY FOR CHILDREN, Defendants.

ORDER ADOPTING REPORT AND RECOMMENDATION

GEORGE A. O'TOOLE, Jr., District Judge.

The magistrate judge to whom this matter was referred has recommended that the defendants' motion to dismiss be denied. The defendants have filed objections to the Report and Recommendation ("R&R"). After carefully reviewing the pleadings, the parties' submissions, the R&R, and the objection, I agree with the magistrate judge's analysis and conclusions.

I add the following observation: Denial of the motion to dismiss does not resolve disputed factual issues in the plaintiff's favor, but rather permits them to be explored at trial. Thus, for example, whether the failure to obtain pollution insurance that was ultimately effective was a material breach of the lease obligation to "maintain" pollution insurance may be a matter that turns on particular facts. But where there are alternatives, dismissal is not warranted where which alternative prevails may depend on what facts are proved or not at trial. The defendants' objection in this respect is in present circumstances not persuasive.

Accordingly, I ADOPT the magistrate judge's recommendation. The defendants' Motions to Dismiss (dkt. no. 6) is DENIED.

It is SO ORDERED.

REPORT AND RECOMMENDATION RE: DEFENDANTS' MOTION TO DISMISS PURSUANT TO FEDERAL RULES OF CIVIL PROCEDURE 12(b)(6) AND 12(b)(1) (DOCKET ENTRY # 6)

September 12, 2014

Pending before this court is a motion to dismiss filed by defendant Forsyth International, Inc. d/b/a The Forsyth Institute and Forsyth Dental Infirmary for Children ("Forsyth") under Fed.R.Civ.P. 12(b)(6) ("Rule 12(b)(6)"), and Fed.R.Civ.P. 12(b)(1) ("Rule 12(b)(1)"). (Docket Entry # 6). After conducting a hearing on August 14, 2014, this court took the motion (Docket Entry # 6) under advisement.

PROCEDURAL BACKGROUND

Steadfast Insurance Company ("Steadfast"), as subrogee of the Museum of Fine Arts ("MFA"), filed this action seeking to recover funds it paid to or on behalf of the MFA for environmental clean up costs under an insurance policy issued to the MFA ("the Steadfast policy"). Forsyth, a non-profit dental research corporation, occupied property located at 140 The Fenway in Boston, Massachusetts ("the property") under a lease with the MFA and purportedly released hazardous material, including mercury, into the sewer system during the lease.

The complaint sets out a cause of action under section four of Massachusetts General Laws chapter 21E ("chapter 21E") (Count I) against Forsyth as the entity liable for the release. Count II asserts that Forsyth negligently released the hazardous material and Count III seeks indemnification from Forsyth as the entity primarily at fault. In Count V, Steadfast alleges that Forsyth materially breached the lease with the MFA.[1]

The lease between the MFA and Forsyth included a clause that waived all claims and causes of action against the other party resulting from perils insured against under any insurance policy maintained by either party up to the amount of any recovery under the policy.[2] (Docket Entry # 4, § 5.6). Forsyth argues that this waiver of rights clause bars Steadfast, which stands in the shoes of the MFA, from maintaining all of the foregoing causes of action. The issue is one of first impression in this circuit. Forsyth additionally submits that the chapter 21E claim fails because Steadfast did not give proper notice and respond to Forsyth's request for further information. See Mass. Gen. L. ch. 21E, § 4A.

Jurisdiction is based on the diversity of the parties. 28 U.S.C. § 1332. Steadfast is a Delaware corporation with a principal place of business in Illinois and Forsyth is a Massachusetts corporation with a principal place of business in Massachusetts.

STANDARD OF REVIEW

Forsyth moves to dismiss the complaint under both Rule 12(b)(1) for lack of subject matter jurisdiction and Rule 12(b)(6) for failure to state a claim. Steadfast initially submits that Forsyth fails to clearly articulate what claims it seeks to dismiss under Rule 12(b)(6) as opposed to Rule 12(b)(1). (Docket Entry # 10, n.1). To the contrary, Forsyth argues that Steadfast's failure to comply with the notice requirements of section 4A of chapter 21E deprives "this Court of subject matter jurisdiction over the claim." (Docket Entry # 7). Forsyth therefore seeks to dismiss all of the claims under Rule 12(b)(6) and the chapter 21E claim under Rule 12(b)(1).

The standard of review for a Rule 12(b)(6) motion is well established. To survive a Rule 12(b)(6) motion to dismiss, the complaint must include factual allegations that when taken as true demonstrate a plausible claim to relief even if actual proof of the facts is improbable. Bell Atlantic v. Twombly , 550 U.S. 544, 555-558 (2007). Thus, while "not equivalent to a probability requirement, the plausibility standard asks for more than a sheer possibility that a defendant has acted unlawfully." Boroian v. Mueller , 616 F.3d 60, 65 (1st Cir. 2010) (internal quotation marks omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint... has not shown that the pleader is entitled to relief." Feliciano-Hernández v. Pereira-Castillo , 663 F.3d 527, 533 (1st Cir. 2011) (internal quotation marks, brackets and citations omitted). Discarding legal conclusions and taking the facts in the governing complaint as "true and read in a plaintiff's favor, " the complaint "must state a plausible, not a merely conceivable, case for relief." Sepúlveda-Villarini v. Dept. of Educ. Of Puerto Rico , 628 F.3d 25, 29-30 (1st Cir. 2010).

In reviewing a complaint, a court considers the complaint and any documents attached to it. Fed.R.Civ.P. 10(c) ("an exhibit to a pleading is a part of the pleading for all purposes"). The lease attached to the complaint is therefore part of the Rule 12(b)(6) record. In evaluating a Rule 12(b)(6) motion, the court may also consider a limited category of documents outside the complaint without converting the motion into one for summary judgment.[3] Such documents include public records and documents sufficiently referred to in the complaint. See Butler v. Balolia , 736 F.3d 609, 611 (1st Cir. 2013) (supplementing facts in complaint "by examining documents incorporated by reference into the complaint, matters of public record, and facts susceptible to judicial notice'"); Freeman v. Town of Hudson , 714 F.3d 29, 36 (1st Cir. 2013) (court may consider "official public records; documents central to plaintiffs' claim; and documents sufficiently referred to in the complaint'") (ellipses and internal brackets omitted); Giragosian v. Ryan , 547 F.3d 59, 65-66 (1st Cir. 2008) (court can consider documents relied on in complaint, public records, and other documents subject to judicial notice).

The complaint sufficiently refers to the following documents which Steadfast attaches to the opposition to the motion: (1) an October 10, 2008 penalty assessment notice ("PAN") issued by the Massachusetts Water Resources Authority ("MWRA") to Forsyth (Docket Entry # 1, ¶ 12(b)) (Docket Entry # 10-4); (2) an April 23, 2009 settlement agreement between the MWRA and Forsyth requiring Forsyth to pay $25, 000 and to sample and report mercury from a designated location at the property (Docket Entry # 1, ¶ 12(c)) (Docket Entry # 10-5); (3) Massachusetts Department of Environmental Protection ("MDEP") hazardous waste manifests documenting shipments of hazardous waste, including mercury, from the property during the lease (Docket Entry # 1, ¶ 12(d)) (Docket Entry # 10-6); (4) MWRA inspection reports indicating continued discharge of mercury "into the plumbing waste system" during the lease (Docket Entry # 1, ¶ 12(e)) (Docket ...


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