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Pine Top Receivables of Illinois, LLC v. Del Estado

United States District Court, Seventh Circuit

June 11, 2013

PINE TOP RECEIVABLES OF ILLINOIS, LLC, a limited liability corporation, Plaintiff,
BANCO DE SEGUROS DEL ESTADO, statutory corporation wholly owned by the Sovereign Republic of Uruguay, Defendant.


MARVIN E. ASPEN, District Judge.

Plaintiff Pine Top Receivables of Illinois, LLC ("Plaintiff" or "PTRIL") seeks to collect debts that Defendant Banco De Seguros del Estado ("Defendant" or "Banco") allegedly owes Plaintiff's assignor, Pine Top Insurance Company ("Pine Top"), under a number of reinsurance treaties. (First Am. Compl. ("FAC") ¶ 26, 31.) Plaintiff filed a three-count amended complaint for an order compelling arbitration (Count I), an order holding that Defendant is estopped from opposing arbitration (Count II), or in the alternative, for damages caused by Defendant's alleged breach of contract (Count III). ( Id. ¶¶ 26, 29, 31.) Presently before us is Defendant's motion to dismiss Counts I and II for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 66.) Plaintiff's motion to compel arbitration (Dkt. No. 68) and Defendant's motion to strike (Dkt. No. 75) are also pending. For the reasons stated below, we grant Defendant's motion to dismiss and deny Plaintiff's motion to compel. We deny Defendant's motion to strike as moot.


We draw the following facts directly from the complaint and accept them as true for the purposes of the present motion. Pine Top was an Illinois-based insurance company. (FAC ¶ 8.) At various times between 1977 and 1986, Pine Top and Defendant entered into treaties of reinsurance ("Policies"), [1] under which Defendant agreed to pay specified shares of Pine Top's liabilities on underlying insurance contracts, in exchange for premium payments and other recoveries. ( Id. ¶¶ 10, 12.) Pine Top performed all of its obligations under the Policies. ( Id. ¶ 15.)

In 1986, the Circuit Court of Cook County placed Pine Top in liquidation and appointed the Director of Insurance and its Liquidator. ( Id. ¶ 8.) The Liquidator took possession of Pine Top's assets and operations, and continued the administration of claims. ( Id. ¶ 16.) When the Liquidator determined that "all or substantially all of the events [that] could affect the amount due to or from Defendant had been accounted for, " he provided Defendant with a final account and demanded payment of the net amount due under the Policies. ( Id. ¶ 18.) Defendant failed to pay. ( Id. )

On November 16, 2010, Plaintiff and the Liquidator entered into a Purchase Agreement and Assignment of Debt ("Purchase Agreement" or "P.A."). ( Id. ¶ 6.) The Purchase Agreement assigned to Plaintiff "all rights, title, benefit and interest in the Debts [owed by Defendant to Pine Top under the Policies] absolutely and with full title." (P.A. cl. 2.1 (Dkt. No. 67-1).) It specified that the assignment of debt "shall not be construed as a novation or assignment of the Policies" ( Id. cl. 2.4.1), and defined the scope of Plaintiff's authority as assignee. ( Id. cl. 5).

After executing the Purchase Agreement, Plaintiff demanded that Defendant submit to arbitration to resolve the outstanding debts. (FAC ¶ 24.) Defendant refused to arbitrate the dispute ( Id. ), and Plaintiff initiated this lawsuit on August 11, 2012. (Dkt. No. 1.) We dismissed the original complaint without prejudice, and Plaintiff filed the present amended complaint. (Dkt. No. 55, 59-1.) While Defendant's motion to dismiss the FAC was still pending, Plaintiff filed a motion to compel arbitration, which seeks identical relief as Count I of the FAC. (Dkt. No. 68.)


A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is meant to test the sufficiency of the complaint, not to decide the merits of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). In evaluating a motion to dismiss, we must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Thompson v. Ill. Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002). A court may grant a motion to dismiss under Rule 12(b)(6) only if a complaint lacks enough facts "to state a claim for relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949-50 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974 (2007)); Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614, 618-19 (7th Cir. 2007). "A claim has facial plausibility when the plaintiff pleads 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, 129 S.Ct. at 1949.

Although a facially plausible complaint need not give "detailed factual allegations, " it must allege facts sufficient "to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S.Ct. at 1964-65. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. These requirements ensure that the defendant receives "fair notice of what the... claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555, 127 S.Ct. at 1964.


I. Petition to Compel Arbitration (Count I)

In Count I, Plaintiff seeks to compel arbitration. (FAC ¶ 26.) Pine Top and Defendant included binding arbitration clauses in the Policies. ( Id. ¶¶ 14, 20.) The issue here is whether the Purchase Agreement assigned Plaintiff the right to enforce those clauses. We dismissed the original complaint because we found that there was no assignment of the right to compel arbitration. (Dkt. No. 55 at 8.) The new allegations in the FAC do not change our opinion.[2]

In its original complaint, Plaintiff based its right to compel arbitration on the provisions of the underlying Policies, not the terms of the Purchase Agreement itself. (Dkt. No. 55 at 6.) In our order dismissing the complaint, we observed that the Purchase Agreement expressly provided that it "shall not be construed to be a novation or assignment of the Policies." ( Id.; P.A. cl. 2.4.1.) Accordingly, the scope of Plaintiff's rights as assignee are defined by the terms of the Purchase Agreement, not the underlying Policies. (Dkt. No. 55 ...

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