United States District Court, S.D. Illinois
MEMORANDUM AND ORDER
PHIL GILBERT, DISTRICT JUDGE
case, plaintiff Philadelphia Indemnity Insurance Company
(“PIIC”) seeks rescission of an insurance policy
it issued to defendant Behavioral Health Alternatives, Inc.
(“BHA”) or, in the alternative, a declaratory
judgment stating that the insurance policy it issued to BHA
does not cover the defense of or indemnity for the underlying
suit brought in state court by the estate and family of Gayla
Timmermeier. BHA has moved to dismiss this case under Federal
Rule of Civil Procedure 12(b)(6) on the grounds that PIIC
should be estopped from rescinding the policy or claiming it
does not cover the underlying lawsuit (Doc. 26). PIIC has
responded to the motion (Doc. 31).
Standard for Dismissal
reviewing a Rule 12(b)(6) motion to dismiss, the Court
accepts as true all allegations in the complaint.
Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). To avoid dismissal under Rule 12(b)(6) for failure
to state a claim, a complaint 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
requirement is satisfied if the complaint (1) describes the
claim in sufficient detail to give the defendant fair notice
of what the claim is and the grounds upon which it rests and
(2) plausibly suggests that the plaintiff has a right to
relief above a speculative level. Bell Atl., 550
U.S. at 555; see Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009); EEOC v. Concentra Health Servs., 496
F.3d 773, 776 (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 (citing Bell Atl.,
550 U.S. at 556).
Bell Atlantic, the Supreme Court rejected the more
expansive interpretation of Rule 8(a)(2) that “a
complaint should not be dismissed for failure to state a
claim unless it appears beyond doubt that the plaintiff can
prove no set of facts in support of his claim which would
entitle him to relief, ” Conley v. Gibson, 355
U.S. 41, 45-46 (1957). Bell Atlantic, 550 U.S. at
561-63; Concentra Health Servs., 496 F.3d at 777.
Now “it is not enough for a complaint to avoid
foreclosing possible bases for relief; it must actually
suggest that the plaintiff has a right to relief . . . by
providing allegations that ‘raise a right to relief
above the speculative level.'” Concentra Health
Servs., 496 F.3d at 777 (quoting Bell Atl., 550
U.S. at 555).
Bell Atlantic did not do away with the liberal
federal notice pleading standard. Airborne Beepers &
Video, Inc. v. AT&T Mobility LLC, 499 F.3d 663, 667
(7th Cir. 2007). A complaint still need not contain detailed
factual allegations, Bell Atl., 550 U.S. at 555, and
it remains true that “[a]ny district judge (for that
matter, any defendant) tempted to write ‘this complaint
is deficient because it does not contain . . .' should
stop and think: What rule of law requires a
complaint to contain that allegation?” Doe v.
Smith, 429 F.3d 706, 708 (7th Cir. 2005) (emphasis in
original). Nevertheless, a complaint must contain “more
than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.”
Bell Atl., 550 U.S. at 555. If the factual detail of
a complaint is “so sketchy that the complaint does not
provide the type of notice of the claim to which the
defendant is entitled under Rule 8, ” it is subject to
dismissal. Airborne Beepers, 499 F.3d at 667.
preliminary matter, PIIC has referenced in its response
material outside and not attached to the Amended Complaint.
When such material is presented in connection with a Rule
12(b)(6) motion to dismiss, the Court may treat the motion to
dismiss as a motion for summary judgment or it may exclude
the additional material from consideration. See Fed.
R. Civ. P. 12(d). In this case, the Court declines to
consider the additional material and will consider this
motion as it was captioned, under Rule 12(b)(6).
allegations in the Amended Complaint and the reasonable
inferences that can be drawn from them establish the
following relevant facts for the purposes of this motion.
August 2013, Gayla Timmermeier sought services from BHA, an
organization that provides comprehensive outpatient mental
health services. After a subsequent visit to BHA, Timmermeier
committed suicide. On September 9, 2013, Gayla
Timmermeier's brother Earl Timmermeier telephoned BHA to
inform it of Gayla Timmermeier's death. In that phone
call, Earl Timmermeier said that Gayla Timmermeier's
family planned to sue BHA.
than a year later, BHA applied to PIIC for commercial
insurance coverage. BHA Executive Director Belinda Gunning
completed the application. In the application, she stated
that no BHA client had committed suicide in the prior four
years and that BHA did not know of any circumstances that
could reasonably give rise to a lawsuit or an insurance
on these representations, PIIC issued Policy No. PHPK1264138,
effective December 1, 2014, to December 1, 2015
(“Policy”). The Policy covered claims made within
the effective period for incidents occurring as far back as
December 1, 1986. A claim was considered to be made when BHA
first received and recorded notice of the claim. The Policy
also expressly excluded coverage for incidents about which
BHA knew on the date the Policy went into effect that could
reasonably be expected to generate a claim for damages.
September 4, 2015, Earl Timmermeier and other family members
filed a negligence action against BHA in the Circuit Court
for the Third Judicial Circuit, Madison County, Illinois. The
complaint in the underlying lawsuit did not plead that Earl
Timmermeier had alerted BHA to Gayla Timmermeier's
suicide or to a potential lawsuit on or around September 9,
2013. BHA tendered the defense of the lawsuit to PIIC, which
agreed to defend BHA in the underlying suit.
filed this lawsuit on June 30, 2017. As noted above, PIIC
seeks to rescind the Policy based on material
misrepresentations made in BHA's application for
insurance (Count 1). Alternatively, PIIC seeks a declaration
that the Policy does not cover the underlying lawsuit because
Earl Timmermeier first made his claim to BHA on September 9,
2013, outside the Policy's effective dates (Count 2). It
also seeks a declaration that the underlying lawsuit falls
within an exclusion for incidents about which BHA knew on
December 1, 2014, and could reasonably ...