JONAS v. AIG DOMESTIC CLAIMS, INC. Case No. 1:12 CV 544.
ROBERT JONAS, Plaintiff, v. AIG DOMESTIC CLAIMS, INC., et al., Defendants.
United States District Court, N.D. Ohio, Eastern Division.
August 17, 2012.
DONALD C. NUGENT, District Judge.
This matter is before the Court on the Motion for Judgment on the Pleadings filed by Defendant, National Union Fire Insurance Company of Pittsburgh, Pa. (Docket #14.)
From 1985 until 2002, Plaintiff, Robert Jonas, served as the President of W.P. Hickman Systems, Inc. ("Hickman"). From 2002 until November 29, 2007, Mr. Jonas was employed as Sales Director of Hickman and served on Hickman's Board of Directors. In August 2007, Mr. Jonas states that he "blew the whistle internally at Hickman regarding fraud, embezzlement, and other corporate malfeasance by certain Hickman officers" Opposition Brief at p. 2. Hickman terminated Mr. Jonas's employment in November 2007 and removed him from the Board of Directors in December 2007.
On April 9, 2008, Mr. Jonas filed a Complaint in the Cuyahoga County Court of Common Pleas, Robert Jonas v. W.P. Hickman Systems, Inc., Case No. CV 08 656375, asserting claims against Hickman for defamation; wrongful termination in violation of Ohio public policy; and, wrongful termination in violation of Ohio Revised Code § 4113.52. On November 7, 2011, Mr. Jonas obtained a Consent Judgment against Hickman in the amount of $3,000,000.
On January 31, 2012, Mr. Jonas filed his Supplemental Complaint against AIG Domestic Claims, Inc.; National Union; and, Gemini Insurance Company. National Union issued Insurance Policy No. 290-54-28 to Hickman ("the Policy"), effective September 14, 2007 to September 14, 2008. Mr. Jonas seeks coverage under the Policy for the Consent Judgment.
On April 2, 2012, National Union filed its Motion for Judgment on the Pleadings. (Docket #14.) National Union argues Mr. Jonas is not entitled to coverage under the Policy pursuant to the Policy Exclusions set forth in Clause 4, Paragraphs (i); (i)(2); and, (i)(3), which read as follows:
Policy at Clause 4 (see Endorsement #4).
National Union states that as a past employee of Hickman, Mr. Jonas is an "Insured" under the Policy and, therefore, Exclusion (i) precludes coverage for the Consent Judgment. National Union further states that the Exceptions to Exclusion (i) do not apply because Mr. Jonas "was" a director of Hickman, as referenced in Exception (i)(2), and was a "past director" of Hickman within four years prior to the claim being made, as referenced in Exception (i)(3).
On June 4, 2012, Mr. Jonas filed his Opposition to Defendant National Union Fire Insurance Company's Motion for Judgment on the Pleadings. (Docket #23.) Mr. Jonas argues that the "Insured vs. Insured" Exclusion does not apply to the Consent Judgment. Specifically, Mr. Jonas cites Exception (i)(2) of the Policy, which provides that the Insured vs. Insured Exclusion does not apply to "an Employment Practices claim brought by an Employee of the Company other than an Employee who is or was a director, member of the Board of Managers or Management committee member of the named Entity."
Mr. Jonas argues that Exception (i)(2) should be read to exclude coverage only if the Employee "was a director" of Hickman when the Claim was filed. Mr. Jonas asserts that because he was no longer a director at the time he filed his Complaint in April 2008, the Insured vs. Insured Exclusion does not bar coverage for the Consent Judgment. Mr. Jonas urges the Court to draw a distinction between the phrases "past director" and "was a director," and that the use of the word "was" in Exception (i)(2) instead of the word "past" (as is used in Exception (i)(3)) must be interpreted to mean that the Insured vs. Insured Exclusion would only apply if he were serving as a director at the time he filed his Complaint in April 2008.
In addition to the foregoing, Mr. Jonas argues that the purpose of the Insured vs. Insured Exclusion is to prevent collusion among associates, not to exclude wrongful discharge suits and, that because there is no sign of collusion in this case, the Insured vs. Insured Exclusion is inapplicable.
On July 9, 2012, National Union filed its Reply Memorandum in Support of Motion for Judgment on the Pleadings. (Docket #27.)
Standard of Review
The Sixth Circuit reviews motions for judgment on the pleadings under Fed. R. Civ. P. 12(c) under the de novo standard applicable to motions to dismiss under Rule 12(b)(6). See Scheid v. Fanny Farmer Candy Shops, Inc.,
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) allows a defendant to test the legal sufficiency of a complaint without being subject to discovery. See Yuhasz v. Brush Wellman, Inc.,
In order to survive a motion to dismiss, a complaint must provide the grounds of the entitlement to relief, which requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action. See Bell Atl. Corp. v. Twombly,
On a motion brought under Rule 12(b)(6), the court's inquiry is limited to the content of the complaint, although matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint may also be taken into account. See Amini v. Oberlin College,
Insurance contracts must be construed in accordance with the same rules as other written contracts. Universal Underwriters Ins. Co. v. Shuff,
As the Ohio Supreme Court stated in Westfield Ins. Co. v. Galatis,
"[A]n exclusion in an insurance policy will be interpreted as applying only to that which is clearly intended to be excluded." Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd.,
The Policy — Exclusions and Exceptions.
The National Union Fire Insurance Policy excludes coverage for Claims brought by an Insured, except under certain circumstances.
Clause 4, Exception (i)(2).
Clause 4, Exception (i)(2) reads, in its entirety, as follows:
Exception (i)(2) permits coverage for an "Employment Practices Claim" brought by an Employee, but specifically states that this Exception to the Insured vs. Insured Policy Exclusion for an "Employment Practices Claim" does not apply if the Employee bringing the Claim "is or was" a director of the Company.
Mr. Jonas "was" a director of the Company from 1985 to December 19, 2007. Therefore, Mr. Jonas's claim does not fall within Exception (i)(2) to the Insured vs. Insured Policy Exclusion. Mr. Jonas argues that the language "was a director" in Exception (i)(2) should be interpreted to mean that the Employee must have been a director at the time the Claim was filed in order for the Insured vs. Insured Exclusion to apply. Opposition Brief at p. 5. There is no basis for this argument and such an interpretation would require the Court to effectively add language the Policy, thereby creating an Exception to the Insured vs. Insured Exclusion which simply does not exist.
Clause 4, Exception (i)(3)
Exception (i)(3), part of Endorsement 4 to the Policy, provides an Exception for Claims made by an Employee who was a past director, provided that a certain amount of time has passed. Clause 4, Exception (i)(3) reads, in its entirety, as follows:
Exception (i)(3) provides an Exception to the Insured vs. Insured Exclusion for "any Claim" brought by a "past director" who has not served as a director for at least four years prior to bringing the Claim. Mr. Jonas was a director of Hickman through December 2007. His Claim against Hickman was first made on April 9, 2008. Therefore, Mr. Jonas served as a director within four years of bringing his claim. The Exception to the Insured vs. Insured Exclusion set forth in Exception (i)(3) does not permit coverage for Mr. Jonas's claim.
Reading Sections (i)(2) and (i)(3) together, the Policy was drafted in such a way as to exclude coverage for an Employment Practices Claim made by an Employee who is recent director of the Company (served within four years of filing the Claim) but to allow coverage for any claim, even an Employment Practices Claim, by an Employee whose service as a director was further in the past. Thus, whether or not a former director can bring an Employment Practices Claim under the express language of the Policy is based upon the length of time since the Claimant served as a director. In this case, because his Claim was filed within four years of his service as a director of the Company, Mr. Jonas's Claim is excluded from coverage.
The Court takes note of the fact that Exception (i)(3) refers to the "Claim being first made against any "person." It is unclear whether the word "person" was chosen intentionally, or was meant to include claims against the Company, Hickman. If in fact the word "person" was chosen purposefully, then Exception (i)(3) would have no relevance Mr. Jonas's Claims against the Company. However, Mr. Jonas's Claims would still be Excluded under Clause 4, Paragraph (i), and not subject to Exception (i)(2), because of Mr. Jonas's prior service as a director of the Company.
For the reasons stated above, Plaintiff's Complaint fails to state a claim upon which relief can be granted.
The Motion for Judgment on the Pleadings filed by Defendant, National Union Fire Insurance Company of Pittsburgh, Pa. (Docket #14) is GRANTED.
This case is hereby TERMINATED.
IT IS SO ORDERED.
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