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Nationwide Mutual Fire Insurance Co. v. Castle

United States District Court, Sixth Circuit

October 2, 2013

MATTHEW CASTLE, et al., Defendants.


AMUL R. THAPAR, District Judge.

Facts drive pleadings. A court can no more adjudicate a factually barren lawsuit than a physician can diagnose a symptomless patient. The defendants' four-paragraph counterclaim in this case recites the law and alleges no facts. Their amended counterclaim more than doubles the length of its predecessor without further illuminating the facts underlying the claim. For this reason, the Court must grant the plaintiff's motions to dismiss the counterclaim and amended counterclaim.


A fire destroyed Anthony and Maria Castle's home at 181 Beaver Valley Road in Martin, Kentucky (the "Beaver Valley Road property"). R. 15 at 1, 3. At the time of the blaze, they were in the midst of selling that home, via a land sale contract, to their son, Matthew Castle. Id. at 2. The land sale contract called for Matthew to name Anthony and Maria as additional insureds on any homeowners insurance he purchased for the property. Id. at 3.

Within a month of the fire at the Beaver Valley Road property, a second fire destroyed another home owned by Matthew Castle, located at 10956 Main Street in Martin, Kentucky (the "Main Street property"). Id. at 2-4. The parties allude to evidence that arson caused both fires. Id. at 4 ("the homes may have been destroyed by arson"); R. 5 at 6-7. Whatever the fires' cause, the Castles disavow any foul play. R. 15 at 4.

Before the fires, Matthew Castle obtained homeowners insurance policies from Nationwide Mutual Fire Insurance Company to cover both properties. Id. at 3-4. Neither policy, however, listed his parents as additional insureds. Id. at 2-3. Nationwide sued all three Castles, seeking a declaratory judgment that those policies were null and void from their inception. R. 5 at 10. The Castles filed a counterclaim, R. 4, which they later amended, R. 17, alleging that Nationwide had breached the insurance policies and violated Kentucky's Unfair Claims Settlement Practices Act ("UCSPA"). Id. at 3-5. Pursuant to Federal Rule of Civil Procedure 12(b)(6), Nationwide moved to dismiss the defendants' counterclaim and amended counterclaim for failure to state a claim. R. 10; R. 20. Nationwide argues that the counterclaim "does not set forth any facts to allow the Court to make any inferences concerning liability" and that "[t]he Castles have not pleaded sufficient facts." R. 10 at 1.


A counterclaim, like 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). In order to survive a motion to dismiss under Rule 12(b)(6), a counterclaimant must "plead enough factual matter to raise a plausible inference of wrongdoing." 16630 Southfield Ltd. P'ship v. Flagstar Bank, F.S.B., No.12-2620, 2013 WL 4081909, at *2 (6th Cir. Aug. 14, 2013) (internal quotation marks omitted). If the well-pled facts do not allow the court to infer "more than the mere possibility of misconduct, " then dismissal is appropriate. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

The Castles' counterclaim is devoid of facts plausibly supporting their allegations. Specifically, the Castles did not plead facts establishing: (1) that Anthony and Maria Castle have standing to enforce the Main Street property's insurance policy, (2) that Nationwide actually breached either insurance policy, and (3) that Nationwide acted in bad faith. So, the Court must grant Nationwide's motions to dismiss the Castles' counterclaim.

I. The Castles Plead Insufficient Facts To Make Their Breach of Contract Claims Plausible, So Those Claims Must Be Dismissed.

The Castles assert that Nationwide breached two contracts: Matthew Castle's insurance policies for the Beaver Valley Road and Main Street properties. In order to establish a breach of contract under Kentucky law, the Castles must prove: (1) the existence of a contract, (2) breach of that contract, and (3) damages stemming from the breach. Metro Louisville/Jefferson Cnty. Gov't v. Abma, 326 S.W.3d 1, 8 (Ky. 2009). The Castles' counterclaim, however, suffers from a dearth of evidence in support of the first two elements.

A. Matthew Castle Properly Pleads the Existence of Both Contracts, but Anthony and Maria Castle Plead Sufficient Facts To Establish Standing To Enforce Only One Contract.

To meet the first element of their breach of contract claims, the Castles must plead facts that, when taken as true, establish the existence of a contract for insurance coverage for both properties. As the party named on both insurance policies, Matthew Castle successfully accomplishes this. In contrast, Anthony and Maria Castle offer no facts supporting their interest in Matthew's insurance policy for the Main Street property. They do, however, plead facts sufficient to state a claim that they have rights under the policy for the Beaver Valley Road property.

The Main Street Property: The defendants provide adequate factual support for Matthew Castle's contention that he possesses a Nationwide insurance policy for the Main Street property. R. 17 at 2 (alleging that Matthew purchased policy number 63 16 HO 504915). Anthony and Maria Castle, on the other hand, have no known relationship with that property or with Matthew's policy. To establish breach of contract as a stranger to the contract, a party must show that he was an intended third-party beneficiary of that contract. See Laurel Constr. Co. v. Paintsville Util. Comm'n, 336 S.W.3d 903, 907 (Ky. Ct. App. 2010). Anthony and Maria Castle make no factual showing ...

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