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BURLINGTON INSURANCE COMPANY v. OKIE DOKIE

August 2, 2004.

BURLINGTON INSURANCE COMPANY, Plaintiff,
v.
OKIE DOKIE, INC. et al., Defendants.



The opinion of the court was delivered by: RICARDO URBINA, District Judge

MEMORANDUM OPINION

DENYING THE DEFENDANT'S MOTION TO DISMISS

I. INTRODUCTION

  This matter comes before the court on Defendant C.J. Thomas' ("C.J. Thomas") motion to dismiss for failure to state a claim on which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). C.J. Thomas asserts that the complaint fails to properly allege (1) a duty of care owed by the defendant to the plaintiff and (2) that the plaintiff's reliance on the alleged misrepresentations was reasonable. Because the plaintiff has adequately pled negligent misrepresentation, the court denies C.J. Thomas' Motion to Dismiss.

  II. BACKGROUND

  A. Factual History

  Defendant Okie Dokie, Inc. ("Okie Dokie") is the owner and operator of Dream, an establishment in the District of Columbia described in the complaint as a nightclub. Compl. ¶¶ 8, 10. C.J. Thomas, an insurance broker, prepared an application for insurance on behalf of Okie Dokie for a commercial general liability insurance policy to cover Dream. Id. ¶¶ 3, 23, 26. The application described Dream as a restaurant, claiming that: (1) the previous insurance carrier cancelled its policy primarily because Dream had a dance floor; (2) Dream does not sponsor "Social Events;" and (3) Dream's $4 million in total sales is comprised of $3 million food sales and $1 million in liquor sales. Id. ¶¶ 25, 26-30. In reliance on these statements, plaintiff Burlington Insurance Company ("Burlington") issued a commercial general liability policy to Okie Dokie on June 28, 2002. Id. ¶¶ 34, 36.

  On August 10, 2002, an underaged drunk driver who had allegedly been drinking at Dream, struck and killed a police officer named Hakim Farthing. Id. ¶ 44. Farthing's estate sued Okie Dokie for $50 million on October 1, 2002 ("Farthing Action"). Id. ¶ 45. Burlington is currently defending Okie Dokie in the Farthing Action. Id. ¶ 46.

  B. Procedural History

  In response to the Farthing Action, Burlington filed this action against Okie Dokie and C.J. Thomas on September 26, 2003. See generally Compl. With regard to Okie Dokie, Burlington seeks: (1) a declaration that Burlington has no duty to defend or indemnify Okie Dokie in the Farthing Action; (2) rescission of the insurance policy; and (3) restitution for all costs Burlington has paid with respect to the Farthing Action. Id. ¶¶ 47-69.

  With regard to C.J. Thomas, Burlington seeks damages stemming from alleged negligent misrepresentation in the insurance application. Id. ¶¶ 70-76. The complaint also alleges that C.J. Thomas failed to disclose that Dream is a nightclub, which hosts concerts, seeks the patronage of persons age eighteen to twenty, derives over 25% of its revenue from the sale of alcoholic beverages, and regularly features an "open bar." Id. ¶ 72. The plaintiff asserts that "C.J. Thomas was under a duty to disclose one or more of the facts identified in ¶ 72 to Burlington." Id. ¶ 73. The complaint alleges that these false statements and omissions were material to the plaintiff's decision to issue the policy to Okie Dokie. Id. ¶ 74. The plaintiff claims that it "reasonably relied on one or more of the false statements and omissions set forth in ¶¶ 71 and 72. Id. ¶ 75.

  C.J. Thomas moved to dismiss Burlington's complaint on the grounds that the complaint inadequately asserts all essential elements of the negligent misrepresentation claim. Def.'s Mot. to Dismiss at 1 ("Def.'s Mot."). The court now turns to that motion.

  III. ANALYSIS

 
A. Legal Standard for Motion to Dismiss for Failure to State a Claim
  A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of a complaint. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). The complaint need only set forth a short and plain statement of the claim, giving the defendant fair notice of the claim and the grounds upon which it rests. Kingman Park Civic Ass'n v. Williams, 348 F.3d 1033, 1040 (D.C. Cir. 2003) (citing FED R. CIV. P. 8(a)(2) and Conley v. Gibson, 355 U.S. 41, 47 (1957)). "Such simplified notice pleading is made possible by the liberal opportunity for discovery and the other pre-trial procedures established by the Rules to disclose more precisely the basis of both claim and defense to define more narrowly the disputed facts and issues." Conley, 355 U.S. at 47-48 (internal quotation marks omitted). It is not necessary for the plaintiff to plead all elements of his prima facie ...

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