Court denies dismissal of Great Lakes Insurance declaratory judgment action

By Charmaine Little | Feb 8, 2019

ST. LOUIS – A defendant’s attempt to get Great Lakes Insurance SE’s declaratory judgment action against AMCO Insurance Co. and others dismissed in a federal court missed the mark on Feb. 2.

U.S. District Judge Henry Edward Autrey of the U.S. District Court for the Eastern District of Missouri in the Eastern Division denied defendant Matt Lee’s motion to dismiss, ruling that the plaintiff's first amended complaint satisfies Rule 12(b)(6).

A lawsuit was filed over a residential construction project where Lee was one of many subcontractors. As a result, Great Lakes was asked to defend Lee, while the general contractor, TXR, was insured and protected by AMCO. 

Great Lakes filed an action in hopes of getting a declaratory judgment that AMCO is fully obligated to defend and indemnify TXR and that Great Lakes’ obligation to TXR is activated only after AMCO provides full indemnity. 

"Great Lakes seeks only resolution of the responsibility of Great Lakes, if any, to TXR and AMCO, and the responsibilities of TXR and AMCO, if any, to Great Lakes and Great Lakes’ named insured, Matt Lee and Lee Masonry," the ruling states.

The court pointed out that for the policy to be activated, there had to be some sort of property damage during the policy period caused by an occurrence.

The plaintiff alleged the claims against Lee don’t suffice as an “occurrence” under the Great Lakes policy.

Since Great Lakes’ first amended complaint met the requirements under Rule 12(b)(6) and properly stated a claim, the court determined it was best to not dismiss the case.

“Plaintiff alleges that is providing a defense to Matt Lee, doing business as Lee Masonry, under a reservation of rights in the underlying proceeding,” the ruling states. “It has alleged that there are multiple provisions applicable to the underlying proceeding.” 

Lee said the lawsuit has negligence claims and an occurrence, so the Great Lakes exclusions do not apply. The court disagreed.

“Defendant argues the exclusions do not apply because the underlying lawsuit contains allegations regarding defendant’s work. Defendant however is seeking a determination in his motion that in reality seeks the ultimate relief sought by the declaratory judgment action," Autrey wrote. "In essence, defendant’s motion is really one for judgment instead of dismissal via Rule 12(b)(6)."

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