Milestone v . Fire Equipment 13-CV-198-SM 12/13/13 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Milestone Engineering & Construction, Inc., Plaintiff

v. Case N o . 13-cv-198-SM Opinion N o .

Fire Equipment, Inc., and Everest Indemnity Ins. Co., Defendants

O R D E R

Plaintiff, Milestone Engineering & Construction, Inc.

(“Milestone”), brings this suit against Fire Equipment, Inc.

(“Fire Equipment”) and its liability insurer, Everest Indemnity

Insurance Company (“Everest”). Before the court is Everest’s

motion to dismiss the sole count against it for failure to state

a claim, document n o . 1 7 .

Standard of Review

A motion to dismiss under Federal Rule of Civil Procedure

12(b)(6) will be denied where the complaint alleges “facts

sufficient to establish a ‘claim to relief that is plausible on

its face.’” Gray v . Evercore Restructuring L.L.C.,

2 0 ,

324 (1st Cir. 2008) (quoting Trans–Spec Truck Serv., Inc. v .

Caterpillar Inc.,

(1st Cir. 2008)). In

assessing plausibility, the court must “isolate and ignore statements in the complaint that simply offer legal labels and

conclusions” and accept as true all “non-conclusory” and “non-

speculative” facts, “drawing all reasonable inferences in the

pleader’s favor.” Schatz v . Republican State Leadership Comm.,

0 , 55 (1st Cir. 2012).

Discussion

Milestone subcontracted with Fire Equipment for the

installation of a fire suppression system at the offices of

Milestone’s customer, Lindt & Sprungli (USA) Inc. (“Lindt”). In

the performance of its subcontracted services, Fire Equipment

allegedly damaged Lindt’s IBM server and related equipment.

Milestone compensated Lindt for the damage. Milestone brought

this suit against Fire Equipment for breach of contract, breach

of implied warranty, and negligence seeking reimbursement for the

money it paid to Lindt. Milestone named Fire Equipment’s

liability insurer, Everest, as an additional defendant.

In the sole count against Everest, the amended complaint

alleges that Everest “furnished a liability insurance policy” to

Fire Equipment promising “to indemnify [Fire Equipment] against

and pay for all damages for which” Fire Equipment has become

“liable as a result of its operations.” Am. Cmplt., doc. n o . 1 1 ,

at 3-4. The complaint alleges that Milestone is “an intended

2 third party beneficiary” of that insurance policy. The complaint

also alleges that “Everest has conceded liability, although not

the amount of damages.”

at 4 .

Although not entirely clear from the complaint or

Milestone’s brief, it appears that Milestone is asserting that it

may sue to enforce Everest’s promise to pay because it has third-

party beneficiary status for two reasons: (1) it is an “intended”

third-party beneficiary; and (2) Everest has admitted Fire

Equipment’s liability. Everest argues that the claim must be

dismissed because Milestone does not plausibly allege either of

these circumstances.

A. Milestone as Intended Beneficiary of the Insurance Policy

A third-party is a beneficiary of a contract where the

parties to the contract “intended [it] to have that right.”

Brooks v . Trustees of Dartmouth College,

(2011)

(internal quotation marks and citation omitted). Importantly,

the “fact that a third party is to receive some benefit through

the performance of the contract does not make that party a third-

party beneficiary.”

.

As noted, the only allegation in the amended complaint

regarding third-party beneficiary status is the general statement

3 that Milestone is “an intended third party beneficiary” of the

insurance contract. Am. Cmplt., doc. n o . 1 1 , at 4 . Assuming,

without deciding, that “New Hampshire . . . treat[s] third-party

beneficiary status as a question of fact,” Contour Design, Inc.

v . Chance Mold Steel Co., Ltd.,

(D.N.H.

2011) (Laplante, J . ) , Milestone’s allegation falls short.1

Everest submitted the insurance policy as an exhibit to its

motion, and because the policy is “central to plaintiff[‘s]

claim” against Everest, the “court may properly consider [it]

. . . without converting defendant[‘s] motion into one for

summary judgment.” Miller v . Nationstar Mtg., LLC,

, at *1 (D.N.H. Aug. 1 4 , 2012) (internal quotation marks

and citation omitted). Nothing in the policy suggests that

Everest and Fire Equipment intended Everest’s contractual

promises to be enforceable by and for the benefit of Milestone,

or in general by tort claimants such as Milestone. That i s , the

insurance contract does not support the amended complaint’s

general allegation that Milestone is an intended third-party

beneficiary. See Animal Hosp. of Nashua, Inc. v . Antech

1 Most courts “treat third-party beneficiary status as a question of law.” Contour,

. The issue, however, is unsettled in New Hampshire.

Even if this court were to treat third-party beneficiary status as a legal question, the court cannot accept Milestone’s conclusory allegation as true because bare legal allegations must be “ignore[d].” Schatz,

5 .

4 Diagnostics,

, at *4 (D.N.H. May 1 7 , 2012) (on

motion to dismiss, “general allegation” may be undermined by

“contradict[ory] ... specific factual allegations”) (citing

Carrol v . Xerox Corp.,

3 1 , 243 (1st Cir. 2002)).

The amended complaint does not plausibly allege that

Milestone is an intended third-party beneficiary of the insurance

contract.

B. Everest’s Alleged Admission of Liability

Milestone argues that it has third-party beneficiary status

on the alternative ground that Everest has conceded Fire

Equipment’s liability, relying on Shaheen v . Preferred Mutual

Ins. Co.,

(D.N.H. 1987). In Shaheen,

plaintiffs sued their alleged tortfeasor’s indemnity insurer

claiming, among other things, that the insurer had breached its

obligation of good faith and fair dealing to the insured when it

failed to settle plaintiffs’ claims. The court held that

plaintiffs could maintain a direct action under a third-party

beneficiary theory if they could properly allege that there had

been “an explicit admission of [the insured’s] liability or a

judicial determination of same.”

. Finding that

plaintiffs had not alleged either of these circumstances, the

5 court dismissed the claim. See

(relying on Burke

v . Fireman’s Fund Ins., Co.,

(1980)).

Everest does not quarrel with the proposition that Milestone

may bring a direct action under the policy if Everest conceded

Fire Equipment’s liability to Milestone. It argues, however,

that the amended complaint does not plausibly alleged that

conversion.

The amended complaint simply declares that “Everest has

conceded liability, although not the amount of damages.” Am.

Cmplt., doc. n o . 1 1 , at 4 . Contending that the allegation is

plausible, Milestone submitted an email as an addendum to its

brief which purports to establish Everest’s concession. See doc.

n o . 1 5 . Everest says the email is taken out of context. As

noted, in ruling on a motion for judgment on the pleadings, the

court may consider materials outside the pleadings that are

central to the complaint without converting the motion to one for

summary judgment. See Miller,

, at * 1 . The email

was not made part of the complaint and is not central to i t .

Under these circumstances, the court will not consider the email,

or for that matter, Everest’s proffered explanation regarding the

context of the email. What is left, then, is the amended

complaint’s unadorned allegation that Everest has conceded

liability.

6 The court must accept the allegation as true for purposes of

the present motion. It is not a bare legal conclusion, nor is it

a circumstantial fact giving rise to inferences, the

reasonableness of which the court must assess. Everest may press

its argument that the allegation “mischaracterizes the factual

background in this case” on a motion for summary judgment, or at

trial, but not at this procedural juncture. Milestone is

reminded, of course, of its obligation under Rule 11 to allege

only those “factual contentions [that] have evidentiary support.”

Fed. R. Civ. P. 11 (b)(3).

For these reasons, the amended complaint states a claim

against Everest.

Conclusion

Everest’s motion to dismiss, doc. n o . 1 7 , is denied.

SO ORDERED.

Steven J. McAuliffe Jnited States District Judge

December 13, 2013

cc: Frank P. Spinella, Jr., Esq. Elsabeth D. Foster, Esq. Michael P. Johnson, Esq. Gillian A . Woolf, Esq.

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