ROBERT C. CHAMBERS, District Judge.
Pending before the Court is a Motion for Partial Dismissal by Defendant Arch Insurance Company (Arch). ECF No. 29. For the following reasons, the Court
Plaintiff General Assurance of America, Inc. (GAA) filed this action on December 28, 2017, alleging inter alia that Arch breached its fiduciary duties and tortuously interfered with GAA's business relationships and dealings. See Compl. at ¶¶ l, m, ECF No. 1, at 9. Arch argues these particular claims are barred by West Virginia's two-year statute of limitations and, therefore, must be dismissed. In response, GAA asserts that Missouri's five-year statute of limitations applies under a choice-of-law provision in an Agency Agreement entered into by the parties. In the alternative, GAA contends that, even if the Court determines West Virginia law applies, the statute of limitations did not begin to run until April 30, 2016 and, thus, the Complaint was timely filed.
Although a complete recitation of the history of this case is unnecessary for purposes of the current motion, an abbreviated synopsis of the facts is valuable. The current case is round two of litigation in this Court arising from complex and contentious litigation involving the denial of an insurance claim for damage that occurred to a commercial building owned by Frederick Management Company, LLC (Frederick Management). See Frederick Mgmt. Co. v. Gen. Assurance of Am., Inc., 3:12-3019 (S.D. W. Va. 2012) (original action). When the damage occurred, First Community Bank, which had a security interest in the building, had a forced-placed insurance policy on the property issued by Arch. After insurance issues arose, Frederick Management filed suit against First Community Bank, Arch, GAA, and Compass Claim Service, Inc. Frederick Management alleged that GAA was an agent of First Community Bank and Arch in handling the claim. During that litigation, Arch filed a cross-claim against GAA, demanding that GAA defend and indemnify it. Ultimately, Arch settled with Frederick Management and dismissed its cross-claim against GAA. The settlement agreement between Frederick Management and Arch provided that the parties were to bear "their own costs and attorneys' fees." Ex. 4 to the Compl., at 1, ECF No. 1-2, at 21 (Partial Dismissal Order, 3:12-3019, ECF No. 311). Likewise, in the Order voluntarily dismissing Arch's cross-claim against GAA, the parties stipulated to "bear their own costs and attorneys' fees." Ex. 7 to the Compl., at 1, ECF No. 1-2, at 32 (Voluntary Order of Dismissal of Cross-Cl., 3:12-3019, ECF No. 317).
In this action, GAA asserts that Arch breached these agreements because Arch paid for its attorneys' fees and costs and for its settlement with Frederick Management by wrongfully withholding the commissions GAA had earned by selling insurance policies for Arch. Arch also terminated its business relationship with GAA, which resulted in GAA suffering a loss of a business with, but not limited to, First Community Bank. As relevant here, GAA claims that these actions breached the fiduciary duties Arch owed to it and interfered with its business relationships. Arch denies these claims but, irrespective of whether GAA's claims are meritorious, Arch argues that GAA's claims for breach of fiduciary duties and tortious interference with business relationships are barred by West Virginia's two-year statute of limitations for torts. Arch further argues that the Missouri choice-of-law clause in the Agency Agreement does not apply because these are extra-contractual claims and, therefore, are not controlled by the choice-of-law provision.
As this Court's jurisdiction is based upon diversity pursuant to 28 U.S.C. § 1332, the Court must apply West Virginia's choice-of-law rules in determining what law applies. Kenney v. Indep. Order of Foresters, 744 F.3d 901, 905 (4th Cir. 2014). Under West Virginia law, the Court must first decide how the claim at issue is characterized. Id. If the claim sounds in contract, the Court generally applies the rule of lex loci contractus,
Under West Virginia laws, the Court finds that GAA's claims for breach of fiduciary duty and for tortious interference with business relationships are considered torts, subject to West Virginia's two-year statute of limitations. See West Virginia Code § 55-2-12 (setting forth the statute of limitations);
Upon consideration, the Court agrees with Arch. In fact, GAA points to no language in the Agency Agreement, or the choice-of-law provisions contained therein, that it believes is broad enough to govern non-contractual tort claims. See Cavcon, Inc. v. Endress + Hauser, Inc., 557 F.Supp.2d 706, 720 (S.D. W. Va. 2008) (finding that a choice-of-law provision applied to a breach of contract claim, but not a claim for tortious interference or other tort or quasi-tort claims); Work While U-Wait, Inc. v. Teleasy Corp., Civ. Act. No. 2:07-00266, 2007 WL 3125269, at *6 (S.D. W. Va. Oct. 24, 2007) (stating, where a choice-of-law provision is narrow and applies only to governing and construing the agreement itself, and does not purport to govern all disputes between the parties, the choice-of-law provision does not apply to a fraud claim that sounds in tort); see also FDIC Corp. v. British-Am. Corp., 755 F.Supp. 1314, 1325 (E.D. N.C. 1991) ("A contractual choice-of-law provision selecting the law to govern the construction or interpretation of the contract has no impact on the law which governs claims unrelated to the construction or interpretation of the contract." (citations omitted)). Accordingly, the Court shall apply West Virginia's two-year statute of limitations to the claims at issue here.
GAA further argues that, even if West Virginia's two-year statue of limitations applies, its claims are not barred by the statute of limitations. Specifically, GAA states that Arch did its final accounting of the commissions on April 30, 2016, and it was at that point it became clear that Arch would not refund the commissions it deducted from the account. Therefore, GAA argues its claims were timely filed as of December 28, 2017.
Arch rebuts this argument, however, by pointing to the Complaint itself. Arch argues that nowhere in the Complaint does GAA mention the final accounting. In fact, GAA attached several documents to its Complaint, demonstrating that the claims accrued—at the latest—on February 13, 2014. Specifically, GAA attached to its Complaint an Affidavit from Ronald H. Vassar, President of GAA, dated March 24, 2014, in which he states, in part:
Ex. 1 to the Compl., Aff. of Ronald H. Vassar, at 2-3, ECF No. 1-2, at 3-4. The exhibits attached to the Affidavit also were attached to the Complaint. These included: (1) a letter from First Community Bank sent by Certified Mail on August 14, 2013, stating the Bank was not renewing its agreement with GAA after it expired on January 31, 2014. Id., Letter from Garry Sutis, Director of Operations of First Cmty. Bank to Laura Little, Senior Vice President of GAA, (mailed Aug. 14, 2013), ECF No. 1-2, at 6; (2) a letter dated December 9, 2013, to Mr. Vassar from John Mohler, Vice President of Arch, stating that Arch was terminating the Agency Agreement it had with GAA, effective April 9, 2014. Id., Letter from John Mohler to Mr. Vassar, (Dec. 9, 2013), ECF No. 1-2, at 9; and (3) the "Loss Activity by Master Policy Prefix from 10/01/2012 to 03/05/2014" showing various loss amounts deducted by Arch. Id., Loss Activity by Master Policy Prefix from 10/01/2012 to 03/05/2014, at 1-2 (Mar. 5, 2014), ECF No. 1-2, at 12-13.
In considering Arch's argument, the Court first recognizes that the statute of limitations is an affirmative defense that may be raised in a Rule 12(b)(6) motion to dismiss for failure to state a claim. Dean v. Pilgrim's Pride Corp., 395 F.3d 471, 474 (4th Cir. 2005). Generally, however, a 12(b)(6) motion based upon the statute of limitations "is only permissible `in the relatively rare circumstances where facts sufficient to rule on an affirmative defense are alleged in the complaint . . .' In such a rare circumstance[], `all facts necessary to the affirmative defense [must] clearly appear on the face of the complaint.'" Waugh v. Elan Fin. Serv., No. 3:17-4378, 2018 WL 2976430, at *4 (S.D. W. Va. June 13, 2018) (quoting Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007)). However, in evaluating a Rule 12(b)(6) motion, a court also may consider documents attached to a complaint and other extrinsic documents "so long as they are integral to the complaint and authentic." Philips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citation omitted); see also Fed. R. Civ. P. 10(c) ("A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes."); Fayetteville Inv'rs v. Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th Cir. 1991) (stating that exhibits attached to a complaint "are a part of the complaint which was subject to a motion to dismiss under Rule 12(b)(6)" as being time barred); Opsitnick v. Ray, No. 5:14-CV-405-BO, 2015 WL 300420, at *2 (E.D. N.C. Jan. 22, 2015) (stating a court may consider documents attached and integral to a complaint when a 12(b)(6) motion raises a statute of limitations challenge). Here, neither party argues that the documents attached to GAA's Complaint are not authentic or integral to GAA's allegations. Indeed, GAA relies upon and references these documents throughout its Complaint. Therefore, as the ultimate question in this case is when GAA's causes of action arose for its claims of breach of fiduciary duty and tortious interference with its business relationships, the Court must look to the Complaint and the attachments to ascertain whether that determination can be made.
With certain exceptions, a tort action typically accrues under West Virginia law "when a tort occurs." Merrill v. W. Va. Dep't of Health & Human Res., 632 S.E.2d 307, 312 (W. Va. 2006) (internal quotation marks and citation omitted).
Turning first to GAA's claim for tortious interference with a business relationship, GAA asserts in the Complaint that Arch tortiously interfered with its business relationship with First Community Bank and other banking institutions, resulting in a loss of those business relationships. Compl., at ¶¶ 9, 17. In support, GAA cites the letter mailed on August 14, 2013, that it attached to the Complaint, from First Community Bank stating it will not renew its contract with GAA. Ex. 9 to the Compl., Letter from Mr. Stutis to Ms. Little, ECF No. 1-2, at 56. Additionally, GAA attached the letter from Arch dated December 9, 2013, stating it was terminating its Agency Agreement with GAA and that it "will be cancelling the active master policies that you solicitated under the Agency Agreement for all product lines." Ex. 3 to the Compl., Letter from Mr. Mohler to Mr. Vassar, ECF No. 1-2, at 18. In his Affidavit dated March 24, 2014, Mr. Vassar referenced and attached both of these letters as exhibits, acknowledging the nonrenewal and termination of the agreements. In light of these documents, it is clear and beyond dispute that GAA's claim for tortious interference with business relationships accrued, at the latest, when Arch informed GAA in December of 2013 that it was no longer going to do business with it and was cancelling all the active policies GAA solicitated. Therefore, the Court finds that GAA's claim for tortious interference with business relationships is barred by West Virginia's two-year statute of limitations.
Turning next to GAA claim for breach of fiduciary duty, GAA alleges in its Complaint that Arch owed it fiduciary duties under the Agency Agreement. Compl., at ¶6. With regard to this claim, GAA asserts, in part, that Arch breached its fiduciary duties by disrupting GAA's business relationships. Id. at ¶9. For the reasons explained above with respect to the tortious interference claim, this allegation also is barred by the statute of limitations.
Another breach of fiduciary duty identified by GAA in the Complaint is that Arch did not include GAA, as its Agent/Broker, in Arch's settlement with Frederick Management during mediation on November 12, 2013. Id. at ¶¶9, 13. GAA also attached to the Complaint a copy of this Court's Partial Dismissal Order, entered on December 27, 2013, recognizing the settlement. Ex. 4 to the Compl., ECF No. 1-2, at 21-22. Given that these events occurred in late 2013, a breach of fiduciary duty based upon these facts is clearly beyond the statute of limitations.
Finally, GAA claims that Arch breached its fiduciary duty by deducting the settlement it paid Frederick Management and its attorneys' fees and costs from the commissions it owed GAA under the Agency Agreement. Id. at ¶¶9, 15. In Mr. Vassar's Affidavit dated March 24, 2014, however, he states (1) Arch charged its legal fees to GAA "under the pretense of Incurred Loss Adjustment Expenses;" (2) on December 2, 2013, a total of $120,000 was deducted as Net Incurred Losses from GAA's CLRF, which GAA believed was the settlement proceeds paid to Frederick Management; and (3) "[a] total of $263,967.60 has been charged against GAA's CLRF by Arch[.]" Ex. 1 to the Compl., Affidavit of Mr. Vassar, at ¶¶ 6-8. Additionally, Appendix 3 attached to Mr. Vassar's Affidavit is the Loss Activity by Master Policy Prefix, printed on March 5, 2014, showing, inter alia, the loss activity Arch claimed occurred between October 25, 2012 and February 13, 2014. Although GAA argues it "had hoped" that Arch would refund those commissions when it completed its final accounting on April 30, 2016, the statute of limitations did not accrue when GAA's hopes were dashed. The statute of limitations accrued when the tort occurred, and the Complaint and the attachments make it clear that Arch deducted those amounts, and GAA knew those deductions occurred, at some point prior to Mr. Vassar's Affidavit in March of 2014. As this action was filed more than two years after that date, the statute of limitations had expired.
Moreover, even if the statute of limitations had not expired, this aspect of GAA's breach of fiduciary claim would be barred under West Virginia law. The Complaint asserts that the commissions were payable "under the Agency Agreement." Compl. at ¶9. However, under West Virginia law, a recovery under tort law is barred if the gist-of-the-action "is, in substance, an action on [a] contract, whatever may be the form of the pleading." Dan Ryan Builders, Inc. v. Crystal Ridge Dev., Inc., 803 S.E.2d 519, 526 (W. Va. 2017) (internal quotation marks and citation omitted). Specifically, tort recovery is not permitted when any of these factors are shown:
Id. (quoting Gaddy Eng'g Co. v. Bowles Rice McDavid Graff & Love, LLP, 746 S.E.2d 568, 577 (W. Va. 2013) (per curiam) (other citations omitted)). Here, GAA's claim that Arch breached its fiduciary duty by not paying GAA its commissions under the Agency Agreement is based upon, and arises from, the parties' contractual agreement. Additionally, GAA has made a breach of contract claim in its Complaint to recoup those funds. Thus, GAA could not proceed on this aspect of its claim irrespective of the fact that it is barred by the statute of limitations.
Accordingly, for the foregoing reasons, the Court
The Court
W. Va. Code § 55-2-12.
