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Cardigan Mountain School v. New Hampshire Insurance Co.

United States District Court, D. New Hampshire

October 2, 2014

Cardigan Mountain School
v.
New Hampshire Insurance Company Opinion No. 2014 DNH 216

ORDER

LANDYA McCAFFERTY, District Judge.

The Plaintiff, Cardigan Mountain School ("Cardigan"), has received notice of an unrelated potential legal claim arising from events that are alleged to have taken place in the late-1960s. Mindful of the legal costs undoubtedly involved in defending this claim, Cardigan undertook an attempt to locate the insurance policy that it believes to have been in place at the time. This attempt was unsuccessful.

Nevertheless, Cardigan assembled certain circumstantial evidence that it contends is sufficient to demonstrate that the Defendant, New Hampshire Insurance Company ("NHIC"), insured Cardigan during the relevant period of time and must now bear the legal costs involved in defending the potential claim. Cardigan has brought suit seeking a declaratory judgment that NHIC is liable for the cost of defending against the claim, and that NHIC must also cover Cardigan's legal fees in connection with the filing and prosecution of this action.

NHIC has filed a motion to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), contending that this court lacks subject matter jurisdiction, and that Cardigan has failed to adequately state a claim. As more fully set forth below, the court finds that it does have subject matter jurisdiction, but that Cardigan has indeed failed to state a claim. Thus, NHIC's motion to dismiss will be GRANTED.

Factual Background[1]

Cardigan first received notice of the potential claim in the spring of 2013. Compl. ¶ 1. The nature of the claim is not immediately apparent, but it relates to events that are alleged to have occurred during the 1967-68 school year. Id.

As noted, Cardigan unsuccessfully attempted to locate the insurance policy that it believes to have been in place at the time. Id . Once this search proved fruitless, Cardigan contacted American International Group ("AIG"), NHIC's parent company, with an inquiry as to whether AIG had any relevant records. Id . ¶ 2. To date, AIG has also been unable to turn up any evidence of an applicable policy. Id . ¶ 3.

Nevertheless, Cardigan alleges that it has gathered sufficient circumstantial evidence to conclude that NHIC did provide liability coverage during this period. Cardigan principally relies on a 1971 financial report which indicates that NHIC provided coverage from September 15, 1970, to September 15, 1971. Id . ¶¶ 13-14. Needless to say, the period from 1970 to 1971 is after the 1967-68 school year, the timeframe at issue. So, Cardigan attempts to bolster its position by including several additional allegations:

• The complaint references Mr. Cornelius Bakker, Cardigan's business manager from 1967 to 1970. Id . ¶ 15. First, the complaint contends that Mr. Bakker does not believe that Cardigan changed insurance carriers during his tenure. Id . ¶ 16. Second, the complaint notes that Mr. Bakker worked with A.B. Gile, Inc., a local insurance broker who, the complaint alleges "upon information and belief, " had a close association at the time with NHIC. Id . ¶¶ 20-21.
• The complaint also references Mr. Phillip Wheeler, a retired accountant from Vermont, who was one of the two principals at the auditing firm that prepared the 1971 financial report. Id . ¶ 17. The complaint notes Mr. Wheeler's recollection that, in preparing the 1971 report, auditors compared the 1970 to 1971 financials to the 1969 to 1970 financials. Id . ¶ 18. Mr. Wheeler suggests that the auditors would have noted a change in insurance providers between those two periods had one occurred. Id . ¶ 19.

This represents the full extent of Cardigan's evidence supporting its contention that NHIC underwrote a liability policy covering the 1967-68 school year. When AIG did not affirm the existence of such a policy, Cardigan sought declaratory judgment in state court, and NHIC removed the action to this court. Now, NHIC has moved to dismiss based on lack of subject matter jurisdiction and failure to state a claim.

Rule 12(b)(1) - Subject Matter Jurisdiction

Pursuant to Article III of the United States Constitution, "the exercise of the judicial power is limited to cases and controversies. Beyond this it does not extend, and unless it is asserted in a case or controversy within the meaning of the Constitution, the power to exercise it is nowhere conferred." Muskrat v. United States , 219 U.S. 346, 356 (1911) (internal quotation marks omitted). NHIC has moved to dismiss on grounds that the court lacks subject matter jurisdiction because there is not yet a case or controversy. More specifically, NHIC takes the position that because Cardigan has merely received notice of a potential claim, but has not yet been sued, the dispute ...


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