M&M Sisters, LLC, et al v. Scottsdale Insurance Company

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-11290
Non-Argument Calendar
____________________
M&M SISTERS, LLC,
BERTHA MENENDEZ GARCIA,
MARIA MENDEZ,
Plaintiffs-Appellants,
versus
SCOTTSDALE INSURANCE COMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Southern District of Florida
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2 Opinion of the Court 22-11290
D.C. Docket No. 1:21-cv-24081-FAM
____________________
Before W ILLIAM PRYOR , Chief Judge, NEWSOM , and B RASHER , Cir-
cuit Judges.
PER CURIAM:
M&M Sisters, LLC, and its two owners, Bertha Garcia and
Maria Mendez, appeal the dismissal of their third amended com-
plaint against Scottsdale Insurance Company for breach of con-
tract. The district court dismissed M&M’s third amended com-
plaint for failure to state a claim for relief.
See Fed. R. Civ. P. 12(b).
M&M challenges the dismissal of its pleading without further leave
to amend. We affirm.
M&M purchased a commercial general liability policy from
Scottsdale for an apartment building located at “1111 NW 43 Ave-
nue, Miami, FL 33126.” The policy covered “‘property damage’ . . .
caused by an ‘occurrence,’” which the policy defined as “an acci-
dent, including continuous or repeated exposure to substantially
the same general harmful conditions.” Under the policy, M&M
would incur “property damage” when it had “[p]hysical injury to
tangible property” or suffered a “[l]oss of use of tangible property
that is not physically injured.”
In May 2019, M&M filed a claim for damage to its building,
and Scottsdale assigned an adjuster to investigate. In September
2019, M&M demanded an audio and video recording of the inspec-
tion. Scottsdale refused.
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22-11290 Opinion of the Court 3
In October 2019, M&M filed a complaint in a Florida court
for a declaratory judgment. M&M sought an order compelling
Scottsdale to record its inspection and declaring that the claim was
covered under the insurance policy and that delays in inspecting
the property and in determining coverage constituted a construc-
tive denial of coverage. On Scottsdale’s motion, the state court
stayed the action pending a determination of coverage.
In January 2021, Scottsdale denied M&M’s claim. Scottsdale
determined that the loss was excluded from coverage after its struc-
tural engineer attributed the damage to the building to wear and
tear in the roof and windows and to faulty construction, repairs,
maintenance, and materials in the drainage system of the roof and
on the roof. The adjuster “determined there was no damage to the
roof of the building resulting from wind or any other covered cause
of loss, and no damage to the interior of the [building] caused by
an opening in the roof . . . caused by wind or any other covered
cause of loss.”
In May 2021, M&M filed an amended complaint against
Scottsdale for breach of contract. M&M alleged that its “Property
sustained a sudden, accidental and/or otherwise covered loss un-
der the Policy, resulting in extensive damage to the interior and
exterior of the insured risk.” M&M also alleged that Scottsdale had
“refuse[d] to perform” its duties “to promptly investigate, adjust
and issue payment for the Covered Loss,” which “includ[ed], but
[was] not limited to, the actual cash value of the loss and/or dam-
ages.”
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4 Opinion of the Court 22-11290
Scottsdale moved to dismiss the amended complaint or for
a more definite statement. M&M agreed for the state court to grant
the motion, dismiss the amended complaint without prejudice, and
give it 20 days to file a second amended complaint that “allege[d]
[its] damage and the cause of [its] alleged loss with greater particu-
larity.”
M&M filed a second amended complaint that alleged it “suf-
fered a sudden, accidental and/or otherwise covered loss”; “more
specifically, . . . extensive roof damage which resulted in ensuing
water damage to the interior of” “units 101, 102, 104, 105, 201, 202,
206 and 210.” M&M repeated that Scottsdale had “refuse[d] to per-
form” its duties “to promptly investigate, adjust and issue payment
for the Covered Loss,” which “includ[ed], but [was] not limited to,
the actual cash value of the loss and/or damages” of more than
$30,000.
In October 2021, M&M estimated its damages at
$2,591,333.16. Scottsdale removed the action to the federal court
based on diversity of citizenship,
see 28 U.S.C. §§ 1332, 1446, and it
moved to dismiss the complaint.
The district court dismissed the second amended complaint.
The district court observed that M&M “alleged [no] facts explain-
ing what ‘roof damage’ or ‘ensuing water damage occurred,’ . . .
[or] how that ‘covered loss’ caused damage to the roof or interior
of the property.”
See Fed. R. Civ. P. 12(b). “[M]erely assert[ing] un-
identified damage from an unidentified cause . . . and that [Scotts-
dale had] breached the policy by failing to pay the claim,” without
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22-11290 Opinion of the Court 5
providing “facts that, if true, demonstrate [Scottsdale’s] liability,”
the district court ruled, was “insufficient to support a breach-of-
contract claim.” The district court dismissed the complaint without
prejudice with leave to amend within 14 days.
The third amended complaint was virtually identical to its
predecessor and repeated the same allegations about M&M’s loss,
and the failure of Scottsdale to investigate and pay. M&M added
facts about the date on which and reasons that Scottsdale denied
coverage. M&M also alleged that it had “an all risk policy, subject
to exclusions and limitations for which there are none applicable to
warrant denial of coverage” and that the adverse decision was “im-
proper . . . [for] fail[ing] to identify an applicable exclusion.”
Scottsdale moved to dismiss the third amended complaint
and submitted a copy of its denial letter. M&M responded that its
“all risks” policy covered all losses or damage to its property unless
expressly excluded by the policy. And M&M argued that its allega-
tions of roof damage causing water damage during the policy pe-
riod sufficed to establish coverage under the policy and shifted the
burden to Scottsdale to establish that the damage to the insured
building was excluded from coverage.
The district court granted the motion to dismiss the third
amended complaint.
See id. The district court ruled that the com-
plaint lacked facts that the property damage was covered by
M&M’s “all risk” policy, which covered only “fortuitous” or unex-
pected losses.
See Fayad v. Clarendon Nat. Ins. Co., 899 So. 2d
1082, 1086 (Fla. 2005). The district court explained that the “sparse
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6 Opinion of the Court 22-11290
allegations” M&M made “[w]ith respect to the actual damage and
event that caused it” made it “impossible to . . . [determine] one
way or another whether the damage causing event was plausibly
fortuitous.” And the district court, having “highlighted th[e] defi-
ciency in its first order dismissing the complaint[, faulted] . . . M&M
[for having] made no apparent effort to cure it.”
Two standards of review govern this appeal. We review
de
novo the dismissal of a complaint.
Einhorn v. Axogen, Inc., 42 F.4th
1218, 1222 (11th Cir. 2022). We review the denial of a motion to
amend a complaint for abuse of discretion.
Covenant Christian
Ministries, Inc. v. City of Marietta, Ga., 654 F.3d 1231, 1239 (11th
Cir. 2011).
A complaint must include “a short and plain statement of
the claim showing that the pleader is entitled to relief.” Fed. R. Civ.
P. 8(a)(2). Rule 8 “does not require detailed factual allegations, but
it demands more than an unadorned, the-defendant-unlawfully-
harmed-me accusation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
“A pleading that offers labels and conclusions or a formulaic recita-
tion of the elements of a cause of action will not do.”
Id. (internal
quotation marks omitted). To survive a motion to dismiss, a com-
plaint must contain “sufficient factual matter, accepted as true,
[that] state[s] a claim to relief that is plausible on its face.”
Id.
We need not decide whether M&M had to allege its loss was
“fortuitous” because a more fundamental reason supports the de-
cision that its third amended complaint fails to state a claim.
See
Fed. R. Civ. P. 12(b)(6). M&M alleged no facts from which the
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22-11290 Opinion of the Court 7
district court could plausibly infer that Scottsdale breached its con-
tract by denying M&M’s claim. Under Florida law, which the par-
ties agree applies, an insured with an “all-risks” policy establishes
coverage if its insured property suffered a loss while the policy is in
effect
unless the cause of the loss is expressly excluded from cover-
age.
Panettieri v. People’s Tr. Ins. Co., No. 4D20-2624, 2022 WL
2962558, at *2 (Fla. Dist. Ct. App. July 27, 2022). M&M alleged that
its all-risks policy was in effect when its building was damaged. But
the denial letter from Scottsdale, which was incorporated into the
third amended complaint by reference, established that the insurer
denied coverage based on exclusions in its policy for wear and tear,
for deterioration, for faulty or defective repairs, materials, and
maintenance, and for interior water damage not connected to a
covered loss to the roof or walls of the building. M&M’s conclusory
allegation that its “Property sustained a sudden, accidental and/or
otherwise covered loss under the Policy” fails to allege any facts
from which the district court could plausibly infer that the damage
was attributable to causes other than those identified by Scottsdale
and so its refusal to further investigate and to pay breached their
contract.
See Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182,
1188 (11th Cir. 2002) (“[C]onclusory allegations . . . masquerading
as facts will not prevent dismissal.”). Because M&M’s allegations
“are merely consistent with [Scottsdale’s] liability, [the third
amended complaint] stops short of the line between possibility and
plausibility of entitlement to relief.”
Ashcroft, 556 U.S. at 678 (in-
ternal quotation marks omitted). The district court did not err by
dismissing the third amended complaint.
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8 Opinion of the Court 22-11290
The district court also did not abuse its discretion by failing
sua sponte to give M&M another opportunity to amend its com-
plaint. The district court identified the deficiencies in M&M’s sec-
ond amended complaint and provided leave to amend despite no
request from M&M to do so. As the district court stated, despite
having several opportunities to “adequately stat[e] a claim both be-
fore and after the case was removed to” federal court, M&M “made
no apparent effort to cure” the deficiencies both courts identified
in their orders of dismissal. It would have been futile to give M&M
leave to amend its complaint a fourth time.
See L.S. ex rel. Hernan-
dez v. Peterson, 982 F.3d 1323, 1332 (11th Cir. 2020).
We AFFIRM the dismissal of M&M’s third amended com-
plaint.
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