McShane Construction Co. v. Gotham Insurance Co., No. 16-2632 (8th Cir. 2017)
Annotate this CaseMcShane filed suit against Gotham for failing to pay its insurance claim related to the alleged improper installation of a fire protection and suppression system by one of McShane's subcontractors, Mallory. The Eighth Circuit affirmed the district court's grant of Gotham's motion to dismiss for failure to state a claim. The court held that McShane's statutory claims were properly dismissed because neither rests upon a private right of action; McShane failed to state a claim for which relief can be granted with regard to its breach of contract theories where McShane failed to allege a legal obligation to pay any judgment covered under the terms of the policy; and McShane failed to state a claim upon which relief could be granted based upon waiver or estoppel.
Court Description: Shepherd, Author, with Riley and Beam, Circuit Judges] Civil case - Insurance. In action seeking insurance coverage related to the improper installation of a fire detection and suppression system by one of plaintiff's subcontractors, the district court did not err in dismissing the action under Rule 12(b)(6) for failure to state a claim upon which relief can be granted; two of the claims were based on Nebraska statutes which do not provide a private right of action; with respect to claims concerning breach of contract, plaintiff failed to allege a legal obligation to pay any judgment covered under the terms of the policy; similarly there could no be claim for breach of the duties of good faith and fair dealing in the absence of a reasonable basis for denying benefits; plaintiff, a third party beneficiary under the subcontractor's policy failed to plausibly alleged the terms of the policy demonstrate a reasonable intendment to include plaintiff in the subcontractor's Errors and Omissions coverage; mitigation claim was properly rejected as was plaintiff's claim that defendant waived denial of coverage or was estopped from denying coverage because plaintiff detrimentally relied on the existence of coverage when it hired the subcontractor. Judge Beam, concurring in the judgment.
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