CVS Albany, LLC v. 1688 Rojav Realty, LLC

Background

CVS sued Rojav for breach of a commercial lease. The lease required Rojav to maintain at least $5 million in commercial general liability coverage, through base and umbrella policies, and to name CVS as an additional insured. Rojav obtained policies from Century Surety Company and Merchants Mutual Insurance Company for the relevant policy period, and CVS was named as an additional insured under both policies according to the complaint.

A separate state-court lawsuit involved a slip-and-fall at the leased premises. CVS and Rojav were both defendants in that action, and both denied liability. Merchants Mutual later disclaimed coverage for CVS under Rojav’s umbrella policy, stating that CVS did not qualify as an additional insured. CVS alleged that the disclaimer deprived it of the $5 million in coverage that Rojav was required to obtain under the lease.

CVS asserted three causes of action: breach of contract, declaratory judgment, and attorney’s fees. The breach-of-contract claim sought a judgment holding Rojav liable for losses CVS might sustain in the underlying action, up to $5 million. The declaratory-judgment claim sought a declaration that Rojav breached the lease and was obligated to indemnify CVS for those losses.

Motion and Legal Standard

Rojav moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legal claim. Rojav argued that CVS’s declaratory-judgment claim was duplicative of its breach-of-contract claim because both claims concerned the same alleged violation of the lease and sought the same relief.

On a motion to dismiss, the court accepts well-pleaded factual allegations as true and draws reasonable inferences for the nonmoving party, but it does not have to accept legal conclusions presented as facts.

Court’s Analysis

The court explained that the Declaratory Judgment Act permits, but does not require, a federal court to issue a declaration of the parties’ legal rights. Courts commonly dismiss a declaratory-judgment claim when another claim in the same case will resolve the same issues.

Here, both claims required deciding whether Rojav breached Article 35 of the lease and whether Rojav owed CVS compensation for losses from the underlying action. CVS did not explain why the declaratory judgment would serve a separate useful purpose or resolve uncertainty that would remain after the breach-of-contract claim was decided. The court therefore concluded that the declaratory claim merely replicated issues that would be resolved through the contract claim.

Disposition

The court granted Rojav’s motion to dismiss CVS’s declaratory-judgment claim. The order did not rule on CVS’s breach-of-contract claim or its attorney’s-fees claim. The court stated that the action would be referred to the designated magistrate judge for general pretrial management.