          United States Court of Appeals
                     For the First Circuit



No. 14-2182

                   CARDIGAN MOUNTAIN SCHOOL,

                     Plaintiff, Appellant,

                               v.

                NEW HAMPSHIRE INSURANCE COMPANY,

                      Defendant, Appellee.



          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF NEW HAMPSHIRE

        [Hon. Landya B. McCafferty, U.S. District Judge]



                             Before

                   Howard, Selya, and Barron,
                         Circuit Judges.



     Scott H. Harris, with whom Nicholas C. Casolaro, Andrew R.
Hamilton, and McLane, Graf, Raulerson & Middleton, P.A. were on
brief, for appellant.
     Mark D. Sheridan, with whom Jason F. King, Sean P. Neafsey,
and Squire Patton Boggs (US) LLP were on brief, for appellee.



                          May 27, 2015
           BARRON, Circuit Judge.           This appeal arises out of an

action   for   a   declaratory    judgment.      The   plaintiff,   now   the

appellant, is a private middle school in Canaan, New Hampshire.

The school seeks to prove that, nearly fifty years ago, the

insurance company that is the defendant, and now the appellee,

issued the school an insurance policy that covers a claim that the

school recently received concerning events allegedly occurring

during the 1967-1968 academic year.

           The twist is that while the school can document that it

had a policy with the insurance company at some point, it cannot

find a copy of the policy for the year in question.                 And the

insurance company has told the school that it cannot confirm the

existence of the policy.         Thus, the company contends that it is

not obliged to cover the claim and, more significantly for present

purposes, that the school's complaint should be dismissed because

it fails to make a plausible case that such a policy ever existed.

           The District Court sided with the insurance company and

dismissed the suit. But although the question is close, we reverse

and remand for further proceedings.

                                     I.

           In 2013, the Cardigan Mountain School received a demand

letter asserting a claim (about which we have been given no

details) based on events that allegedly occurred during the 1967-


                                    - 2 -
1968 school year.        In response, the school asked the New Hampshire

Insurance Company to defend against the claim as the carrier of

the school's comprehensive general liability insurance policy at

that time.

             The   New    Hampshire     Insurance     Company   rejected    the

request. The company explained that it had not been able to locate

any policy covering the school for the relevant time period, and

thus that it was not the school's carrier at that time and

therefore had no duty to defend against this claim now.

             Not having found a copy of the policy in its own records,

the school filed this suit in New Hampshire state court under the

New Hampshire declaratory judgment statute.              See N.H. Rev. Stat.

Ann. § 491:22.       The school sought a judgment "adjudicating and

decreeing the existence of, and Cardigan's rights under, any policy

issued by" New Hampshire Insurance Company.

             New    Hampshire         Insurance      Company     --      which,

notwithstanding its name, is a Pennsylvania corporation with its

headquarters in New York -- removed the suit to federal court on

diversity-of-citizenship grounds.              See 28 U.S.C. § 1332(a).    New

Hampshire Insurance Company then moved to dismiss the suit for

failure to state a claim.        See Fed. R. Civ. P. 12(b)(6).

             The   District    Court    granted    New   Hampshire    Insurance

Company's motion and dismissed the suit.                 The District Court


                                       - 3 -
concluded that the school's complaint did not plausibly show the

existence of the policy.1   The school appealed.2

                                II.

           Under the Federal Rules of Civil Procedure, a complaint

must provide "a short and plain statement of the claim showing

that the pleader is entitled to relief."    Fed. R. Civ. P. 8(a)(2).

To meet that standard, a plaintiff "need not demonstrate that [it]

is likely to prevail" on its claim.        García-Catalán v. United

States, 734 F.3d 100, 102 (1st Cir. 2013).    Rather, the complaint

need include only enough factual detail to make the asserted claim

"plausible on its face."    Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570

(2007)).   We review the District Court's dismissal of complaint




     1  The District Court also held that the school's suit was
ripe for adjudication, because the school had received a demand
letter threatening legal action and the uncertainty over the
availability of insurance coverage had "significant implications"
for the parties' responses to that letter.          Neither party
challenges that ripeness holding on appeal.
     2 The school does not challenge the District Court's separate

holding that New Hampshire law places the burden on the school to
prove the existence of the disputed insurance policy, rather than
placing the burden on New Hampshire Insurance Company to disprove
the existence of the policy, and we therefore do not address that
question in this appeal. See Kelley v. LaForce, 288 F.3d 1, 11
(1st Cir. 2002) (issues not raised in the appellant's brief are
waived). We thus resolve this appeal on the understanding that
the school bears the burden of persuasion on this issue.

                               - 4 -
for failure to state a claim de novo.               García-Catalán, 734 F.3d at

102.

               To evaluate the sufficiency of a complaint under Rule 8,

we first must "distinguish 'the complaint's factual allegations

(which       must    be   accepted   as   true)    from    its     conclusory   legal

allegations (which need not be credited).'"                  Id. at 103 (quoting

Morales-Cruz v. Univ. of P.R., 676 F.3d 220, 224 (1st Cir. 2012)).

We    then    must    "determine     whether      the   factual     allegations   are

sufficient to support 'the reasonable inference that the defendant

is liable . . . .'"            Id. (quoting Haley v. City of Boston, 657

F.3d 39, 46 (1st Cir. 2011)).

               To perform this two-step analysis, though, we need to be

clear about the legal issue that is in dispute.                     Here, the school

seeks to prove that the company must cover the claim made in the

2013 demand letter that the school received.                      But on appeal, the

issue is narrower.           The sole legal question in dispute concerns

the existence of the policy, not whether that policy, if it exists,

covers the claim.          And that is because, as in the District Court,

the    New     Hampshire      Insurance     Company       seeks     the   complaint's

dismissal solely on the ground that the complaint does not make a

plausible case that the policy was ever in place.                     See Goldman v.

First Nat'l Bank of Bos., 985 F.2d 1113, 1116-17 n.3 (1st Cir.

1993) ("[T]heories not raised squarely in the district court cannot


                                          - 5 -
be surfaced for the first time on appeal." (quoting McCoy v. Mass.

Inst. of Tech., 950 F.2d 13, 22 (1st Cir. 1991))).

           We thus look at the complaint to determine what facts it

sets forth concerning the existence of the policy. We then address

whether, accepting the truth of those facts, the complaint makes

out a plausible case that the policy does in fact exist.

                                    A.

           The allegations in the school's complaint do not include

a direct allegation that the insurance policy existed.           In fact,

the   complaint   alleges   that   New   Hampshire   Insurance   Company's

representative "has noted that she has searched for the policy and

been unable to find it, but has assured the [school] that her

search continues."    In place of a direct allegation, the complaint

relies on circumstantial evidence.         That evidence is as follows.

           The complaint alleges that an accounting firm prepared

an audit report for the school dated September 1971.         That report

is attached as an exhibit to the complaint.            The report states

that from September 1970 to September 1971 the school had a

"Special Multi-Peril" insurance policy from the New Hampshire

Insurance Company.     And, according to the report, that policy

included $1,000,000 in "General Liability" coverage.

           The complaint further states that Phillip Wheeler, "one

of the two principals in the [accounting] firm that prepared" that


                                   - 6 -
audit report, "believes that had the school changed carriers"

between the 1969-1970 school year and the 1970-1971 school year,

"then the auditors would have noted the change."               No such change

is noted in the audit report.

            To show that the policy was in place during the critical

1967-1968   school     year,    the   complaint     alleges   that   "Cornelius

Bakker, Cardigan's business manager between 1967 and 1970, is

certain the school had insurance during his tenure." The complaint

further alleges that Bakker "worked with A.B. Gile, Inc., a local

insurance brokerage, to secure Cardigan's insurance coverage."

And the complaint alleges that Bakker "does not believe Cardigan

changed carriers while he was business manager between 1967 and

1970."

            The     complaint     offers      one   additional,      bolstering

allegation.       It alleges "[u]pon information and belief" that the

insurance brokerage the school used "had a close association with"

New Hampshire Insurance Company and "advised most of its commercial

clients like Cardigan to place their commercial lines of insurance

with" New Hampshire Insurance Company.

            New Hampshire Insurance Company argues, and the District

Court held, that, except for the allegation concerning the audit

report, the complaint sets forth "nothing more than speculation

and conjecture."      New Hampshire Insurance Company thus argues that


                                      - 7 -
we are not "obligated to accept" those other allegations as true.

New Hampshire Insurance Company relies for that argument on the

Supreme Court's decisions in Ashcroft v. Iqbal, 556 U.S. 662

(2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).

            In each decision, the Supreme Court held that "the tenet

that a court must accept as true all of the allegations contained

in a complaint is inapplicable to legal conclusions."                  Iqbal, 556

U.S. at 678; see Twombly, 550 U.S. at 555.               Iqbal illustrates the

sort of "conclusory statements" that are "not entitled to the

assumption of truth."         556 U.S. at 678-79.

            Iqbal involved a suit by an individual -- Iqbal -- who

was    arrested   and   detained      following   the     September    11,    2001,

terrorist attacks.           Id. at 666.       After Iqbal was released, he

brought suit against a variety of federal officials, asserting

alleged    violations    of     his   constitutional      rights.      Id.      The

defendants included John Ashcroft, who had been the United States

Attorney General at the time, and Robert Mueller, then the Director

of the Federal Bureau of Investigation.             Id.

            The Supreme Court explained that the complaint's "bald

allegations" that Ashcroft and Mueller were personally involved in

unconstitutional conduct were "conclusory" and thus should have

been    disregarded     by    the   district    court.      Id.   at   681.      In

particular, the Supreme Court held that statements that Ashcroft


                                       - 8 -
and Mueller "'knew of, condoned, and willfully and maliciously

agreed    to    subject   [the     plaintiff]'       to    harsh       conditions    of

confinement"      based   on   his    "'religion,         race,    and/or    national

origin'" were not factual allegations that must be taken as true.

Id. at 680.      And the Court ruled the same with respect to Iqbal's

allegations that "Ashcroft was the 'principal architect'" of the

policy    and    that   "Mueller     was   'instrumental'         in    adopting    and

executing it."      Id. at 680-81.

               These sorts of allegations, the Court explained, were

"nothing more than a 'formulaic recitation of the elements' of a

constitutional      discrimination         claim."        Id.     at   681   (quoting

Twombly, 550 U.S. at 555).             In contrast, Iqbal did credit as

factual those allegations in the complaint that made reference to

specific events.        See id. (crediting allegations including "that

'the [FBI], under the direction of Defendant MUELLER, arrested and

detained thousands of Arab Muslim men'").

               The Supreme Court's decision in Twombly is similar.

Twombly was an antitrust suit. See 550 U.S. at 548. The plaintiffs

contended that the defendants had conspired "in restraint of trade"

in the local telephone market.             Id. (quoting 15 U.S.C. § 1).             The

plaintiffs lacked any direct evidence of the existence of the

conspiratorial agreement on which their claim depended.                      See id.

at 564.        Rather, the plaintiffs based their claim largely "on


                                       - 9 -
descriptions of parallel conduct" by the defendants -- similar

actions taken by putatively independent firms that, according to

the plaintiffs, showed that those firms were really acting in

concert.    Id. at 553-54, 564.

            The Supreme Court credited those factual allegations of

parallel conduct, although it ultimately found them inadequate to

state a claim under § 1.         See id. at 564-66.       But mixed in among

the plaintiffs' allegations about parallel conduct were "a few

stray statements speak[ing] directly of agreement."               Id at 564 &

n.9.   Those "stray statements," the Supreme Court held, were "on

fair reading . . . merely legal conclusions resting on the prior

allegations."      Id. at 564.      In particular, the allegation that the

defendants    "have       entered    into   a   contract,    combination     or

conspiracy . . . and have agreed not to compete with one another"

was, the Supreme Court held, no more than a legal conclusion based

on the allegations of parallel conduct.          Id. at 564-65.     And thus,

the Supreme Court held that this direct allegation of agreement

did not need to be taken as true.           See id.

            New Hampshire Insurance Company contends that, under

Iqbal and Twombly, we are obliged to disregard the school's

allegations outlined above (save for the one concerning the audit

report).     But    New    Hampshire    Insurance     Company's   argument   is

mistaken.


                                      - 10 -
              The allegations in the school's complaint described

above   are    specific       and    factual.       The    complaint    refers     to

individuals        with   relevant    knowledge     who    are    recalling     facts

plausibly known to them.             Those allegations are thus like the

allegations of actual events in Iqbal and of parallel conduct in

Twombly that the Supreme Court took as true; they are specific and

appear to be based on the knowledge of particular individuals.

They are not bare recitations of the legal conclusion the suit

seeks to prove.           We thus conclude that the school's allegations

set forth above are entitled to the presumption of truth at the

motion to dismiss stage.

              At    the   same   time,    precisely       because   these   factual

allegations        involve   a   series   of     particular      recollections   and

beliefs about the school's insurance practices and the role of the

auditor, the complaint provides at most circumstantial evidence

that the school had an insurance policy with this carrier at the

time in question.          And so we must proceed to the second step of

the analysis, and consider whether "the factual allegations are

sufficient     to     support    'the     reasonable      inference    that'"    the

insurance policy at issue was in place.               García-Catalán, 734 F.3d

at 103 (quoting Haley, 657 F.3d at 46).




                                        - 11 -
                                     B.

          In undertaking our inquiry, we must "accept the truth of

all   well-pleaded   facts   and     draw    all   reasonable   inferences

therefrom in the pleader's favor."          Id. at 102 (quoting Grajales

v. P.R. Ports Auth., 682 F.3d 40, 44 (1st Cir. 2012)).           In doing

so, we recognize that "circumstantial evidence often suffices" to

render an asserted claim plausible in the pleading context.           Id.

at 103 (quoting Rodríguez-Reyes v. Molina-Rodríguez, 711 F.3d 49,

56 (1st Cir. 2013)).   But at bottom, this inquiry requires that we

"draw on [our] experience and common sense," Iqbal, 556 U.S. at

679, as the parties have cited no precedent to guide us on the

application of the Rule 8 standard to a lost-insurance-policy suit,

and we have found very little on our own.3          Instead, nearly every

lost-policy case we know of concerns what showing must be made to

survive summary judgment.     See, e.g., Bianchi v. Florists Mut.



      3See Radenbaugh v. State Farm Lloyds, No. 4:13-CV-339-A, 2013
WL 4442024, *2-*4 (N.D. Tex. 2013) (granting motion to dismiss
because, among other things, the complaint made no allegations
that the defendant insurance company had ever issued an insurance
policy to him); N. River Ins. Co. v. Bishop of Pueblo, No. 06-cv-
01971, 2008 WL 280842, *2 (D. Colo. 2008) (denying motion to
dismiss a counterclaim because the "ambiguities" and "issues of
fact" relating to the existence of a policy must be construed in
non-movant's favor); Lumbermens Mut. Cas. Co. v. Foster Wheeler
Corp., No. 88 C 4302, 1993 WL 394769, at *3 (N.D. Ill. Oct. 4,
1993) (holding, with little explanation, that unspecified
allegations in a complaint adequately alleged the existence of a
lost insurance policy).

                                   - 12 -
Ins. Co., 660 F. Supp. 2d 434 (E.D.N.Y. 2009); S. Union Co. v.

Liberty Mut. Ins. Co., 581 F. Supp. 2d 120 (D. Mass. 2008); UTI

Corp. v. Fireman's Fund Ins. Co., 896 F. Supp. 362 (D.N.J. 1995);

Peterborough v. Hartford Fire Ins. Co., 824 F. Supp. 1102 (D.N.H.

1993).

          In our view, although the question is close, the school's

allegations, and the "reasonable inferences" we must draw from

them, García-Catalán, 734 F.3d at 102 (quoting Grajales, 682 F.3d

at 44)), do make a plausible showing that New Hampshire Insurance

Company issued an insurance policy to the school for the 1967-1968

school year.   The school's allegation of the existence of a New

Hampshire Insurance Company policy for the 1970-1971 school year

is directly supported by the school's audit report from that year.

And the school's factual allegations tending to show no change in

coverage in the preceding three years are enough to plausibly

support the existence of coverage in the 1967-1968 school year.

          The factual allegations are "circumstantial," to be

sure, but there is no requirement for direct evidence.   Id. at 103

(quoting Rodríguez-Reyes, 711 F.3d at 56).     Neither is there a

"probability requirement" at the pleading stage.      Twombly, 550

U.S. at 556.   Rather, the factual allegations need only be enough

to nudge the claim "across the line from conceivable to plausible,"




                              - 13 -
thus    "rais[ing]   a   reasonable   expectation     that   discovery   will

reveal evidence of" the lost policy.         Id. at 556, 570.

            The school has alleged specific facts concerning an

audit report that tend to show that it had an insurance policy

from New Hampshire Insurance Company as of 1971.             And the school

has then linked that allegation to the recollections of specific

individuals who were involved in the relevant events and are of

the view both that the school had a general liability policy in

the preceding years, including the crucial 1967-1968 school year,

and that there had been no change in carrier during that period of

time.

            New   Hampshire    Insurance    Company    responds   that     the

school's   complaint,     in   describing   the   recollections   of     these

persons, uses "carefully crafted words" in an effort to disguise

"the vagueness" of the key factual allegations.               New Hampshire

Insurance Company focuses in particular on the allegation that

Bakker "does not believe Cardigan changed carriers" between 1967

and 1970, which, New Hampshire Insurance Company says, is not the

same as saying that "Cardigan did not change carriers."

            But in ordinary usage, the expression "I do not believe

[some event] occurred" may be synonymous with the expression "I

believe [some event] did not occur." We are required at this stage

of the proceedings to "draw all reasonable inferences in" the


                                   - 14 -
school's favor.   Morales-Tañon v. P.R. Elec. Power Auth., 524 F.3d

15, 17 (1st Cir. 2008).     And one reasonable inference from the

school's allegation is thus that Bakker's best recollection is

that the school did not change insurance carriers during his

tenure.   Moreover, the school pleads that Bakker was the person

who "worked with A.B. Gile, Inc., a local insurance brokerage, to

secure Cardigan's insurance coverage."    Given that assertion, it

is a reasonable (albeit not necessary) inference that, had there

been a change in coverage, Bakker would have known about it, due

to his asserted role in securing coverage for the school.    Thus,

Bakker's lack of a belief that there was a change in coverage (even

phrased as it was) is itself a relevant, factual assertion tending

to suggest that no such change in coverage occurred.4


     4  New Hampshire Insurance Company also argues that Bakker
may have lacked knowledge regarding the crucial 1967-1968 policy,
because that policy could have been purchased before Bakker became
the school's business manager at an unspecified time in 1967. But
the school alleges that Bakker worked for the school during that
1967-1968 school year, and that Bakker believes the school did not
"change[] carriers while [Bakker] was business manager."       Any
change in insurance carrier between the 1967-1968 school year and
the 1969-1970 school year would thus have occurred "while [Bakker]
was business manager."    And so it is reasonable to think that
Bakker -- the one who was responsible for purchasing insurance --
would have personal knowledge of such a change, even if -- as New
Hampshire Insurance Company suggests -- Bakker may not have been
the one who purchased the 1967-1968 policy. Moreover, as we have
discussed, the school's allegations also address the possibility
of a change in insurance after Bakker's tenure as business manager
ended at an unspecified time in 1970. The school alleges that any
change between the 1969-1970 and 1970-1971 school years would have

                              - 15 -
                                        III.

              This case is not one in which a plaintiff has selected

an insurance company at random and filed a declaratory judgment

action against it in the hopes that the plaintiff might get lucky

and find a policy.           The school's complaint instead provides a

plausible basis, beyond a mere possibility, for believing that New

Hampshire Insurance Company issued the policy in question. Whether

the school can elicit the evidence that will be required to make

the more demanding showing the school will need to make as the

suit moves forward is, of course, a different question that we

need not address in this appeal.                See Twombly, 550 U.S. at 556

(noting that "a well-pleaded complaint may proceed even if it

strikes   a    savvy   judge    that    actual    proof   of   those   facts   is

improbable, and 'that a recovery is very remote and unlikely'");

see also Metts v. Murphy, 363 F.3d 8, 10, 12 (1st Cir. 2014) (en

banc)   (vacating      the   dismissal     of     the   plaintiffs'    claim   as

"premature" and remanding "to allow a fuller development of the

evidence, and further legal analysis based on that evidence,"

before resolving the claim on the merits).




been noted on the 1970-1971 audit report, which showed the
existence of a New Hampshire Insurance Company policy and noted no
change in insurer from the prior year.

                                       - 16 -
          We thus reverse the District Court's dismissal of this

action for failure to state a claim, and we remand the case for

further proceedings consistent with this opinion.




                             - 17 -
