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Employers Mutual Casualty Co. v. West

United States District Court, N.D. Mississippi, Aberdeen Division

June 21, 2017




         Plaintiff filed this Declaratory Judgment Action on January 15, 2016. Plaintiff has since filed two motions for summary judgment. The Court finds as follows:

         Factual and Procedural Background

         This matter arises from twelve separate complaints and twelve separate cross-complaints from twelve separate underlying civil actions filed in the Circuit Court of Oktibbeha County, Mississippi. All but two actions have been compromised or settled in the underlying state court suit. Employers Mutual Casualty Company (EMC) filed two motions for summary judgment. The first motion seeks a declaration as to whether EMC must provide coverage for claims made by Brytni West and Dustin Carley against the insureds, Jason Littrell and Littrell Construction, Inc (Littrell).[1] The second motion for summary judgment seeks a declaration as to whether EMC must provide coverage to Littrell for claims made by D.L. Acton Construction Company (“DLA”) in its ancillary cross complaints filed in the underlying actions.[2] DLA has responded to both motions, arguing that EMC should provide coverage to Littrell as to the underlying Carley and West complaints as well as their own underlying complaint. However, the Defendant insureds, Jason Littrell and Littrell Construction, Inc. have not responded.

         The West Complaint and the Carley Complaint both allege that separate Defendants, DLA and Bragan Properties, through their various entities, constructed multifamily dwellings that were “defective, inadequate, and negligent [in] design and construction.” These dwellings comprised of three story apartment buildings with outdoor wooden decks on the front and rear of the dwellings. The complaints allege that Littrell, who served as subcontractor for DLA, built the decks with “undeniable knowledge” that college students would be residing in the properties, and that the decks would be natural gathering spots. However, the complaints allege that these decks were attached to the building structure using only nails, “instead of the more common and safer alternative of bolts.” Further, West alleges that “the decks were nailed only to press board or [oriented strand board], and not to a solid piece of wood, ” and that no flashing was installed, which purportedly allowed water to damage what West claims to be the “already structurally weak deck and its attachment to the building.” The Carley Complaint alleges that the property owners and managers had actual notice of the unstable nature of the decks.

         The West Complaint alleges that the “gradual, but continual weakening finally hit a breaking point on or about November 22, 2014, ” when the deck collapsed, causing everyone standing on the deck to free-fall before crashing down on the broken deck onto cars parked below. Regarding injuries sustained in the fall, West and Carley made claims against Littrell for negligence, breach of warranty, misrepresentation, fraud, and fraudulent concealment, products liability, and wanton, gross and/or intentional conduct.

         DLA's underlying cross-complaint arises out of the same facts that are the subject of the West and Carley lawsuit. DLA makes claims ancillary to the West Complaint for indemnification to the extent that those claims relate to “bodily injury.” Summary Judgment Standard Summary judgment is warranted under Rule 56(a) of the Federal Rules of Civil Procedure when the evidence reveals there is no genuine dispute regarding any material fact and that the moving party is entitled to judgment as a matter of law. The rule “mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a sufficient showing to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

         Conclusory allegations, speculation, unsubstantiated assertions, and legalistic arguments are not an adequate substitute for specific facts demonstrating a genuine issue for trial. TIG Ins. Co. v. Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002). “A party asserting that a fact cannot be or is genuinely disputed must support the assertion by citing to particular parts of materials in the record ... or showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact .” Fed. R. Civ.P. 56(c)(1). The court is only obligated to consider cited materials but may consider other materials in the record. Id. at 56(c)(3). The court must resolve factual controversies in favor of the nonmovant “but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When such contradictory facts exist, the court may “not make credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).

         Analysis and Discussion

         EMC filed their first Motion for Summary Judgment in which they argue that there is no duty to provide coverage, including a duty to defend or indemnify, for those matters alleged in the West and Carley complaints. First, EMC argues that although the West and Carley complaints do allege damages because of “bodily injury” as that term is defined in EMC's Policy, the Policy would not be triggered because the “bodily injury” did not occur within the Policy period. Second, EMC argues that West and Carley do not seek damages because of “property damage” as that term is defined in the Policy. Third, EMC argues that the Complaints do not claim “bodily injury” or “property damage” caused by an “occurrence” as that term is defined. Finally, EMC argues that the Complaints do not make a claim for “personal and advertising injury, ” as defined under Coverage Part B of the Policy, and they do not make a viable claim under Coverage Part C of the Policy regarding Medical Payments coverage. As EMC's third argument, whether the accident constituted an “occurrence” under the Policy, is dispositive in this matter, EMC's remaining arguments need not be addressed.

         EMC has two distinct obligations to its insured-(1) a duty to indemnify its insured for covered claims and (2) a duty to furnish a legal defense to certain claims. Mimmit v. Allstate County Mut. Ins. Co., 928 So.2d 203, 207 (Miss. Ct. App. 2006). Furthermore, “the burden of proving coverage rests with the insured.” Architex Ass'n, Inc. v. Scottsdale Ins. Co., 27 So.3d 1148, 1157 (Miss. 2010). EMC argues that the Policy does not provide coverage for either obligation.

         “Mississippi[3] has adopted the ‘allegations of the complaint' rule (sometimes referred to as the eight-corners test) to determine whether an insurer has a duty to defend, ” pursuant to which the court reviews the allegations in the underlying complaint to see whether it states a claim that is within or arguably within the scope of the coverage provided by the insurance policy. Ingalls Shipbuilding v. Federal Ins. Co., 410 F.3d 214, 225 (5th Cir. 2005). In so doing, the court compares the words of the complaint with the words of the policy, looking “not to the particular legal theories” pursued by the plaintiffs, “but to the allegedly tortious conduct underlying” the suit. Id. (citations omitted). See also United States Fidelity & Guarn. Co. v. Omnibank, 812 So.2d 196, 200 (Miss. 2002). “If the complaint states a claim that is within or arguably within the scope of coverage provided by the policy, then the insurer has a duty to defend.” QBE Ins. Corp. v. Brown & Mitchell, Inc., 591 F.3d 439, 443 (5th Cir. 2009) (applying Mississippi law) (quotation omitted).

         The duty to indemnify, however, arises only if the facts actually established in the underlying suit amount to a covered claim. Estate of Bradley ex rel. Sample v. Royal Surplus Lines Ins., 647 F.3d 524, 531 (5th Cir. 2011) (applying Mississippi law). An insurer may have a duty to defend but, eventually, no duty to indemnify. Moeller v. American Guar. and Liability Ins. Co., 707 So.2d 1062, 1069 (Miss. 1996). In contrast, “if there is no duty to defend, there can be no duty to indemnify.” Evanston Ins. Co. v. Neshoba Cnty. Fair Ass'n, Inc., 442 F.Supp.2d 344, 345 n.1 (S.D.Miss. 2006).

         In the case at bar, the terms of the EMC Policy require coverage for sums that the insured “becomes legally obligated to pay as damages because of ‘bodily injury' or ‘property damage' to which this insurance applies.” The Policy states that the insurance applies to “bodily injury” and “property damage” only if the bodily injury or property damage is caused by an “occurrence.” “Occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The “Mississippi Supreme Court has found that the use of the term ‘accident' in a CGL policy to define ‘occurrence' is ‘sufficiently unambiguous for [the court] to hold that the term accident refers to [the insured's action] and not whatever unintended damages flowed from that act.'” W.R. Berkley Corp. v. Rea's Country Lane Const., Inc., 140 So.3d 437, 443 (Miss. Ct. App. 2013); quoting Allstate Ins. v. Moulton, 464 So.2d 507, 510 (Miss. 1985). The Court has further held that “an accident by its very nature produces unexpected and unintended results. It follows that bodily injury or property damage, expected or intended from the standpoint of the insured, cannot be the result of an accident. Omnibank, 812 So.2d at 200. In further elaboration, the Mississippi Supreme Court has held that ...

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