M.D. v. Cohlmia

• Decision Date: 03 June 2010
• Docket Number: No. 09-CV-545-TCK (TLW).,09-CV-545-TCK (TLW).
• Citation: 718 F.Supp.2d 1279
• Parties: Arshad YOUSUF, M.D., Plaintiff, v. George COHLMIA, M.D. and Cardiovascular Surgical Specialists Corp., Defendants. and Physicians Liability Insurance Company, Intervenor/Plaintiff, and American National Property Company, Garnishee.
• Court: U.S. District Court — Northern District of Oklahoma

718 F.Supp.2d 1279

Arshad YOUSUF, M.D., Plaintiff,

v. George COHLMIA, M.D. and Cardiovascular Surgical Specialists Corp., Defendants.andPhysicians Liability Insurance Company, Intervenor/Plaintiff,andAmerican National Property Company, Garnishee.

No. 09-CV-545-TCK (TLW).

United States District Court,N.D. Oklahoma.

June 3, 2010.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

Colin Hampton Tucker, John H. Tucker, Rhodes Hieronymus Jones Tucker & Gable, Tulsa, OK, for Plaintiff.

Robert N. Naifeh, Jr., Sarah Lee Gossett Parrish, Derryberry & Naifeh LLP, Oklahoma City, OK, for Intervenor/Plaintiff.

Brian Jay Rayment, Kivell Rayment & Francis, Douglas Evan Stall, Samantha Weyrauch, Barber & Bartz, Tulsa, OK, for Defendants.

David H. Cole, Nevin Ray Kirkland, Edmonds Cole Law Firm, Oklahoma City, OK, for Garnishee.

AMENDED OPINION AND ORDER ¹

TERENCE C. KERN, District Judge.

Now before the Court is the Plaintiff's Motion for Summary Judgment Against Garnishee American National Property and Casualty Company (Doc. 27), and the Motion for Summary Judgment of Intervenor/Plaintiff, Physician's Liability Insurance Company, Against Garnishee, American National Property and Casualty Company (Doc. 30).

I. Background

Garnishee American National Property and Casualty Company (“ANPAC”) issued two general commercial liability insurance policies to Plaintiff's judgment debtors, Cardiovascular Surgical Specialists Corp. (“CVSS”) and CVSS employee, George Cohlmia, M.D. (“Cohlmia”). The policies are identical although each policy covers a separate business location. Intervenor/Plaintiff Physician's Liability Insurance Company (“PLICO”) issued a separate professional liability insurance policy to CVSS and Cohlmia (collectively referenced herein as “Defendants”).

On November 15, 2004, Plaintiff Arshad Yousuf filed suit against Defendants in state court for defamation, tortious interference with business relationships/contract, intentional infliction of emotional distress/tort of outrage, negligence, and breach of contract. Specifically, Plaintiff alleged that Cohlmia made false statements to local news media that disparaged Plaintiff's professional reputation. Cohlmia denied that the statements were false.

Defendants demanded, pursuant to the insurance policies, that ANPAC and PLICO defend the lawsuit. PLICO agreed to defend the lawsuit and did so under a reservation of rights. On May 4, 2005, PLICO notified ANPAC of the underlying action and demanded that ANPAC share in the defense. ANPAC refused to defend or share in the defense, essentially arguing that (1) no defamation claim triggered coverage; (2) the damages did not constitute bodily injury or property damage; and (3) such damages were excluded by the policies because they were “expected or intended from the standpoint of the insured.” ( See Mot. Summ. J., Doc. 27, ANPAC Letters dated June 29, 2005, Exs. 8, 9.) ANPAC further stated that, even if it erred in refusing to defend its insureds, PLICO had no right to contribution or indemnification.

Plaintiff disclaimed damages for defamation and filed an Amended Petition which omitted the defamation claim but kept the remaining four causes of action. At trial, Plaintiff offered evidence that the conduct of the Defendants affected him emotionally and physically in the form of headaches, stress, and upset stomach. He took over-the-counter medications to alleviate those conditions. Before the case was submitted to the jury, Plaintiff withdrew his claims for breach of contract and intentional infliction of emotional distress. The trial court instructed the jury on the two causes of action that remained: negligence and intentional interference with business relationships.

Although Defendants requested specific verdict forms which would have required the jurors to specify the theory or theories of recovery forming the basis for their verdict, Plaintiff objected, and the trial court provided a general verdict form with special interrogatories. The verdict forms did not allow for the allocation of any verdict into the competing theories of recovery. On February 10, 2006, the jury found in Plaintiff's favor and awarded Plaintiff $5,000.000. Jurors specifically found that Defendants acted in reckless disregard of the rights of others, and that Defendants acted intentionally and with malice towards others, but the jury awarded “-0-” dollars in punitive damages. The journal entry of judgment was filed on March 8, 2006, and Defendants appealed.

After judgment was entered in the underlying action, Cohlmia commenced an action to require PLICO to pay the judgment against him, and Plaintiff commenced a garnishment action against PLICO to collect his judgment against Cohlmia, PLICO's insured. On December 26, 2006, the trial court granted summary judgment to PLICO in both cases, essentially holding that PLICO had no obligation to pay the judgment. The parties dispute whether the trial court ruled on PLICO's obligation to defend the suit. Nonetheless, PLICO continue to provide a defense pending appeal, subject to a reservation of rights, and it again tendered the claim to ANPAC for defense. On April 10, 2007, PLICO also requested that ANPAC reimburse it for the costs it incurred in defending the suit. ANPAC again rejected PLICO's demand, arguing that the ANPAC policies excluded coverage for personal injury arising out of the publication of a defamatory or disparaging material when such publication was made by an insured with knowledge of the falsity thereof.

In this matter, Plaintiff claims that ANPAC is liable for payment of the damages assessed against Defendants because the actions of Defendants and the injuries suffered by Plaintiff are covered under the ANPAC policies. Plaintiff seeks to garnish the benefits available under the policies to Defendants. The policies provide coverage of $1,000,000 per occurrence or offense up to two occurrences or offenses in a policy year, and two independent policies for two business locations were in place at the relevant time. The policy limits for each policy are $2,000,000. Since each policy insured both CVSS and Cohlmia, Plaintiff argues, ANPAC is liable in the aggregate for $4,000,000 under the circumstances of this case. Plaintiff also seeks accrued post-judgment interest.

ANPAC generally denies that the damages awarded Plaintiff in the underlying tort suit are covered by the policies it issued to Defendants. Alternatively, ANPAC asserts that, even if coverage was afforded under the policies, Plaintiff would be limited to $2,000,000 and would not be entitled to costs or interest. Finally, ANPAC requests that, should the Court disagree with ANPAC's position, it should delay its decision pending appeal of a state court decision in the underlying action holding that the Plaintiff could not look to PLICO for indemnity under the terms of Defendants' policy with PLICO.

For its part, PLICO filed its Complaint in Intervention on October 15, 2009, seeking to recover its defense costs from ANPAC. ANPAC argues that PLICO cannot maintain an action for contractual subrogation, equitable subrogation, or equitable contribution to recover defense costs. ANPAC also asserts that PLICO's claims are barred by the statute of limitations.

After the parties completed their briefing on the motions for summary judgment, the Oklahoma Court of Civil Appeals reversed the underlying state court judgment and remanded the matter for a new trial based upon an erroneous jury instruction regarding the tort of intentional interference with business relationships. The appellate court also reversed the judgment of the state court granting PLICO's post-trial motion for summary judgment. Yousuf v. Cohlmia, Case No. 104,090, at 13. (Opinion, filed March 19, 2010) (unpublished). Plaintiff's petition for writ of certiorari requesting review of the appeal by the Oklahoma Supreme Court was denied on May 24, 2010. ²

The state appellate court's decision to reverse the judgment entered in state court and remand the matter for new trial does not render this matter of insurance coverage moot. It does, however, affect the relief afforded, if any. To the extent that Plaintiff and Intervenor/Plaintiff seek declaratory relief, the Court may act, but to the extent Plaintiff seeks garnishment for the amount of the state court judgment or post-judgment interest, the Court declines to act, as the underlying judgment has been vacated. ³

II. Analysis A. Standard of Review

Summary judgment is proper only if “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c)(2); e.g., Vaughn v. Epworth Villa, 537 F.3d 1147, 1150 (10th Cir.2008). The Court resolves all factual disputes and draws all reasonable inferences in favor of the non-moving party. Turner v. Public Serv. Co. of Colorado, 563 F.3d 1136, 1142 (10th Cir.2009) (citations omitted). “Under Rule 56(c), the moving party bears the initial burden of presenting evidence to show the absence of a genuine issue of material fact.” Trainor v. Apollo Metal Specialties, Inc., 318 F.3d 976, 979 (10th Cir.2002) (citation omitted). “Once this burden is met, Rule 56(e) requires the non-moving party to set forth specific facts showing there is a genuine issue for trial.” Id. (citation omitted). Thus, “the moving party does not have the ultimate burden of persuasion at trial,” but “it has both the initial burden of production on a motion for summary judgment and the burden of establishing that summary judgment is appropriate as a matter of law.” Id. (citation omitted).

B. Insurance Contracts

Under Oklahoma law, the interpretation and construction of insurance contracts constitutes an issue of law for the court to determine and resolve. E.g., Dodson v. St. Paul Ins. Co., 812 P.2d 372, 376 (Okla.1991); Torres v. Sentry Ins., ...