State Farm Fire & Cas. Co. v. Pettigrew

• Decision Date: 05 April 2016
• Docket Number: Case No. 15-CV-0342-CVE-TLW
• Citation: 180 F.Supp.3d 925
• Court: U.S. District Court — Northern District of Oklahoma
• Parties: State Farm Fire and Casualty Company, an Illinois Corporation, Plaintiff, v. Wayne Pettigrew, individually and d/b/a Group & Pension Planners, Inc.; First Trinity Financial Corporation, an Oklahoma corporation; Gregg Zahn, an individual, Defendants.

180 F.Supp.3d 925

State Farm Fire and Casualty Company, an Illinois Corporation, Plaintiff,

v.Wayne Pettigrew, individually and d/b/a Group & Pension Planners, Inc.; First Trinity Financial Corporation, an Oklahoma corporation; Gregg Zahn, an individual, Defendants.

Case No. 15-CV-0342-CVE-TLW

United States District Court, N.D. Oklahoma.

Signed April 5, 2016

Andrew Wakeman, Galen Lee Brittingham, John Scott Gladd, Atkinson Haskins Nellis Brittingham Gladd & Carwile, Tulsa, OK, for Plaintiff.

Kelsie J. Lewis, William D. Pettigrew, Noland Pettigrew & Lewis, Oklahoma City, OK, Keith Allen Ward, Keith A. Ward PLLC, Tulsa, OK, for Defendants.

OPINION AND ORDER

CLAIRE V. EAGAN

, UNITED STATES DISTRICT JUDGE

Now before the Court is the Motion of First Trinity Financial Corporation and Gregg Zahn for Summary Judgment Against State Farm Fire & Casualty Company (Dkt. # 30) and Pettigrew's joinder therein (Dkt. # 34), the Motion for Summary Judgment and Supporting Brief of Plaintiff State Farm Fire and Casualty Company (Dkt. # 35), and Wayne Pettigrew's motion for summary judgment (Dkt. # 52). Defendants First Trinity Financial Corporation (FTFC) and Gregg Zahn move for summary judgment on the ground that a personal liability umbrella policy issued by State Farm Fire and Casualty Company (State Farm) to Wayne Pettigrew requires State Farm to defend and indemnify Pettigrew in a state court action that FTFC and Zahn filed against Pettigrew after Pettigrew made allegedly defamatory statements about Zahn's leadership of FTFC. Dkt. # 30. Pettigrew joined FTFC and Zahn's motion (Dkt. # 34) and filed his own motion for summary judgment (Dkt. # 52), arguing that State Farm is required to defend and indemnify Pettigrew in the suit against him by FTFC and Zahn because the state court action is a covered loss under the umbrella policy and no policy exclusions apply.¹ State Farm filed a cross motion for summary judgment, arguing that the umbrella policy does not provide coverage to Pettigrew, specifically asserting that policy exclusions for business pursuits, professional services, and acts as a board member preclude coverage. Dkt. # 35. The parties each ask the Court to find that they are entitled to judgment as a matter of law and deny the opposing party's motion.

I.

This insurance coverage dispute arises from a homeowner's insurance policy and a personal liability umbrella policy that State Farm issued to Pettigrew, under which Pettigrew seeks coverage for a state court action against FTFC and Zahn. FTFC is a holding company for an Oklahoma insurance company. Dkt. # 30-1, at 7. Zahn founded the company in 2004 and recruited Pettigrew, who has over 30 years of experience as an insurance professional, both as an insurance broker and insurance consultant, to serve as a founding board member. Dkt. # 35-2; Dkt. # 35-3, at 3; Dkt. # 43-2, at 5-6. Zahn serves FTFC's president, chief executive officer (CEO), and chairman of the board of directors. Dkt. # 2-6; Dkt # 35, at 11; Dkt. # 43, at 4. Pettigrew served as member of FTFC's board of directors from its inception in 2004 to 2013. Dkt. # 35, at 9; Dkt. # 43, at 3. As an initial investment, Pettigrew purchased 40,000 shares in Southwest Security Financial Corporation, later renamed FTFC. Dkt. # 35, at 9-10; Dkt. # 43, at 4. Pettigrew later purchased an additional 2,000 shares and received 8,000 shares as dividends in 2009 and 2010. Dkt. # 35, at 10; Dkt. # 43, at 4. Pettigrew currently owns 50,000 shares. Dkt. # 35, at 10; Dkt. # 43, at 4. Pettigrew admits that he had a profit motive in becoming an FTFC shareholder. Dkt. # 35-3, at 4. Pettigrew also received annual compensation for his service on the board, totaling $26,500 over the near decade Pettigrew served on the board. Dkt. # 35, at 11; Dkt. # 43, at 4.

In 2009, Zahn was appointed CEO of FTFC. Dkt. # 35, at 11; Dkt. # 43, at 4. After Zahn assumed this role, Pettigrew became increasingly concerned with Zahn's leadership. Dkt. # 2-3. Pettigrew's stated reasons for concern were Zahn's sale of stock to family members at a price of ten cents per share, the company's shift from marketing insurance to acquiring assets, Zahn's participation on both the compensation and nominating committees, the lack of separation between company president and the chairman of the board, and issues related to Zahn's prior business dealings in Montana. Id.

At a March 14, 2013 FTFC board meeting, the board entertained nominations for the board of directors. Dkt. # 35, at 12; Dkt. # 43, at 5. Pettigrew did not receive a nomination to continue serving on the board after the expiration of his term on May 15, 2013. Dkt. # 35, at 12; Dkt. # 43, at 5. Before the conclusion of his term, Pettigrew made an open records request to the Oklahoma Insurance Department, seeking information related to his concerns about Zahn's leadership. Dkt. # 35, at 12; Dkt. # 43 at 5. Through the open records request, Pettigrew received information that, prior to founding FTFC, Zahn entered into a deferred prosecution agreement in Montana relating to Zahn's actions as an officer in another corporation, AmWest Financial Network, Inc.² Dkt. # 35, at 12; Dkt. # 43, at 5. The deferred prosecution agreement related to charges of securities fraud. Dkt. # 35, at 12; Dkt. # 43, at 5.

On April 8, 2013, Pettigrew sent a letter to Zahn notifying Zahn of Pettigrew's resignation, effective May 1, 2013.³ Dkt. # 2-3. The letter included Pettigrew's stated reasons for his resignation, which included lack of board oversight, failure to follow proper procedures, and Pettigrew's recent discovery of “previous charges and prosecutions against [Zahn] by other state regulators[.]” Id. On the same day, Pettigrew sent a letter to a fellow board member, Tinker Owens, advising Owens of his resignation and detailing the reasons for his departure. Dkt. # 35-11. Pettigrew also sent a letter to Irving Faught, Commissioner of the Oklahoma Department of Securities, advising Faught of Pettigrew's resignation and calling for an investigation of Zahn and FTFC. Dkt. # 2-5.

On April 9, 2013, Pettigrew sent a letter to John Doak, Commissioner of the Oklahoma Insurance Department, advising Doak of Pettigrew's resignation and explaining the concerns that lead to Pettigrew's resignation. Dkt. # 2-4. Pettigrew signed the letter as “Wayne Pettigrew, Board Member.” Id. Pettigrew also issued two press releases: one announcing his resignation, effective May 1, 2013 and one announcing the resignation of another FTFC board member, Shannon Young. Dkt. # 35-14; Dkt. # 35-15. The second press release stated that Pettigrew and Young were requesting an investigation by the Oklahoma Department of Securities and detailed Zahn's past “issues with securities department violations.” Dkt. # 35-16. Pettigrew explained that he took these actions because he had a fiduciary duty to protect the interests of FTFC stockholders. Dkt. # 35-3, at 4.

On July 19, 2013, in response to Pettigrew's letters and public statements, FTFC and Zahn filed suit against Pettigrew in Tulsa County District Court alleging breach of fiduciary duty, defamation, intentional interference with business relationships, intentional interference with prospective business relationships, fraud and deceit, outrage, and seeking punitive damages. Dkt. # 2-6. At the time, State Farm had issued two insurance policies to Pettigrew: a homeowners insurance policy and a personal liability umbrella policy. Dkt. # 2-1; Dkt. # 2-2. Pettigrew made demand on State Farm to defend and indemnify him in the state court action. Dkt. # 2-7. State Farm agreed to defend Pettigrew, subject to a reservation of rights. Id. State Farm then filed this action, seeking declaratory judgment that neither policy it issued to Pettigrew provides coverage for the loss at issue and that it has no duty to defend or indemnify Pettigrew in the state court action. Dkt. # 2. The parties have filed competing motions for summary judgment, each arguing that judgment as a matter of law is appropriate. Defendants assert that, as a matter of law, the umbrella policy covers the state court action and that no policy exclusions are applicable. Dkt. # 30, at 5; Dkt. # 52, at 21-22. State Farm asserts that it has no duty to defend or indemnify Pettigrew in the state court action because the umbrella policy exclusions preclude coverage as a matter of law. Dkt. # 35, at 33-36.

II.

Summary judgment pursuant to Fed. R. Civ. P. 56

is appropriate where there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Kendall v. Watkins, 998 F.2d 848, 850 (10th Cir.1993). The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient 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, 477 U.S. at 317, 106 S.Ct. 2548. “Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed ‘to secure the just, speedy, and inexpensive determination of every action.’ ” Id. at 327, 106 S.Ct. 2548 (quoting FED. R. CIV. P. 1).

“When the moving party has carried its burden under Rule 56(c)

, its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.’ ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citations omitted). “The mere existence of a scintilla of evidence in...