Kent & Smith Holdings, L.L.C. v. HDI Global Ins. Co., CIVIL ACTION 16-333-SDD-RLB
| Decision Date | 25 September 2018 |
| Docket Number | CIVIL ACTION 16-333-SDD-RLB |
| Citation | 344 F.Supp.3d 878 |
| Parties | KENT & SMITH HOLDINGS, L.L.C. v. HDI GLOBAL INSURANCE COMPANY |
| Court | U.S. District Court — Middle District of Louisiana |
Thomas Richard Temple, Jr., Jordan L. Faircloth, Carroll Devillier, Jr., Breazeale, Sachse & Wilson, LLP, Baton Rouge, LA, Jeremy S. LaCombe, LaCombe Law Firm, LLC, New Roads, LA, Richard J. Ward, III, Clayton, Fruge & Ward, Port Allen, LA, for Kent & Smith Holdings, L.L.C.
George Davidson Fagan, Anton L. Hasenkampf, McNeil J. Kemmerly, Leake & Andersson LLP, Margaret F. Swetman, Proskauer Rose LLP, New Orleans, LA, for HDI Global Insurance Company.
RULING
This matter is before the Court on the Cross-Motions for Summary Judgment by Plaintiff Kent & Smith Holdings, L.L.C. ("Plaintiff")1 and Defendant, HDI Global Insurance Company ("Defendant").2 Plaintiff and Defendant have filed Oppositions3 to each other's motions, and Defendant filed a Reply.4 For the following reasons, the Court finds that the Motion by Defendant should be GRANTED, and the Motion by Plaintiff should be DENIED.
Plaintiff is a Louisiana-based construction support and logistics company that performs project work for contractors throughout the Gulf South.5 Defendant issued Plaintiff a general commercial liability insurance policy.6 The stated policy period was July 1, 2014 to July 1, 2015.
In October 2015, Lanny and Valerie Lewis sued Plaintiff in the 19th Judicial Court for the Parish of East Baton Rouge. The Lewises' Petition claims that they agreed to let Plaintiff deposit dirt from an excavation project on their land, on the condition that the dirt was free of "big pieces of concrete"7 and other debris. When the Lewises later found "piles of crap"8 and concrete on their property, they allegedly asked Plaintiff to remove the unwanted debris. When the parties failed to agree on a plan to remove the debris, the Lewises filed their suit, claiming that Plaintiff deposited debris-laden dirt contra the terms of their oral contract. The Lewises' alleged damages are twofold. First, they seek a judgment "declaring [Plaintiff] in breach of contract and requiring specific performance for the removal of all concrete, pipe, re-bar and other trash from the property,"9 or, in the alternative, "a money judgment for the expense of removing the debris deposited on the property by defendants,"10 which they estimate would cost $150,000.11 Second, the Lewises seek a "money judgment for ... lost profits and depreciated value,"12 alleging that Plaintiff's failure to remove the debris caused T4 Group, a developer who had agreed to purchase the land for more than $2.7 million, to terminate their purchase agreement with the Lewises.13
On March 7, 2016, after examining the allegations in the Lewis lawsuit, Defendant denied Plaintiff's coverage request, informing Plaintiff of its conclusion that the Lewises' allegations did not set forth claims that were coverable under the policy and that even if they did, coverage was excluded by the "Damage to Impaired Property Or Property Not Physically Injured" Exclusion in the Policy.14 Following that denial, Plaintiff filed a Petition for Declaratory Judgment in the Eighteenth Judicial District Court for the Parish of West Baton Rouge, requesting a judgment of coverage and a defense under the policy, plus extracontractual penalties for Defendant's alleged arbitrary and capricious declination of coverage. Defendant then removed the matter to this Court under 28 U.S.C. § 1332.15
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."16 In assessing whether a dispute to any material fact exists, the Court considers all of the evidence in the record but must refrain from making credibility determinations or weighing the evidence.17 A party moving for summary judgment "must ‘demonstrate the absence of a genuine issue of material fact,’ but need not negate the elements of the nonmovant's case."18 If the moving party satisfies its burden, "the non-moving party must show that summary judgment is inappropriate by setting ‘forth specific facts showing the existence of a genuine issue concerning every essential component of its case.’ "19 However, the non-moving party's burden "is not satisfied with some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence."20
Notably, "[a] genuine issue of material fact exists, ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ "21 All reasonable factual inferences are drawn in favor of the nonmoving party.22 However, 23 "Conclusory allegations unsupported by specific facts ... will not prevent the award of summary judgment; ‘the plaintiff [can]not rest on his allegations ... to get to a jury without any "significant probative evidence tending to support the complaint." ’ "24
Defendant asserts that it is entitled to summary judgment regarding its duty to defend "because no coverage exists pursuant to the HDI Policy for claims asserted against [Plaintiff] in the Underlying Action."25 Because subject matter jurisdiction in this case is based on diversity of citizenship, the Court applies the law of the forum state. In Louisiana, the duty to defend analysis 26 Under Louisiana's "Eight Corners Rule," duty to defend must be analyzed by applying the allegations of the complaint without resort to extrinsic evidence.27 The insurer has a duty to defend unless the allegations in the underlying complaint "unambiguously preclude coverage."28 Summary judgment declaring a lack of coverage under an insurance policy is not proper unless there is no reasonable interpretation of the policy, when applied to the undisputed material facts shown by the evidence supporting the motion, under which coverage could be afforded.29 So, the duty to defend inquiry turns on (1) whether the Lewis lawsuit alleged a potentially covered event that would trigger Defendant's duty to defend under the Policy, and (2) whether that alleged triggering event fell within an exclusion of the policy.
1. The Policy Language
Plaintiff argues that the Policy provides coverage in connection with the Lewis lawsuit because the dumping of debris caused "property damage" that is covered under the Policy. Specifically, the Policy states that Defendant "will pay those sums the insured becomes legally obligated to pay as damages because of ... ‘property damage’ to which this insurance applies."30 The Policy defines "property damage" as follows:
Plaintiff contends that both prongs of the definition could apply to the Lewises' allegations.
The term "physical injury" in Clause (a) is not defined in the Policy.32 In Plaintiff's view, the Lewis allegations fit comfortably within a plain reading of the term "physical injury" because the dumping of unwanted debris "improperly altered"33 the Lewises' land. The term "improper alteration" does not appear in the Policy, and Plaintiff provides no support for its contention that "improper alteration" is synonymous with "physical injury."
Faced with a similar issue, the Louisiana First Circuit Court of Appeal relied on Webster's Dictionary to clarify the meaning of "physical injury" where it was not defined in an insurance policy. " ‘Physical’ is ‘of or relating to natural or material things as opposed to things mental, moral, spiritual, or imaginary’;" the court wrote, "and ‘injury’ means ‘an act that damages, harms, or hurts.’ "34 The presence of the debris on the Lewises' land is certainly physical. But Plaintiff has not shown that there is any allegation of injury to the land itself.
Plaintiff further argues that the Lewises did not need to explicitly assert a claim for "property damage" as such in order to trigger coverage for property damage. It is true that the law does not require a formal recitation of the words "property damage," but that does not change the fact that the Lewis lawsuit fails to allege any physical harm beyond the temporary presence of the unwanted debris. In fact, Plaintiff points to no allegation in the Lewis Petition that specifically alleges a physical injury to their land.
In comparison, allegations that Louisiana courts have found triggered coverage for "property damage" due to "physical injury" include a claim for "physical degrading of the infrastructure"35 at a plant, "damage to piping and other plant components due to [a] pump's excessive vibration,"36 damage to concrete caused by the removal of defective bolts,37 and homes "damaged by excessive differential settlement of the foundations."38 Similarly, a petition that described "damage to the gypsum wall board panels, tape and joint compound, interior paint finishes, vinyl base boards, and the carpet"39 led the Louisiana Fourth Circuit Court of Appeals to conclude that "[the plaintiff] sufficiently alleged that there may have been damage to property ... thereby triggering coverage under the...
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