Metro. Prop. & Cas. Ins. Co. v. Westport Ins. Corp.
| Decision Date | 07 January 2015 |
| Docket Number | No. 8:13CV78.,8:13CV78. |
| Citation | 131 F.Supp.3d 888 |
| Parties | METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY, Assignee of the Claims of Agency One Insurance, Inc., and Pamela A. Siroky, Plaintiff, v. WESTPORT INSURANCE CORP., Defendant. |
| Court | U.S. District Court — District of Nebraska |
Christopher R. Miller, Miller, Grell Law Firm, Lincoln, NE, for Plaintiff.
Joyce F. Noyes, Robert P. Conlon, Walker, Wilcox Law Firm, Chicago, IL, Michael K. Huffer, Cassem, Tierney Law Firm, Omaha, NE, for Defendant.
The issue before the court in this insurance coverage dispute is whether Westport Insurance Corporation ("Westport" or "Defendant"), should have defended and indemnified Agency One Insurance, Inc. ("Agency One"), and its president, Pamela A. Siroky ("Siroky"), on claims concerning a homeowner's policy that was improperly written by Agency One's employee, Doug Inlay ("Inlay"). The claims against Agency One and Siroky were made by Metropolitan Property and Casualty Insurance Company ("Met P & C" or "Plaintiff"), which issued the homeowner's policy and which has since taken an assignment of Agency One's and Siroky's claims against Westport.
Westport has moved for summary judgment and argues there is no coverage under the errors and omissions policy it issued to Agency One because, shortly before it received notice of the Met P & C claim, Westport sent out a "Specified Individual Entity Exclusion" to exclude coverage for any claim arising out of the wrongful acts of Inlay. Westport requests that Plaintiff's action be dismissed and that a declaratory judgment be entered on count I of Westport's counterclaim, declaring that Westport does not owe any defense or indemnity obligation for claims asserted against Agency One and Siroky in an action brought by Met P & G in the United States District Court for the District of Northern Iowa. In response, Plaintiff argues (1) that Westport knew of an actual or potential claim regarding Inlay before it issued the exclusion, (2) that such a unilateral modification of an insurance contact is void under Nebraska law, and (3) that even if the exclusion is valid, Westport still had a duty to indemnify and defend Agency One and Siroky on claims that they negligently failed to train, monitor and supervise Inlay, and were otherwise negligent and breached their fiduciary duties to Met P & G. The motion for summary judgment will be denied.
Plaintiff has moved to dismiss count II of Westport's counterclaim, which was not pleaded at the time the motion for summary judgment was filed, and which requests a declaratory judgment that a consent judgment entered in the Iowa lawsuit is unenforceable because of collusion. Plaintiff argues that Westport's allegations fail to satisfy the particularized pleading requirements of Federal Rule of Civil Procedure 9(b). Westport responds (1) that Rule 9(b)is inapplicable and (2), in any event, that Plaintiff did not object to Westport's motion to amend the counterclaim to add count II. The motion to dismiss will be denied.
"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." Fed.R.Civ.P. 56(a). A material fact is one that "might affect the outcome of the suit under the governing law," and a genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In determining whether a genuine issue of material fact exists, the evidence is to be taken in the light most favorable to the nonmoving party, Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970), and the court must not weigh evidence or make credibility determinations, Anderson, 477 U.S. at 249, 106 S.Ct. 2505.
As required by the court's local rules, Westport's supporting brief (filing 91) includes a 78–paragraph "statement of material facts about which the moving party contends there is no genuine issue to be tried and that entitles the moving party to judgment as a matter of law." NECivR 56.1(a)(1).1 Plaintiff's opposing brief (filing 93) includes an appropriate response to each paragraph. See NECivR 56.1(b)(1).2 In addition, Plaintiff has included a separate, 74–paragraph "statement of material facts about which there is no dispute," and Westport has responded to each paragraph of this statement in its reply brief (filing 100). The additional facts stated by Plaintiff,3 and Westport's response, are considered by the court pursuant to Federal Rule of Civil Procedure 56(c)(1). Upon review of the briefs and referenced materials, the court finds there is no genuine dispute regarding the following facts stated by the parties.
1. Agency One is an independent insurance agency located in David City, Nebraska. Agency One has been in business since 1996 and places personal, business and financial insurance for its clients through a select number of carriers. See Ex. A1 to the Declaration of Joyce F. Noyes ("Noyes Decl."), attached as Ex. A to Index of Evidence in support of Westport's motion for summary judgment (filing 92), at 13:2–11, 18:11–15.
2. Siroky is and has been the President, manager and part-owner of Agency One since 1996. Id. at 18:11–23, 68:12–17. Siroky works and has always worked out of the David City, Nebraska office of Agency One. Id. at 13:2–6, 58:3–6. Before 1996, Siroky worked in the insurance business for 11 years. Id. at 13:9–11.
3. In early 2010, Siroky was introduced to Inlay. Id. at 55:13–22. Inlay had been working in Sioux City, Iowa as an agent for Liberty Mutual Insurance Company. Id. at 56:14–24, 58:15–17. Inlay advised Siroky that he was dissatisfied and was looking for an opportunity to work as an independent agent, placing policies with different insurance companies. Id. at 57:2058:2.
4. Siroky met with Inlay on two additional occasions, the first at his office in Sioux City and the second in Omaha. Id. at 59:9–16.
5. Siroky and Inlay discussed ways Inlay could expand Agency One's business, including Inlay writing Iowa business for carriers with whom Agency One was appointed, such as Metropolitan Property and Casualty Insurance Company ("Met P & C") Id. at 63:10–64:10, 67:19–68:3; Ex. A3 to the Noyes Decl. at 2. It was expected that Inlay could expand Agency One's business by placing policies in Iowa where Siroky was not licensed. Ex. A1 to Noyes Decl. at 67:19–68:3.
6. Based at least in part upon the conclusion that Inlay could increase the revenues of Agency One, Siroky agreed that Inlay could join her agency and write insurance policies in Iowa and Nebraska under the Agency One name from his office in Iowa. Ex. A1 to Noyes Decl. at 67:19–68:11; Ex. A3 to Noyes Decl. at 2. To that end, Siroky and Inlay entered into an Agreement dated May 1, 2010. See Ex. A4 to Noyes Decl. The Agreement stated that Agency One would retain 3% of all commissions earned on policies written by Inlay. Id. at WIC00317.
7. At the time, Inlay had insurance licenses in Nebraska, Iowa and South Dakota. Ex. A1 to Noyes Decl. at 62:23–63:2.
8. After May 1, 2010, Inlay was appointed as an authorized agent with all of the carriers with whom Agency One had appointments to produce and write policies. Ex. A5 to Noyes Decl. at NDOI0000004932.
9. In 2010, the Prudential Insurance Company of America filed suit in the United States District Court for the Northern District of Iowa in the matter styled The Prudential Insurance Company of America, et al v. Douglas E. Inlay, Case No. 10–4072. In that case, Prudential sought a restraining order against Inlay for alleged misappropriation of trade secrets in connection with Inlay's employment by Agency One ("the Prudential case"). Ex. A6 to Noyes Decl. at NDOI000000271–NDOI000000274.4
10. By letter dated July 29, 2010, Siroky received a copy of an Order entered by the Court in the Prudential case. Id. at NDOI000000270. Counsel for Prudential advised Siroky that Prudential had obtained a restraining order which they construed to bind Agency One. Id. Agency One did not notify its errors and omissions carrier, Westport, of the Prudential claim. Ex. A1 to Noyes Decl. at 133:5–9.5
11. Prior to April 2010, the Iowa Department of Insurance ("IDOI") had been investigating Inlay's conduct as a licensed insurance producer. See Ex. A7 to Noyes Decl., AgOne000022–AgOne000027.
12. The IDOI initially revoked Inlay's Iowa insurance producer's license on May 28, 2010. Ex. A37 to Noyes Decl. at NDOI0000002441.
13. On July 16, 2010, the Iowa Department of Inspections and Appeals issued an Amended Proposed Decision that Inlay's Iowa insurance producer's license should be revoked. Ex. A7 to Noyes Decl. at AgOne000027. The Amended Proposed Decision stated that the issue before the Iowa Department of Insurance was, in part, whether Inlay had made misrepresentations on insurance applications. Id. at AgOne000022.
Ex. A8 to Noyes Decl. at AgOne000020–AgOne000021.
15. Inlay was placing insurance policies through Agency One during the...
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