AKH Co. v. Universal Underwriters Ins. Co., Case No. 13-2003-JAR-KGG
| Decision Date | 07 October 2019 |
| Docket Number | Case No. 13-2003-JAR-KGG |
| Citation | 428 F.Supp.3d 536 |
| Parties | AKH COMPANY, INC., Plaintiff, v. UNIVERSAL UNDERWRITERS INSURANCE CO., Defendant, Universal Underwriters Insurance Co., Counter-Claimant v. AKH Company, Inc., Andonian Enterprises, Inc., 55, Inc., TireNetwork Group, Inc., Trade Co., LLC, Andy Andonian, and Hratch Andonian, Counter-Defendants. |
| Court | U.S. District Court — District of Kansas |
Anne Gepford Beville, James D. Myers, Richard F. Lombardo, Shaffer Lombardo Shurin PC, Brian E. Sobczyk, Scott C. Hecht, Stinson Leonard Street, LLP, Kansas City, MO, Craig Aronson, Pro Hac Vice, Vatche Chorbajian, Pro Hac Vice, Law Offices of Vatche Chorbajian, APC, Rancho Santa Fe, CA, for Plaintiff/Counter-Defendant AKH Company, Inc.
Richard F. Lombardo, Shaffer Lombardo Shurin PC, Kansas City, MO, for Counter-Defendants 55 Inc., Andy Andonian, Hratch Andonian, Andonian Enterprises, TireNetwork Group, Inc.
Alanna G. Clair, Pro Hac Vice, Shari L. Klevens, Pro Hac Vice, Dentons US, LLP, Washington, DC, Derek H. MacKay, Knight Nicastro, LLC, Lisa M. Krigsten, Dentons US, LLP, Kansas City, MO, for Defendant/Counter-Claimant.
This is a commercial liability insurance coverage dispute filed by AKH Company, Inc. ("AKH") against its insurance carrier, Universal Underwriters Insurance Company ("UUIC"), arising out of an underlying trademark infringement action between AKH and Reinalt-Thomas Corporation d/b/a Discount Tire ("RT") that UUIC defended and settled under a reservation of rights ("RT litigation"). UUIC counterclaimed, and both parties amended to assert various tort and contract theories. In 2018, the Court allowed UUIC leave to amend to add two counterclaims against AKH and several new parties for alter ego liability and fraudulent transfer.1 The new claims were based on allegations that after this lawsuit was filed, AKH diverted its assets to these related parties to avoid any potential judgment in this case. AKH alleges five claims against UUIC in contract and tort; UUIC alleges 13 counterclaims against AKH in contract and tort, in addition to its fraudulent transfer and alter ego liability claims against AKH and the new Counter-Defendants.
Before the Court are the parties' cross-motions for summary judgment (Docs. 638, 632, 634). AKH moves for summary judgment on AKH Counts I—III, and on all of UUIC's counterclaim counts. UUIC moves for summary judgment on all remaining AKH counts,2 and on UUIC Counts VI, XII, XIV, and XV. AKH and the other Counter-Defendants move for partial summary judgment on UUIC Counts XIV and XV. These motions are fully briefed and the Court is prepared to rule. As described more fully below, the Court grants in part and denies in part AKH and UUIC's cross-motions for summary judgment. AKH's motion is denied on AKH Counts I—III, as well as on UUIC Counts I–IV, and VII–XV. AKH's motion is granted as to UUIC Counts V and VI. UUIC's motion is granted as to all remaining AKH claims—Counts I–IV and VI—and is otherwise denied. The Counter-Defendants' motion for partial summary judgment is denied.
Summary judgment is appropriate if the moving party demonstrates that there is no genuine dispute as to any material fact and that it is entitled to judgment as a matter of law.3 In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party.4 "There is no genuine issue of material fact unless the evidence, construed in the light most favorable to the nonmoving party, is such that a reasonable jury could return a verdict for the nonmoving party."5 A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim."6 An issue of fact is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the non-moving party."7
To prevail on a motion for summary judgment on a claim upon which the moving party also bears the burden of proof at trial, the moving party must demonstrate "no reasonable trier of fact could find other than for the moving party."8 The facts "must be identified by reference to an affidavit, a deposition transcript, or a specific exhibit incorporated therein."9 Rule 56(c)(4) provides that opposing affidavits must be made on personal knowledge and shall set forth such facts as would be admissible in evidence.10 The non-moving party cannot avoid summary judgment by repeating conclusory opinions, allegations unsupported by specific facts, or speculation.11 "Where, as here, the parties file cross-motions for summary judgment, we are entitled to assume that no evidence needs to be considered other than that filed by the parties, but summary judgment is nevertheless inappropriate if disputes remain as to material facts."12
Finally, summary judgment is not a "disfavored procedural shortcut;" on the contrary, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action."13 In responding to a motion for summary judgment, "a party cannot rest on ignorance of facts, on speculation, or on suspicion and may not escape summary judgment in the mere hope that something will turn up at trial."14
The following material facts are either stipulated, uncontroverted, or viewed in the light most favorable to the nonmoving party.15
AKH operates under the name "Discount Tire Centers," selling and installing tires through its retail garages in California and on its Internet website. AKH registered the domain name www.discounttires.com on July 20, 1997. AKH operated its www.discounttires.com website from AKH's office located in California from July 1, 1997 to at least May 1, 2009. UUIC, AKH's insurance company during the time frame at issue in this lawsuit, is a subsidiary of Zurich American Insurance Company ("Zurich").
UUIC issued a commercial liability policy ("the Policy") to AKH for the coverage period of May 1, 2007 to May 1, 2008. The Policy was renewed for five consecutive one-year periods from May 1, 2008 to May 1, 2013. The Policy provides that UUIC will defend and indemnify AKH against a covered "SUIT," subject to its terms, conditions, provisions, and exclusions. The Policy includes Garage Unicover Coverage Part 500 (Edition 3-98) ("1998 Garage Coverage"). The 1998 Garage Coverage provides coverage for "DAMAGES" because of "INJURY" caused by an "OCCURRENCE" arising out of "GARAGE OPERATIONS."16 "In addition to our limits for INJURY ..., WE will also pay: (a) all costs and expenses in defending an INSURED, and interest on that part of the judgment covered by this Coverage Part within OUR limits, that accrues after entry of any judgment in any SUIT WE defend, but only until WE have paid, offered to pay or deposited in court that part of the judgment that is within OUR limit."17
The Policy also includes Umbrella Coverage Part 980 (Edition 3-98) ("1998 Umbrella Coverage"). The 1998 Umbrella Coverage provides coverage for a "LOSS" in excess of any "UNDERLYING INSURANCE."18 The Umbrella Coverage provides that "WE WILL ALSO PAY – If there is no UNDERLYING INSURANCE or any other insurance available to an INSURED, and coverage is afforded by this Coverage Part (except for the INSURED'S retention) WE will pay, in addition to OUR limit: (a) all costs and expenses in defending an INSURED, and interest on that part of the judgment covered by this Coverage Part within OUR limits, that accrues after entry of any judgment in any SUIT WE defend, but only until WE have paid, offered to pay or deposited in court that part of the judgment that is within OUR limit."19
The Policy further provides: "Each INSURED must cooperate and assist US in the investigation, settlement, defense, enforcement of contribution or indemnification,"20 and states that the insurer has "no duty to provide coverage under any Coverage Part unless [the insured has] fully complied with all Conditions applicable to that Coverage Part."21
The Policy's limits of liability are $5 million.
On May 14, 2010, RT filed suit against AKH in the United States District Court for the District of Arizona ("RT action"). RT's action alleged claims of trademark infringement, trademark dilution and false designation of origin as to the "DISCOUNT TIRE" mark under the Lanham Act, a violation of the Anticybersquatting Consumer Protection Act ("ACPA"), and Arizona state law claims for trademark infringement, dilution, and unfair competition. On October 22, 2010, AKH filed its own complaint against RT in the United States District Court for the Central District of California ("AKH action"). AKH's action alleged claims for breach of contract and declaratory relief related to a 1991 Settlement Agreement between AKH and RT relating to the use of the "DISCOUNT TIRE" mark. AKH also alleged claims for unfair competition, and trademark infringement under state and federal law. On February 9, 2011, the two matters were consolidated in the Central District of California ("RT litigation").
During the RT litigation, CEO Michael Schaeper, Hratch Andonian, Sergio Andonian, and Andy Andonian were all executives of AKH authorized to act on its behalf.
AKH tendered to UUIC its defense and indemnity of RT's First Amended Complaint on December 9, 2011. By letters dated January 5, 2012 and February 29, 2012, UUIC agreed to defend AKH as to RT's claims against AKH, subject to a reservation of...
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