Allstate Ins. Co. v. Punturo
| Decision Date | 09 August 2019 |
| Docket Number | Case No. 1:18-CV-326 |
| Parties | ALLSTATE INSURANCE COMPANY, Plaintiff, v. Bryan PUNTURO, et al., Defendants. |
| Court | U.S. District Court — Western District of Michigan |
Matthew A. Stone, Michael M. Wachsberg, Pedersen Keenan King Wachsberg & Andrzejak PC, Commerce Township, MI, for Plaintiff.
Jonathan R. Moothart, Moothart & Sarafa, PLC, Williamsburg, MI, Brace Edward Kern, BEK Law, PLC, Traverse City, MI, for Defendant.
Plaintiff, Allstate Insurance Company, filed this diversity case against Bryan and Fawn Punturo, B & A Holdings, LLC d/b/a Parkshore Resort, and Brace Kern, seeking a declaratory judgment that Allstate does not owe Defendant Kern a duty to indemnify for a lawsuit pending in Michigan state court against Kern—an employee and the principal of Bek Law, PLC—and others. In particular, Allstate alleges that Business Owners Policy No. 648239769, which it issued to Bek Law, PLC, provides no coverage for the claims asserted in the underlying lawsuit.
Pursuant to the Court's April 1, 2019, Order (ECF No. 24), Allstate has filed a motion for summary judgment. (ECF No. 26.) Kern has filed a response, to which Allstate has replied. In addition, the Punturos and B & A Holdings have also responded, and Allstate has filed a reply. Accordingly, the matter is ready for decision.1
For the reasons that follow, the Court will grant Allstate's motion and issue the requested declaratory judgment.
On or about February 16, 2017, Bryan Punturo, Fawn Punturo, and B&A Holdings, LLC (collectively the Punturos), filed a complaint against Defendant Kern and Sauburi Boyer and Danielle Kort (formerly Danielle Boyer), alleging state-law claims for defamation, false light invasion of privacy, and tortious interference with business relations. In a separate count, Fawn Punturo alleged a derivative claim for loss of consortium. (ECF No. 1-1.) B&A Holdings operates a hotel and conference facility on East Grand Traverse Bay known as the ParkShore Resort. Bryan Punturo owns 50% of B&A Holdings.
The Punturos allege that Sauburi Boyer operated a parasailing business from ParkShore property from approximately 2003–2006. In 2006, Boyer moved his parasailing business from ParkShore to a new location at another hotel. From that time until the summer of 2013, Casey Punturo, Bryan Punturo's son, operated a parasailing business from ParkShore in competition with Boyer's business. (Id. at PageID.11.) According to the Punturos, in 2014, Boyer began attempting to limit competition in the parasailing business by, among other things, purchasing the assets of Casey Punturo's business and obtaining non-compete agreements with other potential competitors. However, that same year, Boyer became financially overextended and defaulted on his purchase agreement with Casey Punturo and on his lease agreement with Bryan Punturo. (Id. at PageID.12.) Bryan Punturo thereafter filed suit against Boyer to collect the amount due on the lease.
Instead of responding to Bryan Punturo's lawsuit, Boyer sought advice from Defendant Kern, a lawyer practicing in the Traverse City area. Upon Kern's advice, Boyer contacted the Grand Traverse County Prosecutor's Office and, subsequently, the Michigan Attorney General, accusing Punturo of violating Michigan's Antitrust Reform Act. In 2016, the Michigan Attorney General and the Michigan State Police raided ParkShore's offices and seized the hard drive from Punturo's computer. Eventually, the Michigan Attorney General filed a criminal case against Punturo charging him with extortion, instead of antitrust violations. In addition, earlier in 2016, Kern, representing Boyer, sued Punturo and ParkShore in state court alleging antitrust violations and other claims and seeking $781,500 in damages plus attorney's fees. The state court dismissed Boyer's civil suit against Punturo without Punturo or ParkShore filing a responsive pleading. (Id. at PageID.13.) The Grand Traverse County District Court ultimately dismissed the criminal extortion case against Punturo following the preliminary examination. (Id. at PageID.14.)
While the criminal extortion case and Boyer's civil antitrust case against Punturo were pending, Kern and the Boyers made numerous statements to the media regarding both cases, some of which expressly accused Punturo of violating state anti-trust laws by engaging in unfair competition and extortion. (Id. at PageID.14–17.) In February 2017, the Punturos' counsel sent Kern and Boyer demands for retraction, but Kern and Boyer failed to retract their statements. (Id. at PageID.22.)
Allstate issued a Business Owners Policy, No. 648239769, to Bek Law, PLC. Kern, as an employee of Bek Law, is an insured under the Policy. After receipt of the Punturos' complaint in the underlying litigation, Kern tendered the defense to Allstate and his errors and omissions insurance carrier. The Punturos' claims in the underlying litigation fall within the Policy's coverage period. Allstate agreed to defend Kern and Bek Law, PLC, subject to a reservation of rights. (ECF No. 1 at PageID.3.)
Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56. Material facts are facts which are defined by substantive law and are necessary to apply the law. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A dispute is genuine if a reasonable jury could return judgment for the non-moving party. Id.
The court must draw all inferences in a light most favorable to the non-moving party, but may grant summary judgment when "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Agristor Fin. Corp. v. Van Sickle , 967 F.2d 233, 236 (6th Cir. 1992) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) ).
The issue presented by the instant motion is whether the Policy provides coverage for the Punturos' claims in the underlying litigation. Because the instant case is a diversity action, the court must apply the substantive law of the forum state, including the law governing interpretation and enforcement of insurance policies. Alticor, Inc. v. Nat'l Union Fire Ins. Co. of Pa. , 916 F. Supp. 2d 813, 821 (W.D. Mich. 2013) ; see also Savedoff v. Access Grp., Inc. , 524 F.3d 754, 762 (6th Cir. 2008) (). No party contends that the Court should apply the law of a state other than Michigan in deciding Allstate's motion.
Michigan law construes insurance contracts generally in the same manner as other contracts. Farmers Ins. Exch. v. Kurzmann , 257 Mich. App. 412, 417, 668 N.W.2d 199, 203 (2003). An insurance policy must be read as a whole in order to discern and effectuate the parties' intent. Id. at 418, 668 N.W.2d at 203. Courts must accord the terms of a policy their plain and ordinary meaning. Auto-Owners Ins. Co. v. Churchman , 440 Mich. 560, 566, 489 N.W.2d 431, 433-34 (1992). "Any clause in an insurance policy is valid as long as it is clear, unambiguous and not in contravention of public policy." Raska v. Farm Bureau Ins. Co. , 412 Mich. 355, 361-62, 314 N.W.2d 440, 440 (1982). An insurance policy is deemed ambiguous when its provisions are capable of two or more interpretations that conflict. Fromm v. Meemic Ins. Co. , 264 Mich. App. 302, 311, 690 N.W.2d 528, 533 (2004). Ambiguous insurance policies and exclusions are construed against the insurer. See Bruce v. Cuna Mut. Ins. Soc'y , 219 Mich. App. 57, 60, 555 N.W.2d 718, 720 (1996). However, a clear and specific exclusion must be given effect, because an insurance company cannot be held liable for risks it did not agree to assume. South Macomb Disposal Auth. v. Am. Ins. Co. , 225 Mich. App. 635, 653, 572 N.W.2d 686, 695 (1997).
Divining whether an insurance policy provides coverage entails a two-step process. First, a court must determine if the insurance policy provides coverage to the insured. Heniser v. Frankenmuth Mut. Ins. Co. , 449 Mich. 155, 172, 534 N.W.2d 502, 510 (1995). If so, the court must determine whether an exclusion negates the coverage. Id. The insured bears the burden of establishing that the claim falls within the terms of the policy. Id. However, the insurer must prove that an exclusion precludes coverage. Id. at 161 n.6, 534 N.W.2d at 505 n.6.
In this case, coverage under the Policy for business liability is addressed in Section II – Liability, which provides, in pertinent part:
A. Coverages
(ECF No. 1-2 at PageID.128.)
In their complaint, the Punturos allege that they were injured by Kern's statements. As such, the only possible coverage the Policy could provide Kern is for "personal and advertising injury," as there is no reasonable basis to conclude that the Punturos' claims allege "bodily injury" or "property damage."2 At a minimum, the defamation and false light invasion of privacy claims are the types of offenses that come within the Policy's "personal and advertising injury" coverage. (Id. at PageID.142.) While, at first look, it would appear that the Policy...
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