Alticor, Inc. v. Nat'l Union Fire Ins. Co. of Pa., No. 1:07–cv–1079.

CourtUnited States District Courts. 6th Circuit. United States District Court (Western District Michigan)
Writing for the CourtPAUL L. MALONEY
Citation916 F.Supp.2d 813
PartiesALTICOR, INC., Amway Corp., and Quixtar, Inc., Plaintiffs, v. NATIONAL UNION FIRE INSURANCE CO. OF PENNSYLVANIA, Defendant.
Decision Date04 January 2013
Docket NumberNo. 1:07–cv–1079.

916 F.Supp.2d 813

ALTICOR, INC., Amway Corp., and Quixtar, Inc., Plaintiffs,
v.
NATIONAL UNION FIRE INSURANCE CO.
OF PENNSYLVANIA, Defendant.

No. 1:07–cv–1079.

United States District Court,
W.D. Michigan,
Southern Division.

Jan. 4, 2013.


[916 F.Supp.2d 815]


D. Andrew Portinga, Thomas R. Wurst, Miller Johnson PLC, Grand Rapids, MI, for Plaintiffs.

[916 F.Supp.2d 816]

Charles W. Browning, Jeffrey C. Gerish, Plunkett Cooney, Bloomfield Hills, MI, for Defendant.


OPINION AND ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, GRANTING IN PART PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT, AND DENYING DEFENDANT'S CONTINGENT MOTION FOR PARTIAL SUMMARY JUDGMENT

PAUL L. MALONEY, Chief Judge.

In this lawsuit, the Plaintiffs seek insurance coverage under a specific policy that was in effect between 1998 and 1999. Before this Court are three motions for summary judgment.1 Defendant National Union Fire Insurance Company of Pittsburgh, Pennsylvania (“National Union” or “Defendant”) filed a motion for summary judgment and brief in support.2 (ECF. No. 26 “Defendant's Motion” and ECF No. 32 “Defendant's Brief.”) Plaintiffs Alticor, Inc., Amway Corp., and Quixtar, Inc. (collectively “Plaintiffs”) filed a cross motion for summary judgment and a brief in support.3 (ECF. No. 28 “Plaintiffs' Motion.” and ECF No. 33 “Plaintiffs' Brief.”) National Union also filed a contingent motion for partial summary judgment and supporting brief. 4 (ECF No. 31 “Contingent Motion” and ECF No. 32 “Contingent Brief.”) National Union requests the Court resolve the Contingent Motion only in the event that it is necessary, which depends on the outcome of the first two motions for summary judgment. A hearing on the three motions was held on November 20, 2012.

The ultimate issue underlying this litigation and these motions is whether, under the 1998–1999 Commercial General Liability policy issued by National Union to Amway, National Union has a duty to defend Amway on the basis of an amended complaint filed in 2006 in a lawsuit in the United States District Court for the Western District of Missouri. The Court finds National Union's duty to defend was triggered.

LEGAL FRAMEWORK

Summary judgment is appropriate only if the pleadings, depositions, answers to interrogatories and admissions, together with the affidavits, show there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Tucker v. Tennessee, 539 F.3d 526, 531 (6th Cir.2008). The burden is on the moving party to show that no genuine issue of material fact exists, but that burden may be discharged by pointing out the absence of evidence to support the nonmoving party's case. Fed.R.Civ.P. 56(c)(1); Bennett v. City of Eastpointe, 410 F.3d 810, 817 (6th Cir.2005) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The facts, and the inferences drawn from them, must be viewed in the light most favorable to the nonmoving party.

[916 F.Supp.2d 817]

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (quoting Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). Once the moving party has carried its burden, the nonmoving party must set forth specific facts in the record showing there is a genuine issue for trial. Matsushita, 475 U.S. at 574, 106 S.Ct. 1348;Jakubowski v. Christ Hosp., Inc., 627 F.3d 195, 200 (6th Cir.2010) (“After the moving party has met its burden, the burden shifts to the nonmoving party, who must present some ‘specific facts showing that there is a genuine issue for trial.’ ” (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505)). The question is “whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251–252, 106 S.Ct. 2505.

FACTUAL BACKGROUND

The following facts are not in dispute and find support in the record or in relevant litigation history. On August 5, 2003, Plaintiffs were sued in the United States District Court for the Western District of Missouri. See Nitro Distrib., Inc. v. Alticor, Inc., Amway Corp., and Quixtar, Inc., No. 03–3290–cv–RED (W.D.Mo.) (“ Nitro ”). As a result of the Nitro action, coverage was requested under a Commercial General Liability (“CGL”) policy, and was declined.5 On January 6, 2005, National Union and Illinois National Insurance Company (“Illinois National”) filed suit in this district seeking a declaratory judgment that they had no obligation to provide coverage in the Nitro action.6See National Union Fire Ins. Co. of Pittsburgh, Pennsylvania v. Alticor, Inc., No. 1:05–cv–15, 2005 WL 2206461 (W.D.Mich.) (Enslen S.J.) (“ Alticor I ”). Among the factual allegations in the Nitro lawsuit, the plaintiffs alleged that the defendants “disparaged” them.7 (Defendant's Brief. Ex. I “ Nitro Complaint.”) On cross summary judgment motions, Judge Richard Enslen found that the disparagement allegation did not trigger coverage under the personal or advertising injury provisions of the insurance policies. Alticor I, 2005 WL 2206461, at *3 (W.D.Mich. Sept. 12, 2005). Judge Enslen concluded that the disparagement allegation was made in the context of the lawsuit's antitrust claims brought under the Sherman Act, and did not “even arguably” allege a separate claim for libel, slander, or product disparagement. Id. The defendants appealed.

Approximately one year later, on September 5, 2006, the plaintiffs in the Nitro action filed an amended complaint. (ECF No. 1–2 Ex. A to Compl.Nitro Amended Complaint.”) The Nitro Amended Complaint added a claim for injurious falsehood. ( Id. ¶¶ 216–22.) The relevant portions of the amended complaint, referring to the injurious falsehood allegations, are included here.

108. The involvement of Amway in BSMs with the kingpins as part of this ongoing conspiracy is further amply illustrated

[916 F.Supp.2d 818]

in dealings with Team In Focus. In mid–2000, a group of Amway Diamond distributors in the Yager/Gooch/Childers Amway line of sponsorship met in Chicago to address their common concern about the tool system and the abuses and inequities they had experienced as tool distributors in the Gooch Pro Net Pyramid. These distributors ultimately decided to form what became known as Team In Focus (“TIF”), and essentially break away from Gooch. Thus this breakaway would create yet another tool system or pyramid, and once again, Amway was involved.

118. Thereafter, on knowledge and belief, the Amway kingpins and the IBOIAI Board applied pressure on Amway who recanted, withdrawing its support of TIF, including its commitment to supply tools.

122. Ultimately, on April 19, 2002, after TIF attempted to implement its own tool “system” for its downline distributors and compete directly with Amway and the kingspins for BSMs, Amway terminated the Amway distributorships of the TIF leadership principals for purported “antitrust violations' in setting up their own tool systems. Other TIF founders thereafter resigned their distributorships with Amway in protest. Amway then forced the dispute into its arbitration process before JAMS, and that is where it ended, shrouded in secrecy. The TIF distributors were out of Amway and out of the Amway-related tool business. Because the TIF distributors should have been Nitro, West Palm and U–Can–II's BSMs customers, those Plaintiffs were also harmed.

128. About this same time (fall 2002), Quixtar responded to the requests of the principal Diamonds of Plaintiffs Nitro, West Palm (Stewart) and U–Can–II (Harts) to be permitted to resume leadership of their downlines in the Amway business (after being boycotted out of the tool and function business), so as to enable Plaintiffs to attempt to resume their participation in functions and thus access tool sales as well. In letter of October 25, 2002, Quixtar stated:

“[we] have determined at this time, allowing you to service the downline would not be in the best interest of the involved IBOs, Quixtar or the Quixtar business ... Furthermore, as a result of the current dispute between you and the other IBOs, it is difficult for us to imagine how you could be qualified to bring the requisite harmony, leadership and teamwork that these groups will require. While no one disputes your right to seek redress for your concerns, the manner in which you have chosen to do so has resulted in a very public and acrimonious airing of this dispute.

The “dispute” refers to a dispute of BSMs. The “very public and acrimonious airing of this dispute” refers to the Plaintiffs' refusal to submit to the inherently biased Amway arbitration process with JAMS, which this Court has now found to be unenforceable. Ironically, Ken Stewart of Nitro and West Palm remains an Amway “qualified Diamond,” yet Amway has made sure he is kept out of any meaningful involvement in the training and motivation of distributors via the BSMs business. By keeping them on the sidelines of the business, Amway could ensure that Stewart and the Harts could not re-engage and compete for BSMs through their BSMs companies—the Plaintiffs herein. Again, Amway perpetuated this boycott and facilitated control of the tool business.

134. Once a distributorship was viewed by the conspirators in an unfavorable way, as were these Plaintiffs, usually following that distributor's assertion

[916 F.Supp.2d 819]

of a position or right Amway or the kingpins did not like, an effort to compete for BSMs, or simply a desire to take their business, the following typically transpired:

(a) They “trashed” the grievant distributor by spreading falsehoods, for example: “He is not committed to the business”; “he is not committed to his downline”; “he won't pay you what you're entitled”; “he is too religious”; “he is a rogue”; “he is inactive”; “he is not interested in providing you with leadership”; and “he doesn't care...

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12 practice notes
  • Cont'l Ins. Co. v. Honeywell Int'l, Inc., A–21 September Term 2016
    • United States
    • United States State Supreme Court (New Jersey)
    • June 27, 2018
    ...Mfg. Corp. v. Travelers Indem. Co., 106 F.Supp.3d 892, 895 (W.D. Mich. 2015) ; Alticor, Inc. v. Nat'l Union Fire Ins. Co. of Pa., 916 F.Supp.2d 813, 832–33 (W.D. Mich. 2013) ; Century Indem. Co. v. Aero–Motive Co., 318 F.Supp.2d 530, 545 (W.D. Mich. 2003).4 Indeed, not all cases line up as ......
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    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
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    ...Petroleum Specialties, Inc. , 69 F.3d 98, 102 (6th Cir. 1995) ; see also Alticor, Inc. v. Nat'l Union Fire Ins. Co. of Pennsylvania , 916 F. Supp. 2d 813, 826 (W.D. Mich. 2013).Accordingly, the Court finds that it is not limited to the allegations in Berardi's, Diller's, and Grady's complai......
  • Allstate Ins. Co. v. Punturo, Case No. 1:18-CV-326
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    • United States District Courts. 6th Circuit. United States District Court (Western District Michigan)
    • August 9, 2019
    ...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) ("We generally apply the substantive ......
  • Burka v. Vanderbilt Univ. Med. Ctr., 3:19-cv-00113
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee
    • July 21, 2021
    ...also depend on the facts known to the insurer at the time it declined coverage); Alticor, Inc. v. Nat'l Union Fire Ins. Co. of Pa., 916 F. Supp. 2d 813, 826 (W.D. Mich. 2013) (noting that under Michigan law, "[t]he duty to defend ... is not limited by the specific language of the pleadings,......
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12 cases
  • Cont'l Ins. Co. v. Honeywell Int'l, Inc., A–21 September Term 2016
    • United States
    • United States State Supreme Court (New Jersey)
    • June 27, 2018
    ...Mfg. Corp. v. Travelers Indem. Co., 106 F.Supp.3d 892, 895 (W.D. Mich. 2015) ; Alticor, Inc. v. Nat'l Union Fire Ins. Co. of Pa., 916 F.Supp.2d 813, 832–33 (W.D. Mich. 2013) ; Century Indem. Co. v. Aero–Motive Co., 318 F.Supp.2d 530, 545 (W.D. Mich. 2003).4 Indeed, not all cases line up as ......
  • Saoud v. Everest Indem. Ins. Co., Case No. 19-12389
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
    • July 28, 2021
    ...Petroleum Specialties, Inc. , 69 F.3d 98, 102 (6th Cir. 1995) ; see also Alticor, Inc. v. Nat'l Union Fire Ins. Co. of Pennsylvania , 916 F. Supp. 2d 813, 826 (W.D. Mich. 2013).Accordingly, the Court finds that it is not limited to the allegations in Berardi's, Diller's, and Grady's complai......
  • Allstate Ins. Co. v. Punturo, Case No. 1:18-CV-326
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Western District Michigan)
    • August 9, 2019
    ...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) ("We generally apply the substantive ......
  • Burka v. Vanderbilt Univ. Med. Ctr., 3:19-cv-00113
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee
    • July 21, 2021
    ...also depend on the facts known to the insurer at the time it declined coverage); Alticor, Inc. v. Nat'l Union Fire Ins. Co. of Pa., 916 F. Supp. 2d 813, 826 (W.D. Mich. 2013) (noting that under Michigan law, "[t]he duty to defend ... is not limited by the specific language of the pleadings,......
  • Request a trial to view additional results

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