Atain Specialty Ins. Co. v. Sai Darshan Corp.

• Decision Date: 29 December 2016
• Docket Number: CIVIL ACTION NO. H–16–1446
• Parties: ATAIN SPECIALTY INSURANCE COMPANY, Plaintiff, v. SAI DARSHAN CORP. d/b/a America's Best Value Inn, Arvindbhai N. Patel, Vantage Hospitality Group, Inc., Andre Doyle, Joseph Tippins, Sherreka Tippins, Angela Tippins, Thomika Andrews, Rhonai Simmons, and Pamela Kennedy, Individually and a/n/f of J.T. and J.T., Defendants.
• Court: U.S. District Court — Southern District of Texas

226 F.Supp.3d 807

ATAIN SPECIALTY INSURANCE COMPANY, Plaintiff,

v.SAI DARSHAN CORP. d/b/a America's Best Value Inn, Arvindbhai N. Patel, Vantage Hospitality Group, Inc., Andre Doyle, Joseph Tippins, Sherreka Tippins, Angela Tippins, Thomika Andrews, Rhonai Simmons, and Pamela Kennedy, Individually and a/n/f of J.T. and J.T., Defendants.

CIVIL ACTION NO. H–16–1446

United States District Court, S.D. Texas, Houston Division.

Signed December 29, 2016

George T. Jackson, Bush & Ramirez LLC, Houston, TX, for Plaintiff.

R Brent Cooper, Kimberly Jean Kelly, Tarron Leigh Gartner–Ilai, Cooper & Scully, P.C., Dallas, TX, McDonald Scott Worley, McDonald Worley PC, Houston, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

SIM LAKE, UNITED STATES DISTRICT JUDGE

Plaintiff, Atain Specialty Insurance Company ("Atain"), brings this action against defendants, Sai Darshan Corp. ("Sai Darshan"), doing business as America's Best Value Inn, Arvindbhai N. Patel ("Patel"), Vantage Hospitality Group, Inc. ("Vantage"), Andre Doyle, Joseph Tippins, Sherreka Tippins, Angela Tippins, Thomika Andrews, Rhonai Simmons, and Pamela Kennedy, individually and as next friend of J.T. and J.T. ("the Individual Defendants"), seeking a declaration pursuant to 28 U.S.C. § 2201 and § 2202 and Chapter 37 of the Texas Civil Practice & Remedies Code that coverage does not exist under Policy No. CIP183811 ("the Policy") issued to America's Best Value Inn/Sai Darshan for claims asserted in a state court lawsuit styled Andre Doyle, Joseph Tippins, Sherreka Tippins, Angela Tippins, Thomika Andrews, Rhonai Simmons, Pamela Kennedy, Individually and a/n/f of J.T. and J.T. v. Vantage Hospitality Group, Inc., Sai Darshan Corp. d/b/a America's Best Value Inn, and Arvindbhai Patel , filed in the 61st Judicial District Court of Harris County, Texas, Cause No. 2016–29571 ("Underlying Lawsuit").¹ Pending before the court is Atain Specialty Insurance Company's Motion for Summary Judgment ("Atain's MSJ") (Docket Entry No. 25), and Defendant Vantage Hospitality Group, Inc.'s Partial Motion for Summary Judgment on Plaintiff's Duty to Defend ("Vantage's MPSJ") (Docket Entry No. 31). For the reasons explained below, Atain's motion will be granted and Vantage's motion will be denied as moot.

I. Undisputed Facts and Procedural Background

Atain issued the Policy to America's Best Value Inn and Sai Darshan as named insureds. The policy period was from 12/26/2013 to 12/26/2014.² The grant of coverage was as follows:

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result. But:

(1) The amount we will pay for damages is limited as described in Section III—Limits Of Insurance; and

(2) Our right and duty to defend ends when we have used up the applicable limit of insurance in the payment of judgments or settlements under Coverages A or B or medical expenses under Coverage C .³

The Policy contains a Combined Coverage and Exclusion Endorsement which in pertinent part provides:

IX. ASSAULT AND BATTERY EXCLUSION

This insurance does not apply to "bodily injury" or "property damage," in whole or in part, either directly or indirectly, or in any way arising out of any of the following:

1. Assault and Battery committed by any Insured, any employee of any Insured or any other person;

2. The failure to suppress or prevent Assault and Battery by any person in 1 [,] above;

3. [R]esulting from or allegedly related to the negligent hiring, supervision or training of any employee of the Insured; or

4. Assault or Battery, whether or not caused by or arising out of negligent, reckless or wanton conduct of the Insured, the Insured's employees, patrons or other persons lawfully or otherwise on, at or near the premises owned or occupied by the Insured, or by any other person.

For the purposes of this exclusion, Assault and Battery includes, but is not limited to, the use of reasonable force or self-defense by any party, person, insured or employee of any insured.

Furthermore for this Exclusion, SECTION I—COVERAGES COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY, Section 2. Exclusions, Paragraph a. Expected Or Intended Injury is replaced by the following:

a. Expected Or Intended Injury

"Bodily Injury" or "property damage" expected or intended from the standpoint of the insured.⁴

On May 11, 2014, Tommy Thurman checked into America's Best Value Inn. After checking in at the office, Thurman drove his truck around to the parking lot in the area close to his room. As he exited his vehicle, Thurman was assailed by four men who robbed him and shot him multiple times. Thurman died at the scene.⁵

On or about May 5, 2016, the Individual Defendants filed the Underlying Lawsuit against Vantage, Sai Darshan, and Patel.⁶ Plaintiffs in the Underlying Lawsuit assert claims for negligence, gross negligence, breach of contract, premises liability, violation of the Texas Deceptive Trade Practices Act, and failure to control hotel operations based on the following allegations of fact:

On May 11, 2014, at approximately 5 a.m., Mr. Thurman checked into America's Best Value Inn located at 4515 Airline Drive, Houston, Texas 77022. After checking in at the office, Mr. Thurman drove his truck around to the parking lot in the area close to his hotel room. As he exited his vehicle, he was assailed by four men who began shooting at him. Mr. Thurman was shot multiple times and robbed. He was pronounced dead at the scene.⁷

Plaintiffs in the Underlying Lawsuit also allege that the hotel premises were owned and operated by Sai Darshan and Patel, but that Vantage had entered a membership agreement for the hotel with Sai Darshan and Patel pursuant to which Vantage had a right of control and may be held liable for Sai Darshan and Patel under the theory of principal and agency for its own failure to inspect, supervise, train, or ensure that Sai Darshan and Patel were providing reasonably safe premises for all guests.⁸

On May 24, 2016, Atain filed this action seeking a declaration that coverage for the claims made in the Underlying Lawsuit does not exist under the Policy due to the Assault and Battery Exclusion, and that Atain owes neither a duty to defend nor a duty to indemnify any person or entity in the Underlying Lawsuit (Docket Entry No. 1). On July 8, 2016, the Individual Defendants (plaintiffs in the Underlying Lawsuit) filed their answer (Docket Entry No. 9); on July 13, 2016, Sai Darshan and Patel filed their answers (Docket Entry Nos. 11 and 12); and on August 5, 2016, Vantage filed its answer (Docket Entry No. 16). On August 19, 2016, the court signed a stipulation of no coverage as to Sai Darshan d/b/a America's Best Value Inn and Patel, and dismissed those defendants without prejudice (Docket Entry No. 20). On September 6, 2016, Atain filed its motion for summary judgment (Docket Entry No. 25) seeking declaration that it has no duty to defend or indemnify any person or entity on the claims asserted in the Underlying Lawsuit. On October 10, 2016, Vantage filed its motion for partial summary judgment (Docket Entry No. 31) that Atain does have a duty to defend Vantage in the Underlying Lawsuit, and that the issue of whether Atain has a duty to indemnify Vantage is not ripe for determination. None of the individual defendants have filed a response to Atain's MSJ.

II. Standard of Review

Summary judgment is authorized if the movant establishes that there is no genuine dispute about any material fact and the law entitles it to judgment. Fed. R. Civ. P. 56(a). Disputes about material facts are "genuine" if 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, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). The Supreme Court has interpreted the plain language of Rule 56(a) to mandate the entry of summary judgment "after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett , 477 U.S. 317, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). 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." Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc ), (quoting Celotex , 106 S.Ct. at 2553–2554 ). Factual controversies are to be resolved in favor of the nonmovant, "but only when ... both parties have submitted evidence of contradictory facts." Little , 37 F.3d at 1075. "When parties file cross-motions for summary judgment, [courts] review ‘each party's motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party.’ " Cooley v. Housing Authority of City of Slidell , 747 F.3d 295, 298 (5th Cir. 2014) (quoting Ford Motor Co. v. Texas Department of Transportation , 264 F.3d 493, 498 (5th Cir. 2001) ). See also Shaw Constructors v. ICF Kaiser Engineers, Inc. , 395 F.3d 533, 538–39 (5th Cir. 2004), cert. denied , 546 U.S. 816, 126 S.Ct. 342, 163 L.Ed.2d 54 (2005) ("Cross-motions must be considered separately, as each movant bears the burden of establishing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law.").

III. Cross Motions for Summary Judgment

Atain argues that it is entitled to summary judgment declaring that it has no duty to defend or indemnify because the Assault...