Auto Owners Ins. Co. v. Guardian Builders Inc.

• Decision Date: 25 March 2014
• Docket Number: Case No.: 5:11-cv-04096-VEH
• Parties: AUTO OWNERS INSURANCE COMPANY, Plaintiff, v. GUARDIAN BUILDERS INC., et al, Defendants.
• Court: U.S. District Court — Northern District of Alabama

AUTO OWNERS INSURANCE COMPANY, Plaintiff, v. GUARDIAN BUILDERS INC., et al, Defendants.

Case No.: 5:11-cv-04096-VEH

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA EASTERN DIVISION

DONE: March 25, 2014

MEMORANDUM OPINION

This declaratory judgment action was filed by the plaintiff, Auto Owners Insurance Company ("Auto Owners"), against the defendants, Guardian Builders, Inc. ("Guardian"), Randall and Melissa Uselton ("the Useltons"), and Edgar Wayne Tackett. (Docs. 1, 11). Guardian was the general contractor which built the Useltons' home. Tackett was the sole owner/officer of Guardian. (Doc. 40-9 at 7). Auto Owners issued Commercial General Liability (CGL) policy number 054617-38561274 ("the policy") to Guardian.¹ The plaintiff seeks a declaration that it has noduty under the policy to pay an arbitration award issued against Guardian, and in favor of the Useltons. (Doc. 1 at 2, 6).²

On October 15, 2012, the plaintiff filed a motion for summary judgment. (Doc. 40). On November 5, 2012, the Useltons filed a response to the motion. (Doc. 45). Guardian and Tackett did not respond to the motion. On November 13, 2012, the plaintiff filed a reply. (Doc. 47). On September 16, 2013, the magistrate recommended that the motion be granted in part and denied in part. (Doc. 51). The case is before the court on the plaintiff's objections to the recommendation, filed September 30, 2013. (Doc. 52). The defendants have not responded to the objections.

For the reasons stated herein, the magistrate's recommendation is ADOPTED to the extent that it is consistent with this memorandum opinion, and to the extent to which no objections were made. To the extent that the objections are inconsistent with this opinion, they are OVERRULED. The magistrate's conclusion that a factquestion remains as to whether the defendants have shown that there is coverage for the award is not adopted. The plaintiff's objection to that conclusion is SUSTAINED. Summary Judgment will be GRANTED to the plaintiff by separate order.

I. STANDARDS

A. Summary Judgment Standard

The Eleventh Circuit has summarized the summary judgment burden, including when a defendant seeks judgment as a matter of law on the basis of an affirmative defense, as follows.

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmoving party to "come forward with specific facts showing that there is a genuine issue for trial." See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986) (quotations and emphasis omitted). If the movant bears the burden of proof on an issue, because, as a defendant, it is asserting an affirmative defense, it must establish that there is no genuine issue of material fact as to any element of that defense. See Martin v. Alamo Community College Dist., 353 F.3d 409, 412 (5th

Cir.2003).

International Stamp Art, Inc. v. U.S. Postal Service, 456 F.3d 1270, 1273-74 (11thCir. 2006).³

B. District Court Review of Report and Recommendation

After conducting a "careful and complete" review of the findings and recommendations, a district judge may accept, reject, or modify the magistrate judge's report and recommendation. See 28 U.S.C. § 636(b)(1) ("A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge."); Williams v. Wainwright, 681 F.2d 732 (11th Cir. 1982) (quoting Nettles v. Wainwright, 677 F.2d 404, 408 (5th Cir. 1982), overruled on other grounds by Douglass v. United Services Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996)).⁴The district judge may also receive further evidence or recommit the matter to the magistrate judge with instructions. 28 U.S.C. § 636(b)(1).

A district judge "shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). This requires that the district judge "give fresh consideration to those issues to which specific objection has been made by a party." Jeffrey S. v. State Bd. of Educ., 896 F.2d 507, 512 (11th Cir. 1990) (citing H.R. Rep. No. 94-1609, 94th Cong., 2nd Sess., reprinted in 1976 U.S. Code Cong. & Admin. News 6162, 6163). In contrast, those portions of the R&R to which no objection is made need only be reviewed for clear error. Macort v. Prem, Inc., 208 Fed. App'x. 781, 784 (11th Cir. 2006).⁵

"Neither the Constitution nor the statute requires a district judge to review, de novo, findings and recommendations that the parties themselves accept as correct."United States v. Woodard, 387 F.3d 1329, 1334 (11th Cir. 2004) (internal quotation marks omitted) (quoting United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003)). It is incumbent upon the parties to timely raise any objections that they may have regarding a magistrate judge's findings contained in a report and recommendation, as the failure to do so subsequently waives or abandons the issue, even if such matter was presented at the magistrate judge level. See, e.g., United States v. Pilati, 627 F.3d 1360 at 1365 (11th Cir. 2010) ("While Pilati raised the issue of not being convicted of a qualifying offense before the magistrate judge, he did not raise this issue in his appeal to the district court. Thus, this argument has been waived or abandoned by his failure to raise it on appeal to the district court."). However, the district judge has discretion to consider or to decline to consider arguments that were not raised before the magistrate judge. Stephens v. Tolbert, 471 F.3d 1173, 1176 (11th Cir. 2006); see also Williams v. McNeil, 557 F.3d 1287, 1292 (11th Cir. 2009) ("Thus, we answer the question left open in Stephens and hold that a district court has discretion to decline to consider a party's argument when that argument was not first presented to the magistrate judge.").

"Parties filing objections must specifically identify those findings objected to. Frivolous, conclusive or general objections need not be considered by the district court." Nettles, 677 F.2d at 410 n.8. "This rule facilitates the opportunity for districtjudges to spend more time on matters actually contested and produces a result compatible with the purposes of the Magistrates Act." Id. at 410. Indeed, a contrary rule "would effectively nullify the magistrate judge's consideration of the matter and would not help to relieve the workload of the district court." Williams, 557 F.3d at 1292 (internal quotation marks omitted) (quoting United States v. Howell, 231 F.3d 615, 622 (9th Cir. 2000)).

II. THE MAGISTRATE'S FINDINGS OF FACT

There is no objection to the magistrate's findings of fact. The court has reviewed them for clear error and found none. Accordingly, the magistrate's findings of fact are ADOPTED, verbatim, by this court, and set out herein as follows:

Guardian Builders built a home for Randall and Melissa Uselton that was completed in 2008. The Useltons first occupied it in February of 2008. Very soon after moving in, the Useltons noticed several problems, including water intrusion into the home. They complained to Guardian Builders at that time.

Guardian Builders had liability insurance through Auto-Owners pursuant to a policy issued in 2007 that provided as follows:

SECTION I - COVERAGES

COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1. Insuring Agreement

a. We will pay those sums that the insuredbecomes 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. We may at our discretion investigate any claim or "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 end when we have used up the applicable limit of insurance in the payment of judgments or settlements under Coverage A or B or medical expenses under Coverage C.

No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments - Coverage A and B.

a. This insurance applies to "bodily injury" and "property damage" only if:

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory";

(2) The "bodily injury" or "property damage" occurs during the policy period; . . . .

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2. Exclusions

This insurance does not apply to:

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j. Damage to Property

"Property damage" to:

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(7) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it.

k. Damage To Your Product

"Property damage" to "your product" arising out of it or any part of it.

l. Damage To Your Work

"Property damage" to "your work" arising out of it or any part of it and included in the "products-completed operations hazard."

m. Damage to Impaired Property Or Property Not Physically Injured

"Property damage" to "impaired property" or property that has not been physically injured, arising out of:

(1) A defect, deficiency, inadequacy or dangerous condition in "your product"or "your work"; or

(2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms.

This exclusion does not apply to the loss of use of other property arising out of sudden and accidental physical injury to "your product" or "your work" after it has been put to its intended use.

* * *

SECTION IV - COMMERCIAL GENERAL LIABILITY CONDITIONS

2. Duties In The

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