Auto Owners Ins. Co. v. Pers. Touch Med Spa Llc

• Decision Date: 14 January 2011
• Docket Number: Civil Action No. 4:10–cv–683–TLW.
• Citation: 763 F.Supp.2d 769
• Parties: AUTO OWNERS INSURANCE COMPANY, Plaintiff,v.PERSONAL TOUCH MED SPA, LLC, Inder Hora, Sapna Hora, Alexandria Gardner, Dana Buffo, and Tracie Carricker, Defendants.
• Court: U.S. District Court — District of South Carolina

763 F.Supp.2d 769

AUTO OWNERS INSURANCE COMPANY, Plaintiff,

v.PERSONAL TOUCH MED SPA, LLC, Inder Hora, Sapna Hora, Alexandria Gardner, Dana Buffo, and Tracie Carricker, Defendants.

Civil Action No. 4:10–cv–683–TLW.

United States District Court, D. South Carolina, Florence Division.

Jan. 14, 2011.

Morgan S. Templeton, Peden Brown McLeod, Jr., Elmore and Wall, Charleston, SC, for Plaintiff.Mark Andrew Nappier, Jeffcoat Pike and Nappier, Myrtle Beach, SC, Frederick Miles Adler, F. Miles Adler Law Office, Pawleys Island, SC, William Gary White, III, William Gary White III Law Office, Columbia, SC, for Defendants.

ORDER

TERRY L. WOOTEN, District Judge.

The plaintiff, Auto Owners Insurance Company (“plaintiff” or “Auto Owners”), brought this civil action on March 17, 2010. (Doc. # 1). Auto Owners seeks a declaratory judgment that no coverage exists under a “Businessowners” policy of insurance it issued to defendant Personal Touch Med Spa, LLC (“Personal Touch”) for claims asserted against Personal Touch in a state court action underlying this coverage dispute. The state court action is currently pending in Horry County, South Carolina under the name Alexandria Gardner, Dana Buffo, and Tracie Carricker v. Personal Touch Med Spa, L.L.C., Inder Hora, and Sapna Hora, No. 2009–CP–26–11598. The plaintiffs in the underlying state court action (“underlying lawsuit”) are named as defendants in this action-Alexandria Gardner (“Gardner”), Dana Buffo (“Buffo”), and Tracie Carricker (“Carricker”). Personal Touch and the remaining two defendants in this action, Inder Hora (“Inder”) and Sapna Hora (“Sapna”),¹ are named as defendants in the underlying lawsuit. Inder is the owner of Personal Touch.

On August 16, 2010, Auto Owners filed a motion for summary judgment, arguing there is no possibility of coverage for the claims asserted against its insured in the underlying state court action. (Doc. # 27). Defendants Inder, Sapna, and Personal Touch filed a motion to dismiss on September 2, 2010, arguing that this Court should dismiss or, in the alternative, stay this action pending resolution of the underlying lawsuit. (Doc. # 29). On the same day, Inder, Sapna, and Personal Touch also filed a motion to stay Auto Owners' motion for summary judgment. (Doc. # 31). In addition, Inder, Sapna, and Personal Touch filed a response to Auto Owners' motion for summary judgment, (Doc. # 30), to which Auto Owners filed a reply. (Doc. # 32). Finally, Auto Owners also filed a response to the motion to dismiss filed by Inder, Sapna, and Personal Touch. (Doc. # 33). A hearing was held before this Court on November 17, 2010 on the summary judgment motion (Doc. # 27), the motion to dismiss (Doc. # 29), and the motion to stay the motion for summary judgment (Doc. # 31). (Entry # 36). The Court has considered the applicable law, arguments of counsel, and memoranda submitted. These motions are now ripe for disposition.

FACTS

This declaratory judgment action arises out of a lawsuit in state court brought by Gardner, Buffo, and Carricker against Personal Touch, Inder, and Sapna. Gardner, Buffo, and Carricker are former employees of Personal Touch. Auto Owners asserts there is no coverage under the “businessowners” policy it issued to Personal Touch for the claims alleged in the state court complaint. Gardner, Buffo, and Carricker allege numerous causes of action in the state court action, including termination in violation of public policy because submission to sexual harassment and battery was made a condition of their employment with Personal Touch (“wrongful termination”), battery, defamation, and breach of contract. In addition, Carricker alleges a cause of action for false imprisonment.

According to the allegations set forth in the state court complaint, about and subsequent to July 2008 Buffo and Gardner were employees of Personal Touch. State Ct. Compl. ¶ 4. Buffo was the manager, and Gardner was a patient coordinator. Id. Carricker, a salesperson, was hired in September 2008. Id. The complaint alleges that Inder, one week after taking over ownership of Personal Touch, was supervising Gardner and asked her to join him next door for a meal. Id. ¶ 5. Inder then offered Gardner a raise and created and signed a new commission agreement. Id. After making these offers, “Inder said he would be like a friend or brother to her rather than an employer.” Id. ¶ 6. Subsequently, for a period of about thirty minutes, he allegedly began making inappropriate requests such as asking Gardner “to allow him to massage her or to see her stomach.” Id. Gardner declined these requests, and Inder asked her not to tell his wife about what happened. Id.

The following day Inder allegedly apologized and asked Gardner to keep what happened a secret. Id. ¶ 7. When asked if she had told her husband, Gardner responded affirmatively. Id. As the day progressed, Inder allegedly displayed his displeasure with Gardner by berating and yelling at her. Id. The complaint further states that “Gardner afterwards told Plaintiff Buffo about the incident” but does not specify when Gardner told Buffo about the incident or about what incident Buffo was told. Id. ¶ 8.

The complaint sets forth that Inder allegedly continued to harass and express displeasure toward Gardner because she wanted to limit their relationship to a professional one. Id. ¶ 10. The complaint further alleges that Inder's hostile and intimidating behavior forced Gardner to sign an agreement reducing her commission and other contractual rights. Id. Finally, on September 10, 2008, Gardner was in her office at Personal Touch when Inder allegedly entered the room, “grabbed a chart she was working on, and violently jerked it out of her hand.” Id. ¶ 11. Next, he began berating her and, on a pretext, fired her. Id. According to the complaint, Gardner was never paid the commissions she was promised. Id.

As for Buffo, the complaint alleges that about a week after Gardner told Buffo about the “incident,” ² Inder took Buffo to a restaurant. Id. ¶ 9. While at the restaurant, Inder allegedly grabbed Buffo “roughly around her neck in a headlock, and began smacking her on her cheek, yelling insults at her and telling her she was fired.” Id. The complaint further alleges that Inder failed to comply with Buffo's employment contract, including payment of her bonus. Id.

With regard to Carricker, the complaint alleges that soon after hiring her Inder began touching her knees. Id. ¶ 12. Even though Carricker told Inder the touching was not welcomed, he continued to do so on a daily basis and would grab her arm to prevent her from leaving. Id. Inder also requested a meeting off premises, but Carricker refused. Id. Subsequently, Personal Touch, Inder, and Sapna held an event at the Crown Reef. Id. ¶ 13. At this event, Inder allegedly sought out Carricker, “got in her face, grabbed her by the arm and began yelling at her.” Id. Inder forcefully held her by the arms when she tried to leave. Id. When she escaped, Inder said he did not want to see her again, and Carricker asked if she was fired. Id. Inder did not respond. Id. The following day Carricker came to work for a meeting with Mr. and Mrs. Hora, but before the meeting, Inder told her to leave and threateningly raised his hand to force her to leave. Id.

MOTION TO DISMISS

A. Motion to Dismiss Standard

Defendants Personal Touch, Inder, and Sapna filed a motion to dismiss or, in the alternative, stay this declaratory judgment action pending resolution of the underlying lawsuit. (Doc. # 29). “The Declaratory Judgment Act, 28 U.S.C. § 2201(a), provides that district courts ‘may declare’ the rights of interested parties.” United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 493 (4th Cir.1998). Through this Act, “Congress sought to place a remedial arrow in the district court's quiver; it created an opportunity, rather than a duty, to grant a new form of relief to qualifying litigants.” Wilton v. Seven Falls Co., 515 U.S. 277, 288, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). Therefore, consistent with Congress's intent, Courts have long interpreted the Act's permissive language “to provide discretionary authority to district courts to hear declaratory judgment cases.” Kapiloff, 155 F.3d at 493. However, “[t]his discretion is not unbounded [because] a district court may not refuse to entertain a declaratory judgment action out of ‘whim or personal disinclination’ but may do so only for ‘good reason.’ ” Nautilus Ins. Co. v. Winchester Homes, Inc., 15 F.3d 371, 375 (4th Cir.1994) (quoting Public Affairs Assoc., Inc. v. Rickover, 369 U.S. 111, 112, 82 S.Ct. 580, 7 L.Ed.2d 604 (1962); Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 324 (4th Cir.1937)).³

In determining whether to entertain a declaratory judgment action, district courts must initially consider two factors outlined by the Fourth Circuit Court of Appeals in Aetna Casualty & Surety Co. v. Quarles: “(1) [whether] the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and (2) [whether] it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.” Aetna Cas. & Sur. Co., 92 F.2d at 325. When a related proceeding is pending in state court, in addition to the Quarles factors, the decision of a district court over whether to exercise jurisdiction over a declaratory judgment action should also be governed by “considerations of federalism, efficiency, and comity.” Penn–Am. Ins. Co. v. Coffey, 368 F.3d 409, 412 (4th Cir.2004) (quoting Centennial Life Ins. Co. v. Poston, 88 F.3d 255, 257 (4th Cir.1996)). District courts are not without guidance, however, in weighing these considerations as the Fourth Circuit Court of Appeals has set forth four factors, known as the Nautilus factors, to aid district courts in deciding whether to exercise jurisdiction when there is a pending related state court action:

(1) whether the state has a strong interest in...