Bohreer v. Erie Ins. Group, 1:06CV555.
| Decision Date | 16 February 2007 |
| Docket Number | No. 1:06CV555.,1:06CV555. |
| Citation | 475 F.Supp.2d 578 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | Maxine BOHREER, et al., Plaintiffs, v. ERIE INSURANCE GROUP, et al., Defendants. Erie Insurance Group, et al., Third-Party Plaintiffs, v. Hallmark Insurance Group, Inc., et al., Third-Party Defendants. |
Benjamin Weaver Glass, III, Benjamin W. Glass, III & Associates, Fairfax, VA, for Plaintiffs.
David Joseph Walton, June E. Gilson, Richard E. Wegryn, Jr., Cozen O'Connor, West Conshohocken, PA, John Becker Mumford, Jr., Hancock Daniel Johnson & Nagle PC, Glen Allen, VA, for Erie Insurance Group, Erie Insurance Exchange, and Erie Indemnity Company.
William J. Carter, Kelly Marie Lippincott, Carr Maloney PC, Washington, DC, for Third-Party Defendants.
In this insurance coverage dispute, plaintiffs have asserted four claims against defendants alleging that defendants had a duty to defend and indemnify plaintiff Northern Virginia Funeral Choices, Inc. ("NVFC") against claims that NVFC breached its contract with plaintiffs Maxine Bohreer and Tricia King to cremate and return the remains of Marion J. Bohreer. Additionally, defendants have asserted contract and tort claims against third-party defendants, seeking contribution and indemnity in the event defendants are liable to plaintiffs.
At issue are: (i) defendants' motion for summary judgment; (ii) plaintiffs' crossmotion for partial summary judgment; and (iii) third-party defendants' motion for summary judgment. As these motions have been fully briefed and argued, they are now ripe for disposition. For the reasons that follow, defendants' motion for summary judgment and third-party defendants' motion for summary judgment must be granted on the ground that the undisputed facts demonstrate that defendants had no duty to defend or indemnify NVFC against the claims brought by plaintiffs Maxine Bohreer and Tricia King.
On October 20, 2001, Marion Jay Bohreer died in Scottsdale, Arizona. The same day, plaintiff Maxine Bohreer, Mr. Bohreer's wife, spoke on the telephone with a representative from the Anatomic Gift Foundation, Inc. ("AGF"). During the conversation, Mrs. Bohreer authorized AGF to utilize Mr. Bohreer's body for organ donation, and then to have his remains cremated and returned to Mrs. Bohreer. Pursuant to this authorization, AGF utilized Mr. Bohreer's body for medical science and transported his remains to NVFC, a crematory in Chantilly, Virginia. On November 3, 2001, Mr. Bohreer's remains were cremated. Then, on November 20, 2001, Mrs. Bohreer received a box from AGF labeled "Family Pet Cremations." The label further identified the contents as the remains of a pet named Marion Jay Bohreer cremated on November 3, 2001. Ultimately, a pathology evaluation of the cremated ashes in the box disclosed they were non-human. The record does not disclose the current whereabouts of Mr. Bohreer's remains.
Thereafter, on October 24, 2002, Mrs. Bohreer and plaintiff Tricia King, Mr. Bohreer's daughter, filed an amended complaint, inter alia, against NVFC in the Superior Court of Arizona (the "Underlying Action") alleging:
(i) That NVFC breached its contract to cremate and return the remains of Mr. Bohreer by "mishandl[ing] the cremains of Marion Jay Bohreer and either los[ing] and/or convert[ing] the remains, or comming[ing] the cremains with those of an animal";
(ii) That NVFC breached the covenant of good faith and fair dealing, inter alia, by "not safeguard[ing] and control[ling] the body of Marion Jay Bohreer and provid[ing] Plaintiffs with the unadulterated cremated remains"; and
(iii) That NVFC intentionally, recklessly, or negligently interfered with Mr. Bohreer's body by "remov[ing], withh[olding], mutilat[ing] or improperly cremat[ing] the body and remains of Marion Jay Bohreer," thereby causing plaintiffs emotional distress and physical injury.
Once suit was filed, NVFC contacted its insurance agent, third-party defendant Mark Goldberg, a licensed insurance broker authorized to sell defendant Erie Insurance Group's ("Erie") policies, to request that Erie provide a defense and coverage. Thus, on November 1, 2002, Goldberg submitted to Erie a Report of Loss notifying Erie of the Underlying Action. The Report of Loss also states Several weeks later, on November 26, 2002, Erie denied NVFC coverage for the Underlying Action, stating that "coverage does not apply nor is there a duty to defend this matter under your Ultraflex Policy."
In October 2001, at the time of the alleged mishandling of Marion Bohreer's remains, NVFC was insured by Erie through an Ultraflex Policy.2 This Policy provided that Erie would pay for damages resulting from "bodily injury or property damage for which the law holds" the insured, NVFC, "responsible and which are covered by [NVFC's] policy," provided the injury or damage was caused by an "occurrence." Erie denied NVFC coverage for the Underlying Action, citing various Ultraflex Policy exclusions. Specifically, Erie stated that the Ultraflex Policy did not provide coverage for the allegations in the Underlying Action because:
(i) The allegations in the Underlying Action do not constitute an "occurrence;"3
(ii) The allegations in the Underlying Action do not constitute "bodily injury;"4
(iii) The allegations in the Underlying Action are excluded from coverage under the "liability assumed by contract" exclusion;5
(iv) The allegations in the Underlying Action are excluded from coverage under the "care, custody, or control" exclusion;6
(v) The allegations in the Underlying Action are excluded from coverage under the "professional services" exclusion;7 and (vi) The allegations in the Underlying Action are excluded from coverage because NVFC did not comply with the Notice Provision.8
Given this, Erie declined to defend or indemnify NVFC with respect to the Underlying Action.
On March 31, 2005, after Erie denied coverage, NVFC settled the Underlying Action and assigned to the Underlying Action plaintiffs, Mrs. Bohreer and Ms. King, all rights and claims NVFC has or may have against Erie, Goldberg, or Hallmark Insurance Group, Inc. ("Hallmark"). Relying on this assignment, on March 29, 2006, plaintiffs Mrs. Bohreer, Ms. King, and NVFC filed the instant complaint against Erie alleging
(i) that Erie breached the insurance contract by refusing to defend and/or indemnify NVFC as to the Underlying Action;
(ii) that NVFC's insurance policy should be reformed consistent with the original Ultrapack Policy;
(iii) that NVFC is entitled to declaratory judgment; and
(iv) that Erie acted in bad faith in denying coverage.
On June 12, 2006, Erie filed a third-party complaint against Goldberg and Hallmark alleging
(i) that third-party defendants breached the agency agreement with Erie;
(ii) that third-party defendants acted negligently; and
(iii) that, to the extent Erie is liable, third-party defendants are liable for contribution and indemnity.
Next, by Order dated July 7, 2006, liability and damages issues were bifurcated so that disputes related to coverage and reformation would be resolved first, and then the issues of damages and bad faith would be addressed, if necessary. Bohreer v. Erie Ins. Group, No. 1:06cv555 (E.D.Va. July 7, 2006) (Order). Pursuant to this bifurcation, the parties now seek summary judgment on certain dispositive liability issues. Specifically, plaintiffs and defendants seek summary judgment on the issue of Erie's duty to defend and indemnify plaintiff NVFC with respect to the Underlying Action. In addition, third-party defendants seek summary judgment on Erie's third-party complaint, arguing that they cannot be liable if Erie is not liable.
The summary judgment standard is too well-settled to require elaboration here. In essence, summary judgment is appropriate only where, on the basis of undisputed material facts, the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). And importantly, to defeat summary judgment the non-moving party may not rest upon a "mere scintilla" of evidence, but must set forth specific facts showing a genuine issue for trial. Id. at 324, 106 S.Ct. 2548; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In this case, the material facts are essentially uncontested and the dispute turns entirely on whether these uncontested facts fit within the scope of coverage provided by Erie in the Ultraflex Policy. Given this, adjudication by way of summary judgment is appropriate.
In this insurance contract dispute, the issue is whether the allegations asserted in the Underlying Action fall within the scope of the insurance policy such that Erie had a duty to defend and indemnify NVFC in that action. Under Virginia law,9 the duty to defend "arises whenever the complaint [against the insured] alleges facts and circumstances, some of which would, if proved, fall within the risk covered by the policy." VEPCO v. Northbrook Property & Cas. Ins., 252 Va. 265, 268, 475 S.E.2d 264 (1996). Virginia law also recognizes that the duty to defend is broader than the duty to indemnify. Id.; Town Crier Inc. v. Hume, 721 F.Supp. 99, 101 (E.D.Va.1989). As both the duty to defend and the duty to indemnify are at issue, analysis properly begins with determining whether Erie had a duty to defend NVFC in the Underlying Action. If so, then the next step is to determine whether Erie has a duty to indemnify NVFC. If, on the other hand, Erie had no duty to defend NVFC in the Underlying Action, then it follows that it has no duty to indemnify NVFC. See Morrow Corp. v. Harleysville Mut. Ins. Co., 101 F.Supp.2d 422, 426-27 (E.D.Va.2000) (...
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