Cent. Mut. Ins. Co. v. Davis
| Decision Date | 17 December 2021 |
| Docket Number | Civil Action No. 6:19-CV-00065, Civil Action No. 6:19-CV-00086 |
| Citation | 576 F.Supp.3d 493 |
| Parties | CENTRAL MUTUAL INSURANCE COMPANY, Plaintiff, v. Mary Ann DAVIS dba Past Times, Defendant. Mary Ann Davis, Plaintiff, v. Central Mutual Insurance Company, Defendant. |
| Court | U.S. District Court — Southern District of Texas |
Scott A. Stewart, Russell J. Bowman, Bowman & Stella, P.C., Irving, TX, for Central Mutual Insurance Company.
Jeffrey G. Henry, Sprouse Shrader Smith PLLC, Austin, TX, Christopher L. Jensen, Sprouse Shrader Smith PLLC, Amarillo, TX, for Mary Ann Davis.
This declaratory judgment action was brought by an insurer, Central Mutual Insurance Company ("Central"), to determine its obligations under a policy held by Mary Ann Davis. Davis is the sole proprietor of Past Times, a needlepoint shop, and Rio Grande Royalties, an oil and gas landman operation. Davis also owns a corporation called Upland Energy. Under the name "Mary Ann Davis DBA Past Times," she purchased an insurance policy (the "Policy") from Central to cover the building she uses for commercial operations and business property. After Hurricane Harvey, Davis filed an insurance claim which included: (1) damages to property used for Rio Grande Royalties, (2) a three-year internet and phone subscription service for "Mary Ann Davis—Upland Energy," (3) building restoration work amounting to $145,987.49, and (4) legal expenses related to the restoration work. Central disputes liability on these items and has brought a declaratory judgment action seeking clarification of its obligations under the Policy. The Parties have filed competing Motions for Summary Judgment with respect to Central's liability. For the following reasons, the Court GRANTS IN PART Central's Motion and DENIES Davis's Motion.
Central is an insurance company incorporated in and with its principal place of business in Ohio. (Dkt. No. 1 at ¶ 1).1 Davis, domiciled in Texas, is the sole proprietor of Past Times, a needlepoint shop operating out of a building located at 105 Santa Rosa, Victoria, Texas 77901 (the "Santa Rosa Building"). (Id. at ¶¶ 2, 5–6); (Dkt. No. 22 at 2). Davis apparently has two other businesses operating out of the Santa Rosa Building: Rio Grande Royalties and Upland Energy. (Dkt. No. 22 at 2, 7). Central issued an insurance Policy to "Mary Ann Davis DBA Past Times" for the Santa Rosa Building and the property within it. (Dkt. No. 1 at ¶ 5). Central alleges that the Policy describes Past Times as a "gift shop" and "retail nick nak store." (Id. at ¶ 6).
On August 28, 2017, Davis filed an insurance claim for damages to the property caused by Hurricane Harvey. (Id. at ¶ 7). In addition to damages sustained by Past Times's property, Davis also included in her claim (1) damages to property used by Rio Grande Royalties, (id. at ¶ 9); (2) internet and phone services for Davis's other business, Upland Energy, (id. at ¶ 16); (3) restoration work on the Santa Rosa Building amounting to $145,987.49 performed by ServPro, a third-party contractor, (id. at 6); (Dkt. No. 24 at ¶ 24); and (4) $930 in legal expenses associated with the ServPro work, (Dkt. No. 1 at ¶ 18). Central has paid benefits only for those damages it deemed covered under the Policy—namely, the damages sustained by Past Times and $86,000 of ServPro's restoration work—but disputes liability for the remaining items. (Id. at ¶¶ 15–19). Central argues that "the Policy only provides insurance coverage pertaining to the retail gift shop business, Past Times," (id. at ¶ 11), and that other damages under the Premier Plus endorsement were covered up to $10,000. (Dkt. No. 17 at 14).
On July 19, 2019, Central filed this case, captioned Civil Action No. 6:19-CV-65, for declaratory judgment. Central asks the Court to declare that Central has fully discharged its obligations and has no further liability for the outstanding claims. (Dkt. No. 1 at ¶ 19). On August 23, 2019, Davis filed her own separate action in state court against Central and Frost Insurance Agency, Inc. ("Frost"), the agent that procured the Policy. That matter was removed to this Court as Civil Action No. 6:19-CV-86. In that case, Davis seeks a declaratory judgment on Central's liability with respect to the outstanding items and also alleges breach of contract, breach of duty of good faith and fair dealing, and violation of the Texas Insurance Code against Central. . In the alternative, she alleges negligence and misrepresentation against Frost. (Id. at ¶ 32). Frost was later voluntarily dismissed from the case. That case was consolidated with Civil Action No. 6:19-CV-65 on August 4, 2021. (Dkt. No. 43).
Central and Davis filed competing Motions for Summary Judgment in this case.2 (Dkt. No. 17); (Dkt. No. 22). Both Parties have completed briefing on the Motions and have lodged objections to the summary judgment evidence. (Dkt. No. 24); (Dkt. No. 32); (Dkt. No. 33); (Dkt. No. 34); (Dkt. No. 37); (Dkt. No. 40). The Court now reviews the dueling Motions and related papers.
Summary judgment is appropriate when there is "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A material fact is one that might affect the outcome of the suit under governing law," and "a fact issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Renwick v. PNK Lake Charles, L.L.C. , 901 F.3d 605, 611 (5th Cir. 2018) (quotations omitted). The moving party "always bears the initial responsibility of informing the district court of the basis for its motion," and identifying the record evidence "which it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). "If the moving party fails to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of the nonmovant's response." United States v. $92,203.00 in U.S. Currency , 537 F.3d 504, 507 (5th Cir. 2008) (quoting Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam)).
If the movant meets this burden, the nonmovant must then come forward with specific facts showing there is a genuine issue for trial. Fed. R. Civ. P. 56(c) ; 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). The nonmovant must "go beyond the pleadings and by [the nonmovant's] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Nola Spice Designs, L.L.C. v. Haydel Enters., Inc. , 783 F.3d 527, 536 (5th Cir. 2015) (quoting EEOC v. LHC Grp., Inc. , 773 F.3d 688, 694 (5th Cir. 2014) ). "The nonmovant must identify specific evidence in the record and articulate the precise manner in which that evidence supports his or her claim." Carr v. Air Line Pilots Ass'n , 866 F.3d 597, 601 (5th Cir. 2017) (cleaned up). "If the evidence is merely colorable, or is not significantly probative," summary judgment is appropriate. Parrish v. Premier Directional Drilling, L.P. , 917 F.3d 369, 378 (5th Cir. 2019).
The nonmovant's burden "will not be satisfied by ‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.’ " Boudreaux v. Swift Transp. Co. , 402 F.3d 536, 540 (5th Cir. 2005) (quoting Little , 37 F.3d at 1075 ). Hearsay evidence and unsworn documents that cannot be presented in a form that would be admissible in evidence at trial do not qualify as competent opposing evidence. Fed. R. Civ. P. 56(c)(2) ; Martin v. John W. Stone Oil Distrib., Inc. , 819 F.2d 547, 549 (5th Cir. 1987). For evidence to be admitted, the materials "need only be capable of being ‘presented in a form that would be admissible in evidence.’ " LSR Consulting, LLC v. Wells Fargo Bank, N.A. , 835 F.3d 530, 534 (5th Cir. 2016) (quoting Fed. R. Civ. P. 56(c)(2) ).
In reviewing a motion for summary judgment, the district court must view the evidence in the light most favorable to the nonmovant. Coleman v. Hous. Indep. Sch. Dist. , 113 F.3d 528, 533 (5th Cir. 1997). This means that factual controversies are to be resolved in the nonmovant's favor, "but only when ... both parties have submitted evidence of contradictory facts." Little , 37 F.3d at 1075. The Court is not obligated to search the record on the nonmovant's behalf for evidence that may raise a fact issue. Topalian v. Ehrman , 954 F.2d 1125, 1137 n.30 (5th Cir. 1992).
In reaching a resolution on summary judgment, state law rules of contract interpretation are applied, with the court giving "effect to the intentions of the parties as expressed by the policy language," Am. Nat'l Gen. Ins. Co. v. Ryan , 274 F.3d 319, 323 (5th Cir. 2001), and interpreting the policy as a matter of law. A federal court sitting in diversity is bound to apply the law that would be utilized by the underlying state court. See Jack H. Brown & Co., Inc. v. Toys "R" Us, Inc. , 906 F.2d 169, 173 (5th Cir. 1990). Since this case involves an insured who is a Texas citizen, Texas law controls in this action.3 Tex. Ins. Code art. 21.42 ; see Canutillo Indep. Sch. Dist. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. , 99 F.3d 695, 700 (5th Cir. 1996).
As a preliminary matter, both Davis and Central have filed objections to certain evidence. Davis objects to parts of Sean Davis's affidavit, to the commercial insurance application attached as Exhibit B to his affidavit, and to some parts of Todd Brickman's affidavit.4 (Dkt. No. 24 at 1–4). Central has responded to the objections. (Dkt. No. 33). For its part, Central objects to certain...
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