City of Grosse Pointe v. U.S. Specialty Ins. Co.
| Decision Date | 13 July 2020 |
| Docket Number | Case No. 18-cv-13428 |
| Citation | 472 F.Supp.3d 392 |
| Parties | CITY OF GROSSE POINTE, Plaintiff, v. U.S. SPECIALTY INSURANCE CO., Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Nathan S. Scherbarth, Zausmer, P.C., Farmington Hills, MI, Timothy A. Diemer, Jacobs and Diemer, P.C., Detroit, MI, for Plaintiff.
Elan R. Kandel, Sabrina Christine Haurin, Bailey Cavalieri LLC, Columbus, OH, Mahde Y. Abdallah, Melvin B. Hollowell, The Miller Law Firm, P.C., Rochester, MI, for Defendant.
On November 1, 2018, the City of Grosse Pointe ("City") filed the instant breach of contract and declaratory judgment claims against Defendant U.S. Specialty Insurance Company ("Defendant"). ECF No. 1.
Presently before the Court are the City's Partial Motion for Summary Judgment, which was filed on September 25, 2019, and Defendant's Motion for Summary Judgment, which was filed on October 4, 2019. ECF Nos. 19, 20. The parties timely filed their Responses to the respective motions. ECF Nos. 22, 25. The parties also timely filed their Reply briefs. ECF Nos. 26, 27. Additionally, the parties filed Joint Statements of Facts for their respective motions.1 ECF Nos. 29, 30. A hearing on this matter was held on June 19, 2020. For the reasons that follow, the Court will GRANT the City's Motion for Partial Summary Judgment [#19]. Additionally, the Court will DENY Defendant's Motion for Summary Judgment [#20].
In its Complaint, the City alleges that Defendant breached its insurance contract when Defendant refused to tender a defense to the claims raised in Lisa Monticciolo v. City of Grosse Pointe, et al. , 18-cv-11797 ("Underlying Action"). ECF No. 1, PageID.12. Plaintiff also brings a claim for declaratory judgment pursuant to 28 U.S.C. §§ 2201, 2202 for the purpose of deciding an actual case and controversy between the parties regarding insurance coverage issued to the City. Id. ; see also ECF No. 30, PageID.1516.
Defendant issued Special Coverage Policy No. PKG80110771 to the City, effective for the period from October 1, 2016 to October 1, 2017 ("Original Policy"). ECF No. 30, PageID.1517; see also ECF No. 1-2. The City subsequently purchased a Renewal Insurance Policy No. PKG80210771 from Defendant with allegedly identical Employment Practices Liability ("EPL") Coverage, effective for the period from October 1, 2017 through October 1, 2020 ("Renewal Policy"). ECF No. 30, PageID.1517; see also ECF No. 1-3.
The Original Policy and the Renewal Policy (together, the "Policies") included identical EPL Coverage. ECF No. 30, PageID.1517. The EPL Coverage states that Defendant:
will pay those sums that the insured becomes legally obligated to pay as "damages" because of an "employment practices wrongful act" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those "damages", even if the allegations of such "suit" are groundless, false, or fraudulent. However, we will have no duty to defend the insured against any "suit" seeking "damages" to which this insurance does not apply. We may, at our discretion, investigate any "employment practices wrongful act" and settle any claim or "suit" that may result.
ECF No. 20, PageID.611. The Policies define "employment practices wrongful act" to include the following acts, among others: (1) discrimination; (2) harassment; (3) retaliation; (4) wrongful dismissal, discharge, or termination; (5) wrongful hiring, demotion, discipline, evaluation, supervision, or investigation of an "employee" or intentional interference with an employment contract; and (6) wrongful deprivation of a career opportunity, the wrongful failure to promote an "employee" or the wrongful failure to employ. Id. at PageID.612. Further, the Policies state that "[a]ll claims or ‘suits’ for ‘damages’ that arise as a result of a series of related ‘employment practices wrongful acts’ committed by an insured will be deemed to have taken place at the time of the first such ‘employment practices wrongful act.’ " Id.
The EPL Coverage also contains an exclusion:
This insurance does not apply to "damages," claims or "suits" alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving ... [a]ny claim deriving in whole or in part, from any fact, series of facts or circumstances, or matters asserted or alleged in any prior or pending legal action or litigation, administrative or regulatory proceeding, claim, "suit," demand, arbitration, decree or judgment against any insured prior to the beginning of the Policy Period listed in the Declarations.
Id. at PageID.612–13.
On June 6, 2018, Lisa Monticciolo, Public Safety Officer for the City, filed a lawsuit against the City, the City's Department of Public Safety ("Department"), and Steven Poloni. See ECF No. 1-4. Ms. Monticciolo alleges that she has been retaliated and discriminated against on the basis of her sex in violation of Title VII and Michigan's Elliot-Larsen Civil Rights Act ("ELCRA"). See generally id. Specifically, she purports that despite having the best qualifications and most seniority in the Department, she was passed over for a promotion to an open detective bureau position. Id. The City filled this position with a male sergeant on January 1, 2018 instead of Ms. Monticciolo. Id. at PageID.388. Further, Ms. Monticciolo alleges that in June 2017, she was denied medically accommodating training and was instead forced to use her sick leave despite another male officer having been accommodated by the City. Id. at PageID.389.
On or about March 1, 2018, Ms. Monticciolo filed an EEOC Charge against the Department. ECF No. 29, PageID.1508. In the 2018 EEOC Charge, she alleges that on or about May 2, 2011, she filed an EEOC Charge in 2011, which "subsequently became a lawsuit in or about November 2011." Id. Further, she asserts that since 2011, she has "been subjected to a series of retaliatory actions, including being denied promotion and subjected to different terms and conditions of employment." Id. In sum, Ms. Monticciolo alleges that she has been "denied promotion and subjected to different terms and conditions of employment" due to her sex and "in retaliation for having participated in a protected activity in violation of Title VII ... as amended." Id. On May 8, 2018, Ms. Monticciolo received her Right to Sue Letter from the EEOC. Id. at PageID.1509.
Defendants in the Underlying Action filed a Motion for Summary Judgment on April 15, 2019. Their Motion was denied on October 17, 2019. The Underlying Action is currently set for trial in this Court for August 3, 2020.
Ms. Monticciolo previously filed a lawsuit on November 15, 2011 ("First Lawsuit") against the City, the Department, and others in the Circuit Court of Wayne County, Michigan, Case No. 11-014119-CZ. ECF No. 20, PageID.613. The First Lawsuit was removed to federal court and was assigned to the Honorable Avern Cohn, Case No. 11-cv-15253. Id. The parties in the instant matter contest whether the complaints in the Underlying Action and the First Lawsuit contain similar allegations. See ECF No. 29, PageID.1505.
In her Amended Complaint in the First Lawsuit, Ms. Monticciolo alleged that she was denied a promotion to an open position in the Department's detective bureau based on her sex and in retaliation for having filed the 2011 EEOC Charge. Id. Specifically, Ms. Monticciolo asserted causes of action for violations of Title VII and ELCRA on the basis of defendant's failure to promote her to the detective bureau position; violations of Mich. Comp. Laws §§ 15.361, et seq. for alleged retaliation for filing the 2011 EEOC Charge; hostile work environment/sexual harassment; and failure to supervise. Id. at PageID.614.
The parties reached a settlement agreement on February 13, 2015. Id.
On June 8, 2018, the City forwarded Ms. Monticciolo's Complaint in the Underlying Action to Defendant. ECF No. 30, PageID.1521. Defendant appointed its counsel Tom McGraw to defend the City "subject to a full reservation of its rights under the Policies[.]" Id. On August 17, 2018, Defendant sent a letter informing the City that it was denying insurance coverage for all claims. Id. at PageID.1522. In the letter, Defendant indicated that there was no coverage based on the Policies’ "Prior and Pending Exclusion." Id. Further, Defendant explained that the "employment practices wrongful acts" alleged in the Underlying Action are related to the "employment practices wrongful acts" alleged in the First Lawsuit; thus, the acts "are deemed to have occurred prior to the inception of the Policies." ECF No. 20, PageID.617. Defendant also asserted that there is no coverage under the Policies’ Excess Coverage Part. Id.
On September 11, 2018, the City's counsel sent a letter to Defendant, contesting Defendant's denial of coverage. ECF No. 30, PageID.1524. Defendant's counsel responded on October 1, 2018, maintaining Defendant's position that there is no coverage under the Policies. Id. at PageID.1524–25. The City's other insurer, Michigan Municipal League ("MML") agreed to fund one third of the defense costs incurred by the City and the insureds in the Underlying Action. Id. at PageID.1525. Plaintiff continues to self-fund the remaining two thirds of defense costs. Id.
On November 1, 2018, the City filed the instant lawsuit against Defendant, alleging that Defendant breached the Policies. ECF No. 1, PageID.10. Plaintiff also seeks a declaration that Defendant is obligated to provide a defense and indemnity under the Policies for the Underlying Action. Id. at PageID.12–13.
The City's instant Motion for Partial Summary Judgment ...
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