Country Mut. Ins. Co. v. Omicron Capital, LLC
| Decision Date | 27 April 2015 |
| Docket Number | Case No. 4:13-cv-1476-SPM |
| Parties | COUNTRY MUTUAL INSURANCE COMPANY, Plaintiff, v. OMICRON CAPITAL, LLC and RICHARD SADDLER, Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This case is before the Court on the Motion for Summary Judgment filed by Plaintiff Country Mutual Insurance Company. (Doc. 51). The parties have consented to the jurisdiction of the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c)(1). (Doc. 18). For the reasons stated below, the motion will be granted.
This action concerns a dispute over whether Plaintiff Country Mutual Insurance Company ("Country Mutual") is obligated under the terms of an insurance policy to defend and provide indemnity to Defendant Omicron Capital, LLC ("Omicron") and its owner, DefendantRichard Saddler (collectively, "Defendants"), with regard to a state court lawsuit filed against Defendants.
In mid-July 2012, Saddler contacted Ruth Husbands, an insurance agent who sells insurance policies on behalf of Country Mutual. Saddler inquired about obtaining professional liability insurance or errors and omissions insurance, but Ms. Husbands told him that neither she nor Country Mutual wrote policies with such coverage. On July 29, 2012, Saddler signed an application for a business owners liability insurance policy from Country Mutual. The application did not contain an application for professional liability insurance or errors and omissions insurance. The "Liability" section of the application listed a $2,000,000 aggregate limit in the box labeled "Bodily Injury and Property Damage," but there was no amount listed in the box labeled "Professional Liability." (Doc. 51-3, at p. 2).
On July 30, 2012, Country Mutual issued Policy Number AM 9132271 (the "Policy") to Defendants. The Policy stated, 2 However, on August 15, 2012, Country Mutual sent Saddler and Ms. Husbands a cancellation notice stating that the Policy was cancelled effective October 17, 2012. Country Mutual's underwriting department told Ms. Husbands that Country Mutual could not write a business owners liability policy for Omicron or Saddler but that it would bind coverage for 65 days to allow them to find alternate coverage. On August 17, 2012, Ms. Husbands personally delivered a copy of the Policy to Saddler at his home. At thatmeeting, Saddler asked Ms. Husbands whether the Policy would cover a situation where Omicron took a client's money for services and a dispute arose as to whether or not that money had to be returned to the client when the services were not performed. Ms. Husbands explained that the Policy did not cover that type of loss.
Saddler and Omicron paid the initial premium for the Policy by check in August 2012, but the check was returned for insufficient funds. Country Mutual sent a notice to Saddler informing him of the returned check and requesting payment for the premium for the 65 days of insurance provided by Country Mutual. No premium was ever paid for the Policy. In December 2012, a third-party debt collector sent Saddler a collection notice. Saddler called Ms. Husbands and demanded that the collection notice be rescinded because the Policy did not provide him the coverage he wanted. Ms. Husbands told Saddler that Country Mutual would be willing to forego the unpaid premium if Saddler would agree to rescind the Policy effective July 30, 2012. Saddler orally agreed, and Ms. Husband sent him a "Commercial Change Request Form" indicating that the Policy was cancelled effective July 30, 2012, for the reason, "Client never need policy." (Doc. 51-9). The form is not signed by Saddler.
On November 27, 2012, PJP Enterprises, Inc. ("PJP") filed a complaint against Saddler and Omicron in a state court in Wyoming (the "PJP lawsuit"). (Doc. 51-2). PJP alleged that Saddler and Omicron held themselves out as loan brokers and that on August 8, 2012, PJP entered a contract with Omicron under which Omicron agreed to assist PJP in finding financing for its business. PJP alleged that under the terms of the contract, PJP wired $75,000 to Omicron on August 21, 2012, which was to be held in escrow to pay for third-party services to be performed in connection with arranging the financing. PJP also alleged that under the terms ofthe contract, the $75,000 was to be returned to PJP in the event that that the contract was terminated and the funds had not been used to pay for third-party services for PJP. PJP alleged that Omicron did not use the $75,000 for third-party services, that Omicron failed to provide financing for PJP, that PJP terminated the contract, and that Omicron improperly refused to return any of the $75,000. PJP further alleged that after it demanded return of the money, Defendants intentionally forged and changed a copy of the contract to remove the provision stating that the $75,000 was refundable and to add a provision stating that Omicron would be paid the $75,000 even if it failed to provide financing. PJP brought claims of breach of contract, unjust enrichment, and fraud against Defendants.
In its Amended Complaint, Country Mutual seeks a declaration that the Policy does not provide coverage for any of the allegations contained in the PJP lawsuit, that Country Mutual has no duty to defend or pay for defense costs for any of the allegations contained in the PJP lawsuit, and that Defendants have no right to indemnity for any of the allegations contained in the PJP lawsuit. Defendants have filed six counterclaims against Country Mutual: reformation of the Policy on grounds of mutual mistake; breach of written contract; vexatious refusal to pay under the written contract; breach of oral contract of insurance; vexatious refusal to pay under the oral contract; and negligent failure to procure insurance.
In the instant motion, Country Mutual seeks summary judgment in its favor on its declaratory judgment claim and each of Defendants' counterclaims. Saddler, proceeding pro se, has filed a response to the motion and an objection to Country Mutual's Statement ofUncontroverted Facts. (Docs. 55 & 56). Omicron has not responded to the motion for summary judgment.3
The Court shall grant a motion for summary judgment "if the movant shows that 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 dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party; a fact is material if its resolution affects the outcome of the case." Othman v. City of Country Club Hills, 671 F.3d 672, 675 (8th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The moving party bears the initial responsibility of informing the court of the basis of its motion and of identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets this initial burden, the non-moving party must then set forth affirmative evidence from which a jury might return a verdict in his or her favor. Anderson, 477 U.S. at 256-57. The nonmoving party "may not rest upon mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Id. at 256. "Mere allegations, unsupported by specific facts or evidence beyond the nonmoving party's own conclusions, are insufficient to withstand a motion for summary judgment." Thomas v. Corwin, 483 F.3d 516, 527 (8th Cir. 2007).
In considering a motion for summary judgment, the Court must view the facts in the light most favorable to the nonmoving party, and all justifiable inferences must be drawn in favor of the nonmoving party. Peebles v. Potter, 354 F.3d 761, 765 (8th Cir. 2004). The Court's function is not to weigh the evidence, but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249.
Country Mutual first asks the Court to grant summary judgment on its claim seeking a declaration that the Policy does not require it to defend or indemnify Defendants with regard to the allegations in the PJP lawsuit.
Under Missouri law, which applies in this diversity case, "An insurer owes two distinct duties to its insured: a duty to indemnify and a duty to defend." Allen v. Cont'l W. Ins. Co., 436 S.W.3d 548, 552 (Mo. 2014). The insurer's duty to defend is "broader than its duty to indemnify" and arises "when there is a potential or possible liability to pay based on the facts at the outset of the case." Id. at 552 (quotation marks omitted). Id. In addition, the insurer "has a duty to defend if facts that are known to the insurer, or that are reasonably apparent to the insurer, at the commencement of the suit establish a potential for coverage." Id. However, "An insurer does not have a duty to defend a suit where the petition upon its face alleges a state of facts which fail to bring the case within the coverage of the policy." Trainwreck West Inc. v. Burlington Ins. Co., 235 S.W.3d 33, 42 (Mo. Ct. App. 2007) (quotation marksomitted). Generally, "'where there is no duty to defend, there is no duty to indemnify.'"...
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