Estate of Taylor v. St. Paul Fire and Marine Inc.

• Decision Date: 19 September 2002
• Docket Number: No. 1-00-02397-AA.,1-00-02397-AA.
• Citation: 268 F.Supp.2d 873
• Parties: ESTATE OF Tasha TAYLOR et al., Plaintiffs, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

268 F.Supp.2d 873

ESTATE OF Tasha TAYLOR et al., Plaintiffs, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY et al., Defendants.

No. 1-00-02397-AA.

United States District Court, N.D. Ohio. Eastern Division.

September 19, 2002.

COPYRIGHT MATERIAL OMITTED

Christian R. Patno, Garson & Associates, David L. Meyerson, Garson & Associates, James A. DeRoche, Garson & Associates, Cleveland, OH, for Plaintiffs.

D. John Travis, Gallagher, Sharp, Fulton & Norman, Paul D. Eklund, Davis & Young, David L. Lester, Ulmer & Berne, Cleveland, OH, for Defendants.

MEMORANDUM AND ORDER

ALDRICH, District Judge.

This is a breach of insurance contract case, in which the plaintiffs, the Estate of Tasha Taylor, Ernesha Walker, Edna Taylor, and Michael Taylor, seek to recover monetary damages arising out of an automobile accident involving Tasha Taylor, under insurance policies issued by the defendant, the St. Paul Fire and Marine Insurance Company ("St.Paul").¹ This Court has previously granted St. Paul's motion to bifurcate and stay the plaintiffs' bad faith claim. See Doc. # 31. Now before the Court are the parties' cross-motions for summary judgment (Docs.# 34, 35) as to the issue of coverage only. For the following reasons, this Court grants the plaintiffs' motion (Doc. # 34) and denies St. Paul's motion (Doc. #35).

I. Background

On August 24, 1995, Tasha Taylor was a passenger in a motor vehicle traveling westbound on Interstate 90 in Sheridan, New York, when the driver fell asleep at the wheel. The vehicle left the highway and collided with a concrete culvert. Taylor suffered severe injuries, including brain injuries and a coma, and ultimately, on August 10, 1998, died as a result of these injuries. Edna Taylor is Tasha Taylor's mother, Ernesha Walker is Tasha Taylor's minor daughter, and Michael Taylor is Tasha Taylor's brother. At the time of the accident, Tasha Taylor, Edna Taylor, Michael Taylor, and Ernesha Walker lived together in Cleveland, Ohio.

At the time of the accident, Edna Taylor was an employee of University Hospitals Health System, Inc. and/or University Hospitals of Cleveland ("University Hospitals"). University Hospitals was insured by Hartford for automobile liability. University Hospitals was also insured by St. Paul under two policies, Policy No. HK03400057, entitled "Health Care Commercial General Liability Protection" ("general liability policy"), and Policy No. 566UH0045, entitled "Umbrella Excess Liability Policy" ("umbrella excess liability policy"). The Estate of Tasha Taylor brought suit against the driver of the automobile in the Cuyahoga County Court of Common Pleas, and, on November 25, 1998, settled its claims for $600,000.

On August 28, 2000, the plaintiffs filed this action against St. Paul and Hartford in the Cuyahoga County Court of Common Pleas, alleging that they are insured under policies issued by the defendants, that those policies extend underinsured and/or uninsured motorist ("UIM") coverage to them pursuant to the Ohio Supreme Court's decision in Scottr-Pontzer v. Liberty Mut. Fire Ins. Co., 85 Ohio St.3d 660, 710 N.E.2d 1116 (1999), and that they are entitled to recover under those policies for the lost society, services, affection, guidance, inheritance, support, earnings, companionship, advice, instruction, love, and counsel of Tasha Taylor and because of the defendants' bad faith. This complaint was apparently the first notice to the defendants of the plaintiffs' claims under the policies. The defendants removed the case to this Court on September 19, 2000. On May 18, 2001, this Court granted the defendants' motion to bifurcate the proceedings, to stay the plaintiffs' bad faith claim, and to limit discovery to the issue of coverage. The plaintiffs subsequently settled their claims against Hartford for $400,000. The plaintiffs and St. Paul have now filed cross-motions for summary judgment as to the issue of UIM coverage under the St. Paul policies.

II. Summary Judgment Standard

Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The burden then shifts to the nonmoving party to demonstrate the existence of a material dispute as provided in Rule 56(e):

[a]n adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.

Fed.R.Civ.P. 56(e); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2c. 202 (1986). Parties opposing summary judgment must go beyond the pleadings and produce some type of evidentiary material in support of their position. See Celotex, 477 U.S. at 324, 106 S.Ct. 2548.

In determining whether a genuine issue of material fact exists, this Court must view the evidence in a light most favorable to the nonmoving party. See Adickes v. S.H. Kress & Co., 3S8 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); White v. Turfway Park Racing Assn., 909 F.2d 941, 943-4 (6th Cir.1990). A fact is "material" only if its resolution will affect the outcome of the lawsuit. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. Determination of whether an issue is "genuine" requires consideration of the applicable evidentiary standards. Thus, in most civil cases, the Court must decide whether the evidence is such that "reasonable jurors could find by a preponderance of the evidence that the [nonmoving party] is entitled to a verdict" or whether the evidence is "so one-sided that [the moving party] must prevail as a matter of law." Id. at 2512. Rule 56(c) "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322, 106 S.Ct. 2548.

III. Analysis

A. Subject Matter Jurisdiction

Although jurisdiction was not addressed by the parties, "federal courts are courts of limited jurisdiction and have a continuing obligation to examine their subject matter jurisdiction throughout the pendency of every matter before them." In re Wolverine Radio Co., 930 F.2d 1132, 1137 (6th Cir.1991). There is arguably some question whether this case constitutes a direct action on a policy of liability insurance under 28 U.S.C. § 1332(c)(1). In a direct action on a policy of liability insurance, an insurer is deemed to have the citizenship of its insured, destroying diversity in most such cases. The question whether suits seeking recovery pursuant to Scott-Pontzer and related cases constitute direct actions on a policy of liability insurance has created substantial uncertainty in this jurisdiction. On October 30, 2001, this Court held that Scott-Pontzer cases do not constitute direct actions on a policy of liability insurance, and that diversity is therefore not destroyed under section 1332(c)(1). Redmon v. Sumitomo Marine Mgmt. (U.S.A.), Inc., 179 F.Supp.2d 787 (N.D.Ohio 2001) (Aldrich, J.). At last count, seven courts have disagreed, and have held that jurisdiction is lacking. Butler v. Zurich Am. Ins. Co., 184 F.Supp.2d 695 (N.D.Ohio 2002) (Katz, J.); Stubbins v. Nationwide Agribusiness Ins. Co., 181 F.Supp.2d 805 (N.D.Ohio 2002) (Carr, J.); Cornelia v. St. Paul Mercury Ins. Co., 177 F.Supp.2d 704 (N.D.Ohio 2001) (O'Malley, J.); Reese v. Fid. & Guar. Ins. Underivriters, Inc., Case No. 1:01CV2633 (N.D.Ohio Mar. 22, 2002) (Oliver, J.); Monahan v. Am. States Ins. Co., Case No. 5:00CV1191 (N.D.Ohio Dec. 20, 2001) (Economus, J.); Kohus v. Hartford Ins. Co., Case No. 1:01CV1179, 2001 WL 1850889 (N.D.Ohio Nov. 19, 2001) (Matia, J.); Kormanik v. St. Paul Fire & Marine Ins. Co., 208 F.Supp.2d 824 (N.D.Ohio 2001) (Polster, J.). On the other hand, five courts besides this one have found that section 1332(c)(1) does not apply to destroy diversity in this situation. Johnson v. Fireman's Fund Ins. Co., Case No. 1:01CV1063 (N.D.Ohio Jan. 15, 2002) (Nugent, J.); Fid. & Guar. Ins. Underwriters, Inc. v. Nocero, Case No. 1:01CV397, 2001 WL 1792448 (N.D.Ohio Dec. 13, 2001) (Gaughan, J.); Martin v. Midwestern Indemnity Co., Case No. 5:00CV1864 (N.D.Ohio Nov. 27, 2001) (Dowd, J.); Bliss v. Nat'l Union Fire Ins. Co., Case No. 1:01CV2046 (N.D.Ohio Nov. 1, 2001) (Wells, J.); see also Lepley v. Hartford Accident & Indem. Co., 174 F.Supp.2d 666 (N.D.Ohio 2001) (assuming jurisdiction) (Gwinn, J.). The Sixth Circuit has not yet had the opportunity to provide any guidance on this issue. See Cornelia v. St. Paul Mercury Ins. Co., 33 Fed.Appx. 737, 2002 WL 467940 (6th Cir. 2002) (dismissing, pursuant to 28 U.S.C. § 1447(d), the appeal of a remand under section 1332(c)(1)). The Court therefore finds, for the reasons stated in Redmon, that this case does not constitute a direct action against the insurer of a policy of liability insurance within the meaning of section 1332(c)(1), and that the Court has subject matter jurisdiction in this case.

B. Coverage

1. Insureds Under the Umbrella Excess Liability Policy

In Scott-Pontzer, the Ohio Supreme Court suggested that the first inquiry in a case such as this one should focus on whether the plaintiff is an "insured" under the policy in question. Scott-Pontzer, 710 N.E.2d at 1118 ("If we find Pontzer was not...