Home Insurance Com. v. Hartford Fire Ins. Co.

• Decision Date: 01 February 2005
• Docket Number: No. CIV.A. 2:99CV1319S.,CIV.A. 2:99CV1319S.
• Court: U.S. District Court — Middle District of Alabama
• Parties: HOME INSURANCE COM., & Colonial Companies, Inc., and Colonial Life and Accident Insurance Com., Plaintiffs, v. HARTFORD FIRE INSURANCE, COMPANY, et al., Defendants.

379 F.Supp.2d 1282

HOME INSURANCE COM., & Colonial Companies, Inc., and Colonial Life and Accident Insurance Com., Plaintiffs, v. HARTFORD FIRE INSURANCE, COMPANY, et al., Defendants.

No. CIV.A. 2:99CV1319S.

United States District Court, M.D. Alabama, Northern Division.

February 1, 2005.

Claude William Gladden, Jr., James S. Witcher, III, Hand Arendall, LLC, James Ross Forman, III, Robert S.W. Given, Burr & Forman LLP, John Wesley Clark, Jr., Clark Dolan Morse Oncale & Hair PC, Birmingham, AL, for Plaintiffs.

Bert S. Nettles, Brennan Collins Ohme, London & Yancey, Birmingham, AL, Judy B. Van Heest, Micheal Stewart Jackson, Beers Anderson Jackson Patty & Van Heest PC, Montgomery, AL, for Defendants.

MEMORANDUM OPINION AND ORDER

COODY, Chief United States Magistrate Judge.

In this case, Home Insurance Company ("Home") seeks a declaratory judgment against Twin City Fire Insurance Company, Hartford Casualty Insurance Company and Hartford Fire Insurance Company (hereinafter collectively referred to as "the defendants" or "Hartford") regarding coverage in the state court lawsuits styled Parker White v. Colonial Life & Accident Ins. Co., CV-95-2251 (Cir.Ct.Mtgy, Ala.) and Lucas White v. Colonial Life & Accident Ins. Co., CV-97-1182-P (Cir.Ct.Mtgy, Ala.). Home seeks a declaratory judgment and recovery from these defendants for subrogation, unjust enrichment, implied contract for indemnity or common law action for indemnity and reimbursement.

Colonial Companies, Inc. and Colonial Life and Accident Insurance Company (hereinafter collectively "Colonial") earlier were realigned as plaintiffs in this action and seek recovery from the defendants for breach of contract and breach of the duty of good faith and fair dealing as a result of action taken in the underlying Parker White state court litigation.¹ Colonial also claims that Hartford failed to defend Colonial in Home's suit against Colonial filed in 1999 and which the parties subsequently settled. In that case, Home sought judgment against Colonial requiring Colonial to reimburse it for money Home paid to settle claims in the Parker White case. In essence, Colonial argues that if Hartford had done what it should have done with respect to the Parker White lawsuit, Home would never have sued Colonial.

The court has jurisdiction of this action pursuant to its diversity jurisdiction. See 28 U.S.C. § 1332. Pursuant to 28 U.S.C. § 636(c)(1) and M.D. Ala. LR 73.1, the parties have consented to the United States Magistrate Judge conducting all proceedings in this case and ordering the entry of final judgment.

On October 19, 2004, the court entered an order granting the defendants leave to file the pending motion for summary judgment. (Doc. # 159). The defendants filed their motion for summary judgment and supporting brief on November 2, 2004. (Doc. # 160). The plaintiffs have thoroughly responded to the motion for summary judgment, and the court has heard oral argument on the motion. For the reasons that follow, the court concludes that the defendants' motion for summary judgment should be granted and the case dismissed with prejudice.

I. THE SUMMARY JUDGMENT STANDARD

Under FED. R. CIV. P. 56(c) summary judgment is proper "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." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).² The party moving for summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the `pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323, 106 S.Ct. 2548. The movant may meet this burden by presenting evidence showing there is no dispute of material fact, or by showing that the nonmoving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Id. at 322-324, 106 S.Ct. 2548. If the movant succeeds in demonstrating the absence of a material issue of fact, the burden shifts to the non-movant to establish, with evidence beyond the pleadings, that a genuine issue material to the non-movant's case exists. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115-17 (11th Cir.1993); see also FED. R. CIV. P. 56(e). ("When a motion for summary judgment is made and supported... an adverse party may not rest upon the mere allegations or denials of [his] pleading, but [his] response ... must set forth specific facts showing that there is a genuine issue for trial."). What is material is determined by the substantive law applicable to the case. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute of material fact "is `genuine' ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248, 106 S.Ct. 2505. The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Ind. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Rather, the non-movant must present "affirmative evidence" of material factual conflicts to defeat a properly supported motion for summary judgment. Anderson, 477 U.S. at 257, 106 S.Ct. 2505. If the non-movant's response consists of nothing more than conclusory allegations, the court must enter summary judgment for the movant. See Holifield v. Reno, 115 F.3d 1555, 1564 n. 6 (11th Cir.1997); Harris v. Ostrout, 65 F.3d 912 (11th Cir.1995). However, if there is a conflict in the evidence, "the [plaintiff's] evidence is to be believed and all reasonable inferences must be drawn in his favor." Anderson, 477 U.S. at 255, 106 S.Ct. 2505; Molina v. Merritt & Furman Ins. Agency, 207 F.3d 1351, 1356 (11th Cir.2000). After the nonmoving party has responded to the motion for summary judgment, the court must grant summary judgment if there remains no genuine issue of material fact and the moving party is entitled to judgment as a matter of law FED. R. CIV. P. 56(c). With these principles of law in mind, the court will determine now whether summary judgment is appropriate and should be granted.

II. FACTS

A. The Parker White Lawsuit. Viewed in the light most favorable to the plaintiffs and drawing all reasonable inferences in their favor, the following facts are treated as undisputed for the purposes of summary judgment. Home insured Colonial under four commercial general liability policies from January 1, 1990 until January 1, 1994. Home also insured Colonial under umbrella policies during this time period. Twin City, a subsidiary of Hartford, undertook to insure Colonial under commercial general liability policies beginning on January 1, 1994, and continuing until January 1, 1997. Hartford also issued umbrella policies to Colonial for the period of January 1, 1994 until May 1, 1995.

On October 19, 1995, Parker White filed a lawsuit in state court against Colonial and other defendants, alleging breach of contract, fraud, and the tort of outrage. See Parker White v. Colonial Life & Accident Ins. Co., CV-95-2251 (Cir.Ct.Mtgy, Ala.). According to Parker White, his claims arose out of his employment relationship with Colonial. Parker White had worked for Colonial for many years when, in March 1991, Colonial terminated his contract as marketing director and demoted him to sales agent. In December 1991, after many discussions and lengthy negotiations, Parker White agreed to continue his employment with Colonial as a sales agent, provided that Colonial permanently assign 174 accounts to him.³

In 1992, Parker White began experiencing health problems including angina and depression.⁴ In February 1994, Colonial began reassigning the 174 accounts to other agents. In August 1994, Parker White was complaining to his physician about depression, fatigue, and partial impotence, all of which he attributed to Colonial's reassignment of accounts away from him. (Pls' Evid. Submission, Vol. 1, Ex. J, Attach. 38). In October 1995, Parker White filed his action in state court alleging that Colonial's reassignment of the accounts constituted fraud as well as a breach of its agreement to permanently assign the accounts to him. Parker White sought compensatory and punitive damages.

Colonial timely notified Home and Hartford of Parker White's lawsuit. Hartford retained counsel for Colonial under a reservation of rights. In addition, the defendants contacted Home and requested that Home share the cost of defending Colonial. Home agreed to share defense expenses, also under a reservation of rights. The Parker White action was set for trial on January 5, 1998.

In November 1997, trial counsel for Colonial submitted to the insurance companies a pretrial report detailing Parker White's claims for damages and opined that Colonial had only a "50/50" chance of a defense verdict. In December 1997, Parker White made a settlement demand to all defendants in the underlying lawsuit. The case was ultimately settled by Home agreeing to pay Parker White two million dollars, and by Colonial agreeing to certain renewal commissions on specific accounts at an estimated total cost of $355,000 to $400,000 dollars. Hartford did not contribute to the settlement. Rather, Hartford withdrew its settlement offer contribution of $250,000 after Home refused to waive it rights to seek reimbursement.

On November 4, 1999, Home filed this action against the defendants seeking to recover the two million dollars Home paid to settle the Parker White litigation and a declaration that Hartford's policies instead of Home's policies covered that lawsuit. Home's claims sound in equity...