Lemuel v. Admiral Ins. Co.

• Decision Date: 23 January 2006
• Docket Number: No. 2:03CV1101-D.,2:03CV1101-D.
• Parties: Mildred LEMUEL, as administratrix of the estate of Darnell Eugene Lemuel, deceased, et al., Plaintiffs, v. ADMIRAL INS. CO., Defendant.
• Court: U.S. District Court — Middle District of Alabama

414 F.Supp.2d 1037

Mildred LEMUEL, as administratrix of the estate of Darnell Eugene Lemuel, deceased, et al., Plaintiffs, v. ADMIRAL INS. CO., Defendant.

No. 2:03CV1101-D.

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

January 23, 2006.

COPYRIGHT MATERIAL OMITTED

Timothy Charles Halstrom, Moore & Halstrom, Montgomery, AL, for Plaintiffs.

Murray (Ray) Harlin Gibson, Jr., Steven Wesley Money, Gibson Rodgers & Money, Tuscaloosa, AL, for Defendant.

MEMORANDUM OPINION AND ORDER

DE MENT, Senior District Judge.

I. INTRODUCTION

Before the court are three motions for summary judgment, each of which is accompanied by a memorandum brief and an evidentiary submission: (1) Admiral Insurance Co.'s ("Admiral") motion for summary judgment (Doc. No. 26); (2) Mildred Lemuel's ("Lemuel") counter-motion for summary judgment (Doc. No. 46); and (3) Markel American Insurance Company's ("Markel") motion for summary judgment.¹ (Doc. Nos. 75-76.)

These consolidated proceedings, involving three separate lawsuits, arose from a $5,000,000 default judgment entered in favor of Lemuel in the Alabama state court on her wrongful death complaint seeking recovery against Lifestar Response of Alabama, Inc., d/b/a Care Ambulance ("Lifestar"), also a party in this litigation. In the underlying state court lawsuit, Lemuel alleged that an ambulance service operated by Lifestar provided inadequate medical treatment to Lemuel's husband, which led to his untimely death. At all relevant times, Lifestar's primary insurance carrier was Admiral, and its excess insurance carrier was Markel.

Lemuel, thereafter, filed a garnishment action in state court, claiming that Admiral was liable for a portion of the $5,000,000 default judgment against Lifestar pursuant to the insurance policy. Admiral responded by simultaneously removing the garnishment suit to the United States District Court for the Middle District of Alabama, see 2:03cv1101-D, and filing a declaratory judgment action in this court, seeking a declaration that it is not liable for the default judgment, see 2:03cv1102-D.

In its declaratory judgment action, Admiral argues that summary judgment is appropriate because, contrary to the terms of the insurance policy, Lifestar did not notify it of Lemuel's lawsuit or forward suit papers, until after the entry of the default judgment. Because of the delay in notice, Admiral asserts that it is not required to pay any portion of the default judgment rendered against Lifestar. In a separate declaratory judgment action (2:04cv042-D), Markel, who did not receive notice of the Lemuel lawsuit until almost a year after Admiral, is seeking a similar summary judgment adjudication that Lifestar's untimely notice constitutes a breach of the notice provision of its policy. As a result, Markel also contends that it is not responsible or liable to expend any sums under its excess policy as a result of the default judgment entered against Lifestar in the underlying state court litigation.

Opposing Admiral's and Markel's motions for summary judgment, Lemuel and Lifestar present parallel arguments. Relying on New York statutory law or, alternatively, on common-law equitable estoppel and waiver, they assert that Admiral forfeited its defense of late notice because it failed to provide timely notice of its intent to disclaim coverage on that basis. Additionally, Lifestar persists in the contention it advanced during the state court proceedings that, due to the wrong designation of its name, Lifestar was not put on notice of the Lemuel litigation until after the entry of the default judgment and that, after receiving actual notice, it immediately notified Admiral. Regarding Markel's motion for summary judgment, Lemuel and Lifestar contend that New Jersey law governs the coverage dispute and argue, in effect, that the excess policy's notice provision is unenforceable against Lifestar under that state's law, but that, in any event, Markel was not prejudiced by the alleged late notice. Lemuel's and Lifestar's arguments bring to the forefront choice-of-law issues.

For the reasons stated herein, the court finds that the state court's finding that Lifestar received actual notice of the Lemuel litigation on January 7, 2003, is entitled to preclusive effect based upon the doctrine of res judicata and that, under the applicable law from each jurisdiction cited by the parties, Lifestar acted unreasonably in giving late notice to Admiral and Markel. Furthermore, the court finds that Markel, which must demonstrate that it was prejudiced as a result of the late notice, has satisfied its burden.

Accordingly, after careful consideration of the arguments of counsel, the relevant law and the record as a whole, the court finds that Admiral's and Markel's motions for summary judgment are due to be granted and that Admiral and Markel are entitled to declarations that they are not obligated to indemnify Lifestar or pay any portion of the $5,000,000 default judgment in the Lemuel lawsuit. The court further finds that Lemuel's counter-motion for summary judgment is due to be denied.

II. JURISDICTION AND VENUE

The court properly exercises subject matter jurisdiction over this action, pursuant to 28 U.S.C. § 1332 (diversity jurisdiction). The parties do not contest personal jurisdiction or venue, and the court finds adequate allegations of both.

III. SUMMARY JUDGMENT STANDARD

A court considering a motion for summary judgment must construe the evidence and make factual inferences in the light most favorable to the nonmoving party. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Summary judgment is entered only if it is shown "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). At this juncture, the court does not "weigh the evidence and determine the truth of the matter," but solely "determine[s] whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citations omitted). This determination involves applying substantive law to the substantive facts that have been developed. A dispute about a material fact is genuine if a reasonable jury could return a verdict for the nonmoving party, based on the applicable law in relation to the evidence developed. See id. at 248, 106 S.Ct. 2505; Barfield v. Brierton, 883 F.2d 923, 933 (11th Cir.1989).

The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The burden then shifts to the non-moving party, which "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Summary judgment will not be entered unless the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party. See id. at 587, 106 S.Ct. 1348.

IV. BACKGROUND

A. The Facts Surrounding the Default Judgment as Determined by the State Court

The findings upon which the underlying default judgment is based are set forth in the circuit court's July 31, 2003 order, entered in the case styled Mildred Lemuel, et al. v. Care Ambulance Service of Alabama, Inc., et al., CV 2002-3098-PR, in the Circuit Court for Montgomery County, Alabama (Ex. 1 to Doe. No. 26), as well as in the opinion of the Supreme Court of Alabama, affirming the judgment of the circuit court, Lifestar Response of Alabama, Inc. v. Lemuel, 908 So.2d 207 (Ala. 2004), which the court summarizes below.

On November 8, 2000, Lemuel's husband suffered a "hemorrhagic cardiovascular accident." Lifestar, 908 So.2d at 210, 222. A Lifestar ambulance and its paramedics responded to the "911" emergency call from Lemuel. See id. at 210, 221. Lifestar transported Lemuel's husband to the hospital. His condition was grave when he arrived, and two days later Lemuel's husband died at that facility. See id. at 210, 221-22.

On November 7, 2002, Lemuel, as the administratrix of her husband's estate and in her own right, filed a wrongful death complaint in the Circuit Court for Montgomery County, Alabama. In her state-court complaint, Lemuel alleged that the failure of Care Ambulance Service of Alabama, Inc.'s paramedics to administer oxygen to Lemuel's husband and to provide other necessary emergency treatment resulted in oxygen deprivation to his brain which led to brain damage and ultimately death.²

Unbeknownst to her at the time, Lemuel incorrectly named Care as the defendant, rather than Lifestar. As in the state court litigation, the failure of Lemuel to correctly name Lifestar in the original state court complaint is a fact which underlies the heart of Lifestar's arguments in this litigation; thus, at this juncture, the court highlights the facts surrounding the relationship between Care and Lifestar. As reflected in the Supreme Court of Alabama's opinion, Lifestar and Care entered into an "Asset Purchase Agreement" on November 19, 1998, pursuant to which Lifestar purchased all of the assets of Care. Care operated a basic and advanced life-support ambulance and medical-transportation service, and its Montgomery, Alabama, South Perry Street place of business was conveyed to Lifestar as part of that Agreement. See id. at 209.

During the state court proceedings, the circuit court found that Lifestar "caused substantial confusion to exist in the public's ability to distinguish between `Lifestar' and `Care.'" (Circuit Court Order at 7 (Ex. E to Doc. No. 46).) After Lifestar purchased the assets of "Care," Care continued to use the trade name "Care Ambulance Service," despite the parties' agreement that Care would change its name; Lifestar "share[d] a common office"...