Liberty Mut. Fire Ins. Co. v. Lindsey
| Decision Date | 11 February 2021 |
| Docket Number | CIVIL ACTION NO. 3:19-CV-00666-DSC |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | LIBERTY MUTUAL FIRE INSURANCE COMPANY, Plaintiff, v. DAVID LINDSEY, DAPHNE LINDSEY, KRISTI LINDSEY through General Guardians DAVID LINDSEY and DAPHNE LINDSEY, and HANNAH SUTTON through HEATHER SUTTON, Guardian, Defendants. |
THIS MATTER is before the Court on "Liberty Mutual Fire Insurance Company's Motion for Judgment on the Pleadings" (Doc. 22) and "Defendant Sutton's Motion for Summary Judgment" (Doc. 24), as well as the parties' associated briefs, affidavits, and exhibits. See Docs. 1, 1-1, 1-2, 1-3, 18, 19, 23, 23-1, 25, 26, 27, 28, and 29.
The parties have consented to Magistrate Judge jurisdiction under 28 U.S.C. § 636(c) and this Motion is ripe for the Court's determination.
Having carefully considered the parties' arguments, the record, and the applicable authorities, the Court grants Plaintiff's Motion for Judgment on the Pleadings and denies Defendant Sutton's Motion for Summary Judgment as discussed below.
Plaintiff Liberty Mutual Fire Insurance Company ("LMFIC") issued a homeowner's insurance policy, No. H32-258-172491-70, (the "Policy") to Defendants David and Daphne Lindsey with effective dates of August 27, 2017 to August 27, 2018. Doc. 1 at 1-2; Doc. 1-1. On March 17, 2018, Kristi Lindsey, the minor daughter of David and Daphne Lindsey, was operating a golf cart on Polk Mountain Road, a public road in Union County, North Carolina. Doc. 1 at 3. She lost control of the golf cart and crashed. Id. Defendant Heather Sutton was a passenger in the golf cart and suffered injuries. Id. The golf cart was owned by Frank and Loretta Lindsey, the parents of Defendant David Lindsey. Id.
On July 16, 2019, Defendant Sutton filed a personal injury action ("Underlying Action") in Union County against David, Daphne, and Kristi Lindsey (the "Lindsey Defendants"). Doc. 1 at 4; Doc. 1-2. Defendant Hannah Sutton claimed that this incident was covered under the Policy. Id. at 4.
On August 29, 2019, LMFIC denied coverage for the Lindsey Defendants, but agreed to provide a defense subject to a full and complete reservation of rights. Doc. 1 at 4; Doc. 1-3 at 5. LMFIC denied coverage because (1) the accident fell within a Policy exclusion barring coverage for unregistered motor vehicles when registration is required by law and (2) the golf cart did not fall within the exception to the motor vehicle exclusion for golf carts owned by an insured and operated at the time of the "occurrence" within the legal boundaries of a golf course or private residential community. Doc. 1-3 at 4-5.
On December 6, 2019, LMFIC filed its Complaint for Declaratory Judgment pursuant to 28 U.S.C. § 2201(a) to determine the rights and obligations of the parties under the Policy. Doc. 1. On January 16, 2020, Defendant Heather Sutton filed a Motion to Dismiss pursuant to Rule 12(b)(6). Doc. 10. On January 24, 2020, the Lindsey Defendants filed a Motion to Dismiss pursuant to Rule 12(b)(6). Doc. 12. Since Defendant Sutton and the Lindsey Defendantspresented nearly identical arguments, the Court addressed both Motions to Dismiss together. Both Motions were denied. Doc. 17.
On December 11, 2020, LMFIC filed a Motion for Judgment on the Pleadings pursuant to Rule 12(c). Doc. 22. On January 6, 2021, Defendant Sutton filed a response as well as a Motion for Summary Judgment. Docs. 24, 25. This Order addresses both Motions.
LMFIC seeks a declaration that it has no duty to defend or indemnify the Lindsey Defendants in connection with the Sutton Underlying Action, and that it has no duty to indemnify her for any of the damages she suffered. Defendant Sutton seeks summary judgment as to coverage in this matter.
Rule 12(c) of the Federal Rules of Civil Procedure permits a party to move for judgment on the pleadings after the pleadings are closed. The legal standard applied to a Rule 12(c) motion is the same as a Rule 12(b)(6) motion for failure to state a claim. See Demetry v. Lasko Prods., Inc., 284 F. App'x 14, 15 (4th Cir. 2008). "A Rule 12(c) motion is designed to dispose of a case when the material facts are not in dispute and the court can judge the case on the merits by considering the pleadings and any attachments to the pleadings and materials referenced, which are incorporated into the pleadings by Rule 10(c)." Hartford Cas. Ins. Co. v. Greve, No. 3:17CV183-GCM, 2017 WL 5557669, at *2 (W.D.N.C. Nov. 17, 2017), aff'd, 742 F. App'x 738 (4th Cir. 2018) (quotation marks omitted).
The applicable test is whether, "when viewed in the light most favorable to the party against whom the motion is made, genuine issues of material fact remain or whether the case can be decided as a matter of law." Id. A Rule 12(c) motion "has been appropriately used forresolving declaratory judgment actions involving the construction of insurance policy language or provisions." Unitrin Auto & Home Ins. Co. v. Siarris, 2015 WL 457630, at *2 (W.D.N.C. Feb. 3, 2015). "While the Court generally considers only the allegations of the pleadings in ruling on a Rule 12(c) motion, the Court may consider documents that are 'integral to and explicitly relied on in the complaint,' so long as there is no question as to the documents' authenticity." In re Versant Props., LLC, No. 1:10CV198, 2011 WL 1131057, at *3 n.4 (W.D.N.C. Mar. 25, 2011); see also Massey v. Ojaniit, No. 3:11-CV-477-RJC, 2013 WL 1320404, at *7 (W.D.N.C. Mar. 29, 2013) . "[T]he court need not accept allegations that 'contradict matters properly subject to judicial notice or exhibit.'" Massey, 2013 WL 1320404, at *7.
When a district court's jurisdiction is based on diversity, the court must apply the forum state's choice of law rules. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941). North Carolina is the forum state. Therefore, North Carolina's choice of law rules apply.
For insurance contracts, North Carolina courts apply the principle of lex loci contractus, which requires that "the substantive law of the state where the last act to make a binding contract occurred, usually delivery of the policy, controls the interpretation of the contract." See Beal v. Coastal Carriers, Inc., 794 S.E.2d 882, 893 (N.C. Ct. App. 2016). Under North Carolina law, "[a]n insurer's duty to defend is ordinarily measured by the facts as alleged in the pleadings," and insurers are required to defend policyholders from even "unsubstantiated" allegations if they allege an injury covered by the policy. Harleysville Mut. Ins. Co. v. Buzz OffInsect Shield, LLC, 692 S.E.2d 605, 611 (2010) (quoting Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co., 340 S.E.2d 374, 377 (1986)). "[H]owever, even a meritorious allegation cannot obligate an insurer to defend if the alleged injury is not within, or is excluded from, the coverage provided by the insurance policy." Id.
If the parties dispute whether a duty to defend exists, the insured must first show that the facts asserted fall within the policy's coverage, after which "the insurer must show that the policy precludes coverage based on an exclusion." Penn. Nat'l Mut. Cas. Ins. Co. v. Sharpe Images, Inc., No. 3:11-CV-150, 2012 WL 3962747, at *2 (W.D.N.C. Sept. 11, 2012). When there is no duty to defend, there is no duty to indemnify. Greve, 2017 WL 5557669, at *5. North Carolina courts apply the definitions supplied in insurance contracts, and undefined words are given "a meaning consistent with the sense in which they are used in ordinary speech, unless the context clearly requires otherwise." Harleysville, 692 S.E.2d at 612 (quoting Wachovia Bank & Tr. Co. v. Westchester Fire Ins. Co., 172 S.E.2d 518, 522 (1970)). The meaning of an insurance contract is a question of law for the court. See Wachovia, 172 S.E.2d at 522.
As an initial matter, the golf cart involved in this incident falls within the Policy's definition of a "motor vehicle," which is defined as a "self-propelled land or amphibious vehicle." Doc. 1-1 at 8-9. LMFIC contends that all of the claims in the Underlying Action fall squarely within Exclusion A.1 or A.2 of the "Motor Vehicle Liability" exclusions of the Policy.
LMFIC contends that because the incident occurred on a public highway and the golf cart was not registered, it falls squarely within Exclusion A.1.b of the Policy.
The Policy excludes coverage for personal liability claims arising out of "Motor Vehicle Liability." The pertinent provision in the "Motor Vehicle Liability" exclusion in A.1.b. provides as follows:
Doc. 1-1 at 25. Both the Lindsey Defendants and Sutton have admitted that the golf cart was not registered with the North Carolina Department of Motor Vehicles at the time of the accident. Doc. 18 at 2; Doc. 19 at 2.
N.C. Gen. Stat. § 20-50(a) provides that a "vehicle intended to be operated upon any highway of this State must be registered with the Division [of Motor Vehicles] in accordance with G.S. 20- 52, and the owner of the vehicle must comply with G.S. 20-52 before operating the vehicle." (emphasis added). Under the statute, the issue presented here is whether a golf cart is intended to be operated on a highway.
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