Liberty Mut. Ins. Co. v. Estate, CIVIL ACTION NO. 3:17-CV-599-CRS

• Decision Date: 28 March 2019
• Docket Number: CIVIL ACTION NO. 3:17-CV-599-CRS
• Citation: 377 F.Supp.3d 723
• Parties: LIBERTY MUTUAL INSURANCE COMPANY, et al., Plaintiffs v. The ESTATE OF Hugo J. BOBZIEN, Jr. BY AND THROUGH his personal Representative and Administratrix, Theresa B. HART, et al., Defendant
• Court: U.S. District Court — Western District of Kentucky

377 F.Supp.3d 723

LIBERTY MUTUAL INSURANCE COMPANY, et al., Plaintiffs

v.The ESTATE OF Hugo J. BOBZIEN, Jr. BY AND THROUGH his personal Representative and Administratrix, Theresa B. HART, et al., Defendant

CIVIL ACTION NO. 3:17-CV-599-CRS

United States District Court, W.D. Kentucky, at Louisville.

Signed March 28, 2019

Cecilia F. Weihe, Douglas W. Langdon, John Kendrick Wells, IV, Frost Brown Todd LLC, Louisville, KY, for Plaintiffs.

John M. Sosbe, D. Duane Cook, Cook & Watkins, PLC, Georgetown, KY, for Defendant the Estate of Hugo J. Bobzien, Jr.

Elizabeth E. Vaughn, Henderson, KY, Nicholas C.A. Vaughn, Somerset, KY, for Defendant Michael J. Bobzien.

MEMORANDUM OPINION

Charles R. Simpson III, Senior Judge

This matter is before the court for consideration of cross-motions for summary judgment in this declaratory judgment action. The plaintiffs, Liberty Mutual Insurance Company, Liberty Insurance Corporation, Liberty Mutual Fire Insurance Company, and LM Insurance Corporation (collectively herein "Liberty" or the "Liberty entities"), contend that there is diversity of citizenship between the parties and the amount in controversy exceeds $ 75,000.00 excluding interest and costs, satisfying the requirement that independent subject matter jurisdiction exist for this court to "declare the rights and other legal relations" of the parties. 28 U.S.C. § 2201(a) ; Brotherhood Mut. Ins. Co. v. United Apostolic Lighthouse, Inc. , 200 F.Supp.2d 689, 691 (E.D. Ky. 2002). The defendants, the Estate of Hugo J. Bobzien, Jr. ("Hugo's Estate," "Hugo," or the "father" herein, as appropriate) and Michael J. Bobzien ("Michael" or the "son" herein), do not challenge the assertion of subject matter jurisdiction.

The Liberty entities are each alleged to be organized under the laws of states other than Kentucky and to have principal places of business outside the Commonwealth. Complaint, DN 1, pp. 2, PageID #2. They are all licensed to do business in Kentucky. Hugo's Estate is capable of being sued by and through its Administratrix, Theresa B. Hart, who is a citizen of Kentucky. Michael is a citizen of the state of Florida and the plaintiff in the underlying lawsuit brought in the Jefferson County, Kentucky, Circuit Court. The court thus finds that there is complete diversity between the parties. The allegation that the amount in controversy exceeds $ 75,000.00 is unchallenged and will therefore be accepted for purposes of finding that this court has subject matter jurisdiction over this matter. We note that the allegations in the underlying state court complaint claim Michael suffered numerous and significant bodily injuries which could yield a damage award in excess of $ 75,000.00.

Upon a finding of subject matter jurisdiction, the court must determine, in its discretion, whether the case is an appropriate one for declaratory relief under the Declaratory Judgment Act, 28 U.S.C. §§ 2201, et seq. The principal considerations in making this determination are (1) whether the judgment would settle the controversy; (2) whether the declaratory action would serve a useful purpose in clarifying the legal relations in issue; (3) whether the declaratory remedy is being used merely for purposes of "procedural fencing" or "to provide an arena for a race for res judicata "; (4) whether the use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and (5) whether there is an alternative remedy that is better or more effective. Am. Home Assurance Co. v. Evans , 791 F.2d 61, 63 (6th Cir. 1986) (citing Grand Trunk Western R.R. v. Consolidated Rail Corp. , 746 F.2d 323, 326 (6th Cir. 1984) ). The parties are in agreement that the court should exercise its discretion to render a declaratory judgment. For the reasons set forth below, the court will entertain the summary judgment arguments and render a declaratory judgment in this case.

A. Undisputed Facts¹ - State Court Litigation

Michael was born in 1958 and is the biological son of Hugo. Michael resided in his father's household under his father's care, control and dominion, from birth until he reached the age of majority in approximately 1976. In the FAC, Michael recites the following events:

From the date of his birth until he reached the age of majority, [Michael] was repeatedly, forcibly, knowingly, intentionally, wantonly, chronically, recklessly, grossly negligently and/or negligently exposed and subjected to [his father's] hazardous cigarette smoke while he necessarily lived at his childhood residence under the exclusive control and dominion of [his father], primarily in this county.

As a direct, natural and foreseeable result of [Hugo's] decisions to repeatedly, forcibly, knowingly, intentionally, wantonly, chronically, recklessly, grossly negligently and/or negligently expose and subject [Michael] to his hazardous cigarette smoke, and as a substantial factor and proximate cause of such decisions, [Michael] has recently, and within one year from commencement of this action, been caused to develop chronic obstructive pulmonary disease

, osteopenia (with 2 chronic compression fractures of his L2 and T2 vertebrae, osteoarthritis in hips and knees, chronic back pain and/or degenerative disc disease, cataracts, past and future medical costs, past and future pain and suffering, past and future loss of enjoyment of life, permanent impairment of the power to labor and earn money, loss of future life expectancy, past and future inconvenience and other serious injuries and harms.

The conduct of [Hugo] as herein alleged was committed intentionally, knowingly, wantonly, recklessly and/or with gross negligence.

Hugo died on March 30, 2016. After his father's death, Michael filed claims for bodily injury in the probate action, but his claims were disallowed. He then filed a state court action [Civ. Action No. 17-CI-002751] containing the above factual allegations and presenting three claims for relief: negligence, negligence per se, and premises liability. Each claim articulates a duty owed by the father to the son: a common law duty owed by Hugo to exercise ordinary care for the protection of his son (negligence); a statutory duty owed by Hugo to exercise ordinary care for the protection of his son (negligence per se); and a duty owed by Hugo to exercise ordinary care to make his property reasonably safe for invitees, including his then minor son (premises liability). The claims are identically written, with the exception of the particular duty to which the claim refers. Representative of the claims, Count 1 – Negligence alleges:

At all times relevant, [Hugo] had a common law duty to exercise ordinary care for the protection of his son, [Michael], which included the duty to refrain from repeatedly, forcibly, knowingly, intentionally, wantonly, chronically, recklessly, grossly negligently and/or negligently exposing and subjecting his minor son, the Plaintiff, to unsafe, dangerous, neglectful, abusive and/or harmful conditions, including his hazardous cigarette smoke.

At all times relevant, [Hugo] breached the foregoing common law duty by repeatedly, forcibly, knowingly, intentionally, wantonly, chronically, recklessly, grossly negligently and/or negligently exposing and subjecting his son to his hazardous cigarette smoke.

As a direct, natural, foreseeable, factual and proximate cause of [Hugo's] breaches of the foregoing common law duty, [Michael] has been seriously injured and harmed as herein previously alleged.

The conduct of [Hugo] as herein alleged was undertaken intentionally, knowingly, wantonly, recklessly and/or with gross negligence, thereby entitling [Michael] to an award of punitive damages.

DN 23-2. Michael's illnesses and conditions allegedly resulted from his childhood exposure to secondhand smoke. The FAC frames the claims to allege breaches of duty as a result of Hugo's decisions to expose his son to that hazardous condition. Hugo's Estate has answered and denied these claims. The state action is ongoing.

Hugo's Estate provided notice of the suit to the Liberty entities. They are defending the state court action under a reservation of rights while seeking a declaration from this court that they have no obligation to indemnify or further defend Hugo's Estate under any of the policies issued to Hugo.

B. Exercise of Jurisdiction – Considerations

The parties assert that adjudicating the coverage issues "by comparing the allegations in the underlying complaint with the terms of the insurance policy"² will not require any fact-finding. The question as to the obligations, if any, of the insurer to the insured are generally matters of law, and thus may be decided by this court. Cincinnati Ins. Co. v. Motorists Mutual Ins. Co. , 306 S.W.3d 69, 73 (Ky. 2010).

A declaration of "no coverage" would clearly settle the dispute as between the Liberty entities and Hugo's Estate. So, too, would a finding in favor of Hugo's Estate³ that the grounds articulated by the Liberty entities do not constitute an impediment to the Estate's demand for a defense and indemnification. In the event the court were to conclude that one or more of Michael's claims "potentially, possibly or might come within the coverage of the policy,"⁴ the Liberty entities' duty to defend would be clear with respect to all of Michael's claims in the state court suit. James Graham Brown Found. , 814 S.W.2d at 279-80 ; Martin County Coal Corp. v. Universal Underwriters Ins. Servs. , 792 F.Supp.2d 958 (E.D. Ky. 2011) ; Travelers Property Cas. Co. of America v. Hillerich & Bradsby Co., Inc. , 598 F.3d 257 (6th Cir. 2010) (the duty to defend applies to all claims, once duty is triggered). Of course, this court cannot find that indemnity is owed to Hugo's Estate. If the policy terms are not preclusive, any obligation to indemnify would flow from the state court action. The parties recognize this and seek only a determination whether any of the policy terms preclude indemnity and...