Longaberger Co. v. U.S. Fidelity & Guar. Co.

• Decision Date: 01 June 1998
• Docket Number: No. C2-96-262.,C2-96-262.
• Citation: 31 F.Supp.2d 595
• Court: U.S. District Court — Southern District of Ohio
• Parties: LONGABERGER CO., Plaintiff, v. UNITED STATES FIDELITY & GUARANTY CO., Defendant.

Page 595

31 F.Supp.2d 595

LONGABERGER CO., Plaintiff, v. UNITED STATES FIDELITY & GUARANTY CO., Defendant.

No. C2-96-262.

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

June 1, 1998.

Joseph William Ryan, Jr., Porter Wright Morris & Arthur, Columbus, OH, for plaintiff, The Longaberger Company.

Thomas Joe Keener, Keener Doucher Curley & Patterson, Columbus, OH, Frank Winston, Jr., Wiley Rein & Fielding, Washington, DC, for defendant, United States Fidelity and Guaranty Company.

MEMORANDUM AND ORDER

HOLSCHUH, District Judge.

I. INTRODUCTION

This case is before the Court on motions for summary judgment filed by both the plaintiff and the defendant. The motions have been fully briefed and are ready for decision.¹

The plaintiff, Longaberger Co. (Longaberger) brings this action against the defendant, United States Fidelity & Guaranty Company (USF & G), for declaratory judgment seeking to determine the defendant's obligations under a commercial general liability insurance policy. Specifically, Longaberger is seeking a declaratory judgment requiring USF & G to defend and indemnify Longaberger under its commercial general liability policy in connection with an action pending in U.S. District Court in Lee v. Longaberger Co., No. CS-95-825 (S.D.Ohio). That case concerns the discharge of carbon monoxide by a faulty heater in a residential home leased by the plaintiff. The jurisdiction of this Court is based on diversity jurisdiction pursuant to 28 U.S.C. § 1332 Both parties have stipulated as to the facts in the case and each has moved for summary judgment pursuant to Rule 56(b) of the Federal Rules of Civil Procedure.

II. SUMMARY JUDGMENT STANDARD

Fed.R.Civ.P. 56(c) provides:

[Summary judgment] ... shall be rendered forthwith 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 judgment as a matter of law.

"[T]his standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis in original); Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir.1984).

Summary judgment will not lie if the dispute about a material fact is genuine; "that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. The purpose of the procedure is not to resolve factual issues, but to determine if there are genuine issues of fact to be tried. Lashlee v. Sumner, 570 F.2d 107, 111 (6th Cir.1978). Therefore, summary judgment will be granted "only where the moving party is entitled to judgment as a matter of law, where it is quite clear what the truth is ... [and where] no genuine issue remains for trial, ... [for] the purpose of the rule is not to cut litigants off from their right of trial by jury if they really have issue to try." Poller v. Columbia Broadcasting Sys., 368 U.S. 464, 467, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962) (quoting Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 627, 64 S.Ct. 724, 88 L.Ed. 967 (1944)); accord County of Oakland v. City of Berkley, 742 F.2d 289, 297 (6th Cir.1984).

In making this inquiry, the standard to be applied by the Court mirrors the standard for what was formerly referred to as a directed verdict. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson, 477 U.S. at 250, 106 S.Ct. 2505.

"The primary difference between the two motions is procedural; summary judgment motions are usually made before trial and decided on documentary evidence, while directed verdict motions are made at trial and decided on the evidence that has been admitted." Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731, 745, n. 11[, 103 S.Ct. 2161, 76 L.Ed.2d 277] (1983). In essence, though, the inquiry under each is the same: whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.

Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505. Accordingly, although summary judgment should be cautiously invoked, it is an integral part of the Federal Rules, which are designed "to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 1).

In a motion for summary judgment the moving party bears the "burden of showing the absence of a genuine issue as to any material fact, and for these purposes, the [evidence submitted] must be viewed in the light most favorable to the opposing party." Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) (footnote omitted); accord Adams v. Union Carbide Corp., 737 F.2d 1453, 1455-56 (6th Cir.), cert. denied, 469 U.S. 1062, 105 S.Ct. 545, 83 L.Ed.2d 432 (1984). Inferences to be drawn from the underlying facts contained in such materials must also be considered in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Watkins v. Northwestern Ohio Tractor Pullers Ass'n, 630 F.2d 1155, 1158 (6th Cir.1980). Additionally, "unexplained gaps" in material submitted by the moving party, if pertinent to materials submitted by the moving party, if pertinent to material issues of fact, justify denial of a motion for summary judgment. Adickes, 398 U.S. at 157-60, 90 S.Ct. 1598.

If the moving party meets its burden and adequate time for discovery has been provided, summary judgment is appropriate if the opposing party 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. The existence of a mere scintilla of evidence in support of the opposing party's position is insufficient; there must be evidence on which the jury could reasonably find for the opposing party. Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

When a motion for summary judgment is made and supported as provided in this rule, an 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).

III. FACTUAL BACKGROUND

1. Longaberger owns and maintains a number of commercial and residential properties in Dresden, Ohio.

2. One such property owned by Longaberger, a single-family, two-story, residential property located at 307 Chestnut in Dresden, Ohio (the "property"), was leased by Longaberger to Janet Lee in June 1993. Ms. Lee thereafter lived in this property with her three children — Jeffrey Lee, David Lee, and Michael Lee.

3. In February 1994, Ms. Lee complained to Longaberger of moisture on the walls of the property. Longaberger made repairs to the property's roof. Notwithstanding these repairs, a water problem apparently persisted.

4. Upon further investigation, Longaberger determined that the water on the walls of the property was the result of condensation. Accordingly, Longaberger employees installed a "power vent" in the brick chimney of the property to vent exhaust from the natural gas furnace in use at the property.

5. Even after the power vent was installed, the condensation problem allegedly continued. On February 28, 1994, a Longaberger employee inspected the property, and determined that the chimney chase had collapsed and thus rendered the power vent inoperable. Longaberger employees attempted to address the situation by venting furnace gasses through the wall of the property. After the furnace gasses were vented through the wall of the property, the condensation problem lessened.

6. On March 2, 1994, at the request of Ms. Lee, Columbia Gas Company ("Columbia Gas") inspected the furnace at the property. Ms. Lee contends that Columbia Gas found that carbon monoxide was being released into the property as a result of a problem with the furnace.

7. On March 4, 1994, Longaberger employees installed a new furnace at the property.

8. On March 7, 1994, Ms. Lee, for the first time, notified Longaberger that she and her three sons were allegedly suffering from carbon monoxide poisoning.

9. On or about July 20, 1994, Longaberger notified USF & G of the claims presented by Ms. Lee and her children. Longaberger demanded that USF & G state its coverage position with respect to the Lee's claims under a commercial general liability insurance contract, numbered 1MP30058285401, which covered the period for September 30, 1993 to September 30, 1994.

10. The insurance contract number 1MP30058285401 between USF & G and Longaberger at issue in this matter contains the following language under the "Exclusions" section:

2. Exclusions.

This insurance does not apply to:

* * * * * *

f. (1) "Bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants:

(a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured;

(b) At or from any premises, site or location which is or was at any time used by or for any insured or others for the handling, storage, disposal, processing or treatment of waste;

(c) Which are or were at any time transported, handled, stored, treated, disposed of, or processed as waste by or for any insured or...