Louisville Galleria, LLC v. Phila. Indem. Ins. Co.

• Decision Date: 25 March 2022
• Docket Number: Civil Action No. 3:20-CV-733-CHB
• Citation: 593 F.Supp.3d 637
• Parties: LOUISVILLE GALLERIA, LLC, et al., Plaintiffs, v. PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Western District of Kentucky

593 F.Supp.3d 637

LOUISVILLE GALLERIA, LLC, et al., Plaintiffs,

v.PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant.

Civil Action No. 3:20-CV-733-CHB

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

Signed March 25, 2022

Christopher N. Jacovitch, Justin M. Schaefer, Michael S. Maloney, Schiller Barnes Maloney PLLC, Louisville, KY, for Plaintiffs.

Barry M. Miller, Freeman, Mathis & Gary, LLP, Lexington, KY, for Defendant.

MEMORANDUM OPINION AND ORDER

CLARIA HORN BOOM, UNITED STATES DISTRICT COURT JUDGE

This matter is before the Court on Plaintiffs Louisville Galleria, LLC, Louisville Galleria Services, LLC, Louisville Galleria Garage, LLC, Cordish Operating Ventures, LLC, and the Cordish Companies, Inc.’s Motion for Summary Judgement, [R. 18]. Defendant Philadelphia Indemnity Insurance Company ("Philadelphia") filed a Response, [R. 22]. Plaintiffs filed a Reply, [R. 23], and Philadelphia filed a Sur–Reply, [R. 26]. This matter is now ripe for review. For the reasons stated below, the Court will grant Plaintiffs’ Motion for Summary Judgment.

I. Background

In April 2013, Louisville Galleria Services, LLC ("LGS"), entered into a Protective Service Agreement ("the Agreement") with American Service Industries, Inc. ("ASI").¹ [R. 18, p. 5]. The Agreement provided that ASI would provide security and "protective services" for LGS, including for the Fourth Street Live! entertainment area in downtown Louisville. Id. at 6. The Agreement also contained insurance and indemnity provisions, requiring ASI to procure insurance and to name certain Plaintiffs as additional insureds:

Contractor shall be liable for all conduct, of any kind, of its personnel while such personnel are performing any duties under this Agreement , or any other such related work for Client under this Agreement. In this regard, Contractor agrees to maintain the following polices of insurance, to the extent commercially available, in its own name, and in the names of Client , Entertainment Consulting International, LLC, Entertainment Concepts Investors Management Company, LLC; Entertainment Concepts Investors, LLC; Entertainment Consulting Services, LLC; The Cordish Company; The Cordish Companies Inc. ; Four Street Realty Holdings, LLC; Fourth Street Realty Holdings Investors, LLC; Louisville Galleria, LLC ; Louisville Galleria Investors, LLC; Louisville Saloons, LLC; ARB KY, LLC; Hotel Louisville, LLC; FSL Management, LLC; FSH Management, LLC; FSL Entertainment, LLC; Downtown Sports, LLC; Fourth Street EDC, LLC; Hogan Holdings 3, LLC as additional insureds ...

a. Comprehensive General Liability on an occurrence form ... with limits of not less than $4,000,000 combined single limit per occurrence, covering acts and omissions of Contractor, bodily injury and property damage ...

Contractor shall indemnify and hold harmless and defend Client and Client's parent company or companies, subsidiaries, related entities, shareholders, directors, officers, affiliates, employees, agents, and successors or assigns ... from all suits, actions, complaints, or claims of any character, type or description, brought or made on accounts of or resulting from any injuries, libel, false imprisonment or damages howsoever caused, received or sustained by any person or persons or property arising out of, or occasioned by, the acts of Contractor or its director, officers, employees, personnel, agents, and successors or assigns while performing any duties on the Client's premises or elsewhere under this Agreement[.]²

[R. 18–4, Ex. D, pp. 4–5, ¶¶ 8–9] (emphasis added).

In accordance with the Agreement, from January 1, 2015, to February 15, 2016, Philadelphia insured ASI under a commercial liability policy—policy number PHPK1274034 ("Policy"). [R. 18, p. 3; R. 22, p. 3]. Importantly, the Policy contained a blanket additional insureds endorsement (the "AI Endorsement") that, among other things, addressed who was granted additional–insured status under the Policy:

Blanket Additional Insureds by Contract – Any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability for "bodily injury," "property damage" or "personal advertising injury" caused, in whole or in part, by :

(1) Your acts or omissions; or

(2) The acts or omissions of those acting on your behalf;

in the performance of your ongoing operations for the additional insured.

[R. 18–1, Ex. A, p. 88; R. 18, p. 4; R. 22, p. 5].

On January 26, 2016, Kristen McMains ("McMains") was attacked by a third–party assailant in a parking garage owned and operated by the Plaintiffs and sustained serious injuries. [R. 18, p. 5; R. 22, pp. 1–2]. As a result, on January 23, 2017, McMains filed suit in Jefferson Circuit Court (the "McMains Suit") against the Plaintiffs and Towne Park, LLC, alleging that the Plaintiffs breached their duty to provide security and protect her from harm. [R. 18, p. 5; R. 18–2, Ex. B]. On the day of the incident, two ASI security personnel were actively patrolling the Fourth Street Live! area, which included the parking garage where McMains was attacked. [R. 18, p. 9]. However, McMains did not name ASI as a defendant in her state court action.³ [R. 22, p. 2]; see also [R. 18–2, Ex. B].

Shortly after McMains filed her suit, Plaintiffs’ representative, Dana Gausepohl ("Gausepohl"), tendered the defense and indemnity to ASI based on the terms and provisions of the Agreement, attaching both the Agreement and the complaint filed by McMains in state court (the "Underlying Complaint"). [R. 18, pp. 7–8; R. 18–6, Ex. F]. The email requested that the message be forwarded to ASI's insurer, Philadelphia. [R. 18–6, Ex. F]. On April 25, 2017, Rick Hartman ("Hartman"), a senior claims specialist at Philadelphia, denied Gausepohl's request for defense and indemnity on the mistaken ground that ASI personnel were not working the day of McMains’ attack. [R. 18, p. 8; R. 18–7, Ex. G]. In response, on May 5, 2017, Gausepohl sent Hartman ASI's billing records, which confirmed that two ASI employees were patrolling on January 26, 2016, during the time of the attack. [R. 18, p. 9; R. 18–8, Ex. H; R. 18–9, Ex. I]. Nevertheless, Philadelphia refused Plaintiffs’ request for defense and indemnity. [R. 18, p. 9].

On February 27, 2018, Plaintiffs filed a Third–Party Complaint against ASI in the McMains Suit, alleging (1) indemnity, apportionment, and contribution, and (2) breach of contract. [R. 18–10, Ex. J]. In January 2021, via mediation, Plaintiffs and McMains entered into a settlement agreement, which expressly excluded ASI. [R. 22, p. 2; R. 20–1, Ex. O–2, p. 2, ¶ 2]. Thus, the remaining claim in the McMains Suit is Plaintiffs’ third–party claim against ASI for apportionment, indemnification, and breach of contract. [R. 22, p. 3]. On February 22, 2021, the Jefferson Circuit Court granted ASI's Motion to Continue the Trial. [R. 22–3, Ex. C]. Since then, there have been no other filings in the McMains Suit. [R. 22, p. 3].

On November 2, 2020, Plaintiffs filed this declaratory judgment action against Philadelphia pursuant to 28 U.S.C. § 1332 and 28 U.S.C, § 2201, et seq. [R. 1, p. 3, ¶¶ 11–13]. Plaintiffs seek, among other things, (1) a ruling that Philadelphia owed the Plaintiffs a defense in the McMains suit; (2) indemnification from Philadelphia for the settlement reached between the Plaintiffs and McMains in the McMains Suit; and (3) recognition that Plaintiffs are "additional insureds" pursuant to the Agreement and Philadelphia's Policy. [R. 1; R. 18, p. 3]. Plaintiffs moved for summary judgment on July 9, 2021, arguing they are additional insureds under the Policy and entitled to a defense and indemnity. Philadelphia countered that Plaintiffs are not additional insureds because the named insured (here, ASI) did not "cause[ ], in whole or in part," McMains’ injuries, as evidenced by the fact that ASI was never named by McMains in the Underlying Complaint. [R. 22]. This dispute largely revolves around the scope and application of the AI Endorsement's phrase "caused, in whole or in part, by."

II. Standard of Review

Because Kentucky is the forum state, its substantive law will be used. Rawe v. Liberty Mut. Fire. Ins. Co. , 462 F.3d 521, 526 (6th Cir. 2006).⁴ However, federal procedural law will govern as applicable, including in establishing the appropriate summary judgment standard. Weaver v. Caldwell Tanks, Inc. , 190 F. App'x 404, 408 (6th Cir. 2006). Summary judgment is proper where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). When determining a motion for summary judgment, the Court must construe the evidence and draw all reasonable inferences from the underlying facts in favor of the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Lindsay v. Yates , 578 F.3d 407, 414 (6th Cir. 2009).

The Court may not "weigh evidence and determine the truth of the matter" at the summary judgment stage. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 265, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Court "need consider only the cited materials, but it may consider other materials in the record." FED. R. CIV. P. 56(c)(3).

The initial burden of establishing no genuine dispute of material fact rests with the moving party. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party satisfies this burden, the burden then shifts to the nonmoving party to produce "specific facts" showing a "genuine issue" for trial. Id. at 324, 106 S.Ct. 2548. Where "a party fails to support an assertion of fact or fails to properly address another party's assertion of fact," the Court...