Madison Cnty. v. Evanston Ins. Co.

Citation340 F.Supp.3d 1232
Decision Date28 September 2018
Docket NumberCase No. 5:15-cv-01997-HNJ
Parties MADISON COUNTY, Sheriff Blake Dorning, et al., Plaintiffs v. EVANSTON INSURANCE COMPANY, et al., Defendants
CourtU.S. District Court — Northern District of Alabama

David J. Hodge, Joseph D. Aiello, Morris King & Hodge, J. Jeffery Rich, Madison County Commission, Huntsville, AL, for Plaintiffs.

H. Harold Stephens, Amanda James Turnage, Harold D. Mooty, III, Bradley Arant Boult Cummings LLP, Huntsville, AL, Brian C. Richardson, Fredrick Lane Finch, Jr., Brandon J. Clapp, Swift Currie McGhee & Hiers LLP, Birmingham, AL, for Defendants.

AMENDED MEMORANDUM OPINION

HERMAN N. JOHNSON, JR., UNITED STATES MAGISTRATE JUDGE

This civil action proceeds before the court on Defendant Advanced Correctional Healthcare, Inc.'s ("ACH") Motion for Summary Judgment (Doc. 89), Defendant Evanston Insurance Company's ("Evanston") Motion for Summary Judgment (Doc. 91), Evanston's Motion to Strike Exhibits in Support of Plaintiffs' Brief in Opposition (Doc. 106), and Plaintiffs' Request for Judicial Notice. (Doc. 116).

Based upon the following analyses, the court will GRANT Evanston's summary judgment motion; DENY ACH's summary judgment motion as to Plaintiffs' fraud, breach-of-contract, and indemnity claims; GRANT ACH's motion as to Plaintiffs' promissory estoppel claim; DENY Plaintiffs' Request for Judicial Notice; and DENY Evanston's Motion to Strike as moot.

STANDARD OF REVIEW

Pursuant to the Federal Rules of Civil Procedure, "[t]he court shall grant summary judgment if 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. Rule 56(a). Defendants, as the parties seeking summary judgment, bear the initial responsibility of informing the district court of the basis for their motions, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which they believe demonstrate the absence of a genuine issue of material fact. Clark v. Coats & Clark, Inc. , 929 F.2d 604, 608 (11th Cir. 1991) (quoting Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ).

Rule 56 "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who 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. "In such a situation, there can be ‘no genuine issue as to any material fact,’ since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 322-23, 106 S.Ct. 2548. In addition, a movant may prevail on summary judgment by submitting evidence "negating [an] opponent's claim," that is, by producing materials disproving an essential element of a non-movant's claim or defense. Id. at 323, 106 S.Ct. 2548 (emphasis in original).

A non-moving party demonstrates a genuine issue of material fact by producing evidence by which a reasonable fact-finder could return a verdict in its favor. Greenberg v. BellSouth Telecomms., Inc. , 498 F.3d 1258, 1263 (11th Cir. 2007) (citation omitted). The "court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Products, Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) (citations omitted). " ‘Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.’ " Id. (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). "Thus, although the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe." Reeves , 530 U.S. at 151, 120 S.Ct. 2097 (citation omitted). "That is, the court should give credence to the evidence favoring the nonmovant as well as that ‘evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that that evidence comes from disinterested witnesses.’ " Id. (citation omitted).

BACKGROUND

The undersigned sets forth the following facts for the summary judgment determination, drawn from the evidence taken in the light most favorable to Plaintiffs.

Plaintiff Blake Dorning ("Dorning") serves as the Sheriff of Madison County, Alabama ("County"). As Sheriff, Dorning's duties include (1) managing and operating the Madison County Jail ("Jail") and (2) providing services that tend to inmates' needs, including housing, food, and medical care. A November 2000 consent decree binds Dorning to provide constitutionally adequate medical care to the Jail's inmates, and Dorning utilizes funding from the County to comply with the consent decree's requirements. (Doc. 95-11 at 3-23). The County retains a statutory duty to fund the operation of the Jail through the Sheriff's budget, which includes funding at a necessary level to provide constitutionally adequate medical care.

In 2002, Dr. Norman Johnson ("Johnson") founded Advanced Correctional Health Care, Inc. ("ACH"). ACH provides healthcare in seventeen (17) states at approximately three-hundred (300) correctional facilities, serving as the largest privately-owned provider of correctional healthcare.

On July 29, 2005, Dorning and the County (collectively, "Plaintiffs") issued a Request for Proposals (RFP) to administer a comprehensive, healthcare services system at the Jail. (Doc. 95-9 at 27). The RFP indicated that the selected provider would serve as the sole supplier of healthcare services, and the coordinator of the healthcare delivery system, at the Jail. (Id. at 28). The RFP required that the selected provider carry "acceptable professional liability insurance providing coverage for claims including professional liability, negligence, and claims asserted pursuant to 42 U.S.C. § 1983... and name Madison County, the Sheriff, and their agents and employees as additional insureds." (Id. at 34). The RFP also required that the selected provider "indemnify, defend, and hold harmless the Sheriff, Madison County and any and all of their agents and employees from any claims arising from the delivery of healthcare services to inmates at the [Jail]." (Id. )

ACH and Plaintiffs Enter into a Health Services Agreement

ACH, along with several other companies, responded to the RFP. Although the County rejected ACH's first proposal, the County subsequently engaged ACH to negotiate a contract for the provision of healthcare at the Jail. The discussions between ACH and the County culminated in a Health Services Agreement in July 2006 ("Agreement"). (Doc. 94-2 at 8 through Doc. 94-3 at 12). The parties subsequently renewed the Agreement on May 1, 2009 (Doc. 95-11 at 33-49); May 1, 2012 (Doc. 95-11 at 51 through Doc. 95-12 at 18); and February 1, 2014. (Doc. 95-13 at 2-22).

All versions of the Agreement state that ACH would serve as the "sole supplier of healthcare services (including pharmacy) and coordinator of the healthcare delivery system" at the Jail. (Doc. 94-2 at 8; Doc. 95-11 at 33, Doc. 95-11 at 51; Doc. 95-13 at 2). The Agreement required ACH to "develop, manage and staff a comprehensive healthcare services system," yet Dorning retained responsibility for the Jail's operations. (Doc. 94-2 at 8-9; Doc. 95-11 at 33-34; Doc. 95-11 at 51-52; Doc. 95-13 at 2-3). Additionally, the Agreement stated the following:

6. MINIMUM QUALIFICATIONS AND REQUIREMENTS: The Sheriff requires and ACH represents and warrants that it will meet certain minimum requirements. At a minimum, ACH will strictly comply with the following:
......
B. INSURANCE: ACH covenants to furnish, and it is understood and agreed that ACH shall procure at its own expense, and maintain in force throughout the entire term of this Agreement, including any renewal terms, General Liability, Professional Liability, and Medical Malpractice Insurance providing coverage for claims including professional liability, negligence, and claims asserted pursuant to 42 U.S.C. § 1983 in the amount of One Million Dollars ($1,000,000) per occurrence, and Three Million Dollars ($3,000,000) aggregate, insuring all claims that may arise out of the course and scope of this Agreement. Madison County and the Sheriff shall be additional named insureds on the aforesaid policies of insurance.

(Doc. 94-2 at 9; Doc. 95-11 at 34; Doc. 95-11 at 52; Doc. 95-13 at 3).

The Agreement accorded that "[a]s between insurance coverage provided by other sources to the above named entities and individuals and ACH's insurance coverage, ACH's insurance coverage shall be primary." (Id. ). The Agreement also required ACH to furnish the Madison County Administrator with a copy of ACH's insurance policy obtained in compliance with the Agreement. (Id. ) Furthermore, it provided that "all claims, litigation costs, attorney fees and any judgment or settlement money will be paid by ACH" should "ACH's insurance provider withdraw coverage or become insolvent." (Doc. 94-2 at 10; Doc. 95-11 at 35; Doc. 95-12 at 1; Doc. 95-13 at 4).

The Agreement also contained bilateral indemnification provisions:

D. INDEMNIFICATION:
ACH agrees to indemnify and save harmless Madison County, and the Sheriff, and their respective supervisors, agents, officers, employees, and officials from and against any and all liability, loss, damages, interest, judgments and liens growing out of any and all costs and expenses (including, but not limited to, reasonable attorney fees and disbursements) arising out of or incurred in connections with any and all claims, demands, suits, actions or proceedings, which may be brought against Madison
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