Main St. Am. Assurance Co. v. Marble Solutions, LLC

• Citation: 557 F.Supp.3d 844
• Decision Date: 30 August 2021
• Docket Number: 2:20-cv-02411-MSN-cgc
• Parties: MAIN STREET AMERICA ASSURANCE COMPANY, Plaintiff, v. MARBLE SOLUTIONS, LLC; Carlin McGlown, Individually and as a Representative of Marble Solutions, LLC; Adrian McGlown, Individually and as a Representative of Marble Solutions, LLC; and Daniel Hosea Waller, Individually and as a Representative of Marble Solutions, LLC, Defendants.
• Court: U.S. District Court — Western District of Tennessee

557 F.Supp.3d 844

MAIN STREET AMERICA ASSURANCE COMPANY, Plaintiff,

v.MARBLE SOLUTIONS, LLC; Carlin McGlown, Individually and as a Representative of Marble Solutions, LLC; Adrian McGlown, Individually and as a Representative of Marble Solutions, LLC; and Daniel Hosea Waller, Individually and as a Representative of Marble Solutions, LLC, Defendants.

No. 2:20-cv-02411-MSN-cgc

United States District Court, W.D. Tennessee, Western Division.

Signed August 30, 2021

Kenneth Wayne Ward, Hannah S. Lowe, Trammell, Adkins & Ward, P.C., Knoxville, TN, for Plaintiff.

Taylor A. Cates, Sarah Elizabeth Stuart, Burch Porter & Johnson, Stephen Scott Taylor, Dowden Worley Jewell & Olswing, PLLC, Memphis, TN, for Defendants Marble Solutions, LLC, Carlin McGlown, Adrian McGlown.

ORDER DENYING PLAINTIFF'S MOTIONS FOR SUMMARY JUDGMENT; ORDER DENYING DEFENDANTS’ MOTION FOR EXTENSION OF TIME TO RESPOND; AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

MARK S. NORRIS, UNITED STATES DISTRICT JUDGE

Before the Court are Plaintiff Main Street America Assurance Company's ("Plaintiff or "Plaintiff Main Street") Motions for Summary Judgment, (ECF Nos. 23 and 45); Defendants Marble Solutions, LLC, Carlin McGlown, and Adrian McGlown's (collectively "Defendants") Motion for Extension of Time to Respond to Plaintiff's Motion for Summary Judgment, (ECF No. 35); and Defendants’ own Motion for Summary Judgment, (ECF No. 41). For the reasons below, the Court DENIES Plaintiff's motions, DENIES Defendants’ motion for extension of time, and GRANTS and DENIES IN PART Defendants’ motion for summary judgment.

Background

This is a declaratory judgment action in which the Court must determine the parties’ respective duties and rights under an insurance policy issued by Plaintiff Main Street. The Court must decide whether Plaintiff Main Street has a duty to defend and indemnify Defendants in a civil proceeding in a state court in Travis County, Texas ("Texas suit" or "underlying suit").¹

(ECF No. 1 at PageID 3.) The underlying suit arises out of an alleged sexual assault committed by one of Defendants’ employees.²

Defendants were contracted to remodel a hotel property in Cedar Park, Texas. (ECF No. 1 at PageID 1; ECF No. 45-2 at PageID 449–50.) The Texas suit plaintiffs allege that Defendants’ employee, Daniel Hosea Waller,³ raped minor plaintiff Jane Doe on April 4, 2019. (ECF No. 45-2 at PageID 449.) Prior to this act, the Texas suit plaintiffs claim that Defendant Waller had an extensive criminal history related to child sexual offenses that Defendant Marble Solutions, LLC either knew or should have known about. (Id. )

The Texas suit plaintiffs allege that Defendant Waller intentionally assaulted the minor plaintiff in addition to alleging that he committed the intentional tort of false imprisonment. (Id. at PageID 452–53.) They further claim that Defendant Marble Solutions, LLC was negligent in relation to its supervision of Defendant Waller. (Id. at PageID 452–54.) Specifically, Defendants failed to "examine the credentials of [its] employees," that they did not "properly vet their employees/contractors by performing adequate background checks," and that they did not take "reasonable care in monitoring and supervising the conduct of the employees they did hire." (Id. at PageID 452.) They further allege that Defendant Marble Solutions, LLC is liable under a theory of respondeat superior. (Id. at PageID 452–454.) The Texas suit plaintiffs also seek to hold Defendants Adrian McGlown and Carlin McGlown individually liable. (Id. )

On May 17, 2021, a co-defendant in the underlying suit, Cedar Park Hospitality d/b/a Holiday Inn Express-Cedar Park, filed crossclaims against Defendants Marble Solutions, LLC and Daniel Waller. (ECF No. 46-1 at PageID 475.) The crossclaims allege that any injuries sustained by the plaintiffs were due to Defendant Waller's intentional acts and Defendant Marble Solutions, LLC's negligence. (ECF No. 45-3 at PageID 460–61.)

I. The Insurance Policy

The insurance policy (Policy No. MPG6356S) issued by Plaintiff Main Street contains the following pertinent provisions:

A. Coverage

1. Business Liability

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury", "property damage" or "personal and advertising injury" to which this insurance applies.

...

b. This insurance applies: (1) To "bodily injury" and "property damage" only if: (a) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory" ; (b) The "bodily injury" or "property damage" occurs during the policy period; and (c) Prior to the policy period, no insured listed under Paragraph C.1. Who is An Insured and no "employee" authorized by you to give or receive notice of an "occurrence" or claim, knew that the "bodily injury" or "property damage" had occurred, in whole or in part.

...

(2) To "personal and advertising injury" caused by an offense arising out of your business , but only if the offense was committed in the "coverage territory" during the policy period.

(ECF No. 1-6 at PageID 43; ECF No. 25 at PageID 244–45) (emphasis added). The policy then defines several key terms:

F. Liability And Medical Expenses Definitions

3. "Bodily injury" means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.

...

4. "Coverage territory" means:

a. The United States of America (including its territories and possessions), Puerto Rico and Canada;

...

13. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions

...

14. "Personal and advertising injury" means injury, including consequential "bodily injury", arising out of one or more of the following offenses:

a. False arrest, detention or imprisonment;

b. Malicious prosecution;

c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;

d. Oral or written publication, in any manner, or material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;

e. Oral or written publication, in any manner, or material that violates a person's right of privacy;

f. The use of another's advertising idea in your "advertisement"; or

g. Infringing upon another's copyright, trade dress or slogan in your "advertisement".

(ECF No. 1 at PageID 54–56; ECF No. 25 at PageID 245–46.)

Plaintiff admits that the alleged injuries in the underlying suit qualify as a "bodily injury" and that the alleged events occurred within the "coverage territory." (Id. at PageID 239.) The issues in dispute are: (1) whether the alleged injuries in the underlying suit arise from an "occurrence," (Id. ), and (2) whether the false imprisonment claim raised by the Texas suit plaintiffs qualifies as a "personal and advertising injury." (ECF No. 43 at PageID 407; ECF No. 45 at PageID 434.)

II. Procedural History

Plaintiff commenced this action seeking a declaratory judgment on June 11, 2020. (ECF No. 1.) The Court's scheduling order set May 17, 2021, as the deadline for the parties to file dispositive motions. (ECF No. 21 at PageID 207.) Plaintiff filed its initial motion for summary judgment on December 7, 2020. (ECF No. 23.) Defendants failed to timely respond to Plaintiff's motion. (See ECF No. 40 at PageID 347); see also L.R. 56.1(b) ("A party opposing a motion for summary judgment must file a response within 28 days....").

Seventy-eight (78) days after Plaintiff filed its motion for summary judgment, new counsel for Defendants made an appearance, and prior counsel moved to withdraw. (See ECF Nos. 33, 34, and 36.) Defendants sought an extension of time to respond to Plaintiff's pending motion for summary judgment that same day. (ECF No. 35.) Plaintiff opposes Defendants’ request for an extension. (ECF No. 40.)

Just eight (8) days later, and before the Court ruled on their request, Defendants’ filed their response to Plaintiff's motion for summary judgment on March 1, 2021. (ECF Nos. 38 and 39.) While still voicing their objection to Defendants’ untimely response, Plaintiff filed its reply on March 15, 2021. (ECF No. 42.)

On March 5, 2021, Defendants filed their own motion for summary judgment. (ECF No. 41.) Plaintiff filed its response on April 5, 2021. Defendants then filed their reply on April 19, 2021. (ECF No. 44.)

Finally, on May 17, 2021, Plaintiff filed its Supplemental Memorandum of Law in Support of Summary Judgment addressing a crossclaim raised in the underlying Texas suit. (ECF No. 45.) Defendants filed their response on May 26, 2021. (ECF No. 46.)

Legal Standard

Federal Rule of Civil Procedure 56 permits a party to move for summary judgment — and the Court to 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. 56(a). In ruling on a motion for summary judgment, the Court must view the facts contained in the record and all inferences that can be drawn from those facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Nat'l Satellite Sports, Inc. v. Eliadis, Inc. , 253 F.3d 900, 907 (6th Cir. 2001). The Court cannot weigh the evidence, judge the credibility of witnesses, or determine the truth of any matter in dispute. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). As is the case here, when there is no dispute as to the material facts, an insurer's duty to defend is a question of law that can be decided at the summary judgment stage. Travelers Indem. Co. of America v. Moore & Assoc., Inc. , 216 S.W.3d 302, 305 (Tenn. 2007).⁴

Analysis

I. Defend...