Medical Liability Mut. Ins. Co. v. Alan Curtis LLC

• Decision Date: 10 March 2008
• Docket Number: No. 07-2061.,07-2061.
• Citation: 519 F.3d 466
• Parties: MEDICAL LIABILITY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. ALAN CURTIS LLC; Alan Curtis; Evergreene Properties of North Carolina, LLC; Alan Curtis Enterprises, Inc., Defendants-Appellants, Arkansas Advocates for Nursing Home Residents, Amicus Curiae.
• Court: U.S. Court of Appeals — Eighth Circuit

519 F.3d 466

MEDICAL LIABILITY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. ALAN CURTIS LLC; Alan Curtis; Evergreene Properties of North Carolina, LLC; Alan Curtis Enterprises, Inc., Defendants-Appellants Arkansas Advocates for Nursing Home Residents, Amicus Curiae.

No. 07-2061.

United States Court of Appeals, Eighth Circuit.

Submitted: January 14, 2008.

Filed: March 10, 2008.

Keith, Irving Billingsly, argued, Little Rock, AR, for Appellant.

Jess Askew, III, argued, Bonnie J. Johnson, on the brief, Little Rock, AR, for Appellee.

Before LOKEN, Chief Judge, MURPHY, Circuit Judge, and JARVEY,¹ District Judge.

MURPHY, Circuit Judge.

Medical Liability Mutual Insurance Company (Insurer) brought this action against Alan Curtis and Evergreene Properties of North Carolina, LLC (Evergreene) seeking a declaratory judgment regarding its duties to defend and indemnify them against claims in an Arkansas state court action brought by the estate of Annie Redden. All parties filed motions for summary judgment. The district court² concluded that Insurer had no duty to defend or indemnify Curtis, that it had a duty to defend Evergreene on all claims in the underlying lawsuit, and that its duty to indemnify Evergreene extended only to any judgment against it for breach of contract. Curtis and Evergreene appeal. We affirm.

I.

Annie Redden entered into a contract with Evergreene and moved into its Crestpark Inn of Marianna (Crestpark) nursing home facility in 1997. Evergreene holds the medical needs license for Crestpark and contracted with Alan Curtis Enterprises, Inc. (Curtis Enterprises) to provide onsite management and operational services at Crestpark and seven other Evergreene nursing home facilities in Arkansas. Redden moved out of Crestpark on January 9, 2003 and died in November 2003.

On March 3, 2005 Redden's estate initiated a state court action in Arkansas against Evergreene, Curtis Enterprises, and Alan Curtis, an employee of Curtis Enterprises, seeking compensatory and punitive damages for negligence, wrongful death, medical malpractice, and violations of the Arkansas Long Term Care Resident's Rights Act (RRA) (Ark.Code § 20-10-1201 et seq.) and other regulations. The estate's fourth amended complaint, filed on December 20, 2006, upon which this action is based named Evergreene and Alan Curtis, but not Curtis Enterprises as defendants and added a breach of contract claim against "Defendant."

Evergreene is the named insured under a primary policy and a supercover umbrella policy originally issued by Fireman's Fund Insurance Company, but later acquired by Insurer which succeeded to all of the obligations under the policies. The primary policy covers claims on an "occurrence" basis, that is claims are covered only if they arise "from incidents that occur while the policy is in force." The policy was in force from January 15, 2000 to January 15, 2001 and therefore does not cover any claim arising from incidents which occurred outside that period. The underlying lawsuit was initiated on March 3, 2005, after which Evergreene notified Insurer and demanded that it provide coverage under the primary policy both for its defense and indemnity.

Insurer brought this action for a declaratory judgment regarding its rights and obligations under the policies. Both sides moved for summary judgment. Insurer argued that each of the estate claims has a two or three year limitations period. Claims with a two year statute of limitations would be timely only if they had arisen from incidents occurring on or after March 3, 2003, since the state court action was initiated on March 3, 2005. Timely claims with three year statutes of limitation must have arisen from incidents occurring on or after March 3, 2002. Since the policy does not cover claims which arise from incidents occurring after the policy period ended on January 15, 2001 Insurer asked the court to declare that it was not obligated to defend or indemnify on any of the estate claims. Appellants countered that some of the estate claims should be subject to a five year limitations period, which would trigger coverage under the policy because they could arise from incidents occurring as early as March 3, 2000, a date within the policy period. Appellants also argued that the continuous treatment doctrine tolled the statute of limitations on the estate's negligence claims because the estate alleged injuries resulting from a continuous course of treatment, part of which may have occurred during the policy period.

The district court concluded that the estate's breach of contract claim against "Defendant" had a five year limitations period under Arkansas Code § 16-56-111 and that it applied only to Evergreene because Redden never contracted with Curtis. Although Insurer was held to have a duty to defend and indemnify Evergreene against the contract claim because that claim may be based on an incident which occurred during the policy period, Insurer has no duties to Curtis with regard to that claim. The court also decided that the duty to defend Evergreene on the contract claim triggered a duty to defend against all of the estate's claims, but not necessarily to indemnify it. The estate's other claims were barred by applicable statutes of limitation or were based on incidents occurring outside the policy period, and Insurer thus had no duty to indemnify Evergreene or Curtis on any of them.

Since the original complaint was filed on March 3, 2005, and the covered period for occurrences ended on January 15, 2001, the court concluded the case was filed too late to obligate Insurer to cover the wrongful death and medical malpractice claims which have a two year limitations period. That was also true for negligence, statutory and regulatory violations, and claims under the RRA which the court concluded have a three year limitations period. In addition, the continuous treatment doctrine was held not to toll any of the statutes of limitation. Evergreene and Curtis appeal.

On appeal Evergreene and Curtis argue that once the district court determined that Insurer had a duty to defend Evergreene on the contract claim, triggering a duty to defend on all of the estate claims, it should not have reached any questions regarding the duty to indemnify on the negligence, wrongful death, and RRA claims or the duties to defend or indemnify Curtis. They contend that resolution of those coverage questions turns on factual issues to be presented in the underlying lawsuit; to answer the questions in this action raises the risk of inconsistent judgments. Insurer counters that the district court acted within its discretion by resolving all questions about the scope of its duties to defend and indemnify appellants and points out that it is not a party to the underlying lawsuit where different interests and issues are involved.

The RRA does not include a limitations provision, and Evergreene, Curtis, and Amicus Arkansas Advocates for Nursing Home Residents (Advocates) argue that the district court erred by concluding that claims under it are subject to a three year limitations period under Arkansas Code § 16-56-105. Evergreene and Curtis argue for a five year limitations period, either under § 16-56-111 on the theory that the claim sounds in contract or under § 16-56-115 because the claim does not fall under any other Arkansas statute of limitations. Advocates urge us to certify the RRA limitations period question to the Arkansas Supreme Court and argue alternatively that claims under the RRA should have no limitations period or five years. Insurer argues that a party may not request certification after an adverse judgment, that Advocates do not have standing to request certification of an issue to the Arkansas Supreme Court, and that the district court did not err in concluding that the RRA claim has a three year statute of limitations because it either sounds in tort or is a statutory source of liability, both of which have a three year limitations period under Arkansas law.

Evergreene and Curtis argue that the district court also erred by concluding that the continuous treatment doctrine did not toll the statute of limitations on the negligence and RRA claims and by deciding the issue because it involves a factual dispute which should be resolved in the underlying lawsuit. Insurer counters that the district court was correct in concluding that the complaint did not allege facts which could have implicated the continuous treatment doctrine and that regardless, the doctrine would not apply as a matter of law to a relationship between a nursing home and its client.

Curtis argues that the district court erred by concluding that Insurer does not have a duty to defend him coextensive with its duty to defend Evergreene. Curtis says that because Curtis Enterprises acted as Evergreene's agent in the management and operation of Crestpark, the policy obligates Insurer to defend him to the same extent it must defend Evergreene. Insurer counters that Curtis was not a party to the contract between Redden and Evergreene on which the breach of contract claim and the duty to defend are based.

II.

We review for an abuse of discretion a district court's decision to exercise jurisdiction over a declaratory judgment action in which there are parallel state court proceedings, giving great deference to its analysis and conclusions. See Wilton v. Seven Falls Co., 515 U.S. 277, 283, 286, 288, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995); Scottsdale Ins. Co. v. Detco Indus., Inc., 426 F.3d 994, 997 (8th Cir.2005). An insurer who is not a party to the parallel proceeding "is entitled to have the extent of the coverage of its policy declared," Scottsdale Insurance Co. v. Flowers, 513 F.3d 546, 559 (6th Cir.2008), quoting American States Insurance Co. v. D'Atri, 375 F.2d 761, 763 (6th Cir.1967), and a district court is not prohibited from answering all questions presented to it on declaratory judgment, see Royal...