Nat'l Cas. Ins. Co. v. Solomon
| Decision Date | 24 November 2020 |
| Docket Number | Civil Action No. 20-1768 (RC),Civil Action No. 20-699 (RC) |
| Citation | 502 F.Supp.3d 401 |
| Parties | NATIONAL CASUALTY INSURANCE COMPANY, Plaintiff, v. Henry A. SOLOMON, et al., Defendants. Atlanta Channel, Inc. v. Solomon, et al. |
| Court | U.S. District Court — District of Columbia |
Charles C. Lemley, Wiley Rein LLP, Washington, DC, Lawrence David Mason, Goldberg Segalla LLP, Chicago, IL, Thomas Peter Bernier, Dehay & Elliston LLP, Baltimore, MD, for Plaintiff.
Dawn E. Boyce, Nicholas J. Lawrence, Pro Hac Vice, Bancroft, McGavin, Horvath & Judkins, P.C., Fairfax, VA, for Defendant Henry A. Solomon.
W. James Mac Naughton, Newton, NJ, for Defendant Atlanta Channel Company, Inc.
GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT ; DENYING PLAINTIFF'S MOTION TO DISMISS
In this case, Plaintiff National Casualty Insurance Company ("National Casualty") seeks declaratory judgment against Defendants Henry A. Solomon and The Atlanta Channel Company, Inc. ("ACI") regarding a legal malpractice insurance policy. ACI filed a legal malpractice suit against Mr. Solomon (the "Underlying Lawsuit") alleging that, in December of 1999, he submitted a defective application for a special broadcasting license with the Federal Communications Commission ("FCC"). The Underlying Lawsuit remains pending in this Court and is scheduled for trial next year. Because Mr. Solomon asserts that he does not have the money to satisfy a judgment against him (ACI seeks millions of dollars in damages), an issue looms over the Underlying Lawsuit: who will pay if ACI wins? National Casualty provided Mr. Solomon with legal malpractice insurance at the relevant time and has been covering his legal expenses for the duration of the Underlying Lawsuit. Through this action, however, National Casualty seeks a declaratory judgment finding that it has no duty to defend or indemnify Mr. Solomon because he failed to provide timely notice under the terms of the insurance contract. In response, ACI brings a counterclaim and argues that, under Virginia law, National Casualty will still have to pay any judgment issued against Mr. Solomon, notwithstanding any breach of the contract on his part.
ACI has moved for partial summary judgment on its counterclaim. See ACI's Mem. Supp. Mot. Partial Summ. J. ("ACI's Mem."), ECF No. 20-3.1 National Casualty has moved to dismiss ACI's counterclaim. See Nat'l Casualty's Mot. Dismiss, ECF No. 30. Resolution of these motions depends on the same legal analysis. In addition, because ACI considers the arguments made in response to its motion frivolous, it has moved for sanctions against National Casualty. See ACI's Mem. Supp. Mot. Sanction ("Mot. Sanctions"), ECF No. 37-1. For the reasons stated below, the Court grants ACI's motion for partial summary judgment and denies National Casualty's motion to dismiss. Because the Court does not find sanctions are warranted for the reasons explained below, ACI's motion for sanctions is denied.2
National Casualty issued to Mr. Solomon, through his law firm at the time Haley, Bader & Potts, P.L.C., a Lawyers Professional Liability Insurance Policy (the "Policy") that covered the firm from June 1999 to June 2000. See Compl. Ex. A, ECF No. 1-1. Haley, Bader & Potts, P.L.C. was based in Arlington, Virginia and the Policy included several specific references to Virginia. See id. at 15, 16. The Policy was issued in Virginia. See ACI's Statement of Material Facts Not in Dispute ¶¶ 6–8 ("ACI's Statement of Facts"), ECF No. 20-1.
In December 1999, Mr. Solomon, acting on behalf of his client ACI, filed a Statement of Eligibility with the FCC to acquire a Class A License for its television station. See id. ¶ 11. In the Underlying Lawsuit, ACI seeks damages of at least $25,000,000 based on Mr. Solomon's alleged negligence in filing the form—he filed the Statement of Eligibility with several questions left blank, resulting in its rejection. See id. ; see also 2d Am. Compl. ¶¶ 28–29, 32, The Atlanta Channel v. Solomon , No. 15-cv-1823 (D.D.C. June 1, 2017), ECF No. 69.3 Mr. Solomon filed administrative appeals shortly after the initial rejection, but those remained pending for more than a decade. See Compl. ¶¶ 15–16. Mr. Solomon did not make National Casualty aware of the allegedly defective Statement of Eligibility until November of 2012. Id. ¶ 16.
After receiving notice of the potential malpractice claim, National Casualty sent Mr. Solomon a series of reservation of rights letters. See ACI's Statement of Fact Ex. B–D. In each letter, National Casualty confirms that it will defend Mr. Solomon, but reserves certain rights to challenge coverage. See id. Specifically, in the initial reservation of rights letter sent on December 23, 2015, National Casualty states:
The FCC dismissed the ACI Statement on June 9, 2000. Thereafter, you engaged in multiple filings in an effort to address the allegedly defective ACI Statement including a Petition for Reconsideration filed on June 22, 2000 and an Application for Review on December 20, 2000 ... National Casualty, however, was not notified of any circumstances relating to the allegedly defective ACI Statement until November 2012. This delay of more than 12 years after the FCC's initial ruling on June 9, 2000, dismissing the ACI Statement, was substantially untimely ... Thus, you and the Haley Firm breached your notice obligations under the Policy.
Id. Ex. B at 5–6. National Casualty reiterates the position that Mr. Solomon breached the terms of the Policy by failing to provide timely notice in the other two reservation of rights letters sent on July 5, 2016 and October 10, 2019. See id. Ex. C–D. It is undisputed that ACI did not receive the first two reservation of rights letter until December 13, 2019, ACI's Statement of Facts ¶¶ 19, 22, and the last reservation of rights letter until November 27, 2019, id. ¶ 25. As such, ACI was not given notice of the reservation of rights letters within forty-five days of Mr. Solomon receiving them.
National Casualty filed this lawsuit seeking "a declaratory judgment finding that it has no duty to defend or indemnify [Mr.] Solomon" under the Policy. Compl. ¶ 1. The Complaint also asks for a judgment declaring that "National Casualty has no obligation to indemnify Defendant Atlanta Channel for any future final judgment awarded in favor of Defendant Atlanta Channel arising out of the Underlying Lawsuit." Id. at 10. ACI brought a counterclaim and cross claim requesting an order stating that "[a]ny judgment entered in the [Underlying Lawsuit] in favor of ACI against Mr. Solomon without the consent of Mr. Solomon is enforceable against National Casualty pursuant to Va. Code § 38.2-2200 notwithstanding any breach of the Policy by Mr. Solomon described in any Reservation of Rights Letter." ACI Ans. at. 9, ECF No. 19.
ACI has moved for summary judgment on its counterclaim. See ACI's Mem. National Casualty has moved to dismiss the counterclaim. See Nat'l Casualty's Mot. Dismiss. In addition to these motions, ACI has filed a motion for sanctions against National Casualty. See Mot. Sanctions. The Court addresses the motion for partial summary judgment and motion to dismiss together first, then turns to the motion for sanctions.
Summary judgment is proper when "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). A "material" fact is one capable of affecting the substantive outcome of the litigation. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute is "genuine" if there is enough evidence for a reasonable jury to return a verdict for the non-movant. See Scott v. Harris , 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). The principal purpose of summary judgment is to streamline litigation by disposing of factually unsupported claims or defenses and determining whether there is a genuine need for trial. See Celotex Corp. v. Catrett , 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The movant bears the initial burden of identifying portions of the record that demonstrate the absence of any genuine issue of material fact. See Fed. R. Civ. P. 56(c)(1) ; Celotex , 477 U.S. at 323, 106 S.Ct. 2548. In response, the non-movant must point to specific facts in the record that reveal a genuine issue that is suitable for trial. See Celotex , 477 U.S. at 324, 106 S.Ct. 2548. In considering a motion for summary judgment, a court must "eschew making credibility determinations or weighing the evidence[,]" Czekalski v. Peters , 475 F.3d 360, 363 (D.C. Cir. 2007), and all underlying facts and inferences must be analyzed in the light most favorable to the non-movant, see Anderson , 477 U.S. at 255, 106 S.Ct. 2505. Nevertheless, conclusory assertions offered without any evidentiary support do not establish a genuine issue for trial. See Greene v. Dalton , 164 F.3d 671, 675 (D.C. Cir. 1999).
The Federal Rules of Civil Procedure require that a complaint contain "a short and plain statement of the claim" in order to give the defendant fair notice of the claim and the grounds upon which it rests. Fed. R. Civ. P. 8(a)(2) ; accord Erickson v. Pardus , 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam). A motion to dismiss under Rule 12(b)(6) "tests the legal sufficiency of a complaint" under that standard; it asks whether the plaintiff has properly stated a claim. Browning v. Clinton , 292 F.3d 235, 242 (D.C. Cir. 2002). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550...
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