PHILADELPHIA INDEMNITY INSURANCE CO. v. CREATIVE YOUNG MINDS, LTD.

• Decision Date: 29 December 2009
• Docket Number: Civil Action No. 3:08-CV-1827-L.
• Citation: 679 F. Supp.2d 739
• Parties: PHILADELPHIA INDEMNITY INSURANCE CO., Plaintiff, v. CREATIVE YOUNG MINDS, LTD. d/b/a Primrose School of Walnut Creek, et al., Defendants.
• Court: U.S. District Court — Northern District of Texas

679 F.Supp.2d 739

PHILADELPHIA INDEMNITY INSURANCE CO., Plaintiff, v. CREATIVE YOUNG MINDS, LTD. d/b/a Primrose School of Walnut Creek, et al., Defendants.

Civil Action No. 3:08-CV-1827-L.

United States District Court, N.D. Texas, Dallas Division.

December 29, 2009.

David J. Metzler, David R. Oliveros, Cowles & Thompson PC, Dallas, TX, for Plaintiff.

R. Rogge Dunn, Gregory M. Clift, Clouse Dunn Khoshbin, Dallas, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

SAM A. LINDSAY, District Judge.

Before the court are: (1) Plaintiff's Motion to Dismiss Defendants' Counterclaims, filed June 15, 2009; (2) Plaintiff's Motion for Summary Judgment on its Declaratory Judgment Action, filed October 29, 2009; and (3) Joint Motion to Abate, filed December 29, 2009. After carefully considering the motions, briefs, record, and applicable law, the court grants in part and denies in part Plaintiff's Motion for Summary Judgment on its Declaratory Judgment Action, grants Plaintiff's Motion to Dismiss Defendants' Counterclaims, and denies as moot the parties' Joint Motion to Abate.

I. Factual and Procedural Background

Plaintiff Philadelphia Indemnity Insurance Company ("Plaintiff" or "PIIC") filed its Original Complaint in this court on October 14, 2008, against Defendant Creative Young Minds, Ltd. d/b/a Primrose School of Walnut Creek ("CYM"). Plaintiff later amended its pleading to add Hatch Enterprises II, Ltd. ("Hatch Ltd.") and Creative Young Minds II, Ltd. d/b/a Primrose School of Grand Peninsula ("CYM II") as Defendants. Plaintiff pleads that Sherman and Meredith Hatch are the principal owners or limited partners of each Defendant. In its live pleading, the First Amended Original Complaint filed May 14, 2009 (the "Complaint"), Plaintiff seeks several declarations pursuant to the Texas and federal Declaratory Judgment Acts regarding two insurance policies.

The underlying dispute is based upon an accident in which Meredith Hatch ("Mrs. Hatch") was killed while riding a bicycle on Camp Wisdom Road in Grand Prairie, Texas, at approximately 8:00 a.m. on Sunday, June 8, 2008 (the "Accident"). Mrs. Hatch and a friend were struck from behind by a 2001 Lincoln Navigator driven by Kenneth Bain, and both were killed. The Navigator was owned by Cynthia Bain and insured by State Farm.

PIIC issued insurance policies to Defendants CYM and CYM II. It issued a Commercial Lines Policy, number PHPK288872, to CYM from February 1, 2008, to February 1, 2009 (the "CYM Policy"). It also issued a Commercial Lines Policy, number PHPK255341, to Hatch Ltd. and CYM II from August 20, 2007, to August 20, 2008 (the "CYM II Policy").

Sherman Hatch ("Mr.Hatch") submitted claims under the CYM and CYM II Policies for uninsured and underinsured motorists ("UM/UIM"), Automobile Medical Payments ("MedPay"), and Personal Injury Protection ("PIP"). Plaintiff denied coverage because Mrs. Hatch was not an insured. It seeks declarations that: (1) the UM/UIM coverage does not apply to the injuries received by Mrs. Hatch in the Accident; (2) that Mrs. Hatch is not an insured for MedPay coverage; and (3) that there is no PIP coverage. It also seeks attorney's fees.

Defendants filed counterclaims against Plaintiff alleging breach of contract and negligence. Their live pleading, Defendants' Answer to Plaintiff's First Amended Original Complaint and Counterclaim ("Counterclaim") was filed July 31, 2009. These counterclaims are contingent: "If the Court determines such coverage is not provided under the policy, Defendant brings this counterclaim for Plaintiff's failure to provide the requested coverage." Countercl. 5, ¶ 4. Accordingly, although filed later, the court first considers Plaintiff's motion for summary judgment to determine whether coverage for the Accident exists.

II. Motion for Summary Judgment

A. Legal Standard

Summary judgment shall be rendered when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir.1998). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When ruling on a motion for summary judgment, the court is required to view all facts and inferences in the light most favorable to the nonmoving party and resolve all disputed facts in favor of the nonmoving party. Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir.2005). Further, a court "may not make credibility determinations or weigh the evidence" in ruling on motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000); Anderson, 477 U.S. at 254-55, 106 S.Ct. 2505.

Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir.1996). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871, 115 S.Ct. 195, 130 L.Ed.2d 127 (1994). The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Ragas, 136 F.3d at 458. Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Id.; see also Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 & n. 7 (5th Cir.), cert. denied, 506 U.S. 832, 113 S.Ct. 98, 121 L.Ed.2d 59 (1992). "Only disputes over facts that might affect the outcome of the suit under the governing laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. Disputed fact issues which are "irrelevant and unnecessary" will not be considered by a court in ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548.

B. Analysis

Plaintiff contends that there is no coverage for the Accident under either the CYM or CYM II Policy. It contends that under the policies, Mrs. Hatch is not insured under the UM/UIM, MedPay, or PIP provisions. Defendants respond that there are no fact issues and it is for the court to determine whether coverage exists. They also contend that Plaintiff is not entitled to attorney's fees.¹

1. UM/UIM Coverage

Plaintiff contends that Mrs. Hatch is not an "Insured" under either policy with respect to UM/UIM coverage. Defendants do not specifically address this argument.

Both the CYM and the CYM II Policies include a provision for UM/UIM coverage and the provisions are identical:

We will pay damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of "bodily injury" sustained by an "insured", or "property damage" caused by an "accident". The owners or operator's liability for these damages must arise out of the ownership, maintenance or use of the "uninsured motor vehicle".

Pl.'s App. 186, 400. The CYM Policy names "Creative Young Minds, Ltd." as the "Named Insured," and the CYM II Policy names "Hatch Enterprises II, Creative Young" as the "Named Insured." Id. at 185, 399.

Section B of the UM/UIM endorsements states:

Who Is An Insured

If the Named Insured is designated in the Declarations as: ...

2. A partnership, limited liability company, corporation or any other form of organization, then the following are "insureds":

a. The Named Insured for "property damage" only.

b. Any "designated person" and any "family member" of such person.

c. Any person "occupying" a "covered auto".

d. Any person or organization for damages that person or organization is entitled to recover because of "bodily injury" sustained by a person described in b. or c. above.

Id. at 186, 400 (original emphasis). Plaintiff argues that Mrs. Hatch does not meet any of the definitions of an insured person under either policy. It argues that she does not meet subsection (a) because the "Named Insured" are the Defendant entities. Plaintiff contends that she does not meet the requirements in subsection (b) because no one is listed on the schedule as a "designated person" on either policy. Id. at 185, 399. It argues that subsection (c) does not apply because no "covered auto" was involved in the Accident. The term "covered auto" is defined by the endorsement as an auto "owned or leased by the Named Insured" or a "temporary substitute" for such vehicle. Id. at 188, 402. Finally, it argues that subsection (d) does not apply because Mrs. Hatch is not a person described in subsection (b) or (c). Defendants do not set forth any specific arguments regarding how Mrs. Hatch meets any of the definitions in the endorsements for the UM/UIM coverage. They do not cite any provision of either policy or any case law to support a finding that Mrs. Hatch is covered under the UM/ UIM provisions.

The interpretation...