Scottsdale Ins. Co. v. Safeco Ins. Co. of Am., CIV.A.99-D-1008-E.

• Decision Date: 10 August 2000
• Docket Number: No. CIV.A.99-D-1008-E.,CIV.A.99-D-1008-E.
• Citation: 111 F.Supp.2d 1273
• Parties: SCOTTSDALE INS. CO, Plaintiff, v. SAFECO INS. CO. OF AM., Defendant.
• Court: U.S. District Court — Middle District of Alabama

111 F.Supp.2d 1273

SCOTTSDALE INS. CO, Plaintiff, v. SAFECO INS. CO. OF AM., Defendant.

No. CIV.A.99-D-1008-E.

United States District Court, M.D. Alabama, Eastern Division.

August 10, 2000.

Mark W. Lee, Dorothy A. Powell, Parsons, Lee & Juliano, P.C., Birmingham, AL, for Plaintiff.

William H. Webster, Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, AL, for Defendant.

MEMORANDUM OPINION AND ORDER

DE MENT, District Judge.

Before the court are two Motions For Summary Judgment filed by Plaintiff and Defendant ("Pl.'s Mot." and "Def.'s Mot.," respectively), on May 24, 2000.¹ After careful consideration of the arguments of counsel, the relevant law, and the record as a whole, the court finds that Plaintiff's Motion For Summary Judgment is due to be denied and Defendant's Motion For Summary Judgment is due to be granted.

JURISDICTION AND VENUE

The court has subject matter jurisdiction over this lawsuit under 28 U.S.C. §§ 1332 and 2201.² The parties do not contest personal jurisdiction or venue.

SUMMARY JUDGMENT STANDARD

On a motion for summary judgment, the court is to construe the evidence and factual inferences arising therefrom in the light most favorable to the nonmoving party. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Summary judgment can be entered on a claim only if it is shown "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). As the Supreme Court has explained the summary judgment standard:

[T]he plain language of Rule 56(c) 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. 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.

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting FED. R. CIV. P. 56(c)).

The trial court's function at this juncture is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See id. at 248, 106 S.Ct. 2505; Barfield v. Brierton, 883 F.2d 923, 933 (11th Cir.1989).

The party seeking summary judgment has the initial burden of informing the court of the basis for the motion and of establishing, based on relevant "portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,'" that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323, 106 S.Ct. 2548 (quoting FED. R. CIV. P. 56(c)). The mechanics of satisfying the initial burden vary, however, depending upon which party, the movant or the nonmovant, bears the burden of proof at trial. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir.1993) (detailing the nature of the parties' responsibilities when preparing or defending against a motion for summary judgment).

Once this initial demonstration under Rule 56(c) is made, the burden of production, not persuasion, shifts to the nonmoving party. The nonmoving party must "go beyond the pleadings and by [his or] her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324, 106 S.Ct. 2548 (quoting FED. R. CIV. P. 56(e)). In meeting this burden, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Corp. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). That party must demonstrate that there is a "genuine issue for trial." FED. R. CIV. P 56(e); see also Anderson, 477 U.S. at 250, 106 S.Ct. 2505; Matsushita, 475 U.S. at 587, 106 S.Ct. 1348. An action is void of material issues for trial "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." Matsushita, 475 U.S. at 587, 106 S.Ct. 1348.

BACKGROUND

The parties do not dispute the material facts. On February 26, 1996, Evans Realty, Inc. ("Evans") and E.L. Spencer, Jr. ("Spencer") entered into a Management Agreement whereby Evans agreed to manage the Briarcliff South Apartments in Jackson, Mississippi, which Spencer owned. (Management Agreement, attached as Ex. 4 to Pl.'s Mot. and as Ex. A to Def.'s Mot., at 1.) Pursuant to the Management Agreement, Spencer agreed,

[t]o indemnify, defend, and save Evans harmless from all suits in connection with the premises and from liability for damage to property and injuries to or death of any employee or other person whomsoever, and to carry at its own expense public liability and workman's compensation insurance naming [Spencer] and Evans and adequate to protect their interests ....

(Id. at 2.)

After executing the Management Agreement, Spencer purchased a commercial general liability insurance policy ("the Pacific Policy") from Pacific Insurance Company, Inc. ("Pacific"). (Pl.'s Br. at 3; Def.'s Br. at 2.) The Pacific Policy insured Spencer, doing business as Briarcliff South Apartments, and "[a]ny person ... or any organization while acting as [Briarcliff South Apartment's] real estate manager." (The Pacific Policy, attached as Ex. B to Def.'s Mot., at 5 § II(2)(b).) The Pacific Policy had a liability limit of $1,000,000 per occurrence and provided coverage from May 23, 1997, to May 23, 1998.

Spencer also purchased an insurance policy from Plaintiff ("the Scottsdale Policy"). (The Scottsdale Policy, attached as Ex. 3 to Pl.'s Mot. and as Ex. C to Def.'s Mot., at "Declarations" page.) The Scottsdale Policy specifically named Spencer as the only insured. (Id.) However, the Scottsdale Policy provided that it, generally, "follows the terms, conditions, exclusions, definitions, and endorsements of the [Pacific Policy]." (Id. at 1.) Like the Pacific Policy, the Scottsdale Policy had a liability limit of $1,000,000 per occurrence and provided coverage from May 23, 1997, to May 23, 1998. (Id. at "Declarations" page.)

After executing the Management Agreement, Evans purchased a commercial insurance policy from Defendant ("the Safeco Policy"). The Safeco Policy named only Evans as the insured and provided coverage from April 30, 1997, to April 30, 1998. (The Safeco Policy, attached as Ex. 1 to Pl.'s Mot. and as Ex. D to Def.'s Mot., at "Commercial Policy Common Declarations" page.) The Safeco Policy had a liability limit of $1,000,000 per occurrence. (Id. at "Additional Declarations" to "Commercial General Liability Coverage Part" page.)

On June 10, 1998, Theophilus Mason ("Mason") filed a lawsuit in the Circuit Court of the First Judicial District, Hinds County, Mississippi, alleging negligence against, among others, Spencer and Briarcliff South Apartments ("the Mason lawsuit"). (Pl.'s Mot., Ex. 5). In his second amended complaint ("the underlying second amended complaint"), Mason added Evans, among others, as a defendant. (The Underlying Second Am. Compl., attached as Ex. 6 to Pl.'s Mot. and as Ex. F. to Def.'s Mot.)³ The underlying second amended complaint alleges that on February 12, 1998, Matthew McNair shot Mason in both legs on the premises of Briarwood South Apartments, where Mason was then a tenant. (The Underlying Second Am. Compl. ¶¶ 9, 11.)

Mason settled the Mason lawsuit for $1,400,000. (Def.'s Mot., Ex. G.) Pacific contributed $1,000,000 to the settlement pursuant to the Pacific Policy. (Pl.'s Br. at 8; Def.'s Br. at 5.) Plaintiff contributed the remaining $400,000. (Haldiman Aff., attached as Ex. 8 to Pl.'s Mot.) Plaintiff asked Defendant to contribute to the $400,000 that it paid to settle the Mason lawsuit, but Defendant refused. (Pl.'s Mot., Exs. 15-17.)

On September 9, 1999, Plaintiff filed a Complaint for Declaratory Judgment against Defendant in this court. In its Second Amended Complaint For Declaratory Judgment, Plaintiff alleges that the Scottsdale Policy was excess to the Safeco Policy and, therefore, the Safeco policy should have paid up to its liability limit toward the settlement of the Mason lawsuit before the Scottsdale Policy contributed to the settlement. (Pl.'s Second Am. Compl. For Declaratory J. ¶ 13.) Accordingly, Plaintiff seeks a declaration that Defendant must indemnify it for the $400,000 that it contributed to settle the Mason lawsuit. (Id. ¶ 25.) Plaintiff also requests interest, attorney's fees, and costs. (Id. ¶ 26.)

DISCUSSION

The issue in this lawsuit is whether the Scottsdale Policy has priority over the Safeco Policy in contributing to the settlement of the Mason lawsuit the $400,000 that exceeded the liability limit of the Pacific Policy. The resolution of this issue is a matter of law. Because the Parties do not dispute the material facts, this lawsuit is ripe for summary judgment.

Plaintiff characterizes the Scottsdale Policy as an umbrella policy and the Safeco Policy as a primary policy with an excess provision. (Pl.'s Br. at 11-15; Pl.'s Reply at 3-4.) Plaintiff argues that under Alabama law an umbrella policy is the last policy to pay. (Pl.'s Br. at 12-14.) Therefore, according to Plaintiff, the liability limit of the Safeco Policy should have been exhausted before the Scottsdale Policy contributed to the settlement of the Mason lawsuit. (Id. at 10.)

Defendant agrees that the Safeco...