Sentry Select Ins. Co. v. Guess Farm Equip., Inc.
| Decision Date | 25 October 2013 |
| Docket Number | Civil Action No. 5:12-03504-JMC |
| Court | U.S. District Court — District of South Carolina |
| Parties | Sentry Select Insurance Company, Plaintiff, v. Guess Farm Equipment, Inc., d/b/a Guess Irrigation Company, and Justice Family Farms, LLC, Defendants. |
Plaintiff Sentry Select Insurance Company ("Sentry") filed the instant action against Defendants Guess Farm Equipment, Inc. d/b/a Guess Irrigation Company ("Guess"), and Justice Family Farms, LLC ("Justice"), invoking jurisdiction pursuant to 28 U.S.C. §§ 1332(a) and 1367, and seeking a declaration by the court under the authority of the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, that Sentry does not have a duty to defend and/or indemnify Guess in an underlying state court action pursuant to a commercial general liability policy identified as Sentry Policy No. 25-09902-01 (the "CGL policy"). (ECF No. 1.)
This matter is before the court by way of (1) a motion by Guess to bifurcate adjudication of whether Sentry has a duty to defend and/or duty to indemnify Guess and to stay the action pursuant to Fed. R. Civ. P. 42(b); (2) Sentry's motions to (a) dismiss Guess's defenses of waiver and estoppel and counterclaim for bad faith/negligence, (b) bifurcate Guess's breach of the duty of good faith and fair dealing claim from its breach of contract claim, and (c) stay the litigation of Guess's breach of the duty of good faith and fair dealing claim pending resolution of the underlying state court matter; and (3) Sentry's motion to stay the matter until the underlying state court matter is resolved. (ECF Nos. 31, 63, 70.) Each party has filed opposition to theiropponent's motion(s), respectively. (See ECF Nos. 35, 64, 75.) In addition, the court has heard oral argument from the parties on the aforementioned motions. (See ECF No. 79.) For the reasons set forth below, the court denies as moot Guess's motion to bifurcate and to stay the action pursuant to Fed. R. Civ. P. 42(b); grants Sentry's motion to dismiss Guess's defenses of waiver and estoppel and counterclaim for bad faith/negligence; denies without prejudice Sentry's motion to bifurcate Guess's breach of the duty of good faith and fair dealing claim from its breach of contract claim; denies as moot Sentry's motion to stay litigation of the breach of the duty of good faith and fair dealing claim pending resolution of the underlying state court matter; and grants Sentry's motion to stay the matter until the underlying state court matter is resolved.
Sentry is an insurance company. (ECF No. 1 at 2 ¶ 3.) Sentry issued the CGL policy to Guess as the named insured in April 2010. (See ECF No. 1-2.) The CGL policy has coverage limits of $500,000.00 per occurrence, $1,500,000.00 for general aggregate, $1,500,000.00 for products-completed operations aggregate, and $500,000.00 for personal and advertising injuries. (Id. at 8.) The CGL policy included the following relevant provisions:
SECTION I - COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. (Id. at 12.)
This insurance does not apply to:
17. "Property damage" means:
a. Physical injury to tangible property, including all resulting loss of use of that property. (Id. at 39.)
22. "Your work":
The CGL policy was effective from April 1, 2010 to May 1, 2011.1
On December 11, 2012, Sentry filed this action seeking a declaration that it is not required under the CGL policy to provide Guess with a defense or indemnity regarding claims asserted against it in the lawsuit styled Guess Farm Equipment Company, Inc. d/b/a Guess Irrigation Company v. Justice Family Farms, LLC and Catfish Bay, LLC, Case No. 2011-CP-17-00413 (the "South Carolina Lawsuit"), which is currently pending in the Court of Common Pleas for Dillon County (South Carolina).2 (See, e.g., ECF No. 1 at 2 ¶ 8.) In response to Sentry's complaint for declaratory relief, Guess filed an initial answer and counterclaim on January 3, 2013, and, subsequently, an amended answer and counterclaim on January 24, 2013. (ECF Nos.6, 13.) In both pleadings, Guess denied the material allegations of the complaint and asserted counterclaims against Sentry based on Sentry's refusal to provide coverage relative to the South Carolina Lawsuit as well as the lawsuit originally styled Justice Family Farms LLC v. Guess Irrigation Company LLC, C/A No. 5:11-cv-00426 (S.D. W. Va. June 17, 2011) (the "West Virginia Lawsuit"), which was filed in the United States District Court for the Southern District of West Virginia on June 17, 2011, and dismissed on March 8, 2012, for lack of personal jurisdiction.3 (Id.)
Though it filed an answer to the initial counterclaim, Sentry responded to the counterclaim in the amended answer with a motion to dismiss on February 19, 2013. (ECF Nos. 12, 25.) Sentry then filed a motion for summary judgment on February 22, 2013. (ECF No. 26.)
Thereafter, on March 8, 2013, Guess filed the pending motion to bifurcate resolution of the duty to defend issue from the duty to indemnify issue, requesting that the court adjudicate first the duty to defend issue and stay the duty to indemnify issue until completion of the Underlying Lawsuits. (ECF No. 31.) Sentry filed opposition to Guess's motion to bifurcate on March 25, 2013, to which Guess filed a reply in support of bifurcation on April 4, 2013. (ECF Nos. 35, 36.)
On April 5, 2013, Sentry filed a motion for a protective order, seeking a stay of discovery and all remaining deadlines in the scheduling order entered on January 4, 2013. (ECF Nos. 8, 38.) On April 8, 2013, the court granted Sentry's motion and stayed all deadlines. (ECF No. 41.) On April 25, 2013, Guess filed a motion for partial summary judgment. (ECF No. 43.)
Before Sentry's February 19, 2013 motion to dismiss was adjudicated, Guess was granted leave by the court to file—and did file—its second amended answer and counterclaim on July11, 2013. (ECF Nos. 55, 57.) As a result of this amendment, the court found that Sentry's aforementioned motion to dismiss had been rendered moot and denied the motion without prejudice on July 31, 2013. (ECF No. 61.) Thereafter, Sentry filed an answer to the counterclaim in the second amended answer on July 25, 2013, and an amended answer to the counterclaim on July 30, 2013, as well as the pending motion to dismiss and for other relief (including a stay) on August 16, 2013. (ECF Nos. 59, 60, 63.)
On August 6, 2013, the court entered a text order, denying the competing motions for summary judgment that had been filed by the parties. (ECF No. 62.) The court found that "as discovery has not concluded and . . . there are outstanding factual issues as to the scope and nature of the damage that is being litigated in state court, specifically regarding whether the claims include property damage, summary judgment is not appropriate at this juncture." (Id.)
Guess filed opposition to Sentry's motion to dismiss and for other relief on September 3, 2013, to which Sentry filed a reply in support of dismissal on September 13, 2013. (ECF Nos. 64, 66.) On September 19, 2013, Guess filed a motion to lift the stay, seeking clarification regarding the status of the stay and asserting that the stay should be lifted if it had not already been impliedly lifted by the August 6, 2013 text order denying summary judgment. (ECF No. 65.) On September 16, 2013, the court granted Guess's motion to lift the stay, stating that "[d]iscovery may commence immediately." (ECF No. 67.)
On September 20, 2013, Sentry filed its second currently pending motion to stay, requesting that the entire case be stayed until the resolution of the South Carolina Lawsuit. (ECF No. 70.) Guess filed opposition to Sentry's motion to stay on October 7, 2013. (ECF No. 75.)
On October 24, 2013, the court held a hearing on the aforementioned pending motions, wherein the court was advised that, inter alia, Sentry would defend Guess to the conclusion ofthe South Carolina Lawsuit, subject to a reservation of rights. (ECF No. 79.)
Under the Declaratory Judgment Act, a district court, in a case or controversy otherwise within its jurisdiction, "may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The Supreme Court has "repeatedly characterized the Declaratory Judgment Act as 'an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant.'" Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995) (quoting Pub. Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241 (1952)). Courts have long interpreted the Act's permissive language "to provide discretionary authority to district courts to hear declaratory judgment cases." United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 493 (4th Cir. 1998). "[A]...
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