Sphinx Intern. v. National Union Fire Ins. Co.
| Decision Date | 13 September 2002 |
| Docket Number | No. 6:01CV1462-ORL-19KRS.,6:01CV1462-ORL-19KRS. |
| Parties | SPHINX INTERNATIONAL, INC. f/k/a/ Phoenix International, Ltd., Inc.; Bahram Yusefzadeh; and RAJU Shivdasani Plaintiffs, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. and Genesis Indemnity Insurance Company, Defendants. |
| Court | U.S. District Court — Middle District of Florida |
David H. Simmons, Bart R. Valdes, Drage, de Beaubien, Knight, Simmons, Mantzaris & Neal, Orlando, FL, for Plaintiffs.
Daniel C. Johnson, Carlton Fields, P.A., Tampa, FL, Steven J. Brodie, K. Renee Schimkat, Carlton Fields, P.A., Miami, FL, Lewis K. Loss, Ross, Dixon & Bell, L.L.P., Washington, DC, Lora A. Dunlap, Jon Marshall Oden, Fisher, Rushmer, Werrenrath, Dickson, Talley & Dunlap, P.A., Orlando, FL, Jeffrey J. Ward, Ross, Dixon & Bell, Washington, DC, for Defendants.
This case comes before the Court upon the following:
(1) Defendant Genesis Indemnity Insurance Company's Motion to Dismiss, or in the Alternative, for Summary Judgment, and Supporting Memorandum of Law (Doc. No. 26, filed January 31, 2002), and Plaintiffs' Response to Defendant Genesis Indemnity Insurance Company's Motion to Dismiss Plaintiffs' Complaint, or in the Alternative, for Summary Judgment (Doc. No. 35, filed February 26, 2002).1
(2) Plaintiffs' Unopposed Motion for an Enlargement of Time to File A Memorandum of Law in Opposition to Defendant Genesis Indemnity Insurance Company's Motion to Dismiss or, in the Alternative, for Summary Judgment (Doc. No. 33, filed February 19, 2002);
(3) Defendant Genesis Indemnity Insurance Company's Motion for Leave to File a Reply Memorandum, or, in the Alternative, for Oral Argument (Doc. No. 45, filed April 16, 2002), and Plaintiffs' Response to Defendant Genesis Indemnity Insurance Company's Motion for Leave to File a Reply Memorandum or, in the Alternative, for Oral Argument (Doc. No. 46, filed April 29, 2002);
(4) Plaintiffs' Motion to Strike Defendant, Genesis Indemnity Insurance Company's Motion to Dismiss, or in the Alternative, Motion for Summary Judgment and Incorporated Memorandum of Law (Doc. No. 52, filed May 31, 2002);
(5) Plaintiffs' Dispositive Motion for Partial Summary Judgment Against Genesis Indemnity Insurance Company and Request for Oral Argument With Memorandum of Law in Support Thereof ( Doc. Nos. 68 and 69, filed June 26, 2002), and Defendant Genesis Indemnity Insurance Company's Opposition to Plaintiffs' Motion for Partial Summary Judgment (Doc. No. 84, filed July 25, 2002); and
(6) Joint Request for Referral to Magistrate (Doc. No. 85, filed July 29, 2002).
In this action, Plaintiffs seek insurance coverage under two contracts issued by Genesis Indemnity Insurance Company ("Genesis") on or about July 1, 1996.
The first, Director and Officers Liability Insurance Policy # ZXHB000865 (the "D & O" policy), was issued to Phoenix International, Ltd. ("Phoenix") for the policy period July 1, 1996 to July 1, 1999. (Defendant's Motion to Dismiss, p. 2; Ex.1). Under its terms, the D & O policy provided coverage for loss resulting from claims first filed during the policy period against the directors and officers of Phoenix that alleged they had committed "any actual or alleged negligent act, omission or error, including but not limited to, any negligent misstatement, misleading statement, neglect or breach of duty by the DIRECTORS OR OFFICERS in the discharge of their duties in their capacity as DIRECTORS OR OFFICERS of the COMPANY, individually or collectively." Id. at 3.
The D & O policy also provided coverage to Phoenix for loss resulting from "Securities Claims" first made against Phoenix during the policy period. The D & O policy defined securities claims to include claims arising out of alleged violations of law concerning the purchase, sale, or transfer of securities on the open market, but specifically excluded claims alleging violations of law concerning any Registration Statement, Preliminary Prospectus, or Prospectus. Id.
The second policy, Directors and Officers Prospective Liability Policy # ZXB000866 (the "Prospectus" policy) provided, inter alia, coverage regarding the PHOENIX INTERNATIONAL, LTD., INC., Registration Statement filed and/or declared effective with the Securities and Exchange Commission ("SEC") on July 1, 1996. (Plaintiffs' Response to Motion to Dismiss, p. 3, Ex.2) The same policy also originally covered the PHOENIX INTERNATIONAL, LTD., INC. Prospectus filed on July 1, 1996 for a period of three (3) years ending on July 1, 1999. Id. The parties later amended this policy to extend coverage for the PHOENIX INTERNATIONAL, LTD., INC. Prospectus for Secondary Public Offering of Securities for one (1) year beyond the initial policy period. Id. at 4.2
Both the D & O and the Prospectus policies contained an "insured vs. insured" exclusion. It is this exclusion that is at the heart of the instant litigation. The provision excludes from coverage claims made against the insureds:
By or at the behest of the COMPANY, or any affiliate of the Company or any DIRECTOR or OFFICER, or by any security holder of the COMPANY, whether directly or derivatively, unless such CLAIM is instigated and continued totally independent of, and totally without the solicitation of, or assistance of, or active participation of, or intervention of any DIRECTOR or OFFICER or the COMPANY; provided, however, this exclusion shall not apply to wrongful termination employment claims brought by a former employee other than a former employee who is or was a DIRECTOR or OFFICER of the COMPANY.
D & O policy, Section IV. K; Prospectus Policy IV.K Both policies define "DIRECTORS" and "OFFICERS" as "persons who were, now are, or shall be duly elected Directors or duly elected or appointed Officers of the COMPANY, including their estates, heirs, legal representatives or assigns in the event of their death, incapacity or bankruptcy." D & O policy, Section II; Prospectus Policy, Section II.
On or about November 23, 1999, George Taylor, a former officer and director of Phoenix, filed a purported securities class action complaint captioned, Taylor v. Phoenix International, Ltd.,et al., U.S. District Court, Middle District of Florida, Case No. 99-1495-CIV-ORL-18C. On the same day, Taylor published a notice over Business Wire, a national newswire service, soliciting other Phoenix securities holders to discuss with Taylor's counsel their rights or interests with respect to the Taylor suit. See Ex. 5, Vinale Aff. at ¶ 3, and Exhibit B (Doc. No. 26). The other lead plaintiffs in the suit were recruited from this notice. Id. On May 5, 2000, Taylor and the other lead plaintiffs filed an amended complaint. See Exhibit 6.
Phoenix submitted a claim for coverage in connection with the action to Genesis, which denied it on the basis of the insured v. insured exclusion. On or about October 18, 2001, Plaintiffs initiated this action against National Union and Genesis in the Circuit Court of the Eighteenth Judicial Circuit in and for Seminole County, Florida.3 On or about December 11, 2001, the case was removed to this Court.
Summary judgment is authorized "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show 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); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "The Court has instructed that `the substantive law will identify which facts are material' and that the trial judge, ruling on a summary judgment motion, must evaluate the evidence presented by the substantive evidentiary burden." Brown v. Crawford, 906 F.2d 667, 669-70 (11th Cir.1990) (quoting Anderson, 477 U.S. at 248, 254, 106 S.Ct. 2505).
The moving party bears the burden of proving that no genuine issue of material facts exists. Celotex v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining whether the moving party has satisfied the burden, the Court considers all inferences drawn from the underlying facts in the light most favorable to the party opposing the motion and resolves all reasonable doubts against the moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505. The Court may not weigh conflicting evidence or weigh the credibility of the parties. See Hairston v. Gainesville Sun Pub. Co., 9 F.3d 913, 919 (11th Cir.1993) (citation omitted). If a reasonable fact finder could draw more than one inference from the facts, and that inference creates an issue of material fact, then a court must not grant summary judgment. Id. Summary judgment is appropriate only in circumstances where "the evidence is such that a reasonable jury could [not] return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.
Plaintiffs make five arguments as to why Genesis' motion for summary judgment should not be granted, and why their motion for summary judgment against Genesis should be granted. First, they contend that George Taylor was never a "duly" elected or appointed officer or director of Phoenix and therefore is not subject to the insured v. insured exclusion. Second, they argue that there is no evidence of collusion so as to implicate the insured v. insured exclusion. Third, they contend that, based on the Complaint in the Securities Claims Action, Defendant was required to defend Plaintiffs. Fourth, Plaintiffs maintain that, as a matter of law, their expectation of coverage is sufficient to preclude summary judgment. Fifth, Plaintiffs allege that as construed by Genesis, the insured v. insured exclusion "swallows up" the entire policy, is patently ambiguous, and therefore must be construed against the insurer. The Court will address each argument in turn.4
To continue reading
Request your trial
-
Bodewes v. Ulico Cas. Co.
...Co., 307 F.Supp.2d 1355 (S.D.Fla.2004), which in turn cites Level 3 Communications and Sphinx International, Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA, 226 F.Supp.2d 1326 (M.D.Fla.2002), as "[t]he only cases addressing the question of whether the presence of an insured plaintif......
-
Westchester Fire Ins. Co. v. Wallerich
...any inquiry into whether the underlying lawsuit was collusive. Westchester relies on Sphinx International, Inc. v. National Union Fire Insurance Co. of Pittsburgh, PA., 226 F.Supp.2d 1326 (M.D.Fla.2002) and PowerSports, Inc. v. Royal & Sunalliance Insurance Co., 307 F.Supp.2d 1355 (S.D.Fla.......
-
Sphinx Intern. v. National Union Fire Ins. Co.
...[Genesis]'s submission as a motion summary judgment rather than a motion to dismiss." Sphinx Int'l, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA., 226 F.Supp.2d 1326, 1328 n. 1 (M.D.Fla.2002). Sphinx appealed, but because the district court's order did not dispose of the claims again......
-
Macey v. Carolina Cas. Ins. Co.
...2007); PowerSports, Inc. v. Royal & Sunalliance Ins. Co., 307 F.Supp.2d 1355, 1362 (S.D.Fla.2004); Sphinx Int'l, Inc. v. Nat'l Union Fire Ins. Co., 226 F.Supp.2d 1326 (M.D.Fla.2002); Am. Medical Int'l, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 244 F.3d 715 (9th Cir.2001). These court......