St. Paul Guardian Ins. Co. v. Centrum G.S. Ltd.

• Decision Date: 29 August 2003
• Docket Number: No. Civ.A. 3:97CV1478-L.,Civ.A. 3:97CV1478-L.
• Citation: 383 F.Supp.2d 891
• Parties: ST. PAUL GUARDIAN INSURANCE COMPANY, Plaintiff, v. CENTRUM G.S. LIMITED, et al., Defendants.
• Court: U.S. District Court — Northern District of Texas

383 F.Supp.2d 891

ST. PAUL GUARDIAN INSURANCE COMPANY, Plaintiff, v. CENTRUM G.S. LIMITED, et al., Defendants.

No. Civ.A. 3:97CV1478-L.

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

August 29, 2003.

Clayton E. Bailey, Baker & McKenzie, R. Brent Cooper, R. Douglas Rees, Cooper & Scully, Dallas, TX, for St. Paul Guardian Insurance Company.

Faith Winsborough Bruner, Law Office of Faith W. Bruner, Dallas, TX, for Gerry Perdue.

Bruce L. Dean, Lynn Pham Moore & Ross, Lisa A. Dreishmire, Bracewell & Patterson, Daniel T. Mabery, Ernest Martin, Jr., Haynes & Boone, Maureen F. Moore, Lynn Pham Moore & Ross, Dallas, TX, for Centrum GS Limited.

ORDER

LINDSAY, District Judge.

This case has been remanded from the Fifth Circuit Court of Appeals for the court to determine the merits of Plaintiff St. Paul Guardian Insurance Company's ("St. Paul" or "Plaintiff") late notice defense, and whether St. Paul has a duty under the CGL policy to defend Defendants against the claims asserted in the underlying state court action, styled Gerry Perdue v. Yaromir Steiner, Steiner & Associates, Inc. d/b/a the Centrum Property Company, d/b/a Centrum Towers and d/b/a Steiner Management, Inc., Cause No. 95-08507-F, 116th Judicial District Court, Dallas County, Texas.

The court has before it St. Paul Guardian Insurance Company's Motion for Summary Judgment, filed February 23, 1998; Defendants' Cross-Motion for Summary Judgment, filed March 26, 1998; St. Paul Guardian Insurance Company's Reply to Defendants' Response to St. Paul Guardian Insurance Company's Motion for Summary Judgment, filed April 10, 1998; St. Paul Guardian Insurance Company's Response to Defendants' Cross-Motion for Summary Judgment, filed April 15, 1998; Defendants' Reply Brief in Support of Defendants' Cross-Motion for Summary Judgment, filed April 30, 1998; St. Paul Guardian Insurance Company's Surreply, filed May 18, 1998; Defendants' Final Reply Brief in Support of Cross-Motion for Summary Judgment, filed May 22, 1998; St. Paul Guardian Insurance Company's Supplemental Brief on Issue of Notice, filed February 17, 1999; Defendants' Response to St. Paul Guardian Insurance Company's Supplemental Brief on Issue of Notice, filed March 10, 1999; St. Paul Guardian Insurance Company's Reply to Defendants' Response to Plaintiff's Supplemental Brief on Issue of Notice, filed March 25, 1999; Plaintiff's Supplemental Brief in Support of Plaintiff's Motion for Summary Judgment, filed May 31, 2002; and Defendants' Supplemental Brief After Issuance of the Fifth Circuit Court of Appeals' Mandate, filed May 31, 2002. After careful consideration of the parties' written submissions, the summary judgment evidence, and applicable authority, the court denies St. Paul Guardian Insurance Company's Motion for Summary Judgment on its late notice defense, and grants Defendants' Cross-Motion for Summary Judgment on Plaintiff's late notice defense.

I. Factual and Procedural Background

The background facts and procedural history of this case are set out in the court's Memorandum Opinion and Order, filed October 31, 2000, and the Fifth Circuit's decision in St. Paul Guardian Ins. Co. v. Centrum GS Ltd., 283 F.3d 709 (5th Cir.2002). The court therefore only recites those facts necessary to determine the issue of Plaintiff's late notice defense. The relevant facts are not in dispute.

St. Paul is an insurance company headquartered in St. Paul, Minnesota. Defendant Centrum G.S. Limited ("Centrum") is a Texas limited partnership and owner of the Centrum Building, a nineteen-story office tower located in Dallas, Texas. Defendant Goodyork Corporation ("Goodyork") is a Texas corporation headquartered in Los Angeles, California and general partner of Centrum. Defendant Steiner & Associates, Inc. ("Associates") is a Florida corporation and property manager of the Centrum Building. Defendant Yaromir Steiner ("Steiner") is a citizen of the state of Florida, employed by Associates and an officer of Associates. Brenda Brushaber ("Brushaber") is a citizen of the state of Texas and employed by Associates as the General Manager of the Centrum Building.¹

In 1994, St. Paul issued a Commercial General Liability insurance policy ("CGL policy") to Centrum effective from December 23, 1994, to December 23, 1995. The CGL policy covers inter alia, bodily injury, property damage and personal injury liability. The CGL policy contains provisions concerning the insured's duties in the event of an incident that could result in liability damages covered under the policy, written demands by a third-party, or suit against its insured. Among these provisions is the requirement that the insured notify the insurer when an incident happens as soon as possible, and to send a copy of all written demands, as well as all written documents, if a lawsuit is commenced.

In early February 1995, Gerry Perdue ("Perdue") assumed the position of Chief Building Engineer for the Centrum Building. Approximately one month later, Perdue's employment as Chief Building Engineer was terminated. Perdue filed suit against Brushaber, Associates and Steiner on August 23, 1995, alleging claims under state law for wrongful termination, intentional infliction of emotional distress, libel, slander, invasion of privacy, fraud, negligence and breach of contract. On February 7, 1996, Perdue filed his First Amended Original Petition adding Centrum and Goodyork as defendants. Centrum filed its answer to Perdue's petition on March 8, 1996, but did not notify St. Paul of the lawsuit until February 26, 1997, when its counsel forwarded to St. Paul a copy of the suit papers from the Perdue lawsuit. St. Paul initially denied coverage based on Centrum's late notice and, subsequently, on its determination that Perdue's claims were not covered under the provisions of the CGL policy. On July 18, 1997, Perdue filed his Fourth Amended Original Petition in the underlying litigation. Trial of the Perdue lawsuit was scheduled for May 11, 1998. The case was actually tried in June 1999.

St. Paul filed this declaratory judgment action against Defendants on June 19, 1998, seeking a judicial declaration that it has no duty to defend or indemnify Centrum or any other defendant in the Perdue action. St. Paul subsequently filed a motion for summary judgment contending that Perdue's claims are not covered under the CGL policy, and that it, therefore, has no duty to defend or indemnify Defendants in the underlying action. St. Paul also asserts that Defendants' late notice of Perdue's claims and suit relieved it of its obligations under the CGL policy. Defendants in turn filed a cross-motion for summary judgment, contending that Perdue's claims are covered under the CGL policy and that St. Paul is therefore obligated to defend them, and that St. Paul was not relieved under the policy, because it failed to show that it was prejudiced by any delay in Defendants' untimely notice of Perdue's claims and suit.

On October 31, 2000, the court granted summary judgment in favor of St. Paul, finding, inter alia, that Perdue's claims did not fall within the personal injury provisions of the CGL policy, because the alleged personal injuries were not the result of the insured's business activities. Since the court determined that Defendants' actions relating to the termination of Perdue were not business activities as required under the CGL policy, it did not reach the merits of St. Paul's late notice defense. Defendants appealed the court's decision to the Fifth Circuit. On March 11, 2002, the Fifth Circuit issued its decision, in which it affirmed in part and reversed in part the court's decision, and remanded the case for the court to determine the merits of St. Paul's late notice defense.

Thereafter, the court issued an order directing the parties to submit supplemental briefing regarding St. Paul's late notice defense, including any recent authority that might have some impact on the court's decision.

II. Summary Judgment 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 inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Ragas, 136 F.3d at 458. 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, 475 U.S. at 586, 106 S.Ct. 1348. 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....