State Farm Auto. Ins. Co. v. Long

• Decision Date: 02 May 2017
• Docket Number: Case No. 2:15–cv–00046–KGB
• Citation: 259 F.Supp.3d 938
• Parties: STATE FARM AUTOMOBILE INSURANCE CO., Plaintiff v. Grant LONG, Jr. and Ralph Matarazzo, Defendants
• Court: U.S. District Court — Eastern District of Arkansas

259 F.Supp.3d 938

STATE FARM AUTOMOBILE INSURANCE CO., Plaintiff

v.Grant LONG, Jr. and Ralph Matarazzo, Defendants

Case No. 2:15–cv–00046–KGB

United States District Court, E.D. Arkansas, Eastern Division.

Signed May 2, 2017

Michael McCarty Harrison, Nicholas Daniel Hornung, Watts, Donovan & Tilley, P.A., Little Rock, AR, for Plaintiff.

Austin H. Easley, Easley & Houseal, PLLC, Forrest City, AR, for Defendants.

OPINION AND ORDER

Kristine G. Baker, United States District Judge

Before the Court is plaintiff State Farm Automobile Insurance Co.'s ("State Farm") motion for summary judgment (Dkt. No. 41). Defendant Ralph Matarazzo has responded in opposition to the motion for summary judgment (Dkt. No. 46). Defendant Grant Long, Jr. has not responded; a default was previously entered against Mr. Long in this matter (Dkt. No. 23). For the following reasons, the Court grants the motion for summary judgment (Dkt. No. 41).

I. Procedural Background

Mr. Matarazzo asserts that Mr. Long was driving a vehicle insured by State Farm when an accident occurred on May 5, 2015, in St. Francis County, Arkansas (Dkt No. 1, ¶ 5). Both Mr. Long and Mr. Matarazzo were served personally with the summons and complaint on April 27, 2015 (Dkt. Nos. 3, 4). Mr. Matarazzo filed his answer on June 2, 2015 (Dkt. No. 6). On May 16, 2016, counsel for Mr. Matarazzo filed with the Court a notice of Mr. Long's discharge in bankruptcy (Dkt. No. 21). Mr. Long is in default in this matter and has not appeared since the Clerk's entry of default (Dkt. No. 23).

Mr. Matarazzo filed a motion to stay discovery and appoint counsel for Mr. Long (Dkt. No. 31). The Court denied that motion (Dkt. No. 52).

II. Factual Background

The following facts are taken from State Farm's statement of undisputed facts unless otherwise indicated (Dkt. No. 43). In Mr. Matarazzo's statement of facts, he states that "[Mr.] Matarazzo does not believe the substantive facts in the case are disputed. The facts surrounding the issuance of the policy and the underlying accident are agreed by the parties to this action. The disputes arise in the ambiguity, interpretation, and meaning of the terms of the insurance contract at issue." (Dkt. No. 49, ¶ 1).

State Farm issued an automobile liability insurance policy, policy number 257 6126–F24–04A ("the Policy"), to Sedrick Hicks and Ashiya Hudson with a policy period of December 2, 2013, to June 24, 2014 (Dkt. No. 41, Ex. A). Mr. Hicks and Ms. Hudson were current on all premiums owed under the Policy for the policy period. The named insureds for the Policy were Mr. Hicks and Ms. Hudson. The vehicle listed on the Declarations Page of the Policy was a 2007 Infiniti QX56.

Mr. Long was involved in a motor/vehicle pedestrian accident with Mr. Matarazzo on May 5, 2014, in St. Francis County, Arkansas. The motor/vehicle pedestrian accident between Mr. Long and Mr. Matarazzo occurred while Mr. Long was operating and transporting the 2007 Infiniti QX56 with Ms. Hudson's consent and permission in the course and scope of his employment as owner of Grant's Car Wash. Mr. Matarazzo has filed a civil suit against Mr. Long in the Circuit Court of St. Francis County, Arkansas, case number 62CV–2014–217–2, seeking monetary damages for alleged bodily injuries he sustained as a result of the May 5, 2014, motor vehicle/pedestrian accident.

Pursuant to the "Insuring Agreement " in the Policy, State Farm agreed to pay:

a. damages an insured becomes legally liable to pay because of:

(1) bodily injury to others; and

(2) damage to property

caused by an accident that involves a vehicle for which that insured is provided Liability Coverage by this policy.

(Dkt. No. 41–1, at 11).

"Insured" is defined in the Policy in pertinent part as:

3. Any other person for his or her use of:

a. your car ,

b. a newly acquired car ,

c. a temporary substitute car , or

d. a trailer while attached to a car described in a., b., or c. above.

Such vehicle must be used within the scope of your consent....

(Id. at 10–11).

You or Your is defined in pertinent part in the Policy as "the named insured or named insured shown on the Declarations Page." (Id. at 10).

There are various enumerated "Exclusions " in the Policy regarding coverage provided to an "insured ." One of the Exclusions precludes liability coverage for an insured :

8. WHILE MAINTAINING OR USING THE VEHICLE IN CONNECTION WITH THAT INSURED'S EMPLOYMENT IN OR ENGAGEMENT OF ANY KIND IN A CAR BUSINESS.

(Id. , at 12).

In the Policy, the term "car business" is defined as "a business or job where the purpose is to sell, lease, rent, repair, service, modify, transport, store, or park land motor vehicles or any type of trailer." (Id. , at 9).

This Exclusion goes on to state:

8. ... This exclusion does not apply to:

a. you ; or

b. any resident relative

While maintaining or using your car, a newly acquired car, a temporary substitute car , or a trailer .

(Id. , at 12). Again, "you " or "your " is defined in pertinent part in the Policy as "the named insured or named insured shown on the Declarations Page." (Id. , at 10). "Resident relative " is defined as a person , other than you , who resides primarily with the first person shown as a named insured on the Declaration Page and who is: (1) related to that named insured or his or her spouse by blood, marriage, or adoption, including an unmarried and unemancipated child of either who is away at school and otherwise maintains his or her primary residence with that named insured; or (2) a ward or a foster child of that named insured, his or her spouse, or a person described in subparagraph one. ( Id. , at 9–10).

State Farm states that on May 5, 2014, Mr. Long "owned and operated a car business, Grant's Car Wash, which repaired, modified, cleaned, detailed, transported and serviced motor vehicles." (Dkt. No. 43, at 3, ¶ 9). Mr. Matarazzo denies these allegations (Dkt. No. 49, at 2, ¶ 9). Instead, Mr. Matarazzo argues that "[i]t is disputed whether or not Grant Long, Jr. fits the definition of an ‘insured’ as referenced in paragraph 8 of the Exclusions to Liability Coverage." (Dkt. No. 47, at 1, ¶ 2).

State Farm further contends that on May 5, 2014, Ms. Hudson retained the services of Mr. Long and "permissively allowed him to operate and transport her 2007 Infiniti QX56 in the course and scope of his employment as owner of his car business, Grant's Car Wash, for the purpose to repair, service and transport the vehicle." (Dkt. No. 43, at 3, ¶ 10). Again, Mr. Matarazzo denies these allegations (Dkt. No. 49, at 2, ¶ 10). Instead, Mr. Matarazzo argues that "[i]t is disputed whether or not Grant Long, Jr. was using the vehicle in connection of [sic] a ‘car business’ as defined in the DEFINITIONS section of the policy. [ ] It is disputed whether or not Grant Long, Jr.'s purpose in using the vehicle was to ‘repair’ the vehicle as the term is commonly used and understood in society, in the insurance and automotive industries, and in the contract here. [ ] It is disputed whether or not Grant Long, Jr.'s purpose in using the vehicle was to ‘service’ the vehicle as the term is commonly used and understood in society, in the insurance and automotive industries, and in the contract here. [ ] It is disputed whether or not Grant Long, Jr.'s purpose in using the vehicle was to ‘transport’ the vehicle as the term is commonly used and understood in society, in the insurance and automotive industries, and in the contract here. [ ] It is disputed whether or not Grant Long, Jr.'s purpose in using the vehicle was to ‘modify’ the vehicle as the term is commonly used and understood in society, in the insurance and automotive industries, and in the contract here. [ ] It is disputed whether or not Grant Long, Jr. was using the vehicle to ‘repair’ the vehicle as the term is commonly used and understood in society, in the insurance and automotive industries, and in the contract here." (Dkt. No. 47, ¶¶ 2–8).

III. Standard of Review

Summary judgment is proper when there is no genuine issue as to any material fact and when the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c) ; Holloway v. Lockhart , 813 F.2d 874, 878 (8th Cir. 1987). A factual dispute is genuine if the evidence could cause a reasonable jury to return a verdict for either party. Miner v. Local 373 , 513 F.3d 854, 860 (8th Cir. 2008). "The mere existence of a factual dispute is insufficient alone to bar summary judgment; rather, the dispute must be outcome determinative under prevailing law." Holloway v. Pigman , 884 F.2d 365, 366 (8th Cir. 1989). However, parties opposing a summary judgment motion may not rest merely upon the allegations in their pleadings. Buford v. Tremayne , 747 F.2d 445, 447 (8th Cir. 1984). The initial burden is on the moving party to demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The burden then shifts to the nonmoving party to establish that there is a genuine issue to be determined at trial. Prudential Ins. Co. v. Hinkel , 121 F.3d 364, 366 (8th Cir. 1997). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

IV. Analysis

This Court has diversity jurisdiction, and this case is governed by Arkansas law. Am. Eagle Ins. Co. v. Thompson , 85 F.3d 327, 330 (8th Cir. 1996). State Farm asserts that, as there is no coverage under the operative policy number 257 6126–F24–04A, "State Farm has no duty to provide a defense to or indemnify Mr. Long for damages arising out of the motor vehicle/pedestrian accident between he and Mr. Matarazzo on May 5, 2014." (Dkt. No. 32, ¶ 1). State Farm maintains that Mr. Long was operating a vehicle owned by Mr. Hicks in the course and scope of his employment with Grant's Car Wash, which precludes coverage for the accident at issue based on the "car business" exclusion in the...