State Farm Fire & Cas. Co. v. Miraglia
| Decision Date | 02 July 2008 |
| Docket Number | No. 4:07-CV-013-A.,4:07-CV-013-A. |
| Citation | 565 F.Supp.2d 709 |
| Parties | STATE FARM FIRE & CASUALTY COMPANY, Plaintiff, v. Blake MIRAGLIA, et al., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Atlanta, GA, Julia Dobbins, Shannon Gracey Ratliff & Miller, Fort Worth, TX, for Plaintiff.
Ed Huddleston, Law Snakard & Gambill, Fort Worth, TX, Patricia McGarvey Rosendahl, Coats Rose Yale Ryman & Lee, Houston, TX, for Defendants.
This diversity action was brought under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201. Plaintiff, State Farm Fire & Casualty Company, ("State Farm") has filed two motions for summary judgment. The first sought a declaration that because of untimeliness of notice given to State Farm of claims and litigations against its insured, defendant Blake Miraglia ("Miraglia"), it does not have an obligation under insurance policies it issued to him as to claims made against him in liability suits brought in Texas state courts (collectively, "Texas state court suits") by the other defendants, Tara Schuchmann ("Schuchmann"), Rick Wessel ("Wessel"), Phillip Powell ("Powell"), and J. Alan Barron ("Barron") (collectively, "underlying plaintiffs"). The second seeks a declaration that State Farm provides no coverage as to those claims and suits because of the coverage language and certain exclusions in the policies. Miraglia countered with two motions for summary judgment of his own, collectively seeking summary adjudications that State Farm must defend him in the Texas state court suits and indemnify him for any liability he might suffer in those suits.1 The court has concluded that State Farm's motions should be granted and that Miraglia's should be denied.
State Farm issued two policies of liability insurance to Miraglia, both of which were in effect during the period of time when Miraglia engaged in the conduct about which the underlying plaintiffs complain in the Texas state court suits. One was a homeowners policy, bearing policy number 81-KW-0884-8, and the other was an umbrella policy, bearing policy number 81-K8-9032-5. Both named Miraglia and his wife as insureds. The controversy is over whether State Farm has defense and payment obligations under either or both of these policies with respect to the Texas state court suits and the claims being asserted therein by the underlying plaintiffs.
The underlying plaintiffs seek recovery for damages in the Texas state court suits that they allege were caused by defamatory information Miraglia posted on the Yahoo Finance Message Boards under the pseudonym "paydaylender" after disputes developed between Miraglia and First Cash Financial Services Inc. ("First Cash") over business arrangements they had entered into as part of First Cash's acquisition of Miraglia, Inc., a business that was owned by Miraglia.
The disputes between First Cash and Miraglia led to a suit by Miraglia against First Cash in the District Court of Tarrant County, Texas, 48th Judicial District (No. 48-195989-2), seeking a recovery for damages based on alleged breaches of duty owed by First Cash to Miraglia arising out of their business arrangements. In August 2003 First Cash filed a counterclaim against Miraglia in suit No. 48-195989-2 in which it made the following allegations in support of its request for recovery for damages from Miraglia:
9. On October 4, 2002, Miraglia resigned his employment from First Cash amid certain controversies and disputes, and this lawsuit followed soon thereafter. Disgruntled and with an axe to grind, Miraglia resorted to a cyber smear campaign against FCFS.
10. Miraglia used as his forum the Yahoo Finance Message Boards where he posted under the pseudonym "paydaylender." There, cloaked with anonymity and unencumbered by editorial filters, Miraglia shared information, including false and misleading information, about First Cash with the world. At times, Miraglia even wrote about himself in the third person for the purpose of further misleading and deceiving the recipients.
11. Motivated by bitterness and ill will, Miraglia made numerous false assertions of management insider trading, management's disregard for shareholder rights and fiduciary duties, improper compensation schemes between the board and management, and failure of First Cash to disclose material information.
12. Among the themes revisited and false statements repeated by Miraglia were allegations that corporate insiders, board members and members of the management team, had engaged in the illegal practice of insider trading. For example only, and not by limitation, in one message entitled "Insiders Dumping Again," Miraglia suggested that management "created . . . positive news so they could sell into it." He also suggested that First Cash was withholding material and adverse information from the market, "while [corporate insiders] dump shares." In addition, Miraglia accused First Cash's management of engaging in an illegal "pump and dump" scheme.
13. Miraglia liberally used innuendo and/or implication in his publication of false and malicious statements regarding FCFS, and its management. The information conveyed by Miraglia created a false impression of FCFS' business as well as the character of its management.
14. That Miraglia was bent on harming FCFS is evident from another message in which Miraglia wrote, "Their actions have pushed me to take actions which are irreversible." Clearly, Miraglia was on a mission to injure FCFS, albeit a pathetic and misguided one. He understood and intended the damaging consequences of his actions.
15. The consequences of Miragla's [sic] actions are far reaching. Not only did he impeach the honesty, integrity, virtue and reputation of First Cash, he falsely accused First Cash with the commission of a crime. As a result, First Cash has suffered or incurred injuries to its character, good will and reputation, as well as economic harm.
State Farm's Resp. to Miraglia's First Mot. for Summ. J., App. Vol. 1 at 259-61. A copy of the counterclaim was served on Miraglia, through his counsel, in August 2003.
Virtually identical allegations were made in a series of suits filed against Miraglia in August 2003 by officials of First Cash who alleged that they were damaged by Miraglia's internet postings. One was filed in the Superior Court of the State of Arizona, in and for the County of Maricopa, ("Arizona state court suit") by Richard T. Burke ("Burke"), a member of the board of directors of First Cash. Miraglia's allegations against the officials of First Cash were modified as necessary to reflect the claims of the officials that Miraglia acted intentionally, knowingly, and with malice to harm them when he made his internet postings. For example, Burke alleged in the Arizona state court suit that:
6. . . . . Miraglia became a cyber-libelist, embarking on a cyber smear campaign against FCFS and its officers and directors, including Burke.
. . . .
8. Consumed by bitterness and ill will, Miraglia knowingly and with malice made numerous false assertions of insider trading, disregard for shareholder rights and fiduciary duties, improper compensations schemes between the board and management, and failures to disclose material information.
. . . .
12. That Miraglia was bent on harming Burke, FCFS and the shareholders of FCFS is evident from another message in which Miraglia wrote, "Their actions have pushed me to take actions which are irreversible." Clearly, Miraglia was on a perceived "mission" to injure Burke, FCFS, and the shareholders of FCFS, albeit a pathetic and misguided one. He understood and intended the damaging consequences of his actions.
Id. at 272-73. Miraglia was served with Burke's complaint in August 2003.
On the date of the filing of Burke's pleading in Arizona, Joe R. Love ("Love") filed a pleading instituting an action against Miraglia in the District Court in and for Oklahoma County, State of Oklahoma ("Oklahoma state court suit"). Love alleged that he is a member of the board of directors of First Cash. He made allegations against Miraglia virtually identical to the allegations Burke made in his Arizona state court suit. Miraglia was served with a copy of Love's suit papers in August 2003.
The underlying plaintiffs filed their Texas state court suits against Miraglia in the last half of the year 2003. Id., Vol. 2 at 367-68.2 Barron's was filed in the 415th District Court of Parker County, Texas, in August 2003 as Case No. 51257; Powell's was filed in the 236th District Court of Tarrant County, Texas, in December 2003 as Case No. 236-203613-03; Wessel's was filed in the 48th District Court of Tarrant County, Texas, in December 2003 as Case No. 48-203617-03; and Schuchmann's was filed in the 134th District Court of Dallas County, Texas, in December 2003 as Case No. 03-13611-G. Id. Barron alleged that he was Chief Operations Officer of. First Cash; Powell alleged that he was Chief Executive Officer and Chairman of the Board of First Cash; Wessel alleged that he was President, Secretary, Treasurer, and member of the board of directors of First Cash; and Schuchmann alleged that she was a member of the board of directors of First Cash. The court infers that each of the underlying plaintiffs made allegations against Miraglia that were basically the same as the allegations Burke and Love made against him in the August 2003 Arizona and Oklahoma state court suits.
The underlying plaintiffs appear to have withheld service of process on Miraglia as to the Texas state court suits for several months. In the interim, Miraglia, First Cash, Burke, and Love engaged in negotiations and reached a settlement of (a) the claims Miraglia made in his litigation against First Cash (No. 48-195989-2); (b) First Cash's counterclaim...
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...under an insurance policy is an appropriate use of the declaratory judgment mechanism."); See State Farm Fire & Cas. Co. v. Miraglia, 565 F.Supp.2d 709 (N.D. Tex. 2008) (actual controversy exists where insurer sought declaration as to its obligation to defend and indemnify its insured). The......