Tower Grp. Cos. v. Ozark Hous. Dev. Inc., Case No. 1:12–cv–0493–MEF.

• Decision Date: 22 November 2013
• Docket Number: Case No. 1:12–cv–0493–MEF.
• Citation: 984 F.Supp.2d 1193
• Parties: TOWER GROUP COMPANIES, Plaintiff, v. OZARK HOUSING DEVELOPMENT INC., et al., Defendants.
• Court: U.S. District Court — Middle District of Alabama

984 F.Supp.2d 1193

TOWER GROUP COMPANIES, Plaintiff,

v.OZARK HOUSING DEVELOPMENT INC., et al., Defendants.

Case No. 1:12–cv–0493–MEF.

United States District Court,

M.D. Alabama,

Southern Division.

Nov. 22, 2013.

David MacArthur Wilson, Jud Clifford Stanford, Wilson & Berryhill PC, Birmingham, AL, for Plaintiff.

Ladonna B. Spivey, Ladonna B. Spivey, Ozark, AL, Labarron Nelson Boone, Beasley Allen Crow Methvin Portis & Miles PC, Montgomery, AL, for Defendants.

Memorandum Opinion and Order

MARK E. FULLER, District Judge.

I. Introduction

Plaintiff Tower Group Companies (“Tower Group”) brings this declaratory judgment action against Defendants Ozark Housing Development (“OHD”) and Clarissa Smith, Individually and as mother and next friend of T.S.S., the Estate of J.K.S. and J.S., and Mary Parker, Administrator of the Estate of J.K.S. and J.S. (collectively, the “Tort Plaintiffs”), seeking a declaration as to whether Tower Group is obligated to defend and to indemnify OHD with regard to an underlying state lawsuit brought by the Tort Plaintiffs against OHD. Tower Group also seeks a declaration as to whether the commercial general liability policy issued to OHD covers any claims filed in the underlying suit and, consequently, whether the Tort Plaintiffs are entitled to any benefits or proceeds under that policy. This cause is now before the Court on Tower Group's Motion for Summary Judgment. (Doc. # 21.) The Court has reviewed the submissions of the parties and finds that, for the reasons set forth below, the above-styled action is due to be DISMISSED with leave to re-file.

II. Jurisdiction and Venue

The Court has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332, based upon the parties' diversity of citizenship ¹ and an amount of controversy exceeding $75,000, exclusive of interest and costs. The parties contest neither personal jurisdiction nor venue, and the Court finds adequate grounds to support both.

III. Facts

This case involves a dispute over whether an endorsement in the insurance policy issued by Tower Group to OHD precludes coverage for claims currently pending in state court. On November 8, 2011, three minor children died in a fire that spread quickly through the Peachburg Apartment complex in Union Springs, Alabama. The Tort Plaintiffs attributed the children's deaths to the failure of several smoke detectors in the building. On February 15, 2012, the Tort Plaintiffs brought suit in the Circuit Court of Bullock County, Alabama against, among others ², OHD, a non-profit entity they allege was responsible for inspecting and maintaining the smoke detectors. The Tort Plaintiffs alleged that OHD had a duty to provide the children with a safe living environment and that they (1) negligently and/or wantonly failed to provide adequate safety devices in the apartment to detect and/or extinguish the fire, (2) negligently and/or wantonly failed to ensure the detectors were installed in a manner that would allow early detection of a fire, and (3) negligently and/or wantonly failed to properly install, test, inspect, repair, and/or maintain the smoke detectors. The Tort Plaintiffs further allege that those failures by OHD proximately caused the deaths of the children. The Tort Plaintiffs seek both compensatory and punitive damages. According to the parties, the underlying state suit remains pending in Bullock County, Alabama as Civil Action No. CV–2011–000045, the discovery process is underway, and the suit has not yet been resolved.

On June 11, 2013, more than 16 months after the underlying state tort action was filed, Tower Group filed its Complaint for Declaratory Judgment (Doc. # 1) naming OHD and the Tort Plaintiffs as defendants. In the suit before this Court, Tower Group seeks a judicial declaration of its rights and obligations with respect to an insurance policy it issued previously to OHD. Specifically, Tower Group seeks a declaration that it has no duty to defend or to indemnify OHD with respect to the underlying state lawsuit and that the Tort Plaintiffs are not entitled to any benefits under the policy. As a basis for this declaration, Tower Group argues that, although the policy covered losses incurred on the date of the fire, there was an endorsement that precludes coverage for any claims arising out of inspection services provided by OHD. Because the facts in the underlying state suit unequivocally show that OHD did nothing more than inspect the smoke detectors, Tower Group contends that the endorsement was triggered and that the policy affords no coverage to OHD. At the time the complaint in this lawsuit was filed, Tower Group was furnishing OHD a defense in the underlying state tort action under a reservation of rights. Tower Group has not been joined as a defendant in the underlying state tort action. As a result, the insurance coverage issues are not pending before the Bullock County Circuit Court.

OHD filed its answer in this lawsuit on July 23, 2012, and the Tort Plaintiffs filed their answers on August 30, 2012. Almost a year later, on August 1, 2013, Tower Group and OHD filed a Joint Stipulation of Consent Judgment (Doc. # 20) in which Tower Group and OHD agreed that the Tower Group policy excludes coverage for any and all claims arising out of the underlying state suit and that OHD is not entitled to a defense or indemnification under the policy. The next day, Tower Group filed its motion for summary judgment (Doc. # 21) on its declaratory judgment action as to both OHD and the Tort Plaintiffs. The Tort Plaintiffs filed no response to Tower Group's motion for summary judgment. On October 7, 2013, the Court entered a Consent Judgment according to the terms of Tower Group and OHD's Joint Stipulation. (Doc. # 27.) The Consent Judgment resolved all claims for a declaratory judgment between Tower Group and OHD. The only remaining claims currently pending before the Court involve Tower Group's request for a declaration that the Tort Plaintiffs are not entitled to benefits or proceeds under the policy Tower Group issued to OHD should the Tort Plaintiffs prevail against OHD in the underlying state court action.

On October 11, 2013, a status conference was held with Tower Group and the Tort Plaintiffs. The purpose of this status conference was to address the pending motion for summary judgment filed by Tower Group to which the Tort Plaintiffs did not respond. At this conference, counsel for the Tort Plaintiffs argued that the declaratory judgment action pending against them would not be ripe until the state court issued a judgment against OHD and, therefore, the Court should dismiss or stay the action. Tower Group countered that because the Tort Plaintiffs had failed to respond to its motion for summary judgment, and because the facts alleged therein must be considered undisputed for purposes of its motion, the action was ripe and summary judgment was due in its favor. Alternatively, Tower Group argued that summary judgment should be granted in its favor because there was no chance circumstances in the underlying state court action could change such that the Tower Group policy would extend coverage to OHD.

At the conclusion of the telephone conference, the Court requested that the parties submit a short letter brief addressing the following issue: whether granting summary judgment on the facts before the Court in this action would bar subsequent suit by the Tort Plaintiffs against Tower Group in a direct action should new evidence arise triggering coverage. Neither party found authority addressing this issue. In their letter brief, the Tort Plaintiffs reiterated their arguments that the matter would not be ripe until after a state court judgment was issued. In response, Tower Group filed an Objection and Motion to Strike Portions of Defendants' Letter Brief. (Doc. # 29). As grounds for this motion, Tower Group argues that the Tort Plaintiffs are impermissibly using the letter brief as a vehicle to assert arguments that they should have presented in response to its motion for summary judgment and that the Tort Plaintiffs waived the right to make ripeness arguments at this point in the litigation as a result of their failure to file a response to Tower Group's summary judgment motion. Another status conference was held on November 7, 2013, at which time the Court gave the parties notice of its intent to dismiss the case based on its discretionary power under the Declaratory Judgment Act.

IV. Legal Standard

A motion for summary judgment looks to “pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A court should grant summary judgment when the pleadings and supporting materials show that no genuine dispute exists as to any material fact and the moving party deserves judgment as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The party moving for summary judgment “always bears the initial responsibility of informing the district court of the basis for its motion, and identifying” the relevant documents that “it believes demonstrate the absence of a genuine [dispute] of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (alteration to original). To shoulder this burden, the moving party can present evidence to this effect. Id. at 322–23, 106 S.Ct. 2548. Or it can show that the non-moving party has failed to present evidence in support of some element of its case on which it ultimately bears the burden of proof. Id.

If the moving party meets its burden, the non-movant must then designate, by affidavits, depositions, admissions, or answers to interrogatories, specific facts showing the existence of a genuine dispute for trial. Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590, 593–94 (11th...