TOWN OF SOUTH WHITLEY, IND. v. Cincinnati Ins. Co.

• Decision Date: 01 November 1989
• Docket Number: Civ. No. F 88-358.
• Citation: 724 F. Supp. 599
• Parties: TOWN OF SOUTH WHITLEY, WHITLEY COUNTY, INDIANA, Plaintiff, v. CINCINNATI INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Indiana

724 F. Supp. 599

TOWN OF SOUTH WHITLEY, WHITLEY COUNTY, INDIANA, Plaintiff, v. CINCINNATI INSURANCE COMPANY, Defendant.

Civ. No. F 88-358.

United States District Court, N.D. Indiana, Fort Wayne Division.

November 1, 1989.

J. Frank Kimbrough, Wilks & Kimbrough, Fort Wayne, for plaintiff.

Thomas C. Ewing and James J. Shea, Hunt, Suedhoff, Borror & Eilbacher, Fort Wayne, for defendant.

ORDER

WILLIAM C. LEE, District Judge.

This matter is before the court on cross motions for summary judgment. Oral arguments were heard on August 17, 1989, at which time this court requested further briefing on the issue of the identity of the Town of South Whitley and the elected members of the Town's governing board with respect to Exclusion (h)(2) of the defendant's policy. Rebriefing of the issue was completed on September 8, 1989. For the reasons set forth below, defendant's motion for summary judgment will be granted.

Summary Judgment

Summary judgment is proper "if 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 a judgment as a matter of law." Fed.R. Civ.P. 56(c). Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery, against a party "who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and in which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The standard for granting summary judgment mirrors the directed verdict standard under Rule 50(a), which requires the court to grant a directed verdict where there can be but one reasonable conclusion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). A scintilla of evidence in support of the nonmoving party's position is not sufficient to successfully oppose summary judgment; "there must be evidence on which the jury could reasonably find for the plaintiff." Id. 106 S.Ct. at 2512; Valentine v. Joliet Tp. High School Dist. No. 204, 802 F.2d 981, 986 (7th Cir.1986).

Initially, Rule 56 requires the moving party to inform the court of the basis for the motion, and to identify those portions of the "pleadings, depositions, answers to interrogatories, and admission on file, together with the affidavits, if any, which demonstrate the absence of a genuine issue of material fact," Celotex, 106 S.Ct. at 2553. The non-moving party may oppose the motion with any of the evidentiary materials listed in Rule 56(c), but reliance on the pleadings alone is not sufficient to withstand summary judgment. Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). In ruling on a summary judgment motion the court accepts as true the non-moving party's evidence, draws all legitimate inferences in favor of the non-moving party, and does not weigh the evidence or the credibility of witnesses. Anderson, 106 S.Ct. at 2511.

Substantive law determines which facts are material; that is, which facts might affect the outcome of the suit under the governing law. Id. 106 S.Ct. at 2510. Irrelevant or unnecessary facts do not preclude summary judgment even when they are in dispute. Id. The issue of fact must be genuine. Fed.R.Civ.P. 56(c), (e). To establish a genuine issue of fact, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The non-moving party must come forward with specific facts showing that there is a genuine issue for trial. Id. A summary judgment determination is essentially an inquiry as to "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 106 S.Ct. at 2512.

Factual and Procedural Background

The plaintiff, the Town of South Whitley, is a governmental entity created under the laws of Indiana and is a citizen of the state of Indiana. The defendant, Cincinnati Insurance Company (CIC), is a citizen of the state of Ohio, having been incorporated under the laws of Ohio and having its principal place of business in Ohio.

CIC issued a three-year policy to South Whitley effective January 1, 1985. The policy was known as a commercial umbrella liability policy, bearing Policy No. CCC 289 42 31. The policy provided South Whitley with different types of excess casualty coverage for its governmental operations. The plaintiff made a demand upon the defendant pursuant to the policy to provide a defense and indemnification in a case brought against it by Darol Eldridge. This declaratory judgment action was filed by plaintiff as a result of defendant's denial of coverage.¹

The civil action brought by Eldridge named the Town of South Whitley, its Board of Trustees and the Town Marshall as defendants. Eldridge alleged that the defendants illegally discriminated against him when they failed to hire him for the position of Deputy Town Marshall in Spring, 1986. Believing that he had been denied the job because of his age, the fifty-four year old Eldridge filed a "Charge of Discrimination" with the Equal Employment Opportunity Commission (EEOC). After an investigation, the EEOC found merit in Eldridge's claim and issued a "Letter of Violation" against South Whitley on January 29, 1987. Eldridge filed his civil action in this United States District Court on March 14, 1988, claiming constitutional violations of due process and equal protection and violation of the Indiana Age Discrimination in Employment Act (ADEA).

The CIC insurance policy at issue contains the following pertinent provisions:

PART I — DEFINED WORDS AND PHRASES

A. `You', `your', and `yours' mean a person or organization shown as the Named Insured in the declarations ...

G. `occurrence' means an accident, or a happening or event, or a continuous or repeated exposure to conditions which occurs during the policy period which unexpectedly or unintentionally results in personal injury, property damage or advertising liability. All such exposure to substantially the same general conditions existing at or emanating from one premises location shall be deemed one occurrence; ...

H. Personal Injury means:

(1) Bodily harm or injury, sickness, disease, disability, shock, fright, mental anguish or mental injury including care, loss of services or death arising out of these; ...

(3) Discrimination or humiliation; ...

K. `ultimate net loss' means the sum actually expended or payable in cash to procure settlement or satisfaction of the Insured's legal obligation for damages either by (1) final adjudication or (2) compromise with the written consent of the Company; ...

PART II — THE COVERAGE

A. We will pay

We will pay on behalf of the Insured the ultimate net loss for occurrences during the policy period in excess of the underlying insurance or for occurrences covered by this policy which are either excluded or not covered by underlying insurance because of Personal Injury, Property Damage, or Advertising Liability anywhere in the world.

B. THIS POLICY DOES NOT APPLY — EXCLUSIONS

* * * * * *

(h) to any liability for Personal injury arising out of discrimination including fines or penalties imposed by law, if (1) insurance coverage therefor is prohibited by law or statute, or (2) committed by or at your direction; ...

C. OUR DUTIES AND YOURS IN CLAIMS OR SUITS-DEFENSE, INVESTIGATION, SETTLEMENT, REIMBURSEMENT, ASSISTANCE AND COOPERATION

(a) With respect to such insurance as is afforded by this policy, if there is no underlying insurer obligated to do so, we shall have the right and duty to defend any suit against the Insured seeking damages on account of personal injury, property damage or advertising liability, even if any of the allegations of the suit are groundless, false or fraudulent and we may make such investigation and settlement of any claim or suit as we deem expedient, but we shall not be obligated to defend any suit after the applicable limit of our liability has been exhausted.

D. WHO IS AN INSURED — PERSONS OR ORGANIZATIONS WE WILL COVER

Each of the following is an Insured under this policy to the extent set forth below:

* * * * * *

(f) Any executive officer, director, other employee or stockholder of yours while acting within the scope of his duties as such.

CIC contends that the Town of South Whitley is not entitled to indemnification pursuant to the foregoing policy provisions. First, CIC argues that the policy provides coverage only for "unintentional" acts, and since all of the underlying claims made in the Eldridge case require a showing of "intentional" discrimination, there can be no basis for indemnification. Second, CIC argues that even if there is a claim by Eldridge based on "unintentional" discrimination, the discriminatory acts of which Eldridge complain were performed by the insured, and therefore, are excluded from coverage pursuant to Exclusion (h)(2).

Analysis

Eldridge's complaint against the Town of South Whitley involves three claims; one under 42 U.S.C. § 1983 for violation of the Due Process Clause of the Constitution, one under 42 U.S.C. § 1983 for violation of the Equal Protection Clause of the Constitution, and one for violation of the Indiana Age Discrimination in Employment Act.

CIC is correct in its contentions that Eldridge's claims for constitutional violations brought pursuant to § 1983 require proof of discriminatory intent. Under existing federal law, a Due Process claim is treated as an intentional tort. Williams v. Boles, 841 F.2d 181, 183 (7th Cir.1988). A plaintiff making a due process claim must show that the intentional actions of the defendant caused a...