Turk v. Tig Ins. Co.

• Decision Date: 17 April 2009
• Docket Number: Case No. 2:08-cv-00958-RLH-PAL.
• Citation: 616 F.Supp.2d 1044
• Parties: Michael E. TURK, Plaintiff, v. TIG INSURANCE COMPANY; Does I through X; and Roe Corporations XI through XX, Defendants.
• Court: U.S. District Court — District of Nevada

616 F.Supp.2d 1044

Michael E. TURK, Plaintiff, v. TIG INSURANCE COMPANY; Does I through X; and Roe Corporations XI through XX, Defendants.

Case No. 2:08-cv-00958-RLH-PAL.

United States District Court, D. Nevada.

April 17, 2009.

Ariel E. Stern, Ballard Spahr Andrews & Ingersoll, LLP, Las Vegas, NV, Kurt A. Smith, Smith & Kim Attorneys At Law, Henderson, NV, for Plaintiff.

Andrew R. McCloskey, Law Offices of Andrew R. McCloskey, Las Vegas, NV, for Defendant.

ORDER

(Motion for Summary Judgment—# 12; Motion to Bifurcate Trial—# 13; Countermotion for Summary Judgment—# 15)

ROGER L. HUNT, Chief Judge.

Before the Court is Defendant TIG Insurance Co.'s Motion for Summary Judgment (# 12), filed December 29, 2008. The Court has also considered Plaintiff Michael Turk's Opposition (# 15), filed January 17, 2009, and Defendant's Reply (# 28), filed January 30, 2009.

Also before the Court is Plaintiff's Countermotion for Summary Judgment (# 15), filed January 17, 2009; Defendant's Opposition (# 29), filed February 4, 2009; and Plaintiffs Reply (# 31), filed February 18, 2009.

Also before the Court is Defendant's Motion to Bifurcate Trial (# 13), filed January 9, 2009. The Court has also considered Plaintiffs Opposition (# 21), filed January 27, 2009, and Defendant's Reply (# 30), filed February 10, 2009.

BACKGROUND

This case involves an insurance coverage dispute arising from two different insurance policies issued by Defendant TIG Insurance Company. TIG insured State Insulation & Drywall under three general liability policies and three excess liability policies from August 14, 1996, to August 14, 1999 ("State Policies"). TIG also insured Rancho Del Norte Villas, Inc. ("Rancho del Norte"), a construction company, under two "Coverage Plus Umbrella Liability Policies" from December 30, 1998, to September 1, 2000 ("Rancho Policies"). In 1997, Rancho del Norte built an apartment complex in North Las Vegas called Villas at Rancho del Norte (the "Villas"). Plaintiff Michael Turk alleges that at the time Rancho del Norte built the apartment complex, he was an officer and minority shareholder of the company.

I. The Underlying Lawsuit

In October 2004, the Disabled Rights Action Committee ("DRAC"), through its "Tester" Tamara Thompson, visited the Villas and determined that it was not built in accordance with the Fair Housing Act, 42 U.S.C. § 3602. On February 4, 2005, Thompson and DRAC filed suit (the "Thompson lawsuit") against Rancho del Norte, Defendant Michael Turk, and various other individuals and entities involved in the construction of the Villas, Thompson and DRAC alleged that the defendants discriminated against disabled individuals in violation of the Fair Housing Act by failing to provide (1) an accessible building entrance for handicapped individuals; (2) handicapped parking without curb cuts; and (3) handicapped access to the pool.

II. Request for Insurance Coverage

Turk claims he is entitled to insurance coverage under the State and Rancho Policies because he was an officer of Rancho del Norte from 1994 to 2001. According to Turk, he is entitled to coverage under the State Policy because Rancho del Norte is an additional insured under the State Policies. Turk asserts that under the Rancho Policies, however, he is a named insured. Under the Rancho Policies, TIG provides Rancho del Norte "Coverage Plus Umbrella Liability" insurance above two general commercial liability policies provided by Clarendon National Insurance Company ("Clarendon Policies" or "underlying insurance"). The Rancho Policies state that TIC will pay, on Rancho del Norte's behalf, damages due to personal injury, property damages, or advertising injury during the policy period, but only for losses in excess of policy limits on the underlying insurance. Nonetheless, the Rancho Policies also state that TIG will insure Rancho del Norte "with respect to an occurrence for which no underlying insurance applies" as long as the Rancho Policies apply. (Dkt. # 12, Mot. for Summ. J. Ex. G-H.) The Rancho Policies cover Rancho del Norte and its officers, directors, and shareholders. Notably, the policies do not cover "any claim or suit based upon or alleging discrimination against any person." (Id.) This insurance limitation applies to discrimination based on "age, ethnic origin, marital status, physical or mental hardship, race, religious affiliation, sex, or sexual orientation." (Id.)

In addition to seeking coverage from TIG, Turk tendered defense to Clarendon Insurance. Clarendon has refused to defend or indemnify Turk, claiming that its insurance policy does not cover the claims brought by the Thompson plaintiffs.

Turk claims that in June 2007, he found a document indicating that Rancho had been insured by TIG. He also alleges he found a document indicating that TIG insured Rancho del Norte Communities, a company he was affiliated with between 1996 and 2001. On June 27, 2007, Plaintiff's counsel tendered defense of the DRAC Complaint and sent three policy numbers to TIG, two for the State Policies and one for the Rancho Policies. TIG alleges that Turk's tender of defense was "shrouded in confusion" because Turk did not specify the correct policy periods or the correct entities involved in this dispute. (Dkt. # 29, Opp'n 12.) After not hearing from TIG for over a month, Turk's attorney called TIG to inquire about the status of his claim. Turk alleges that a TIG representative informed his attorney that TIG never insured Rancho del Norte and that the policy number Turk sent to TIG applied to the State Policies, not to the Rancho Policies. This representative also told Turk's attorney that Rancho del Norte was not an additional insured under the State Policies. In August 2C07, Turk's attorney sent a fax asking TIG to send a copy of the Rancho Policies to him. According to Turk, TIG did not comply with this request.

Turk alleges his attorney made several phone calls to TIG over the course of the next several months, but was never given a straight answer regarding his request for insurance coverage. TIG denied Turk's claim on March 4, 2008, on the basis that neither Rancho nor Turk was an additional insured under the State Policies. On March 7, 2008, Turk disputed this decision, and he asked TIG to insure him under the Rancho Policies. On March 13, 2008, TIG again told Turk that it never insured Rancho del Norte under any insurance policy and that it would not defend him in the Thompson litigation. TIG continued asserting that it did not insure Rancho del Norte until November 18, 2008, when it faxed the Rancho Policies to Turk stating that it had "recently obtained" the policies. (Dkt. # 17, Appx. Ex. 22.) TIG alleges that once it located the two Rancho Policies, it "immediately produced them to Turk's counsel." (Dkt. # 29, Opp'n, 13.)

On June 24, 2008, Turk filed suit against TIG in Nevada state court. In his Amended Complaint, filed the next day, Turk asserted claims for breach of contract, breach of the covenant of good faith and fair dealing, and unfair practices in settling claims. Turk also seeks declaratory relief. On July 25, 2008, Defendant removed the case to this Court based on the diversity of the parties. Each party has now moved for summary judgment, and Defendant has also filed a Motion to Bifurcate the Trial. For the reasons discussed below, Defendant's Motion for Summary Judgment is granted in part and denied in part. Plaintiff's Countermotion for Summary Judgment and Defendant's Motion to Bifurcate are both denied.

DISCUSSION

I. Motion for Summary Judgment

A court will grant summary judgment if "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue is "genuine" if there is a sufficient evidentiary basis on which a reasonable fact-finder could find for the nonmoving party, and a dispute is "material" if it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In evaluating a motion, a court views all facts and draws all inferences in the light most favorable to the nonmoving party. Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982).

The movant bears the burden of showing that there are no genuine issues of material fact. Id. "In order to carry its burden of production, the moving party must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial." Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir.2000). Once the movant satisfies the requirements of Rule 56, the burden shifts to the party resisting the motion to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256, 106 S.Ct. 2505; Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The nonmoving party "may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material, to show that the dispute exists," Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir.1991), and "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, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

II. Breach of Contract

Turk alleges TIG breached its insurance contract by refusing to defend or indemnify him in the Thompson lawsuit. Under Nevada law, an insurer has a duty to defend its insured whenever there is potential for coverage. Bidart v. Am. Title, 734 P.2d 732, 734 (Nev.1987). In other words, "[a]n insurer ... bears a duty to defend its insured whenever it ascertains...