W. Bend Mut. Ins. Co. v. RAE ARC Indus.
| Decision Date | 16 September 2021 |
| Docket Number | 4:19CV2654 |
| Parties | WEST BEND MUTUAL INSURANCE COMPANY, Plaintiff, v. RAE ARC INDUSTRIES, INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
Pending is Plaintiff West Bend Mutual Insurance Company's Motion for Summary Judgment (ECF No. 28).[1] The Court has been advised, having reviewed the record, the parties' briefs, and the applicable law. For the reasons that follow the Court denies the motion.
The stipulated facts[2] are as follows:
1. Plaintiff issued to “Rae Arc Industries, Inc. and The Carousel Center” a general liability policy, Policy No. A120820 01, which policy was effective February 19, 2017 to February 19, 2018 (hereinafter “the West Bend Policy”). ECF No. 27-1 is a certified copy of the West Bend Policy, including the Affidavit of Ashley Bonin.
2. Included in the West Bend Policy is an Endorsement entitled “EXCLUSION - NAMED DRIVER”, which was signed by Shannon Arcade, as a representative of the first named insured. ECF No. 27-2 is a copy of this signed Endorsement.
3. Law Office of Shirley J. Smith, LLC, Administrator of the Estate of Bradley A. Huffman, Deceased v. RaeArc Industries, Inc., et al., No. 2019 CV 01562 (Mahoning Cty. Common Pleas Ct. filed July 30, 2019) has been filed in state court (“the underlying litigation”). It asserts injury claims on behalf of the Estate of Bradley A. Huffman against various defendants, including Rae Arc Industries, Inc., The Carousel Center, and Sharita Williams. The claims arise out of an incident that occurred on July 30, 2017. ECF No. 27-3 is a copy of the Complaint filed in the underlying litigation.[3]
4. Defendants Rae Arc and/or The Carousel Center are in the business of providing support services for people with developmental disabilities and mental health issues. The services provided by Rae Arc and The Carousel Center and their employees/agents include residential support services and care.
5. On July 30, 2017, decedent Bradley Huffman (age 69) resided at 851 S. Canfield-Niles Road, Austintown, Ohio.
6. On July 30, 2017, Sharita Williams was employed by Rae Arc and/or The Carousel Center as a care giver providing services to Huffman.
7. On July 30, 2017, Sharita Williams was operating her private vehicle, owned by her, in the driveway of the Huffman residence at 851 S. Canfield-Niles Road, Austintown, Ohio.
8. The automobile being operated by Sharita Williams struck Bradley Huffman.[4]
9. The Complaint filed in the underlying litigation alleges injuries and damages as a result of this July 30, 2017 accident.
Plaintiff seeks a declaratory judgment that it is not required to defend nor indemnify Rae Arc for the claims of the Estate of Bradley A. Huffman. Plaintiff argues that coverage for the claims in the underlying litigation is precluded by certain exclusions contained in the West Bend Policy. The Court concludes, however, that (1) Plaintiff has a duty to defend Rae Arc in the underlying litigation and (2) resolution of the question of Plaintiff's duty to indemnify is precluded by unanswered factual questions.
Summary judgment is appropriately granted when the pleadings, the discovery and disclosure materials on file, and any affidavits show “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Johnson v. Karnes, 398 F.3d 868, 873 (6th Cir. 2005). The moving party is not required to file affidavits or other similar materials negating a claim on which its opponent bears the burden of proof, so long as the movant relies upon the absence of the essential element in the pleadings, depositions, answers to interrogatories, and admissions on file. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party must “show that the non-moving party has failed to establish an essential element of his case upon which he would bear the ultimate burden of proof at trial.” Guarino v. Brookfield Twp. Trustees., 980 F.2d 399, 403 (6th Cir. 1992).
Once the movant makes a properly supported motion, the burden shifts to the non-moving party to demonstrate the existence of genuine dispute. An opposing party may not simply rely on its pleadings. Rather, it must “produce evidence that results in a conflict of material fact to be resolved by a jury.” Cox v. Ky. Dep't. of Transp., 53 F.3d 146, 150 (6th Cir. 1995). The non-moving party must, to defeat the motion, “show that there is doubt as to the material facts and that the record, taken as a whole, does not lead to a judgment for the movant.” Guarino, 980 F.2d at 403. In reviewing a motion for summary judgment, the court must view the evidence in the light most favorable to the non-moving party when deciding whether a genuine issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970).
The United States Supreme Court, in deciding Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986), stated that in order for a motion for summary judgment to be granted, there must be no genuine issue of material fact. Id. at 248. The existence of some mere factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Scott v. Harris, 550 U.S. 372, 380 (2007). A fact is “material” only if its resolution will affect the outcome of the lawsuit. In determining whether a factual issue is “genuine, ” the court must decide whether the evidence is such that reasonable jurors could find that the non-moving party is entitled to a verdict. Id.Summary judgment “will not lie . . . if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.To withstand summary judgment, the non-movant must show sufficient evidence to create a genuine issue of material fact. Klepper v. First Am. Bank, 916 F.2d 337, 342 (6th Cir. 1990). The existence of a mere scintilla of evidence in support of the non-moving party's position ordinarily will not be sufficient to defeat a motion for summary judgment. Id.(citing Anderson, 477 U.S. at 252).
The Supreme Court of Ohio has held that “[a]n insurer's duty to defend is broader than and distinct from its duty to indemnify.” Sharonville v. Am. Emps. Ins. Co., 109 Ohio St.3d 186, 189 (2006). Once it has been found that an insurer must defend even one claim within an underlying complaint, it must defend all other claims therein, regardless of their potential coverage from the insurance policy. Id.Ohio has generally adopted a system of notice pleading, see Ohio R. Civ. P. 8, and the Supreme Court of Ohio has stated, “the pleadings alone may not provide sufficient factual information to determine whether the insurer has an obligation to defend the insured.” City of Willoughby Hills v. Cincinnati Ins. Co., 9 Ohio St.3d 177, 180 (1984).[5] Therefore, the test of the duty to defend is whether any of the underlying claims “potentially or arguably” fall within the “scope of the allegations” of the underlying complaint. Id.
The pleadings may be broad in scope and the duty to defend attaches until such a point when no claim may even potentially or arguably be covered. The question of a duty to defend or indemnify is then answered by a comparison of the breadth of the pleadings and the coverage of the policy. If they overlap to a sufficient degree that a covered claim could arise, then the insurer must defend. The question of indemnity would then await the resolution of the relevant litigated claims. A two-step process has been helpful in such analyses: “(1) determine the scope of the insurance policy; and (2) assess whether the allegations fall within the scope of that policy.” Fortney & Weygandt, Inc. v. Am. Manufacturers Mut. Ins. Co., No. 1:04CV48, 2012 WL 13020177, at *5 (N.D. Ohio Aug. 31, 2012) (Oliver, C.J.). In applying this test to the West Bend Policy in the case at bar, it becomes apparent that there is at least some potential for the underlying litigation to resolve in such a way as to give rise to a covered claim. For this reason, Plaintiff must defend the state court action and the within motion cannot be granted.
The West Bend Policy (ECF No. 27-1) is a Commercial Package Policy which contains various different coverages. It contains three relevant coverage parts: Business Auto Coverage, Commercial General Liability (“CGL”) Coverage, and Commercial Liability Umbrella Coverage. The Business Auto Coverage part contains an endorsement with a named driver exclusion stating “[t]his insurance does not apply to any loss, damage and/or liability caused by the ownership, maintenance, or use of a covered auto while being driven or operated by the following named driver: Sharita Williams.” ECF No. 27-2. The parties do not dispute that this exclusion precludes any coverage for the underlying litigation. It is also undisputed that this named driver exclusion applies only to the Business Auto Coverage part. The Commercial Liability Umbrella Coverage part is subject to a separate named driver exclusion (ECF No. 27-1 at PageID #: 515) which would also preclude coverage for a motor vehicle driven by Sharita Williams. This separate exclusion differs from the one applicable to the Business Auto Coverage part in that it is contingent upon underlying coverage.[6] Although much discussion is given to the Commercial Liability Umbrella Coverage part by the parties it only applies to the extent that coverage is available elsewhere in the West Bend Policy (ECF No. 27-1). For this reason, the...
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