W. Heritage Ins. Co. v. Love
| Decision Date | 03 June 2014 |
| Docket Number | No. 4:13–CV–0034–DGK.,4:13–CV–0034–DGK. |
| Citation | 24 F.Supp.3d 866 |
| Court | U.S. District Court — Western District of Missouri |
| Parties | WESTERN HERITAGE INSURANCE CO., Plaintiff/Counterclaim Defendant, v. Parrish LOVE, d/b/a Asphalt Wizards, Does 1–50, Defendants, and Fun Services of Kansas City, Inc., Defendant/Counterclaim Plaintiff. |
Alan B. Yuter, Rachel E. Hobbs, Selman Breitman, LLP, Los Angeles, CA, Kelly Cochran, Meagan L. Patterson, Waldeck, Goldstein & Patterson P.A., Prairie Village, KS, for Plaintiff/Counterclaim Defendant.
Phillip A. Bock, Bock & Hatch, LLC, Chicago, IL, Rex A. Sharp, Barbara Frankland, Gunderson Sharp LLP, Prairie Village, KS, Ryan M. Kelly, David M. Oppenheim, Jeffrey A. Berman, Anderson & Wanca, Rolling, Meadows, IL, Max G. Margulis, Margulis Law Group, Chesterfield, MO, for Defendant/Counterclaim Plaintiff.
John G. Sommer, Independence, MO, for Defendants.
ORDER GRANTING IN PART SUMMARY JUDGMENT MOTIONS
This declaratory judgment action concerns insurance coverage for a class action lawsuit filed by Defendant/Counterclaim Plaintiff Fun Services of Kansas City, Inc. (“Fun Services”) against Defendant Parrish Love d/b/a Asphalt Wizards (“Asphalt Wizards”) in the Circuit Court of Jackson County, Missouri. Fun Services is suing Asphalt Wizards for allegedly sending unsolicited faxes in violation of the federal Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, and Missouri common law. Fun Services seeks to satisfy any judgment in the Jackson County case with the proceeds from insurance policies issued to Asphalt Wizards by Plaintiff/Counterclaim Defendant Western Heritage Insurance Company (“Western Heritage”).
Western Heritage filed suit in this Court seeking a declaration that it has no duty to defend or indemnify Asphalt Wizards in the underlying lawsuit, and Western Heritage named both Asphalt Wizards and Fun Services as defendants. Fun Services responds that Western Heritage has a duty both to defend and indemnify, and it also asserts counterclaims for “Supplementary Payments” and “Vexatious Refusal to Pay and Attorneys' Fees.”1
Now before the Court are Western Heritage's and Fun Services' cross-motions for summary judgment (Docs. 66 and 83, respectively). Western Heritage moves for an order on its claim that it owes no duty to indemnify based on various provisions in the policies' deductible endorsements. Alternately, it moves for partial summary judgment on various coverage defenses. Fun Services moves for summary judgment on its claim that Western Heritage has both a duty to defend and indemnify.
For the reasons set forth below, the Court finds: (1) Fun Services lacks standing to assert any counterclaims against Western Heritage; (2) Western Heritage waived any coverage defenses by failing to issue a timely reservation of rights letter to Asphalt Wizards; (3) the policies $1,000 deductible applies on a per-claim and per-person basis; (4) this deductible exceeds the amount of damages that could possibly be awarded to a single class member in the underlying suit, thus Western Heritage owes no duty to indemnify; but (5) the policies require Western Heritage to defend Asphalt Wizards in the underlying lawsuit irrespective of whether the deductible can be met.
Accordingly, the motions are GRANTED IN PART and DENIED IN PART.
A moving party is entitled to summary judgment “if the movant shows 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). The movant bears the initial responsibility of informing the court of the basis for its motion, and it must identify those portions of the record which demonstrate the absence of a genuine issue of material fact. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir.2011). If the movant does so, then the nonmovant must respond by submitting evidence demonstrating that there is a genuine issue for trial. Id. The court views any factual disputes in the light most favorable to the nonmoving party. Id. Decisions concerning credibility determinations, how to weigh the evidence, and what inferences to draw from the evidence, are decisions reserved for the jury, not the judge. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).
To establish a genuine issue of fact sufficient to warrant trial, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The nonmoving party must set forth specific facts showing there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). But the nonmoving party “cannot create sham issues of fact in an effort to defeat summary judgment.” RSBI Aerospace, Inc. v. Affiliated FM Ins. Co., 49 F.3d 399, 402 (8th Cir.1995) (citation omitted). “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Ricci v. DeStefano, 557 U.S. 557, 585, 129 S.Ct. 2658, 174 L.Ed.2d 490 (2009).
For purposes of resolving the pending summary judgment motions, the Court finds the relevant undisputed facts to be as follows.2
Defendant Asphalt Wizards provides asphalt and paving services in the Kansas City metropolitan area. Plaintiff Western Heritage is an insurance company that issued three consecutive commercial general liability policies to Asphalt Wizards in effect from May 18, 2004 through May 18, 2007 (“the Policies”). For purposes of this case, the policies are almost identical, except that the policy in effect from May 18, 2006, to May 18, 2007, also contains an endorsement titled “Exclusion–Violation of Statutes That Govern E–Mails, Fax, Phone Calls or Other Methods of Sending Material or Information.” This endorsement states it excludes coverage for, among other things, “property damage” or “personal and advertising injury” “arising directly or indirectly out of any action or omission that violates or is alleged to violate ... The Telephone Consumer Protection Act (TCPA), including any amendment of or addition to such law....”
The Policies cover amounts the insured becomes legally obligated to pay as a result of “property damage” caused by an “occurrence” as defined in the policies. They define “occurrence” to include “continuous or repeated exposure to substantially the same general harmful conditions.” The Policies also state that “[w]e will pay those sums that the insured becomes legally obligated to pay as damages because of ‘personal and advertising injury’ to which this insurance applies.” The Policies contain a $1 million per occurrence limit and a $2 million general aggregate limit.
Each of the Policies contain a deductible liability insurance endorsement fixing a $1,000 “per-claim” deductible for “property damage” and “advertising injury” claims which “applies to all damages sustained by one person or organization as the result of any one claim.” Each endorsement states that “[t]he Company's obligations under the coverages afforded by this policy to pay damages on behalf of the Insured apply only to the amount of damages in excess of the deductible amount stated above.” They provide that, “[t]he terms of the policy, including those with respect to the Company's rights and duties with respect to the defense of suits ... apply irrespective of the application of the deductible amount.” They also state that the deductible amount is comprised of “all damages sustained by one person or organization as the result of any one claim” and “investigation” and “legal expenses incurred in the handling and investigation of each claim....”3
In 2005, Asphalt Wizards hired a company called Profax to fax a one-page advertisement for asphalt and paving services to companies in the Kansas City metropolitan area. Asphalt Wizards provided Profax with an Excel list containing the fax numbers to which it wanted Profax to send the ad.
According to Profax's invoices, Profax successfully sent 33,073 faxes on Asphalt Wizards behalf, including one to Fun Services, while the Policies were in effect.
On January 7, 2008, Fun Services filed a class action lawsuit in the Circuit Court of Jackson County, Missouri alleging two claims. Count I asserts Asphalt Wizards violated the TCPA by sending unsolicited faxes; Count II asserts it committed common-law conversion by commandeering the class members fax machines in the course of sending unsolicited faxes. For the TCPA violations, the class seeks statutory damages in the amount of $500 for each fax sent.4 On the conversion claims, the class seeks the actual damages resulting from receipt of the unsolicited faxes.
Asphalt Wizards notified Western Heritage of the lawsuit on or about May 1, 2008. On June 26, 2008, Western Heritage mailed Asphalt Wizards a letter acknowledging receipt of the lawsuit. The letter's heading includes a claim number, policy number SCP 0553453, the caption of the Jackson County lawsuit, and a date of loss. The body of the letter states:
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