West American Ins. Co. v. Prewitt

• Decision Date: 18 November 2005
• Docket Number: No. Civ.A. 5:04-510-JMH.,Civ.A. 5:04-510-JMH.
• Citation: 401 F.Supp.2d 781
• Parties: WEST AMERICAN INSURANCE CO., Plaintiff, v. Richard H. PREWITT, Defendant.
• Court: U.S. District Court — Eastern District of Kentucky

401 F.Supp.2d 781

WEST AMERICAN INSURANCE CO., Plaintiff, v. Richard H. PREWITT, Defendant.

No. Civ.A. 5:04-510-JMH.

United States District Court, E.D. Kentucky, Lexington Division.

November 18, 2005.

Marvin L. Coan, Hummel Coan Miller & Sage, Louisville, KY, for Plaintiff.

Ernest H. Jones, II, Geralds, Jones, Swisher & Rohlfing, Lexington, KY, for Defendant.

MEMORANDUM OPINION AND ORDER

HOOD, District Judge.

Currently pending before the Court are two motions. Defendant filed a motion for reconsideration of the Court's earlier order denying his motion to dismiss [Record No. 6]. Plaintiff subsequently moved for summary judgment [Record No. 12]. All responses and replies having been filed, these matters are now ripe for review.

FACTUAL BACKGROUND

In 1981 Robert Hensley bought a 37 foot sailboat. He kept the boat in Maryland and made annual sailing trips, and he also leased the boat out for charters for several years. Since 1987, Hensley has not maintained any insurance on the boat.

In 2003 Hensley invited Defendant Richard H. Prewitt to join him on his boat for an extended sailing trip from Maryland to Florida and possibly the Dry Tortugas. Hensley and Prewitt had known each other since the 1970s, were friends, and had sailed together several times, although never on such a long trip. Prewitt had never done overnight sailing before.

On June 10, 2003, Prewitt and Hensley departed from Maryland sailing south. Since there is nowhere to stop in the ocean, the two men alternated at the helm in four-hour shifts and sailed through the nights. They rotated for three weeks without deviation from the schedule. Generally, the person at the helm set the course in response to the conditions, and Prewitt did not have to consult with Hensley regarding alterations in the course, although Hensley, as the boat's owner, could have overruled Prewitt if he wished.

Sometime on the night of June 30, 2003, Hensley turned over the helm to Prewitt.¹ Unlike at the beginning of most shifts, on that night Hensley directed Prewitt to steer a specific course on a heading between 200 and 210 degrees to avoid running aground on Carysfort Reef. Hensley went below to sleep, where he remained for approximately one hour until the boat ran aground on the reef. Prewitt had adjusted course from a heading of 210 to 200 after realizing that the prior heading would lead into the reef, but the correction was insufficient to avoid running aground.

The boat came to a stop on top of the reef, and the hull filled with water. Although there was a dinghy, Hensley did not offload any of his personal property, and by the time that help arrived around 11:00 a.m. the next day, the personal property was destroyed. A salvage company was contacted but was unable to salvage the boat from the reef. They recommended to Hensley another salvage company with better equipment, but Hensley never called that company or made any other attempt at salvaging his boat. As a result, the boat was totally destroyed.

Prewitt has described various pieces of equipment on the boat that were either broken or not working as a result of a lack of electrical power on the night of the accident. West American has not disputed these descriptions.

PROCEDURAL BACKGROUND

In October of 2003, Hensley brought a negligence action against Prewitt in Clark County Circuit Court, Case No. 03-CI-00570. Prewitt's insurance company, West American Insurance Company, agreed to provide him with a defense subject to a reservation of the right to challenge whether Prewitt's coverage applied.

West American filed the instant action seeking declaratory judgment in November of 2004. West American seeks a judgment declaring that Prewitt's homeowner's policy, No. FHW09181309, does not cover damage to Hensley's boat or require West American to pay for Prewitt's legal defense in the state court action.²

In December of 2004 Prewitt filed a motion to dismiss [Record No. 2], arguing that the Court should decline to exercise jurisdiction because the underlying factual issues were still in dispute in state court. The Court denied this motion [Record No. 5], finding that the exercise of jurisdiction over this matter would not interfere with the state court litigation, and that there did not appear to be any factual disputes that would require abstaining from hearing the case. Prewitt filed a motion for reconsideration [Record No. 6], one of two motions that is before the Court at this time. The parties agreed to conduct discovery for a limited amount of time, and subsequently West American filed its motion for summary judgment [Record No. 12].

DISCUSSION

I. Prewitt's Insurance Policy

This action requires the Court to interpret the language of an exclusion in Prewitt's homeowner's insurance policy. The parties agree that Kentucky law controls, and in Kentucky the interpretation of insurance contracts is a matter of law for the Court. See Kemper Nat'l Ins. Co. v. Heaven Hill Distilleries, Inc., 82 S.W.3d 869, 871 (Ky.2002).

Prewitt's policy insures him against liability for damage to the property of third parties, subject to certain exclusions. The sole exclusion at issue in this case, exclusion 2(c), states that personal liability coverage "does not apply to ... `[p]roperty damage' to property rented to, occupied or used by or in the care of the `insured.'"³ The resolution of the coverage dispute turns on whether Hensley's boat was property "used by" or "in care of" Prewitt at the time of the accident.

II. Remaining Issues of Disputed Fact

The resolution of both pending motions depends in part on whether material facts remain in dispute. For the motion to reconsider, remaining disputes of material fact might lead to a finding that this Court should defer to the ongoing state court litigation. For the motion for summary judgment, of course, disputed issues of material fact would prevent the Court from granting summary judgment.

Upon examination of the record it is clear that there are no remaining disputed issues of material fact. Both parties agree with the general description and timeline of the accident. Both parties agree that from the time the trip commenced, Hensley and Prewitt rotated four-hour shifts at the helm like clockwork. Both parties agree that Prewitt was at the helm and Hensley was asleep below at the time of the collision. Both parties agree that although it was Hensley's boat, Prewitt generally had discretion to set the boat's course while he was at the helm, and that there was no need for him to consult Hensley before making changes to the heading in response to conditions. Both parties agree that Hensley had chosen the general route for the trip, and that on the night of the accident Hensley gave Prewitt a specific range of headings to follow.

Prewitt suggests that factual issues regarding the state of repair of various pieces of equipment remain in dispute, and therefore that the Court should defer to the state court's resolution of its litigation, or at least not grant summary judgment. West American does not address whether Prewitt's description of the equipment is accurate, but instead claims that the state of the equipment is not material to resolving the coverage dispute. The Court agrees. Although whether the boat's equipment was properly functioning may be material to resolving issues of negligence and comparative negligence in state court, the state of the equipment is not material to whether the boat was in care of or being used by Prewitt.

III. Defendant's Motion for Reconsideration

In its opinion denying Prewitt's motion to dismiss, the Court weighed the factors for determining whether to exercise jurisdiction over a declaratory judgment action as articulated by the Sixth Circuit:

(1) whether the judgment would settle the controversy;

(2) whether the declaratory judgment action would serve a useful purpose in clarifying the legal relations at issue;

(3) whether the declaratory remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a race for res judicata";

(4) whether the use of a declaratory action would increase the friction between our federal and state courts and improperly encroach on state jurisdiction; and (5) whether there is an alternative remedy that is better or more effective.

Scottsdale Ins. Co. v. Roumph, 211 F.3d 964, 968 (6th Cir.2000). The Court held that a judgment would settle the insurance coverage controversy and would neither interfere with the state court case nor create friction between state and federal courts. Moreover, the Court held that the declaratory judgment action was being brought in good faith and not for improper purposes, and that although West American could have intervened in state court, it was entitled to choose federal court under the statute.

No facts have arisen in discovery that change the Court's weighing of these factors. The proceeding in state court will determine whether Prewitt was negligent, and whether Hensley was comparatively negligent. It is to these determinations that Prewitt's claims about Hensley's failure to properly maintain working navigational equipment are relevant. Prewitt argues that Hensley's failure to maintain the equipment is evidence that Hensley, not Prewitt, was in control of the boat. However, it is not disputed that Hensley had ultimate control over the boat; the issue is whether at the time of the accident the boat was being used by or was in care of Prewitt. Resolution of whether the boat's equipment was functioning properly would not tell the Court anything about the applicability of the exclusion.

IV. Defendant's Motion for Summary Judgment

A. The Summary Judgment Standard

Summary judgment should be granted 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 the moving party is entitled to judgment as a...