Esurance Insurance Company v. Grissett et al
MEMORANDUM OPINION. Signed by Judge Virginia Emerson Hopkins on 8/13/2013. (JLC)
Esurance Insurance Company v. Grissett et al
2013 Aug-13 PM 12:31
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NOEL GRISSETT, et al.,
) Case No.: 2:12-CV-963-VEH
This matter is before the court on the objections (Doc. 29) of Defendant Pamela
Layton (“Ms. Layton”) to Magistrate Judge John E. Ott’s report and recommendation
(the “R&R”) (Doc. 28), which recommends that Esurance Insurance Company’s
(“EIC”) Motion for Summary Judgment (Doc. 20) (the “Motion”) be granted.1
EIC’s Motion, supporting brief, and evidentiary attachments were all filed on
February 19, 2013. Ms. Layton filed her opposition (Doc. 21) and evidentiary
materials (Doc. 22) on March 11, 2013, to which EIC replied (Doc. 23) on March 20,
The parties have not consented to the jurisdiction of the magistrate judge.
Therefore, in accordance with 28 U.S.C. § 636(b), the magistrate judge entered a report
2013. EIC filed additional evidence in support of its Motion (Doc. 24) on March 29,
The R&R was entered on May 6, 2013. (Doc. 28). Ms. Layton’s objections
were filed on February 29, 2012. (Doc. 29). This case was randomly assigned to the
undersigned judge on May 22, 2013. (Doc. 30). Finally, EIC filed its opposition (Doc.
34) to Ms. Layton’s objections on May 31, 2013. The matter, therefore, is now under
submission, and for the reasons explained below, the court OVERRULES Ms.
Layton’s objections, and ACCEPTS the magistrate judge’s R&R.
Summary Judgment Standard
The Eleventh Circuit has summarized the summary judgment burden, including
when a defendant seeks judgment as a matter of law on the basis of an affirmative
defense, as follows.
Summary judgment is appropriate “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). Once the moving party has properly
supported its motion for summary judgment, the burden shifts to the
nonmoving party to “come forward with specific facts showing that there
is a genuine issue for trial.” See Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d
538 (1986) (quotations and emphasis omitted). If the movant bears the
burden of proof on an issue, because, as a defendant, it is asserting an
affirmative defense, it must establish that there is no genuine issue of
material fact as to any element of that defense. See Martin v. Alamo
Community College Dist., 353 F.3d 409, 412 (5th Cir.2003).
International Stamp Art, Inc. v. U.S. Postal Service, 456 F.3d 1270, 1273-74 (11th Cir.
District Court Review of Report and Recommendation
After conducting a “careful and complete” review of the findings and
recommendations, a district judge may accept, reject, or modify the magistrate judge’s
report and recommendation. See 28 U.S.C. § 636(b)(1) (“A judge of the court may
accept, reject, or modify, in whole or in part, the findings or recommendations made
by the magistrate judge.”); Williams v. Wainwright, 681 F.2d 732 (11th Cir. 1982)
(quoting Nettles v. Wainwright, 677 F.2d 404, 408 (5th Cir. 1982), overruled on other
The “facts” are determined for summary judgment purposes only. They may
not be the actual facts. See Cox v. Administrator U.S. Steel & Carnegie, 17 F.3d 1386,
1400 (11th Cir. 1994) (“[W]hat we state as ‘facts’ in this opinion for purposes of
reviewing the rulings on the summary judgment motion [ ] may not be the actual facts”
(internal quotation marks omitted) (quoting Swint v. City of Wadley, 5 F.3d 1435, 1439
(11th Cir. 1993))). Where the facts are in dispute, they are viewed in the manner most
favorable to the plaintiff. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th
Cir. 1993) (“The district court should resolve all reasonable doubts about the facts in
favor of the non-movant, and draw all justifiable inferences in his [or her] favor.”
(internal quotation marks omitted) (quoting United States v. Four Parcels of Real
Property, 941 F.2d 1428, 1437 (11th Cir. 1991) (en banc))).
grounds by Douglass v. United Services Auto. Ass’n, 79 F.3d 1415 (5th Cir. 1996)).3
The district judge may also receive further evidence or recommit the matter to the
magistrate judge with instructions. 28 U.S.C. § 636(b)(1).
A district judge “shall make a de novo determination of those portions of the
report or specified proposed findings or recommendations to which objection is made.”
28 U.S.C. § 636(b)(1). This requires that the district judge “give fresh consideration
to those issues to which specific objection has been made by a party.” Jeffrey S. v.
State Bd. of Educ., 896 F.2d 507, 512 (11th Cir. 1990) (citing H.R. Rep. No. 94-1609,
94th Cong., 2nd Sess., reprinted in 1976 U.S. Code Cong. & Admin. News 6162,
6163). In contrast, those portions of the R&R to which no objection is made need only
be reviewed for clear error. Macort v. Prem, Inc., 208 Fed. App’x. 781, 784 (11th Cir.
The Eleventh Circuit has adopted as binding precedent all Fifth Circuit
decisions issued before October 1, 1981, as well as all decisions issued after that date
by a Unit B panel of the former Fifth Circuit. Stein v. Reynolds Sec., Inc., 667 F.2d 33,
34 (11th Cir. 1982); see also United States v. Schultz, 565 F.3d 1353, 1361 n.4 (11th
Cir. 2009) (discussing the continuing validity of Nettles).
Macort dealt only with the standard of review to be applied to a magistrate's
factual findings, but the Supreme Court has held that there is no reason for the district
court to apply a different standard to a magistrate's legal conclusions. Thomas v. Arn,
474 U.S. 140, 150, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985). Thus, district courts in this
circuit have routinely applied a clear-error standard to both. See Tauber v. Barnhart,
438 F. Supp. 2d 1366, 1373–74 (N.D. Ga. 2006) (collecting cases). This is to be
contrasted with the standard of review on appeal, which distinguishes between the two.
“Neither the Constitution nor the statute requires a district judge to review, de
novo, findings and recommendations that the parties themselves accept as correct.”
United States v. Woodard, 387 F.3d 1329, 1334 (11th Cir. 2004) (internal quotation
marks omitted) (quoting United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir.
2003)). It is incumbent upon the parties to timely raise any objections that they may
have regarding a magistrate judge’s findings contained in a report and recommendation,
as the failure to do so subsequently waives or abandons the issue, even if such matter
was presented at the magistrate judge level. See, e.g., United States v. Pilati, 627 F.3d
1360 at 1365 (11th Cir. 2010) (“While Pilati raised the issue of not being convicted of
a qualifying offense before the magistrate judge, he did not raise this issue in his appeal
to the district court. Thus, this argument has been waived or abandoned by his failure
to raise it on appeal to the district court.”). However, the district judge has discretion
to consider or to decline to consider arguments that were not raised before the
magistrate judge. Stephens v. Tolbert, 471 F.3d 1173, 1176 (11th Cir. 2006); see also
Williams v. McNeil, 557 F.3d 1287, 1292 (11th Cir. 2009) (“Thus, we answer the
question left open in Stephens and hold that a district court has discretion to decline to
See Monroe v. Thigpen, 932 F.2d 1437, 1440 (11th Cir. 1991) (when a magistrate's
findings of fact are adopted by the district court without objection, they are reviewed
on appeal under a plain-error standard, but questions of law remain subject to de novo
consider a party’s argument when that argument was not first presented to the
“Parties filing objections must specifically identify those findings objected to.
Frivolous, conclusive or general objections need not be considered by the district
court.” Nettles, 677 F.2d at 410 n.8. “This rule facilitates the opportunity for district
judges to spend more time on matters actually contested and produces a result
compatible with the purposes of the Magistrates Act.” Id. at 410. Indeed, a contrary
rule “would effectively nullify the magistrate judge’s consideration of the matter and
would not help to relieve the workload of the district court.” Williams, 557 F.3d at
1292 (internal quotation marks omitted) (quoting United States v. Howell, 231 F.3d
615, 622 (9th Cir. 2000)).
This insurance coverage dispute centers upon the application of an “engaged in
business” exclusion to the repair work that Milton Bell (“Mr. Bell”), Ms. Layton’s
father, agreed to do and was in the process of doing on his daughter’s car when the
vehicle was damaged. The R&R recommends that summary judgment in favor of EIC
is appropriate because the record reflects that Mr. Bell “undertook the repairs
expecting to be paid for his work.”5 (Doc. 28 at 7); (see also Doc. 22-1 at 40-41
(excerpts from Mr. Bell’s deposition transcript confirming that, Mr. Bell’s
understanding, prior to the accident, was that his daughter “was going to pay [him] for
the job” including for “some labor, too” although he might have “give[n] her a little
As Ms. Layton generally contends in her objections:
[B]ecause Milton Bell did not charge his daughter for repair work done
before or after the accident and because there is a pattern of Milton Bell
not charging his children for repair work to their vehicles, evidence has
been presented that the instant accident falls outside of the application of
Esurance’s “engaged in business” exclusion.
(Doc. 29 at 2).
Ms. Layton more specifically maintains that Mr. Bell’s post-accident decision
not to charge Ms. Layton for any repairs creates a genuine issue of material fact with
Quoting from Vallas v. Cincinnati Ins. Co., 624 So. 2d 568, 571 (Ala. 1993),
the R&R assumes “[f]or the sake of argument” that the term “business [as used in the
exclusion] is understood to be ‘an undertaking or calling for gain, profit, advantage, or
livelihood.’” (Doc. 28 at 7). Vallas involved whether a similarly worded business
pursuits exclusion should apply to the allegedly damaging actions of an insured general
partner in furtherance of a limited investment partnership. See id. at 572 (“Therefore,
we hold that the McCurtin Creek limited partnership, of which the insured John Vallas
was a general partner, was a ‘business pursuit’ within the meaning of the exclusion in
the CIC policy.”).
The page references to Doc. 22-1 correspond with the court’s CM/ECF
respect to applying the exclusion. (Id. at 3-5). Ms. Layton finally suggests that Mr.
Bell’s intent is irrelevant to the exclusionary inquiry, but offers no authority for this
contention.7 (Id. at 5-7).
In contesting the validity of the coverage ruling proposed in the R&R, Ms.
Layton does not refer to any Alabama authority which has construed this type of
exclusion under circumstances comparable to those presented here. Instead, as
persuasive authority, Ms. Layton relies upon a specific section from an American
Jurisprudence article. (See Doc. 29 at 4-5 (quoting George A. Locke, J.D., Avoiding
the “Business Pursuits” Exclusion – Insured’s Activity as Not Business Pursuit, 15
Am. Jur. Proof of Facts 3d § 6 at 532 (1992))).
More particularly, Ms. Layton suggests that this secondary authority stands for
the proposition that whether an insured receives compensation for the activity alleged
to be a business pursuit is critical to a court’s exclusionary determination. However,
this very same section relied upon by Ms. Layton expressly cautions:
As such, the court OVERRULES this particular objection as underdeveloped.
Cf. Flanigan’s Enters., Inc. v. Fulton County, Ga., 242 F.3d 976, 987 n.16 (11th Cir.
2001) (finding that a party waives an argument on appeal if the litigant “fail[s] to
elaborate or provide any citation of authority in support” of the argument); Ordower
v. Feldman, 826 F.2d 1569, 1576 (7th Cir. 1987) (stating that an argument made
without citation to authority is insufficient to raise an issue before the court).
Additionally, the court OVERRULES this objection because its substance conflicts
with those authorities cited by Ms. Layton which substantiate that the intent of the
insured is relevant to the application of an “engaged in business” exclusion.
Whatever the probative value of evidence that the insured did or did not
gain financially as a result of the activity at issue, it seems clear that most
courts regard an actual achievement or nonachievement of financial gain
as less important than the presence or absence of a gain-related motive on
the part of the insured. If the evidence of a profit motive is clear, the
court may well ignore the fact that the activity happened to result in a loss
for the insured. Similarly, the court may choose to overlook the fact that
the insured received remuneration for the activity if the evidence of an
underlying profit motive is otherwise weak or conflicting.
Id. (footnotes omitted) (emphasis added).8
Therefore, the full import of Ms. Layton’s cited authority emphasizes the
overriding importance of an insured’s monetary motive when providing the activity or
service to a third party over the insured’s receipt of any remuneration, when evaluating
whether to apply the exclusion. Further, because Mr. Bell’s undisputed deposition
testimony reveals that he intended to charge and to be paid for the repair work to be
performed on his daughter’s vehicle, the full context of the article cited by Ms. Layton
actually bolsters, rather than discredits, the conclusion reached by the magistrate judge
in his R&R.
Ms. Layton also relies upon Safeco Ins. Co. v. Hale, 189 Cal. Rptr. 463 (Cal.
The court agrees that application of this type of exclusion should be intentdriven and specifically finds that proof of an insured’s profit motive (i.e., intending to
be paid for car repair services) prior to an occurrence under a policy constitutes the
type of evidence that is key to the exclusionary determination as opposed to any
arguable conflicting post-occurrence actions or non-actions engaged in by the insured
(e.g., ultimately not billing for any car repair services).
Ct. App. 1983), as persuasive authority in support of her objections. (Doc. 29 at 5
n.1).9 Ms. Layton maintains that “Hale is particularly relevant since it involves a
gratuitous extension of an ongoing service – the stabling of horses – that the insured
also provided commercially.” (Id. at 5 n.1). However, what Ms. Layton neglects to
inform this court is that relevant to the court’s decision in Hale were the following
[T]he trial court found that Boots was originally stabled at the Hales’
residence premises as a favor to Penny Roaseau; that Boots was used
neither in the business operation or activities of the Hales; that Penny did
not pay a fee in exchange for the Hales’ care of Boots. These facts,
amply supported by the record lead to one conclusion: the injury arose
out of a nonbusiness pursuit. Accordingly, the business pursuits exclusion
does not apply.
Hale, 189 Cal. Rptr. at 352 (emphasis added).
Thus, in Hale, the non-application of a comparable exclusion turned in part upon
the insured’s gratuitous intent prior to the injury of the horse. Further, such reasoning
utilized in Hale lends contrasting support to the magistrate judge’s recommendation
that the policy’s “engaged in business” exclusion should apply in this instance – Mr.
Bell did not have a gratuitous intent at the onset of his dealings with his daughter and
Ms. Layton additionally cites to Vallas (Doc. 29 at 5 n.1), but makes no effort
to clarify why this coverage case, in which the Supreme Court of Alabama affirmed
summary judgment and excluded coverage in favor of an insurer, is helpful to her.
Indeed, nothing in the magistrate judge’s treatment of the “engaged in business”
exclusion in his R&R conflicts with Vallas’s holding.
only changed his mind, in terms of seeking compensation from her, after her automobile
Finally, in the absence of any authority from Ms. Layton that brings into question
the magistrate judge’s analysis, this court is persuaded to adopt the R&R. In sum, even
though Mr. Bell never did receive any payment from his daughter for his repair work,
because Mr. Bell testified that he intended to charge Ms. Layton for his services, no
reasonable jury could conclude that the “engaged in business” exclusion was
For the reasons set out above, the court OVERRULES Ms. Layton’s objections
and ACCEPTS the R&R. Accordingly, EIC’s Motion (Doc. 12) is due to be
GRANTED. The court will enter a separate final judgment order.
DONE and ORDERED this the 13th day of August, 2013.
VIRGINIA EMERSON HOPKINS
United States District Judge
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