QBE Insurance Corporation v. Azar et al

Filing 34

MEMORANDUM OPINION AND ORDER DISMISSING CASE that plaintiff's motion for judgment on the pleadings is GRANTED, and it is ORDERED that plaintiff has no duty under the terms of the commercial general liability insurance policy bearing Policy Numbe r ANG 30428 issued to Mike Graham in receivership for Blount Memory Gardens, LLC, et al to either provide a defense or to indemnify defendants in connection with the claims alleged in a state court action styled Sammie A. Jones v. Loewen (Alabama) In c., doing business asMoss-Service Funeral Home, et al., currently pending in the Circuit Court of Cullman County, Alabama as Civil Action No. CV-11-900224; All claims in this action now having been disposed of by this and prior orders of court; costs are taxed to the party which incurred them as more fully set out in order. Signed by Judge C Lynwood Smith, Jr on 5/23/2013. (AHI ) Modified on 5/24/2013 (AHI).

FILED
2013 May-24 AM 08:19
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
Q B E
I N S U R A N C E
CORPORATION,
Plaintiff,
vs.
DENISE AZAR, in her capacity as
receiver of Cullman Memory
Gardens, LLC, a.k.a. Cullman
Memoria l G a rdens , LLC;
CULLMAN
MEMORY
GARDENS, LLC, a.k.a.
CULLMAN MEMORIAL
GARDENS, LLC; DOUG
WILLIAMS; MICHAEL
KASHORT BUCKELEW; and
SAMMIE A. JONES,
Defendants.

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Civil Action No. CV-12-S-00844-NE

MEMORANDUM OPINION AND
DECLARATORY JUDGMENT
Plaintiff, QBE Insurance Corporation, requests a declaratory judgment stating
that it has no legal duty under the terms of an insurance policy issued to Mike
Graham in receivership for Blount Memory Gardens, LLC, et al., to defend or
indemnify defendants in connection with the claims alleged in a state court action
styled Sammie A. Jones v. Loewen (Alabama) Inc., doing business as Moss-Service
Funeral Home, et al., currently pending in the Circuit Court of Cullman County,

Alabama as Civil Action No. CV-11-900224.1 Plaintiff seeks a declaratory judgment
against five defendants: i.e., Denise Azar, in her capacity as receiver of Cullman
Memory Gardens, L.L.C., also known as Cullman Memorial Gardens, L.L.C.;
Cullman Memory Gardens L.L.C., also known as Cullman Memorial Gardens,
L.L.C.; Doug Williams; Michael Kashort Buckelew; and Sammie A. Jones.2 Plaintiff
commenced this action in the Northern District of Alabama pursuant to 28 U.S.C. §
1332(a)(1), based upon the parties’ complete diversity of citizenship and the requisite
amount in controversy.3 Accordingly, “state substantive law and federal procedural
law” apply. Hanna v. Plumer, 380 U.S. 460, 465 (1965).
This action is before the court on plaintiff’s motion for a judgment on the
pleadings.4 Federal Rule of Civil Procedure 12(c) provides that, “[a]fter the pleadings
are closed — but early enough not to delay trial — a party may move for judgment
on the pleadings.” Fed. R. Civ. P. 12(c) (2008) (alteration supplied). “Judgment on
the pleadings is proper when no issues of material fact exist, and the movant is
entitled to judgment as a matter of law.” Ortega v. Christian, 85 F.3d 1521, 1524
(11th Cir. 1996) (alteration supplied). When reviewing such a motion, the court is
1

See doc. no. 2 (Amended Complaint).

2

See id. For a description of the relationship between the policy issued to Mike Graham, and
the claims raised in the present action, see Section II, infra. For a discussion of the substitution of
Michael Kashort Buckelew for the original named defendant, Michael Andrew Buckelew, see
footnote 13, infra.
3

Doc. no. 2 (Amended Complaint) ¶¶ 5-6.

4

See doc. no. 33 (Motion for a Judgment on the Pleadings).
2

required to accept the facts alleged in the complaint as true, and to view them in the
light most favorable to the nonmoving party. Swerdloff v. Miami National Bank, 584
F.2d 54, 57 (5th Cir. 1978).5
Despite this court’s order that “any response to the Motion for Judgment on the
Pleadings (doc. no. 32) is due by May 21, 2013,”6 none of the defendants have filed
a response. There is some unpublished federal authority suggesting that if a party
fails to respond to a motion for entry of judgment on the pleadings, the court may
grant the motion by default. See Yarbrough v. Credit Control Services, No.
09-61136, 2011 WL 860435 (S.D. Fla. Feb. 12, 2011) (discussing the grant of a
motion for a judgment on the pleadings by default); Harron v. Cartwright, No.
05-1538, 2006 U.S. Dist. LEXIS 9418, *1 (E.D. Pa. March 8, 2006) (“Plaintiff has
not responded to either motion. The motion for judgment on the pleadings will
therefore be granted as unopposed pursuant to Local Civil Rule 7.1(c).”).
Nevertheless, this court has reviewed plaintiff’s motion on the merits; and, after
doing so, will grant the motion.7
5

In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh
Circuit adopted as binding precedent all Fifth Circuit decisions handed down prior to the close of
business on September 30, 1981.
6

Unnumbered Order Dated May 7, 2013.

7

Cf., e.g., Trustees of the Central Pension Fund of the International Union of Operating
Engineers and Participating Employers v. Wolf Crane Service, Inc., 374 F.3d 1035, 1039 (11th Cir.
2004) (observing in the context of unopposed motions for summary judgment that Federal Rule of
Civil Procedure 56(e) provides “that where ‘the adverse party does not respond, summary judgment,
if appropriate, shall be entered against the adverse party’”) (emphasis in original).
3

I. SUMMARY OF FACTS
Plaintiff, QBE Insurance Corporation, disputes the existence of a duty to either
provide a defense or indemnify defendants in connection with the claims asserted in
a state court action styled Sammie A. Jones v. Loewen (Alabama) Inc., doing business
as Moss-Service Funeral Home, et al., currently pending in the Circuit Court of
Cullman County, Alabama as Civil Action No. CV-11-900224.8 Sammie A. Jones,
the plaintiff in that state court action, is the son of Mary Ruth Jones, deceased.9
Following Mrs. Jones’s death on September 6, 2009, Sammie Jones entered
into a contract with Loewen (Alabama), doing business as Moss Service Funeral
Home (“Moss”), to conduct the funeral service on September 9, 2009, and inter his
mother’s remains in Lot 115, Section 2A of Cullman Memory Gardens.10 Doug
Williams, a Moss employee, then allegedly directed Michael Andrew Buckelew to dig
a grave for Mrs. Jones in a different area of the same cemetery.11
As a result of the relocation of Mrs. Jones’s grave, Mr. Jones asserts that his
mother could not be buried on the date originally set for her funeral, and that she was
instead buried the following day.12 Mr. Jones alleges that, as a consequence of the

8

See doc. no. 2 (Amended Complaint).

9

Doc. no. 1-1 (State-Court Complaint) ¶ 10.

10

Id. ¶¶ 10-12.

11

Id. ¶¶ 13-14.

12

Id. ¶ 15.
4

change in the date of burial, “[m]any of the out-of-town family members who had
traveled to Cullman for the funeral could not attend . . . because they had to return to
work.”13
Mr. Jones asserts claims against five defendants: i.e., Moss; Cullman Memory
Gardens, Inc.; Cullman Memory Gardens, LLC; Doug Williams; and Michael Andrew
Buckelew.14 Mr. Jones’s complaint contains nine counts based upon the following
remedial theories:

i.e., negligence; wantonness; negligent training/negligent

supervision; the tort of outrage; respondeat superior; agency; conspiracy; fraud; and
breach of contract.15

Mr. Jones seeks several forms of damages, including

compensatory and punitive damages.16
QBE Insurance Corporation, the plaintiff in the present federal action, has
issued a commercial general liability insurance policy bearing Policy Number ANG
30428 (“the Policy”) to Mike Graham in receivership for Blount Memory Gardens,
LLC, et al.17 Mr. Jones alleges the following relationship between Mike Graham, and
13

Id. (alteration supplied).

14

See id. ¶¶ 2-7. Mr. Jones’s state court complaint mistakenly names Michael Andrew
Buckelew as a defendant. This court previously granted the motion to substitute Michael Kashort
Buckelew for his son, Michael Andrew Buckelew, after receiving a notice from Michael Kashort
Buckelew to the effect that Michael Andrew Buckelew has no connection to these allegations, and
that Michael Kashort Buckelew should, instead, have been named as a defendant. See doc. no. 28
(Notice by Michael Kashort Buckelew); doc. no. 30 (Motion to Substitute Party Defendant); doc.
no. 31 (Order Granting Motion to Substitute Party Defendant).
15

Doc. no. 1-1 (State-Court Complaint) ¶¶ 16-52.

16

Id. at 8.

17

See doc. no. 1-3 (Policy).
5

the defendants named as “Cullman Memory Gardens, Inc.” and “Cullman Memory
Gardens, LLC” in the state court action:
Mike W. Graham & Associates, LLC was the owner, managing
member or manager of a number of cemeteries and funeral homes across
the State of Alabama. In 2005, the Alabama Department of Insurance
placed all of the Mike Graham operated/owned Alabama cemeteries and
funeral homes into receivership based upon allegations of financial
irregularities and improprieties related to the sale of pre-need funeral
services. Upon information and belief, Mike W. Graham & Associates,
LLC is no longer a viable business entity, and the receiver has sold all
but one of the cemeteries or the assets of the receivership estate.
Cullman Memory Gardens was sold by the receiver in October or
November 2009. The funeral made the basis of the underlying action in
this case occurred approximately one month prior to the court order
approving the sale of Cullman Memory Gardens, LLC’s assets.18
The Policy issued to Mike Graham in receivership for Blount Memory
Gardens, LLC, et al., contains a Funeral Services Exclusion endorsement that states
as follows:
EXCLUSION - FUNERAL SERVICES
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
The following exclusion is added to Paragraph 2., Exclusions of Section
I - Coverage A - Bodily Injury And Property Damage Liability and
Paragraph 2., Exclusions of Section I - Coverage B - Personal And
Advertising Injury Liability:
This insurance does not apply to “bodily injury,”“property damage” or
“personal and advertising injury” arising out of errors or omissions in
18

Id. at 4 n.1.
6

the handling, embalming, disposal, burial, cremation or disinterment of
dead bodies.19
II. DISCUSSION
The Policy issued by plaintiff to Mike Graham in receivership for Blount
Memory Gardens, LLC, et al., contains multiple parts: i.e., an insurance agreement
that “states what kind of coverage is provided and the causes of loss or perils that will
be covered”; and various exclusions that “eliminate coverage that otherwise would
be provided under the policy’s insuring agreement.” 1-1 John A. Appleman & Jean
Appleman, Insurance Law and Practice § 1.07 (Law Library ed. 2013).
When coverage is disputed, the insured has the burden to establish that the loss
at issue is “covered under the policy.” State Farm Fire & Casualty Co. v. Shady
Grove Baptist Church, 838 So. 2d 1039, 1043 (Ala. 2002). Once coverage is
established, the insurer “has the burden of proof in asserting that a claim is excluded
under its policy.” Id.; see also Appleman on Insurance § 1.07 (Law Library ed.
2013).
Liability insurance coverage includes two separate duties: (1) the
duty to defend; and (2) the duty to indemnify. Porterfield v. Audubon
Indem. Co., 856 So. 2d 789, 791, 2002 Ala. LEXIS 331 at *4 (Ala.
2002).
“It is well settled ‘that [an] insurer’s duty to defend is more
extensive than its duty to [indemnify].’ United States Fid. & Guar. Co.
v. Armstrong, 479 So. 2d 1164, 1168 (Ala. 1985) (citations omitted).
19

Doc. 1-4 (Funeral Services Exclusion Endorsement).
7

Whether an insurance company owes its insured a duty to provide a
defense in proceedings instituted against the insured is determined
primarily by the allegations contained in the complaint. Id. at 1168. If
the allegations of the injured party’s complaint show an accident or an
occurrence within the coverage of the policy, then the insurer is
obligated to defend, regardless of the ultimate liability of the insured.
Ladner & Co. v. Southern Guar. Ins. Co., 347 So. 2d 100, 102 (Ala.
1977) (citing Goldberg v. Lumber Mut. Cas. Ins. Co., 297 N.Y. 148, 77
N.E.2d 131 (1948)).
Tanner v. State Farm Fire & Casualty Co., 874 So. 2d 1058, 1063-64 (Ala. 2003)
(alterations in original) (emphasis omitted).
“Where facts are alleged in the complaint to support a cause of action, it is the
facts, not the legal phraseology, that determine whether an insurer has a duty to
defend its insured in the action.” Hartford Casualty Insurance Co. v. Merchants &
Farmers Bank, 928 So. 2d 1006, 1012 (Ala. 2005). Thus, “[t]o ascertain whether [an
insurer] owes [its insured] a duty to defend, the court focuses on the factual
allegations in the complaint, not on the legal theories asserted.” Cotton States Mutual
Insurance Co. v. Daniel, No. 3:07-CV-843-WKW, 2008 WL 4999097, *18 (M.D.
Ala. Nov. 20, 2008) (alterations supplied).
The Policy issued by plaintiff to Mike Graham in receivership for Blount
Memory Gardens, LLC, et al., contains a Funeral Services Exclusion endorsement
that excludes “‘bodily injury,’ ‘property damage’ or ‘personal and advertising injury’
arising out of errors or omissions in the handling, embalming, disposal, burial,

8

cremation or disinterment of dead bodies.”20 The various claims asserted by Sammie
A. Jones in the underlying state action clearly “aris[e] out of errors or omissions in
the handling . . . [and] burial . . . of [the] dead bod[y]” of Mr. Jones’s mother, Mary
Ruth Jones.
In Reed v. Netherlands Insurance Co., 860 F. Supp. 2d 407 (E.D. Mich. 2012),
a federal court from the Eastern District of Michigan interpreted the same Funeral
Services Exclusion at issue in this action. See id. at 410-11. Like Mr. Jones, the Reed
plaintiffs alleged that an insured cemetery buried their mother in the wrong grave
plot. Unlike Mr. Jones, those plaintiffs asserted claims for breach of contract,
negligence, intentional infliction of emotional distress, violation of the Michigan
Consumer Protection Act, and fraud, but did not include counts of wantonness,
negligent training/negligent supervision, respondeat superior, agency, or conspiracy.
The Reed court granted the insurer’s motion for summary judgment on the
grounds that “the policy does not cover any of Plaintiffs’ claims,” and specifically
held that “Plaintiffs’ contract and negligence claims for burying the body in the
wrong place are precluded by the [Funeral Services] Exclusion.” Id. at 420 (alteration
supplied). Because “it is the facts, not the legal phraseology, that determine whether
an insurer has a duty to defend its insured,” Hartford, 928 So. 2d at 1012, that logic
applies to all of the claims asserted by Mr. Jones “arising out of” the handling and
20

Doc. 1-4 (Funeral Services Exclusion Endorsement).
9

burial of Mrs. Jones’s body, and not only those for negligence and breach of contract.
For all of those reasons, plaintiff does not owe a duty to defend or indemnify
defendants under the terms of the Policy in connection with the claims alleged in the
state court action styled Sammie A. Jones v. Loewen (Alabama) Inc., doing business
as Moss-Service Funeral Home, et al.
III. DECLARATORY JUDGMENT
For the reasons explained above, plaintiff’s motion for judgment on the
pleadings is GRANTED, and it is ORDERED, ADJUDGED, and DECREED that
plaintiff, QBE Insurance Corporation, has no duty under the terms of the commercial
general liability insurance policy bearing Policy Number ANG 30428 issued to Mike
Graham in receivership for Blount Memory Gardens, LLC, et al.21 to either provide
a defense or to indemnify defendants in connection with the claims alleged in a state
court action styled Sammie A. Jones v. Loewen (Alabama) Inc., doing business as
Moss-Service Funeral Home, et al., currently pending in the Circuit Court of Cullman
County, Alabama as Civil Action No. CV-11-900224.22
All claims in this action now having been disposed of by this and prior orders
of court, the Clerk is directed to close this file. Costs are taxed to the party which
incurred them.
21

See doc. no. 1-3 (Policy).

22

See doc. no. 2 (Amended Complaint).
10

DONE and ORDERED this 23rd day of May, 2013.

______________________________
United States District Judge

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