Assurance Company of America v. Amerisure Mutual Insurance Company
ORDER GRANTING Amerisure's 27 Motion for Summary Judgment as set out & DENYING Assurance's 31 Motion for Summary Judgment as set out. Signed by Judge Callie V. S. Granade on 3/12/2012. (tot)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
ASSURANCE COMPANY OF AMERICA, )
individually and as subrogee of its
insured, Coastal Builders, Inc.,
) CIVIL NO. 10-00112-CG-B
AMERISURE MUTUAL INSURANCE
This case is before the court on the parties’ cross motions for summary
judgment. Plaintiff Assurance Company of America (“Assurance”), seeks
contribution in the amount of $162,157.00 from Defendant Amerisure Mutual
Insurance Company (“Amerisure”) for the cost of defense and settlement of two
lawsuits against its subrogor, Coastal Builders, Inc. (“CBI”). (Doc. 1, pp. 4-10).
Amerisure has filed a motion for summary judgment (Doc. 27), a memorandum in
support of its motion (Doc. 30), a reply brief in support (Doc. 44), as well as an
opposition to Assurance’s motion (Doc. 36). Assurance has filed a motion for
summary judgment (Doc. 31), a memorandum in support of its motion (Doc. 33), a
reply brief in support (Doc. 42), and an opposition to Amerisure’s motion (Doc. 37).
For the reasons enumerated below, Amerisure’s motion for summary judgment
(Doc. 27) is due to be GRANTED, and Assurance’s motion for summary judgment
(Doc. 31) is due to be DENIED.
This lawsuit arises out of claims asserted against CBI, an Alabama-based
construction company and the subrogor of Assurance. (Doc. 31, p. 1). CBI was the
general contractor for two condominium projects in Baldwin County, Alabama,
which resulted in two lawsuits being filed against CBI for alleged construction
defects. Id. at 3.
Assurance issued a policy of commercial general liability insurance (the
“Assurance policy”) covering CBI for a policy period beginning October 1, 2000, and
ending October 1, 2001. (Doc. 34, p. 1). CBI renewed the Assurance policy for a
second year, from October 1, 2001, through October 1, 2002. Id. Amerisure also
issued a policy of commercial general liability insurance (the “Amerisure policy”)
covering CBI for a policy period beginning November 1, 2002, through October 1,
2003. (Doc. 29-3, p. 17). CBI renewed the Amerisure policy several times, and
ultimately had coverage through October 1, 2007. See Doc. 29-3, pp. 32, 46, 71, and
On March 26, 2003, the Clearwater Condominium Association, Inc.
(“Clearwater”) filed a lawsuit against CBI and other defendants (the “Clearwater
lawsuit”) in the Circuit Court of Baldwin County, Alabama. (Doc. 34, p. 5). The
Clearwater lawsuit alleged, among other things, that CBI was the general
contractor which constructed Clearwater and that the project was plagued by
numerous construction defects as a result of CBI’s negligence. Id. CBI notified
Assurance of the claim, and on April 22, 2003, Assurance assigned counsel to defend
CBI in the Clearwater lawsuit. Id. at 6. Four years and four months later, on July
19, 2007, David Green of Zurich N.A., the parent company of Assurance, notified
Erika Refka, a claims representative employed by Amerisure, of the Clearwater
lawsuit, and directed CBI’s defense counsel to forward a copy of Clearwater’s
complaint to Refka. Id. at 7.
On May 4, 2004, the Four Winds Condominium Association (“Four Winds”)
filed a second lawsuit against CBI (the “Four Winds lawsuit”) in the Circuit Court of
Baldwin County, Alabama. Id. at 8. Much like the Clearwater lawsuit, the Four
Winds lawsuit also alleged that CBI was the general contractor which constructed
Four Winds and that the project was plagued by numerous construction defects as a
result of CBI’s negligence. Id. CBI notified Assurance of the Four Winds lawsuit on
January 10, 2005. Id. Assurance assigned counsel to defend CBI approximately one
month later, on February 3. Id. Just over three years later, on May 21, 2007, CBI’s
defense counsel notified Amerisure of the Four Winds lawsuit. Id. at 10.
Amerisure was, for the most part, fairly nonresponsive after being notified of
the Clearwater and Four Winds lawsuits. See Doc. 34, pp. 7-8, 10. In any event,
Amerisure did not agree to share in CBI’s defense. Id. Both cases were
subsequently settled, the Clearwater lawsuit on September 8, 2008, for which
Assurance contributed $31,000 and ultimately paid legal fees of $67,705.91. Id. at
8. The Four Winds lawsuit was settled on March 5, 2008, for which Assurance paid
$124,000 in settlement and $101,608.54 in legal fees. Id. at 11.
Assurance now seeks contribution of $162,157.00, representing half of the
settlement amounts and legal fees it paid in settling the Clearwater and Four
SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56(a) provides that summary judgment shall
be granted “if the movant shows that there is no genuine dispute as to any material
fact and that the movant is entitled to judgment as a matter of law.” The trial
court’s function is not “to weigh the evidence and determine the truth of the matter
but to determine whether there is a genuine issue for trial.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986). “The mere existence of some evidence to
support the non-moving party is not sufficient for denial of summary judgment;
there must be ‘sufficient evidence favoring the nonmoving party for a jury to return
a verdict for that party.’” Bailey v. Allgas, Inc., 284 F.3d 1237, 1243 (11th Cir. 2002)
(quoting Anderson, 477 U.S. at 249). “If the evidence is merely colorable, or is not
significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at
249-250. (internal citations omitted).
The basic issue before the court on a motion for summary judgment is
“whether the evidence presents a sufficient disagreement to require submission to a
jury or whether it is so one-sided that one party must prevail as a matter of law.”
See Anderson, 477 U.S. at 251-252. The moving party bears the burden of proving
that no genuine issue of material fact exists. O'Ferrell v. United States, 253 F.3d
1257, 1265 (11th Cir. 2001). In evaluating the argument of the moving party, the
court must view all evidence in the light most favorable to the non-moving party,
and resolve all reasonable doubts about the facts in its favor. Burton v. City of
Belle Glade, 178 F.3d 1175, 1187 (11th Cir. 1999). “If reasonable minds might
differ on the inferences arising from undisputed facts, then a court should deny
summary judgment.” Hinesville Bank v. Pony Exp. Courier Corp., 868 F.2d 1532,
1535 (11th Cir. 1989) (citing Mercantile Bank & Trust v. Fidelity & Deposit Co., 750
F.2d 838, 841 (11th Cir. 1985)).
Once the movant satisfies his initial burden under Rule 56(a), the nonmoving party “must make a sufficient showing to establish the existence of each
essential element to that party's case, and on which that party will bear the burden
of proof at trial.” Howard v. BP Oil Co., 32 F.3d 520, 524 (11th Cir. 1994)(citing
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). Otherwise stated, the nonmovant must “demonstrate that there is indeed a material issue of fact that
precludes summary judgment.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608
(11th Cir. 1991). The non-moving party “may not rely merely on allegations or
denials in its own pleading; rather, its response must . . . set out specific facts
showing a genuine issue for trial.” Vega v. Invsco Group, Ltd., 432 Fed.Appx. 867,
870 (11th Cir. 2011). “A mere ‘scintilla’ of evidence supporting the [non-moving]
party’s position will not suffice; there must be enough of a showing that the jury
could reasonably find for that party.” Walker v. Darby, 911 F.2d 1573, 1577 (11th
Cir. 1990) (citation omitted). “[T]he nonmoving party may avail itself of all facts
and justifiable inferences in the record taken as a whole.” Tipton v. Bergrohr
GMBH-Siegen, 965 F.2d 994, 998 (11th Cir. 1992). “Where the record taken as a
whole could not lead a rational trier of fact to find for the non-moving party, there is
no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986) (internal quotation and citation omitted).
“[T]he failure of an insured to comply within a reasonable time with such
conditions precedent in an insurance policy requiring the insureds to give notice of
an accident or occurrence releases the insurer from obligations imposed by the
insurance contract.” Travelers Indem. Co. of Connecticut v. Miller, ---So.3d ---, 2011
WL 6004619, *3 (Ala. 2011) (quoting Reeves v. State Farm Fire & Cas. Co., 539
So.2d 252, 254 (Ala. 1989)). The term “as soon as practicable” has been interpreted
“to mean that ‘notice must be given within a reasonable time in view of the facts
and circumstances of the case.’ ” Id. (quoting Haston v. Transamerica Ins. Servs.,
662 So.2d 1138, 1141 (Ala. 1995)). “Prompt” notice has also been interpreted to
mean that such notice must be given within a reasonable time in view of all the
facts and circumstances. St. Paul Fire & Marine Ins. Co. v. Elliott, 545 So.2d 760
(Ala. 1989). Only two factors are to be considered in determining the
reasonableness of a delay in giving notice to the insurer: the length of the delay and
the reasons for the delay. United States Fid. & Guar. Co. v. Baldwin County Home
Builders Ass'n, 770 So.2d 72, 75 (Ala. 2000). Whether notice of the occurrence or
claim was given to the insurer within a reasonable time rests on the reasonableness
of the delay. Id. Prejudice to the insurer from any such delay in providing notice is
not a factor. Id.
In the instant case, it is undisputed that the Clearwater lawsuit was filed on
March 26, 2003, and that Amerisure did not receive notice of the suit until July 19,
2007 -- four years and four months later. (Doc. 34, pp. 5-7). It is further undisputed
that the Four Winds lawsuit was filed on May 4, 2004, and that Amerisure did not
receive notice of the suit until approximately May 21, 2007 – slightly more than
three years to the day later. Id. at pp. 8-10.
The reason that Assurance gives for the delay in notifying Amerisure is that
Assurance itself only learned of CBI’s policy with Amerisure on May 18, 2007. (Doc.
37, p. 4). Assurance also argues that CBI “took prompt steps to put applicable
insurance carriers on notice,” but that the nature of the Clearwater and Four Winds
lawsuits against CBI were “not limited to a single event or instantaneous
occurrence” because they were construction cases involving claims of faulty
workmanship. See id. at p. 5. Assurance also asserts that it took steps to place
Amerisure on notice “upon being reasonably convinced that the claims extended
past [Assurance’s] coverage period, and upon learning of [Amerisure’s] coverage
periods.” Id. at 5.
Assurance’s arguments do not hold water. The Alabama Supreme Court has
ruled unambiguously that ignorance of coverage is not an excuse to justify dilatory
conduct on the part of a named insured in providing notice of a claim to its insurer.
Big Three Motors, Inc. v. Employers Ins. Co. of Alabama, 449 So.2d 1232, 1236 (Ala.
1984). Although CBI may have taken prompt steps to notify Assurance of the
claims it faced, the undisputed evidence shows that CBI and Assurance, as
subrogor, simply did not do so with regard to Amerisure. Furthermore, while the
allegations of construction defects leveled by Clearwater and Four Winds against
CBI were not limited to a single event or occurrence, the filing of each complaint
was a single, discrete event that should have been reported to Amerisure “as soon
as practicable” pursuant to Section IV, paragraph 2(b)(2) of the Amerisure policy.
See Doc. 29-3, p. 11 (“If a claim is made or ‘suit’ is brought against any insured, you
must … [n]otify us as soon as practicable. You must see to it that we receive written
notice of the claim or ‘suit’ as soon as practicable”).
The reason presented by Assurance to justify its delay is the same reason
presented by the insured in Big Three Motors (i.e., that Assurance and its subrogee
did not realize that the Amerisure coverage existed). (Doc. 37, p. 3) (“… Assurance
Company of America was focused on defending Coastal Builders, Inc., in the
lawsuits … it was not readily apparent to [Assurance] …whether [CBI] had
additional coverage after [Assurance’s] coverage ended.”) The Alabama Supreme
Court wasted no time in deeming this excuse to be insufficient. Big Three Motors,
449 So.2d at 1236. This court does the same. In light of the insufficient notice to
Amerisure of the claims against CBI, this court finds that no reasonable jury could
find that Amerisure owes contribution for the defense and settlement of the
Clearwater and Four Winds claims.
Accordingly, the court finds as a matter of law that there has been a breach of
the notice provision of the Amerisure policy. Thus, Assurance’s motion for
summary judgment is hereby DENIED and Amerisure’s motion for summary
judgment is hereby GRANTED.
DONE and ORDERED this 12th day of March, 2012.
/s/ Callie V. S. Granade
UNITED STATES DISTRICT JUDGE
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