Star Insurance Company et al v. Trinity Property Management, LLC et al
OPINION and ORDER granting 63 Motion for Summary Judgment. A declaratory judgment will be entered separately. Signed by Honorable P. K. Holmes III on October 5, 2021. (jlm)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FORT SMITH DIVISION
STAR INSURANCE COMPANY and
CENTURY SURETY INSURANCE COMPANY
TRINITY PROPERTY MANAGEMENT, LLC, et al.
OPINION AND ORDER
Before the Court is Plaintiffs Star Insurance Company and Century Surety Insurance
Company’s motion (Doc. 63) for summary judgment, brief in support (Doc. 64), and statement of
facts (Doc. 65). Separate Defendant Trinity Property Management, LLC (“Trinity”) filed a
response (Doc. 68), brief in opposition (Doc. 70), and statement of facts (Doc. 69). Plaintiffs filed
a reply (Doc. 75). For the reasons set forth below, the motion will be GRANTED.
In December 2017 Plaintiff issued Commercial General Liability Policy Number 4198783
(“Policy A”) to Trinity, with a policy end date of December 2018. (Doc. 63-2). In December 2018
Plaintiff issued Commercial General Liability Policy Number 4247191 (“Policy B”) to Trinity
which contained identical terms to Policy A and remained in effect until December 2019.
The portions of the policies relevant to this lawsuit read:
SECTION 1 – COVERAGES
COVERAGE A – BODILY INJURY AND PROPERTY DAMAGE
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally
obligated to pay as damages because of “bodily injury” or “property
damage” to which this insurance applies. We will have the right and
duty to defend the insured against any “suit” seeking those damages.
However, we will have no duty to defend the insured against any
“suit” seeking damages for “bodily injury” or “property damage” to
which this insurance does not apply . . . .
b. This insurance applies to “bodily injury” and “property damage”
(1) The “bodily injury” or “property damage” is caused by
an “occurrence” that takes place in the “coverage territory.”
(2) The “bodily injury” or “property damage” occurs during
the policy period; and
(3) Prior to the policy period, no insured listed under
Paragraph 1. of Section II – Who Is An Insured and no
“employee” authorized by you to give or receive notice of
an “occurrence” or claim, knew that the “bodily injury” or
“property damage” had occurred, in whole or in part. If such
a listed insured or authorized “employee” knew, prior to the
policy period, that the “bodily injury” or “property damage”
occurred, then any continuation, change or resumption of
such “bodily injury” or “property damage” during or after
the policy period will be deemed to have known prior to the
COVERAGE B – PERSONAL AND ADVERTISING INJURY
1. Insuring Agreement
a. We 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. We will have the right and
duty to defendant the insured against any “suit” seeking those
damages. However, we will have no duty to defend the insured
against any “suit” seeking damages for “personal and advertising
injury” to which this insurance does not apply.
This insurance does not apply to:
a. Knowing Violation Of Rights Of Another
“Personal and advertising injury” caused by or at the direction
of the insured with the knowledge that the act would violate the
rights of another and would inflict “personal and advertising
SECTION V – DEFINITIONS
3. “Bodily injury” means bodily injury, sickness or disease sustained by a
person, including death resulting from any of these at any time.
SPECIAL EXCLUSIONS AND LIMITATIONS ENDORSEMENT
E. It is agreed that the following changes are made to SECTION V –
3. Item 13., “Occurrence” is deleted in its entirety and replaced with
13. “Occurrence” means an accident, including continuous or repeated
exposure to substantially the same general harmful conditions. All “bodily
injury” or “property damage” arising out of an “occurrence” or series of
related “occurrences” is deemed to take place at the time of the first such
damage or injury even though the nature and extent of such damage or
injury may change; and even though the damage may be continuous,
progressive, cumulative, changing or evolving; and even though the
“occurrence” causing such “bodily injury” or “property damage” may be
continuous or repeated exposure to substantially the same general harmful
Pursuant to Arkansas Code Section 23-79-155:
b. The definition of “occurrence” also includes “bodily injury” and
“property damage” resulting from faulty workmanship; and
b. The definition of “occurrence” required by this section of
Arkansas law does not serve to limit or restrict the applicability of
any exclusion for “bodily injury” or “property damage” under this
4. Item 14., “Personal and advertising injury” is deleted in its entirety
and replaced with the following:
14. “Personal and advertising injury” means injury, including consequential
“bodily injury”, arising out of one or more of the following offenses:
c. The wrongful eviction from or the wrongful entry into or the
invasion of the right of private occupancy of a room, dwelling or premises
that a person occupies, provided that such wrongful eviction, wrongful entry
or invasion of the right of private occupancy was committed by or on behalf
of the room’s, dwelling’s or premises’ owner, landlord or lessor.
(Doc. 63-2, pp. 12, 17, 24, 26, 48, 49; Doc. 63-3, pp. 13, 18, 25, 27, 48, 49).
Plaintiff also issued to Trinity three Commercial Excess Liability policies, two of which
covered excess liability arising from claims covered by Policy A and Policy B, and the third
covered excess liability from a policy issued by a separate insurance company which provided no
defense or indemnification to the current complaint.
Trinity is a property management company hired to manage Southbrooke Apartments in
Fort Smith, Arkansas. Beginning in 2020, Southbrooke Apartment tenants filed a lawsuit in the
Circuit Court of Sebastian County, Arkansas and the United States Department of Housing and
Urban Development (“HUD”) filed three complaints against Trinity. The HUD complaints and
the lawsuit allege that a Trinity maintenance worker, Joshua Cason, repeatedly sexually assaulted
and harassed female tenants in their apartments when he was sent to make repairs. This harassment
allegedly began as early as 2016. Though the victims made multiple reports to the manager of the
apartment complex—Dawanna Sweeten, a Trinity employee—and filed police reports, no action
was taken against Cason; he maintained his employment and possession of a master key which
allowed him to enter any apartment in the complex.
Plaintiffs filed a second amended complaint in this action for declaratory judgment seeking
a declaration that, under the plain terms of five insurance policies issued to Trinity, Plaintiffs have
no obligation to provide a defense or indemnity to Trinity in the underlying lawsuit or HUD
Complaints 1, 2, or 3. The parties have settled the underlying lawsuit, HUD Complaint 2, and
HUD Complaint 3. The only remaining proceeding is HUD Complaint 1 (the “HUD Complaint”),
which alleges that Trinity committed gender discrimination in violation of §§ 804(b) and 818 of
the Fair Housing Act “by imposing discriminatory terms and conditions on the rental of a dwelling
on the basis of sex; and by interfering and coercing a person in her enjoyment of a dwelling because
of sex.” (Doc. 63-1, p. 2). Plaintiffs argue that under the terms of the insurance policies issued to
Trinity they have no duty to defend or insure against any losses stemming from the HUD
Complaint. Trinity disagrees.
After viewing the record in the light most favorable to the nonmoving party and granting
all reasonable factual inferences in the nonmovant’s favor, a motion for summary judgment must
be granted “if the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to summary judgment as a matter of law.” Fed. R. Civ. P. 56(a); Haggenmiller
v. ABM Parking Serv., Inc., 837 F.3d 879, 884 (8th Cir. 2016). Facts are material when they can
“affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). Disputes are genuine when “the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Id. “While the burden of demonstrating the
absence of any genuine issue of material fact rests on the movant, a nonmovant may not rest upon
mere denials or allegations, but must instead set forth specific facts sufficient to raise a genuine
issue for trial.” Haggenmiller, 837 F.3d at 884 (quotations omitted).
A federal district court sitting in diversity applies its forum state’s substantive law.
Guardian Fiberglass, Inc. v. Whit Davis Lumber Co., 509 F.3d 512, 515 (8th Cir. 2007). In
Arkansas, the duty to defend under an insurance policy arises when there is a possibility that the
injury or damage may fall within the policy coverage. Scottsdale Ins. Co. v. Morrowland Valley
Co., LLC., 411 S.W.3d 184, 190-91 (Ark. 2012). Generally, the “pleadings against the insured
determine the insurer’s duty to defend.” Id. To determine if a duty to defend arises, the “language
in the contract from which the purported duty arises” is examined. Id. “The provisions of an
insurance contract ‘are to be interpreted by the court in the plain and ordinary meaning of the terms
and cannot be construed to contain a different meaning.’” Unigard Sec. Ins. Co. v. Murphy Oil
USA, Inc., 962 S.W.2d 735, 739–40 (Ark. 1998) (quoting Horn v. Imperial Cas. & Indem. Co.,
636 S.W.2d 302, 303 (Ark. 1982)). “The terms of an insurance contract are not to be rewritten
under the rule of strict construction against the company issuing it so as to bind the insurer to a
risk which is plainly excluded and for which it was not paid.” Id. at 750 (quoting S. Farm Bureau
Cas. Ins. Co. v. Williams, 543 S.W.2d 467, 470 (Ark. 1976)).
Turning to the applicable insurance policies in this case, there is no possibility that the
discrimination alleged in the HUD Complaint falls within Coverage A. Coverage A only applies
to “bodily injury” or “property damage” caused by an “occurrence.” Under the policies, an
“occurrence” is an accident. The HUD Complaint alleges unlawful discrimination by Trinity,
stating Trinity was notified by tenants of Cason’s sexual assaults and Trinity intentionally chose
not to address the complaints. Intentional conduct is not an accident, and there is therefore no duty
to defend under Coverage A.
The duty to defend also does not arise under the terms of Coverage B, “personal and
advertising injury liability.” Personal and advertising injury is defined as injury arising out of
wrongful entry into a dwelling committed on behalf of the room’s, dwelling’s or premises’ owner,
landlord or lessor.
The discrimination complained of arose out of Cason’s entry into the
apartments of the complainants. However, for there to be “personal and advertising injury,”
Cason’s entry and subsequent assault would need to have been on behalf of, and therefore imputed
to, his employer.
Under Arkansas law there is a possibility that Cason’s actions could be imputed to Trinity.
See, e.g., J.B. Hunt Transp., Inc. v. Doss, 899 S.W.2d 464, 468-69 (Ark. 1995) (holding respondeat
superior may apply in circumstances where employer leaves discretion in completing employment
tasks to employee because “whether an employee is acting within the scope of employment is not
necessarily dependent upon the situs of the occurrence but on whether the individual is carrying
out the object and purpose of the enterprise, as opposed to acting exclusively in his own interest.”).
If Cason’s actions were imputed to Trinity, however, the exclusion for the “Knowing
Violation Of Rights Of Another” would apply and preempt coverage under the policy. Under this
exclusion, no coverage is provided for actions caused by or at the direction of Trinity with the
knowledge that the act would violate the rights of another and would inflict “personal and
advertising injury.” Should the law impute Cason’s conduct to Trinity, it would also impute
Sweeten’s knowledge of that conduct, if not Cason’s. When Cason sexually assaulted the
complainants, and when Sweeten refused to address the reports, a reasonable person would have
been aware that this violated the complainants’ rights and would cause injury. See CNA Ins. Co.
v. McGinnis, 666 S.W.2d 689, 691 (Ark. 1984) (holding that the test for whether injury is expected
or intended is an objective standard). Therefore, should Cason’s conduct be imputed to Trinity,
the exclusion for the “Knowing Violation Of Rights Of Another” would preclude the duty to
Because there is no possibility that the harm arising out of the allegations in the HUD
Complaint is covered by Coverage A or Coverage B, Plaintiff has no duty to defend Trinity.
Because there is no duty to defend triggered by the underlying policies, the Commercial Excess
Liability policies also will not be triggered. Plaintiffs’ motion for summary judgment will be
IT IS THEREFORE ORDERED that Plaintiffs’ motion (Doc. 63) for summary
judgment is GRANTED. A declaratory judgment will be entered separately.
IT IS SO ORDERED this 5th day of October, 2021.
/s/P. K. Holmes, III
P.K. HOLMES, III
U.S. DISTRICT JUDGE
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