D & D Parks Construction Inc v. Century Surety Company
MEMORANDUM OPINION AND ORDER. Defendant's Motion for Summary Judgment is GRANTED. Judgment to be entered accordingly. Signed by Honorable P. K. Holmes, III on June 10, 2013. (jas)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
D & D PARKS CONSTRUCTION, INC.
Case No. 3:12-CV-03167
CENTURY SURETY COMPANY
MEMORANDUM OPINION AND ORDER
Currently before the Court are Defendant Century Surety Company’s (“Century”) Motion for
Summary Judgment (Doc. 7) and brief in support (Doc. 8). Plaintiff D&D Parks Construction, Inc.
(“D&D”) failed to file a response in opposition to the Motion.
The Complaint in this case was originally filed in the Circuit Court of Baxter County,
Arkansas, on November 15, 2012. The Complaint alleges that D&D, an Arkansas corporation, was
sued by a couple named Charles and Lauri Martin because their home, which was built by D&D,
contained certain construction defects. At the time the Martins’ home was being constructed, D&D
was covered under a commercial general liability policy issued by Century, an insurance company
incorporated in Ohio with its principal place of business in Michigan. D&D contends it contacted
Century regarding the Martins’ lawsuit prior to the time the lawsuit proceeded to trial, but Century
refused to accept liability. On May 4, 2011, the Martins prevailed against D&D in state court, and
D&D was ordered to pay a judgment of $119,662.33, plus costs and interest. Now that D&D has
paid the judgment in full, it brings suit against Century pursuant to the general liability policy’s
coverage provisions and asks for reimbursement of the costs it incurred as a result of the Martins’
Century removed the instant dispute to this Court on December 26, 2012, based on diversity
of citizenship pursuant to 28 U.S.C. § 1332. Shortly thereafter, on March 18, 2013, Century moved
for summary judgment, asserting that it was not liable to D&D because D&D failed to comply with
the notice provision of the insurance contract, which required Century to be notified of any pending
claim as soon as practicable or, if the claim related to a pending lawsuit, at the time the lawsuit was
Before examining the merits of the case, the Court observes that when faced with a summary
judgment motion, the burden of proof is placed on the moving party to establish both the absence
of a genuine dispute of material fact and that it is entitled to judgment as a matter of law. See Fed.
R. Civ. P. 56; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Nat’l
Bank of Commerce of El Dorado, Ark. v. Dow Chem. Co., 165 F.3d 602 (8th Cir. 1999). The Court
must review the facts in a light most favorable to the party opposing a motion for summary judgment
and give that party the benefit of any inferences that logically can be drawn from those facts.
Canada v. Union Elec. Co., 135 F3d 1211, 1212-13 (8th Cir. 1997). In order for there to be a
genuine issue of material fact, the non-moving party must produce evidence “such that a reasonable
jury could return a verdict for the nonmoving party.” Allison v. Flexway Trucking, Inc., 28 F.3d 64,
66 (8thCir. 1994) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). In addition,
the Eighth Circuit has held that a district court should not treat a plaintiff’s failure to respond to a
motion for summary judgment—as has occurred here—as sufficient justification to dispose of the
motion without further analysis. Canada, 135 F.3d at 1213. Courts “should . . . proceed to examine
those portions of the record properly before them and decide for themselves whether the motion is
well taken.” Id.
The Court has examined the entire record in this case. Of particular interest is the notice
provision in the insurance policy at issue, which states as follows:
You must see to it that we are notified as soon as practicable of an
“occurrence” or an offense which may result in a claim. . .
If a claim is made or “suit” is brought against any insured, you must:
(1) Immediately record the specifics of the claim or “suit” and the date
(2) Notify us as soon as practicable.
You must see to it that we receive written notice of the claim or “suit” as
soon as practicable.
You and any other involved insured must:
(1) Immediately send us copies of any demands, notices, summonses or legal
papers received in connection with the claim or “suit”;
(2) Authorize us to obtain records and other information;
(3) Cooperate with us in the investigation or settlement of the claim or
defense against the “suit”; and
(4) Assist us, upon our request, in the enforcement of any right against any
person or organization which may be liable to the insured because of injury
or damage to which this insurance may also apply.
No insured will, except at that insured’s own cost, voluntarily make a
payment, assume any obligation, or incur any expense, other than for first aid,
without our consent.
(Doc. 7-5, pp. 9-10). The insurance contract also provides that a lawsuit for damages cannot be
brought against Century “unless all of [the contract’s] terms have been fully complied with.” Id. at
In support of the Motion for Summary Judgment, Century submits an affidavit from Martha
Hart, the Assistant Vice President and Construction Defect Claims Manager for Century. Ms. Hart’s
affidavit affirms that the first communication Century received from D&D regarding the Martins’
lawsuit occurred on or about June 30, 2011, well after judgment had entered against D&D. (Doc.
7-1, p. 1). Ms. Hart states that “[a]t no point in time prior to June 30, 2011 was Century Surety
Company notified by Plaintiff of a claim asserted by the Martins, nor was Century Surety Company
ever afforded an opportunity to investigate or defend any such claim.” Id.
Ms. Hart attaches to her affidavit three exhibits, all of which post-date the entry of judgment
against D&D in the state court case brought by the Martins. The first exhibit is a letter to D&D from
Century’s senior claims representative Charles Norris. (Doc. 7-2). This letter demonstrates that as
of July 1, 2011, Century was conducting an investigation into the facts surrounding D&D’s recent
claim for losses, but was unaware at that time that an actual lawsuit had been filed—and judgment
entered—against D&D. The second exhibit is Century’s initial claim report on D&D, which states
that the Century agent received notice of D&D’s claim for losses on June 27, 2011, and the company
received notice as of June 30, 2011. (Doc. 7-3). The third exhibit is Century’s internal activity log,
kept by Mr. Norris. (Doc. 7-4). The call log describes Mr. Norris’s follow-up contact with D&D
on its “new claim” for coverage. It appears from the call log that Mr. Norris first became aware of
the existence of the Martins’ lawsuit and resulting judgment against D&D on or about July 1, 2011.
Considering Century’s uncontroverted evidence that D&D failed to provide timely notice of
the existence of the Martins’ lawsuit until after judgment had entered, the Court finds that D&D
cannot recover under its insurance policy because D&D failed to meet the policy’s clear and
unambiguous notice provision that was a condition precedent to coverage. The Eighth Circuit has
determined that “one party’s failure to fulfill a condition precedent entirely excuses any remaining
obligations of the other party.” AIG Centennial Ins. Co. v. Fraley-Landers, 450 F.3d 761, 763 (8th
Cir. 2006). In order to prevail, an insurance company need not show that it suffered prejudice as a
result of its insured’s lack of timely compliance with the notice provision. Id. at 767. See also
Fireman’s Fund Ins. Co. v. Care Mgmt, Inc., 2010 Ark. 110, at *10 (2010) (“In sum, it is well-settled
law in Arkansas that an insured must strictly comply with an insurance-policy provision requiring
timely notice where that provision is a condition precedent to recovery.”).
Due to the lack of timely notice to Century of the Martins’ pending lawsuit against D&D,
Century was not afforded the opportunity to investigate and interpose a defense to the lawsuit prior
to the entry of judgment. D&D is therefore barred from recovery against Century pursuant to the
insurance policy, as D&D failed to present evidence to counter Century’s proof that this case should
be dismissed. Conseco Life Ins. Co. v. Williams, 620 F.3d 902, 909 (8th Cir. 2010) (“‘When the
movant makes a prima facie showing of entitlement to a summary judgment, the respondent must
discard the shielding cloak of formal allegations and meet proof with proof by showing a genuine
issue as to a material fact.’”) (quoting Flentje v. First Nat’l Bank of Wynne, 340 Ark. 563 (2000)).
Therefore, for all the reasons set forth above, IT IS ORDERED that Defendant Century
Surety Company’s Motion for Summary Judgment (Doc. 7) is GRANTED.
This case is
DISMISSED WITH PREJUDICE, and judgment will enter contemporaneously with this Order.
IT IS SO ORDERED this 10th day of June, 2013.
/s/P. K. Holmes, III
P.K. HOLMES, III
CHIEF U.S. DISTRICT JUDGE
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