State Volunteer Mutual Insurance Company v. Rye et al

Filing 29

ORDER denying 21 Motion for Summary Judgment. This action is moot and is dismissed without prejudice. Signed by Honorable Jimm Larry Hendren on January 16, 2009. (jn)

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IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF ARKANSAS FAYETTEVILLE DIVISION STATE VOLUNTEER MUTUAL INSURANCE COMPANY vs. BRUCE RYE, M.D., et al. ORDER Now on this 16th day of January, 2009, comes on to be CASE No. 08-5086 DEFENDANTS PLAINTIFF considered the plaintiff's Motion for Summary Judgment (Doc. 21). The Court, being well and sufficiently advised, finds and orders as follows with respect thereto: 1. The plaintiff, State Volunteer Mutual Insurance Company ("State Volunteer"), instituted this action seeking a declaratory judgment regarding a medical professional insurance policy it issued to defendant Dr. Bruce Rye. 2. State Volunteer sought a declaration that no coverage existed under the policy and that it had no obligation to defend or indemnify Dr. Rye in connection with a state-court action, referred to by the parties as the "Landry suit," in which Dr. Rye was sued for, inter alia, sexual assault, battery, and medical malpractice. 3. State Volunteer has moved for summary judgment, arguing that Dr. Rye's alleged conduct does not come within the scope of "professional services" covered under the policy and that policy exclusions expressly preclude coverage for the alleged conduct. 1 4. Defendants respond that State Volunteer's declaratory judgment complaint should be dismissed, as "the controversy that precipitated this litigation is moot." (Doc. 24 at pg. 1.) Defendants explain that the Landry suit has been settled and the action was dismissed with prejudice on August 20, 2008. 5. State Volunteer argues that its request for declaratory relief is not moot, as Dr. Rye might seek to recover under the policy for the sums he paid to settle the Landry suit, for attorneys' fees and costs incurred therein, and for damages based on "a claim for alleged bad faith." 6. (Doc. 27 at pg. 2.)1 Under the Declaratory Judgment Act, 28 U.S.C. 2201 - 2202, a district court is "without power to grant declaratory relief unless [an actual] controversy exists." Maryland Cas. Co. The question all the v. Pacific Coal & Oil Co., 312 U.S. 270, 272 (1941). in each case is "whether that the facts is a alleged, under circumstances, show there substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Id. at 273. State Volunteer also argues that there is an issue as to whether the d i s m i s s a l of the Landry suit applies not only to the claims of Zacharias Landry, t h e alleged victim of Dr. Rye's actions, but also to those of Linda Landry, who i n s t i t u t e d the suit on her minor son's behalf. The Court sees no merit to this a r g u m e n t , as Zacharias Landry turned 18 during the pendency of the state-court a c t i o n and, prior to the settlement of the action, he was substituted as the " o n l y party in interest in th[e] litigation." (Doc. 11 Attach. 1 6.) 1 2 7. Since the settlement of the Landry suit nearly five months ago, there is no indication that Dr. Rye has made any claim under the insurance policy at issue. The possibility that he might do so in the future is not "of sufficient immediacy and reality" to warrant a declaratory judgment. Cf. Nautilus Ins. Co. v. Nevco Waterproofing, 2006 W.L. 2920596, *1 (5th Cir. 2006) (insurer's action against insured seeking declaratory judgment as to whether insurer had duty to defend was rendered moot when underlying action against insured was settled and dismissed); Prudential Property and Cas. Ins. Co. v. Beaufort, 263 F.Supp.2d 982, 985 (E.D. Penn. 2003) (insurer's declaratory judgment action that policy provided no coverage in state-court tort action was moot where the tort suit was voluntarily dismissed, as insurer was no longer subject to demand for legal defense and indemnification in the underlying suit, and there was no evidence to establish imminent likelihood that the suit would be refiled or that a bad faith suit would be instituted). 8. Based on the foregoing, the Court hereby finds and orders as follows: * DENIED. * This action is moot and is hereby DISMISSED as such. Plaintiff's Motion for Summary Judgment (Doc. 21) is This dismissal, however, is WITHOUT PREJUDICE. Should any claim be made under the insurance policy at issue in this action, the 3 plaintiff may move to re-open this action and renew its motion for summary judgment. IT IS SO ORDERED. /S/JIMM LARRY HENDREN JIMM LARRY HENDREN UNITED STATES DISTRICT JUDGE 4

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