State Farm Fire and Casualty Company v. LeBlanc et al

Filing 97

ORDER granting 85 Motion for Summary Judgment and dismissing counterclaim. Ordered by Judge Hugh Lawson on May 16, 2013. (mbh)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
VALDOSTA DIVISION

STATE FARM FIRE AND CASUALTY
COMPANY,
Plaintiff,

Civil Action 7:09-CV-76 (HL)

v.
LLOYD J. LEBLANC JR., THE B&F
SYSTEM, INC., EDNA G. LEBLANC,
PRODUCTOS MEXICANOS DON JOSE,
INC.,
LEBLANC’S
LLC,
MAXAM
WHOLESALE OF GA, INC., DIRECT
SOURCE
IMPORTS,
INC.,
JEFF
LEBLANC, and LLOYD LEBLANC III,
Defendants.
ORDER
This case is before the Court on State Farm Fire and Casualty Company’s
Second Motion for Summary Judgment (Doc. 85). For the reasons set out below,
the Motion is granted.1

1

Defendants Lloyd LeBlanc Jr., Edna G. LeBlanc, Maxam Wholesale of Atlanta, Inc.
(mis-named in the caption as Maxam Wholesale of GA, Inc.), Lloyd (“Jody”) LeBlanc III,
Jeff LeBlanc, Direct Source Imports, Inc., Productos Mexicanos Don Jose, Inc., and
LeBlanc’s, LLC are collectively referred to as the “LeBlanc Defendants.” The term
“Defendants” includes the LeBlanc Defendants and The B&F System, Inc.
The jury in the underlying case did not find any liability on the part of LeBlanc’s, LLC.
Final judgment on all claims was entered in favor of LeBlanc’s, LLC on July 10, 2012.

I.

BACKGROUND
On December 6, 2007, Defendant The B&F System, Inc. (“B&F”) filed a

lawsuit in this Court against Lloyd J. LeBlanc Jr., Maxam Wholesale of Atlanta,
Inc. (“MWA”), Direct Source Imports, Inc. (“DSI”), Jeff LeBlanc, and Jody
LeBlanc, in what became Civil Action No. 7:07-CV-192. On May 4, 2010, B&F
filed an amended complaint against Lloyd, MWA, DSI, Jeff, and Jody, and added
Edna G. LeBlanc, Productos Mexicanos Don Jose, Inc. (“PMDJ”), and LeBlanc’s
LLC as defendants.
The underlying complaint relates to a former business relationship
between Lloyd and B&F. The complaint alleges that on November 21, 1986, B&F
and Lloyd entered into a distributor agreement (the “MIDA”) and licensing
agreement (the “SMLA”) which licensed Lloyd to use the name Maxam to
conduct certain business. Lloyd began doing business in Tifton as Maxam
Wholesale of GA, a sole proprietorship.
In 1991, Lloyd bought another Maxam branch, this one located in Atlanta.
For a period of time Lloyd operated both the Atlanta and Tifton locations. Lloyd
eventually combined the businesses, initially operating one facility in Atlanta.
Around 1996, Lloyd moved the business to Tifton. The combined entity became
known as Maxam Wholesale of Atlanta, which remained a sole proprietorship.

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In 2004, Lloyd incorporated the business and created Maxam Wholesale of
Atlanta, Inc. (“MWA”). Jeff and Jody LeBlanc worked for MWA, and their
paychecks were drawn on that corporation’s accounts. Edna was responsible for
bookkeeping, balancing the checkbook, and preparing end of the year tax
paperwork, but she was never formally paid by Lloyd or MWA for her efforts.
The underlying complaint revolves around allegations that Lloyd, Edna,
Jeff, and Jody worked in concert to start up DSI to compete directly with B&F.
The complaint alleges that DSI is in the same business as B&F, has patterned its
business to mirror that of B&F, and has used B&F’s marks and confidential data
to usurp B&F’s business contacts and customers. A three-week long trifurcated
trial was held in the underlying case, and the jury entered verdicts on January 23
and February 3, 2012. The jury found that Lloyd breached the MIDA; that Lloyd
breached the SMLA; that PMDJ, DSI, Jeff, Jody, and Edna all tortiously
interfered with the MIDA; that PMDJ and DSI tortiously interfered with the SMLA;
that Lloyd, Jeff, Jody, Edna, MWA, DSI, and PMDJ infringed on B&F’s MAXAM
registered trademark; that Lloyd, Jeff, Jody, Edna, MWA, DSI, and PMDJ
infringed on B&F’s lid knob trademark; that Lloyd, Jeff, Jody, Edna, MWA, DSI,
and PMDJ infringed on B&F’s “Maxam Wholesale” trademark; that Jeff, Jody,
DSI, and PMDJ were liable for false designation of origin/unfair competition and
violations of the Georgia Uniform Deceptive Trade Practices Act; that Jeff

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committed cyberpiracy; that Lloyd, Edna, Jeff, and Jody engaged in a civil
conspiracy; that DSI and PMDJ engaged in a common business enterprise; that
Jody and Jeff should be held personally liable for torts committed by PMDJ and
DSI; and that Jody and Jeff should be held personally liable for trademark
infringement or false designation of origin/unfair competition committed by PMDJ
and DSI. Final judgment on the jury’s verdict was entered on July 10, 2012. The
underlying case is currently on appeal.
This declaratory judgment action was initially filed on June 16, 2009. After
a lengthy stay of the case, State Farm moved for summary judgment. That
motion was granted by the Court on March 1, 2012. The LeBlanc Defendants
appealed the order, and in October of 2012, the Eleventh Circuit Court of
Appeals reversed and remanded the case in part for the Court to consider
whether State Farm owes indemnity or a duty of defense to the LeBlanc
Defendants under a business policy issued to Lloyd LeBlanc Jr. d/b/a Maxam
Wholesale of GA and a personal liability umbrella policy issued to Lloyd. State
Farm has again moved for summary judgment.
II.

SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56 requires that summary judgment be

granted “if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P.

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56(a). “The moving party bears ‘the initial responsibility of informing the ... court
of the basis for its motion, and identifying those portions of the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, which it believes demonstrate the absence of a genuine issue of
material fact.’” Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir.
2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2549
(1986) (internal quotations omitted)). Where the moving party makes such a
showing, the burden shifts to the non-movant, who must go beyond the pleadings
and present affirmative evidence to show that a genuine issue of material fact
does exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505
(1986).
The applicable substantive law identifies which facts are material. Id. at
248. A fact is not material if a dispute over that fact will not affect the outcome of
the suit under the governing law. Id. An issue is genuine when the evidence is
such that a reasonable jury could return a verdict for the non-moving party. Id. at
249–50.
In resolving a motion for summary judgment, the court must view all
evidence and draw all reasonable inferences in the light most favorable to the
non-moving party. Patton v. Triad Guar. Ins. Corp., 277 F.3d 1294, 1296 (11th
Cir. 2002). The court is bound only to draw those inferences which are

5

reasonable. “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. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct.
1348 (1986). “If the evidence is merely colorable, or is not significantly probative,
summary judgment may be granted.” Anderson, 477 U.S. at 249-50 (internal
citations omitted).
III.

ANALYSIS
A.

The PLUP Policy

The first insurance policy at issue is a personal liability umbrella policy,
Policy Number 81-NQ-9486-0, issued by State Farm to Lloyd LeBlanc Jr., which
was in effect from July 10, 2006 to July 10, 2007 (the “PLUP Policy”).
State Farm argues several reasons why there is no coverage available for
any of the LeBlanc Defendants under the PLUP Policy. First, State Farm
contends that Jeff, Jody, DSI, PMDJ, and MWA do not qualify as insureds under
the PLUP Policy. Second, State Farm argues that the underlying lawsuit contains
no allegations of covered damages, as the PLUP Policy only covers bodily injury,
property damage, and personal injury. Finally, State Farm argues that the PLUP
Policy’s business pursuits exclusion precludes coverage.
Defendants did not address the PLUP Policy in their responses to State
Farm’s motion, and therefore, they have abandoned any claim for coverage

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under the PLUP Policy. Wilkerson v. Grinnell Corp., 270 F.3d 1314, 1322 (11th
Cir. 2001); Road Sprinkler Fitters Local Union No. 669 v. Indep. Sprinkler Corp.,
10 F.3d 1563, 1568 (11th Cir. 1994) (claims not addressed in response to
summary judgment motion deemed abandoned).
Thus, State Farm does not owe the LeBlanc Defendants a defense or
indemnity under the PLUP Policy. Summary judgment is granted in State Farm’s
favor as to the PLUP Policy.
B.

The LeBlanc Business Policy

The second policy is a business policy issued to Lloyd LeBlanc d/b/a
Maxam Wholesale of GA, Policy Number 91-NM-7119-2, which was in effect
from May 14, 2007 to May 14, 2008 (the “Business Policy”).
State Farm offers a slew of reasons why there is no coverage available
under the Business Policy. First, State Farm argues that the LeBlanc Defendants
do not qualify as insured under the Business Policy for the actions complained of
in the underlying litigation. Second, State Farm argues that there are no
allegations of covered damages under the terms of the Business Policy, as there
was no bodily injury or property damage, or any personal or advertising injury.
Third, State Farm argues that even if there was an advertising injury, the claims
would be excluded under the terms of the Business Policy. Finally, State Farm
argues that there is no coverage provided under the Business Policy for the

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Lanham Act, Uniform Deceptive Trade Practices Act, breach of the SMLA,
tortious interference with the SMLA, and civil conspiracy and common enterprise
claims asserted in the underlying action.
As with the PLUP Policy, Defendants did not address certain of State
Farm’s arguments in their responses to State Farm’s motion, and therefore, they
have abandoned certain claims for coverage under the Business Policy. The
remaining coverage questions for the Court’s consideration are: (1) whether
Lloyd, Edna, Jeff, Jody, and MWA qualify as insureds under the Business Policy
for the remaining allegations against them;2 (2) whether there has been an
advertising injury under the Business Policy; and if so, whether any such
advertising injury is excluded under certain policy exclusions; and (3) whether the
breach of the Service Mark License Agreement is considered an occurrence
under the Business Policy. Because the Court answers the first question in the
negative, it is not necessary to address the other two questions.
1.

Insureds under the Business Policy

With respect to who qualifies as an insured, the Designation of Insured
subpart of Section II of the Business Policy states in pertinent part as follows:

2

The remaining allegations against Lloyd, Edna, Jeff, Jody, and MWA are: (1) Lanham
Act and breach of the SMLA claims against Lloyd; (2) Lanham Act claims against Edna;
(3) Lanham Act claims against Jeff; (4) Lanham Act claims against Jody; and (5)
Lanham Act claims against MWA.
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WHO IS AN INSURED
1.

If you are designated in the Declarations as:

a.
an individual, you and your spouse are
insureds but only with respect to the conduct of a
business of which you are the sole owner;
b.
a partnership or joint venture, you are an
insured. Your members, your partners and their
spouses are also insureds but only with respect to the
conduct of your business;
c.
an organization other than a partnership or
joint venture, you are an insured. Your executive
officers, directors and trustees are insureds but only
with respect to their duties as your officers, directors or
trustees. Your stockholders are also insureds but only
with respect to their liability as stockholders.
2.

Each of the following is also an insured:

a.
your employees, other than your executive
officers, but only for acts within the scope of their
employment by you. However, no employee is an
insured for:
(1)
bodily injury or personal injury to you
or to a fellow employee while in the course of his or her
employment, or the spouse, child, parent, brother or
sister of that fellow employee as a consequence of such
bodily injury or personal injury or for any obligation to
share damages with or repay someone else who must
pay damages because of the injury;
(2)
bodily injury or personal injury arising
out of his or her providing or failing to provide
professional health care services;

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(3)
property damage to property owned
or occupied by or rented or loaned to that employee,
any of your other employees or any of your partners or
members if you are a partnership or joint venture; or
(4)
bodily injury or property damage
arising out of the ownership, maintenance, use or
entrustment to others of any non-owned auto or any
agent or employee of an owner of any non-owned auto;
b.
any person, other than your employee, or
any organization while acting as your real estate
manager;
c.
any person or organization having proper
temporary custody of your property if you die but only:
(1)
with respect to liability arising out of
the maintenance or use of that property; and
(2)
been appointed.

until your legal representative has

d.
your legal representative, if you die, but
only with respect to duties as such. That representative
will have all your rights and duties under this policy.
*****
4.
Any organization you newly acquire or form, other
than a partnership or joint venture, and over which you
maintain ownership or majority interest will qualify as a
Named Insured if there is no other similar insurance
available to that organization. Coverage under this
provision is afforded only until the 90th day after you
acquire or form the organization or the end of the policy
period, whichever is earlier. However, no person or
organization is an insured with respect to:

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a.
bodily injury or property damage that
occurred before you acquired or formed the
organization; and
b.
personal injury or advertising injury arising
out of an offense committed before you acquired or
formed the organization.
No person or organization is an insured with respect to
the conduct of any current or past partnership or joint
venture that is not shown as a Named Insured in the
Declarations.
(Doc. 1-2, pp. 30-31) (emphasis omitted).
a.

MWA

The named insured on the Business Policy is Lloyd LeBlanc d/b/a Maxam
Wholesale of GA. This was a sole proprietorship. MWA is a corporation. The
allegations asserted in the underlying complaint relate to the corporation, not the
sole proprietorship. State Farm argues under Georgia law, MWA is a separate
and distinct legal entity from Lloyd or the sole proprietorship, and any judgment
entered against MWA would not be covered under the Business Policy issued to
Lloyd individually or as a sole proprietor. Instead, MWA should have purchased
its own insurance policy.
The LeBlanc Defendants argue in response that Edna told State Farm’s
agent that “we got a new company name, Maxam Wholesale of Atlanta”
(Deposition of Edna LeBlanc, p. 15), that Lloyd told State Farm’s agents about
MWA, and that Lloyd and Edna were assured that they had sufficient coverage.

11

The LeBlanc Defendants contend that because State Farm’s agents knew of the
incorporation but failed to amend the declaration page, State Farm is estopped
from arguing that MWA is not an insured under the policy. The LeBlanc
Defendants further argue that State Farm cannot now attempt to deny coverage
to MWA on the basis that the named insured was not switched to the corporation
because State Farm accepted premium payments from MWA for 17 years.
In reply, State Farm states that it was Lloyd’s duty to review his policy and
determine whether the coverage requested was procured. The declarations page
clearly states that the named insured is Lloyd LeBlanc d/b/a Maxam Wholesale
of GA. There is no mention of MWA. Further, State Farm argues, the LeBlanc
Defendants have not presented any evidence of any formal request for coverage
for the corporate entity, and incorporating a new entity would have affected
coverage. Finally, State Farm argues that any representations made by its
agents do not create coverage.
“[T]he construction of insurance policies, and, therefore, the scope of
coverage, are matters of state law.” Miller v. Harco Nat’l Ins. Co., 274 Ga. 387,
390, 552 S.E.2d 84, 851 (2001) (quoting T.H.E. Ins. Co. v. Larsen Intermodal
Servs., 242 F.3d 667, 674(II)(A)(1) (5th Cir. 2001)). Accordingly, in support of its
argument that MWA is not an insured, State Farm relies on two Supreme Court

12

of Georgia cases, Shelby Insurance Co. v. Ford, 265 Ga. 232, 454 S.E.2d 464
(1995), and Miller v. Harco National Insurance Co., 274 Ga. at 387.
In Shelby Insurance Co., a child was injured on the premises of a day care
center operated by KDC, Inc., a corporation owned by the appellee and her
husband. The corporation had no insurance coverage, but the appellant
insurance company had issued to the appellee individually a policy which
provided coverage to her as an individual “only with respect to the conduct of a
business of which you are the sole owner.” 265 Ga. at 233. The insurance
company denied coverage under the policy because the entity operating the day
care center was not a named insured under the policy.
The Georgia Court of Appeals found in favor of the appellee insured,
holding that since the appellee was the sole owner of the business entity in
question, both she and the corporate entity were the named insured. Shelby Ins.
Co. v. Ford, 212 Ga. App. 303, 441 S.E.2d 764. In other words, the appellate
court determined that the owner of a corporation is necessarily the owner of the
business operated by the corporation.
The Georgia Supreme Court reversed, finding that the Court of Appeals’
holding “ignores both the language of the insurance policy and the basic premise
of law pertaining to corporations, that they are entities distinct from their owners.
The courts of this state have said many times that a corporation and its owner,

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even a sole owner, are separate and distinct.” 265 Ga. at 233.3 The Supreme
Court held that the fact that the appellee owned the corporation did not change
the fact that the corporate owner of the child care business was distinct from the
appellee as an individual. “It was with Cain, as an individual, that appellant
contracted to provide insurance coverage, and that contract cannot be enlarged
by the court to include as a named insured a wholly distinct legal entity.” Id. at
465-66.
In Miller, the other case relied upon by State Farm, the Georgia Supreme
Court was faced with certified questions from the Eleventh Circuit Court of
Appeals concerning coverage issues in the context of a motor vehicle accident.
The Supreme Court noted that “[a]n individual doing business under a trade
name is clearly a sole proprietor distinct under Georgia law from a corporation in
which that individual holds stock.” 274 Ga. at 390 (citations omitted). Citing to
3

“No hard and fast rule can be laid down, but it seems clear that so long as the law
authorizes the formation of subservient corporations, the law would defeat its own
purpose by disregarding its own creature merely because a parent corporation, or other
sole owner, controls the subsidiary, or one-man corporation, and uses it and controls it
to promote his or its ends. [Cit.]” ITT Bus. Servs. Corp. v. Roberts, 184 Ga. App. 764,
767, 362 S.E.2d 496 (1987).
“[A] corporation is an artificial person created by law. The corporate identity is entirely
separate from the identity of its officers and stockholders. A corporation and even its
sole owner are two separate and distinct persons. [Cit.]” Thrift v. Maxwell, 162 Ga. App.
237, 239, 290 S.E.2d 301 (1982).
“One person may own all the stock of a corporation, and still such individual shareholder
and the corporation would, in law, be two separate and distinct persons. [Cits.]” Keller v.
Bldg. Prods. v. Young, 137 Ga. App. 682(1)(b), 224 S.E.2d 815 (1976).
14

Shelby Insurance Co., the Court stated that “[i]f an insurer contracts to provide
insurance coverage to a sole proprietor, the courts cannot enlarge the contract to
include as a named insured the wholly distinct legal entity of a corporation, even
if the sole proprietor owns a majority of stock thereof.” Id. The court went on to
respond to the Eleventh Circuit’s first certified question, which inquired whether
an insurance policy provides coverage for final judgments against a corporation
when it only specifies coverage for final judgment against a sole proprietorship,
as follows: “Although a policy provides coverage for final judgments recovered
against the insured, it generally does not cover final judgments against a
corporation in which the insured is the controlling stockholder. Because
corporations and their shareholders are separate and distinct entities, insurance
coverage for final judgments against the latter cannot ordinarily be enlarged to
include final judgments against the former.” Id.
“The general rule is that [a]n action on a policy of insurance or on a written
binder must be brought in the name of the holder of the legal title thereto.
Generally, one other than the person to whom it was issued can not, in his own
name, maintain an action thereon, unless the policy has been duly assigned to
him in writing.” U.S. Homes Assistance Corp. v. S. Guaranty Ins. Co., 131 Ga.
App. 676, 678, 206 S.E.2d 555 (1974). Here, there was no insurance contract
between MWA and State Farm. There was no written assignment or transfer of

15

the policy.4 State Farm agreed to provide coverage to Lloyd LeBlanc as a sole
proprietor. Lloyd and MWA are separate legal entities. Under Shelby Insurance
Co., Miller, and U.S. Homes, this Court is restrained to find that there is no
coverage available to MWA under the Business Policy. The Court cannot enlarge
the Business Policy to “include as a named insured a wholly distinct legal entity.”
Shelby Ins. Co., 265 Ga. at 234.5
However, the LeBlanc Defendants argue that under State Farm Fire &
Casualty Co. v. Mills Plumbing Co., Inc., State Farm should be required to insure
MWA. 152 Ga. App. 531, 263 S.E.2d 270 (1979). In Mills Plumbing, a plumbing
business was initially established as a partnership. The partnership secured
insurance coverage. The partnership later incorporated. There was no formal
notification to the insurer of the incorporation, but the business continued its
operations in the same manner as before. Subsequent to the incorporation, the
insurance company audited the business to determine whether or not its
premiums should be adjusted. The audit revealed that the incorporation had
resulted in several changes which could have affected future premiums. The

4

The Business Policy contains a provision which states the insured’s rights and duties
under the policy may not be transferred without State Farm’s written consent except in
the case of death of an individual Named Insured. (Doc. 1-2, p. 39).
5

Subpart 4 of the Who is an Insured provision would not create coverage for MWA for
two reasons. One, other insurance would be available to MWA, and two, the 90-day
period of coverage would have expired in 2005. In any event, the LeBlanc Defendants
did not argue that this subpart would have created coverage.
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changes were reflected on the audit work sheets which clearly designated that
the audit had been conducted on a corporate entity. The work sheets were
submitted to the insurance company, where they were reviewed and became the
basis for an upward adjustment of the premiums. The increased premiums were
paid with checks drawn on the corporate account. Id.
In a declaratory judgment action to determine whether coverage was
available to the corporation under the policy, the Court of Appeals held:
Under these circumstances it cannot be said, as a
matter of law, that the insurer has not “consented” to the
assignment of the policy by the partnership to the
corporation or that the insurer has not, by its actions,
waived the policy requirement that assignments be
endorsed on the face of the policy. When the insurer
received the audit report, it knew or should have known
that the partnership had been replaced by the
corporation. At that point, the insurer chose not to treat
the policy as no longer in force, but, rather increased
the premiums due thereunder, for reasons based upon
the fact of that incorporation.
Id. at 533.
The Court of Appeals emphasized that the insurer had “elected to treat the
corporation as the assignee of the policy and has enjoyed the benefits of that
election, in the form of higher premiums received from the corporation and
retained by the insurer.” Id. at 536. Therefore, because the insurer had in effect
treated the policy as assigned to the corporation, the insurer was estopped from
arguing that there had to be a formal written assignment of the policy. Id. at 537.

17

The Court finds Mills Plumbing distinguishable from the facts presented in
this case, and therefore inapplicable. Mills Plumbing involved a switch from a
partnership to a corporation, two business entities. Here, there was a change
from a sole proprietorship to a corporation. There was nothing conducted by
State Farm like the insurer’s audit in Mills Plumbing, and there is no evidence of
a premium adjustment made because of the incorporation of the business.
As for the payment of the premiums, the evidence presented by the
LeBlanc Defendants does not advance their cause. In her affidavit dated
November 8, 2011, Edna LeBlanc stated that “[f]rom a period beginning
approximately 1990 and extending through 2007, Maxam Wholesale of Atlanta
paid State Farm Fire & Casualty Company each year for comprehensive
business coverage. . . .The premiums were paid by Maxam Wholesale of
Atlanta.” (Affidavit of Edna G. LeBlanc, ¶ 5). But what is important is what Edna
did not say. She does not say that the payments came from MWA the
corporation. Instead, the payments came from Maxam Wholesale of Atlanta,
which was the trade name used by Lloyd for 14 years before the incorporation.
Further, the payment documentation attached to the affidavit shows that the
payments were made by Maxam Wholesale of Atlanta. The canceled checks and
other documentation do not reflect that the payments came from a corporate

18

account. The payments would not have put State Farm on notice of MWA’s
existence.
There is one other piece of evidence attached to the affidavit that in the
Court’s opinion distinguishes this case from Mills Plumbing. The Business Policy
at issue was for the time period of May 14, 2007 through May 14, 2008. The
premium due for that term year was $5,815.11. On May 23, 2007, Lloyd LeBlanc
charged that premium payment to his personal credit card. (Doc. 53-1, p. 5).
There is no mention of Maxam Wholesale of Atlanta or MWA whatsoever in
connection with that premium payment. Thus, in making the payment for the
policy under which the LeBlanc Defendants now seek coverage, Lloyd was
acting as an individual. The payment was not charged to a corporate credit card.
There is no reason State Farm would have been put on notice that coverage was
really being sought or purchased for MWA rather than Lloyd as a sole proprietor.
The Court finds that no valid assignment of coverage to MWA occurred.
The LeBlanc Defendants’ other argument is that State Farm is estopped
from arguing that MWA is not an insured under the Business Policy because its
agents knew of the incorporation but failed to secure proper coverage. However,
the cases relied upon by the LeBlanc Defendants do not deal with the question of
whether a person or entity is a named insured under a policy. Instead, Christian
v. Allstate Ins. Co., 239 Ga. 850, 239 S.E.2d 328 (1977), involved a denial of

19

coverage on the basis of nonownership of a car, and Georgia Farm Bureau
Mutual Insurance Co. v. Wall, 242 Ga. 176, 249 S.E.2d 588 (1978), is not an
estoppel case, but rather involved a lawsuit for reformation of a contract based
upon alleged mutual mistake. In any event, to the extent the LeBlanc Defendants
contend that the insurance agents negligently failed to procure the correct policy
of insurance, that is a separate matter between the LeBlanc Defendants and the
agents, not the LeBlanc Defendants and State Farm.
“The insured has a duty to read and examine the policy where its
examination ‘would have made it readily apparent that the coverage requested
was not issued.’” Lavoi Corp., Inc. v. Nat. Fire Ins. of Hartford, 293 Ga. App. 142,
149, 666 S.E.2d 387, 393 (2008) (quoting Jim Anderson & Co. v. Partraining
Corp., 216 Ga. App. 344, 454 S.E.2d 210 (1995)). In this case, it was readily
apparent from the declarations page that there was no coverage for MWA. The
onus was on the insured to ensure the coverage and named insured(s) were
correct. The LeBlanc Defendants failed to do for years. The Court will not now
create coverage for MWA. State Farm does not owe MWA a defense or
indemnity under the Business Policy. Summary judgment is granted in State
Farm’s favor as to MWA’s claims under the Business Policy.

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b.

Jeff and Jody LeBlanc

Under the Business Policy, the employees of the named insured are
covered, but only for acts within the scope of their employment. The named
insured under the Business Policy is Lloyd LeBlanc d/b/a Maxam Wholesale of
Atlanta. During the times relevant to the underlying lawsuit, Jeff and Jody
LeBlanc were employees of MWA. Because they were not employed directly by
the named insured, and because the Court will not extend coverage to MWA, Jeff
and Jody LeBlanc do not qualified as insureds under the Business Policy. State
Farm does not owe Jeff or Jody LeBlanc a defense or indemnity under the
Business Policy. Summary judgment is granted in State Farm’s favor as to Jeff
and Jody LeBlanc’s claims under the Business Policy.6
c.

Lloyd LeBlanc

There is no dispute that Lloyd LeBlanc is the named insured on the
Business Policy. However, the policy only provides coverage “with respect to the
conduct of a business of which you are the sole owner.” State Farm argues that
the claims in the underlying litigation and Lloyd’s actions associated with those
claims were not related to the conduct of Lloyd’s business, but instead were done

6

The Court also agrees with State Farm that Jeff and Jody LeBlanc were not acting
within the scope of their employment with respect to the claims asserted in the
underlying litigation. Instead they were engaging in a private enterprise by setting up a
competing business. There simply is no way to find that Jeff and Jody’s actions in any
way advanced the interests of their employer.
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in an effort to assist Jeff and Jody LeBlanc set up a business which would
directly compete with Lloyd’s business.
The Court agrees with State Farm. The liability to which Lloyd was
subjected in the underlying case had nothing to do with his conduct of MWA or
Maxam Wholesale of Atlanta. He even testified that his actions in loaning money
to Jeff and Jody and renting them space for their competing business were done
“with the dad hat on” and not as the owner of Maxam Wholesale of Atlanta.
(Deposition of Lloyd LeBlanc, p. 34). The loans made and lines of credit signed
for Jeff and Jody to purchase products for their competing business were done in
Lloyd’s name personally, not the business’ name. All the actions alleged in the
underlying complaint were taken in an effort to set up Jeff and Jody’s new
business, not in furtherance of MWA or Maxam Wholesale of Atlanta.7 “The
phrase ‘conduct of the business’ requires a focus on the purported insured’s
activity in determining whether the conduct of the business owner was business
or personal.” Nova Cas. Co. v. Anderson, No. 804CV2085T27TGW, 2005 WL
7

Q:
And when you were loaning your sons money and renting them the space
and you were doing that as their father and not as the Maxam owner, was that
furthering your business in any way, or was that just dad helping his kids?
A:

Just dad helping the kids.

Q:

And it didn’t further your business in any way?

A:

No.

(Deposition of Lloyd LeBlanc, p. 39).
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3336496, at * 4 (M.D. Fla. Dec. 8, 2005) (citing Society Ins. v. Linehan, 238
Wis.2d 359, 364-65, 616 N.W.2d 918 (Wis. App. 2000)). Lloyd LeBlanc’s actions
were personal pursuits, not business activities performed for the purpose of the
business.
This is a good point to address the LeBlanc Defendants’ argument that the
jury’s finding that there was a civil conspiracy between Lloyd, Edna, Jeff, and
Jody somehow creates insurance coverage for all of them. The fact that one
member of the conspiracy was insured does not mean there is suddenly
insurance coverage for all the members of the conspiracy. The LeBlanc
Defendants have not presented any statutory or case law supporting such a
proposition, and the Court has found none on its own. Further, the Court is at a
loss as to how the conspiracy finding means all of Lloyd’s actions would have to
be construed as actions taken to advance the business interests of his business,
as argued by the LeBlanc Defendants. There was no finding that MWA was
involved in a conspiracy, as that was only alleged against the individual
Defendants. In addition, there was no finding that MWA engaged in a common
business enterprise with any other corporate defendant, as B&F specifically
withdrew that contention before the case went to the jury in Phase II of the trial
and MWA is not included on the verdict form as to the common business
enterprise claim.

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The Court finds that State Farm does not owe Lloyd LeBlanc a defense or
indemnity under the Business Policy. Summary judgment is granted in State
Farm’s favor as to Lloyd LeBlanc’s claims under the Business Policy.
d.

Edna LeBlanc

The Business Policy provides coverage to an individual named insured
and his spouse, but only with respect to the conduct of a business of which the
insured is the sole owner. For the same reasons set out above with respect to
Lloyd, namely that the allegations and liability in the underlying suit had nothing
to do with Lloyd’s conduct of his business, State Farm does not owe Edna
LeBlanc a defense or indemnity under the Business Policy. Summary judgment
is granted in State Farm’s favor as to Edna LeBlanc’s claims under the Business
Policy.
IV.

CONCLUSION
State Farm Fire and Casualty Company’s Second Motion for Summary

Judgment (Doc. 85) is granted. State Farm does not have a duty to defend or
indemnify any of the LeBlanc Defendants under either the PLUP Policy, Policy
Number 81-NQ-9486-0, or the Business Policy, Policy Number 91-NM-7119-2.
Because judgment is entered in State Farm’s favor, the reinstated counterclaim
of Jeff LeBlanc, Jody LeBlanc, and DSI is dismissed.

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SO ORDERED, this 16th day of May, 2012.
/s/ Hugh Lawson
HUGH LAWSON, SENIOR JUDGE

mbh

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