Selective Insurance Company of America v. Russell et al

Filing 54

ORDER granting in part and denying in part 40 Motion for Summary Judgment and the Court DECLARES that Selective has a duty to defend in the underlying action. The Court STAYS this action pending resolution of the underlying action in Barrow County Superior Court. Signed by Judge Richard W. Story on 7/6/15. (rsg)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
GAINESVILLE DIVISION
SELECTIVE INSURANCE
COMPANY OF AMERICA,
Plaintiff,
v.
RICHARD RUSSELL, as
Administrator of the Estate of
LEONARD W. CRAIG, Deceased,
DOROTHY CRAIG, PRECISION
TAPPING, INC., JOYCE
CONNER and ALLMERICA
FINANCIAL ALLIANCE
INSURANCE COMPANY,
Defendants.

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CIVIL ACTION NO.
2:13-CV-00214-RWS

ORDER
This case comes before the Court on Defendant Allmerica Financial
Alliance Insurance Company’s (“Allmerica”) Motion for Summary Judgment
[40] and Plaintiff’s Motion for Leave to File Sur-Reply Brief in Opposition to
Defendant’s Motion for Summary Judgment (“Motion for Leave to File SurReply”) [52]. After a review of the record, the Court enters the following
Order.

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Background1
This case arises out of a dispute about insurance coverage in connection
with an automobile accident and subsequent lawsuit filed in state court.
Selective Insurance Company (“Selective”) brings this declaratory judgment
action seeking a declaration of its rights and duties under an insurance policy
issued to Precision Tapping, Inc. (“Precision Tapping”). Relevant to the
present motion, Plaintiff names Allmerica Financial Alliance Insurance
Company (“Allmerica”) as Defendant in its Complaint. Allmerica and
Selective dispute which party’s policy affords coverage for the automobile
accident forming the basis of the underlying suit.2
On September 26, 2011, automobiles driven by Defendant Joyce Conner

1

Unless otherwise indicated, the Court relies on the statement of facts
submitted by Defendant in support of its Motion for Summary Judgment. If, however,
a fact is disputed, the Court views all evidence and factual inferences in the light most
favorable to Plaintiff as the non-moving party, as the Court must on a motion for
summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986).
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Defendant Richard Russell, as Administrator of the Estate of Leonard W.
Craig and Defendant Dorothy Craig filed a suit against Ms. Conner and Precision
Tapping in Barrow County Superior Court, bringing claims for wrongful death and
pain and suffering, loss of consortium, and burial and funeral expenses. (Russell v.
Conner, 13cv-1104-B (Sup. Ct. of Barrow Cnty. Aug. 16, 2013), Dkt. [1-4].) Claims
against Precision Tapping are premised on respondeat superior liability. (Id. ¶ 5.)
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and Defendant Dorothy Craig collided in an accident that resulted in the death
of Leonard W. Craig. (Allmerica’s Statement of Undisputed Material Facts in
Supp. of Mot. for Summ. J. (“Allmerica’s SOMF”), Dkt. [40-2] ¶¶ 2-3.) At the
time of the accident, Ms. Conner was operating a 2005 Nissan Xterra, Vehicle
No. 5N1ANOBU15C630155 (the “Xterra”). (Id. ¶ 5.) The parties dispute who
owned the Xterra at the time of the accident.
Ownership is disputed because on the day of the accident, Ms. Conner
went to the Department of Motor Vehicles (“DMV”)3 with the intent to transfer
title of the Xterra from Precision Tapping into her own name. (Pl.’s Statement
of Add’l Material Facts That Present a Genuine Issue for Trial (“Pl.’s SOMF”),
Dkt. [45-1] ¶ 4.) Ms. Conner informed the DMV of her wish to transfer the
title, signed the certificate of title, and paid for the transfer. (Id. ¶ 5.) The
accident occurred after Ms. Conner left the DMV.
In addition to ownership at the time of the accident, the parties dispute
whether Ms. Conner was acting as an employee of Precision Tapping and

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The Court takes notice that the parties refer in their filings to the Georgia
“Department of Motor Vehicles.” The Court is unsure whether the parties mean to
refer to the Department of Driver Services or the Department of Revenue, but for the
purposes of this Order, will refer to the entity as the parties do, as the “DMV”.
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whether the Xterra was an automobile covered by Policy No. S190948101
issued by Selective (the “Selective Policy”). Selective asserts that Ms. Conner
was traveling to her mother’s house at the time of the accident, and therefore
that she was not conducting any business for Precision Tapping. (Id. ¶¶ 8-15.)
Allmerica relies on Ms. Conner’s use of the Xterra as her “mobile office” to
support its contention that Ms. Conner was acting as an employee of Precision
Tapping at the time of the accident. (Allmerica’s SOMF, Dkt. [40-2] ¶ 7.) The
Selective Policy provides that “Insureds” under the policy includes Precision
Tapping, anyone using a covered automobile owned by Precision Tapping, and
“Your ‘employee’ if the covered ‘auto’ is owned by that ‘employee’ or a
member of his or her household.” (Id. ¶ 10.) Accordingly, Allmerica asserts
that Selective is responsible for primary coverage under the terms of the
Selective Policy. Selective, however, states that Allmerica’s policy provides
coverage for “newly acquired autos” and therefore Allmerica bears primary
responsibility. (Pl.’s SOMF, Dkt. [45-1] ¶ 16.)
Allmerica now moves the Court for summary judgment, seeking a
declaration that (1) Selective’s insurance policy affords coverage for the
accident, (2) Selective has a duty to defend and indemnify Ms. Conner and
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Precision Tapping in the underlying lawsuit, and (3) Selective bears the
primary responsibility for coverage. Defendants Richard Russell, as
Administrator of the Estate of Leonard W. Craig, Deceased, and Dorothy Craig
support and join in Allmerica’s Motion for Summary Judgment. (Dkt. [44].)
Selective responds in opposition. The Court first sets forth the relevant legal
standard before turning to the parties’ arguments.
I.

Legal Standard – Summary Judgment
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.” “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 (1986)). 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
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genuine issue of material fact does exist. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 257 (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.
Finally, 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). But, the court is bound only to draw those inferences that are
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.”
Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997) (quoting
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (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); see also Matsushita, 475 U.S. at 586 (once the moving party has met
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its burden under Rule 56(a), the nonmoving party “must do more than simply
show there is some metaphysical doubt as to the material facts”).
II.

Analysis
As an initial matter, the Court will consider in its analysis the arguments

Allmerica makes in its Reply [49]. Courts generally do not consider issues
raised for the first time in a reply brief, but the Court has the discretion to do
so. See Conn. State Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337,
1352 n. 11 (11th Cir.2009). Accordingly, the Court will consider Allmerica’s
arguments and GRANTS Plaintiff’s Motion for Leave to File Sur-Reply [52].
Where relevant, the Court will consider the arguments submitted in Selective’s
sur-reply brief [52-1].
A.

Duty to Defend

First, the Court finds that Selective has a duty to defend in the
underlying suit. “An insurer’s duty to defend and its duty to indemnify are
separate and independent obligations.” City of Atlanta v. St. Paul Fire &
Marine Ins. Co., 231 Ga. App. 206, 208, 498 S.E.2d 782, 785 (1998). “An
insurer must defend its insured against any claim that potentially falls within
the scope of its policy.” Auto Owners Ins. Co. v. Unit Owners Ass'n of
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Riverview Overlook Condo., Inc., No. 1:13-CV-3012-TWT, 2014 WL
5465286, at *2 (N.D. Ga. Oct. 28, 2014) (citing Shafe v. American States Ins.
Co., 288 Ga. App. 315, 317, 653 S.E.2d 870 (2007)) (emphasis added). The
parties do not appear to dispute that Ms. Conner was an employee of Precision
Tapping at the time of the accident, even though they do dispute whether she
was acting within the scope of her employment. (Pl.’s Resp. & Objections to
Allmerica’s SOMF, Dkt. [46] ¶ 7.) Therefore, even if ownership of the Xterra
transferred from Precision Tapping to Ms. Conner prior to the accident, Ms.
Conner is an “insured” under the Selective Policy, which provides that the term
“Insureds” includes: “Your ‘employee’ if the covered ‘auto’ is owned by that
‘employee’ or a member of his or her household.” (Allmerica’s SOMF, Dkt.
[40-2] ¶ 10; the Selective Policy, Dkt. [1-2] at 35.) Accordingly, Allmerica’s
motion for summary judgment is GRANTED as to this issue, and the Court
DECLARES that Selective has a duty to defend even though it may not have a
duty to indemnify.
B.

Duty to Indemnify and Primacy of Coverage

Having ruled that Selective has a duty to defend in the underlying suit,
the Court now DENIES the balance of Allmerica’s Motion for Summary
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Judgment. The Court cannot definitively conclude on the present record
whether Selective’s insurance policy covered the Xterra at the time of the
accident. Nor can the Court conclude which policy must provide primary
coverage. Determination of these questions turns on the resolution of two
disputed issues of material fact: (1) who owned the Xterra at the time of the
accident and (2) whether Ms. Conner was acting as an employee of Precision
Tapping at the time of the accident.
The Court finds that the Superior Court of Barrow County is in the best
position to determine these questions, and therefore STAYS the present action
pending resolution of the underlying law suit.
Well-settled law provides that the Declaratory Judgment Act, pursuant to
which Plaintiff brings this action, is properly “understood to confer on federal
courts unique and substantial discretion in deciding whether to declare the
rights of litigants.” Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). To
that end, the Supreme Court has “repeatedly characterized the Declaratory
Judgment Act as an enabling Act, which confers a discretion on courts rather
than an absolute right upon the litigant.” Id. at 287 (citations omitted). It gives
federal courts the ability to make a declaration of rights, but it does not impose
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a duty to do so. Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942).
Under the Declaratory Judgment Act, district courts have “unique and
substantial discretion” to decide whether to take action and declare the rights of
interested parties. Wilton, 515 U.S. at 283. Indeed, the Supreme Court has
cautioned that in certain cases, “it would be uneconomical as well as vexatious
for a federal court to proceed in a declaratory judgment suit where another suit
is pending in a state court presenting the same issues, not governed by federal
law, between the same parties.” Id. at 495. In addition, the Eleventh Circuit
has provided guidance for district courts, listing several factors to be
considered in balancing these competing interests: “(1) the strength of the
state’s interest in having the issues raised in the federal declaratory action
decided in the state courts; (2) whether the judgment in the federal declaratory
action would settle the controversy; (3) whether the federal declaratory action
would serve a useful purpose in clarifying the legal relations at issue; (4)
whether the declaratory remedy is being used merely for the purpose of
‘procedural fencing’–that is, to provide an arena for a race for res judicata or to
achieve a federal hearing in a case otherwise not removable; (5) whether the
use of a declaratory action would increase the friction between our federal and
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state courts and improperly encroach on state jurisdiction; (6) whether there is
an alternative remedy that is better or more effective; (7) whether the
underlying factual issues are important to an informed resolution of the case;
(8) whether the state trial court is in a better position to evaluate those factual
issues than is the federal court; and (9) whether there is a close nexus between
the underlying factual and legal issues and state law and/or public policy, or
whether federal common or statutory law dictates a resolution of the
declaratory judgment action.” Ameritas Variable Life Ins. v. Roach, 411 F.3d
1328, 1331 (11th Cir. 2005).
The Court finds that the balance of these factors weighs in favor of
resolution of the remaining factual issues by the state court. Adjudicating the
remainder of this declaratory judgment action may encroach on the state
proceedings and cause friction between the federal and state judiciaries. Cf.
Philadelphia Indemnity Ins. Co. v. AGCO Corp., No. 1:10-cv-4148-TWT, 2011
WL 2652139 (N.D. Ga. July 6, 2011); Essex Ins. Co. v. Foley, No. 10-0511WS-M, 2011 WL 290423 (S.D. Ala. Jan 27, 2011).
The federal courts have no special interest in resolving the coverage
issues presented in this action. See Westchester Surplus Lines Ins. Co. v.
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Romar House Ass’n Inc., 2008 WL 5412937 at *2 (S.D. Ala. Dec. 29, 2008)
(quoting State Auto Ins. Co. v. Summy, 234 F.3d 131, 136 (3rd Cir. 2000))
(“The desire of insurance companies ... to receive declarations in federal court
on matters of purely state law has no special call on the federal forum.”)
Rather, this case presents issues of Georgia law–including ownership of the
Xterra and Ms. Conner’s status as an employee of Precision at the time of the
accident. Those issues will likely be resolved in the underlying law suit.
Judgment on those issues in this action would not settle the underlying
controversy. Of utmost importance, this Court hopes to avoid a ruling on a
factual issue that could be at odds with a later ruling by the state court, which
is, moreover, in a better position to determine those issues at trial than this
Court is at summary judgment.
The Court stays, rather than dismisses, this action. The Court recognizes
that this action does not fall squarely within the category of cases contemplated
by Ameritas, given that Selective and Allmerica are not parties in the
underlying law suit. Cf. Philadelphia Indemnity Co., 2011 WL 2652139 at *2*3 (collecting cases finding that where insurer is not party to state court action
and state suit does not involve insurer’s coverage obligations, state court
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proceedings are related but not parallel). However, the Court is confident that
it acts well within the broad discretion conferred by Brillhart and its progeny in
staying this action. Wilton, 515 U.S. at 288 (“If a district court, in the sound
exercise of its judgment, determines after a complaint is filed that a declaratory
judgment will serve no useful purpose, it cannot be incumbent upon that court
to proceed to the merits before staying or dismissing the action.”).
Conclusion
For the foregoing reasons, Allmerica’s Motion for Summary Judgment
[40] is GRANTED in part and DENIED in part, and the Court DECLARES
that Selective has a duty to defend in the underlying action. The Court STAYS
this action pending resolution of the underlying action in Barrow County
Superior Court.
SO ORDERED, this 6th day of July, 2015.

________________________________
RICHARD W. STORY
United States District Judge

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