Estate of Faith Rogers et al v. American Reliable Insurance Company et al
Filing
24
ORDER DENYING "MOTION FOR SUMMARY JUDGMENT" THAT, BY AGREEMENT OF THE PARTIES, IS BEING CONSIDERED A MOTION FOR JUDGMENT ON THE PLEADINGS 16 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 7/8/11. (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications shall be served by first class mail at the address of record on July 11, 2011.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
THE ESTATE OF FAITH ROGERS;
and MICHELLE ROGERS,
)
)
)
Plaintiff,
)
)
vs.
)
)
AMERICAN RELIABLE INSURANCE
)
COMPANY,
)
)
Defendant.
)
_____________________________ )
CIVIL NO. 10-00482 SOM/RLP
ORDER DENYING “MOTION FOR
SUMMARY JUDGMENT” THAT, BY
AGREEMENT OF THE PARTIES, IS
BEING CONSIDERED A MOTION FOR
JUDGMENT ON THE PLEADINGS
ORDER DENYING “MOTION FOR SUMMARY JUDGMENT” THAT,
BY AGREEMENT OF THE PARTIES,
IS BEING CONSIDERED A MOTION FOR JUDGMENT ON THE PLEADINGS
I.
INTRODUCTION.
This is an action involving insurance coverage.
The
action was removed from state court based on diversity of
citizenship.
The case arises out of the drowning death of two-
year-old Faith Rogers in a condominium pool.
Rogers allegedly
wandered into the pool enclosure of the Maluna Kai Estates
through an open, malfunctioning gate.
In 2007, Faith’s estate and Faith’s mother sued the
condominium association and several individuals who were members
of the board of the condominium association and owners of
condominium units, including Kent D. Knowley.
Knowley tendered
the defense of the action to his homeowner’s insurance carrier,
American Reliable Insurance Company (“ARIC”), which denied
coverage.
However, the condominium association’s insurance
carrier, Great Divide Insurance Company (“GDIC”), provided
Knowley with a defense.
GDIC paid a settlement amount that
included $200,000 to settle the claims against Knowley.
As part
of the settlement, GDIC assigned to Faith Rogers’s estate and her
mother, Michelle Rogers, rights to contribution from ARIC toward
the amount paid on Knowley’s behalf.
The estate and mother now
sue ARIC, seeking contribution to the attorneys’ fees incurred in
defending Knowley and the settlement amount.
On May 13, 2011, ARIC filed a motion for summary
judgment.
Because ARIC submits no evidence in support of its
motion, the motion is more properly analyzed as a motion for
judgment on the pleadings.
At the hearing on the motion, the
parties agreed that the court should construe the motion as one
under Rule 12(c) of the Federal Rules of Civil Procedure.
Because the Complaint possibly states a claim on which relief can
be based, the motion is denied.
II.
RULE 12(c) STANDARD.
Rule 12(c) states, “After the pleadings are closed--but
early enough not to delay trial--a party may move for judgment on
the pleadings.”
The standard governing a Rule 12(c) motion for
judgment on the pleadings is “functionally identical” to that
governing a Rule 12(b)(6) motion.
United States ex rel. Caffaso
v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 n.4 (9th Cir.
2
2011).
For a Rule 12(c) motion, the allegations of the nonmoving
party are accepted as true, while the allegations of the moving
party that have been denied are assumed to be false.
See Hal
Roach Studios v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1550
(9th Cir. 1989).
A court evaluating a Rule 12(c) motion must
construe factual allegations in a complaint in the light most
favorable to the nonmoving party.
922, 925 (9th Cir. 2009).
Fleming v. Pickard, 581 F.3d
“Judgment on the pleadings under Rule
12(c) is proper when the moving party establishes on the face of
the pleadings that there is no material issue of fact and that
the moving party is entitled to judgment as a matter of law.”
Jensen Family Farms, Inc. v. Monterey Bay Unified Air Pollution
Control Dist., __ F.3d __, 2011 WL 2090829, *2 n.1 (9th Cir. May
27, 2011).
Generally, when matters outside the pleadings are
considered, a motion for judgment on the pleadings must be
considered as one for summary judgment under Rule 56 of the
Federal Rules of Civil Procedure.
See Fed. R. Civ. P. 12(d).
Courts have held, however, that, when adjudicating a Rule 12(c)
motion, courts may consider matters subject to judicial notice
without converting the motion to one for summary judgment.
See
Heliotrope Gen., Inc. v. Ford Motor Co., 189 F.3d 971, 981 n.18
(9th Cir. 1999) (“When considering a motion for judgment on the
pleadings, this court may consider facts that are contained in
3
materials of which the court may take judicial notice.”
(quotations omitted)); accord Lacondeguy v. Adapa, 2011 WL 9572,
*2 (E.D. Cal. Jan. 3, 2011); Williams v. City of Antioch, 2010 WL
3632199, *2 (N.D. Cal. Sept. 2, 2010).
III.
BACKGROUND.
On July 14, 2005, two-year-old Faith Rogers drowned in
a pool located in the Maluna Kai Estates.
On July 13, 2007,
Faith’s estate and Faith’s mother, Michelle Rogers, filed a
complaint in this court against the association of apartment
owners (“AOAO”) of Maluna Kai Estates, Kent Knowley, and others.
See Tort Complaint, Civ. No. 07-00373 HG/KSC.
At the hearing on
the present motion, the parties agreed that, in ruling on the
Rule 12(c) motion, the court could consider the allegations made
in 2007 in the underlying tort case.
The court therefore takes
judicial notice of that tort complaint and its allegations.
The underlying tort complaint alleges that Knowley was
the president of the AOAO Maluna Kai Estates and the owner of a
unit in that condominium project.
See id. ¶ 4.
The tort
complaint alleges that Faith drowned in the Maluna Kai Estates
swimming pool.
wall.
Id. ¶ 12.
The pool was surrounded by a rock
According to the tort complaint, Faith entered the pool
area through a broken gate.
Id. ¶¶ 15-24.
The tort complaint
alleges that Knowley had agreed to fix the gate but failed to do
so.
Id. ¶ 29.
In relevant part, the tort complaint asserts that
4
Knowley was negligent in failing to secure the pool in a manner
that would have prevented small children from entering the pool
area without adult supervision.
Id. ¶¶ 28, 33, 35, 36.
It also
alleges that Knowley had a duty to avoid having an attractive
nuisance on Maluna Kai Estate property.
Id. ¶ 33.
The tort
complaint sought damages from the AOAO Maluna Kai Estates,
Knowley, and other defendants, asserting causes of action for
negligence, wrongful death, loss of consortium, and negligent
infliction of emotional distress.
The present coverage complaint alleges that the AOAO
Maluna Kai Estates had an insurance policy with GDIC.
Complaint ¶ 17, Civ. No. 10-00482 SOM/RLP.
See
Pursuant to this
policy, GDIC defended the condominium association, Knowley, and
others against the claims asserted in the underlying tort
complaint.
Id. ¶ 17.
At some point, Knowley tendered the
defense of the underlying tort complaint to his homeowner’s
insurance carrier, ARIC.
Id. ¶ 15.
Knowley’s “Owners’, Landlords’, and Tenants’ Liability
Policy,” Number FIR078144 03, which the parties agreed this court
could consider in ruling on this motion, provides that ARIC
will pay on behalf of the insured all sums
which the insured shall become legally
obligated to pay as damages because of:
A.
bodily injury or
B.
property damage
to which this insurance applied and caused by
an occurrence [defined later in the policy as
an “accident”] and arising out of the
5
ownership, maintenance, or use of the insured
premises and all operations necessary or
incidental thereto, and the company shall
have the right and duty to defend any suit
against the Insured seeking damages on
account of such bodily injury or property
damage, even if any of the allegations of the
suit are groundless, false, or fraudulent and
may make such investigation and settlement of
any claim or suit as it deems expedient . . .
Policy Number FIR078144 03 ¶ I.
The policy excludes from
coverage “bodily injury or property damage arising out of
operations on or from premises (other than the insured premises)
owned by, rented to or controlled by the named insured, or to
liability assumed by the insured under any contract or agreement
relating to such premises.”
Id., Exclusion (q).
On September 5, 2008, ARIC denied coverage.
Complaint ¶ 16, Civ. No. 07-00373 HG/KSC.
underlying tort complaint.
See Tort
Plaintiffs settled the
As part of the settlement, GDIC paid
$200,000 to release the claims against Knowley.
Id. ¶¶ 18-19.
GDIC also assigned its rights to equitable contribution to
Plaintiffs.
Id. ¶ 22.
Plaintiffs are now seeking to have ARIC
equitably contribute towards the defense and settlement of claims
against Knowley with respect to the 2007 action.
IV.
ANALYSIS.
A.
General Law Governing Insurance Contracts.
Federal courts sitting in diversity apply state
substantive law and federal procedural law.
See Mason & Dixon
Intermodal, Inc. v. Lapmaster Int’l LLC, 632 F.3d 1056, 1060 (9th
6
Cir. 2011) (“When a district court sits in diversity, or hears
state law claims based on supplemental jurisdiction, the court
applies state substantive law to the state law claims.”); Zamani
v. Carnes, 491 F.3d 990, 995 (9th Cir. 2007) (“Federal courts
sitting in diversity jurisdiction apply state substantive law and
federal procedural law.” (quotations omitted)).
When
interpreting state law, a federal court is bound by the decisions
of a state’s highest court.
Trishan Air, Inc. v. Fed. Ins. Co.,
635 F.3d 422, 427 (9th Cir. 2011).
In the absence of a governing
state decision, a federal court attempts to predict how the
highest state court would decide the issue, using intermediate
appellate court decisions, decisions from other jurisdictions,
statutes, treatises, and restatements as guidance.
Id.; see also
Burlington Ins. Co. v. Oceanic Design & Constr., Inc., 383 F.3d
940, 944 (9th Cir. 2004) (“To the extent this case raises issues
of first impression, our court, sitting in diversity, must use
its best judgment to predict how the Hawaii Supreme Court would
decide the issue.” (quotation and brackets omitted)).
Under Hawaii law, general rules of contract
construction apply to the interpretation of insurance contracts.
Guajardo v. AIG Haw. Ins. Co., 118 Haw. 196, 203, 187 P.3d 580,
587 (2008); Dawes v. First Ins. Co. of Haw., 77 Haw. 117, 121,
883 P.2d 38, 42 (1994).
Hawaii law requires that an insurance
policy be read as a whole and its terms construed in accordance
7
with their plain, ordinary, and accepted sense in common speech,
unless it appears that a different meaning is intended.
Guajardo, 118 Haw. at 203, 187 P.3d at 587; Dawes, 77 Haw. at
121, 883 P.2d at 42; First Ins. Co. of Haw. v. State, 66 Haw.
413, 423, 665 P.2d 648, 655 (Haw. 1983); see also Haw. Rev. Stat.
§ 431:10-237 (Michie 2011) (“Every insurance contract shall be
construed according to the entirety of its terms and conditions
as set forth in the policy, and as amplified, extended,
restricted, or modified by any rider, endorsement or application
attached to and made a part of the policy.”).
Because insurance contracts are contracts of adhesion,
they must be construed liberally in favor of the insured, and any
ambiguity must be resolved against the insurer.
Put another way,
the rule is that policies are to be construed in accordance with
the reasonable expectations of a layperson.
Guajardo, 118 Haw.
at 203, 187 P.3d at 587; Dawes, 77 Haw. at 131, 883 P.2d at 42.
The burden is on the insured to establish coverage
under an insurance policy.
See Sentinel Ins. Co. v. First Ins.
Co. of Haw., 76 Haw. 277, 291 n.13, 875 P.2d 894, 909 n.13 (1994)
(as amended on grant of reconsideration); Crawley v. State Farm
Mut. Auto. Ins. Co., 90 Haw. 478, 483, 979 P.2d 74, 79 (App.
1999).
The insurer has the burden of establishing the
applicability of an exclusion.
See Sentinel, 76 Haw. at 297, 875
P.2d at 914.
8
The duty to indemnify is owed “for any loss or injury
which comes within the coverage provisions of the policy,
provided it is not removed from coverage by a policy exclusion.”
Dairy Road Partners v. Island Ins., 92 Haw. 398, 413, 922 P.2d
93, 108 (2000).
The obligation to defend an insured is broader
than the duty to indemnify.
The duty to defend arises when there
is any potential or possibility for coverage.
Sentinel, 76 Haw.
at 287, 875 P.2d at 904; accord Haole v. State, 111 Haw. 144,
151, 140 P.3d 377, 384 (2006) (“if there is no potential for
indemnification, then no duty to defend will arise”).
However,
when the pleadings fail to allege any basis for recovery under an
insurance policy, the insurer has no duty to defend.
Pancakes of
Hawaii, Inc. v. Pomare Props. Corp., 85 Haw. 286, 291, 994 P.2d
83, 88 (Haw. Ct. App. 1997)).
In other words, for ARIC to have
no duty to defend, it must prove that it would be impossible for
a claim in the underlying lawsuit to be covered by the policy.
See Tri-S Corp. v. W. World Ins. Co., 110 Haw. 473, 488, 135 P.3d
82, 97 (2006).
“Hawaii adheres to the ‘complaint allegation rule.’”
Burlington Ins. Co., 383 F.3d at 944.
Under that rule,
The focus is on the alleged claims and facts.
The duty to defend “is limited to situations
where the pleadings have alleged claims for
relief which fall within the terms for
coverage of the insurance contract. ‘Where
pleadings fail to allege any basis for
recovery within the coverage clause, the
insurer has no obligation to defend.’”
9
Id. at 944-45 (citing Hawaiian Holiday Macadamia Nut Co. v.
Indus. Indem. Co., 76 Haw. 166, 872 P.2d 230)).
The Hawaii
Supreme Court has cautioned, however, that courts should
carefully examine the allegations of a complaint to ensure that
the plaintiffs are not, through artful pleading, bootstrapping
themselves to obtain insurance coverage by purporting to assert
claims of negligence based on facts that reflect intentional,
rather than negligent conduct.
Dairy Road Partners, 92 Haw. at
417, 992 P.2d at 112; Group Builders, Inc. v. Admiral Ins. Co.,
123 Haw. 142, 147, 231 P.3d 67, 72 (App. 2010).
B.
ARIC’s Duty to Defend or Indemnify.
ARIC contends that it did not owe a duty to defend or
indemnify Knowley with respect to Plaintiffs’ claims because
Faith’s “bodily injury” did not occur on the “insured premises.”
ARIC essentially argues that, because the pool in which Rogers
drowned was a condominium common element and not part of
Knowley’s unit, which ARIC says is the “insured premises,” the
insurance policy it issued to Knowley does not provide coverage
for the underlying tort suit.
ARIC also contends that coverage
is barred by an exclusionary provision.
On the present record,
ARIC is not convincing.
Although ARIC argues that the “insured premises” is
only Knowley’s unit and that insurance coverage did not extend to
the pool, that fact is not readily apparent from the policy.
10
In
relevant part, the policy defines “Insured premises” as “the
premises designated in the declarations.”
FIR078144 03, Additional Definition.
See Policy Number
The Declarations Page
describes the property as:
ON APPROVED ROOF, 1 FAMILY, FRAME, TENANT OCCUPIED
LOCATION: [REDACTED] L HONOAPIILANI HWY
LAHAINA HI 96761
ECF No. 16-3 at Page ID 110.
The policy also defines “insured
premises” as including “the ways immediately adjoining [the
insured premises].”
Id. at PAGE ID 112.
This description,
without further explanation, does not clearly exclude the pool as
part of the covered property.
ARIC may well be able to
demonstrate on a fuller record that its policy does not apply to
accidents occurring at the pool because the pool is not part of
the “insured premises.”
However, ARIC has not sufficiently
demonstrated that fact, as it merely asserts that the pool is not
part of the “insured premises.”
On the present Rule 12(c)
motion, the court may not make assumptions and is instead limited
to liberally construing the allegations contained in the
Complaint in favor of Plaintiffs.
Moreover, read in the light most favorable to
Plaintiffs, the underlying tort complaint did not merely allege
that Faith drowned in a common element of the association.
It
also alleged that Knowley, as a homeowner, had agreed to fix the
gate to the pool that was centrally located in the condominium
11
property.
See 2007 Tort Complaint ¶ 12, 13, 29.
That complaint
alleged that, because of Knowley’s negligence in failing to fix
the gate, Faith drowned.
See id. ¶ 12, 28.
Read liberally,
these allegations may fall within the policy language providing
coverage for accidents “arising out of the ownership,
maintenance, or use of the insured premises and all operations
necessary or incidental thereto.”
Knowley’s alleged agreement in
his capacity as a homeowner might potentially fall within the
policy’s language that coverage would be provided for “all
operations necessary or incidental” to ownership, maintenance, or
use of the insured premises.
Conceivably, Knowley’s failure to
fix the pool gate may have been incidental to his ownership,
maintenance, or use of the insured property--Knowley’s apartment
and possibly the pool.
The policy requires ARIC to defend
Knowley “even if any of the allegations of the suit are
groundless, false, or fraudulent.”
It may well be that, if
Knowley did agree to fix the gate, he did so as president of the
homeowners’ association, not as a homeowner.
the pool was not part of the insured premises.
It may also be that
However this
court, when evaluating a Rule 12(c) motion, must accept the
factual allegations of the underlying tort complaint as true and
construe them in the light most favorable to Plaintiffs.
At this
point, ARIC has not established that the pool, as a matter of
law, is not part of the insured premises and that no factual
12
disputes relating to that issue must be resolved.
Judgment on
the pleading is therefore not appropriate under the circumstances
presented here.
On this Rule 12(c) motion, the court is also not
persuaded that coverage is excluded by Exclusion (q).
Under
Exclusion (q), coverage is excluded for bodily injury “arising
out of operations on or from premises (other than the insured
premises) owned by, rented to or controlled by the named
insured.”
As discussed above, when the underlying tort complaint
is read in the light most favorable to Plaintiffs, it is not
clear whether the pool falls within or outside the “insured
premises,” as described in the declarations page.
It is also not
clear whether the gate to the pool was part of the “ways”
immediately adjoining Knowley’s property.
Because ARIC fails to establish that it would be
impossible for coverage to apply under a liberal reading of the
allegations contained in the tort complaint, ARIC’s Rule 12(c)
motion is denied, without prejudice to the timely filing of a
subsequent motion on a fuller record.
13
V.
CONCLUSION.
As ARIC fails to establish that, as a matter of law,
there was no tort claim with respect to which it had a duty to
defend or indemnify, its motion is denied.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, July 8, 2011.
/s/ Susan Oki Mollway
Susan Oki Mollway
United States District Judge
The Estate of Faith Rogers, et al. v. Am. Reliable Ins. Co., CIVIL NO. 10-00482
SOM/RLP; ORDER DENYING “MOTION FOR SUMMARY JUDGMENT” THAT, BY AGREEMENT OF THE
PARTIES, IS BEING CONSIDERED A MOTION FOR JUDGMENT ON THE PLEADINGS
14
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?