State Farm Fire & Casualty Company v. Nuuanu Baptist Church
Filing
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ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT 15 - Signed by Judge BARRY M. KURREN on 4/30/12. ("State Farm owes no duty to defend or indemnify NBC in the Underlying Lawsuit. The Clerk of Court is DIRECTED to enter Judgment in State Farm's favor and against NBC.") (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 were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
STATE FARM FIRE & CASUALTY )
COMPANY,
)
)
Plaintiff,
)
)
vs.
)
)
NUUANU BAPTIST CHURCH,
)
)
Defendant.
)
______________________________ )
Civ. No. 11-00480 BMK
ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY
JUDGMENT
ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT
Before the Court is Plaintiff State Farm Fire and Casualty Company’s
Motion for Summary Judgment (Doc. 15.) The Court heard this Motion on
April 11, 2012. After careful consideration of the Motion, the supporting and
opposing memoranda, and the arguments of counsel, State Farm’s Motion is
GRANTED.
FACTUAL BACKGROUND
I.
The Underlying Lawsuit
On March 17, 2010, Kenneth and Lynette Sunamoto (“the
Sunamotos”) filed suit against Defendant Nuuanu Baptist Church (“NBC”) in state
court. The Sunamotos and NBC are neighbors. (Underlying Complaint ¶ 6.) The
Sunamotos allege that their property includes a 30 foot wide driveway, “which is
subject to a ‘right of way for any and all purposes’ running in favor of portions of
land owned by [NBC].” (Id. ¶ 5.) The Sunamotos allege that NBC
has unreasonably burdened the Right of Way by conduct
including the following: 1) allowing parking on the
Right of Way, 2) converting the Right of Way into a
thoroughfare by actively diverting onto it an
unreasonable amount of traffic, some not even church
related, 3) using the Right of Way as a pick up and drop
off spot for their church and preschool, 4) inviting or
conducting multiple congregations at all times of the day
and weekends, 5) and converting the Right of Way to an
impermissible commercial, non-residential use.
(Id. at ¶ 11.) The Sunamotos pray for declaratory and injunctive relief, as well as
for damages, fees, and costs.
II.
The Present Lawsuit
State Farm holds two insurance policies, under which NBC is the
insured. NBC tendered the defense of the Underlying Lawsuit to State Farm.
(Quinn Decl’n ¶ 7.) State Farm is defending NBC as to all claims in the
Underlying Lawsuit, subject to a reservation of rights. (Id. ¶ 8.) In this federal
suit, State Farm seeks a declaration that it owes no duty to defend or indemnify
NBC for claims asserted by the Sunamotos in the Underlying Lawsuit.
The two policies issued by State Farm to NBC are (1) a Church
Policy, No. 91-20-4751-8 as modified by Policy Endorsement FE-6656 and (2) a
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Commercial Liability Umbrella Policy, No. 91-BD-7692-3 as modified by Policy
Endorsement FE-8730. (Exs. A & B.) Both Policies provide coverage for
“property damage” and “personal injury.”
A.
Property Damage
The Church Policy provides coverage for “sums the insured becomes
legally obligated to pay as damages because of . . . property damage . . . to which
this insurance applies.” (Exhibit A at Coverage L - Business Liability.) Likewise,
the Umbrella Policy provides coverage if the insured is “legally obligated to pay
damages for . . . property damage . . . to which this insurance applies.” (Ex. B at
Coverage L - Business Liability.)
The Policies provide identical definitions of “property damage”:
a.
b.
physical injury to or destruction of tangible
property, including all resulting loss of use of that
property. All such loss of use will be considered
to occur at the time of the physical injury that
caused it; or
loss of use of tangible property that is not
physically injured or destroyed, provided such loss
of use is caused by physical injury to or
destruction of other tangible property. All such
loss of use will be considered to occur at the time
of the occurrence that caused it.
(Exhibit A at Definitions; Exhibit B at Definitions.)
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B.
Personal Injury
The Church Policy provides coverage for “sums the insured becomes
legally obligated to pay as damages because of . . . personal injury . . . to which this
insurance applies.” (Exhibit A at Coverage L - Business Liability.) Likewise, the
Umbrella Policy provides coverage if the insured is “legally obligated to pay
damages for . . . personal injury . . . to which this insurance applies.” (Ex. B at
Coverage L - Business Liability.)
The Policies provide identical definitions of “personal injury.” The
Church Policy as amended by Policy Endorsement FE-6656 and the Umbrella
Policy as amended by Policy Endorsement FE-8730 define “personal injury” as an
injury arising out of, among other things, “the wrongful eviction from, wrongful
entry into, or invasion of the right of private occupancy of a room, dwelling or
premises that a person occupies, committed by or on behalf of its owner, landlord
or lessor.”1 (Ex. 1 attached to Decl’n of Wall dated 4/11/2012; Ex. B at Policy
Endorsement FE-8730.) Importantly, the coverage for “personal injury” under the
Umbrella Policy “does not apply . . . to personal injury unless the underlying
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The Policies provide additional conduct from which “personal injury” may arise, but the
parties do not address those other portions of the definition of “personal injury.”
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insurance provides coverage for the loss.” (Ex. B at Business Liability
Exclusions.)
STANDARD OF REVIEW
A motion for summary judgment may not be granted unless the court
determines that there is no genuine issue of material fact, and that the undisputed
facts warrant judgment for the moving party as a matter of law. See Fed. R. Civ. P.
56(c). In assessing whether a genuine issue of material fact exists, courts must
resolve all ambiguities and draw all factual inferences in favor of the non-moving
party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); see also
Cline v. Indus. Maint. Eng’g & Contracting Co., 200 F.3d 1223, 1228 (9th Cir.
2000).
In deciding a motion for summary judgment, the court’s function is
not to try issues of fact, but rather, it is only to determine whether there are issues
to be tried. Anderson, 477 U.S. at 249. If there is any evidence in the record from
which a reasonable inference could be drawn in favor of the non-moving party on a
material issue of fact, summary judgment is improper. See T.W. Elec. Serv., Inc.
v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 631 (9th Cir. 1987).
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DISCUSSION
This is a diversity action. Federal courts sitting in diversity apply
state substantive law and federal procedural law. State Farm Fire & Cas. Co. v.
Vogelgesang, Civ. No. 10-00172 SOM-BMK, 2011 WL 2670078, at *4 (July 6,
2011). When interpreting a state law, a federal court is bound by the decisions of a
state’s highest court. Id.
I.
Interpretation of Insurance Contracts
Under Hawaii law, general rules of contract construction apply to the
interpretation of insurance contracts. Dawes v. First Ins. Co. of Haw., 883 P.2d 38,
42 (Haw. 1994). Insurance policies must be read as a whole and construed in
accordance with the plain meaning of their terms, unless it appears that a different
meaning is intended. See id.; Haw. Rev. Stat. § 431:10–237 (“Every insurance
contract shall be construed according to the entirety of its terms and conditions as
set forth in the policy.”).
The Hawaii Supreme Court has recognized that, “because insurance
policies are contracts of adhesion and are premised on standard forms prepared by
the insurer’s attorneys, we have long subscribed to the principle that they must be
construed liberally in favor of the insured and any ambiguities must be resolved
against the insurer.” Dawes, 883 P.2d at 42 (brackets omitted). “Put another way,
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the rule is that policies are to be construed in accord with the reasonable
expectations of a layperson.” Id.
The insurer owes the insured a duty to indemnify “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.
Co., 992 P.2d 93, 108 (Haw. 2000) (citation omitted). The obligation to defend an
insured is broader than the duty to indemnify. Sentinel Ins. Co. v. First Ins. Co. of
Haw., Ltd., 875 P.2d 894, 904 (Haw. 1994). The duty to defend arises when there
is “a mere potential for coverage.” Id. (emphasis in original). However, when the
pleadings fail to allege any basis for recovery under an insurance policy, the
insurer has no duty to defend. Vogelgesang, 2011 WL 2670078, at *5. The
burden is on the insured to establish coverage under an insurance policy. Id.
Hawaii adheres to the “complaint allegation rule.” Burlington Ins. Co.
v. Oceanic Design & Const., Inc., 383 F.3d 940, 944 (9th Cir. 2004). “The focus is
on the alleged claims and facts.” Id. 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.” Id. “Where pleadings fail to allege any basis
for recovery within the coverage clause, the insurer has no obligation to defend.”
Id.
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In this case, the parties dispute whether the Church and Umbrella
Policies provide coverage for the Sunamotos’ claims as either “property damage”
or “personal injury” under the Policies.
II.
Property Damage
State Farm contends that the Sunamotos’ claims are not covered under
either Policy as “property damage” because “none of the [underlying] claims
involve physical injury to tangible property.” (Motion at 19 (emphasis in
original).) NBC addresses “property damage” in a footnote, arguing that the
Sunamotos’ claims “are ambiguous as to whether the Sunamotos assert that there
has been ‘physical injury to or destruction of tangible property.’” (Opp. at 13 n.3.)
Construing the definitions of “property damage” in accordance with
their plain meaning, the Policies clearly require “physical injury to or destruction
of tangible property.” See Dawes, 883 P.2d at 42. (Exhibit A at Definitions;
Exhibit B at Definitions.) However, nowhere in the Underlying Complaint do the
Sunamotos allege that they suffered “physical injury to or destruction of tangible
property.” (Ex. C.) Rather, the Sunamotos claim that NBC burdened the Right of
Way by
1) allowing parking on the Right of Way, 2) converting
the Right of Way into a thoroughfare by actively
diverting onto it an unreasonable amount of traffic, some
not even church related, 3) using the Right of Way as a
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pick up and drop off spot for their church and preschool,
4) inviting or conducting multiple congregations at all
times of the day and weekends, 5) and converting the
Right of Way to an impermissible commercial, nonresidential use.
(Underlying Complaint at ¶ 11.)
The foregoing allegations are clear and not ambiguous. The
Sunamotos’ claims do not allege “physical injury to or destruction of tangible
property” and, therefore, the Underlying Complaint does not present a claim for
“property damage” as defined under the Policies. (Exhibit A at Definitions;
Exhibit B at Definitions.) Accordingly, because the Sunamotos do not “allege any
basis for recovery under the [Church or Umbrella Policies], [State Farm] has no
duty to defend” for “property damage.” Vogelgesang, 2011 WL 2670078, at *5;
Burlington Ins. Co., 383 F.3d at 944 (“Where pleadings fail to allege any basis for
recovery within the coverage clause, the insurer has no obligation to defend.”).
Further, because the Sunamotos’ allegations do not fall within the coverage
provisions for “property damage” under the Policies, State Farm does not owe
NBC a duty to indemnify for “property damage.” Dairy Road Partners, 992 P.2d at
108.2
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In light of the Court’s determination that the Sunamotos’ claims are not covered as
“property damage” under the plain language of the Policies, the Court need not and does not
address whether any “property damage” was caused by an “occurrence.” (Ex. A at Coverage L Business Liability; Ex. B at Coverage L - Business Liability.)
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III.
Personal Injury
State Farm argues that it owes no duty to defend or indemnify the
Sunamotos’ claims, as they do not qualify as “personal injury” under the Policies
because the Underlying Complaint does “not allege that NBC was the owner,
landlord or lessor of the Sunamotos’ property.” (Reply at 8.) NBC responds that
the Sunamotos’ “allegations of enlargement” are ambiguous and may fall within
the definition of “personal injury.” (Opp. at 12.) NBC alternatively contends that
there is a nationwide dispute “as to whether a claim for ‘personal injury’ coverage
. . . requires a physical interference with the possessory interest or right to occupy
real property or if it can simply arise from a claim for interference with the use or
quiet enjoyment of real property.” (Opp. at 13-14.) Further, NBC argues that “the
term ‘invasion of the right of private occupancy’ contained in personal injury
coverage sections of comprehensive general liability insurance policies are
ambiguous.” (Opp. at 14-15.)
Construing the definitions of “personal injury” in accordance with
their plain meaning, the Policies clearly require that the wrongful conduct be
“committed by or on behalf of its owner, landlord or lessor.” See Dawes, 883 P.2d
at 42. (Ex. 1 attached to Decl’n of Wall dated 4/11/2012; Ex. B at Policy
Endorsement FE-8730.) Although the Sunamotos allege that NBC “unreasonably
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burdened the Right of Way,” it is undisputed that NBC is not the “owner, landlord
or lessor” of the driveway that is subject to the Right of Way. (Underlying
Complaint at ¶ 12.) Rather, the Sunamotos own the driveway, and the Underlying
Complaint alleges no wrongful conduct on their part. Consequently, under the
plain meaning of the language of the Policies, none of the allegations concerning
NBC’s conduct are covered as “personal injury.” Accordingly, because the
Sunamotos do not allege any basis for recovery under the Church or Umbrella
Policies for “personal injury,” State Farm has no duty to defend or indemnify NBC
for such claims.3 Burlington Ins. Co., 383 F.3d at 944; Vogelgesang, 2011 WL
2670078, at *5; Dairy Road Partners, 992 P.2d at 108.
CONCLUSION
For the foregoing reasons, the Court GRANTS State Farm’s Motion
for Summary Judgment. State Farm owes no duty to defend or indemnify NBC in
the Underlying Lawsuit. The Clerk of Court is DIRECTED to enter Judgment in
State Farm’s favor and against NBC.
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In light of this Court’s conclusion that NBC’s alleged conduct does not fall within the
Policies’ definition of “personal injury” because NBC is not the “owner, landlord or lessor” of
the property, this Court need not address NBC’s arguments that (1) the Sunamotos’ “allegations
of enlargement” are ambiguous or (2) various phrases within the definition are disputed
nationally or ambiguous. Further, the Court need not address State Farm’s argument that the
Contract Exclusion applies.
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DATED: Honolulu, Hawaii, April 30, 2012.
IT IS SO ORDERED.
/s/ Barry M. Kurren
United States Magistrate Judge
Dated: April 30, 2012
State Farm Fire & Casualty Co. v. Nuuanu Baptist Church, Civ. No. 11-00480 BMK; ORDER
GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT.
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