Mid-Century Insurance Company v. Pizza By Marchelloni et al
Filing
60
ORDER AND OPINION entered by Judge Joe Billy McDade on 5/10/2018. IT IS ORDERED: "Mid-Century Insurance Company's Motion For Judgment On The Pleadings Pursuant To Federal Rule Of Civil Procedure 12(C)" 45 is GRANTED and the "Estate Of Stokes' Motion For Judgment On The Pleadings Pursuant To Federal Rule Of Civil Procedure 12(C)" is DENIED 52 . Civil action terminated. SEE FULL WRITTEN ORDER AND OPINION. (JRK, ilcd)
E-FILED
Thursday, 10 May, 2018 11:39:23 AM
Clerk, U.S. District Court, ILCD
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
MID-CENTURY INSURANCE
COMPANY,
)
)
)
Plaintiff,
)
)
v.
)
)
PIZZA BY MARCHELLONI, ESTATE OF )
JOSE PADILLA and ESTATE OF
)
LYNSE STOKES, deceased, by SHANA )
KRIDNER,
)
)
)
Defendants.
Case No. 17-cv-1214
Honorable Judge Joe B. McDade
ORDER & OPINION
This matter is before the Court on competing motions for judgment on the
pleadings filed by Plaintiff Mid-Century Insurance Company (hereinafter “MidCentury”) and Defendant Estate of Lynse Stokes, deceased, by Shana Kridner
(hereinafter “Estate of Stokes”). For the reasons discussed below, “Mid-Century
Insurance Company’s Motion For Judgment On The Pleadings Pursuant To Federal
Rule Of Civil Procedure 12(C)” (Doc. 45) is GRANTED and the “Estate Of Stokes’
Motion For Judgment On The Pleadings Pursuant To Federal Rule Of Civil Procedure
12(C)” is DENIED.
LEGAL STANDARDS
A party may move for judgment on the pleadings after “the pleadings are
closed—but early enough not to delay trial.” Fed. R. Civ. Pro. 12(c). Rule 12(c) motions
are generally governed by the same standard as motions to dismiss for failure to state
a claim under Rule 12(b)(6). Lodholtz v. York Risk Srvs. Group, Inc., 778 F.3d 635,
639 (7th Cir. 2015). Therefore, “the court must treat all well-pleaded allegations as
true and draw all inferences in favor of the non-moving party.” In re marchFIRST
Inc., 589 F.3d 901, 904 (7th Cir. 2009). However, where the movant attempts “to
dispose of the case on the basis of the underlying substantive merits,” the more
appropriate standard of adjudication is that of a motion for summary judgment. 1
Alexander v. City of Chicago, 994 F.2d 333, 336 (7th Cir. 1993) (citing Nat’l Fidelity
Life Ins. Co. v. Karaganis, 811 F.2d 357, 358 (7th Cir. 1987). Thus, judgment on the
pleadings is only appropriate when there are no disputed issues of material fact and
it is clear that the moving party… is entitled to judgment as a matter of law. Unite
Here Local 1 v. Hyatt Corp., 862 F.3d 588, 595 (7th Cir. 2017) citing Karaganis, 811
F.2d at 358. The district court is confined to the matters presented in the pleadings.
862 F.3d at 595. However, “documents attached to a motion to dismiss are considered
part of the pleadings if they are referred to in the plaintiff's complaint and are central
to his claim.” Adams v. City of Indianapolis, 742 F.3d 720, 729 (7th Cir. 2014)
(adjudicating a motion for judgment on the pleadings by utilizing motion to dismiss
standards).
BACKGROUND
This case arose out of a car accident that occurred on September 4, 2016. Jose
Padilla (“Padilla”) was driving an automobile northbound on Livingston County Road
On April 17, 2018, the Court converted the motions for judgment on the pleadings
to motions for summary judgment because it was considering documentary evidence
outside the pleadings in rendering this Order & Opinion.
2
1
1900 East in Livingston County, Illinois. At that time, Padilla was delivering a pizza
for Pizza by Marchelloni 2. Lynse Stokes was a passenger in the vehicle being driven
by Padilla. A collision occurred that resulted in the deaths of both Stokes and Padilla.
The Estate of Stokes, maintained by Shana Kridner, brought a state civil action in
the Circuit Court of the Eleventh Judicial Circuit of Illinois in Livingston County
against the Estate of Padilla and S.L.D., INC., doing business as Pizza by
Marchelloni, alleging wrongful death against both defendants and survival counts for
the pain and suffering of Lynse Stokes prior to her death. (Doc. 57-1).
Mid-Century extended an insurance policy to Dale Stokes, which was in effect
at the time of the collision. The policy has a businessowners’ liability coverage
provision that states:
We will pay those sums that the insured becomes legally obligated to
pay as damages because of “bodily injury”, “property damage”, “personal
injury” or “advertising injury” to which this insurance applies. We will
have the right and duty to defend the insured against any “suit” seeking
those damages. However, we will have no duty to defend the insured
against any “suit” seeking damages for “bodily injury”, “property
damage”, “personal injury”, or “advertising injury” to which this
insurance does not apply.
(Doc. 45-2 at 96). The policy goes on to list specific exclusions, amongst which was an
automobile exclusion:
B. Exclusions
1. Applicable To Business Liability Coverage
Pizza by Marchelloni is a trade name; like Dunkin Donuts or McDonald’s. A
recurring issue throughout this case is what distinction if any there is between “Pizza
By Marchelloni” and the corporate entity that actually runs the business for which
Padilla delivered pizzas. As will be discussed later, the Court finds that there is a
significant and concrete distinction between “Pizza By Marchelloni” and S.L.D., Inc.,
the corporate entity, for the purposes of discerning who is an insured under the policy
despite that the two entities may be deemed the same colloquially.
3
2
This insurance does not apply to:
g. Aircraft, Auto Or Watercraft
“Bodily injury” or “property damage” arising
out of the ownership, maintenance, use or
entrustment to others of any aircraft, “auto”
or watercraft owned or operated by or rented
or loaned to any insured. Use includes
operation and “loading or unloading”.
(Doc. 45-2 at 98, 100).
Based on the exclusion above, Mid-Century claims it has no duty to defend or
indemnify Pizza by Marchelloni or the Estate of Padilla in any suit seeking damages
for bodily injury to which the policy does not apply. (Doc. 3 at ¶¶21-27). Mid-Century
requests that this Court find no coverage is available under the Mid-Century policy
at issue for the Estate of Padilla or Pizza by Marchelloni and that Mid-Century has
no duty to defend or indemnify the Estate of Padilla or Pizza by Marchelloni for the
underlying lawsuit. Conversely, the Estate of Stokes asks this Court to find that MidCentury owes Pizza by Marchelloni coverage under the policy, which means in
practical terms that Mid-Century has a duty to indemnify Pizza by Marchelloni for
any judgment amount the Estate of Stokes secures in the underlying lawsuit.
Pizza by Marchelloni and the Estate of Padilla admitted that Pizza by
Marchelloni and Padilla were “insureds” as defined by the policy in their Answers to
the Amended Complaint. (Doc. 24 and 18). The Estate of Stokes did not expressly
admit or deny the assertion that Pizza by Marchelloni or Padilla were “insureds” as
defined by the policy; instead it answered the assertion was a legal conclusion that
needed no response. (Doc. 27 at 6). Both the Estate of Stokes and Pizza by Marchelloni
now contend in their responses to Mid-Century’s motion for judgment on the
4
pleadings that the Mid-Century policy was issued to Pizza by Marchelloni’s owners,
Dale and Leticia Stokes, individually, not to S.L.D., Inc., which was the legal entity
that allegedly employed Padilla. (See Docs. 54 at 1-2, 52 at 1-2, 51 at 1-2).
Consequently, they contend that Padilla is not an “insured” under the policy to which
the Auto-Exclusion provision of the policy applies, yet was an agent of the business
such that his tort, which arose out of the business, should be attributed to Pizza by
Marchelloni.
DISCUSSION
In Illinois, the law holds that “if an insurer owes no duty to defend, it owes
no duty to indemnify.” Metzger v. Country Mut. Ins. Co., 2013 IL App (2d Dist.)
120133, ¶ 19, 986 N.E.2d 756, 761; see also Solo Cup Co. v. Fed. Ins. Co., 619 F.2d
1178, 1184 (7th Cir. 1980) (“If the broader duty to defend has not been triggered, it is
because the underlying action is not potentially within the coverage of the policy, and
there could be, as a practical matter, no duty to indemnify in such a situation.”).
Therefore, the Court will begin its analysis with ascertaining whether the MidCentury policy requires Plaintiff to defend Defendants Estate of Padilla and S.L.D.,
Inc. doing business as Pizza by Marchelloni, in the underlying lawsuit.
Courts compare the allegations in an underlying complaint with the coverage
provisions of the insurance policy at issue in order to determine whether an insurer
owes a duty to defend. St. Paul Fire and Marine Ins. Co. v. Village of Franklin
Park, 523 F.3d 754, 756 (7th Cir. 2008); Guillen v. Potomac Ins. Co. of Ill., 785 N.E.2d
1, 7 (Ill. 2003). The interpretation of an insurance policy is a question of law that can
be disposed of without a trial. See Illinois Sch. Dist. Agency v. Pac. Ins. Co., 471 F.3d
5
714, 719 (7th Cir. 2006) (“In Illinois, the interpretation of an insurance policy is a
question of law. See, e.g., Zurich Ins. Co. v. Walsh Constr. Co. of Ill., Inc., 816 N.E.2d
801, 805 (2004)”).
An insurance policy is a contract, and the general rules governing the
interpretation of other types of contracts also govern the interpretation
of insurance policies. Accordingly, our primary objective is to ascertain
and give effect to the intention of the parties, as expressed in the policy
language. If the policy language is unambiguous, the policy will be
applied as written, unless it contravenes public policy. Whether an
ambiguity exists turns on whether the policy language is subject to more
than one reasonable interpretation. Although “creative possibilities”
may be suggested, only reasonable interpretations will be considered.
Thus, we will not strain to find an ambiguity where none exists.
Although policy terms that limit an insurer’s liability will be liberally
construed in favor of coverage, this rule of construction only comes into
play when the policy is ambiguous.
Hobbs v. Hartford Ins. Co. of the Midwest, 823 N.E.2d 561, 564 (Ill. 2005) (citations
omitted).
Here, the underlying complaint alleges that “Defendant Jose Padilla, was
driving a 1997 Nissan 200SX for Pizza By Marchelloni” and that “Lynse Stokes was
a passenger in the vehicle.” (Doc. 57-1 at 1-2). It alleged further that Padilla was in
the process of delivering a pizza for Pizza by Marchelloni when he caused a collision
that resulted in Lynse Stokes suffering pain and dying. The underlying complaint
states
9. At the time of the collision, the Defendant JOSE PADILLA was an
employee of S.L.D. Inc.
10. At the time of the collision, Defendant JOSE PADILLA was in the
process of completing a pizza delivery for S.L.D., Inc.
11. At the time of said occurrence, Defendant JOSE PADILLA was
acting within the course and scope of his employment with S.L.D., Inc.
6
(Doc. 57-1 at 2). The underlying complaint seeks relief for Lynse Stokes’s wrongful
death and pain and suffering against the Estate of Padilla and S.L.D., Inc. doing
business as Pizza by Marchelloni. (Doc. 57-1 at 5). The underlying complaint also
alleges counts against S.L.D., Inc. directly.
As explained above, the Mid-Century policy states:
We will pay those sums that the insured becomes legally obligated to
pay as damages because of “bodily injury”, “property damage”, “personal
injury” or “advertising injury” to which this insurance applies. We will
have the right and duty to defend the insured against any “suit” seeking
those damages. However, we will have no duty to defend the insured
against any “suit” seeking damages for “bodily injury”, “property
damage”, “personal injury”, or “advertising injury” to which this
insurance does not apply.
(Doc. 45-2 at 96(emphasis added)). The policy specifically excludes bodily injury or
property damage arising out of the use of automobiles by the insured:
B. Exclusions
1. Applicable To Business Liability Coverage
This insurance does not apply to:
***
g. Aircraft, Auto Or Watercraft
“Bodily injury” or “property damage” arising out of the ownership,
maintenance, use or entrustment to others of any aircraft, “auto” or
watercraft owned or operated by or rented or loaned to any insured. Use
includes operation and “loading or unloading”.
(Doc. 45-2 at 98, 100 (emphasis added)). “Bodily injury” is defined as “bodily injury,
sickness or disease sustained by a person, including death resulting from any of these
at any time”. (Doc. 45-2 at 107). “Insured” means “any person or organization
qualifying as such under Section C - Who Is An Insured” (Doc. 45-2 at 96) and includes
the Named Insured and any employees of the Named Insured. (Doc. 45-2 at 104).
Padilla is alleged to have committed torts against Lynse Stokes while driving an
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automobile while working for Pizza by Marchelloni. So at first blush, this seems to be
a straightforward case. But alas, litigation is rarely straightforward.
The Common Policy Declarations section of the policy lists “Dale Stokes Pizza
by Marchelloni” as the Named Insured and under Form of Business, the box for
individual is checked. (Doc. 45-2 at 11). There are boxes for corporations and other
entities under Form of Business but only the box next to individual is marked.
Obviously, Pizza by Marchelloni is not an “individual”; it is the name of a pizza
franchise. 3 The term “individual” is not defined in the policy. However, in various
places in the Illinois Insurance Code, the term “individual” is defined as a natural
person or used interchangeably with a natural person. See, e.g., 215 Ill. Comp. Stat.
Ann. §§ 5/1003(J), 5/1510; see also, 215 Ill. Comp. Stat. Ann. §§ 5/143.13, 5/1009(4)(F).
Also, the term “insured” means “any person or organization qualifying as such under
Section C - Who Is An Insured” (Doc. 45-2 at 96). Given the foregoing, the Court finds
that the policy was intended to cover Dale Stokes doing business as a Pizza By
Marchelloni franchisee.
If the Named Insured is designated as an individual in the Declarations section
of the policy, then the policy further defines “insureds” as the individual and the
individual’s spouse. (Doc. 45-2 at 104). Thus, the Court finds that Dale Stokes and
his spouse, Letitia Stokes, were insureds under the policy.
The Articles of Incorporation for S.L.D., Inc. attached to Marchelloni’s response to
Mid-Century’s motion for judgment on the pleadings provide that the purpose of the
corporation was “[t]o act as a Pizzas By Marchelloni franchisee as licensed under a
[sic] Franchise Agreement dated April 30, 1996.” (Doc. 54-1 at 2). Thus, the Court
finds that Pizza By Marchelloni is nothing more than a franchise name.
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3
Mid-Century asserts that Padilla was also an insured under the policy because
he was an employee of Pizza by Marchelloni. (Doc. 45 at 8-10). Both the Estate of
Padilla and Pizza by Marchelloni admitted in their Answers that Padilla was an
insured under the policy. (Doc. 17 at ¶ 20; Doc. 24 at ¶ 20). And the Estate of Stokes
failed to admit or deny the same (Doc. 27 at 6), which sometimes has the effect of
being a tacit admission. Regardless of whether the assertion that one is an insured
under a policy is a legal conclusion, the Court finds that it should still examine
whether Padilla was actually an insured under the policy because a litigant can admit
a factual assertion but such admission does not make the assertion necessarily true;
it simply means the litigant loses the ability to contest the assertion. A litigant could
admit the Earth is flat. Obviously, science has proven that such an admission would
not be true. Therefore, despite these admissions, the Court will still examine whether
Padilla was an actual insured under the policy.
Defendant Pizza by Marchelloni has provided evidence that the business
franchisee itself actually operated as S.L.D., Inc., an entity incorporated under the
laws of Illinois with Dale and Letitia Stokes as the sole stockholders. (See Doc. 18,
Marchelloni’s Answer to the Amended Complaint, see also Doc. 54-1). Defendants also
claim Padilla was an actual employee of S.L.D., Inc., not of Dale Stokes and his
spouse, Letitia Stokes. There is no doubt that the policy provides that ordinary
employees of an insured are also insured. (Doc. 45-2 at 104).
But let us assume that Defendants are correct and Padilla was not an employee
of Dale or Letitia Stokes legally, but rather an employee of S.L.D., Inc., such that he
was not an “insured” under the policy. The Court is hard pressed to understand how
9
that would help the Defendants convince the Court that the underlying lawsuit is
covered by the policy. If Padilla was an employee of S.L.D., Inc.—an entity that is not
an insured under the policy—then based upon the pleadings, Mid-Century’s duty to
defend or indemnify would not even be implicated in the underlying lawsuit.
Defendants disagree. They advance one of the most serpentine theories of
insurance coverage this Court has ever encountered. Defendants argue that Padilla
was an employee of S.L.D., Inc. and not an employee of Dale or Letitia Stokes, and
thus not an insured under the policy that was issued to Dales Stokes for purposes of
the auto-exclusion provision of the policy only. The Estate of Stokes argues further
that the Mid-Century policy nevertheless extends coverage to the Estate of Padilla
and Pizza by Marchelloni in the underlying lawsuit because Padilla was acting within
the scope of his employment for S.L.D., Inc. when the events giving rise to the suit
occurred, and that entity is wholly owned by Dale and Letitia Stokes to carry out
their business as a Pizza by Marchelloni franchisee. It is worth taking a look at the
exact argument advanced by the Estate of Stokes in its submission to the Court:
Padilla was working in furtherance of the Stokes’ business interests.
Padilla was acting in the scope of his employment with S.L.D., Inc., a
business that the named insureds, Dale and Leticia Stokes, alone
owned. According to the policy, see Exhibit 2 attached to Filed Document
45, pg. 96, section A(1)(b): “This insurance applies (2) to (a) “personal
injury” caused by an offense arising out of your business…”. It goes on
to define the businesses that the policy may apply to as “a business of
which you are the sole owner.” See Exhibit 2 attached to Filed Document
45, pg. 104, section C(1). Thus, because the underlying accident arose
out of his employment with S.L.D., Inc., the business owned solely by
Dale and Leticia Stokes, the coverage for the accident still applies, even
if Jose is not himself an insured under the policy. Confusing as this may
be, by not taking the time to write the policy correctly and instead
writing it Dale and Leticia Stokes as individuals with a business,
Plaintiff over insured Dale and Leticia Stokes. Instead of writing them
10
a strictly business policy for S.L.D., Inc., they wrote a policy that covered
both Dale and Leticia Stokes personally as well as any actions taken on
behalf of any business of which they were the sole owners for any acts
(regardless of who performed them) done in connection with that
business which might have caused an injury. This includes any acts
taken by or on behalf of S.L.D., Inc., and any actions taken by S.L.D.’s
employee, Jose Padilla. Thus, the coverage still applies and so the Estate
of Stokes is entitled to judgment on the pleadings in favor of the
existence of coverage.
(Doc. 52 at 1-2).
There are two reasons why the Estate of Stokes’s argument is without merit.
First, it is based upon a faulty premise. The Estate maintains that according to the
policy the insurance applies to “personal injury” caused by an “offense arising out of
your business…” to “which you are the sole owner.” (Doc. 45-2 at 96). Mid-Century
correctly points out that coverage available under the policy is unambiguously
separated and distinguished between coverage of damages due to “bodily injury” and
coverage of damages due to “personal injury” and that the injury complained of in the
underlying complaint is one of “bodily injury” under the policy.
“Bodily injury” is defined as “bodily injury, sickness or disease sustained by a
person, including death resulting from any of these at any time”. (Doc. 45-2 at 107).
The insurance applies to “bodily injury” that is caused by an “occurrence” that takes
place in the “coverage territory” during the policy period. (Section A.1.b.(1) of the
policy at page 96 of Document 45-2). “Personal injury” is defined as
“injury, other than ‘bodily injury’, arising out of one or more of the
following specific offenses: a. False arrest, detention or imprisonment;
b. Malicious prosecution; c. 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, by or on behalf of its owner, landlord
or lessor; d. Oral or written publication of material that slanders or libels
11
a person or organization or disparages a person's or organization’s
goods, products or services; or e. Oral or written publication of material.”
(Doc. 45-2 at 108-109). The insurance specifically applies to “personal injury” when
such injury is caused by an offense arising out of your business. (Section A.1.b.(2) of
the policy at page 96 of Document 45-2).
The allegations in the underlying complaint are that Lynse Stokes died as
result of Padilla’s and/or S.L.D., Inc.’s actions, which correlates to “bodily injury” as
defined by the policy not “personal injury” as that term is defined in the policy.
Furthermore, the phrase “arising out of your business” that appears in Section
A.1.b.(2) of the policy only pertains to “personal injury” not “bodily injury”. (See Doc.
45-2 at 96). Thus, one should not even inquire into whether Padilla’s tort (or S.L.D.,
Inc.’s tort) against Lynse Stokes “arose out of a business” of Dale and Letitia Stokes
when comparing the allegations in the underlying complaint with the coverage
provisions of the insurance policy at issue.
The second problem with the Estate’s argument is that it ignores Illinois
corporate law. The Estate of Stokes argues that the Mid-Century policy “covered both
Dale and Leticia Stokes personally as well as any actions taken on behalf of any
business of which they were the sole owners for any acts (regardless of who performed
them) done in connection with that business which might have caused an injury. This
includes any acts taken by or on behalf of S.L.D., Inc., and any actions taken by
S.L.D.’s employee, Jose Padilla.” (Doc. 52 at 2). Implicit within that argument is the
assertion that a policy purchased by an insured that purports to cover him as an
12
individual with respect to the conduct of a business of which he is the sole owner, 4
will also cover a corporation not named in the policy that actually carries out the
individual’s business. Surprisingly, the parties have not provided any legal authority
on this issue. Perhaps the reason no one briefed this issue is because there appears
to be extremely little case law on it. Nevertheless, at least one court has addressed
this question squarely.
In Shelby Ins. Co. v. Ford, 454 S.E.2d 464 (Ga. 1995), Georgia’s Supreme Court
held that under Georgia law, an insurance policy issued to an individual that covered
her individual liability “only with respect to the conduct of a business of which [she
was] the sole owner” did not extend to cover a corporation for which that individual
was the sole owner. Id. at 465-66. A woman owned a corporation that in turn owned
and operated a day care. Id. at 465. Someone was injured on the premises of the day
care and sued the corporation, which had no insurance, and the owner who did have
insurance. Id. The insurer denied coverage on the ground that the corporation was
not a named insured under the policy. Id. The lower Georgia court of appeals held
that since the owner was the sole owner of the corporation, both she and the
corporation were named insureds. Id. The Georgia Supreme Court reversed and held
that the lower court’s holding was erroneous because it rested on a misapprehension
that ownership of a corporate entity that operates a business is equal to ownership of
the business itself. Ford, 454 S.E.2d at 466. The court reviewed Georgia corporate
For the sake of simplicity and unity of marriage, the Court assumes that “sole
owner” encompasses spouses such that Dale and Letitia constitute a sole owner under
the policy.
13
4
law and found that “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.” Id.
(citation omitted). The court held
the fact that [the owner] owns the corporation does not change the fact
that the corporate owner of the business is distinct from [the owner] as
an individual. It was with [the owner], as an individual, that [the
insurer] 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.
Obviously, Ford is a Georgia case applying Georgia law, but its logic is
persuasive to this Court and has led the Court to conclude it should consult Illinois
corporate law as it attempts to determine whether a policy purchased by an insured
that covers him as an individual with respect to the conduct of a business of which he
is the sole owner will also cover a corporation not named in the policy that actually
carries out the individual’s business.
The Supreme Court of Illinois has pronounced that
“[i]t is a well-established principle that a corporation is separate and
distinct as a legal entity from its shareholders, directors and officers
and, generally, from other corporations with which it may be affiliated.
Stock ownership alone in one corporation by another does not create an
identity of interest between the two or create the relation of principal
and agent, representative, or alter ego between the two…. Generally,
before the separate corporate identity of one corporation will be
disregarded and treated as the alter ego of another, it must be shown
that it is so controlled and its affairs so conducted that it is a mere
instrumentality of another, and it must further appear that observance
of the fiction of separate existence would, under the circumstances,
sanction a fraud or promote injustice.
14
Main Bank of Chicago v. Baker, 427 N.E.2d 94, 101 (Ill. 1981) (emphasis added).
These Illinois principles of separation between a corporate entity and its sole owner
sway the Court to conclude that the Mid-Century policy cannot be deemed to cover
S.L.D., Inc. even though Dale and Letitia Stokes are the only shareholders of the
corporate entity and the corporate entity is clearly the entity carrying out the
business of being a Pizza by Marchelloni franchisee.
Now, lest the Defendants be tempted to raise some sort of corporate veil
piercing argument to try to convince the Court that Padilla and S.L.D., Inc. are
ultimately insureds under the policy, the Court finds that it does not really matter if
they were. That is so because the auto-exclusion provision of the policy clearly applies.
It provides as follows in relevant part:
This insurance does not apply to:
g. Aircraft, Auto Or Watercraft
“Bodily injury” or “property damage” arising
out of the ownership, maintenance, use or
entrustment to others of any aircraft, “auto”
or watercraft owned or operated by or rented
or loaned to any insured. Use includes
operation and “loading or unloading”.
(Doc. 45-2 at 98, 100). The Court has already determined that Lynse Stokes suffered
“bodily injury” as that term is defined under the policy. Clearly, the Estate of Stokes
alleges that bodily injury arose out of Padilla’s use of an automobile to deliver a pizza
for Pizza by Marchelloni. So even if S.L.D., Inc. were an “insured” under the policy,
and Padilla in turn was insured by virtue of the his being an employee of S.L.D., Inc.,
the auto-exclusion provision bars coverage and establishes Mid-Century has no duty
to defend the Estate of Padilla or S.L.D., Inc. in the underlying lawsuit.
15
The Estate of Stokes also argues that judgment is inappropriate because Dale
and Letitia Stokes were not added to this lawsuit. Federal Rule of Civil Procedure 19
instructs that a party is necessary to an action when any of the following several
conditions are met: first, the court cannot accord complete relief among existing
parties in that person’s absence; or second, that person claims an interest relating to
the subject of the action and is so situated that disposing of the action in the person’s
absence may either impair or impede the person’s ability to protect the interest or
leave an existing party subject to a substantial risk of incurring multiple or otherwise
inconsistent obligations because of the interest. Neither Dale nor Letitia Stokes are
defendants in the underlying lawsuit, so their participation is not necessary in this
lawsuit. Given that corporate entities are separate and distinct from their owners,
the Stokes are not necessary to this declaratory judgment action as the sole
shareholders of S.L.D., Inc. either. As for S.L.D., Inc. the entity, it is a party to the
underlying lawsuit, and it is participating in this lawsuit as Pizza by Marchelloni.
(See Doc. 18, Answer demonstrating Pizza by Marchelloni answered this lawsuit
claiming to be the trade name for S.L.D., Inc.).
In conclusion, the Court does not see any way the Mid-Century policy can be
construed to make Mid-Century liable to defend S.L.D. doing business as Pizza by
Marchelloni or the Estate of Padilla in the underlying lawsuit brought against them
for the wrongful death of Lynse Stokes arising out of Padilla’s delivery of a pizza in
an automobile. No further discovery or evidence would have any effect on the Court’s
ruling, so summary judgment in favor of Plaintiff Mid-Century and against the
Defendants is appropriate.
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CONCLUSION
For the reasons stated above, “Mid-Century Insurance Company’s Motion For
Judgment On The Pleadings Pursuant To Federal Rule Of Civil Procedure 12(C)”
(Doc. 45) is GRANTED and the “Estate Of Stokes’ Motion For Judgment On The
Pleadings Pursuant To Federal Rule Of Civil Procedure 12(C)” is DENIED.
IT IS THEREFORE ORDERED
1. No coverage is available under the Mid-Century Policy for S.L.D., Inc. doing
business as Pizza by Marchelloni;
2. Mid-Century Insurance Company has no duty to defend S.L.D., Inc. doing
business as Pizza by Marchelloni, Jose Padilla or the Estate of Jose Padilla in
Estate of Lynse Stokes, deceased, by Shana Kridner v. Estate of Jose Padilla,
et. al., No. 2017 L 5 (Cir. Ct. Livingston County);
3. Mid-Century has no duty to indemnify S.L.D., Inc. doing business as Pizza by
Marchelloni, Jose Padilla or the Estate of Jose Padilla with respect to Estate
of Lynse Stokes, deceased, by Shana Kridner v. Estate of Jose Padilla, et. al.,
No. 2017 L 5 (Cir. Ct. Livingston County).
4. Civil action terminated.
SO ORDERED.
Entered this 10th day of May, 2018.
s/ Joe B. McDade
JOE BILLY McDADE
United States Senior District Judge
17
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