Maxum Indemnity Company v. Audiology LLC

Filing 35

ORDER AND REASONS granting 28 Motion for Summary Judgment. The Court will enter final judgment in favor of Plaintiff. Signed by Judge Jane Triche Milazzo. (ecm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MAXUM INDEMNITY COMPANY

CIVIL ACTION

VERSUS

NO: 13–5216

AUDIOLOGY, LLC

SECTION: "H"(3)
ORDER AND REASONS

Before the Court is Plaintiff's Motion for Summary Judgment (Doc. 28).
For the following reasons, the Motion is GRANTED. The Court will issue
declaratory judgment as prayed for in the Complaint.
BACKGROUND
Plaintiff, an insurance company, issued a commercial general liability
insurance policy (the "Policy") to Defendant. Defendant operates a business
servicing and installing ignition interlock devices.1
1

On January 28, 2013,

An ignition interlock device is a mechanism installed into the ignition system of an
automobile. The interlock device requires the operator of the vehicle to breathe into the device
before starting the vehicle. If the operator is intoxicated, the interlock device will prevent the
vehicle from starting.

1

Defendant was sued in Louisiana state court by Westco Breathalyzers, LLC
("Louisiana Suit"). In the suit, Westco claims that it entered into a contract with
Louisiana Interlocks, LLC which provided that Westco was the exclusive
installer and service provider for interlock devices rented by Louisiana
Interlocks to various individuals. Westco alleges that it holds one hundred
service agreements with Louisiana Interlocks' customers.
The suit alleges that Louisiana Interlocks improperly terminated the
exclusive contract and informed its customers that Defendant was the new
servicer of the interlock devices. Westco claims that, prior to terminating the
contract, Louisiana Interlocks began referring customers to Defendant and that
Defendant falsely represented that it was affiliated with Westco. Eventually,
Louisiana Interlocks contacted its customers and informed them that Defendant
was replacing Westco as the servicer of the devices. The suit seeks damages
from Defendant for (1) making false representations to Westco's clients, (2)
violating the Louisiana Unfair Trade Practices Act, (3) violating Louisiana's
antitrust laws, and (4) intentionally interfering with Westco's contracts.
After Defendant was sued, Plaintiff filed the instant action seeking a
judgment that the Policy does not provide Defendant with defense or indemnity
for the Louisiana Suit. Plaintiff now seeks summary judgment.
LEGAL STANDARD
Summary judgment is appropriate "if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with affidavits, if any, show
2

that there is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law."2 A genuine issue of fact exists only
"if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party."3
In determining whether the movant is entitled to summary judgment, the
Court views facts in the light most favorable to the non-movant and draws all
reasonable inferences in his favor.4 "If the moving party meets the initial burden
of showing that there is no genuine issue of material fact, the burden shifts to
the non-moving party to produce evidence or designate specific facts showing the
existence of a genuine issue for trial."5 Summary judgment is appropriate if the
non-movant "fails to make a showing sufficient to establish the existence of an
element essential to that party’s case."6 "In response to a properly supported
motion for summary judgment, the non-movant must identify specific evidence
in the record and articulate the manner in which that evidence supports that
party’s claim, and such evidence must be sufficient to sustain a finding in favor
of the non-movant on all issues as to which the non-movant would bear the
burden of proof at trial."7 "We do not . . . in the absence of any proof, assume

2

Fed. R. Civ. P. 56(c) (2012).

3

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

4

Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528 (5th Cir. 1997).

5

Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).

6

Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

7

John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th Cir.
2004) (internal citations omitted).

3

that the nonmoving party could or would prove the necessary facts."8
Additionally, "[t]he mere argued existence of a factual dispute will not defeat an
otherwise properly supported motion."9
LAW AND ANALYSIS
Defendant has not opposed this Motion. This does not, however, mean
that the Court may grant the Motion as unopposed. Rather, the Fifth Circuit
approaches the automatic grant of dispositive motions with considerable
aversion.10 Accordingly, the Court has carefully considered this Motion.
In this diversity case, Louisiana law controls.11 Louisiana law governing
the interpretation of insurance contracts is well settled. "An insurance policy is
a contract between the parties and should be construed by using the general
rules of interpretation of contracts set forth in the Louisiana Civil Code."12
"When the words of a contract are clear and explicit and lead to no absurd
consequences, no further interpretation may be made in search of the parties'
intent."13 "An insurance policy should not be interpreted in an unreasonable or
8

Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quoting Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
9

Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).

10

See, e.g., Servicios Azucareros de Venezuela, C.A. v. John Deere Thibodeaux, Inc., 702
F.3d 794, 806 (5th Cir. 2012) ("[The] failure to oppose a 12(b)(6) motion is not in itself grounds
for granting the motion. Rather, a court assesses the legal sufficiency of the complaint.");
Johnson v. Pettiford, 442 F.3d 917, 918 (5th Cir. 2006) (per curiam); John v. State of La. (Bd.
of Trs. for State Colls. & Univs.), 757 F.2d 698, 709 (5th Cir. 1985).
11

Seacor Holdings, Inc. v. Commonwealth Ins. Co., 635 F.3d 675, 681 (5th Cir. 2011).

12

Mayo v. State Farm Mut. Auto. Ins. Co., 869 So. 2d 96, 99 (La. 2004).

13

La. Civ. Code art. 2046.

4

a strained manner so as to enlarge or to restrict its provisions beyond what is
reasonably contemplated by its terms or so as to achieve an absurd conclusion."14
"The rules of construction do not authorize a perversion of the words or the
exercise of inventive powers to create an ambiguity where none exists or the
making of a new contract when the terms express with sufficient clarity the
parties' intent."15

"The determination of whether a contract is clear or

ambiguous is a question of law."16
When determining whether an insurance company has a duty to defend
a suit against its insured, Louisiana courts apply the so-called "eight corners
rule."17 Under this rule, the court looks only to the four corners of the petition
and the four corners of the insurance policy.18 An insurer has a duty to defend
against the suit if, assuming all allegations in the petition to be true, there
would be both liability to the plaintiff and coverage under the policy.19 "An
[insurer's] duty to defend arises whenever the pleadings against the insured
disclose even a possibility of liability under the policy."20
The Court has reviewed both the petition in the Louisiana Suit and the
Policy and finds that the Policy contains no provision that could conceivably
provide coverage for the damages alleged in the Suit. Generally, there are two
14

Carrier v. Reliance Ins. Co., 759 So. 2d 37, 43 (La. 2000).

15

Mayo, 869 So. 2d at 99–100.

16

Cadwallader, 848 So.2d at 580.

17

Vaughn v. Franklin, 785 So. 2d 79, 84 (La. Ct. App. 1 Cir. 2001).

18

Id. (citing Am. Home Assur. Co. v. Czarniecki, 230 So. 2d 253, 259 (La. 1969)).

19

Id.

20

Steptore v. Masco Const. Co., 643 So. 2d 1213, 1218 (La. 1994).

5

types of coverage offered by the Policy: (1) personal injury and property damage,
and (2) personal and advertising injury. There are no allegations that would
support coverage under the first type.21 The Louisiana Suit does not allege that
Westco sustained any personal injuries or damage to any tangible property as
a result of Defendant's alleged conduct. Rather, the Suit alleges that Westco has
sustained loss of business revenue, loss of goodwill, and other intangible
damages. Accordingly, the personal injury and property damage coverage does
not apply to the Louisiana Suit.
Additionally, the Louisiana Suit does not contain any allegations that
would support coverage for personal and advertising injury. The Policy provides
coverage for "those sums that the insured becomes legally obligated to pay as
damages because of 'personal and advertising injury' to which this insurance
applies."22 The Policy further defines "personal and advertising injury" as
[I]njury, including consequential "bodily injury", arising
out of one or more of the following 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, committed
by or on behalf of its owner, landlord or lessor;
d. Oral or written publication, in any manner, of
material that slanders or libels a person or organization
or disparages a person's or organization's goods,
products or services;
21

Indeed, the Complaint and the Motion focus exclusively on personal and advertising
injury coverage.
22

Doc. 28-6, p. 19.

6

e. Oral or written publication, in any manner, of
material that violates a person's right of privacy;
f. The use of another's advertising idea in your
"advertisement"; or
g. Infringing upon another's copyright, trade dress or
slogan in your "advertisement."23
The Louisiana Suit asserts claims against Defendant for fraud, unfair
trade practices, antitrust violations, and intentional interference with contract.
None of those claims fall within the definition of personal and advertising injury.
The Court's conclusion today is similar to that reached by a Louisiana
court in KLL Consultants, Inc. v. Aetna Casualty & Surety Company of Illinois.24
In that case, KLL sought defense and indemnity from Aetna for allegations made
in a Mississippi lawsuit.25

The Mississippi suit alleged that KLL had

intentionally interfered with another company's attempts to procure a
professional services contract from a state agency.26 The Aetna policy at issue
contained a provision extending personal and advertising injury coverage that
is nearly identical to the one present in this case. The KLL court examined the
policy and held:
The language of the policy is clear. In order to be
entitled to coverage for business offenses under
Coverage B of the Commercial Liability Policy under
the 'Advertising injury', there must be an allegation of
libel, slander, or disparagement of a person or
23

Id. at 27.

24

738 So. 2d 691, 696 (La. Ct. App. 5 Cir. 1999).

25

Id. at 693–94.

26

Id.

7

organization or of its goods, products or services, a
violation of [the Mississippi plaintiff's] right to privacy,
misappropriation of advertising ideas or style of doing
business or infringement of a copyright, title or slogan.
Under 'Personal Injury', the petition must allege false
arrest, malicious prosecution, wrongful eviction,
slander or libel, or a violation of [the Mississippi
plaintiff's] right to privacy. This petition does not allege
any of those acts and the courts cannot read any into
the policy. Since there are no such allegations in the
[the Mississippi plaintiff's] petition, we find that this
policy unambiguously excludes coverage.27
Like the petition at issue in KLL, the petition in the Louisiana Suit does
not allege any acts that are entitled to coverage under the Policy. Accordingly,
the Court finds that the Plaintiff does not owe Defendant either defense or
indemnity for the allegations in the Suit.
CONCLUSION
For the foregoing reasons, the Motion is GRANTED. The Court will
enter final judgment in favor of Plaintiff.
New Orleans, Louisiana, this 8th day of January, 2015.
___________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE

27

Id. at 696.

8