Employers Mutual Casualty Company v. Salyer et al

Filing 40

Opinion and Order granting 37 Plaintiff's Motion for Summary Judgment; Final Judgment to be entered. Signed by District Judge Henry T. Wingate on 8/29/2012. (ACF)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
JACKSON DIVISION

EMPLOYERS MUTUAL CASUALTY COMPANY
VS.

PLAINTIFFS

CIVIL ACTION NO. 3:11CV210-HTW-LRA

JAMES SALYER, ET AL

DEFENDANTS
OPINION AND ORDER

This cause is before the court on the Motion for Summary Judgment filed by plaintiff
Employers Mutual Casualty Company [“EMCC”]. No defendant has responded to the
motion, even after the court entered an Order to Show Cause, so the factual allegations of
plaintiff have not been rebutted. Having considered the pleadings, the attachments thereto,
as well as supporting authorities, the Court finds that the motion is well taken and should
be granted.
I. Factual Background and Procedural History
On or about April 12, 2011, EMCC filed a Complaint for Declaratory Relief relating
to five policies of commercial general liability insurance it issued to defendant Engineers
Laboratories, Inc. [“ELI”] from 2007-2010.

ELI had initially requested defense and

indemnification related to a third-party complaint filed against ELI by Noble Real Estate,
Inc., a co-defendant in litigation initiated by James and Sheila Salyer in the Circuit Court
of Madison County, Mississippi. This third party complaint was dismissed in the Salyers
action, but the Salyers amended their complaint to include a direct claim against the
insured, ELI.
The instant case involves EMCC’s rights and duties with respect to the amended
complaint filed by the Salyers in the Madison County litigation. EMCC filed this action to

establish that it does not owe and has never owed any obligation whatsoever connected
with the Salyer litigation and cannot be held liable to ELI for any judgment or settlement
arising from or connected in any way with the Salyer litigation.
EMCC sued as defendants the Salyers, who filed an answer to this complaint but
did not file a response to the summary judgment motion. EMCC also named and served
the complaint on defendants Noble Real Estate, Inc.; Arthur Noble; Jimmy C. Halfacre,
d/b/a/ Halfacre Engineering & Inspection; Lonnie Harris, d/b/a Harris Construction;
Engineers Laboratories, Inc.; and, Environmental Landscape Services, Inc. None of these
defendants responded to the complaint, and the clerk entered defaults against them on
September 27, 2011 [docket nos. 21-36].
II. Summary Judgment Standard
Rule 56 of the Federal Rules of Civil Procedure provides, in relevant part, that
summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show 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.” FED. R. CIV. P. 56(C). The United States Supreme Court has
held that this language “mandates the entry of summary judgment, after adequate time for
discovery and upon motion, against a party who fails to make a sufficient showing to
establish the existence of an element essential to that party’s case, and on which that party
will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986);
see also, Moore v. Mississippi Valley State Univ., 871 F.2d 545, 549 (5th Cir. 1989);
Washington v. Armstrong World Indus., 839 F.2d 1121, 1122 (5th Cir. 1988).

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Although no defendant in this case responded to the summary judgment motion, the
district court must look at the summary judgment evidence to determine whether judgment
is appropriate. See John v. State of La. (Bd. of Trs. for State Colls., & Univs.), 757 F.2d
698, 709 (5th Cir. 1985) (summary judgment cannot be supported solely on the ground that
the non-movant failed to respond to the motion); Harrison v. Corr. Corp. of America, No.
11-20464, 2012 WL 1623575, at *2 (5th Cir. May 9, 2012) (unpublished op.) (reviewing
grant of summary judgment to which no response was filed and stating that the summary
judgment records included the exhibits included in non-moving plaintiff’s petition.)
The party moving for summary judgment bears the initial responsibility of informing
the district court of the basis for its motion and identifying those portions of the record in the
case which it believes demonstrate the absence of a genuine issue of material fact.
Celotex, 477 U.S. at 323. The movant need not, however, support the motion with
materials that negate the opponent’s claim. Id. Summary judgment can be granted only
if everything in the record demonstrates that no genuine issue of material fact exists.
III. Discussion
In determining a coverage issue, the court must look to the factual allegations made
in the underlying liability litigation. E.E.O.C. v. Southern Pub. Co., Inc., 894 F.2d 785, 789
(5th Cir. 1990). In the Salyers’ amended complaint, they charge that ELI negligently
performed soil testing on their home’s lot prior to the construction of the foundation.
Further, ELI negligently determined the proctor density needed for the sub-grade soil to be
stable; because of the improper testing, the fill which was placed below the home was not
stable, causing the fill material beneath the home to be subject to significant settlement and
movement, and requiring repairs costing $67,820.
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Plaintiff EMMC asserts that the allegations and claims in the Salyers’ complaint are
outside its coverage under the policies issued to ELI because of Endorsement CG 22 33
07 98. This endorsement excludes from coverage any injury or damage [or reporting of or
reliance] from an error, omission, defect or deficiency in any test performed or an
evaluation. It also excludes any error, omission, defect or deficiency in experimental data
or the insured’s interpretation of that data.
The Salyers’ complaint does contend that ELI was hired to perform soil evaluations
and testing to be relied upon in the construction; and, that ELI failed in its testing of the soil
on the home’s lot and was negligent in its evaluation and testing methods. These claims
come within the endorsement exclusion, and the court finds that plaintiff is entitled to a
judgment on this basis.
Additionally, plaintiff EMMC contends that its Endorsement CG 22 43 07 98 excludes
any coverage under its policies to ELI. This “professional services” provision excludes any
injury or damage arising out of the rendering or failure to render any professional services
by ELI or by any engineer, architect or surveyor who is employed by ELI. A similar
“professional services” exclusion was addressed and applied in the case of QBE Ins. Co.
v. Brown & Mitchell, 591 F.3d 439 (5th Cir. 2009), and this holding is applicable in the case
now before the court. The court finds that plaintiff is also entitled to a judgment on this
basis.
As asserted by plaintiff EMMC, and not rebutted by evidence set forth by any
defendant, the court finds that both endorsements apply and exclude coverage to ELI in
the Salyers’ litigation.

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As a separate basis for the relief sought, the court also finds that plaintiff EMMC is
entitled to a judgment at law on the basis that the requests for admissions on file and
served upon all defendants were not answered; hence, the matters set forth therein are
“conclusively established . . . .“ See FED. R.CIV. P. 36(b). The 28 requests for admissions
were served on all defendants on September 1, 2011, and were never answered by any
defendant. These admissions establish that the EMMC policies issued to ELI do not
provide any coverage for the Salyers’ claims against ELI in the Madison County litigation.
EMMC is entitled to a judgment as a matter of law by virtue of the admissions, separately
and independently of the coverage analysis discussed above.
Plaintiff EMMC asserts that it is entitled to a default judgment as to all defendants
other than the Salyers under FED.R.CIV.P. 55. However, because it has met its substantive
burden of establishing its entitlement to judgment as a matter of law, it requests that a Rule
56 summary judgment be entered, as opposed to a Rule 55 default judgment. Because
plaintiff has met its substantive burden of proof, the court shall enter a Rule 56 summary
judgment, as opposed to a Rule 55 default judgment. See Nationwide Mut. Fire Ins. Co.
v. Mitchell By and Through Seymour, 911 F.Supp. 230 (S.D. Miss. 1995) (plaintiff insurance
company in declaratory judgment action granted summary judgment instead of default
judgment where insured had neither answered complaint or responded to motion for
summary judgment and insurer had met substantive burden on summary judgment).
The court concludes that there is no genuine issue as to any material fact in this
case, and the moving party [EMMC] is entitled to a judgment as a matter of law. FED. R.
CIV. P. 56(C). The court does hereby adjudicate that:

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A.

EMCC does not owe and has never owed any obligation whatsoever
connected with the underlying Salyer litigation, including, without limitation,
no obligation to defend any complaint, third party complaint, counter-claim
and/or other process or pleadings, or to settle, investigate, defend, and/or
indemnify Engineers Laboratories, Inc., nor any obligation to any other
defendant herein with regard to same; and

B.

EMCC cannot be held liable to Engineers Laboratories, Inc., for any
judgment or settlement any party might secure against it or with Engineers
Laboratories, Inc., arising from or connected in any way with the Salyer
litigation.
IV. Conclusion

For the foregoing reasons:
IT IS HEREBY ORDERED that the plaintiff’s Motion for Summary Judgment [Docket
No. 37] is granted. A Final Judgment in favor of plaintiff shall be entered this day.
SO ORDERED this the 29th day of August, 2012.

s/ Henry T. Wingate
UNITED STATES DISTRICT JUDGE

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