United National Insurance Company v. Young et al

Filing 32

ORDER that 27 United National's Motion for Summary Judgment is GRANTED. FURTHER ORDERED that United National must file a status report within 30 days from the issuance of this Order detailing any outstanding issues in this case. Specifically, Untied National should address whether it intends to seek default judgment against the remaining parties. Signed by Chief Judge Gloria M. Navarro on 2/26/2018. (Copies have been distributed pursuant to the NEF - MMM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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UNITED NATIONAL INSURANCE
COMPANY,

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Plaintiff,
vs.

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LIMMIE YOUNG, III, et al.,

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Defendants.

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Case No.: 2:16-cv-00121-GMN-PAL
ORDER

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Pending before the Court is the Motion for Summary Judgment, (ECF No. 27), filed by

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Plaintiff United National Insurance Company (“United National”). Defendants Audra Duvall

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and Michael Duvall (collectively “the Duvalls”) did not file a response. For the reasons set

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forth herein, Plaintiff’s Motion for Summary Judgment is GRANTED.

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I.

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BACKGROUND
This declaratory judgment action arises from a lawsuit filed in Clark County District

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Court, styled Duvall, et al. v. Aposseadesse III, LLC, et al., case no. A-13-681072-C (“the

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Duvall Action”). At all times relevant to this case, Defendant Limmie Young, III (“Young”)

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was employed as a masseuse by Defendant Aposseadesse III, LLC (“Aposseadesse”). (See

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Duvall Compl. ¶ 14, Ex. 1 to Nielsen Decl., ECF No. 28-1). On May 8, 2011, Young allegedly

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engaged in inappropriate and sexual acts against Audra Duvall while administering a massage

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at Aposseadesse. (Id. ¶¶ 14–25). This incident became the subject matter of the state court

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lawsuit. (Id.).

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In March 2016, the Duvall Action proceeded to a jury trial, and the jury returned a

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verdict in favor of Audra Duvall and Michael Duvall. (Jury Verdict, Ex. 2 to Nielsen Decl.,

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ECF No. 28-2). The jury awarded $59,675 in general damages and $100,000 in punitive

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damages to Audra Duvall and $750 in general damages to Michael Duvall. (Judgment 2:13–

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3:23, Ex. 5 to Nielsen Decl., ECF No. 28-5). The punitive damages were awarded based on a

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finding that both Aposseadesse and Young “engaged in oppressive or malicious conduct”

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against Audra Duvall. (Punitive Verdict Form, Ex. 3 to Nielsen Decl., ECF No. 28-3).

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Throughout the underlying litigation, United National defended Aposseadess as the

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named insured on a contract of professional liability insurance. (Mawby Decl. ¶¶ 4, 5, ECF No.

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29). On January 22, 2016, United National filed the instant declaratory judgment action,

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seeking a declaration regarding its contractual and financial obligations in the underlying

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lawsuit. (Compl., ECF No. 1). Defendants Young and Aposseadesse failed to respond to the

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Complaint, and the Court granted United National’s Motions for Entry of Clerks Default

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against those parties. (ECF Nos. 16, 17). On July 31, 2017, United National filed its Motion for

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Summary Judgment against the Duvalls. (ECF No. 27).

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II.

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LEGAL STANDARD
The Federal Rules of Civil Procedure provide for summary adjudication when the

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pleadings, depositions, answers to interrogatories, and admissions on file, together with the

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affidavits, if any, show that “there is no genuine dispute as to any material fact and the movant

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is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Material facts are those that

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may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

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(1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable

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jury to return a verdict for the nonmoving party. See id. “Summary judgment is inappropriate if

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reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict

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in the nonmoving party’s favor.” Diaz v. Eagle Produce Ltd. P’ship, 521 F.3d 1201, 1207 (9th

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Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103–04 (9th Cir. 1999)). A

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principal purpose of summary judgment is “to isolate and dispose of factually unsupported

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claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).

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In determining summary judgment, a court applies a burden-shifting analysis. “When

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the party moving for summary judgment would bear the burden of proof at trial, it must come

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forward with evidence which would entitle it to a directed verdict if the evidence went

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uncontroverted at trial. In such a case, the moving party has the initial burden of establishing

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the absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp.

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Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). In

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contrast, when the nonmoving party bears the burden of proving the claim or defense, the

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moving party can meet its burden in two ways: (1) by presenting evidence to negate an

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essential element of the nonmoving party’s case; or (2) by demonstrating that the nonmoving

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party failed to make a showing sufficient to establish an element essential to that party’s case

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on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–

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24. If the moving party fails to meet its initial burden, summary judgment must be denied and

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the court need not consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co.,

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398 U.S. 144, 159–60 (1970).

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If the moving party satisfies its initial burden, the burden then shifts to the opposing

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party to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v.

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Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute,

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the opposing party need not establish a material issue of fact conclusively in its favor. It is

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sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the

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parties’ differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors

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Ass’n, 809 F.2d 626, 631 (9th Cir. 1987). In other words, the nonmoving party cannot avoid

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summary judgment by relying solely on conclusory allegations that are unsupported by factual

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data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go

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beyond the assertions and allegations of the pleadings and set forth specific facts by producing

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competent evidence that shows a genuine issue for trial. See Celotex Corp., 477 U.S. at 324.

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At summary judgment, a court’s function is not to weigh the evidence and determine the truth

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but to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249. The

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evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn in

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his favor.” Id. at 255. But if the evidence of the nonmoving party is merely colorable or is not

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significantly probative, summary judgment may be granted. See id. at 249–50.

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III.

DISCUSSION

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In the instant Motion, United National seeks a declaration regarding its remaining

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obligations towards the Duvall Action. (See Pl.’s MSJ 1:24–2:5, ECF No. 27). In ruling on this

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Motion, the Court must evaluate two issues: (1) whether United National’s policy with

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Aposseadesse affords indemnity for punitive damages; and (2) whether United National has

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fulfilled its obligations towards the Duvall Action judgment. The Court addresses each issue in

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turn.

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a) Punitive Damages

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United National argues that its indemnity obligation under the insurance contract does

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not extend to the $100,000 punitive damages award. (Pl.’s MSJ 7:3–10). In interpreting

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contracts, courts “should not rewrite contract provisions that are otherwise unambiguous.” Id.;

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see also Ellison v. Cal. State Auto. Ass’n, 797 P.2d 975, 977 (Nev. 1990) (“[C]ontracts will be

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construed from the written language and enforced as written.”). With respect to insurance

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contracts, “[p]olicy terms should be viewed in their plain, ordinary and popular connotations.”

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Am. Excess Ins. Co. v. MGM Grand Hotels, Inc., 729 P.2d 1352, 1354 (Nev. 1986).

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Contractual construction is a question of law and “suitable for determination by summary

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judgment.” Ellison, 797 P.2d at 977.

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The insurance contract states that United National agrees to “pay those sums that the

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insured becomes legally obligated to pay as ‘compensatory damages’ to which no other

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insurance applies, as a result of a ‘wrongful act.’” (Agreement at 25, Ex. 1 to Mawby Decl.

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ECF No. 29-1). Compensatory damages are expressly defined to exclude “damages imposed

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upon the insured as punitive or exemplary damages for wanton, willful, outrageous, malicious

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or reckless conduct or for gross negligence.” (Id. at 27).

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Here, the jury in the Duvall Action awarded punitive damages based on a finding that

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Aposseadesse and Young “engaged in oppressive or malicious conduct.” (Punitive Verdict

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Form, Ex. 3 to Nielsen Decl., ECF No. 28-3). Accordingly, based on a plain reading of the

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insurance contract, United National’s indemnity obligation does not extend to the punitive

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damage portion of the Duvall Action judgment.

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b) Remaining Obligations

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The judgment in the Duvall Action consists of three elements: (1) the court-awarded

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litigation costs; (2) the general damages award; and (3) the punitive damages. (See Judgment

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2:13–3:23, Ex. 5 to Nielsen Decl.). United National argues that it has fulfilled its obligations

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by paying the full judgment aside from the punitive damages. (Pl.’s MSJ 6:25–3:7). The Court

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agrees.

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On July 17, 2017, United National sent the Duvalls’ attorney two checks totaling

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$86,211.02, which represented the general damages and litigation costs, along with the accrued

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interest. (Payment, Ex. 6 to Nielsen Decl., ECF No. 28-6). The Court finds no basis to believe

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these checks were not properly tendered and received. Accordingly, the Court finds that United

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National has satisfied its payment obligations and grants United National’s Motion for

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Summary Judgment on this issue.

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IV.

CONCLUSION
IT IS HEREBY ORDERED that United National’s Motion for Summary Judgment,

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(ECF No. 27), is GRANTED consistent with the foregoing.

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IT IS FURTHER ORDERED that United National must file a status report within 30

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days from the issuance of this Order detailing any outstanding issues in this case. Specifically,

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Untied National should address whether it intends to seek default judgment against the

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remaining parties.

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DATED this _____ day of February, 2018.

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___________________________________
Gloria M. Navarro, Chief Judge
United States District Judge

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