Shelter Mutual Insurance Company v. Martindale et al

Filing 31

ORDER granting 16 Motion for Summary Judgment; denying 22 Motion to Dismiss and, Alternatively, Request to Stay the Proceedings Pending Resolution of the State Court Case. Signed by Honorable Robin J. Cauthron on 01/02/19. (wh)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
SHELTER MUTUAL INSURANCE
COMPANY,
Plaintiff,
v.
GAVIN MARTINDALE, and
BLAKE NOVACEK,
Defendants.

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No. CIV-17-1243-C

MEMORANDUM OPINION AND ORDER
This case arises out of an insurance coverage dispute between Plaintiff Shelter and
Defendants Martindale and Novacek. Plaintiff filed this action seeking a declaration of the
parties’ rights. There is an underlying state action (“Underlying Lawsuit”) currently being
adjudicated in Cleveland County, Case No. CJ-2018-132. In the Underlying Lawsuit that
generated this dispute, Novacek has pursued claims against Martindale for negligence,
negligence per se, intentional infliction of emotional distress, and civil conspiracy.
I. Background
In 2015, an incident occurred at the Gamma Phi Chapter of Beta Theta Pi (“Beta”)
fraternity in Norman, Oklahoma. As a part of the initiation process, the new members were
required to participate in various boxing and wrestling matches. In addition, on October
11, 2015, Blake Novacek was called to the Beta fraternity house where Novacek alleges
Beta fraternity member Shane Musselmann hit him in the abdomen with a baseball bat and,
as a result, he fell backward, hit his head, and was knocked unconscious. The next

morning, at some point after Novacek awoke on a couch in the fraternity house, next to his
freshly laundered clothing, he encountered Gavin Martindale who told him “to keep his
mouth shut about the incident or Beta would ruin his reputation, damage his property, and
have him kicked out of school.” (Dkt. No. 25, p. 2.) Martindale alleges that he never
threatened Novacek. As a result of these incidents, Novacek brought suit against Beta
Theta Pi Corporation of Oklahoma, Gamma Phi Chapter of Beta Theta Pi, Shane
Muselmann and Gavin Martindale. Shelter Insurance insures Martindale under his parents’
homeowners’ insurance policy (the Policy) and is defending Martindale in the Underlying
Lawsuit under a reservation of right.
II. Motion to Dismiss
Novacek seeks dismissal or stay of Plaintiff’s Complaint for Declaratory Judgment
(Dkt. No. 1). As a result of the ongoing Underlying Lawsuit, Novacek argues that there
are key factual issues that have yet to be determined and Plaintiff’s Complaint should be
dismissed or stayed pending the outcome of the Underlying Lawsuit.
In order for Plaintiff to obtain declaratory judgment in this matter, Plaintiff “must
overcome two hurdles.” Fair Am. Ins. & Reinsurance Co. v. Stewart, 274 F. Supp. 3d
1238, 1244 (N.D. Okla. 2017) (citing Surefoot L.C. v. Sure Foot Corp., 531 F.3d 1236,
1240 (10th Cir. 2008)). “First, a declaratory judgment plaintiff must present the court with
a suit based on an ‘actual controversy.’” Surefoot, at 1240. “Second . . . the Act stipulates
only that district courts ‘may’–not ‘must’–make a declaration on the merits of that
controversy” and “district courts are entitled to consider a number of case-specific factors
in deciding whether or not to exercise their statutory declaratory judgment authority.” Id.
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See also State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 983 (10th Cir. 1994) (“Will a
declaration of rights, under the circumstances, serve to clarify or settle legal relations in
issue? Will it terminate or afford relief from the uncertainty giving rise to the proceeding?
If an affirmative answer can be had to both questions, the trial court should hear the case;
if not, it should decline to do so.”). Here, Plaintiff Shelter has presented the Court with a
suit based on an actual controversy and it is apparent from the facts that a declaratory
judgment rendered by this Court will settle the coverage issue. The second factor here also
weighs in favor of the Court adjudicating the issue as a declaratory judgment will serve to
clarify and settle legal relations. As a result, this Court will exercise jurisdiction and deny
Novacek’s request to dismiss or stay Plaintiff’s Complaint.
III. Motion for Summary Judgment
In order to determine whether coverage exists under the Policy, this Court must first
look to the Policy and analyze the relevant portions. The Policy provides the following
definitions and information for terms used throughout the insurance document, which
specifically define accident, bodily injury, and exclusions under the Policy:
1. Accident means an action or occurrence, or a series of actions or
occurrences, that:
....
(c) Directly resulted in bodily injury or property damage. If an
action or occurrence that started abruptly continues over a period of
time and ultimately results in bodily injury or property damage that
cannot be definitely attributed to any one specific action or
occurrence, all such bodily injury or property damage is, under this
policy definition, only one accident. . . .
....
Accident does not mean:
(a) An action or occurrence that any insured intended to result in
bodily injury, or property damage, of any type;
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(b) An action or occurrence that is intended by any insured, if a
reasonable individual would expect it to result in bodily injury, or
property damage, of any type; or
(c) An intentional action by any person that does not immediately
result in bodily injury or property damage, but ultimately does
result in such because of its repetition or the repetition of similar
actions.
....
4. Bodily injury means:
(a) A physical injury;
(b) A sickness or disease of the body;
(c) The physical pain and physical suffering which directly results
from (a) or (b), above; and
(d) A death which directly results from (a) or (b), above.
Bodily injury does not mean:
(a) A mental injury;
(b) A sickness or disease of the mind;
(c) Mental anguish; or
(d) Emotional distress;
unless such mental or emotional condition is diagnosed by a medical
doctor and directly results from bodily injury to the individual on
whose behalf the claim is made.
....
COVERAGE E - PERSONAL LIABILITY
ADDITIONAL DEFINITION USED IN COVERAGE E
In Coverage E:
Damages means the money an insured is legally obligated to pay another
person for bodily injury, or property damage, caused by an accident. But
damages does not include punitive damages . . . .
INSURING AGREEMENT
Subject to the limits of our liability for this coverage stated in this
section, we will pay damages on behalf of an insured.
EXCLUSIONS
We do not cover:
....
5. Damages arising out of bodily injury or property damage that any
insured intended to cause.
6. Damages arising out of bodily injury or property damage that a
reasonable individual would expect to result from the intentional acts of any
insured.
....
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17. Damages arising out of any activity of any insured that would constitute
a crime under the laws of the state in which such activity occurred, whether
or not such insured is actually charged with a crime for that activity.
(Pl.’s Mot., Dkt. No. 16, Ex. 1, pp. 5, 20.)
Pursuant to Oklahoma law, “interpretation of an insurance contract . . . is
determined by the court as a matter of law.” Max True Plastering Co. v. U.S. Fid. & Guar.
Co., 1996 OK 28, ¶ 20, 912 P.2d 861, 869. Additionally, “the insured has the burden of
showing that a covered loss occurred.” Pitman v. Blue Cross and Blue Shield of Okla.,
217 F.3d 1291, 1298 (10th Cir. 2000). “Therefore, summary judgment in favor of the
insurer is proper when the undisputed facts show that the insured has failed to establish a
covered claim under its insurance policy.” State Farm Fire & Cas. Co. v. Pettigrew, 180
F. Supp. 3d 925, 931 (N.D. Okla. 2016) (citing VBF, Inc. v. Chubb Grp. of Ins. Cos., 263
F.3d 1226 (10th Cir. 2001)). “[A]n insurance contract should be construed according to
the terms set out within the four corners of the document.” Pettigrew, 180 F. Supp. 3d at
931. This Court “‘will not impose coverage where the policy language clearly does not
intend that a particular individual or risk should be covered,’ and neither a ‘split in authority
over whether a certain term is ambiguous,’ nor ‘the fact that the parties disagree’ alone is
sufficient to establish an ambiguity.” Id. at 932 (citing BP Amer., Inc. v. State Auto Prop.
& Cas. Ins. Co., 2005 OK 65, ¶ 6, 148 P.3d 832, 835-36).
Plaintiff asks this Court for summary judgment in this declaratory action and
contends there are no genuine issues of material fact alleged by Novacek as to Martindale
that would trigger coverage under the Policy. A key policy goal and primary principle of
Rule 56 is “to isolate and dispose of factually unsupported claims or defenses.” Celotex
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Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Summary judgment is appropriate “after
adequate time for discovery and upon motion, against a party who fails to make a showing
sufficient 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.” Id., at 322. It is also well established that
the “party seeking summary judgment always bears the initial responsibility of informing
the district court of the basis for its motion . . . which it believes demonstrate the absence
of a genuine issue of material fact. Id., at 323. “As to materiality, the substantive law will
identify which facts are material. Only disputes over facts that might affect the outcome
of the suit under the governing law will properly preclude the entry of summary judgment.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Plaintiff argues that Martindale’s only alleged action was an intentional action and
thus not covered under the language of the Policy. Specifically the intentional action was
a threat to ruin Novacek’s reputation and have him expelled if Novacek reported the action
and that this was Novacek’s “sole allegation.” (Pl.’s Mot., Dkt No. 16, p. 8.) Plaintiff also
argues that “[t]he action or occurrence is not an accident if the insured intended the harm
or if a reasonable person would expect the harm to occur. (Id., at p. 6.) As a result Plaintiff
argues that “[i]t is abundantly clear that Martindale’s alleged actions . . . are not accidental.
Moreover, such threats would be considered an intentional act and any resulting harm
would be expected by the insured.” (Id.) Plaintiff furthers its argument by stating there
was no bodily injury, as required under the insurance policy at issue, alleged to have been
caused by Martindale.

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Martindale argues that Novacek has alleged that his, Martindale’s, negligence
“caused serious bodily injury to Novacek” and argues that the facts in the underlying state
action have yet to be developed.

(Def. Martindale’s Resp., Dkt. No. 26, pp. 6-7.)

Martindale also alleges that “plaintiff has an ongoing duty to defend its insured Martindale
in the underlying lawsuit, primarily because the facts related to that lawsuit are still
disputed and the claims, as pled, are potentially covered by the Shelter Policy.” (Id., at p.
14.) Novacek contends that “Martindale was an active Beta member who had a duty to
create and maintain a safe environment for initiating and admitting new members . . . and
participated in violent, physical pledge activities.” (Def. Novacek’s Resp., Dkt. No. 25, p.
8.) Novacek also argues that “[s]ummary judgment may only be granted in favor of an
insurer in an insurance coverage dispute when the undisputed facts establish that the
insured’s claims are not covered.” (Id.) Novacek contends Plaintiff has a duty to defend
and “under Oklahoma law, an insurer must defend its insured in an action in which the
damages sought are potentially within the policy’s coverage.” (Id., at p. 9.)
Here, the Court finds that Martindale’s sole, intentional action was his alleged threat
to Novacek. The Second Amended Petition (Complaint, Dkt. 1, Ex. 2) alleges that multiple
fraternity members participated in the alleged fight club in the basement of the fraternity
house or other initiation proceedings. At no point in Novacek’s Second Amended Petition
does he make any allegation that Martindale was present during these fights or participated
in those fights. In Novacek’s Response, he argues that “it is possible the court in the
Underlying Action could find Defendant Martindale’s actions were negligent rather than
intentional.” (Def. Novacek’s Resp., Dkt. No. 25, p. 10.) However, Novacek fails to cite
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a specific incident of material fact regarding Martindale’s alleged negligence toward
Novacek. Additionally, at one point during Novacek’s deposition, he even admitted that
the sole allegation against Martindale was a threat:
Q. . . . Is the only allegation that you’re making against Gavin that he
allegedly told you not to tell anybody or he would ruin your reputation or
your family’s reputation?
A. Yes, sir.
....
Q. And at any time did Gavin ruin your reputation or your family’s
reputation or have you kicked out of school?
A. No, sir.
Q. Okay. So the only allegation against my client is that he made a threat to
you?
A. Yes, sir.
(Pl.’s Mot., Dkt. No. 16, Ex. 2, pp. 6-7.) Martindale and Novacek both argue that there are
significant issues of fact that remain and as a result, Shelter’s motion should be denied.
However, from the record before the Court, Novacek’s sole allegation against Martindale
excludes the possibility of coverage under the Policy.

While Novacek’s brief, in

connection with this Motion, raises arguments regarding potentially negligent scenarios,
there are no material facts in the record before the Court that would substantiate a
negligence claim. The alleged threat was not an accident and did not result in any bodily
injury or property damage to trigger coverage under the Policy. Moreover, Novacek
alleges no bodily injury and Martindale did not cause any bodily injury to Novacek. The
language of the Policy is clear and unambiguous; Martindale’s alleged threat is not covered
under the Policy. Plaintiff Shelter does not have a continuing duty to defend Martindale
and in viewing the material facts in the light most favorable to the non-moving party, this
Court concludes that Plaintiff is entitled to summary judgment as a matter of law.
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CONCLUSION
For the reasons set forth herein, Defendant Blake Novacek’s Motion to Dismiss and,
Alternatively, Request to Stay the Proceedings Pending Resolution of the State Court Case
(Dkt. No. 22) is DENIED. Plaintiff Shelter’s Motion for Summary Judgment (Dkt. No.
16) is GRANTED. A separate judgment will issue.
IT IS SO ORDERED this 2nd day of January, 2019.

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