Lioness Holdings, LLC v. Sentinel Insurance Company Ltd.

Filing 63

OPINION AND ORDER: Defendant's Motion to Strike # 61 is DENIED and its Motion for Summary Judgment # 31 is GRANTED in part and DENIED in part. Plaintiff's Motion for Partial Summary Judgment # 34 is DENIED. Signed on 6/20/2018 by Magistrate Judge John Jelderks. (jtj)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

LIONESS HOLDINGS, LLC,
Plaintiff,
v.

SENTINEL INSURANCE COMPANY,
LTD., a Connecticut Insurance Company,
Defendant.

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Civil No. 3:17-cv-01238-JE
OPINION AND ORDER

JELDERI<S, Magistrate Judge:
As an initial mater, the Defendant's motion to strike Plaintiffs Supplemental
Memorandum (Dkt. #61) is DENIED. Prior to receiving the motion I had already read the GreenHite deposition and the Supplemental Memorandum. Neither document changed my mind as to
the rulings that I intended to make. In fact, Mr. Green-Hite's agreement that the IRS was another
reason why the sale fell through bolstered my conclusion that there was insufficient evidence to
allow the jury to consider the claim that there was a pending sale and that Sentinel's conduct was
the reason it was not completed.

OPINION AND ORDER - 1

Plaintiff Lioness Holdings brings this action against Defendant Sentinel Insurance
Company, asserting claims for breach of contract and breach of the covenant of good faith and
fair dealing. The parties have filed cross-motions for summary judgment which came before the
Court for oral argument on June 8, 2018. Trial is currently set for July 9, 2018. For the reasons
set out below and on the record at oral argument, Defendant's motion for summary judgment is
DENIED in part and GRANTED in part and Plaintiff's motion for partial summary judgment is
DENIED.

I. Defendant's Motions:
1.

There is no coverage for Plaintiff's loss for property entrusted to Ryan Reeves and/or
anyone with a "master key" (Second Affirmative Defense).
This motion is DENIED. As I indicated at oral argument, the Court finds that, for the

purposes of this case, the losses in question were caused by Ryan Reeves. This was in effect
agreed to by the parties. Although the Plaintiff now would like it to be a question of fact, the
opinion stated many times by Mr. Lamka that Mr. Reeves was the perpetrator is well supported
by the reasons he gave for his conclusion. Defendant Sentinel has agreed that Mr. Reeves was
the perpetrator. When Mr. Reeves was given the opportunity to testify otherwise, he refused to
testify pursuant to his rights under the Fifth Amendment. However, the motion is denied because
there is a question of fact as to whether the property in question was "entrusted" to him at the
time of the incidents.
lA.

In the alternative, there was only one "occurrence" as a matter oflaw and the
Employee Dishonesty coverage limits Plaintiff's loss to $10,000, which has been
paid in full.
This motion is DENIED. As I indicated at oral argument, the Plaintiff is entitled to

OPINION AND ORDER - 2

present evidence to the jury as to all ten events.
2.

There is no coverage for Plaintiffs loss due to Plaintiffs failure to cooperate (Third
Affirmative Defense).
This motion is DENIED. As I indicated at oral argument, this defense presents a fact

question for the jury.
3.

In the alternative, Defendant moves for partial summary judgment against Plaintiffs
claims for "loss in revenue" and "loss in value" because they are excluded as
consequential damages under the terms of the Policy (Fifth Affirmative Defense).
This motion is DENIED as moot based on the Court's ruling in the following alternative

motion.
3A.

In the alternative, there is no colorable evidence in support of Plaintiffs claims
for "loss in revenue" and "loss in value" and they should be dismissed.
This motion is GRANTED. A careful review of Mr. Lamka's testimony as supplemented

by the Green-Hite deposition leads to the conclusion that the Plaintiff has not presented coherent,
consistent, objective, non-speculative evidence to support either of these large claims. Under
Oregon law it is not necessary to prove the exact amount oflost profits, but the factfinder's
decision cannot be based on conjecture, guesswork or speculation. Evidence that is "merely
colorable" or "not significantly probative" does not present a genuine issue of material fact and
does not preclude the grant of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 249-50, 106 S. Ct. 2505, 2511 (1986)( citations omitted). Mr. Lamka stated that it was not
possible to determine lost profits on each individual store. However, Sentinel's expert was
apparently able to do so and determined that there was no provable loss. There is insufficient

OPINION AND ORDER - 3

evidence that there was an actual sales contract and there is evidence from Plaintiffs accountant
that issues with the IRS were a reason the "sale" was not concluded.
4.

In the alternative, Defendant is entitled to partial summary judgment against Plaintiffs
claims for replacement cost benefits under the terms of the Policy because the property
was never replaced (Eighth Affirmative Defense).
This motion is DENIED. It will be up to the jury to determine what, if any, damages the

Plaintiff is entitled to recover for stolen or damaged property.
5.

In the alternative, partial summary judgment should be granted against Plaintiffs claim
for breach of the implied covenant of good faith and fair dealing because it fails as a
matter of law.
This motion is GRANTED. Although almost every contract carries a covenant of good

faith and fair dealing, it is not a stand alone claim under the facts of this case. I generally have
instructed juries about the covenant in connection with any claim for breach of contract but nof
as a separate claim.
II. Plaintiff's Motions

1.

Dismissal of the Second Affirmative Defense on the ground that Plaintiff did not
"entrust the property" that was subject to the loss to the persons who caused the Loss.
This motion is DENIED as there are factual issues to be decided by the jury.

2.

Dismissal of the Fourth Affirmative Defense on the grounds there is no evidence that
Plaintiff intentionally concealed or misrepresented a material fact or that Defendant relied
to its detriment on the alleged misrepresentations.
This motion is DENIED. If the Defendant wishes to pursue this affirmative defense there

are factual issues to be decided by the jury.

OPINION AND ORDER - 4

3.

Dismissal of the Sixth Affirmative Defense on the ground that this limitation applies
"in any one occurrence." The theft and destruction of property at 10 separate locations
over a three-day period is not "one occurrence."
This motion is DENIED. However, as I indicated at oral argument, the Plaintiff will be

allowed to present evidence as to all of the locations in question and present the case on its
theory that there were 10 occurrences. This defense raises potential' legal and factual issues that
will need to be resolved at trial.
4.

Dismissal of the Tenth Affirmative Defense on the ground that Plaintiff had an
insurable interest in the property.
See discussion at 5. infra. To the extent this remains an issue in the case, at trial it will

likely be ruled on after hearing the evidence and prior to submitting the case to the jury.
However, a factual determination by the jury may be required if the evidence regarding the
ownership and history of the Plaintiff remains as convoluted as it was for purposes of these
motions.
5.

Dismissal of the Eleventh and Twelfth Affirmative Defenses on the ground that, to the
extent that the cited exclusions apply, the theft or destruction of property at separate
locations over a multiple day period is not a "one occurrence."
Based on the parties arguments and a review of the materials submitted by both parties, I

was prepared to DENY the Plaintiffs motions to dismiss Defendant's "Tenth," "Eleventh," and
"Twelfth" Affirmative Defenses, being of the opinion that these defenses raised factual issues to
be resolved at trial. However, after review of the Court's docket, I have determined that these
affirmative defenses are not raised in the Answer and Affirmative Defenses filed by Sentinel on
September 15, 2017. Based on the parties' arguments, I assumed there must have been an

OPINION AND ORDER - 5

Amended Answer but have been unable to find any evidence of such a filing with the Court. I do
know that in materials submitted by counsel for Plaintiff that Sentinel notified Plaintiff of its
intent to withdraw its original Tenth Affirmative Defense, and assert a new Tenth Affirmative
Defense as well as two additional affirmative defenses.
Counsel for Sentinel is to check its records to determine if, perhaps, the Court's docket
clerk overlooked a filing. If, in fact, no Amended Answer was filed, I will authorize the filing of
an Amended Answer within three days of this Order that is consistent with the apparent proposed
Amended Answer which was litigated in these motions. If such an Amended Answer is filed, I
will issue an additional Order consistent with what I have said above.
6.

Money Judgment against Defendant in the amount of no less than $97,089 on the ground
that the minimum amount of property coverage is $10,000 per salon.
This motion is DENIED. As indicated above, it will be up to the jury to determine what,

if any damages, the Plaintiff is entitled to recover.

Conclusion
For the reasons set forth above and as stated on the record at oral argument, Defendant's
Motion to Strike [#61] is DENIED and its Motion for Summary Judgment [# 31] is GRANTED
in part and DENIED in part. Plaintiff's Motion for Partial Summary Judgment[# 34] is
DENIED.
DATED this 20 1h day of June, 2018

OPINION AND ORDER - 6