Di Carlo v. Allstate Insurance Company

Filing 16

ORDER granting 11 Motion for Summary Judgment.(Signed by Judge Nelva Gonzales Ramos) Parties notified.(mserpa, 2)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
MARK A. DI CARLO,
Plaintiff,
VS.
ALLSTATE INSURANCE COMPANY,
Defendant.

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§ CIVIL ACTION NO. 2:14-CV-449
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ORDER GRANTING SUMMARY JUDGMENT
Plaintiff, Mark DiCarlo (DiCarlo) filed this declaratory judgment action against
his insurance carrier, Allstate Insurance Company (Allstate), asking that Allstate provide
a defense and indemnity for claims of defamation, intentional infliction of emotional
distress, and invasion of privacy that family members have made against him. Allstate
denied coverage under its business insurance policy and seeks summary judgment that
the claims made against DiCarlo are not covered. For the reasons set out below, the court
GRANTS the motion.
BACKGROUND FACTS
According to his pleading (D.E. 1-1, pp. 6-51), DiCarlo is a resident of Corpus
Christi, Texas. His elderly father, Henry DiCarlo (Henry), lived in Ohio and suffered a
fall. As a result, Henry was initially admitted to Aultman Hospital in Canton, Ohio.
DiCarlo’s cousins, James R. Swartz and Tonimarie Swartz, along with their
mother (DiCarlo’s paternal aunt) Vilma Swartz (jointly Swartzes), purported to act as
Henry’s caretakers. They allegedly terminated DiCarlo’s power of attorney for Henry’s
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healthcare and, on or about April 30, 2012, without DiCarlo’s knowledge, transferred
Henry to Emeritus Hospice (Emeritus). Emeritus is an assisted living facility in close
proximity to them, where Henry had been given a doctor’s orders for hospice care. The
Swartzes claim that Henry gave written consent to being placed in hospice care. DiCarlo
counters that Henry’s emotional or psychological state was not adequate to give valid
consent.
Once Henry was at Emeritus, the Swartzes allegedly told DiCarlo (who was en
route from Texas to see Henry) that Henry was being denied food, water, and medical
care.

Alarmed, DiCarlo sent urgent faxes to Emeritus on or about May 3, 2012,

contending that the Swartzes had exerted undue influence over Henry, were purposefully
withholding lifesaving measures, and were causing his death to benefit themselves
financially. Henry’s health quickly deteriorated and he died on or about May 9, 2012.
Thereafter, DiCarlo sent his accusations against the Swartzes to the attention of one or
more of the Swartzes’ employers on or about July 13, 2012.
On November 7, 2012, the Swartzes filed suit against DiCarlo for libel, intentional
infliction of emotional distress, and false light invasion of privacy in the Court of
Common Pleas, Lake County, Ohio (D.E. 1-1, pp. 24-31). They claim serious emotional
distress and injury to their professional and personal reputations. In response to these
legal claims, DiCarlo made a demand for benefits under his “insured premises policy,”
Customizer Business Policy, No. 049878640 issued by Allstate covering the period of
February 20, 2012 to February 20, 2013. Allstate argues that the Swartz allegations
concern matters not covered by the policy.
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STANDARD OF REVIEW
The interpretation of a liability insurance policy is a question of law. See Willbros
RPI, Inc. v. Continental Casualty Co., 601 F.3d 306 (5th Cir. 2010) (per curiam). The
Fifth Circuit, referring to the opinion in Ewing Const. Co., Inc. v. Amerisure Ins. Co., 420
S.W.3d 30, 33 (Tex. 2014) as “controlling” Texas law, set out the parties’ respective
burdens of proof. Crownover v. Mid-Continent Casualty Co., 772 F.3d 197, 201 (5th Cir.
2014). According to Ewing, the insured generally has the initial burden to establish
coverage under the policy. If he does so, then the insurer has the burden to prove that one
of the policy's exclusions applies. If the insurer proves that an exclusion applies, the
burden shifts back to the insured to establish that an exception to the exclusion restores
coverage.
In this summary judgment proceeding under Fed. R. Civ. P. 56, Allstate contends
that DiCarlo cannot meet his initial burden to establish coverage as a matter of law
because the allegations against him do not arise from “activities related to [his] business.”
Alternatively, Allstate argues that the policy’s exclusion of coverage for “professional
services” applies. DiCarlo argues that his performance of a healthcare power of attorney
for his father and his expectation of inheritance constitute his “business” and is not a
“professional service.” These are questions of policy interpretation.
To resolve such issues, specifically with respect to the duty to defend, the Court
applies the “eight corners” rule and considers only the policy (D.E. 11–3) and the
allegations in the complaint in the Swartz action (D.E. 11–2).

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According to the eight corners rule, the scope of an insurer's
duty to defend against a lawsuit is determined exclusively by
the allegations in the pleadings and the language of the
insurance policy. Nat'l Union Fire Ins. Co. v. Merchants Fast
Motor Lines, 939 S.W.2d 139, 141 (Tex. 1997). The scope of
the duty to defend is interpreted broadly: “Where the
complaint does not state facts sufficient to clearly bring the
case within or without the coverage, the general rule is that
the insurer is obligated to defend if there is, potentially, a case
under the complaint within the coverage of the policy.” Id.
(quoting Heyden Newport Chem. Corp. v. S. Gen. Ins. Co.,
387 S.W.2d 22, 26 (Tex. 1965)). “Terms in insurance
policies that are subject to more than one reasonable
construction are interpreted in favor of coverage.” Gilbert
Tex. Constr., L.P. v. Underwriters at Lloyd's London, 327
S.W.3d 118, 133 (Tex. 2010).
National Casualty Co. v. Western World Ins. Co., 669 F.3d 608, 612–13 (5th Cir. 2012).
Courts construe insurance policies using familiar principles of contract
interpretation. Texas Farm Bureau Mut. Ins. Co. v. Sturrock, 146 S.W.3d 123, 126 (Tex.
2004). The words of the policy are construed in their plain, ordinary, and popular sense
to reflect the parties' intentions regarding the scope of coverage. Crownover, supra at
202. Finally, “the court should consider the policy as a whole, and interpret the policy to
fulfill the reasonable expectations of the parties in the light of the customs and usages of
the industry.” Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829,
841 (Tex. 2010). See also, Crownover, supra at 202.

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DISCUSSION
While DiCarlo is certainly a “named insured,”1 with the policy having been issued
to him, Allstate has no liability unless the claim falls within the scope of the policy’s
coverage. In particular, the provision for “Liabilities Covered,” reads:
We will pay on behalf of persons insured all sums which
they become legally obligated to pay as damages arising out
of an accidental event, personal injury or advertising injury
that occurs while this policy is in effect. We will cover
accidental events arising out of your completed work or
products only when the accidental event occurs away from
premises you own or rent and:
1. After the work has been completed or abandoned.
2. The product is in the hands of the consumer.
D.E. 11-3, p. 50 (emphasis added; Coverage B-Business Liability, Part OneComprehensive Liability).
“Persons insured” is a defined term in the policy. In relevant part, the definition
states, “The following people and organizations are persons insured under this Part: 1. If
you are shown in the Declarations as an individual, you and your spouse for activities
related to your business.”

D.E. 11-3, p. 51 (emphasis added).

Referencing this

language, Allstate contends that the claims against DiCarlo are not against a “person
insured” because the activities for which he has been sued are not “related to his
business.” Instead, they are personal.
The term “business” is not defined in the policy. Allstate suggests that the plain
meaning of the term is that supplied by Webster’s dictionary as “occupation, profession,

1

D.E. 11-3, p. 2 (Declarations page showing that Insured is Mark DiCarlo, an individual).

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or trade.” D.E. 11, p. 7. It is undisputed that DiCarlo is an attorney whose office is
housed in the premises covered by the policy. Allstate argues that DiCarlo’s dispute with
his relatives regarding Henry’s care and their respective inheritance expectancies is not
related to DiCarlo’s law practice.
DiCarlo responds that Allstate’s definition is too narrow and, even so, the fact that
he held a power of attorney for his father’s healthcare and stood to receive money or
other things of value upon Henry’s death qualifies this matter as part of his business.
DiCarlo argues that Black’s Law Dictionary, p. 179 (5th ed.) contains a more expansive
definition of “business,” as “Employment, occupation, profession, or commercial activity
engaged in for gain or livelihood. Activity or enterprise for gain, benefit, advantage, or
livelihood.”

D.E. 14, p. 16 (emphasis in DiCarlo’s response).

Accordingly, under

DiCarlo’s analysis, anything that he does that might improve his financial status qualifies
as his “business.”
Under the insurance contract rules, however, the claim’s character is defined by
the source of injury rather than the more expansive context in which the claims may have
arisen. In an “eight corners” review of the pleadings, courts are to look to the factual
allegations showing the origin of the damages claimed, not to the legal theories or
conclusions alleged. See Evanston Ins. Co. v. Legacy of Life, Inc., 370 S.W.3d 377, 380
(Tex. 2012); Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Merchants Fast Motor Lines,
Inc., 939 S.W.2d 139, 141 (Tex. 1997) (per curiam). DiCarlo argues that the varied uses
he makes of the premises for which the policy was purchased—renting and maintaining

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office space and filming a public access show—expand the nature of his business. D.E.
14, pp. 11-12. But this does not change the analysis.
Here, the Swartzes are not complaining that DiCarlo injured them through actions
taken pursuant to a power of attorney or by depriving them of their alleged portion of the
inheritance. They do not suggest that something went wrong on the premises or that it
arose from his public access show. Instead, the Swartzes are complaining of DiCarlo’s
correspondence to third parties, attacking the Swartzes’ personal integrity and injuring
their reputation with Emeritus and with their employers. The source of those injuries has
nothing to do with any of the businesses DiCarlo claims to conduct.
DiCarlo suggests that, in evaluating Allstate’s duty to defend, Allstate and this
Court should consider DiCarlo’s allegedly meritorious defenses to the Swartzes’ claims.
He argues that Allstate should have conducted an investigation to determine the truth of
the claims against him and the strength of his defenses. Complying with this request
would take the matter to be decided outside the eight corners rule, contrary to the wellestablished method for determining duty to defend issues.

The Court rejects that

approach.
CONCLUSION
For these reasons, the Court GRANTS Allstate’s motion for summary judgment
because, under the eight corners rule, the claims made against DiCarlo for which he seeks
insurance coverage do not arise from activities related to his business. The Court need
not reach Allstate’s alternative argument that, if the claims did relate to his business, the
business is a “professional service,” which is specifically excluded from coverage.
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Because the claims do not fall within the duty to defend, they are also insufficient to
trigger the duty to indemnify.2 Therefore, Allstate is entitled to dismissal of all of
DiCarlo’s claims.
ORDERED this 29th day of January, 2015.

___________________________________
NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE

2

See generally, Texas Ass'n of Counties Cnty. Gov't Risk Mgmt. Pool v. Matagorda Cnty., 52 S.W.3d 128, 135
(Tex. 2000) (citing Farmers Texas County Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 84 (Tex. 1997)).

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