Submitted: June 23, 2014
Upon Sempris, LLC's Motion for Partial Summary Judgment GRANTED
Upon RSUI Indemnity Company's Motion for Summary Judgment DENIED
Brian L. Kasprzak, Esquire, Marks, O'Neill, O'Brien, Doherty & Kelly, P.C., Thomas K. Hanekamp, Esquire (argued), Kathryn A. Formeller, Esquire, Tressler LLP, Attorneys for Plaintiff
Jennifer C. Wasson, Esquire, Richard L. Horwitz, Esquire, Michael B. Rush, Esquire, Potter Anderson & Corroon LLP, Craig C. Martin, Esquire, Christopher C. Dickinson, Esquire, Brienne M. Letourneau, Esquire (argued), Jenner & Block LLP, Attorneys for Defendants
The Honorable Mary M. Johnston
FACTUAL AND PROCEDURAL CONTEXT
This insurance coverage dispute arises out of a lawsuit filed against Sempris, LLC d/b/a Budget Savers ("Sempris"). The underlying suit, Sarah Toney, et al. v. Quality Resources, Inc., et al. ("Toney Lawsuit"), is pending in the United States District Court for the Northern District of Illinois.
RSUI Indemnity Company ("RSUI") issued a Directors and Officers Liability Policy to Sempris bearing policy number NHP650549 ("Policy"). The effective Policy Period ran from March 1, 2013 through March 1, 2014. The maximum aggregate limit of liability under the Policy is $3, 000, 000. Sempris paid a premium of $29, 400 for the Policy. Sempris tendered the Toney Lawsuit to RSUI for coverage under the Policy. RSUI has denied that it owes a duty to defend or a duty to indemnify Sempris for the Toney Lawsuit.
RSUI is an insurance company organized under New Hampshire law with its principle place of business in Atlanta, Georgia. Sempris is a Delaware corporation with its principle place of business in Minnesota.
The Toney Lawsuit is a putative class action alleging two claims under the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227. Count I – TCPA – Do Not Call Registry – alleges that the defendants made unsolicited telemarketing phone calls to the plaintiff and the class in violation of the TCPA 47 U.S.C. § 227(c) and 47 C.F.R § 64.1200(c). Count II – TCPA – Autodialed Calls to Cell Phones – alleges that the defendants made improper calls to the plaintiff and others' cellular telephones using an automatic telephone dialing system and/or artificial or prerecorded voice, in violation of the TCPA 47 U.S.C. § 227(b) and 47 C.F.R § 64.1200(a).
RSUI filed this action on October 8, 2013, seeking a declaratory judgment that RSUI owes no insurance coverage obligations to Sempris or Provell, Inc. f/k/a Budget Savers ("Provell"). Sempris is currently the sole defendant. On February 28, 2014, RSUI filed a Motion for Summary Judgment. Also on February 28, 2014, Sempris filed a Motion for Partial Summary Judgment seeking a declaration that RSUI has a duty to defend Sempris against the underlying Toney Claim.
RSUI seeks summary judgment on Count II ("No Claim First Made During the Policy Period"); Count III ("Section IV., Exclusions, Paragraph 11 Precludes Coverage for the Toney Lawsuit"); Count IV ("The Endorsement Titled 'Exclusion – Specific' Precludes Coverage for the Toney Lawsuit"); Count V ("Section IV., Exclusions, Paragraph 13.b Precludes Coverage for the Toney Lawsuit"); and Count VI ("The Endorsement Entitled 'Exclusion – Professional Errors and Omissions' Precludes Coverage for the Toney Lawsuit") of its Complaint for Declaratory Judgment. RSUI is also seeking summary judgment on Sempris' counterclaims for breach of contract and declaratory judgment.
STANDARD OF REVIEW
Summary judgment is granted only if the moving party establishes that there are no genuine issues of material fact in dispute and judgment may be granted as a matter of law. All facts are viewed in a light most favorable to the non-moving party. Summary judgment may not be granted if the record indicates that a material fact is in dispute, or if there is a need to clarify the application of law to the specific circumstances. When the facts permit a reasonable person to draw only one inference, the question becomes one for decision as a matter of law. If the non-moving party bears the burden of proof at trial, yet "fails to make a showing sufficient to establish the existence of an element essential to that party's case, " then summary judgment may be granted against that party.
Where the parties have filed cross motions for summary judgment, and have not argued that there are genuine issues of material fact, "the Court shall deem the motions to be the equivalent of a stipulation for decision on the merits based on the record submitted with the motions." Neither party's motion will be granted unless no genuine issue of material fact exists and one of the parties is entitled to judgment as a matter of law.
The parties agree that Delaware law applies to this dispute. Insurance contracts "are construed as a whole, to give effect to the intention of the parties."Where the language of an insurance policy is "clear and unambiguous, the parties' intent is ascertained by giving the language its ordinary and usual meaning."Where the language in an insurance policy is ambiguous, it is construed in favor of the insured. A contract is ambiguous when the provisions at issue "are reasonably or fairly susceptible of different interpretations or may have two or more different meanings."
To determine if an insurer has a duty to defend or indemnify a claim asserted against a policy holder "the Court will look to the allegations in the underlying complaint to decide whether the action against the policy holder states a claim covered by the policy." An insurer's duty to defend generally is broader than its duty to indemnify. An insurer's duty to defend is triggered "where the factual allegations in the underlying complaint potentially support a covered claim.""[W]here there exists some doubt as to whether the complaint against the insured alleges a risk insured against, that doubt should be resolved in favor of the insured." The duty to defend is broad, "if even one count or theory of plaintiff's complaint lies within the coverage of the policy, the duty to defend arises."
In a coverage dispute, the insured has the burden to prove that the insurance policy's provisions cover the claimed loss. The burden then shifts to the insurer to prove that an exclusion applies to bar coverage.
Relevant Policy Provisions
The Insuring Agreement provides, in relevant part:
In consideration of the payment of premium and in reliance upon all statements made to the Insurer in the Application, and subject to the terms, conditions, definitions, exclusions and limitations hereinafter provided, the Insurer agrees:
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C. With the Insured Organization that if a Claim for a Wrongful Act is first made against the Insured Organization during the Policy Period and reported in accordance with Section V. – CONDITIONS, C. Notice of Claim or Circumstance of this policy, the Insurer will pay on behalf of the Insured ...