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Shelter Mutual Insurance Co. v. Phillips

United States District Court, W.D. Oklahoma

June 13, 2018

SHELTER MUTUAL INSURANCE COMPANY, Plaintiff,
v.
DANIEL PHILLIPS AND APRIL MARTIN, as custodial parent of S.M. and A.M., minors, Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBIN J. CAUTHRON United States District Judge

         Plaintiff filed a Motion for Summary Judgment (Dkt. No. 18). Defendant April Martin filed an Opposition to Plaintiffs' Motion for Summary Judgment (Dkt. No. 24). Defendant Phillips filed an Objection and Response to Plaintiff Shelter Insurance's Motion for Summary Judgment (Dkt. No. 25). Plaintiff filed a Combined Reply to Defendant Martin's and Defendant Phillips' Responses to Plaintiff's Motion for Summary Judgment (Dkt. No. 26). The Motion is now at issue.

         I. Background

         April Martin filed a state court action against Daniel Phillips for alleged sexual misconduct and molestation. Martin accused Phillips of engaging in “the sexual molestation and abuse of [S.M. and A.M.] on multiple occasions between March of 2010 and September of 2010.” (Pl.'s Mot., Dkt. No. 18, Ex. 2.) Phillips pled guilty in Oklahoma County District Court to multiple counts of lewd acts with children in violation of 21 Okla. Stat. § 1123. (Pl.'s Mot., Dkt. No. 18, Ex. 4.) Shelter Mutual Insurance Company (“Shelter”) issued multiple Dwelling Insurance Policies[1] to Daniel Phillips and these policies insured multiple rental properties that Daniel Phillips owned. (Pl.'s Mot., Dkt. No. 18, p. 1.) The offending conduct occurred in these rental properties. (Pl.'s Mot., Dkt. No. 18, p. 2.) In her state court Petition, Martin labels her causes of action: Assault and Battery, Negligence, and Intentional Infliction of Emotional Distress. (Pl.'s Mot., Dkt. No. 18, Ex. 2.)

         In the underlying action, Shelter is defending Phillips under a reservation of rights.[2]Shelter Mutual Insurance Company instituted this action in federal court and seeks a declaratory judgment that Defendant Phillips' alleged conduct in molesting S.M. and A.M. was intentional and excluded under the Landlords Liability Coverage provision of their policy and Shelter has no obligation to defend Phillips in either the underlying action or in the event of a judgment against him in the underlying action. (Pl.'s Mot., Dkt. No. 18, p. 9.)

         II. Standard

         A. Declaratory Judgment Act

         The Declaratory Judgment Act is a procedural tool and does not create substantive rights for parties. See Farmers Alliance Mut. Ins. Co. v. Jones, 570 F.2d 1384, 1386 (10th Cir. 1978). “When faced with a motion for declaratory judgment, courts therefore often construe the motion as a motion for summary judgment on a declaratory judgment action.” Miller v. Cincinnati Ins. Co., Civ. No. 17-00271 SCY/JHR, 2018 WL 1633460 (D.N.M. April 2, 2018). “The party seeking a declaratory judgment pursuant to § 2201(a) must overcome two hurdles. First, the plaintiff must demonstrate the existence of an ‘actual controversy. . . .' Second, ‘even where a constitutionally cognizable controversy exists['], a plaintiff ‘must convince the court to exercise its jurisdiction' under the DJA based on ‘a number of case-specific factors.'” Fair Am. Ins. and Reinsurance Co. v. Stewart, 274 F.Supp.3d 1238, 1244 (N.D. Okla. 2017) (citations omitted). The next and final question “‘involves a discretionary assessment of disparate, often incommensurate, and case-specific concerns.'” Id. at 1244-45.

         B. Summary Judgment

         A key policy goal and primary principle of Fed.R.Civ.P. 56 is “to isolate and dispose of factually unsupported claims or defenses.” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Fed.R.Civ.P. 56 sets the standard for summary judgment:

A party may move for summary judgment, identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.

Fed. R. Civ. P. 56(a). 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.” Celotex Corp., 477 U.S. at 322. “[T]his standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). 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, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, ' which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp., 477 U.S. at 323, (quoting Fed. R. Civ. P. 56) (“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, 477 U.S. at 248.) “When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. . . . Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.'” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (footnote and internal citations omitted). In its review, the Court construes the record in the light most favorable to the party opposing summary judgment. Garratt v. Walker, 164 F.3d 1249, 1251 (10th Cir. 1998).

         III. Discussion

         Generally, the insurer bears the burden to defend the insured if the disputed conduct or loss falls outside a policy's exclusionary clause. See generally Fretwell v. Protection Alarm Co.,1988 OK 84, 764 P.2d 149. “[T]here is no duty on the part of the insurer to defend ‘when it is established by the insurer that the facts are such that there is no coverage under the policy for any resulting liability.'” State Farm Fire & Cas. Co. v. Williams, 355 N.W.2d 421, 424-25 (Minn. 1984) (citation omitted). “In order for an intentional act exclusion to result in a denial of coverage in Oklahoma, two elements must be shown: (1) the insured must have intended to commit the act and (2) the insured must intend to commit the injury or harm which resulted.” Allstate Ins. Co. v. Thomas,684 F.Supp. 1056, 1058 (W.D. Okla. 1988). ÔÇťOklahoma's treatment of child molestation convinces the court that Oklahoma would infer an ...


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