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Martinsville Corral, Inc. v. Society Insurance

United States District Court, S.D. Indiana, Indianapolis Division

March 31, 2018

MARTINSVILLE CORRAL, INC. d/b/a MARTINSVILLE TEXAS CORRAL, VICTOR A. SPINA, and WILLIAM SPINA, Plaintiffs,
v.
SOCIETY INSURANCE, Defendant.

          ENTRY ON CROSS MOTIONS FOR SUMMARY JUDGMENT

          TANYA WALTON PRATT, JUDGE

         This matter comes before the Court on Cross Motions for Summary Judgment filed by Plaintiffs, Martinsville Corral, Inc. d/b/a Martinsville Texas Corral, Victor A. Spina, and William Spina (collectively, “MCI”) (Filing No. 55), and Defendant Society Insurance (“Society”) (Filing No. 65). MCI initiated this action for breach of contract alleging that Society intentionally and in bad faith failed to defend and indemnify MCI related to claims brought against it by non-party, DirecTV, LLC., (“DirecTV”). Society claims that the insurance policy issued to MCI does not provide coverage for any of DirecTV's claims. Each party has filed a motion for summary judgment. For the following reasons, the Court DENIES MCI's Motion for Summary Judgment and GRANTS Society's Cross Motion for Summary Judgment.

         I. BACKGROUND

         Martinsville Texas Corral owns two restaurants in southern Indiana (Filing No. 54-4 at 1). Martinsville Texas Corral opened its first Texas Corral restaurant in Martinsville, Indiana in 2009 and opened a second Texas Corral restaurant in Shelbyville, Indiana in 2011 (Filing No. 54-5 at 1). Defendants Victor Spina and William Spina each own 50% of Martinsville Texas Corral (Filing No. 54-5 at 1). Society is an insurance company with its principal place of business in Fond du Lac, Wisconsin. (Filing No. 68-11 at 9.)

         A. The Policy

         On December 6, 2013, Society issued a certain businessowners insurance policy for tavern and restaurant owners (the “Policy”) to MCI (Filing No. 12-1). Under the terms of the Policy, Society promised to provide MCI with general business liability coverage, including coverage for sums MCI “becomes legally obligated to pay as damages because of ‘bodily injury, ' ‘property damage, ' or ‘personal and advertising injury'” to which the Policy applies, and has a duty to defend MCI in any lawsuit seeking such damages. (Filing No. 12-1 at 71). The Policy defines “property damage” as “[p]hysical injury to tangible property, including all resulting loss of use of that property…” or “[l]oss of use of tangible property that is not physically injured…” (Filing No. 12-1 at 86). The definition of “property damage” further clarifies that “electronic data is not tangible property” under the Policy (Filing No. 12-1 at 86). Moreover, the Policy clearly states that it only covers “bodily injury” and “property damage” to the extent it is “caused by an ‘occurrence' that takes place in the ‘coverage territory' … during the policy period” (Filing No. 12-1 at 71). An “occurrence” under the Policy “means an accident, including continuous or repeated exposure to substantially the same general harmful conditions” (Filing No. 12-1 at 85). The Policy also defines “personal and advertising injury” as injury, including consequential ‘bodily injury, ' arising out of one or more of the following offenses:

a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry into, or invasion of the right of privacy occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;
d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services
e. Oral or written publication, in any manner, of material that violates a person's right to privacy;
f. The use of another's advertising idea in your “advertisement”; or g. Infringing upon another's copyright, trade dress or slogan in your “advertisement”.

(Filing No. 12-1 at 86).

         In addition to the standard liability coverage provided by the Policy, MCI purchased coverage under an Employment-Related Practices Liability Endorsement that was incorporated into the Policy (the “Endorsement”) (Filing No. 12-1 at 24-31). Under the Endorsement, Society is required to cover MCI for any damages it “becomes legally obligated to pay resulting from a ‘wrongful act'” to which the Endorsement applies and imposes a duty to defend on Society in any lawsuits seeking such damages (Filing No. 12-1 at 25). The Endorsement defines “wrongful act” to mean one or more of the following offenses, but only when they are employment-related:

a. Wrongful demotion or failure to promote, negative evaluation, reassignment, or discipline of your current “employee” or wrongful refusal to employ;
b. Wrongful termination, meaning the actual or constructive termination of an “employee”:
(1) In violation of breach of applicable law or public policy; or
(2) Which is determined to be in violation of a contract or agreement, other than an employment contract or agreement, whether written, oral or implied, which stipulates financial consideration is due as the result of a breach of the contract; c. Wrongful denial of training, wrongful deprivation of career opportunity, or breach of employment contract; d. Negligent hiring or supervision which results in any of the other offenses listed in this definition; e. Retaliatory action against an “employee” because the “employee” has:
(1) Declined to perform an illegal or unethical act;
(2) Filed a complaint with a governmental authority or a “suit” against you or any other insured in which damages are claimed;
(3) Testified against your or any other insured at a legal proceeding; or
(4) Notified a proper authority of any aspect of your business operation ...

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