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Harn v. Scottsdale Insurance Co.

United States District Court, D. Idaho

September 22, 2014

ROSALINDA HARN, by Michael Colin Harn, Court Appointed Guardian for Rosalinda Harn, Plaintiff,
v.
SCOTTSDALE INSURANCE COMPANY and JOHN DOES I THROUGH X whose true identities are unknown, Defendants.

MEMORANDUM DECISION AND ORDER RE: DEFENDANT SCOTTSDALE INSURANCE COMPANY'S MOTION FOR SUMMARY JUDGMENT (Docket No. 28) PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT (Docket No. 35)

RONALD E. BUSH, Magistrate Judge.

Now pending before the Court are (1) Defendant Scottsdale Insurance Company's Motion for Summary Judgment (Docket No. 28), and (2) Plaintiff's Motion for Partial Summary Judgment (Docket No. 35). Having carefully considered the record, participated in oral argument, and otherwise being fully advised, the Court enters the following Memorandum Decision and Order:

I. RELEVANT BACKGROUND

This case arises out of a dispute between Plaintiff Rosalinda Harn ("Plaintiff") and Spectra Productions, Inc. ("Spectra"), the details of which are described to follow. Spectra carried business liability insurance with Scottsdale Insurance Company ("Defendant"). See Stip., p. 1 (Docket No. 29). That dispute gave rise to a claim Plaintiff filed with the Idaho Human Rights Commission, followed by a suit filed in Idaho state court, in which Plaintiff sued Spectra and two of its employees. See id. Relevant here, Defendant denied any duty to defend Spectra in the underlying state court action. See id. Ultimately, Plaintiff settled the state court action with Spectra by exchanging a covenant not to execute against Spectra for (1) a stipulated judgment in her favor, and (2) an assignment of any and all rights Spectra may have had against Defendant for denying a duty to defend Spectra under the insurance policy. See id. The instant action is based upon those claims, premised upon the following:

A. Factual Backdrop

1. Plaintiff is paralyzed, confined to a reclining wheelchair/gurney as a result of an April 4, 1986 automobile accident involving a drunk driver. See Pl.'s Compl., ¶ 19 (Docket No. 1, Att. 3). Plaintiff is unable to speak or move her body, but understands conversation and communicates by blinking her eyes. See id. at ¶ 20. Plaintiff is cared for by her husband and her legal guardian, Michael Colin Harn. See id. at ¶ 21. For over 20 years, Plaintiff has voluntarily attended events throughout the Pacific Northwest to dramatize for the public, in a first-hand fashion, the dangers and consequences of driving while under the influence of alcohol. See id. at ¶¶ 23-25.

2. On August 19, 2008, Plaintiff and her husband purchased tickets to attend the Western Idaho State Fair, so that Plaintiff could volunteer in the Exposition Building ("Expo Building") at the Mothers Against Drunk Driving ("MADD") Fair Booth. See id. at ¶ 26. To that end, Plaintiff was situated on a gurney and located near the MADD booth to demonstrate the severity of the consequences of drunk driving. See id. at ¶ 27.

3. According to Plaintiff, Spectra leases space in the Expo Building from Ada County (the owner of the Western Idaho Fairgrounds); in turn, Spectra leases spaces to vendors. See id. at ¶ 28. Plaintiff contends that, for all practical purposes, Spectra operates and has control of the Expo Building during the Western Idaho State Fair. See id. at ¶ 29.

4. Plaintiff alleges that while she was volunteering at the MADD booth, Spectra Supervisor Carla Armentrout approached her and her husband and said: "Please take that woman [referring to Plaintiff] out of here.... I want that woman off the premises." Armentrout allegedly told Mr. Harn that Plaintiff was "too graphic." Id. at ¶ 30. When Mr. Harn questioned why, Plaintiff claims Ms. Armentrout responded: "Because she [referring to Plaintiff] is too graphic and other customers are complaining." Id. at ¶ 33. Mr. Harn objected and initially refused to leave. See id. at ¶¶ 33-39. Eventually, Plaintiff and her husband left the Western Idaho Fairgrounds because they did not feel welcome there. See id. at ¶ 40.

B. Plaintiff's Complaint with the Idaho Human Rights Commission

5. On August 21, 2008, Plaintiff filed a complaint against Spectra, containing a "Charge of Discrimination, " with the Idaho Human Rights Commission (the "IHRC Complaint"). See Stip., p. 3, ¶ 3 (Docket No. 29). In the charge, Plaintiff claimed that she was "discriminated against based on my being confined to a wheelchair because I am paralyzed." IHRC Compl., p. 2, attached as Ex. 2 to Stip. (Docket No. 29, Att. 1).

6. On December 1, 2008, Spectra tendered defense of the IHRC Complaint to Defendant. See Stip., p. 3, ¶ 6 (Docket No. 29).[1]

7. On December 10, 2008, Defendant denied Spectra's tender. See id. at p. 3, ¶ 7; see also 12/10/08 Ltr., attached as Ex. 5 to Stip., p. 8 (Docket No. 29, Att. 2) ("The alleged discriminatory conduct does not meet the policy definition of an occurrence' or an offense resulting in personal or advertising injury.' Neither do they meet the policy definition of bodily injury' or property damage.'").

C. Plaintiff's Underlying State Court Complaint

8. On October 19, 2009, Plaintiff filed a complaint against Spectra and its employees in Idaho state court (the "State Court Complaint"), asserting two causes of action: discrimination/loss of civil rights and intentional infliction of emotional distress. See Stip., p. 3, ¶ 3 (Docket No. 29); see also Pl.'s Compl., attached as Ex. 3 to Stip. (Docket No. 29, Att. 2).

9. On January 5, 2010, Spectra tendered defense of the State Court Complaint to Defendant. See Stip., p. 3, ¶ 8 (Docket No. 29).

10. On January 7, 2010, Spectra requested that Defendant revise its coverage decision set forth in its December 10, 2008 denial of Spectra's tender of the IHRC Complaint. See id. at p. 4, ¶ 9; see also 1/7/10 Ltr., attached as Ex. 7 to Stip., p. 1 (Docket No. 29, Att. 2) ("... it is [Spectra's] view that the [P]olicy provides both the duty to defend and the duty to indemnify the claims the Plaintiff makes in the Complaint.").

11. On March 26, 2010, Defendant reaffirmed its denial of Spectra's tender of defense and denied coverage, accordingly, for Plaintiff's State Court Complaint. See Stip., p. 4, ¶ 10 (Docket No. 29); see also 3/26/10 Ltr., attached as Ex. 8 to Stip., p. 6 (Docket No. 29, Att. 2) ("Scottsdale is unable to find coverage for the Complaint, because Plaintiff does not allege any covered personal and advertising injury' offense. Certain exclusions also may apply.").

12. Spectra did not provide any additional pleadings or alleged facts in response to Defendant's denial of Spectra's tender of defense. See Stip., p. 4, ¶ 11 (Docket No. 29).

D. Settlement of Underlying State Court Complaint

13. On August 5, 2011, Spectra requested Defendant's permission to assign its claims to Plaintiff. See Stip., p. 4, ¶ 12 (Docket No. 29); see also 8/5/11 Ltr., attached as Ex. 9 to Stip. (Docket No. 29, Att. 2) ("... Spectra requests that Scottsdale provide it with written consent to transfer its rights and duties under the Policy to the Plaintiff... as part of its settlement of her claims with Spectra.").

14. On August 22, 2011, Defendant declined Spectra's request for permission to assign rights and duties under the Policy to Plaintiff. See Stip., p. 4, ¶ 13 (Docket No. 29); see also 8/22/11 Ltr., attached as Ex. 10 to Stip. (Docket No. 29, Att. 2). A subsequent e-mail exchange between counsel for Spectra and Defendant did not change Defendant's previous decision not to assign its rights and duties under the Policy to Plaintiff. See Stip., p. 4, ¶ 14 (Docket No. 29); see also Ex. 11 to Stip. (Docket No. 29, Att. 2).

15. On December 2, 2011, Spectra entered into a "Settlement Agreement" that included (1) a consent to judgment in favor of Plaintiff in the amount of $306, 451.61, and (2) assignment to the Plaintiff of Spectra's rights under Defendant's Policy. See Stip., p. 4, ¶¶ 15-16 (Docket No. 29); see also Exs. 12-13 to Stip. (Docket No. 29, Att. 3).

16. In exchange for Spectra consenting to judgment and assigning its rights to Plaintiff, Plaintiff agreed not to execute on the judgment against Spectra. See Stip., p. 4, ¶ 17 (Docket No. 29); see also Ex. 14 to Stip. (Docket No. 29, Att. 3).

17. In accordance with the agreements reached between Plaintiff and Spectra in regard to the State Court Complaint, the state court entered judgment against Spectra. See Stip., p. 4, ¶ 18 (Docket No. 29); see also Ex. 15 to Stip. (Docket No. 29, Att. 3).

E. This Coverage Action and the Parties' Cross Motions for Summary Judgment

18. On September 4, 2012, Plaintiff filed this declaratory relief action; on January 18, 2013, Defendant removed it to this Court. See Stip., pp. 4-5, ¶¶ 19-20 (Docket No. 29).

19. On December 16, 2013, Defendant moved for summary judgment, arguing, first, that it properly denied coverage for Plaintiff's allegations because neither the IHRC Complaint nor the State Court Complaint alleged any "bodily injury" resulting from an "occurrence" under the Coverage A section of the Policy; and, second, that Plaintiff's allegations did not fall within the Coverage B "personal and advertising injury" section of the Policy. See Def.'s Mem. in Supp. of MSJ, p. 2 (Docket No. 28, Att. 1).

20. On January 13, 2014, Plaintiff moved for partial summary judgment (and, in doing so, opposed Defendant's summary judgment efforts), arguing that Defendant had a duty to defend Spectra in the underlying state court action pursuant to its Policy, based upon the allegations within the State Court Complaint. See generally Pl.'s Mem. in Supp. of MPSJ (Docket No. 33).

21. Plaintiff and Defendant agree that their cross motions for summary judgment shall be limited to the following issue:

Did Defendant Scottsdale Insurance Company have a duty to defend Spectra Productions and its employee/agent Defendants in [the underlying state court action] based upon the allegations contained in the operative complaint in that action, without consideration at this time of whether or not the Limitation Of Coverage To Designated Premises Or Project Endorsement in the Policy and Endorsement No. 1 apply separate to preclude coverage?

Stip., p. 3 (Docket No. 29).

II. DISCUSSION

A. Motions for Summary ...


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