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Talbot 2002 Underwriting Capital Ltd v. Old White Charities, Inc.

United States District Court, S.D. West Virginia, Beckley Division

January 6, 2017

TALBOT 2002 UNDERWRITING CAPITAL LTD, et al., Plaintiffs,
v.
OLD WHITE CHARITIES, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          IRENE C. BERGER UNITED STATES DISTRICT JUDGE

         The Court has reviewed Plaintiffs and Third Party Defendants HCC and Underwriters' Motion for Summary Judgment (Document 193) and Memorandum of Law in Support (Document 196), and Third Party Defendant All Risks, Ltd.'s Motion for Summary Judgment (Document 197) and Memorandum of Law in Support (Document 198). The Court has also reviewed the Response of Old White Charities, Inc. in Opposition to Motions for Summary Judgment (Document 199) and Bankers Insurance LLC's Omnibus Response to Motions for Summary Judgment (Document 202). Additionally, the Court has reviewed Third Party Defendant All Risks Ltd.s Reply in Support of its Motion for Summary Judgment (Document 203) and the Reply in Support of Plaintiffs and Third Party Defendants HCC and Underwriters' Motion for Summary Judgment (Document 206). For the reasons set forth herein, the Court finds that the motions for summary judgment should be granted.

         PROCEDURAL HISTORY AND FACTUAL BACKGROUND

         A brief review of the claims giving rise to the present case is beneficial to effectively address the pending motions. The Plaintiffs, Talbot 2002 Underwriting Capital Ltd., White Mountains Re Sirius Capital Ltd, and Markel Capital Limited (collectively, the “Underwriters” or “Plaintiffs”), brought suit against Old White Charities, Inc. (“Old White”) on August 19, 2015. The Plaintiffs seek a declaratory judgment on obligations arising under prize indemnity insurance policies issued by the Plaintiffs to Old White. Old White is a non-profit corporation affiliated with the Greenbrier Resort. The insurance policies in question were in effect from June 30, 2015, through July 7, 2015, and proposed to compensate Old White for any losses incurred in a “hole-in-one” contest offered by the Greenbrier Resort and hosted on the 18th hole of Old White TPC golf course during the Greenbrier Classic and Pro-Am, which took place from July 1, 2015, through July 5, 2015. Under the terms of a promotion offered by the Greenbrier Resort, the Hole-In-One Fan Jackpot (the “promotion”), the Greenbrier promised to pay fans seated in the grandstands $100 for the first hole-in-one, $500 for the second hole-in-one, and $1, 000 for the third. To insure against these payouts, the insurance policies in question issued by the Plaintiffs pledged to pay Old White $150, 000 for the first hole-in-one made by a golfer, $750, 000 for the second, and $1, 400, 000 for the third, for a total aggregate insurance value of $2, 300, 000. Among the exclusions and limitations in the policies was a provision requiring that the 18th hole be at least “170 yards from the tee.” (Pl. Complaint at ¶14.) During the tournament, two golfers hit a hole-in-one at the 18th hole. The owner of the Greenbrier, James Justice, allegedly paid fans seated in the grandstands around the 18th hole “a total of roughly $200, 000.” (Id. at ¶24.) It is undisputed that both holes-in-one were hit from a distance of only 137 yards. It is further undisputed that, when completing and executing the application for the insurance policy, both Old White and its agent knew the application contained a 150-yard minimum on the hole to be covered. (Pl. Sum. Judg. Motion Ex. F at 29:16-19.)

         Old White enlisted Bankers Insurance, LLC (“Bankers”) to procure the insurance coverage in question, and Bankers requested that All Risks Ltd. (“All Risks”) serve as its broker. HCC Specialty Underwriters (“HCC”) served as the representatives of the Plaintiffs in issuing the policy to Old White. In their complaint, the Plaintiffs alleged that Old White, in seeking insurance for the promotion, indicated that the yardage on the 18th hole was “[a]pprox 175 [yards] [a]verage, ” and warranted that “[t]he [i]nsured Hole-In-One must be taken from a distance of at least 150 yards for all competitors.” (Id. at ¶32.) The Plaintiffs further alleged that HCC and All Risks negotiated the final policy language requiring the 18th hole to be at least 170 yards from the tee. The Plaintiffs also alleged in their complaint that, while the policy was issued, “neither Old White nor any of its agents” ever paid the required premium payments. (Id. at ¶48.) Old White subsequently made a demand for $900, 000 in insurance coverage on the policy, and the Plaintiffs brought this suit shortly thereafter. The Plaintiffs seek declaratory judgment on the grounds that (1) the policy at issue did not provide coverage for Old White's losses based on Old White's failure to satisfy minimum yardage requirements; (2) the Plaintiffs may rescind the policy based on material and/or incorrect statements made by Old White in its application for coverage; (3) coverage was excluded based on material deviation from the information provided to the Plaintiffs by Old White; (4) coverage is excluded based on Old White's failure to pay the policy premium; and (5) the policy was void based on the failure of Old White and the Plaintiffs to reach a meeting of the minds as to a material term of the policy.

         On September 11, 2015, Old White answered the Plaintiffs' complaint and simultaneously filed a Counterclaim (Document 13) against the Plaintiffs, and at the same time brought a Third Party Complaint (Document 14) against HCC, All Risks, and Underwriters at Lloyd's London (“Lloyd's”). Therein, Old White alleges that HCC and All Risks acted as agents for Lloyd's and the Plaintiffs in procuring the insurance policies at issue in this case.[1] Old White claimed that in applying for these policies, Bankers and Old White “explained all the conditions” for the promotion, including “the fact that Old White had no control over the distance the pins were set because the PGA had sole and exclusive control over the pins.” (Old White's Third Party Complaint, at ¶13.) Specifically, Old White alleged that it placed in the application the following language:

Old white Charities requests hole-in-one coverage for all five days of their tournament . . . The hole to be considered for Hole-in-One Coverage is #18 which plays an average of 175 yards. The pins (as always in a PGA tour event, ) will be set in a new location each morning of the Greenbrier Classic by the PGA. The insured has no idea nor will have any influence as to where the pins will be set.

(Id. at ¶14.). Old White claimed that it was “never advised” by HCC, All Risks, or Lloyd's that insurance was unavailable due to its inability to control the distance. (Id. at ¶15.) Old White alleged that it was contacted by Bankers on June 26, 2015, and informed that the insurance was bound for the promotion, and it then “overnighted the premium of $112, 684.12 to Bankers, ” after which it was told the insurance was in effect for the tournament. (Id. at ¶16-17.) After two golfers hit holes-in-one during the tournament, Old White claimed that the Plaintiffs, All Risks, “and/or HCC all wrongfully refused to pay the claims, even though they had bound the coverage and accepted the premium without advising Old White that there was any change to the conditions of the application.” (Id. at ¶23.) Old White claimed that it was entitled to the insurance proceeds in the policies, and that “[t]he first time Old White was aware of the alleged 170-yard limit was when they received the reservation of rights letter from HCC.” (Id. at ¶26.)

         Based on those allegations, Old White sought recovery under West Virginia Law for breach of contract by HCC, All Risks, and Lloyd's, as well as punitive damages, pre-judgment and post-judgment interest, as well as fees and costs. Old White also sought recovery for breach of the implied covenant of good faith and fair dealing, alleging that the Plaintiffs' claim that Old White failed to pay the policy premium caused reputational damage to itself, the Greenbrier, and James Justice. Additionally, Old White brought a tort claim of negligence and a claim of fraud.

         On October 13, 2015, HCC moved to Dismiss Old White's third party complaint. In an April 19, 2016 Memorandum Opinion and Order (Document 95), this Court granted HCC's motion to dismiss the third party complaint as to Old White's bad faith claims under the West Virginia Unfair Trade Practices Act and for common law bad faith, but denied the motion to dismiss on all other grounds. On November 13, 2015, All Risks separately moved to Dismiss Old White's third party complaint for reasons similar to those argued by HCC. In a May 5, 2016 Memorandum Opinion and Order (Document 99), this Court also granted All Risks' motion to dismiss the third party complaint as to Old White's statutory and common law bad faith claims, but denied the motion to dismiss on all other grounds. As a result, Old White's third party claims of breach of contract, negligence, and fraud still stand.

         On September 15, 2016, the Plaintiffs, HCC, and Lloyd's moved for summary judgment as to the Plaintiffs' claims for declaratory judgment and the remaining claims in Old White's third party complaint. On September 15, 2016, All Risks also moved for summary judgment on the remaining claims in Old White's third party complaint. Old White responded in opposition to both summary judgment motions on September 30, 2016. Bankers, as an intervening defendant, submitted an omnibus response in opposition to the summary judgment motions on September 30, 2016. All Risks, HCC, Lloyd's, and the Plaintiffs all filed replies on October 6, 2016. The motions for summary judgment are ripe for review.

         STANDARD OF REVIEW

         The well-established standard in consideration of a motion for summary judgment is that “[t]he 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)-(c); see also Hunt v. Cromartie, 526 U.S. 541, 549 (1999); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Hoschar v. Appalachian Power Co., 739 F.3d 163, 169 (4th Cir. 2014). A “material fact” is a fact that could affect the outcome of the case. Anderson, 477 U.S. at 248; News & Observer Publ'g Co. v. Raleigh-Durham Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010). A “genuine issue” concerning a material fact exists when the evidence is sufficient to allow a reasonable jury to return a verdict in the nonmoving party's favor. FDIC v. Cashion, 720 F.3d 169, 180 (4th Cir. 2013); News & Observer, 597 F.3d at 576.

         The moving party bears the burden of showing that there is no genuine issue of material fact, and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp., 477 U.S. at 322-23. When determining whether summary judgment is appropriate, a court must view all of the factual evidence, and any reasonable inferences to be drawn therefrom, in the light most favorable to the nonmoving party. Hoschar, 739 F.3d at 169. However, the non-moving party must offer some “concrete evidence from which a reasonable juror could return a verdict in his favor.” Anderson, 477 U.S. at 256. “At the summary judgment stage, the non-moving party must come forward with more than ‘mere speculation or the building of one inference upon another' to resist dismissal of the action.” Perry v. Kappos, No.11-1476, 2012 WL 2130908, at *3 (4th Cir. June 13, 2012) (unpublished decision) (quoting Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985)).

         In considering a motion for summary judgment, the court will not “weigh the evidence and determine the truth of the matter, ” Anderson, 477 U.S. at 249, nor will it make determinations of credibility. N. Am. Precast, Inc. v. Gen. Cas. Co. of Wis., 2008 WL 906334, *3 (S.D. W.Va. Mar. 31, 2008) (Copenhaver, J.) (citing Sosebee v. Murphy, 797 F.2d 179, 182 (4th Cir. 1986). If disputes over a material fact exist that “can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party, ” summary judgment is inappropriate. Anderson, 477 U.S. at 250. If, however, the nonmoving party “fails to make a showing sufficient to establish the existence of an element essential to that party's case, ” then summary judgment should be granted because “a complete failure of proof concerning an essential element . . . necessarily renders all other facts immaterial.” Celotex, 477 U.S. at 322-23.

         DISCUSSION

         The Plaintiffs seek summary judgment on their complaint for declaratory relief against Old White. The Plaintiffs and the third party Defendants HCC and Lloyd's jointly seek summary judgment concerning the remaining claims of breach of contract, negligence, and fraud pending in Old White's counterclaim and third party complaint. Third party Defendant All Risks also seeks summary judgment against Old White concerning the remaining claims of breach of contract, negligence, and fraud in Old White's third party complaint. Although these motions are presented separately, they are nearly identical in argument and, therefore, the Court will address them together.

         A. The Plaintiffs' Summary Judgment Argument for Declaratory Relief

         The Plaintiffs argue that they are entitled to summary judgment on their claim of declaratory relief of non-coverage concerning the prize indemnity policies for five different reasons, presented in the alternative: (1) Old White did not comply with the minimum yardage requirement written into the policy; or (2) rescission of the policy is available because Old White made material misrepresentations to the Plaintiffs in the application for insurance; or (3) coverage is excluded because of a material deviation by Old White; or (4) coverage is excluded because Old White failed to pay the premium on time; or (5) the policy is void because there was never a meeting of the minds between the Plaintiffs and Old White. The Plaintiffs assert that deposition testimony and evidence show that no genuine dispute of material fact exists concerning the information given to Plaintiffs by Old White in the application, and that the Plaintiffs are therefore entitled to a declaration that they can rescind the policy as a matter of law.

         The Plaintiffs first argue that they are entitled to rescind the policy, and that no coverage exists for Old White, because Old White breached the minimum yardage requirement of the policy when the holes-in-one were made at a distance of only 137 yards. In response, Old White argues that it did not breach the contract because it was not aware of, and never agreed to, the minimum yardage requirement in the policy. Old White contends that it clearly informed the Plaintiffs that the PGA Tour would establish the length of the hole, and that it therefore had no say in the matter and did not agree to any certain yardage requirement in the policy. Old White also argues that the Plaintiffs cannot be allowed to rescind the policy because the acts of the Plaintiffs, HCC, Lloyd's, and All Risks created a reasonable expectation of insurance coverage in Old White. Old White argues that the negotiations between Old White and the Plaintiffs and their agents are riddled with ambiguity, and that the terms of the policy were not effectively communicated to the insured.

         The Court finds that, as a matter of law, Old White is not entitled to coverage under the policy because it did not stay within the conditions of the contract. Pursuant to West Virginia law, “where the provisions in an insurance policy contract are clear and unambiguous they are not subject to judicial construction or interpretation, but full effect will be given to the plain meaning intended.” Erie Ins. ...


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