United States District Court, N.D. West Virginia
GRAND CHINA BUFFETT & GRILL, INC.; QI FENG CHEN; and SCOTT ULLOM, Plaintiffs,
STATE AUTO PROPERTY & CASUALTY COMPANY, Defendant.
MEMORANDUM OPINION AND ORDER GRANTING STATE
AUTO'S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 25] AND
DISMISSING THIS CASE WITH PREJUDICE
M. KEELEY UNITED STATES DISTRICT JUDGE
Qi Feng Chen (“Chen”) and Grand China Buffet
& Grill, Inc. (“Grand China”), filed a
complaint in the Circuit Court of Harrison County, West
Virginia, on June 17, 2016 (Dkt. No. 1-1), which, in part,
sought a declaration that defendant State Auto Property &
Casualty Co. (“State Auto”) has a duty to defend
and indemnify them against a wrongful exclusion action filed
in state court by Scott Ullom (“Ullom”) on July
21, 2015 (“underlying complaint”) (Dkt. No. 1-1
at 23). State Auto removed the case to this Court on July 22,
2016 (Dkt. No. 1). Now pending is State Auto's motion for
summary judgment on the coverage issues in the case (Dkt. No.
25). For the reasons that follow, the Court
GRANTS State Auto's motion.
The Underlying Complaint
21, 2015, Ullom filed the underlying complaint in the Circuit
Court of Harrison County, West Virginia, seeking to hold Chen
liable in his capacity as “Director, Incorporator, and
President” of Grand China for violations of the West
Virginia Human Rights Act (“WVHRA”), as well as
“all applicable West Virginia Statutes” and
“Constitutional Laws” (Dkt. No. 1-1 at 25). The
underlying complaint alleges that Ullom has hearing and other
physical impairments that require him to use a service dog,
prosthetic foot, and, at times, a wheelchair. Id. at
claims that, on July 23, 2013, he and his friend were refused
service at Grand China by an “oriental
looking” individual believed to be the manager, Stanley
Sun (“Sun”). Id. at 23. Sun allegedly
would not allow Ullom to bring his service dog into the
restaurant, even after Ullom advised that the dog was not a
pet but provided assistance. Id. at 23-24. The
underlying complaint claims that Sun “frantically
wave[d] both hands above his head and in front of his face,
” and yelled “the dog cannot come in, the dog
cannot come in.” Id. at 23. After exiting
Grand China, Ullom dialed 911. The Clarksburg City Police
arrived shortly thereafter to investigate the incident, but
advised Ullom that Chen was “afraid of what other
customers would say about a dog in his restaurant, ”
and that he had the “right to refuse service to
anyone.” Id. at 24.
underlying complaint seeks “a significant amount”
of damages under the WVHRA, both to accommodate Ullom and to
punish Chen and Grand China for their “intentional acts
of wrong doing.” Id. at 25. It also seeks
damages for emotional distress, embarrassment, and
humiliation in an amount that will “fairly compensate
[Ullom] for the intentional acts of wrong doing.”
Chen placed Grand China's commercial general liability
insurance company, State Auto, on notice of the underlying
complaint, the carrier at first provided a defense. See
id. at 8. After deposing Ullom, however, State Auto
decided that he had not incurred a “bodily
injury” covered under Grand China's policy
(“the Subject Policy”), and withdrew any further
defense to Grand China and Chen. Id. at 9.
result of State Auto's decision to withdraw its defense,
Grand China and Chen filed the instant action against State
Auto and Ullom in the Circuit Court of Harrison County on
June 17, 2016. See id. at 6. The complaint seeks the
following declarations: (1) “that the Subject Policy
does provide them with bodily injury liability coverage for
some or all” of Ullom's claims in the underlying
complaint; (2) “that the Subject Policy does provide
them with personal and advertising injury liability coverage
for some or all” of Ullom's claims in the
underlying complaint; and (3) that State Auto's
reservation of rights was improperly and untimely issued and
that State Auto is barred by waiver and estoppel from
avoiding coverage obligations, or alternatively, that the
reservation of rights is the sole statement of the basis for
coverage avoidance. Id. at 12-14. In addition to the
declaratory claims, the complaint seeks damages for breach of
contract, common law bad faith, a Hayseeds claim,
and violations of the West Virginia Unfair Trade Practices
Act. Id. at 15-21.
Auto removed the case to this Court on July 22, 2016 (Dkt.
No. 1 at 2). On July 29, 2016, State Auto answered the
complaint, and filed a counterclaim and cross claim for
declaratory relief against Grand China and Ullom (Dkt. No.
4). State Auto seeks declarations that Ullom's claims in
the underlying complaint are not covered by the Subject
Policy, and that it has no duty to defend or indemnify Grand
China. Id. at 18.
August 22, 2016, Grand China moved to remand the case to the
Circuit Court of Harrison County based on lack of complete
diversity (Dkt. No. 7). State Auto opposed the motion and
requested that the Court realign Ullom as a plaintiff to
create complete diversity (Dkt. No. 10). At a scheduling
conference on September 29, 2016, the Court denied Grand
China's motion to remand, granted State Auto's motion
to realign Ullom as a plaintiff, bifurcated the case, and
scheduled deadlines for dispositive motions on the coverage
issues raised in the case. On November 8, 2016, State Auto
moved for summary judgment on the coverage issues (Dkt. No.
25). That motion is fully briefed and ripe for review.
STANDARD OF REVIEW
judgment is appropriate where the “depositions,
documents, electronically stored information, affidavits or
declarations, stipulations . . ., admissions, interrogatory
answers, or other materials” establish 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)(1)(A). When ruling on a
motion for summary judgment, the Court reviews all the
evidence “in the light most favorable” to the
nonmoving party. Providence Square Assocs., L.L.C. v.
G.D.F., Inc., 211 F.3d 846, 850 (4th Cir. 2000). The
Court must avoid weighing the evidence or determining its
truth and limit its inquiry solely to a determination of
whether genuine issues of triable fact exist. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
moving party bears the initial burden of informing the Court
of the basis for the motion and of establishing the
nonexistence of genuine issues of fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). Once the moving party
has made the necessary showing, the non-moving party
“must set forth specific facts showing that there is a
genuine issue for trial.” Anderson, 477 U.S.
at 256 (internal quotation marks and citation omitted). The
“mere existence of a scintilla of evidence”
favoring the non-moving party will not prevent the entry of
summary judgment; the evidence must be such that a rational
trier of fact could reasonably find for the nonmoving party.
Id. at 248-52.
federal court exercising diversity jurisdiction is obliged to
apply the substantive law of the state in which it
sits.” Volvo Const. Equip. N. Am. v. CLM Equip.
Co., Inc., 386 F.3d 581, 599-600 (4th Cir. 2004) (citing
Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79 (1938)).
The Court must therefore apply West Virginia law. See
Beckley Mech., Inc. v. Erie Ins. & Cas. Co., 374 F.
App'x 381, 383 n.1 (4th Cir. 2010) (unpublished decision)
(citing Erie, 304 U.S. 64). In West Virginia,
“[d]etermination of the proper coverage of an insurance
contract when the facts are not in dispute is a question of
law.” Syl. Pt. 1, Tennant v. Smallwood, 568
S.E.2d 10 ( W.Va. 2002).
insurance policies establish two main duties on the part of
the insurer, the duty to defend and the duty to indemnify.
See, e.g., Aetna Cas. & Sur. Co. v.
Pitrolo, 342 S.E.2d 156, 160 ( W.Va. 1986); Donnelly
v. Transp. Ins. Co., 589 F.2d 761, 765 (4th Cir. 1978).
An insurer's duty to defend is normally triggered when
“the allegations in the plaintiff's complaint are
reasonably susceptible of an interpretation that the claim
may be covered by the terms of the insurance policy, ”
but “[t]here is no requirement that the facts alleged
in the complaint specifically and unequivocally make out a
claim within the coverage.” Pitrolo, 342
S.E.2d at 160; see also Syl. Pt. 2, Farmers
& Mechs. Mut. Ins. Co. of W.Va. v. Cook, 557 S.E.2d
801, 802 ( W.Va. 2001). If any of the claims against the
insured might trigger coverage, the insurer must defend
against all the claims. See Horace Mann Ins. Co. v.
Leeber, 376 S.E.2d 581, 584 ( W.Va. 1988) (citing
Donnelly, 589 F.2d at 765). Nevertheless, the
insurer need not provide a defense if the claims are
“entirely foreign to the risk insured against.”
Air Force Ass'n v. Phoenix Ins. Co., 896 F.2d
545 (4th Cir. 1990) (unpublished table decision) (citing
Donnelly, 589 F.2d at 765).
specific wording of an insurance policy determines whether it
provides coverage for a particular claim. See Beckley
Mech., 374 F. App'x at 383; Cherrington v. Erie
Ins. Prop. & Cas. Co., 745 S.E.2d 508, 524 ( W.Va.
2013). Indeed, “[l]anguage in an insurance policy
should be given its plain, ordinary meaning.” Syl. Pt.
8, Cherrington, 745 S.E.2d 508 (internal quotations
and citations omitted). Courts should not endeavor to
interpret policy provisions unless they are unclear or
ambiguous. Id. Instead, courts must give terms and
provisions their meaning in the “plain, ordinary and
popular sense, not in a strained or philosophical
sense.” Polan v. Travelers Ins. Co., 192
S.E.2d 481, 484 ( W.Va. 1972); see also Syl. Pt. 9,
Cherrington, 745 S.E.2d 508.
is ambiguous if it “is reasonably susceptible of two
different meanings or is of such doubtful meaning that
reasonable minds might be uncertain or disagree as to its
meaning.” Allstate Ins. Co. v. Ashley, 37 F.3d
1492, at *2 (4th Cir. 1994) (unpublished table decision)
(quoting Syl. Pt. 1, Surbaugh v. Stonewall Cas. Co.,
283 S.E.2d 859, 860 ( W.Va. 1981)). Courts should resolve any
ambiguity in favor of the insured. See Jenkins v. State
Farm Mut. Auto. Ins. Co., 632 S.E.2d 346, 350 ( W.Va.
2006) (quoting Leeber, 376 S.E.2d at 584).
China's complaint seeks a declaration that State Auto is
obligated to defend it against Ullom's allegations
because the underlying complaint alleges a “bodily
injury” or “personal and advertising
injury” within the meaning of the Subject
China first seeks a declaration that the Subject Policy
provides “bodily injury liability coverage for some or
all of the claims asserted and losses allegedly
sustained” by Ullom in the underlying complaint (Dkt.
No. 1-1 at 12). State Auto, however, contends that the
underlying complaint does not allege a claim for
“bodily injury” as that term is defined in the
Subject Policy (Dkt. Nos. 4 at 17; 26 at 9-11).
Subject Policy provides coverage for “bodily
injury” as follows (Dkt. No. 25-2 at 97, 108):
I - COVERAGES
A BODILY INJURY AND PROPERTY DAMAGE LIABILITY