Opinion
Civil Action No. 5:98-CV-264-R
May 27, 1999.
MEMORANDUM OPINION
This matter is before the Court on Defendants' motion for summary judgment (doc. #11). For the following reasons, Defendants' motion is GRANTED.
BACKGROUND
Plaintiff Dwight Williams is a real estate agent whose company is Cumberland Valley Realty, the other Plaintiff in this lawsuit. Williams represented the seller of a piece of land who was going to sell it to Hugo Wilson for $40,000. Wilson then was to sell it to David Wagner for $62,500. The deal fell through, and the seller eventually sold the land to Wagner. Wilson sued Plaintiffs for intentional interference with a prospective contractual relation, and a jury awarded Wilson compensatory damages of $22,500.
Plaintiffs had purchased an insurance policy for professional errors or omissions from Bankers Multiple Line Insurance Company. Frontier Insurance Company later purchased Bankers Multiple Line. The insurers provided a defense for Plaintiffs with a reservation of rights and also participated in settlement negotiations. The reservation of rights excluded coverage for claims "arising out of any injury or damage which the insured either expected or intended." When Williams lost the jury trial, the insurers denied coverage for the judgment, claiming that it arose out of an injury that was expected or intended.
Plaintiffs filed suit for breach of contract and bad faith. Defendants have filed a motion for summary judgment, arguing that the prior litigation has a preclusive effect and that as a matter of law, the damage to Wilson was either expected or intended.
STANDARD
Although Kentucky substantive law applies to this case based on diversity of citizenship jurisdiction, the federal standard for summary judgment applies. Gafford v. General Elec. Co., 997 F.2d 150, 165-66 (6th Cir. 1993). Summary Judgment is available under Fed.R.Civ.P. 56(c) if the moving party can establish that the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The moving party must carry the initial burden by "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 342, 88 L.Ed.2d 28 (1986). In determining whether summary judgment is appropriate, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
If the moving party meets its burden, the burden then shifts to the nonmoving party to present "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The test is "whether the party bearing the burden of proof has presented a jury question as to each element in the case." Hartsel v. Keys, 87 F.3d 795, 799 (6th Cir. 1996). Plaintiff must present evidence on which the trier of fact could find for the plaintiff. Anderson v. Liberty Lobby, 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
DISCUSSION
The issue in this case is whether the injury or damage to Wilson was expected or intended. The Supreme Court of Kentucky, in James Graham Brown Foundation, Inc. v. St. Paul Fire Marine Ins. Co., 814 S.W.2d 273 (Ky. 1991), stated:
The "expected or intended" exception is inapplicable unless the insured specifically and subjectively intends the injury giving rise to the claim. . . . [I]f injury was not actually and subjectively intended or expected by the insured, coverage is provided even though the action giving rise to the injury itself was intentional and the injury foreseeable. While the activity which produced the alleged damage may be fully intended, recovery will not be allowed unless the insured intended the resulting damages.Id. at 278(citations omitted). The court also stated that "[w]hether an insured intended the consequences of its action is normally a question of fact and not one of law." Id. at 276. However, in some circumstances, a court, on a motion for summary judgment, can infer that the insured intended or expected damage. Id. at 277.
The Court infers from the circumstances of the instant case that, as a matter of law, Plaintiff intended or expected the injury to Wilson. See Walker v. Economy Preferred Ins. Co., 909 S.W.2d 343 (Ky.App. 1995) (stating that the "inherently injurious" act of punching someone in the face supports an inference as a matter of law that insured intended to cause injury); Thompson v. West American Ins. Co., 839 S.W.2d 579 (Ky.App. 1992) (finding that the intent to injure can be inferred as a matter of law from insured's act of sexual molestation). Plaintiff knew that Wilson had an agreement to sell the land to Wagner for a profit, and since Plaintiff intentionally interfered with that prospective contract relation by causing seller to sell to Wagner directly, Plaintiff must have expected Wilson to suffer damages. Plaintiff's actions were inherently injurious, and thus, they fall within the exception to the policy.
Plaintiff cannot demonstrate a genuine issue of material fact to survive a motion for summary judgment. Plaintiff is precluded from arguing that he did not intentionally interfere with Wilson's prospective contractual relation with Wagner. Moore v. Commonwealth of Kentucky, 954 S.W.2d 317 (Ky. 1997). Since Plaintiff's breach of contract claim fails, he cannot sustain a claim for bad faith. Wittmer v. Jones, 864 S.W.2d 885 (Ky. 1993). The fact that the insurer defended Plaintiff in the prior action and was involved in settlement negotiations does not establish a cause of action for bad faith, since Plaintiff must first establish that the insurer had an obligation to pay under the policy. Id.
An appropriate order shall issue.
ORDER
Defendants having filed a motion for summary judgment, and the Court being sufficiently advised,
IT IS ORDERED:
Defendants' motion for summary judgment (doc.#11) is GRANTED and this case is DISMISSED with prejudice.
This is a final and appealable order. There is no just cause for delay.