Opinion
No. 3:98CV7-D-A.
Filed Date: March 1, 1999.
OPINION
Presently before the court are the motion of Defendant R. Doyle McKnight, d/b/a Mac's Package Store ("McKnight"), to dismiss and the motion of Plaintiff Grain Dealers Mutual Insurance Company ("Grain Dealers") for summary judgment. Upon due consideration of the aforesaid motions, this court finds that the Defendant's motion to dismiss should be denied and that the Plaintiff's motion for summary judgment should be granted.
Factual and Procedural Background
This lawsuit is a result of three separate underlying cases arising from the same fatal automobile accident. The complaints each allege that Defendant McKnight negligently sold alcoholic beverages to one or more of the minors involved in the accident which proximately caused the automobile collision. At the time of the alleged sale of alcohol to the minors, McKnight was insured pursuant to a commercial insurance policy issued by Plaintiff Grain Dealers. Grain Dealers filed a Complaint for Declaratory Judgment with this Court, asserting that no liability coverage exists for McKnight with regard to the claims made in the underlying state court actions.
DISCUSSION
A. Motion to Dismiss
In its motion to dismiss, Defendant McKnight argues that this court should abstain from ruling on the Plaintiff's Complaint for Declaratory Judgment and dismiss the complaint. McKnight asserts that for this court to address the request for declaratory relief would be duplicative and contrary to judicial economy. However, the Plaintiff points out that it is not a party in any of the underlying cases. The Defendant argues that the Plaintiff may seek intervention in the three underlying state cases, which are all in the same circuit court and before the same judge. Alternatively, McKnight offers that the Plaintiff may bring a separate action for declaratory judgment in the state court. Nevertheless, the Plaintiff argues that the Declaratory Judgment Act allows it to seek resolution of the coverage issue in the federal courts.
"It is now well-settled in the Fifth Circuit that a district court has discretion over whether to decide or dismiss a declaratory judgment action." Travelers Ins. Co. v. Louisiana Farm Bureau Fed'n, 996 F.2d 774, 778 (5 th Cir. 1993). Some of the relevant factors that this court considers in determining whether to decide or dismiss a declaratory judgment action are:
1. Whether there is a pending state action in which all of the matters in controversy may be fully litigated. Rowan Cos., Inc. v. Griffin, 876 F.2d 26, 29 (5 th Cir. 1989).
2. Whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant.
Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 602 (5 th Cir. 1983).
3. Whether the plaintiff engaged in forum shopping in bringing the suit. Rowan, 876 F.2d at 29.
4. Whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist. Id.
5. Whether the federal court is a convenient forum for the parties and witnesses. Mission, 706 F.2d at 602.
6. Whether retaining the lawsuit in federal court would serve the purposes of judicial economy. Id.
Upon considering these factors, the court is of the opinion that this court is the proper forum in which to decide the declaratory judgment action.
This declaratory judgment action addresses the sole issue of coverage. Although there are three pending state actions, none include the issue of coverage. Although the Plaintiff could intervene in the underlying lawsuits or file a declaratory action in state court, maintaining the declaratory action in this federal forum is no less convenient for the parties or witnesses. The same pleadings and motions would be filed in the state action as are being filed in this federal action. Although this court recognizes that the same judge is hearing the three separate state cases, the judge's familiarity with the negligence issues concerning the automobile accident do not enable that judge to address the coverage issue in any more efficient manner than this court can address the coverage issue. Additionally, if this issue were to be handled in state court there would either be three intervening complaints for declaratory judgment or the Plaintiff would have to commence a new action in state court. Either of these options would be less efficient and more economically burdensome than if this court was to decide the declaratory judgment action.
This court is also of the opinion that the filing of this action was neither in anticipation of a lawsuit filed by the defendant, nor a means of forum shopping, nor a means to gain precedence in time or to change forum. This action was filed as a result of other lawsuits, not in anticipation of a lawsuit. As to the forum shopping issue, declaratory relief regarding coverage is the sole issue at hand; therefore, once that issue is decided, this case will be closed and there will be no interference with the state actions. This court finds that forum shopping was not a factor in filing for declaratory relief.
Finally, the district court is always concerned with comity when abstention issues are raised. However, this concern has been overtaken by the Fifth Circuit. In Audubon Ins. Co. v. Terry Road Wine Liquor, Inc., the United States Court of Appeals for the Fifth Circuit affirmed a district court's opinion as to the Mississippi insurance law issues that are very similar, if not identical, to those involved in this case. Audubon, 875 F. Supp. 1243 (S.D. Miss. 1995), aff'd in part, rev'd in part, 68 F.3d 469 (5 th Cir. 1995).
For the foregoing reasons, this court finds that it is the proper forum to address the Plaintiff's complaint for declaratory judgment and, therefore, denies the Defendant's motion to dismiss.
B. Motion for Summary Judgment
On a motion for summary judgment, the movant has the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 2554, 91 L. Ed. 2d 265 (1986) ("the burden on the moving party may be discharged by `showing' . . . that there is an absence of evidence to support the non-moving party's case"). Under Rule 56(e) of the Federal Rules of Civil Procedure, the burden shifts to the non-movant to "go beyond the pleadings and by . . . affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex Corp., 477 U.S. at 324. That burden is not discharged by "mere allegations or denials." Fed.R.Civ.P. 56(e). All legitimate factual inferences must be made in favor of the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 2513, 91 L. Ed. 2d 202 (1986). Rule 56(c) mandates the entry of summary judgment "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp., 477 U.S. at 322. Before finding that no genuine issue for trial exists, the court must first be satisfied that no reasonable trier of fact could find for the non-movant. Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986).
The Plaintiff asserts that the claims brought against McKnight in the underlying state court cases are outside the scope of the policy coverage. The Grain Dealers insurance policy issued to McKnight sets forth the following liability coverage provisions:
A. COVERAGES
1. Business Liability
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury", "property damage", "personal injury" or "advertising injury" to which this insurance applies. We will have the right and duty to defend any "suit" seeking those damages.
Notwithstanding this language, the policy contains the following policy exclusion:
B. EXCLUSIONS
1. Applicable to Business Liability Coverage — This insurance does not apply to:
. . .
c. "Bodily injury" . . . for which any insured may be held liable by reason of:
(1) Causing or contributing to the intoxication of any person;
(2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or
(3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.
This exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.
See Complaint for Declaratory Judgment, Exhibit A, unnumbered pp. 25-26.
Mississippi courts treat insurance contracts like all other contracts. Robinette v. American Liberty Ins. Co., 720 F. Supp. 577, 579-80 (S.D. Miss. 1989), aff'd, 896 F.2d 552 (5 th Cir. 1990). Thus, if a particular insurance policy provision is clear and unambiguous, it will be enforced as written. Robinette, 720 F. Supp. 579-80. However, if the policy provision is ambiguous, then the ambiguities will be construed against the insurer and in favor of the insured. Pemberton v. State Farm Mutual Auto Ins. Co., 803 F. Supp. 1187, 1192 (S.D. Miss. 1992). This court is of the opinion that the above stated policy language is clear and unambiguous. Still, Defendant McKnight asserts that he did not know of the relevant exclusions, nor was he informed of these exclusions by his insurance agent. However, knowledge of unambiguous contents of an insurance policy, including any endorsement, is imputed to the insured, as a matter of law. Cherry v. Anthony, Gibbs, Sage, 501 So.2d 416, 419 (Miss. 1987) (explaining that this principle of contract law applies even if insured has not read policy).
"The general rule is well-settled [in Mississippi] that the obligation of a liability insurance company under a policy provision requiring it to defend an action brought against the insured by a third party is to be determined by the allegations of the complaint in such action." Southern Farm Bureau Casualty Ins. Co. v. Logan, 119 So.2d 268, 271 (Miss. 1960). "Only if the pleadings state facts `bringing the injury within the coverage of the policy' must the insurer defend." Employers Reinsurance v. Martin, Gordon Jones, 767 F. Supp. 1355, 1360 (S.D. Miss. 1991) (quoting Foreman v. Continental Casualty Co., 770 F.2d 487, 489 (5 th Cir. 1985).
The complaints in the underlying state actions allege that the Defendant negligently sold alcohol to minors which proximately caused the subject automobile accident. See Complaint for Declaratory Judgment, Exhibits B, C, and D. These claims are clearly excluded by the language in the insurance policy. In Audubon Ins. Co. v. Terry Road Wine Liquor, Inc., Chief Judge Barbour addressed this identical coverage issue. Audubon, 875 F. Supp. 1243 (S.D. Miss. 1995), aff'd in part, rev'd in part, 68 F.3d 469 (5 th Cir. 1995). The facts involved the sale of alcohol to minors that resulted in an automobile accident; the policy language was identical. Id. at 1244-45. The district court held that there was no coverage as to the claims involving the injuries that resulted from the sale of alcohol to the minors. Id. at 1246. The Fifth Circuit affirmed the holding denying coverage. Audubon, 68 F.3d 469 (5 th Cir. 1995). Following the precedent set by the Fifth Circuit, this court concludes that the claims against McKnight in the underlying state actions are not within the scope of coverage.
A separate order in accordance with this opinion shall issue this day.
ORDER DENYING DEFENDANT'S MOTION TO DISMISS AND GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
Pursuant to an opinion issued this day, it is hereby ORDERED that
Defendant's Motion to Dismiss (Docket #29) is DENIED;
Plaintiff's Motions for Summary Judgment (Docket #34) is GRANTED; and
this case is CLOSED.
All memoranda, depositions, declarations, and other materials considered by the court in ruling on these motions are hereby incorporated into and made a part of the record in this action.
SO ORDERED.