Opinion
Civil No. 2:21cv401
2022-09-07
NATIONWIDE GENERAL INSURANCE COMPANY, et al., Plaintiffs, v. Brian A. STAPLES, et al., Defendants.
Paul Robert Theodore Keikil Schmeding, Shawn Ashley Voyles, McKenry Dancigers Dawson PC, Virginia Beach, VA, for Plaintiff Nationwide General Insurance Company. Shawn Ashley Voyles, McKenry Dancigers Dawson PC, Virginia Beach, VA, for Plaintiff Nationwide Mutual Insurance Company. Brian Nelson Casey, Clarke, Dolph, Hull & Brunick, PLC, Virginia Beach, VA, John Richard Fletcher, Ryan Brandon Graves, Tavss Fletcher Maiden & Reed PC, Norfolk, VA, for Defendant Brian A. Staples. Stephen C. Swain, Ruloff Swain Haddad Morecock Talbert & Woodward, PC, Virginia Beach, VA, for Defendant Norman C. Stevens.
Paul Robert Theodore Keikil Schmeding, Shawn Ashley Voyles, McKenry Dancigers Dawson PC, Virginia Beach, VA, for Plaintiff Nationwide General Insurance Company. Shawn Ashley Voyles, McKenry Dancigers Dawson PC, Virginia Beach, VA, for Plaintiff Nationwide Mutual Insurance Company. Brian Nelson Casey, Clarke, Dolph, Hull & Brunick, PLC, Virginia Beach, VA, John Richard Fletcher, Ryan Brandon Graves, Tavss Fletcher Maiden & Reed PC, Norfolk, VA, for Defendant Brian A. Staples. Stephen C. Swain, Ruloff Swain Haddad Morecock Talbert & Woodward, PC, Virginia Beach, VA, for Defendant Norman C. Stevens. ORDER Arenda L. Wright Allen, United States District Judge
Pending before the Court is a Motion for Judgment on the Pleadings (the "Motion") brought by Plaintiffs NATIONWIDE GENERAL INSURANCE COMPANY ("Nationwide General") and NATIONWIDE MUTUAL INSURANCE COMPANY ("Nationwide Mutual"). ECF No. 18. Also pending before the Court is an Alternative Motion to Stay (the "Alternative Motion") brought by Defendant Norman C. Stevens. ECF No. 20. For the following reasons, the Motion (ECF No. 18) is GRANTED with respect to Plaintiff Nationwide General and DENIED with respect to Plaintiff Nationwide Mutual, and the Alternative Motion (ECF No. 20) is DENIED.
I. BACKGROUND
When ruling on a Motion for Judgment on the Pleadings, the Court accepts the facts alleged by the nonmoving party as true and draws all reasonable factual inferences in that party's favor. Greensill Cap. (Uk) Ltd. v. Tempus Intermediate Holdings, LLC, No. 4:17cv127, 2018 WL 1937063, at *2 (E.D. Va. Apr. 24, 2018) (citing Paul v. ImpactOffice LLC, No. 16cv2686, 2017 WL 2462492, at *2 (D. Md. June 6, 2017)). Accordingly, the Court reviews the facts as alleged in the pleadings in the light most favorable to Defendants Brian A. Staples and Norman C. Stevens (collectively, "Defendants").
Plaintiffs Nationwide General and Nationwide Mutual are businesses that provide insurance policies to Defendant Brian A. Staples. Am. Compl. at ¶¶ 2-3, ECF No. 11; Staples Answer to Am. Compl. at ¶¶ 2-3, ECF No. 15. Each is an Ohio corporation with its principal place of business in Ohio. Am. Compl. at ¶¶ 5-6, ECF No. 11. Mr. Staples is the policyholder for Nationwide General's Homeowners Policy (policy number 53 45 HR 139699) (the "Homeowners Policy") and Nationwide Mutual's Personal Umbrella Policy (policy number 53 45 PU508401) (the "Umbrella Policy") (collectively, the "Policies"). Am. Compl. at ¶¶ 1-3, ECF No. 11; Staples Answer to Am. Compl. at ¶¶ 2-3, ECF No. 15; Exs. A at 3-5 and B at 4, Am. Compl., ECF Nos. 11-1 and 11-2. Mr. Staples is a Virginia resident. Am. Compl. at ¶ 7, ECF No. 11; Staples Answer to Am. Compl. at ¶ 7, ECF No. 15. Defendant Norman Stevens is also a Virginia resident. Am. Compl. at ¶ 8, ECF No. 11; Stevens Answer to Am. Compl. at ¶ 8, ECF No. 17.
All referenced page numbers are based on the ECF header.
On or about December 20, 2019, Mr. Stevens alleges that Mr. Staples physically attacked and injured him at AJ Gators Sports Bar and Grill. Am. Compl. at ¶ 13, ECF No. 11; Staples Answer to Am. Compl. at ¶ 13, ECF No. 15; Stevens Answer to Am. Compl. at ¶ 13, ECF No. 17. On July 28, 2020, Mr. Stevens filed a personal injury lawsuit against Mr. Staples based on these alleged events. Am. Compl. at ¶ 12, ECF No. 11; Staples Answer to Am. Compl. at ¶ 12, ECF No. 15; Stevens Answer to Am. Compl. at ¶ 12, ECF No. 17; see Stevens v. Staples, No. 810CL20005096-00 (Va. Beach, Va. Cir. Ct.) (submitted as Ex. C, Am. Compl., ECF No. 11-3). Mr. Stevens is seeking $1.65 million in compensatory damages and $1 million in punitive damages, plus costs and interest. Am. Compl. at ¶ 12, ECF No. 11; Staples Answer to Am. Compl. at ¶ 12, ECF No. 15; Stevens Answer to Am. Compl. at ¶ 12, ECF No. 17.
On August 14, 2020, Mr. Staples informed Plaintiffs of the December 20, 2019 incident and the lawsuit. Am. Compl. at ¶ 14, ECF No. 11; Staples Answer to Am. Compl. at ¶ 14, ECF No. 15. Mr. Staples has requested that Plaintiffs provide a defense and coverage pursuant to the Policies. Am. Compl. at ¶ 15, ECF No. 11; Staples Answer to Am. Compl. at ¶ 15, ECF No. 15. Plaintiffs currently defend Mr. Staples under a reservation of rights. Am. Compl. at ¶ 16, ECF No. 11; Staples Answer to Am. Compl. at ¶ 16, ECF No. 15.
On July 19, 2021, Plaintiffs filed a Complaint for Declaratory Judgment in this Court. Compl., ECF No. 1. Subsequently, on November 22, 2021, Plaintiffs filed an Amended Complaint for Declaratory Judgment. Am. Compl., ECF No. 11. Plaintiffs argue that under the Policies, they are not required to provide any defense or indemnity coverage to Mr. Staples because (1) there is no coverage for intentional acts, and (2) Mr. Staples provided late notice. Id. at ¶¶ 19-35. On December 3, 2021, Defendant Staples filed an Answer to the Amended Complaint, and on January 14, 2022, Defendant Stevens filed an Answer to the Amended Complaint. Staples Answer to Am. Compl., ECF No. 15; Stevens Answer to Am. Compl., ECF No. 17.
On January 28, 2022, Plaintiffs moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). Mot. for J. on Pleadings, ECF No. 18. On February 1, 2022, Defendant Stevens filed a Response in Opposition to the Motion for Judgment on the Pleadings. Stevens Resp. in Opp'n, ECF No. 20. Within the Response, Defendant Stevens included an Alternative Motion to Stay. Id. at 3-4. On February 11, 2022, Defendant Staples filed a Response in Opposition to the Motion for Judgment on the Pleadings. Staples Resp. in Opp'n, ECF No. 22. After requesting leave of the Court, Defendant Staples filed an Amended Response in Opposition to the Motion for Judgment on the Pleadings. Staples Am. Resp. in Opp'n, ECF No. 24. Plaintiffs filed Replies to Mr. Stevens on February 7, 2022 and to Mr. Staples on February 17, 2022. Reply to Stevens, ECF No. 21; Reply to Staples, ECF No. 26. The Motions are ripe for adjudication. The Court has determined that a hearing on these Motions is unnecessary, as the issues for decision are adequately presented in the briefs. See E.D. Va. Local Civ. R. 7(J).
II. LEGAL STANDARDS
A. Motion for Judgment on the Pleadings
Under Federal Rule of Civil Procedure 12(c), a party may move for judgment on the pleadings after the pleadings are closed but early enough not to delay trial. Fed. R. Civ. P. 12(c). A plaintiff may move for judgment on the pleadings in an action seeking declaratory judgment regarding a contractual dispute. Penn-Am. Ins. Co. v. White Pines, Inc., 476 F. Supp. 3d 354, 359 (E.D. Va. 2020). A court decides a motion for judgment on the pleadings under the same standard as a motion for summary judgment when the motion is based on the underlying merits of the dispute. Id. at 360. The Court "assumes the facts alleged by the nonmoving party to be true and draws all reasonable factual inferences in its favor." Id. (quoting Paul v. ImpactOffice LLC, No. 16cv2686, 2017 WL 2462492, at *2 (D. Md. June 6, 2017)).
"[J]udgment is appropriate only if the moving party establishes that no genuine issue of material fact remains to be resolved and that the party is entitled to judgment as a matter of law." Id. at 360 (quoting Paul, 2017 WL 2462492, at *2). The Court considers the pleadings (the complaint, answer, and any written instruments attached to those filings) and any documents that are "integral to the complaint and authentic." Greensill Cap. (Uk) Ltd., 2018 WL 1937063, at *3 (quoting Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th Cir. 2013), and Philips v. Pitt Cnty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009)) (internal quotation marks omitted).
B. Virginia Insurance Law
i. Choice of Law
Absent a controlling constitutional or statutory provision, a federal court sitting in diversity must apply the substantive law of the state in which it sits. Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Thus, this Court applies Virginia's choice-of-law rule to determine the state law to apply to this insurance contract dispute. See Klaxon Co., 313 U.S. at 496-97, 61 S.Ct. 1020. Under Virginia's choice-of-law rule, "[w]here . . . the parties to the contract have themselves expressly declared that their contract shall be held and construed as made with reference to a certain jurisdiction, that shows by what law they intended the transaction to be governed." Union Cent. Life Ins. Co. v. Pollard, 94 Va. 146, 26 S.E. 421, 422 (1896); see Settlement Funding, LLC v. Von Neumann-Lillie, 274 Va. 76, 645 S.E.2d 436, 438 (2007) (citations omitted). If parties have not expressly declared which jurisdiction's law shall govern the contract, "the nature, validity and interpretation of contracts are governed by the law of the place [where the contract was] made." Klein v. Verizon Commc'ns., Inc., 674 F. App'x 304, 307-08 (4th Cir. 2017) (quoting Black v. Powers, 48 Va.App. 113, 628 S.E.2d 546, 554 (2006)) (alteration in original) (citations and internal quotation marks omitted).
ii. Insurer's Duty to Defend
Under Virginia law, an insurer's duty to defend its insured depends on "whether the allegations made in the complaint . . . potentially fall within the policy's coverage." Pa. Nat. Mut. Cas. Ins. Co. v. Block Roofing Corp., 754 F. Supp. 2d 819, 822 (E.D. Va. 2010) (citing Capitol Env't Servs., Inc. v. N. River Ins. Co., 536 F. Supp. 2d 633, 639 (E.D. Va. 2008) and VEPCO v. Northbrook Prop. & Cas. Ins., 252 Va. 265, 475 S.E.2d 264, 265 (1996)). "[A]n insurer's duty to defend is triggered if there is any possibility that a judgment against the insured will be covered under the insurance policy." CACI Int'l, Inc. v. St. Paul Fire & Marine Ins. Co., 566 F.3d 150, 155 (4th Cir. 2009) (quoting Bohreer v. Erie Ins. Group, 475 F. Supp. 2d 578, 584 (E.D. Va. 2007)) (internal quotation marks omitted).
To determine whether insurance coverage exists, a court applying Virginia law must follow the Eight Corners Rule, which requires a court "to compare the four corners of the insurance policy against the four corners of the underlying complaint." Id. at 153-54 (quoting Cap. Env't Servs., Inc., 536 F. Supp. 2d at 640) (internal quotation marks omitted). "[I]f any allegations [in the complaint] may potentially be covered by the policy, the insurer has a duty to defend." Id. (quoting Cap. Env't Servs., Inc., 536 F. Supp. 2d at 640) (internal quotation marks omitted). In applying the Eight Corners Rule, the Fourth Circuit has recognized that "Virginia courts have not signaled a readiness to look beyond the underlying complaint" and declined to look at documents attached to the complaint or on which the complaint relies. Id. at 156; Premier Pet Prods., LLC v. Travelers Prop. Cas. Co. of Am., 678 F. Supp. 2d 409, 416 n.8 (E.D. Va. 2010).
iii. Insurance Contract Interpretation
Interpreting insurance policy coverage relies on general principles of contract law. "When the language of the insurance policy is clear and unambiguous, courts must give the language its plain and ordinary meaning and enforce the policy as written." Pa. Nat. Mut. Cas. Ins. Co., 754 F. Supp. 2d at 823 (citing Transcon. Ins. Co. v. RBMW, Inc., 262 Va. 502, 551 S.E.2d 313 (2001), and Schneider v. Cont'l Cas. Co., 989 F.2d 728, 733 (4th Cir. 1993)). However, if ambiguity in the contract exists, it must be construed against the insurer. Id. (citing Res. Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631, 636 (4th Cir. 2005)). Whether a contract is ambiguous is a question of law, but courts will not strain to find ambiguities. Id. Ambiguity exists when, in context, the language is capable of more than one reasonable meaning. Id. (citing Res. Bankshares Corp., 407 F.3d at 636).
C. Notice Requirements
"Under Virginia law, insurance policy provisions requiring notice of an accident 'as soon as practicable' or 'as soon as possible' are reasonable and enforceable, and an insured's substantial compliance with these notice provisions is a condition precedent to recovery under the policy." Nationwide Mut. Ins. Co. v. Sandbridge Props., Inc., No. 2:12cv263, 2013 WL 209490, at *2 (E.D. Va. Jan. 17, 2013) (citations omitted). Whether notice is given "as soon as practicable" is usually a question of fact for the jury. Nationwide Mut. Fire Ins. Co. v. Overstreet, 568 F. Supp. 2d 638, 644 (E.D. Va. 2008) (quoting Mason & Dixon, Inc. v. Cas. Co., 199 Va. 221, 98 S.E.2d 702, 705 (1957)); see also Atlas Ins. Co. v. Chapman, 888 F. Supp. 742, 745 (E.D. Va. 1995). "Where there are extenuating circumstances for the delay, the jury may consider whether these circumstances furnish a justification or excuse for the delay." Overstreet, 568 F. Supp. 2d at 644.
However, in certain circumstances, "notice may be so long delayed as to violate an insurance policy's notice provision as a matter of law." Id. at 646. This Court has held that a delay of as little as four months with no justification is unreasonable as a matter of law. See Sandbridge Props., Inc., 2013 WL 209490, at *3; see also, e.g., Chapman, 888 F. Supp. at 746 (finding 126-day delay unreasonable as a matter of law). Additionally, an insured's mistaken, subjective belief that his insurance policy would not be implicated by the accident or occurrence in question is not an excuse or justification for the delay as a matter of law. Overstreet, 568 F. Supp. 2d at 645. "Put differently, it is no defense to a claim that notice was untimely to say that the insured subjectively did not understand his policy might be implicated." Id. (citing State Farm Fire & Cas. Co. v. Walton, 244 Va. 498, 423 S.E.2d 188, 191 (1992)).
D. Motion to Stay
"[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants." United States v. Carter, No. 3:16cv674, 2019 WL 10814595, at *1 (E.D. Va. Nov. 6, 2019) (quoting Landis v. N. Am. Co., 299 U.S. 248, 254, 57 S.Ct. 163, 81 L.Ed. 153 (1936)) (internal quotation marks omitted). When considering a motion to stay, the Court "has wide discretion to 'weigh competing interests and maintain an even balance.' " Dragas Mgmt. Corp. v. The Hanover Ins. Co., No. 2:10cv547, 2012 WL 12896235, at *1 (E.D. Va. Mar. 5, 2012) (quoting Landis, 299 U.S. at 255, 57 S.Ct. 163). "In deciding whether to grant a motion to stay, courts consider three factors: (1) judicial economy, (2) hardship and equity to the moving party if the action is not stayed, and (3) potential prejudice to the non-moving party." Brown v. Energy Servs. Grp. Int'l, Inc., No. 3:21cv611, 2022 WL 2161034, at *4 (E.D. Va. June 14, 2022) (citing Jasper v. United States, No. 1:00cr87, 2017 WL 449308, at *6-*7 (E.D. Va. Feb. 2, 2017)). III. THE INSURANCE CONTRACTS
The Homeowners Policy and Umbrella Policy contain substantially similar provisions on (1) notice and (2) the duty to defend. With respect to notice, both policies require the insured to give "notice to [the insurer] or [the insurer's] agent as soon as is practical" after an "occurrence." Exs. A at 37 and B at 21, Am. Compl., ECF Nos. 11-1 and 11-2. The insured must provide the identity of the insurance policy, the name of the insured, and reasonably available information on the time, place, and circumstances of the "occurrence." Exs. A at 37 and B at 21, Am. Compl., ECF Nos. 11-1 and 11-2. In addition to these common provisions, however, the Umbrella Policy further states that the insurer has "no duty to provide coverage under this Policy if [the insured's] failure to comply with [the duty to give notice as soon as is practical] is prejudicial to [the insurer]." Ex. B at 21, Am. Compl., ECF No. 11-2.
With respect to the duty to defend, the Policies provide coverage for bodily injury caused by an "occurrence," which the Policies define as an "accident." Exs. A at 11-12, 30 and B at 11, 14, Am. Compl., ECF Nos. 11-1 and 11-2. The Policies further state that " 'bodily injury' . . . which is expected or intended by an 'insured' " is excluded from coverage. Exs. A at 33 and B at 15, Am. Compl., ECF Nos. 11-1 and 11-2. However, an exception to this exclusion exists if the bodily injury resulted from the insured's use of reasonable force to protect persons or property. Exs. A at 33 and B at 15, Am. Compl., ECF Nos. 11-1 and 11-2.
IV. ANALYSIS
In support of the Motion for Judgment on the Pleadings, Plaintiffs argue (1) that Mr. Stevens' underlying complaint (the "Stevens complaint") in Stevens v. Staples alleged only intentional acts that are not covered under the Policies and (2) that Mr. Staples breached the terms of the Policies by failing to timely notify Plaintiffs of the incident. Mem. Supp. Mot. for J. on Pleadings at 3-8, ECF No. 19. Because the Policies indicate that the contract law of the state where the Policies were issued governs the interpretation of the contract, the Court will apply Virginia substantive law to Plaintiffs' claims. See Exs. A at 5, 41 and B at 2, 24, Am. Compl., ECF Nos. 11-1 and 11-2. The Court reviews (1) whether Defendant Staples has potential insurance coverage under the notice provisions, (2) whether Defendant Staples has potential insurance coverage for intentional acts, and (3) whether a stay pending the outcome of the underlying state court case (Stevens v. Staples) is warranted.
The Parties, in their briefing, likewise argue the case under Virginia law.
A. Defendant Staples is not covered under the Homeowners Policy because, as a matter of law, he failed to give notice "as soon as is practical."
For the reasons which will be explained below, the Court finds, as a matter of law, that Defendant Staples failed to provide notice "as soon as is practical" as required by the Homeowners Policy. See Ex. A at 37, Am. Compl., ECF No. 11-1. Plaintiff Nationwide General therefore does not have a duty to defend or indemnify Mr. Staples in the underlying lawsuit. See Sandbridge Props., Inc., 2013 WL 209490, at *2 (stating that Virginia law requires substantial compliance with notice provisions as a condition precedent to recovery under insurance policy). The Court declines to reach the question of whether the allegations in the Stevens complaint qualify as an "occurrence" under the Homeowners Policy because Nationwide General does not have a duty to cover Defendant Staples on the basis of notice alone.
The Homeowners Policy provides that the insured must give notice to the insurer "as soon as is practical" after an "occurrence." Ex. A at 37, Am. Compl., ECF No. 11-1. The parties agree that the incident between Mr. Staples and Mr. Stevens occurred on December 20, 2019 and that Mr. Staples did not inform Plaintiffs until August 14, 2020. Mem. Supp. Mot. for J. on Pleadings at 8, ECF No. 19; Staples Am. Resp. in Opp'n at 2, 9, ECF No. 24; Ex. C at 2-3, Am. Compl., ECF No. 11-3. The Court finds as a matter of law that, as there is no viable allegation of extenuating circumstances creating a reasonable justification for the delay, Mr. Staples did not provide notice "as soon as is practical" when he waited 238 days after the incident to give notice to Plaintiffs. See Sandbridge Props., Inc., 2013 WL 209490, at *3 (noting delay of as little as four months without justification to be unreasonable as a matter of law). Mr. Staples failed to substantially comply with the notice provisions of the Homeowners Policy, so he is barred from recovery. See id.
Defendant Staples argues that there are no allegations suggesting he "had any basis for understanding that the altercation in AJ Gators formed the basis for any claim or potential claims that would implicate coverage under" the Homeowners Policy. Staples Am. Resp. in Opp'n at 9, ECF No. 24. When made aware of the claims against him after Mr. Stevens filed the state court action on July 28, 2020, Mr. Staples provided relatively prompt notice to Plaintiffs on August 14, 2020. Id. This argument is not persuasive, however. As noted above, Virginia law is clear that failure to give timely notice because the insured subjectively did not understand that he would be covered under the policy is not a cognizable excuse or justification for the delay. Overstreet, 568 F. Supp. 2d at 645. The fact that Defendant Staples did not realize that the Homeowners Policy covered incidents outside of the home or its cartilage does not constitute a relevant extenuating circumstance or otherwise affect the reasonableness of his delay.
Defendant Staples also argues that the Court should consider lack of prejudice to Nationwide General in support of the reasonableness of his delay. Staples Am. Resp. in Opp'n at 10, ECF No. 24. However, as Defendant notes in his brief, in the absence of a contrary provision in the insurance contract, courts only consider lack of prejudice "where reasonable minds could differ regarding the reasonableness of the delay." Overstreet, 568 F. Supp. 2d at 647. "[W]here notice is so long delayed that it is untimely as a matter of law, an insured may not recover under the policy even if the insurer concedes it was not prejudiced by the delay." Id. Because the 238-day delay here is untimely as a matter of law, Nationwide General does not have to show that it was prejudiced by Defendant's delay (again, in the absence of any relevant contractual provision). Id. As a matter of law, Defendant Staples failed to give notice "as soon as is practical," and the Homeowners Policy thus does not provide coverage for the underlying lawsuit brought by Mr. Stevens. Accordingly, Plaintiff Nationwide General's Motion for Judgment on the Pleadings is GRANTED.
B. Questions of fact remain as to whether the Umbrella Policy covers Defendant Staples.
Defendant Staples argues that under the terms of the Umbrella Policy, Nationwide Mutual may not deny coverage based on untimeliness unless it results in prejudice to Nationwide Mutual. Staples Am. Resp. in Opp'n at 8, ECF No. 24; see Ex. B at 21, Am. Compl., ECF No. 11-2. Defendant Staples states that Nationwide Mutual has not alleged or demonstrated any prejudice resulting from the timing of his notice. Staples Am. Resp. in Opp'n at 8, ECF No. 24. Plaintiff Nationwide Mutual argues, to the contrary, that it does not need to show prejudice from the delay in notice to deny coverage under Virginia law. Reply to Staples at 5, ECF No. 26. The Court finds Defendant Staples's argument on this point more persuasive.
As noted above, Nationwide Mutual is correct that, typically, under Virginia law, "an insurer need not show it was prejudiced by the failure of its insured to provide notice, as compliance with the notice requirement is a condition precedent to recovery under an insurance policy." Overstreet, 568 F. Supp. 2d at 647 (citing State Farm Mut. Auto. Ins. Co. v. Porter, 221 Va. 592, 272 S.E.2d 196, 199-200 (1980) and Erie Ins. Exch. v. Meeks, 223 Va. 287, 288 S.E.2d 454 (1982)). However, unlike the Homeowners Policy, the Umbrella Policy's notice provision specifically provides that Nationwide Mutual has "no duty to provide coverage under this Policy if [the insured's] failure to comply with the following duties is prejudicial to [the insurer]." Ex. B at 21, Am. Compl., ECF No. 11-2 (emphasis supplied). The plain language of the provision thus lays out two factors affecting Nationwide Mutual's duty to provide coverage: (1) whether there is a failure to comply with a listed duty, which includes giving notice "as soon as is practical," and (2) whether the failure to comply is prejudicial to Nationwide Mutual. See Pa. Nat. Mut. Cas. Ins. Co., 754 F. Supp. 2d at 823 (noting that courts must give the language of an insurance policy its plain and ordinary meaning and enforce the policy as written when the language is clear and unambiguous); see also Wheeler v. Standard Fire Ins. Co., 165 F. Supp. 3d 477, 479, 482-83 (W.D. Va. 2016) (accepting without question insurer's premise that a showing of both unreasonable delay and prejudice are required based on materially identical notice provision). Here, there is no showing of prejudice at this stage of the proceedings. Therefore, in contrast to the result under the Homeowners Policy, the fact that Defendant Staples delayed giving notice to Nationwide Mutual for nearly eight months is not sufficient on its own to find as a matter of law that Defendant Staples violated the Umbrella Policy's notice provision.
Nationwide Mutual further argues that the Umbrella Policy provides excess coverage only and that if there is no coverage under the primary insurance policy, then the excess coverage is not triggered. Reply to Staples at 5, ECF No. 26. The plain language of the Umbrella Policy contradicts this argument, however. Section 2 of the Policy Conditions ("Required Underlying Insurance") states:
If [the insured] fail[s] to maintain this required underlying insurance, the coverage (including additional coverages) under this policy will not apply until the damages exceed the coverage and limits required. [The insured] will be responsible for the amount of the loss up to the required underlying insurance limits of liability.Ex. B at 20, Am. Compl., ECF No. 11-2 (emphases supplied). Because the Court has already determined that the underlying insurance (the Homeowners Policy) does not apply, Defendant Staples is personally responsible for the first $500,000 in personal liability loss. Id. at 5, 20. However, the Umbrella Policy would still provide coverage past that amount. Given that the underlying complaint contains a request for $1.65 million in compensatory damages plus interest, the Umbrella Policy clearly is potentially applicable to the events of the underlying complaint. Ex. C at 5, Am. Compl., ECF No. 11-3; see also Ex. B at 14, Am. Compl., ECF No. 11-2 (explicitly excluding a duty to defend when the lawsuit is "[f]or any amount within the limits [the insured] should have, but failed to maintain, in the required underlying insurance") (emphasis added). Because Defendant Staples' Umbrella Policy coverage is not excluded based on delayed notice, the Court proceeds to analyze whether the allegations in the underlying complaint fall under the Umbrella Policy's coverage.
The Umbrella Policy excludes claims for punitive damages from its coverage. Ex. B at 20, Am. Compl., ECF No. 11-2.
C. Under the Umbrella Policy, Nationwide Mutual may have a duty to defend Mr. Staples in Mr. Stevens' underlying tort action.
In contract disputes over insurance coverage, the Eight Corners Rule limits courts to reviewing the four corners of the insurance policy and the four corners of the complaint in the underlying action. See CACI Int'l, Inc., 566 F.3d at 154-56. A review of the Umbrella Policy and the complaint in Stevens v. Staples demonstrates that Plaintiff Nationwide Mutual may have a duty to defend Defendant Staples in Stevens v. Staples. Case No. CL20. 5096 (Va. Cir. Ct.). As such, the Court declines to find that that the Umbrella Policy does not cover Defendant Staples based on the pleadings alone.
i. The actions alleged in Mr. Stevens' complaint do not qualify as an "occurrence" under the Umbrella Policy.
Under the Umbrella Policy, Plaintiff Nationwide Mutual has a duty to defend the insured against claims resulting from an "occurrence." Ex. B at 14, Am. Compl., ECF No. 11-2. The Policy defines "occurrence" as "an accident including continuous or repeated exposure to the same general harmful conditions" and must result in "bodily injury," "property damage," or "personal injury." Ex. B at 11, Am. Compl., ECF No. 11-2. " '[O]ccurrence' and 'accident' are synonymous and . . . refer to an incident that was unexpected from the viewpoint of the insured." AES Corp. v. Steadfast Ins. Co., 283 Va. 609, 725 S.E.2d 532, 536 (2012) (quoting Utica Mut. Ins. Co. v. Travelers Indem. Co., 223 Va. 145, 286 S.E.2d 225, 226 (1982)). An "accident" is commonly understood to mean "an event which creates an effect which is not the natural or probable consequence of the means employed and is not intended, designed, or reasonably anticipated." Id. (quoting Lynchburg Foundry Co. v. Irvin, 178 Va. 265, 16 S.E.2d 646, 648 (1941)) (internal quotation marks omitted). "An intentional act is neither an occurrence nor an accident and therefore is not covered by the standard policy." Id. (quoting Utica Mut. Ins. Co., 286 S.E.2d at 226) (cleaned up). "For coverage to be precluded under [an insurance] policy because there was no occurrence . . . it must be alleged that the insured subjectively intended or anticipated the result of its intentional act or that objectively, the result was a natural or probable consequence of the intentional act." Id.
In applying the Eight Corners Rule, the Court finds that Mr. Staples' actions, as alleged in the Stevens complaint, do not qualify as an "occurrence." Mr. Stevens alleged that Mr. Staples "came at Stevens in a threatening manner" and "unlawfully and wantonly without justification, excuse or caveat, attacked Stevens." Ex. C at 3, Am. Compl., ECF No. 11-3. Mr. Stevens further alleged that Mr. Staples, "without being provoked in any way by Stevens, viciously attacked Stevens, wrapping his arm around Stevens' neck in a choke hold and slamming Stevens [sic] head into the table and concrete patio." Id. Additionally, Mr. Stevens alleged that "Defendant [Staples] purposefully and intentionally attacked and injured Stevens." Id. The underlying complaint alleged actions that are intentional on their face, and Mr. Stevens' injuries are the natural and probable consequence of the alleged intentional act. An intentional act is not an accident and thus does not qualify as an "occurrence."
Defendants argue that the Stevens complaint also alleged that Mr. Staples was "grossly and wantonly negligent and careless" and that Mr. Staples may be found guilty of gross negligence, rather than intentional tort. Stevens Resp. in Opp'n at 1-2, ECF No. 20. This argument is not persuasive. "[A]llegations of negligence are not synonymous with allegations of an accident." AES Corp., 725 S.E.2d at 537; see also Overstreet, 568 F. Supp. 2d at 651-52 (use of the word "negligence" does not compel a court to find that a claim was an "occurrence" under Virginia law). For example, in AES Corp., the Virginia Supreme Court held that even if AES was negligent and did not intend to cause the damage that occurred, the damages that the plaintiff in the underlying action sustained were the natural and probable consequences of AES's intentional emissions. AES Corp., 725 S.E.2d at 537. Similarly, even if Mr. Staples is ultimately found guilty of only gross negligence, Mr. Stevens' bodily injuries are the natural and probable consequence of Mr. Staples' intentional and violent acts alleged in the complaint. Mr. Stevens alleged that Mr. Staples "followed Stevens to the outside patio" and "without being provoked in any way by Stevens, viciously attacked Stevens, wrapping his arm around Stevens' neck in a choke hold and slamming Stevens [sic] head into the table and concrete patio." Ex. C at 3, Am. Compl., ECF No. 11-3. Mr. Stevens' alternative claim of gross and wanton negligence does not convert Mr. Staples' intentional acts into an accident.
ii. The exception for bodily injury resulting from the use of reasonable force for protection applies to the instant case.
Even if the alleged facts do not qualify as an "occurrence," Defendants argue that the duty to defend still exists because of the reasonable force exception. Staples Am. Resp. in Opp'n at 4-5, ECF No. 24. Here the Defendants are closer to the mark. The Umbrella Policy states that " '[b]odily injury' . . . which is expected or intended by an 'insured' " is excluded from the insurer's duty to defend. Ex. B at 15, Am. Compl., ECF No. 11-2. However, this exclusion of "expected or intended" bodily injury does not apply to " 'bodily injury' . . . resulting from the use of reasonable force by an 'insured' to protect persons or property." Id. The Court finds Defendants' argument on this point persuasive.
The facts alleged in the Stevens complaint indicate that Mr. Staples acted intentionally to cause bodily harm. Ex. C at 2-4, Am. Compl., ECF No. 11-3. Although most intentional acts are not covered under the Umbrella Policy, the reasonable force exception raises the possibility that the intentional acts alleged in the Stevens complaint could still fall under the Umbrella Policy coverage. See CACI Int'l, 566 F.3d at 155 ("[A]n insurer's duty to defend is triggered if there is any possibility that a judgment against the insured will be covered under the insurance policy.") (citations and internal quotation marks omitted); Copp v. Nationwide Mut. Ins. Co., 279 Va. 675, 692 S.E.2d 220, 225 (2010) (finding that Nationwide had duty to defend intentional injury lawsuit under reasonable force exception); cf. Gen. Agents Ins. Co. of Am. v. King, No. 97-753, 1998 WL 972250, at *2 (Va. Cir. Ct. June 23, 1998) (finding that the reasonable force exception means the insurance policy may potentially cover the intentional bodily injury lawsuit). This exception "requires consideration of an insured's claim that he or she caused bodily injury or property damage trying to protect person or property in evaluating whether there is a duty to defend in a given case." Copp, 692 S.E.2d at 225. As such, based on the pleadings alone, the Court cannot find that Defendant Staples would not be covered under Nationwide Mutual's Umbrella Policy.
Nationwide Mutual argues that the reasonable force exception does not apply and cites to Lark v. W. Heritage Ins. Co. for this proposition. 64 F. Supp. 3d 802, 809 (W.D. Va. 2014); Reply to Staples at 2-3, ECF No. 26. In Lark, an insurance policy provided a duty to defend for "occurrences" or "accidents." Id. at 808. Like the policy in the instant case, the policy in Lark excluded coverage for expected or intended bodily injury but contained an exception for "bodily injury resulting from the use of reasonable force to protect persons or property." Id. at 805 (cleaned up). The court held that because the allegations of violence are not "occurrences," the general policy is not implicated, and the court does not need to consider whether the exclusion—and in turn, the exception to the exclusion—applies. Id. at 809. The court reasoned that it should only reach the question of whether the exclusion applies if the insured would otherwise be covered under the general policy based on an "occurrence." See id.
In the context of the instant case, the Court does not find Nationwide Mutual's argument for excluding the reasonable force exception persuasive and respectfully declines to follow the holding in Lark. Id. at 809. As a general matter, the Court must construe a contract as a whole, seek to give effect to every provision in the contract, and avoid any interpretation that renders a particular provision superfluous or meaningless. See Verizon Va., LLC v. XO Comms., LLC, 144 F. Supp. 3d 850, 861 (E.D. Va. 2015) (citing Restatement (Second) of Contracts § 202(2)). The Court agrees with Nationwide Mutual that an intentional act is not an "accident" or "occurrence." Mem. Supp. Mot. for J. on Pleadings at 3-4, ECF No. 19. Nationwide Mutual argues that it then follows that the Court should not need to reach the question of whether the exclusion and, in turn, the reasonable force exception to the exclusion apply because there is no coverage to begin with. Reply to Staples at 2-3, ECF No. 26. However, this interpretation of the contract would mean that a court could rarely, if ever, reach the question of whether the exclusion for intended bodily injury or the exception for use of reasonable force applied because, by definition, an intentional act is not an "occurrence" under the general policy. In other words, Nationwide Mutual's interpretation of the Umbrella Policy would render the reasonable force exception meaningless, whereas this Court is required to avoid, where possible, interpreting a contract to render particular provisions meaningless.
Nationwide Mutual further argues that even if the Court considers Mr. Staples' self-defense argument, the extrinsic materials demonstrate that Mr. Staples did not act in self-defense. Reply to Staples at 3-4, ECF No. 26. The Court declines to reach this issue because of the Eight Corners Rule, which limits the question of insurance coverage to the four corners of the policy and the underlying complaint. See CACI Int'l, Inc., 566 F.3d at 155. Whether Mr. Staples used reasonable force to protect persons or property is a question for the factfinder in the underlying tort action. Copp, 692 S.E.2d at 225. The facts before the Court at this time have not established that Plaintiff is entitled to judgment as a matter of law because the Umbrella Policy applies to a subset of intentional acts under the reasonable force exception. Accordingly Plaintiff Nationwide Mutual's Motion for Judgment on the Pleadings is DENIED.
D. The Court will deny Defendant Stevens' Alternative Motion to Stay.
Defendant Stevens also submits an Alternative Motion to Stay proceedings pending a ruling by the Virginia Beach Circuit Court in Stevens v. Staples, No. 810CL20005096-00. Stevens Resp. in Opp'n at 3-4, ECF No. 20. Because Defendants fail to satisfy the three stay factors, the Court declines to stay the instant Motion for Judgment on the Pleadings. First, staying the proceedings would not support judicial economy. Defendant Stevens argues that a stay would promote judicial economy by avoiding inconsistent rulings. Id. at 3. This argument is not persuasive. A ruling in Stevens v. Staples would only decide whether Mr. Staples is liable for (1) assault and battery and (2) gross and wanton negligence. Ex. C at 3-5, Am. Compl., ECF No. 11-3. The resolution of these issues would not alter the decision on the instant Motion for Judgment on the Pleadings with respect to Nationwide General, which turns on the question of timely notice. Additionally, a denial of the Motion for Judgment on the Pleadings with respect to Nationwide Mutual merely indicates that there are still factual issues that have yet to be resolved at the pleadings stage as to insurance coverage.
Second, denying the stay will not cause hardship to Defendants. Defendant Stevens argues that a stay would prevent Plaintiffs and Defendants from incurring significant expenses and unnecessarily wasting resources. Stevens Resp. in Opp'n at 3-4, ECF No. 20. The Court finds the opposite to be true—by ruling on the Motion for Judgment on the Pleadings, the Court can quickly provide greater clarity on the parties' obligations to each other and prevent parties from wasting further resources on the instant Motion. Finally, a stay would prejudice Plaintiffs by delaying proceedings that can be resolved without waiting for the outcome of Stevens v. Staples. Given that the three factors weigh against Defendants, the Alternative Motion to Stay will be DENIED.
V. CONCLUSION
For the forgoing reasons, Plaintiffs Nationwide General and Nationwide Mutual's Motion for Judgment on the Pleadings (ECF No. 18) is GRANTED with respect to Nationwide General and DENIED with respect to Nationwide Mutual. Defendant Stevens' Alternative Motion to Stay (ECF No. 20) is DENIED.
It is ORDERED that:
1. Plaintiff Nationwide General owes no duty to defend or provide coverage to Defendant Staples for the claims and causes of action arising out of the events described in Stevens v. Staples, No. 810CL20005096-00 (Va. Cir. Ct.), because of Defendant Staples' failure to provide timely notice of the December 20, 2019 incident to Plaintiffs as required under the Policies; and
2. Plaintiff Nationwide General has no obligation to provide a defense, insurance coverage, indemnity, or any other benefits, or to pay any judgments, settlements, or claims and causes of action that are the subject of Stevens v. Staples, No. 810CL20005096-00 (Va. Cir. Ct.) to or for Defendant Staples, or any other Defendant in this declaratory judgment action.
IT IS SO ORDERED.