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Netherlands Insurance Company v. Lexington Insurance Co.

United States District Court, Sixth Circuit

May 14, 2013

THE NETHERLANDS INSURANCE COMPANY, Independently and as Subrogee of Thomas Duffy, Sr.; Thomas Duffy, Jr.; David Hargiss; Brian Bobbitt; Josh Boston; Thomas Richey; Bruce Swanson; and Jerry Mezuer, Plaintiff.
v.
LEXINGTON INSURANCE COMPANY, Defendant.

MEMORANDUM OPINION AND ORDER

JOSEPH H. McKINLEY, Jr., District Judge.

This matter is before the Court on Plaintiff Netherlands Insurance Company's Motion for Summary Judgment [DN 16]. Also before the Court is Defendant Lexington Insurance Company's Motion for Summary Judgment [DN 22] and its Motion in Limine to Strike Plaintiff's Expert Testimony [DN 27]. Fully briefed, this matter is ripe for decision. For the following reasons, Netherlands' summary judgment motion is DENIED; Lexington's summary judgment motion is GRANTED in part and DENIED in part; and Lexington's motion in limine to strike Netherlands' expert is GRANTED.

I. BACKGROUND

On July 19, 2006, Ryan Owens died after participating in football practice for his Henderson County High School team. His parents filed a wrongful death action in the Henderson Circuit Court, naming eight football coaches as defendants. The case was styled Estate of Ryan Morgan Owens, et al. v. Tom Duffy, Sr., et al., Civil Action No. 07-CI-00084. Plaintiff, the Netherlands Insurance Company ("Netherlands"), issued an insurance policy that provided commercial general liability insurance coverage to the Henderson County Board of Education. This policy covered the coaches and provided a coverage limit of $1, 000, 000. Due to this policy, Netherlands began defending the coaches, retaining the law firm of English, Lucas, Priest & Owsley, LLP to represent them.

At some point thereafter, Netherlands learned that the coaches had additional commercial general liability insurance available through Defendant, Lexington Insurance Company ("Lexington"). Lexington had issued an insurance policy that provided coverage to the National Organization of Coaches Associations Directors. This policy provided a coverage limit of $1, 000, 000 per coach. Netherlands notified Lexington of the underlying lawsuit and representatives of the two companies began discussing coverage issues. (Aff. of David J. Riley [DN 22-4]; E-mail to David Riley [DN 16-4].) It is undisputed that at one point, the representatives discussed splitting the defense costs evenly. (Id.) A dispute arose regarding the priority of coverage, however, and ultimately, a declaratory judgment action was filed in this Court. Priority was determined by an Agreed Order dated November 4, 2010. (Agreed Order [DN 22-3].) The Agreed Order provides that Netherlands is the primary carrier up to its limit of $1, 000, 000 and that Lexington is the secondary carrier up to its limit of $1, 000, 000 per coach. (Id.)

Litigation of the underlying case continued after this Agreed Order was entered. Netherlands asserts that during this litigation, it paid $207, 565.15 in attorneys' fees and an additional $19, 085.42 in other expenses. According to Netherlands, when the parties' representatives discussed coverage issues, Lexington agreed to pay for, or reimburse Netherlands for, one-half of the defense expenses and one-half of the attorneys' fees in relation to defending the coaches. (See Pl.'s Mem. in Supp. of Mot. for Summ. J. [DN 16-1] 2.) It thus argues that Lexington owes $113, 325.29 under their agreement. Because Lexington has not paid this amount, Netherlands filed the instant lawsuit for subrogation (Count I), breach of contract (Count II), and unjust enrichment (Count III). (Compl. [DN 1].)

Lexington counters that the parties never entered into an agreement to divide defense costs and attorneys' fees evenly. (Aff. of David J. Riley [DN 22-4] §§ 5-9.) According to Lexington, after the Agreed Order was entered, there was no need for the companies to agree on attorneys' fees since insurance law provides that the primary insurer-here, Netherlands-is responsible for the costs of providing a defense to the insured when more than one insurer is liable. In other words, Lexington asserts that there was never any enforceable contract between the companies.

Additionally, Lexington highlights that it has paid $101, 679.82 in legal fees and expenses relating to the coaches' defense. As discussed above, at the time that the parties discussed coverage issues, Netherlands had already retained English, Lucas, Priest & Owsley, LLP to represent the coaches. (Pl.'s Mem. [DN 16-1] 3; Def. Lexington Ins. Co.'s Resp. to the Pl.'s Mot. for Summ. J. [DN 21] 4.) At some point, though, Lexington became concerned that the firm was not actively pursuing a causation defense on the coaches' behalf. (Aff. of David J. Riley [DN 22-4] §§ 13-14.) Lexington thus hired Boehl, Stopher & Graves. After the parties settled in December 2011, Lexington paid Boehl, Stopher & Graves $101, 679.82 in fees and expenses. (Id. §§ 14-16.) Thus, Lexington argues that the amounts paid by the insurers already represent an equitable distribution of the costs. Finally, Lexington notes that the terms of its insurance policy specifically state that when its policy is excess to another policy, it has no duty to defend a suit that any other insurer has a duty to defend. (Lexington Ins. Co. Commercial Gen. Liab. Policy, Amend. of Other Ins. Provision [DN 22-5] § 4.)

II. STANDARD OF REVIEW

Before the Court may grant a motion for summary judgment, it must find that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving party bears the initial burden of specifying the basis for its motion and identifying that portion of the record that demonstrates the absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986). Once the moving party satisfies this burden, the non-moving party thereafter must produce specific facts demonstrating a genuine issue of fact for trial. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247-48 (1986).

Although the Court must review the evidence in the light most favorable to the non-moving party, the non-moving party must do more than merely show that there is some "metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 586 (1986). Instead, the Federal Rules of Civil Procedure require the non-moving party to present specific facts showing that a genuine factual issue exists by "citing to particular parts of materials in the record" or by "showing that the materials cited do not establish the absence... of a genuine dispute[.]" Fed.R.Civ.P. 56(c)(1). "The mere existence of a scintilla of evidence in support of the [non-moving party's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party]." Anderson , 477 U.S. at 252.

In considering a motion for summary judgment, the Court must remain cognizant of the role that expert testimony plays. In this regard, Federal Rule of Evidence 702 provides:

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702. Under Rule 702, the judge acts as a gatekeeper to ensure that expert testimony is both reliable and relevant. Mike's Train House, Inc. v. Lionel, L.L.C. , 472 F.3d 398, 407 (6th Cir. 2006) (citing Kumho Tire Co. v. Carmichael , 526 U.S. 137 (1999)). In determining whether testimony is reliable, the Court's focus "must be solely on principles and methodology, not on ...


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