United States District Court, W.D. Kentucky, Louisville
LIBERTY MUTUAL INSURANCE COMPANY, et al. PLAINTIFFS
THE ESTATE OF HUGO J. BOBZIEN, JR. By and through his personal Representative and Administratrix, THERESA B. HART, et al. DEFENDANT
Charles R. Simpson III Senior Judge United States District
matter is before the court for consideration of cross-motions
for summary judgment in this declaratory judgment action. The
plaintiffs, Liberty Mutual Insurance Company, Liberty
Insurance Corporation, Liberty Mutual Fire Insurance Company,
and LM Insurance Corporation (collectively herein
“Liberty” or the “Liberty entities”),
contend that there is diversity of citizenship between the
parties and the amount in controversy exceeds $75, 000.00
excluding interest and costs, satisfying the requirement that
independent subject matter jurisdiction exist for this court
to “declare the rights and other legal relations”
of the parties. 28 U.S.C. § 2201(a); Brotherhood
Mut. Ins. Co. v. United Apostolic Lighthouse, Inc., 200
F.Supp.2d 689, 691 (E.D.Ky. 2002). The defendants, the Estate
of Hugo J. Bobzien, Jr. (“Hugo's Estate, ”
“Hugo, ” or the “father” herein, as
appropriate) and Michael J. Bobzien (“Michael” or
the “son” herein), do not challenge the assertion
of subject matter jurisdiction.
Liberty entities are each alleged to be organized under the
laws of states other than Kentucky and to have principal
places of business outside the Commonwealth. Complaint, DN 1,
pp. 2, PageID #2. They are all licensed to do business in
Kentucky. Hugo's Estate is capable of being sued by and
through its Administratrix, Theresa B. Hart, who is a citizen
of Kentucky. Michael is a citizen of the state of Florida and
the plaintiff in the underlying lawsuit brought in the
Jefferson County, Kentucky, Circuit Court. The court thus
finds that there is complete diversity between the parties.
The allegation that the amount in controversy exceeds $75,
000.00 is unchallenged and will therefore be accepted for
purposes of finding that this court has subject matter
jurisdiction over this matter. We note that the allegations
in the underlying state court complaint claim Michael
suffered numerous and significant bodily injuries which could
yield a damage award in excess of $75, 000.00.
finding of subject matter jurisdiction, the court must
determine, in its discretion, whether the case is an
appropriate one for declaratory relief under the Declaratory
Judgment Act, 28 U.S.C. §§ 2201, et seq.
The principal considerations in making this determination are
(1) whether the judgment would settle the controversy; (2)
whether the declaratory action would serve a useful purpose
in clarifying the legal relations in issue; (3) whether the
declaratory remedy is being used merely for purposes of
“procedural fencing” or “to provide an
arena for a race for res judicata”; (4)
whether the use of a declaratory action would increase
friction between our federal and state courts and improperly
encroach upon state jurisdiction; and (5) whether there is an
alternative remedy that is better or more effective. Am.
Home Assurance Co. v. Evans, 791 F.2d 61, 63
(6th Cir. 1986)(citing Grand Trunk Western
R.R. v. Consolidated Rail Corp., 746 F.2d 323, 326
(6th Cir. 1984)). The parties are in agreement
that the court should exercise its discretion to render a
declaratory judgment. For the reasons set forth below, the
court will entertain the summary judgment arguments and
render a declaratory judgment in this case.
Undisputed Facts - State Court
was born in 1958 and is the biological son of Hugo. Michael
resided in his father's household under his father's
care, control and dominion, from birth until he reached the
age of majority in approximately 1976. In the FAC, Michael
recites the following events:
From the date of his birth until he reached the age of
majority, [Michael] was repeatedly, forcibly, knowingly,
intentionally, wantonly, chronically, recklessly, grossly
negligently and/or negligently exposed and subjected to [his
father's] hazardous cigarette smoke while he necessarily
lived at his childhood residence under the exclusive control
and dominion of [his father], primarily in this county.
As a direct, natural and foreseeable result of [Hugo's]
decisions to repeatedly, forcibly, knowingly, intentionally,
wantonly, chronically, recklessly, grossly negligently and/or
negligently expose and subject [Michael] to his hazardous
cigarette smoke, and as a substantial factor and proximate
cause of such decisions, [Michael] has recently, and within
one year from commencement of this action, been caused to
develop chronic obstructive pulmonary disease, osteopenia
(with 2 chronic compression fractures of his L2 and T2
vertebrae, osteoarthritis in hips and knees, chronic back
pain and/or degenerative disc disease, cataracts, past and
future medical costs, past and future pain and suffering,
past and future loss of enjoyment of life, permanent
impairment of the power to labor and earn money, loss of
future life expectancy, past and future inconvenience and
other serious injuries and harms.
The conduct of [Hugo] as herein alleged was committed
intentionally, knowingly, wantonly, recklessly and/or with
died on March 30, 2016. After his father's death, Michael
filed claims for bodily injury in the probate action, but his
claims were disallowed. He then filed a state court action
[Civ. Action No. 17-CI-002751] containing the above factual
allegations and presenting three claims for relief:
negligence, negligence per se, and premises liability. Each
claim articulates a duty owed by the father to the son: a
common law duty owed by Hugo to exercise ordinary care for
the protection of his son (negligence); a statutory duty owed
by Hugo to exercise ordinary care for the protection of his
son (negligence per se); and a duty owed by Hugo to exercise
ordinary care to make his property reasonably safe for
invitees, including his then minor son (premises liability).
claims are identically written, with the exception of the
particular duty to which the claim refers. Representative of
the claims, Count 1 - Negligence alleges:
At all times relevant, [Hugo] had a common law duty to
exercise ordinary care for the protection of his son,
[Michael], which included the duty to refrain from
repeatedly, forcibly, knowingly, intentionally, wantonly,
chronically, recklessly, grossly negligently and/or
negligently exposing and subjecting his minor son, the
Plaintiff, to unsafe, dangerous, neglectful, abusive and/or
harmful conditions, including his hazardous cigarette smoke.
At all times relevant, [Hugo] breached the foregoing common
law duty by repeatedly, forcibly, knowingly, intentionally,
wantonly, chronically, recklessly, grossly negligently and/or
negligently exposing and subjecting his son to his hazardous
As a direct, natural, foreseeable, factual and proximate
cause of [Hugo's] breaches of the foregoing common law
duty, [Michael] has been seriously injured and harmed as
herein previously alleged.
The conduct of [Hugo] as herein alleged was undertaken
intentionally, knowingly, wantonly, recklessly and/or with
gross negligence, thereby entitling [Michael] to an award of
DN 23-2. Michael's illnesses and conditions allegedly
resulted from his childhood exposure to secondhand smoke. The
FAC frames the claims to allege breaches of duty as a result
of Hugo's decisions to expose his son to that
hazardous condition. Hugo's Estate has answered and
denied these claims. The state action is ongoing.
Estate provided notice of the suit to the Liberty entities.
They are defending the state court action under a reservation
of rights while seeking a declaration from this court that
they have no obligation to indemnify or further defend
Hugo's Estate under any of the policies issued to Hugo.
Exercise of Jurisdiction - Considerations
parties assert that adjudicating the coverage issues
“by comparing the allegations in the underlying
complaint with the terms of the insurance
policy” will not require any fact-finding. The
question as to the obligations, if any, of the insurer to the
insured are generally matters of law, and thus may be decided
by this court. Cincinnati Ins. Co. v. Motorist Mutual
Ins. Co., 306 S.W.3d 69, 73 (Ky. 2010).
declaration of “no coverage” would clearly settle
the dispute as between the Liberty entities and Hugo's
Estate. So, too, would a finding in favor of Hugo's
Estate that the grounds articulated by the
Liberty entities do not constitute an impediment to the
Estate's demand for a defense and indemnification. In the
event the court were to conclude that one or more of
Michael's claims “potentially, possibly or might
come within the coverage of the policy, ” the Liberty
entities' duty to defend would be clear with respect to
all of Michael's claims in the state court suit.
James Graham Brown Found., 814 S.W.2d at 279-80;
Martin County Coal Corp. v. Universal Underwriters Ins.
Servs., 792 F.Supp.2d 598 F.3d 257 (6th Cir.
2010)(the duty to defend applies to all claims, once duty is
triggered). Of course, this court cannot find that indemnity
is owed to Hugo's Estate. If the policy terms are not
preclusive, any obligation to indemnify would flow from the
state court action. The parties recognize this and seek only
a determination whether any of the policy terms preclude
indemnity and relieve the Liberty entities of the duty to
this action serves a useful purpose in clarifying the legal
relations between insurer and insured. A declaratory judgment
in this regard would not encroach upon the state court's
is no question of “procedural fencing here” or a
“race for res judicata.” The Liberty
entities simply wish to know whether they must remain
engaged. The fleche has occurred in the state court action.
The matter before this court is no feint,  but rather a
parry from which the Liberty entities can
discern their obligations to their insured.
are no novel questions of state law raised in this
declaratory action. There is sufficient Kentucky case law
from which we can readily discern the principles upon which
our analysis must be based, as well as the policy
considerations undergirding those state court decisions.
Further, the issues of coverage are not dependent upon any
resolution of facts in the state court. Thus, we conclude
that state court would be no better equipped than this court
to decide the questions before us.
court also concludes that there is no alternative to this
declaratory action which is superior to the declaratory
judgment process. The Liberty entities could file a
declaratory action in the state court, either separately or
by intervention in the state case, or wait and file an
indemnity action after the liability question has been
determined in the state court action. Neither option offers
any advantage over the declaratory relief sought presently in
this forum. See Scottsdale Ins. Co. v. Flowers, 513
F.3d 546 (6th Cir. 2008).
found that the Grand Trunk factors militate in favor
of the request by both parties that we endeavor to render a
declaratory judgment herein, we proceed to consider the
cross-motions for summary judgment.
Undisputed Facts and Michael's Contentions - Declaratory
are five insurance policies in issue in this litigation.
Three are homeowners' policies, one is a condominium
policy,  and one is a personal excess liability
policy. The following policies were issued to Hugo in
Kentucky as follows:
(1) Liberty Mutual Fire Insurance Company issued a
homeowners' policy for the residence located at 2602 Cave
Spring Place, Louisville, Kentucky, for successive periods
beginning March 31, 2003 and ending March 31, 2011. (Policy
(2) LM Insurance Corporation issued a condominium policy for
the residence located at 727 Savoy Road, Louisville Kentucky,
for continuing and successive periods beginning on March 31,
2011 and ending March 31, 2018. (Policy No. H6528149649140).
(3) Liberty Mutual Fire Insurance Company issued
homeowners' policies for the residence located at 362
Sandy Beach Road, McDaniels, Kentucky, for successive periods
beginning October 31, 2003 and ending October 31, 2006.
(Policy Nos. H3228193162400 and H3228193162401).
(4) Liberty Insurance Corporation issued a homeowners'
policy for the residence located 1045 Sandy Beach Lane,
McDaniels, Kentucky, for successive periods beginning on
September 15, 2010 and ending September 15, 2017. (Policy No.
(5) Liberty Mutual Insurance Company issued a personal excess
liability insurance policy for successive periods beginning
September 13, 2003 and ending September 13, 2017. (Policy No.
the “Liberty policies” or the
the homeowners' policies contain personal liability
coverage provisions, various exclusions, and a set of
definitions which are virtually identical. We quote the
language in the Cave Spring Place policy, in pertinent part,
II - Liability Coverages Coverage
- Personal Liability
claim is made or a suit is brought against an
“insured” for damages because of “bodily
injury”…caused by an “occurrence” to
which this coverage applies, we will:
up to our limit of liability for the damages for which the
“insured” is legally liable… and
Provide a defense at our expense by counsel of our choice,
even if the suit is groundless, false or fraudulent…
II - Exclusions
Coverage E - Personal Liability…do[es] not
apply to “bodily injury”: …
Arising out of sexual molestation, corporal punishment or
physical or mental abuse…
Coverage E - Personal Liability, does not apply to:
“Bodily injury” to you or an
“insured” within the meaning of
…“insured” as defined.
I and II - Conditions
Policy Period. This policy applies only
to…“bodily injury”…in Section II,
which occurs during the policy period.
words and phrases are defined as follows:
“Bodily injury” means bodily harm, sickness or
“Insured” means you and residents of your
household who are…your relatives…
“Occurrence” means an accident, including
continuous or repeated exposure to substantially the same
general harmful conditions, which results, during the policy
period, in… “Bodily injury”…
excess liability policy provides, in pertinent part:
Coverage - Personal Excess Liability
pay all sums in excess of the retained limit
and up to our limit of liability for damages because of
personal injury…to which this policy
applies and for which the insured is legally
policy does not apply to personal
Which is intended by the insured.
policy also does not apply to:
personal injury to any
policy applies only to personal
injury…which occurs during the policy
Loss Payable - Other Insurance
policy applies only to damages in excess of the
retained limit for an occurrence. If
collectible insurance with any other insurer is available for
a loss also covered by this policy, this policy will be
excess and will not contribute with such other insurance.
additional exclusion was added by addendum to the
policy's Section II. Coverage - Personal Excess
policy also does not apply to:
Personal injury…arising out of sexual molestation,
corporal punishment or physical or mental abuse, including
failure to detect, prevent, stop or report such molestation,
punishment or abuse by others.
Definitions state, in pertinent part: