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Live Nation Worldwide, Inc. v. Secura Insurance

United States District Court, W.D. Kentucky, Louisville Division

November 12, 2019

LIVE NATION WORLDWIDE, INC., Plaintiff,
v.
SECURA INSURANCE; CITY SECURITIES INSURANCE, LLC; and ESG SECURITY Defendants

          MEMORANDUM OPINION AND ORDER

          REBECCA GRADY JENNINGS, DISTRICT JUDGE

         This matter is before the Court on four Motions for Summary Judgment. [DE 52, 53, 59, 61]. Responses, [DE 60, 62, 67, 69], and replies were filed, [DE 64, 68, 72]. Briefing is complete, and these matters are ripe for adjudication. For the reasons below, Live Nation Worldwide Inc.'s (“Live Nation”) Motion for Summary Judgment on Coverage Claim Against Secura Insurance (“Secura”) [DE 59] is GRANTED, Live Nation's Motion for Summary Judgment on Breach of Contract Claim Against ESG Security (“ESG”) [DE 61] is DENIED, Secura's Motion for Summary Judgment [DE 52] is DENIED, and ESG's Motion for Summary Judgment [DE 53] is GRANTED.

         BACKGROUND

         Live Nation operates the Louisville Palace, which among other things, is a concert venue. [DE 92, Am. Compl. at 1426, ¶1]. Live Nation contracted with ESG to provide crowd control services for the Louisville Palace. [Id. at 1427, ¶6]. Live Nation and ESG entered into a Vendor Services Agreement (“VSA”) detailing the requirements of the relationship. [Id. at ¶ 7]. ESG's responsibilities included “direction and control of the audience to deter any crowd disturbances” for events being held at the Louisville Palace. [Id.].

         The VSA requires ESG to obtain and maintain certain insurance coverage, including commercial general liability insurance of at least one million dollars per occurrence as explained in Section 3(A) of the VSA. [Id. at 1427, ¶ 7, DE 60-1 at §3(A)(ii)]. The VSA requires ESG to defend, indemnify, and hold harmless Live Nation “from and against any and all claims or loss arising out of any violation of any law, rule, regulation or order, and from any and all claims or liabilities, including reasonable attorney's fees, for loss, damage or injury to persons or property of whatever kind or nature arising from the acts or omissions of Vendor” as explained in Section 4(A) of the VSA. [DE 92 at 1428, ¶ 8]. ESG placed its insurance for the applicable period through City Securities Insurance, LLC (“City Securities”). [Id. at 1428, ¶ 9]. City Securities placed coverage with Secura. [Id. at 1428, ¶ 10]. Live Nation purchased another general liability policy with Starr Insurance, which contained a retained limit of one million dollars. [DE 60 at 842].

         Both Live Nation and ESG were sued in the Jefferson County, Kentucky in an action styled James Mark Hays, et al., v. Live Nation Worldwide, Inc., et al., Jefferson County Circuit Court, Action No. 13CI06424 (“Hays Complaint”). [DE 92 at 1429, ¶ 14; DE 58-3, Hays Complaint at 808]. The Hays Complaint alleged injuries resulting from a fight between several patrons during a Steve Miller Band concert at the Louisville Palace. [DE 58-3]. ESG was performing crowd management services for the concert. [DE 58-3 at 809, ¶ 4]. Live Nation and the plaintiffs in the Hays Action reached a confidential settlement before trial. [DE 92 at 1429, ¶ 17].

         Secura refused to pay for Live Nation's defense costs and indemnify Live Nation for the settlement in Hays. [Id. at 1429, ¶ 16]. Live Nation filed the present complaint (the “Complaint”) against Secura Insurance, City Securities, and ESG Security, Inc., [DE 1] which they later amended (the “FAC”) [DE 92]. The FAC alleges breach of contract, bad faith, and Unfair Claims Settlement Practices Act claims against Secura. [DE 92 at 1431-33]. The FAC alleges breach of contract and indemnification claims against ESG. [Id. at 1433-34]. The FAC also alleges negligence against City Securities as respondeat superior. [Id. at 1435]. City Securities, ESG, and Secura answered. [DE 93, 94, 95]. In its answer, Secura made a counterclaim for a declaratory judgment under 28 USC §2201 and FRCP 57, to determine an actual controversy between Secura and Live Nation. [DE 95 at 1471]. Live Nation answered the counterclaim. [DE 98].

         Live Nation, Secura, and ESG each filed motions for summary judgment on the various claims.[1] [DE 52, 53, 59, 61]. Responses and replies were filed. [DE 60, 62, 64, 67, 68, 69, 72]. The Court heard oral argument on the motions. [DE 101].

         LEGAL STANDARD

         Summary judgment is required when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the burden of specifying the basis for its motion and showing the lack of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the moving party satisfies this burden, the nonmoving party must produce specific facts showing a material issue of fact for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). “Factual differences are not considered material unless the differences are such that a reasonable jury could find for the party contesting the summary judgment motion.” Bell v. City of E. Cleveland, 125 F.3d 855, 1997 WL 640116, at *4 (6th Cir. 1997) (citing Liberty Lobby, 477 U.S. at 252).

         A district court considering a motion for summary judgment may not weigh evidence or make credibility determinations. See Daugherty v. Sajar Plastics, Inc., 544 F.3d 696, 702 (6th Cir. 2008); see also Adams v. Metiva, 31 F.3d 375, 384 (6th Cir. 1994). The Court must view the evidence and draw all reasonable inferences in a light most favorable to the nonmoving party. See Williams v. Int'l Paper Co., 227 F.3d 706, 710 (6th Cir. 2000). But the nonmoving party must do more than show 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 nonmoving party must 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); see also Shreve v. Franklin Cty., Ohio, 743 F.3d 126, 131-32 (6th Cir. 2014). “The mere existence of a scintilla of evidence in support of the [nonmoving party's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party].” Liberty Lobby, 477 U.S. at 252.

         Rule 56(c)(1) requires that a “party asserting that a fact . . . is genuinely disputed must support the assertion by . . . citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials.” Fed.R.Civ.P. 56(c)(1)(A).

         DISCUSSION

         Here, all parties agree that this Court can decide the issues as a matter of law on a motion for summary judgment. [DE 52-1 at 348; 53-1 at 737; 60 at 828-29]. Other courts, deciding similar issues, have done so on summary judgment. Crutchfield v. Transamerica Occidental Life Ins. Co., 527 Fed.Appx. 339, 342 (6th Cir. 2013).

         The motions present three issues. First, whether the VSA required ESG to purchase a policy on behalf of Live Nation on a primary basis, and based on that determination, whether Secura's obligation to Live Nation is satisfied on a pro rata basis with Live Nation's Starr Insurance Policy. Second, whether ESG's duty to indemnify and defend under the VSA was limited to instances of vicarious liability. Third, whether the policy that ESG purchased from Secura met ESG's requirements under the VSA. As discussed below, the Court ultimately need not decide the last question. Secura concedes that if the Court determines the VSA required ESG to purchase a primary basis policy and ESG's liability was not limited to instances of vicarious liability, then Secura would “owe that obligation to its insured.” [DE 102, August 8, 2019 Transcript of Motion Hearing (“Tr.”) at 1883:4-84:15; 1923:8-16]. Thus, the Court only needs to decide what the VSA required ESG to purchase.

         A. The VSA is an unambiguous contract.

         To begin, before the Court can determine what the VSA requires, it must first determine whether the VSA is ambiguous such that the Court may look beyond the four corners of the document to determine its meaning. “[A]n ambiguous contract is one capable of more than one different, reasonable interpretation.” Frear v. P.T.A. Indus., Inc., 103 S.W.3d 99, 106, n.12 (Ky. 2003) (quoting Central Bank & Trust Co. v. Kincaid, Ky., 617 S.W.2d 32, 33 (1981)). Here, while disagreeing with the meaning of some essential terms of the VSA, both parties agree that the VSA is an unambiguous contract.[2] As discussed below, the VSA is unambiguous and there is only one reasonable interpretation of its terms.[3] Next the Court, sitting in diversity, must apply state law in interpreting the contract. Hayes v. Equitable Energy Res. Co., 266 F.3d 560, 566 (6th Cir. 2001) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). Here, according to the VSA's terms, Kentucky law applies. [DE 60-1 at 853, §12].

         B. Secura is obligated to Live Nation on a Primary basis.

         1. The VSA requires ESG to insure Live Nation on a Primary basis

         The VSA requires ESG, the “Vendor, ” to maintain four types of insurance. Section 3(A) lists each type of insurance followed by a short description ...


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