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Rosenberg v. TIG Insurance Co.

United States District Court, M.D. Alabama, Northern Division

October 12, 2017

MICHAEL L ROSENBERG; HEIDI M. CHRISTIE; T.H. TAYLOR, INC. and TERRY H. TAYLOR, Plaintiffs,
v.
TIG INSURANCE COMPANY, as successor by merger to American Safety Indemnity Company, a California corporation, Defendant.

          MEMORANDUM OPINION AND ORDER

          W. HAROLD ALBRITTON, SENIOR UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This cause is before the court on a Motion for Summary Judgment (Doc. #18) filed by Defendant TIG Insurance Company, as successor by merger to American Safety Indemnity Company (“TIG”), together with supporting and opposing briefs and exhibits.

         After winning an arbitration award against Plaintiffs T.H. Taylor, Inc. and Terry H. Taylor (collectively, “Taylor”), Plaintiffs Michael L. Rosenberg and Heidi M. Christie (“Homeowners”) filed a complaint in this court on December 12, 2016 to recover their award from TIG, Taylor's liability coverage provider. (Doc. #1). In the complaint, the Homeowners seek to recover $1 million from TIG via Ala. Code § 27-23-2, a statutory provision that permits creditors like the Homeowners to recover against insurance providers when they have a judgment against an insured. (Doc. #9).[1]

         On September 5, 2017, TIG moved for summary judgment, arguing that Taylor's actions were not covered under the policy because they did not constitute an “occurrence” within the terms of the policy, and alternatively, that any damages suffered by the Homeowners were not covered damages within the meaning of the insurance policy. (Doc. #19). For reasons to be discussed, the Motion for Summary Judgment is due to be GRANTED.

         II. SUMMARY JUDGMENT STANDARD

         Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is proper if “there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         The party asking for summary judgment “always bears the initial responsibility of informing the district court of the basis for its motion, ” relying on submissions “which it believes demonstrate the absence of a genuine issue of material fact.” Id. at 323. Once the moving party has met its burden, the nonmoving party must “go beyond the pleadings” and show that there is a genuine issue for trial. Id. at 324.

         Both the party “asserting that a fact cannot be, ” and a party asserting that a fact is genuinely disputed, must support their assertions by “citing to particular parts of materials in the record, ” or by “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56 (c)(1)(A), (B). Acceptable materials under Rule 56(c)(1)(A) include “depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials.”

         To avoid summary judgment, the nonmoving party “must do more than show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). On the other hand, the evidence of the nonmovant must be believed and all justifiable inferences must be drawn in its favor. See Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986).

         After the nonmoving party has responded to the motion for summary judgment, the court shall grant summary judgment if the movant shows that 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).

         III. FACTS

         The submissions of the parties establish the following facts, construed in a light most favorable to the Homeowners:

         A. The Underlying Dispute and Arbitration

         In December 2007, Taylor entered into an agreement with the Homeowners to build a house in Montgomery, Alabama for $756, 099.00, and the Homeowners entered into a loan agreement with Regions Bank to borrow $805, 400.00 to build the house. (Doc. #9 at ¶¶11-12). In accordance with the terms of the construction agreement, Taylor received periodic payments (or disbursements) from the bank to finance the construction of the house. (Doc. #11-12). When collecting disbursements to finance the construction, Taylor agreed that “the proceeds of the requested advance will be used to pay the bills currently due and for no other purposes.” (Doc. #12).

         Unfortunately, the Homeowners' house was never completed as Taylor's business suffered from a stagnant economy. Three unpaid materialmen filed suits in state court against Taylor and the Homeowners, and the Homeowners filed a crossclaim against Taylor. See Am. Safety Indem. Co. v. T.H. Taylor, Inc., 513 Fed.Appx. 807, 810 (11th Cir. 2013) [hereinafter ASIC II]. The Homeowners subsequently filed an arbitration complaint against Taylor on February 23, 2010, seeking $2 million in damages. (Doc. #20-3). The claims were presented for arbitration on April 23, 2014, and the arbitrator issued a decision on March 24, 2015. (Doc. #24).

         In reviewing the financial documentation related to the disbursements, the arbitrator found that by October 15, 2008, Regions had paid Taylor approximately 90% of the loan amount, even though the construction was only 78.5% completed. (Doc. #20-4 at 3). In total, Regions ...


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