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Maxum Indemnity Co. v. CMR Properties

United States District Court, N.D. Alabama, Southern Division

December 15, 2017

MAXUM INDEMNITY COMPANY, Plaintiff,
v.
CMR PROPERTIES, et al., Defendants.

          MEMORANDUM OPINION

          R. DAVID PROCTOR, UNITED STATES DISTRICT JUDGE.

         This matter is before the court on the Motion for the Court to Enter Default Judgment against Defendants Dennis H. Williams and Dennis H. Williams d/b/a The Williams Team Remodeling under Fed.R.Civ.P. 55(b)(2), filed by Plaintiff Maxum Indemnity Company (“Plaintiff” or “Maxum”) on December 13, 2017. (Doc. # 36). Following the Clerk's Entries of Default against Dennis H. Williams and Dennis H. Williams d/b/a The Williams Team Remodeling (collectively, with Dennis H. Williams, “Williams” or the “Williams Defendants”[1]) on September 2, 2016 (Docs. # 18, 19), Plaintiff now seeks a Rule 55(b) default judgment declaring that there is no insurance coverage for the Williams Defendants for the claims asserted by CMR Properties, Inc. (“CMR Properties”) against Williams in an underlying action pending in the Circuit Court of Jefferson County, Alabama. (Doc. # 36). For the reasons outlined below, the Motion (Doc. # 36) is due to be granted.

         I. Background

         A. The Underlying State Court Action

         On June 15, 2016, Plaintiff filed a Complaint for Declaratory Judgment against Defendants CMR Properties and the Williams Defendants. (Doc. # 1). In the Complaint, Plaintiff explained that CMR Properties is the plaintiff in an underlying lawsuit in the Circuit Court of Jefferson County, Alabama, against Williams (the “underlying action”). (Doc. # 1-1); see also CMR Properties, Inc. v. Dennis H. Williams, an individual d/b/a The Williams Team Remodeling, CV-2016-900828. In the underlying action, CMR alleges that Williams entered into two construction contracts with CMR Properties, and CMR Properties made payments to Williams for work that was never performed. (Docs. # 1 at ¶ 7-10; 1-1). In the state court action, CMR Properties asserts claims against Williams for (1) fraud and misrepresentation, (2) suppression of material facts, (3) deceit, (4) unjust enrichment, (5) breach of contract, and (6) negligence. (Docs. # 1 at ¶ 6; 1-1). Maxum has now asked this court to declare that the Williams Defendants are owed no coverage for the claims asserted by CMR Properties in the underlying action. (Doc. # 1 at ¶ E).

         B. The Insurance Policy

         Maxum issued a Commercial General Liability Policy Number BDG-3010917-01 to Williams for the policy period of July 17, 2015 to July 17, 2016. (Id. at ¶ 16). The insurance policy had exclusions for the insured's knowing violation of rights of another, material published with knowledge of falsity, and breach of contract, among other events. (Id. at p. 6-15). Additionally, the insurance policy required that the insured report all claims immediately and provide Maxum notice of a claim “as soon as practicable.” (Id. at p. 10, 14). Maxum alleges that Williams has no coverage for the claims asserted by CMR Properties in the underlying action for the following reasons:

i. Williams did not provide notice of the claims asserted by CMR Properties “as soon as practicable.” Maxum received no notice of the disputes with CMR Properties until Maxum received notice that a lawsuit had been filed by CMR Properties through a March 15, 2016 Acord Form.
ii. Maxum did not receive notice of Williams' efforts to settle CMR Properties' claims, and Williams failed to obtain Maxum's consent prior to these attempts to settle the claims.
iii. Williams failed to cooperate with Maxum during its investigation of the CMR Properties' claims.
iv. CMR Properties' claims against Williams do not amount to a covered “occurrence” under the insurance policy.
v. There is no coverage for CMR Properties' claims under the insurance policy related to coverage for personal and advertising injury in that no covered offense is alleged.
vi. Even if covered claims were alleged by CMR Properties, exclusions in the policy preclude coverage for the claims.
vii. There is no coverage for claims related to events that occurred prior to the inception of the policy ...

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