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Auto-Owners Insurance Co. v. Morris

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

March 29, 2018

AUTO-OWNERS INS. CO., Plaintiff,
v.
BRIAN AND CHERISE MORRIS, Defendants,
v.
THE PARNELL INS. AGENCY, INC., Third-Party Defendant.

          MEMORANDUM OPINION

          KARON OWEN BOWDRE, CHIEF UNITED STATES DISTRICT JUDGE.

         This declaratory-judgment action involves the interpretation of policy provisions related to uninsured motorist coverage. It comes before the court on Plaintiff Auto-Owners Insurance Company's “Motion for Summary Judgment” (doc. 44) and Third-Party Defendant The Parnell Insurance Agency's “Motion for Summary Judgment” (doc. 43). The court will GRANT both motions.

         In 2013, Brian Morris and his business, “B&C Industries, ” obtained automobile insurance with Auto-Owners through Parnell Insurance Agency. The original named insured on that Policy was “B&C Industries, ” the trade name of a sole proprietorship run by Mr. Morris. In March 2014, Parnell Insurance changed the named insured on the Policy from B&C Industries to “BC Industries LLC, ” a limited liability company incorporated by Brian Morris's wife, Cherise Morris.

         In May 2014, the Morrises, while riding a motorcycle owned by Ms. Morris, suffered injuries in a wreck. Because the at-fault motorist had insufficient coverage to pay the Morrises' bills and because the Morrises did not have their own uninsured motorist coverage on the motorcycle, the Morrises claimed uninsured motorist benefits from Auto-Owners based on the Policy's uninsured motorist coverage.

         Auto-Owners asks for a declaratory judgment that the Policy does not provide the Morrises uninsured motorist coverage for damage or injuries relating to the motorcycle accident. Auto-Owners asserts that the Morrises are not entitled to uninsured motorist coverage under the Policy because the first named insured on the Policy was BC Industries LLC, a limited liability company, and, in this case, the uninsured motorist coverage provision only covers the Morrises if the first named insured is an “individual.” The Morrises have filed counterclaims, asserting breach of the Policy and contract reformation. The Morrises want the court to reform the Policy to the original named insured, B&C Industries, a sole proprietorship. To that end, the Morrises claim that both they and Auto-Owners understood and intended the Policy to insure B&C Industries, a sole proprietorship; the Morrises say that Parnell Insurance unilaterally changed the named insured to BC Industries LLC without their consent. Alternatively, the Morrises claim uninsured motorist coverage under the Policy's “Comprehensive Automobile Liability” endorsement, which, they say, expands the scope of the Policy's coverage.

         Finally, the Morrises bring a claim against Parnell Insurance as a third-party defendant, alleging that Parnell Insurance acted negligently or wantonly when it told Auto-Owners to change the named insured on the Policy from B&C Industries to BC Industries LLC.

         Auto-Owners moves for summary judgment on all of its claims and all of the Morrises' counterclaims against it. Parnell Insurance moves for summary judgment on the Morrises' sole claim against it. For the reasons discussed below, the court will GRANT both motions. The court will ENTER judgment in Auto-Owners's favor. The court finds that Auto-Owners does not owe the Morrises uninsured motorist coverage under the Policy for the May 6, 2014, motorcycle accident.

         STANDARD OF REVIEW

         Summary judgment is an integral part of the Federal Rules of Civil Procedure. Summary judgment allows a trial court to decide cases when no genuine issues of material fact are present and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56. When a district court reviews a motion for summary judgment, it must determine two things: (1) whether any genuine issues of material fact exist; and if not, (2) whether the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).

         The moving party “always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, ' which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed.R.Civ.P. 56). The moving party can meet this burden by offering evidence showing no dispute of material fact or by showing that the non-moving party's evidence fails to prove an essential element of its case on which it bears the ultimate burden of proof. Id. at 322-23.

         Once the moving party meets its burden of showing the district court that no genuine issues of material fact exist, the burden then shifts to the non-moving party “to demonstrate that there is indeed a material issue of fact that precludes summary judgment.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). In reviewing the evidence submitted, the court must “view the evidence presented through the prism of the substantive evidentiary burden, ” to determine whether the nonmoving party presented sufficient evidence on which a jury could reasonably find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986); Cottle v. Storer Commc'n, Inc., 849 F.2d 570, 575 (11th Cir. 1988). Furthermore, all evidence and inferences drawn from the underlying facts must be viewed in the light most favorable to the non-moving party. Graham v. State Farm Mut. Ins. Co., 193 F.3d 1274, 1282 (11th Cir. 1999).

         FACTS

         Cherise and Brian Morris are entrepreneurs. Brian Morris is the sole proprietor of a business that he calls “B&C Industries.”[1] Cherise Morris filed articles of organization for a limited liability corporation in Alabama called “BC Industries LLC” in October 2013. According to the Morrises, their businesses are separate and conduct different operations. BC Industries LLC employed both Morrises.

         In 2013, Brian Morris obtained insurance for his business, B&C Industries, through an agent, third-party defendant Parnell Insurance. Although he ran B&C Industries as a sole proprietor, the Morrises do not dispute that Brian Morris represented to Parnell Insurance that B&C Industries was a partnership. In response to Parnell Insurance's subsequent inquiry, Auto-Owners provided two “New Business Proposals, ” dated May 23 and 24, 2013, to provide automobile insurance coverage to B&C Industries. Auto-Owners noted in both proposals that it understood B&C Industries to be a partnership.

         B&C Industries accepted Auto-Owners's proposal for auto insurance. The named insured on the Policy was B&C Industries. The Policy itself does not indicate whether B&C Industries was a partnership or sole proprietorship.

         In March 2014, Parnell Insurance sent an e-mail to Auto-Owners requesting an update for the Policy's mailing address. The parties dispute whether the Morrises requested any updates to the Policy. Auto-Owners changed the Policy's mailing address to the address of BC Industries LLC, the limited liability company incorporated by Cherise Morris.

         A few days later, Parnell Insurance sent another e-mail to Auto-Owners requesting that the insurer change the named insured on the Policy to “BC Industries LLC.” Parnell Insurance claimed that “[t]here has been no ownership change just the name.” (Doc. 44-6 at 144). Auto-Owners confirmed the name change to Parnell Insurance, but the parties dispute whether Parnell Insurance or Auto-Owners successfully or sufficiently notified the Morrises about the change in the named insured on the Policy.

         On May 6, 2014, Brian and Cherise Morris were injured in an accident when the motorcycle they were driving collided with another vehicle. At the time of the accident, the motorcycle was owned by Cherise Morris and being used in the business of BC Industries LLC. The Morrises accrued damages exceeding the at-fault driver's own insurance coverage, and the Morrises did not have uninsured motorist coverage for Ms. Morris's motorcycle under any policy of their own. The Morrises thus claimed uninsured motorist benefits under the Policy with Auto-Owners. Auto-Owners denies that it owes the Morrises such coverage.

         Relevant to the issues in this case, the Policy contains two provisions each of which the Morrises say independently covers the May 6, 2014, accident: the Policy's standard uninsured motorist coverage and the ...


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