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State Farm Fire and Casualty Co. v. Stone

United States District Court, E.D. Michigan, Southern Division

July 17, 2017

STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff,
v.
MELINDA STONE, et al., Defendants.

          ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (DKT. 22)

          TERRENCE G. BERG UNITED STATES DISTRICT JUDGE

         I. Introduction

         This case involves the duty of the insurer to defend and indemnify the insured. Plaintiff State Farm and Casualty Company has filed a motion seeking a judgment declaring that it does not have a duty to continue defending or to indemnify Defendants Melinda and Douglas Stone in a defamation case that a third party has brought against them. Plaintiff moves for summary judgment, which the Stones oppose.

         Pursuant to the Declaratory Judgment Act. 28 U.S.C. § 2201(a), this court has discretionary jurisdiction over actions for a declaratory judgment. For the reasons outlined below, the Court will exercise its jurisdiction over this matter and GRANT Plaintiff's motion.

         II. Background

         As a preliminary matter, although Plaintiff filed this case against Melinda Stone and Douglas Stone (her husband), Melinda Stone is the only defendant relevant to the facts underlying this motion. Accordingly, any reference in this order to Defendant refers to Melinda Stone.

         Defendant was a patient of Dr. Jake Heiney, formerly an orthopedic doctor. Dkt. 1-2, Pg. ID 66. In 2015, Heiney physically examined her. After the exam, Defendant claimed that Heiney touched her inappropriately and reported him to law enforcement. Dkt. 1-2, Pg. IDs 66-67. Criminal charges were brought against Heiney, who was found guilty after a jury trial. He was imprisoned and lost his license to practice medicine. Dkt. 1-2, Pg. IDs 68, 70. Defendant also brought a civil suit against Heiney, which is pending in Lucas County, Ohio. Dkt. 1-2, Pg. ID 68. He responded with a counter-complaint against Defendant and her husband for defamation based on reports Defendant made to third parties, including law enforcement agents.

         In response to Heiney's defamation lawsuit, Defendant and her husband sought defense and indemnification through Plaintiff, her homeowner's insurance provider. Defendant requested that, under her homeowner's insurance policy (hereinafter “the policy”), Plaintiff provide her and her husband with legal defense against Heiney's counter-complaint and indemnification if a judgment is entered based on his allegations. Dkt. 1, Pg. ID 3. Defendant and her husband obtained the policy from Plaintiff in Monroe County, Michigan. Dkt. 1, Pg. ID 2.

         The policy, in relevant part, provides insurance for any damages the insured may be liable for due to an “occurrence, ” which the policy defines as an “accident” that results in “bodily injury.” Dkt. 1, Pg. ID 3. Under the policy, “bodily injury” does not include emotional damages, unless they arise from a physical injury. Dkt. 1, Pg. ID 4. Plaintiff currently is providing representation for Defendant and her husband against Heiney's counter-complaint under a reservation of rights. Dkt. 22 Pg. ID 159. Plaintiff seeks a declaratory judgment stating that it does not have a duty to defend or indemnify Defendant or her husband under the policy because: (1) Defendant cannot be said to have accidentally caused Heiney to file his counter-complaint, and (2) even if she could, Heiney does not allege bodily injury. Dkt. 22, Pg. IDs 158, 164, 170.

         III. Jurisdiction

         A district court's exercise of jurisdiction under the Declaratory Judgment Act is discretionary. Brillhart v. Excess Ins. Co., 316 U.S. 491, 494 (1942). The Sixth Circuit has articulated five factors for district courts to balance in deciding whether to exercise jurisdiction over declaratory judgment actions:

1. whether the judgment would settle the controversy;
2. whether the judgment would clarify the legal relations at issue;
3. whether the declaratory remedy is being used merely for the purpose of “procedural fencing” or “to provide an arena ...

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