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AMCO Insurance Company v. Westborn Chrysler Jeep Inc.

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

June 29, 2018

AMCO INSURANCE COMPANY and DEPOSITORS INSURANCE COMPANY, Plaintiffs,
v.
WESTBORN CHRYSLER JEEP INC., FRANK BENTLEY, JEFF ROEKLE, and VANESSA BACON, Defendants.

          ORDER GRANTING PLAINTIFFS' MOTIONS FOR SUMMARY JUDGMENT [#18 and 19]

          DENISE PAGE HOOD CHIEF JUDGE.

         I. INTRODUCTION

         Plaintiffs AMCO Insurance Company (“AMCO”) and Depositors Insurance Company (“Depositors”) filed this declaratory action seeking a determination that they owe no duty to provide insurance coverage or a defense to Defendants Westborn Chrysler Jeep Inc. (“Westborn”), Frank Bentley, Jeff Roekle, or any other party, for any claims made against those Defendants in a state court lawsuit filed by Defendant Vanessa Bacon. Defendants Bentley, Roekle, and Bacon have been defaulted. Each of AMCO and Depositors has filed a Motion for Summary Judgment against Westborn [Dkt. Nos. 18 and 19]. The motions are fully briefed, and a hearing was held on March 21, 2018. For the reasons that follow, both motions are granted.

         II. BACKGROUND

         In a state court action, Bacon sued Westborn, Bentley, Roekle, a man named Duvonn E. Davis, Santander Consumer USA, Inc., and Ally Financial, Inc. The lawsuit stems from her involvement in the purchase of two vehicles from Westborn in March 2016, when she allegedly suffered from a mental disability. In that state court action, Bacon alleges that due to her mental disability at that time, she could not knowingly and voluntarily entering into contracts or protect her interests. Bacon alleges that on March 16, 2016, Davis persuaded her to go with him to Westborn for the purpose of acquiring two vehicles, one for Davis and one for his girlfriend (identified only as Meka). Bacon alleges that Davis, Bentley, and Roekle were “acting in concert” to have Bacon sign paperwork to lease a 2016 Chrysler 300S and to purchase a 2016 Dodge Charger. Davis, Bentley, and Roekle, again acting “in concert, ” allegedly arranged for the purchase of an insurance policy from State Farm Mutual Automobile Insurance Company for the two vehicles “fraudulently identifying [Bacon] as the applicant for said policy or policies.” Bacon subsequently filed complaints against Westborn with the Federal Trade Commission, the Detroit Police Department, the Michigan Adult Protective Services, the Better Business Bureau, and the Michigan Attorney General and sought to rescind the transactions.

         In the state court action, Bacon filed a 13-count complaint. In Count X, Bacon alleged intentional infliction of emotional stress, specifically alleging that “Defendants' conduct as outlined above was intentional.” Dkt. No. 18, Ex. 1, ¶ 65. In Counts XII and XIII, Plaintiff alleges fraud, deceit, misrepresentation, coercion, or unjust enrichment and intentional and malicious acts by Defendants.

         AMCO and Depositors are both in the Nationwide family of companies, but they are distinct corporate entities. Plaintiffs suggest that Westborn had three potentially relevant insurance policies with them: a Garage Policy with AMCO, the Depositors Commercial General Liability Policy, and an AMCO Umbrella Policy. The Depositors Commercial General Liability Policy Coverage Form (Coverage A) provides Bodily Injury and Property Damage Liability coverage: “We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury' or ‘property damage' to which this insurance applies.” [Dkt. No. 18, Ex. 2 at 1] The AMCO Garage Policy provides coverage under the Garage Coverage Form, which provides for coverage under “Garage Operations - Other than Covered Autos” and “Garage Operations - Covered Autos.” Id. at 2-3. Both AMCO Garage Operations' coverages require “bodily injury” or “property damage” arising out of an “accident.” Although both AMCO and Depositors offer argument at length with respect to “bodily injury” and “property damage, ” it does not appear that either are relevant to the underlying claims or the instant cause of action - as reflected by the fact that Westborn does not acknowledge or address such coverage in its response brief.

         The Depositors Commercial General Liability Policy Coverage Form (Coverage B) provides “Personal and Advertising Injury” coverage: “We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘personal and advertising injury' to which this insurance applies.” [Dkt. No. 18, Ex. 2, at 6] The policy defines “personal and advertising injury” as follows:

         “Personal and advertising injury” means injury, including consequential “bodily injury”, arising out of one or more of the following offenses:

a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;
d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;
e. Oral or written publication, in any manner, of material that violates a person's right of privacy;
f. The use of another's advertising idea in your “advertisement”; or
g. Infringing upon another's copyright, trade dress or slogan in your “advertisement”.

[Dkt. No. 18, Ex. 2, at 15]

         Coverage B also contains exclusions, including:

         This insurance does not apply to:

a. Knowing Violation Of Rights Of Another
“Personal and advertising injury” caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict “personal and advertising injury”.
b. Material Published With Knowledge Of Falsity
“Personal and advertising injury” arising out of oral or written publication, in any manner, of material, if done by or at the direction of the insured with knowledge of its falsity.
* * *
d. Criminal Acts “Personal and advertising injury” arising out of a criminal act committed by or at the direction of the insured.
e. Contractual Liability
“Personal and advertising injury” for which the insured has assumed liability in a contract or agreement. This exclusion does not apply to liability for damages that the insured would have in the absence of the contract or agreement.
f. Breach Of Contract
“Personal and advertising injury” arising out of a breach of contract, except an implied contract to use another's advertising idea in ...

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