SUSAN WEBBER WRIGHT, District Judge.
Plaintiff Pinnacle Resources, Inc. ("Pinnacle") brings this action for a declaratory judgment against Chartis Specialty Insurance Company ("Chartis") seeking a declaration that Chartis has a duty to defend and to indemnify for any damages that may be awarded against Pinnacle in connection with a lawsuit pending against it in state court. Before the Court is a motion for summary judgment filed by Chartis to which Pinnacle responded.
Pinnacle is an Arkansas corporation located in Pine Bluff which manufactures and supplies bulk lubricants.
During the period of June 1, 2010 through June 1, 2012, Pinnacle had a commercial general liability insurance policy ("the Policy") issued by Chartis.
Summary judgment is proper only if "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). The moving party bears the initial responsibility of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has properly supported its motion for summary judgment, the non-moving party must "come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)(citation omitted)(emphasis in original). A genuine issue exists only if there is sufficient evidence to allow a jury to return a verdict for the non-moving party. Anderson v. Liberty Lobby., Inc., 477 U.S. 242, 249 (1986).
The parties agree that Arkansas substantive law governs this diversity action. As a general rule, the duty to defend is determined by comparing the allegations in the underlying complaint with the scope of coverage provided under the insurance policy. See Murphy Oil USA, Inc. v. Unigard Security Ins. Co., 61 S.W.3d 807, 812-13 (Ark. 2001). Under Arkansas law, the duty to defend is broader that the duty to indemnify, and it arises when there is a possibility that the injury or damage may fall within the liability policy coverage. Id. In testing the pleadings to determine if they state a claim within the policy coverage, a court must resolve any doubt in favor of the insured. Id. at 814. Courts are not, however, required by the rules of contractual construction to stretch their imaginations to create coverage where none exists. Pate v. U.S. Fid. & Guar. Co., 685 S.W.2d 530, 532 (Ark 1985). An intent to exclude coverage in an insurance policy must be expressed in clear and unambiguous language, and the burden is upon the insurance company to present facts that come within the stated exclusion. See Union Bankers Ins. Co. v. National Bank of Commerce, 408 S.W.2d 898, 900 (Ark. 1966).
The Policy states, in relevant part:
This insurance does not apply to:
Chartis argues that the allegations of the lawsuit do not state Gibraltar suffered property damage caused by an occurrence.
812 F.Supp.2d at 546. The Court finds Gibraltar's complaint does not allege loss of use of the property.
Chartis also argues that there is no allegation of property damage as defined by the Policy because there was no "occurrence." Occurrence means an accident. "We have defined an `accident' as `an event that takes place without one's foresight or expectation-an event that proceeds from an unknown cause, or is an unusual effect of a known cause, and therefore not expected.'" U.S. Fidelity & Guar. Co. v. Continental Cas. Co., 120 S.W.3d 556, 563 (Ark. 2003). Chartis contends that the conduct alleged by Gibraltar — that Pinnacle improperly acquired and then sold lubricant blended with its secret formula — is and or is alleged to be intentional. The Court finds there are no allegations surrounding Gibraltar's claims that could indicate an accident.
Lastly, Chartis argues that even if the complaint could be read as to allege "property damage" caused by an "occurrence," coverage is precluded by the Expected or Intended Injury exclusion. The Policy does not apply to property damage "expected or intended from the standpoint of the insured." The Arkansas Supreme Court interpreted this exclusion to preclude coverage for "injuries which the average run of reasonable people would expect or intend to inflict by engaging in the conduct in question." CNA Ins. Co. v. McGinnis, 666 S.W.2d 689, 691 (Ark. 1984).
The complaint alleges Pinnacle's actions caused Gibraltar to lose profits. Any reasonable person would expect that the acquisition and use of a competitor's secret formula would result in a loss of profits. Pinnacle argues that because Gibraltar did not allege that the damage caused by Pinnacle's alleged misappropriation of Gibraltar's secret formula was expected or intended by Pinnacle, there is a possibility that such damages were accidental under the Policy.
The Court finds that even if the complaint could be read to allege the loss of use of tangible property, the incident is excluded from coverage because the loss of use and resulting damage was a loss Pinnacle expected or intended to occur when it allegedly improperly obtained and misued Gibraltar's property.
Pinnacle argues that any ruling on Chartis's motion for summary judgment as to its duty to indemnify would be premature. Chartis contends that when the same reasons that negate a duty to defend — lack of "property damage" and lack of an "occurrence" — negate any possibility that the insurer will ever have a duty to indemnify, it is not premature to make a determination on the duty to indemnify. See Medical Liability Mut. Ins. Co. v. Alan Curtis, LLC, 519 F.3d 466 (8th Cir. 2008) (court determined insurer had no duty to defend or indemnify employee and had duty to defend insured owner on all claims but only had duty to indemnify to with respect to one claim). See also Harleysville Worchester Ins. Co. v. Diamondhead Property Owners Ass'n, 2013 WL 1500709 *3 (W.D. Ark. April 11, 2013("if Court finds Harleysville has no duty to defend . . . then it also has no duty to indemnify").
Because the Court finds there are no genuine issues of material fact in dispute and that there is no coverage under the Policy, defendant's motion for summary judgment will be granted.
IT IS THEREFORE ORDERED that defendant's motion for summary judgment [ECF No. 14] is granted. Plaintiff's motion for partial summary judgment [ECF No. 16] is denied. Plaintiff's complaint is dismissed. A separate Judgment will be entered.