DEE D. DRELL, District Judge.
Pending before the Court is a Motion for Summary Judgment (Doc. 65) filed by Third Party Defendant State Farm Fire & Casualty Co. ("State Farm"), against the Defendant, Oday Lavergne ("Mr. Lavergne"). The motion seeks dismissal of all claims filed against State Farm in its capacity as Mr. Lavergne's insurer. After careful consideration, State Farm's motion will be GRANTED IN PART AND DENIED IN PART, as specified below. Disposition will follow by a separate judgment.
This is a defamation lawsuit in which Mr. Lavergne is accused of making false and derisive statements about the Plaintiff, Wesley Dalton Medford ("Mr. Medford"). State Farm's motion concerns whether certain insurance policies issued to Mr. Lavergne and his privately-owned business provide liability coverage for the defamation claims, or obligate State Farm to provide a defense for Mr. Lavergne against those claims.
Mr. Medford is an Australian citizen and CEO and Chairman of PIVoD Technologies, L.L.C. ("PIVoD").
Mr. Medford filed the instant lawsuit on June 6, 2008. (Doc. 1). In the complaint, he alleges that Mr. Lavergne "commenced with a campaign designed to undermine the integrity and credibility of Plaintiff Medford in the eyes of PIVoD['s] ... membership and management." (Doc. 1, p. 3). More specifically, Mr. Medford claims that Mr. Lavergne, through verbal communications and emails copied to other PIVoD employees, falsely accused him of various acts of mismanagement and self-dealing as an officer of PIVoD. These assailments, Mr. Medford claims, were intended to embarrass Mr. Medford and impugn his business reputation. The complaint originally sought damages against Mr. Lavergne for defamation and breach of fiduciary duty. On July 24, 2008, the Court granted a Motion for Partial Voluntary Dismissal (Doc. 7) filed by Mr. Medford, dismissing without prejudice the breach of fiduciary count in the complaint. (Doc. 8).
Subsequently, on September 30, 2008, Mr. Lavergne filed a third party demand against State Farm. (Doc. 22).
Under Federal Rule of Civil Procedure 56(c), the Court will grant a party's motion for summary judgment only if:
A genuine issue of material fact exists if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
In conducting this analysis, the Court must construe "all of the evidence and all of the factual inferences from the evidence... in a light most favorable to the party opposing the motion." Kling Realty Co., Inc. v. Chevron USA, Inc., 575 F.3d 510, 517 (5th Cir.2009). Any doubts are likewise resolved in favor of the nonmoving party. U.S. ex rel. Longhi v. United States, 575 F.3d 458, 465 (5th Cir.2009). Once the movant has directed the Court's attention to portions of the record which reflect the absence of a genuine issue of material fact, the nonmoving party bears the burden of demonstrating that a genuine issue of material fact exists. United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 506-07 (5th Cir.2008). "However, mere conclusory allegations are not competent summary judgment evidence, and such allegations are insufficient, therefore, to defeat a motion for summary judgment." Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir.1996).
In diversity cases such as this, we must apply the substantive law of the forum state, as interpreted by the state's highest court. See Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 399 (5th Cir.2008). Because Mr. Lavergne's insurance policies were delivered in Louisiana, we interpret them applying Louisiana substantive law. See Thermo Terratech v. GDC Enviro-Solutions, Inc., 265 F.3d 329, 334 (5th Cir. 2001). The Louisiana Supreme Court has provided the following summary of the rules governing the interpretation of insurance policies:
Huggins v. Gerry Lane Enters., Inc., 957 So.2d 127, 129 (La.2007) (quoting Bonin v. Westport Ins. Corp., 930 So.2d 906, 910-11 (La.2006)).
Mr. Lavergne concedes that he has no relevant coverage under two of the five policies issued to him by State Farm. These policies cover his private business, Agilus Health, Inc., which is completely unrelated to his associations with PIVoD. Therefore, only three policies remain for consideration: (1) Mr. Lavergne's Homeowner's Policy (Doc. 65-2, Exh. 1); (2) a Business Policy issued in favor of Mr. Lavergne (Doc. 65-4, Exh. 3); and (3) Mr. Lavergne's Personal Liability Umbrella Policy (Doc. 65-3, Exh. 2). We will consider each of these policies in turn.
State Farm argues that coverage under the Homeowner's Policy does not extend to defamation claims. The policy includes coverage for "Personal Liability" under the following provisions:
(Doc. 65-2, Exh. 1, p. 15) (emphasis in original). The policy defines the term "occurrence" as "an accident, including exposure to conditions, which results in ... bodily injury; or ... property damage ... during the policy period. Repeated or continuous exposure to the same general conditions is considered to be one occurrence." (Doc. 65-2, p. 2). "`[B]odily injury' means physical injury, sickness, or disease to a person," including "required care, loss of services and death resulting therefrom," but not including "emotional distress, mental anguish, humiliation, mental distress, mental injury, or any similar injury unless it arises out of actual physical injury to some person." (Doc. 65-2, p. 1). Finally, "property damage" is defined as "physical damage to or destruction of tangible property, including loss of use of this property," but excluding "theft or conversion of property" by the insured. (Doc. 65-2, p. 2).
The terms of personal liability coverage under Mr. Lavergne's Homeowner's Policy are unambiguous and limiting. Under these provisions, State Farm is not obligated to provide coverage or a defense to Mr. Lavergne against the claims in this suit, as they do not arise from an "occurrence," and do not involve "bodily injury" or "property damage." Although counsel for Mr. Lavergne cursorily argues that two exclusions listed in the Homeowner's Policy do not apply, counsel provides us with no alternative reading of the coverage provisions. Counsel also points to no other provisions which may provide coverage to Mr. Lavergne for these claims. Because no coverage exists under the Homeowner's Policy, we do not reach the issue of whether the policy exclusions may apply to preclude coverage.
Where, as here, the "language in the policy is clear, unambiguous, and expressive of the intent of the parties, the agreement must be enforced as written." Sibley v. Deer Valley Homebuilders, Inc., 32 So.3d 1034, 1039 (La.App. 2d Cir.2010). We find no genuine issue of material fact regarding whether Mr. Lavergne's Homeowner's Policy provides coverage for the claims in the principal litigation, and State Farm is entitled to judgment as a matter of law on this claim. Therefore, State Farm's Motion for Summary Judgment (Doc. 65) will be GRANTED as it applies to Mr. Lavergne's Homeowner's Policy.
Next, State Farm contends that coverage does not extend to Mr. Lavergne's alleged tort under his Business Policy. This argument is rooted in the "Designation of Insured" section of the policy. The relevant provision states that, "[i]f you are designated in the Declaration as ... an individual, you and your spouse are insureds but only with respect to the conduct of a business of which you are the sole owner." (Doc. 65-4, p. 27). This limiting clause clearly narrows the scope of coverage under the policy to liability arising from the operation of an individual's wholly-owned business.
Here, it is uncontested that Mr. Lavergne is designated as an individual in the Declarations section of the policy. Therefore, pursuant to the unambiguous language of the policy, Mr. Lavergne and his spouse qualify as insureds, but only regarding any business which Mr. Lavergne solely owns. There is, however, no allegation that Mr. Lavergne is the sole owner of PIVoD. Indeed, as State Farm points out, Mr. Lavergne alleges that there were other members of the company. As such, Mr.
Finally, State Farm maintains that no coverage exists under Mr. Lavergne's Umbrella Policy. The relevant coverage term provides as follows: "
The business pursuits exclusion withdraws coverage "for any loss caused by your
The policy does not define the term "occupation." Outside of the policy, however, "occupation" is defined as "[a]n activity or pursuit in which a person is engaged; esp., a person's usual or principal work or business." Black's Law Dictionary 1106 (7th ed.1999). This definition comports with the ordinary, prevailing meaning of the term. Moreover, it highlights Mr. Lavergne's principal argument: that his work with PIVoD was not his "primary job," but was rather an "investment opportunity." State Farm argues, by contrast, that Mr. Lavergne desired to profit from his involvement with PIVoD, and was actively involved in the operation of the company. Under the circumstances of this case, we do not grant summary judgment precluding coverage, because it is not entirely clear whether Mr. Lavergne's involvement with PIVoD constituted an "occupation." There are several unsettled points of fact in the record which, in and of themselves, may be sufficient reason to deny summary judgment. Nonetheless, to the better of our understanding of the evidence, a number of factors actually support our decision.
First, however, we must note that Mr. Lavergne was involved in PIVoD to a much larger extent than an average investor
For all of his efforts in cultivating PIVoD, Mr. Lavergne was compensated with, according to his deposition, shares of stock in PIVoD. The record is not entirely clear regarding the logistics involved in compensating Mr. Lavergne. It appears that PIVoD was a limited liability company, a form of juridical entity which does not typically issue shares of stock.
This last observation naturally leads to other questions. Is it necessary to decide that Mr. Lavergne's "primary job" was to act as a member of PIVoD's Board of Managers? Or may we adopt the more generalized conception of the term occupation as including part-time or secondary activities which generate income? Can a person have more than one "occupation" by the terms of the Umbrella Policy? Finally, what is the decisive factor in determining whether an activity constitutes an "occupation"—the desire to profit from the activity, or the formal recognition of the activity as type of employment? None of these questions are definitively answered by the terms of the policy or the arguments contained in either party's briefs. The very fact that the Court is left to decide these questions precludes summary judgment.
State Farm has presented a cognizable argument that a mere investment opportunity-motivated by the desire to make a profit—is sufficient to constitute a business pursuit, at last in general terms. Some Louisiana courts have intimated that profit motive should be a consideration in determining whether an activity constitutes a business pursuit.
If Mr. Lavergne's Umbrella Policy defined the term "business" more broadly, or the term "occupation" at all, our conclusion may be different. Likewise, if the evidence before the Court indicated more clearly that Mr. Lavergne's involvement with PIVoD fell within the plain, ordinary, and uncontested meaning of the term "occupation," then summary judgment may be appropriate. As it stands, however, genuine issues of material fact remain to be
The intentional act exclusion prohibits coverage "for
As a general principal, intentional act exclusions serve to "`prevent an insured from acting wrongfully with the security of knowing that his insurance company will `pay the piper' for the damages.'" Breland v. Schilling, 550 So.2d 609, 613 (La.1989) (quoting Transamerica Ins. Group v. Meere, 143 Ariz. 351, 694 P.2d 181, 186 (1984)). In interpreting an intentional act exclusion, the insured's subjective intent is paramount; the Louisiana Supreme Court has rejected "the approach, followed by certain courts, that an insured intends, as a matter of law, all injuries which flow from an intentional act." Id. at 614.
In his complaint, Mr. Medford alleges that Mr. Lavergne's statements were defamatory per se and, alternatively, that his "words, comments, and statements are merely susceptible of defamatory meaning." (Doc. 1, p. 6, ¶ 20). "In Louisiana, defamatory words have traditionally been classified into two categories: those that are defamatory per se and those that are susceptible of a defamatory meaning." Costello v. Hardy, 864 So.2d 129, 140-41 (La.2004). When words are not defamatory per se, the plaintiff must prove the element of fault, which may amount either to negligence or intent. See id. In other words, Mr. Medford pled (albeit in the alternative) that Mr. Lavergne's words may not have been defamatory per se.
In summary, the complaint leaves open the possibility that proof of fault will be required, and that such fault may rise only to the level of negligence, rather than intent. Thus, while the factual allegations in Mr. Medford's complaint relate principally to intentional conduct, the complaint, read as a whole, leaves open the possibility of coverage.
State Farm also alleges that coverage under the Umbrella Policy is prohibited by the board of directors exclusion, which withdraws coverage "for any loss caused by your act or omission as a member
Instead, we note that this exclusion specifically applies to members of a corporation's board of directors. The evidence before the Court precludes summary judgment on this point because, to the best of our understanding: (1) PIVoD was not a corporation, but was instead a limited liability company; and (2) Mr. Lavergne was not a member of a corporation's board of directors, but was a member of a limited liability company's "Board of Managers." Neither difference is insignificant. Indeed, the exclusion likely exempts board members of a corporation because of the special liability protections afforded to board members by virtue of the position itself.
State Farm argues, however, that Mr. Lavergne filled a role that is the "functional equivalent" of a member of a corporation's board of directors. That statement, however, requires both an extrapolation (and perhaps, an unwarranted deviation) from the plain language of the policy, and a resolution of disputed fact issues. As explained previously, there may be some confusion in the record as to the type of corporate entity that was formed. Ignoring that problem, however, there is still no evidence that serving as a member of PIVoD's Board of Managers is the functional equivalent of serving as a member of a corporation's Board of Directors. Even if there was such evidence, however, the exclusion contains no "functional equivalent" clause, but instead specifically applies specifically to members of a corporations's board of directors.
For purposes of clarity, we now address State Farm's duty to defend Mr. Lavergne in this lawsuit. Generally, "[u]nder Louisiana law, `the scope of the duty to defend under an insurance agreement is broader than the scope of the duty to provide coverage.'" Coleman v. Sch. Bd. of Richland Parish, 418 F.3d 511, 523 (5th Cir.2005) (quoting Suire v. Lafayette City-Parish Consol. Gov't, 907 So.2d 37, 51-52 (La.2005)); accord Graphia v. Schmitt, 7 So.3d 716, 718 (La.App. 5th Cir.2009) ("Generally, an insurer's obligation to defend suits against its insured is broader than its liability for damage claims."). Moreover, if a complaint contains a single claim for which a policy provides coverage, then the insurer is obligated to defend the entire lawsuit. Coleman, 418 F.3d at 523. In other words, "[t]he insurer's duty to defend suits brought against its insured is determined by the allegations of the plaintiff's petition, with the insurer being obligated to furnish a defense unless the petition unambiguously excludes coverage." Elliott v. Cont'l Cas. Co., 949 So.2d 1247, 1250 (La.2007). The insurer's duty to defend arises if there is "even a possibility of liability under the policy." Id. Courts must liberally construe plaintiffs' allegations to determine whether an insurer is
As noted above, the complaint does not foreclose all possible scenarios under which Mr. Lavergne may be entitled to coverage under his Umbrella Policy. As such, we cannot conclude, at least at this point, that State Farm has no duty to defend the claims in this lawsuit. State Farm's Motion for Summary Judgment (Doc. 65) will be DENIED IN PART as it pertains to its duty to defend Mr. Lavergne under the Umbrella Policy.
For the foregoing reasons, Third Party Defendant State Farm's Motion for Summary Judgment (Doc. 65) will be GRANTED IN PART AND DENIED IN PART, as specified above. Only the issue of potential coverage under Mr. Lavergne's Umbrella Policy remains in dispute.
Steed v. St. Paul's United Methodist Church, 728 So.2d 931, 943-44 (La.App. 2d Cir.1999). In this instance, the injury or consequence that allegedly flowed from Mr. Lavergne's words was defamation. Therefore, the fact finder in this case must still determine whether Mr. Lavergne subjectively intended or expected to defame Mr. Medford.
In this case, Mr. Lavergne denied the allegations in Mr. Medford's complaint that he embarked on an intentional campaign to defame Mr. Medford. (Doc. 9, p. 2, ¶¶ 8-9). Moreover, Mr. Lavergne asserted the following affirmative defenses: (1) the defenses of absolute and substantial truth; (2) qualified immunity; (3) that any disputed statements "allegedly made by . . . [Mr. Lavergne] . . . do not rise to the level of false facts or actionable statements"; (4) any injuries incurred by Mr. Medford were "caused by the negligence or fault of others over whom [Mr. Lavergne] has no right of control and for whose acts [Mr. Lavergne] is not responsible"; and (5) that Mr. Lavergne's acts are not accountable for any damage sustained by Mr. Medford. (Doc. 9, pp. 6-7, ¶¶ 29-34). Finally, Mr. Lavergne's answer also contains a counterclaim, asserting that "[a]ll of [Mr.] Lavergne's e-mails and communications to [Mr.] Medford and others. . . were efforts to ensure that [Mr.] Medford followed the corporate formalities and acted appropriately in running the corporation for the benefit of the shareholders." (Doc. 9, p. 9, ¶ 8). These averments at least present issues of fact as to whether Mr. Lavergne intended or expected his statements to result in defamatory damages to Mr. Medford. Graphia, 7 So.3d at 719-20. Although we need not decide the motion based upon these facts, it is worth noting that some courts have looked beyond the bare allegations of the complaint in deciding similar motions.
