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State Farm Fire and Casualty Co. v. Christie

United States District Court, D. Kansas

February 23, 2015

STATE FARM FIRE AND CASUALTY CO., Plaintiff,
v.
DAVID CHRISTIE, et al., Defendants.

MEMORANDUM AND ORDER

CARLOS MURGUIA, District Judge.

Plaintiff State Farm Fire and Casualty Company ("State Farm") filed this suit seeking a declaratory judgment that it has no duty to indemnify defendants David Christie, Alexander Glenn, and D.J. Christie, Inc. ("D.J. Christie")[1] for a judgment entered against them in Meyer v. Christie, No. 07-2230-CM, 2007 WL 3120695 (D. Kan. Oct. 24, 2007) (" Christie I "). The matter before the court is State Farm's Amended Motion for Summary Judgment (Doc. 72).

I. Facts

A. The Underlying Case: Christie I

Christie I concerned a failed joint venture between Alan Meyer, John Pratt, and Dovetail Builders 2, LLC (the " Christie I Plaintiffs")[2] and defendants. The parties intended for the development of a residential housing complex in Junction City, Kansas known as "The Bluffs." State Farm retained an attorney to defend the insured. The Christie I Plaintiffs tendered a settlement offer of $1, 200, 000.00. Defendants offered to settle for $300, 000, but State Farm refused to contribute the full amount of the policy limits towards settlement. Therefore, eight counts against defendants-breach of joint venture agreement, breach of fiduciary duties, wrongful dissociation, civil conspiracy, unjust enrichment, accounting, constructive trust, and injunctive relief-proceeded to trial. The first four of those were submitted to the jury.

At trial, the Christie I jury found that defendants Christie and Glenn breached the joint venture agreement, violated fiduciary duties, wrongfully dissociated from the joint venture, and conspired to take the opportunity to develop The Bluffs for themselves. (Doc. 72-1 at 1.) Finding liability against defendants, the court then submitted the count of unjust enrichment to the jury.[3] In the end, the jury awarded damages totaling $9, 196, 345.00. ( Id. at 2.) On June 16, 2009, the court entered judgment in favor of the Christie I Plaintiffs and against defendants.[4]

B. State Farm's Policy

The issue in the present case is Business Policy 91-B5-4107-7 (the "Policy"), which State Farm issued to D.J. Christie, Inc. The following facts are undisputed by the parties. The Policy insured D.J. Christie, Inc. for the period of March 2005 through March 2006. (Doc 72-8.) The Policy insured business liability, which applied "[t]o advertising injury caused by an occurrence committed in the coverage territory during the policy period. The occurrence must be committed in the course of advertising your goods, products or services." ( Id. at 23.) The Policy defined "advertising injury" as an "injury arising out of one or more of the following offenses... "misappropriation of advertising ideas or style of doing business; or infringement of copyright, title or slogan." ( Id. at 33.) The Policy defined "occurrence" (in relevant part) as "the commission of an offense, or a series of similar or related offenses, which results in personal injury or advertising injury." ( Id. at 35.) The Policy excluded an advertising injury arising out of a "breach of contract other than misappropriation of advertising ideas under an implied contract." ( Id. at 27.)

II. Legal Standards

A. Summary Judgment

Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the record's evidence and reasonable inferences in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). "[T]here must be evidence on which the jury could reasonably find for the plaintiff. The judge's inquiry, therefore, unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict-whether there is [evidence] upon which a jury can properly proceed to find a verdict for the party producing it, upon whom the onus of proof is imposed." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

B. Duty to Indemnify

In the insurance context, the duty to indemnify is a requirement that, if triggered, requires the insurer to pay a judgment entered against its policyholder following a trial or settlement. The duty to indemnify is narrower than the duty to defend. Freightquote.com, Inc. v. Hartford Cas. Ins. Co., 397 F.3d 888, 894 (10th Cir. 2005); see also Kan. Health Care Stabilization Fund v. St. Francis Hosp., 203 P.3d 33, 44 (Kan. App. 2009). The duty to indemnify is "determined by the facts as they are established at trial or as they are finally determined by some other means, such as settlement." Freightquote.com, 397 F.3d at ...


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