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Cincinnati Insurance Co. v. KDL, Inc.

United States District Court, D. Kansas

June 13, 2017

KDL, INC., Defendant.


          KATHRYN H. VRATIL United States District Judge.

         The Cincinnati Insurance Company (“Cincinnati Insurance”) filed suit against KDL, Inc. seeking declaratory relief on a contract for property insurance. This matter comes before the Court on Plaintiff's Motion For Summary Judgment (Doc. #36) filed October 30, 2015. For reasons stated below, the Court overrules plaintiff's motion.

         Summary Judgment Standards

         Summary judgment is appropriate if the pleadings and materials in the record show no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a). A factual dispute is “material” only if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A “genuine” factual dispute requires more than a mere scintilla of evidence. Id. at 252.

         The moving party bears the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party meets its burden, the burden shifts to the nonmoving party to demonstrate that genuine issues remain for trial as to those dispositive matters for which it carries the burden of proof. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir. 1990). The nonmoving party may not rest on its pleadings but must set forth specific facts. Applied Genetics, 912 F.2d at 1241.

         The Court views the record in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 380 (2007). It may grant summary judgment if the nonmoving party's evidence is merely colorable or is not significantly probative. Liberty Lobby, 477 U.S. at 250-51. In response to a motion for summary judgment, a party cannot rely on ignorance of facts, on speculation, or on suspicion, and may not escape summary judgment in the mere hope that something will turn up at trial. Conaway v. Smith, 853 F.2d 789, 794 (10th Cir. 1988). Essentially, the inquiry is “whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law.” Liberty Lobby, 477 U.S. at 251-52.

         Factual Background

         The following material facts are uncontroverted, deemed admitted or, where disputed, viewed in the light most favorable to KDL, the non-movant.

         Cincinnati Insurance insured KDL under a Commercial Policy of Insurance, effective June 1, 2009 to June 1, 2010.[1] KDL is a property holdings company. KDL has shared ownership structures with Lindemuth, Inc., Lindy's Inc., K Douglas, Inc. and Bellairre Shopping Center, Inc. (the “Lindemuth Entities”). Collectively, KDL, the Lindemuth Entities and Kent and Vikki Lindemuth own and manage some 120 commercial, industrial and residential properties, most of which are located in Topeka, Kansas. KDL has no outside or independent property manager. KDL, the Lindemuth Entities and Kent and Vikki Lindemuth are “Named Insureds” under the Policy.

         As part of KDL's property management functions, it owns, maintains and stores machinery and equipment. KDL commonly uses unoccupied spaces for storage of its equipment and machinery, especially in spaces such as strip centers or malls where several tenants are housed in one building structure or within close proximity to other properties which KDL owns and manages. KDL also routinely uses its open space to store the personal property of Lindemuth Entities.

         KDL owns and operates a commercial shopping center known as Deer Creek Shopping Center in Topeka, Kansas. Deer Creek has about 63, 397 square feet of commercial lease space. In June of 2009, Falley's Market, a grocery store which occupied about 41, 687 square feet of retail space at Deer Creek, closed.[2] After the grocery store closed, KDL maintained electricity service but discontinued gas and water service in the grocery store space. KDL also used the space to store equipment and supplies, including materials for construction repair, painting and remodeling. KDL used almost all of the Falley's space for storage. KDL routinely rotated equipment and machinery in the Falley's space and replaced it with other equipment and machinery.

         Some time around March 27 to 30, 2010, an individual damaged the heating, ventilating and air conditioning units (“HVAC”) on the roof of Deer Creek and stole copper pipes. Shortly thereafter, Topeka Police Department officers apprehended the individual.

         The HVAC units and copper pipes are “covered property” under the Policy. Absent an exclusion, the damage and loss related to the HVAC units and copper piping is a covered loss under the Policy. The Policy contains an exclusion for theft and vandalism as follows:

(1) As used in this Vacancy Condition, the term building and the term vacant have the meanings set forth in (1)(a) and (1)(b) below:
(a) When this Coverage Part is issued to a tenant, and with respect to that tenant's interest in Covered Property, building means the unit or suite rented or leased to the tenant. Such building is vacant when it does not contain enough ...

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