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Aspen Square, Inc. v. American Automobile Insurance Co.

United States District Court, D. Kansas

March 11, 2019

ASPEN SQUARE, INC., Plaintiff,
v.
AMERICAN AUTOMOBILE INSURANCE COMPANY, Defendant.

          MEMORANDUM & ORDER

          JULIE A. ROBINSON CHIEF UNITED STATES DISTRICT JUDGE

         Plaintiff Aspen Square, Inc. (“Aspen Square”) brings this action against Defendant American Automobile Insurance Company (“AAIC”) for breach of contract, bad faith, and equitable garnishment to satisfy a judgment entered in Aspen Square's favor against Rainmaker Surveying, Inc. (“Rainmaker Surveying”), a company insured by AAIC. This insurance dispute is before the Court on Plaintiff's Motion for Summary Judgment (Doc. 23) and Defendant's Motion for Summary Judgment (Doc. 21). Aspen Square and AAIC both seek summary judgment on each of Aspen Square's claims. For the reasons discussed in detail below, the Court denies Aspen Square's motion and grants AAIC's motion.

         I. Summary Judgment Standard

         Summary judgment is appropriate if the moving party demonstrates that there is no genuine dispute as to any material fact and that it is entitled to judgment as a matter of law.[1] In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party.[2] “There is no genuine issue of material fact unless the evidence, construed in the light most favorable to the nonmoving party, is such that a reasonable jury could return a verdict for the nonmoving party.”[3] A fact is “material” if, under the applicable substantive law, it is “essential to the proper disposition of the claim.”[4] An issue of fact is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the non-moving party.”[5]

         The moving party initially must show the absence of a genuine issue of material fact and entitlement to judgment as a matter of law.[6] In attempting to meet this standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim.[7]

         Once the movant has met this initial burden, the burden shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.”[8] The nonmoving party may not simply rest upon its pleadings to satisfy its burden.[9] Rather, the nonmoving party must “set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant.”[10]

         The facts “must be identified by reference to an affidavit, a deposition transcript, or a specific exhibit incorporated therein.”[11] Rule 56(c)(4) provides that opposing affidavits must be made on personal knowledge and shall set forth such facts as would be admissible in evidence.[12]The non-moving party cannot avoid summary judgment by repeating conclusory opinions, allegations unsupported by specific facts, or speculation.[13]

         Finally, summary judgment is not a “disfavored procedural shortcut;” on the contrary, it is an important procedure “designed to secure the just, speedy and inexpensive determination of every action.”[14] In responding to a motion for summary judgment, “a party cannot rest 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.”[15]

         II. Uncontroverted Facts

         The following material facts are uncontroverted or stipulated to in the parties' Joint Stipulation of Facts.[16]

         Dennis Lee Smith is a land surveyor, who at all relevant times did business as Rainmaker Surveying. Defendant AAIC issued professional liability insurance policy number #8 91 MZO 80494814, with a Policy Period from April 15, 2015 to April 15, 2016, and a Retroactive Date of April 15, 2015, to Dennis Lee Smith, PLS d/b/a Rainmaker Surveying (the “Policy”).[17] The Policy's Professional Liability coverage provides in relevant part:

Land Surveyors, Civil Engineers and Landscape Architects Professional Liability - 143086 10 09

THIS IS A CLAIMS-MADE AND REPORTED POLICY. PLEASE REVIEW THE POLICY CAREFULLY. COVERAGE APPLIES ONLY TO A CLAIM FIRST MADE AGAINST THE INSURED AND REPORTED TO US DURING THE POLICY PERIOD OR, IF APPLICABLE, DURING THE EXTENDED REPORTING PERIOD, AND IN ACCORDANCE WITH THE REPORTING REQUIREMENTS OF THIS POLICY. CLAIM EXPENSES ARE IN ADDITION TO THE LIMIT OF LIABILITY.

Throughout this Policy the words You and Your refer to the Named Insured stated in the Policy Declarations, and any other person or organization qualifying as a Named Insured under this Policy. The words We, Us and Our refer to the Company providing this Policy. Other words and phrases that appear in boldfaced print have special meaning. Refer to Section III, Definitions.[18]

         The Policy's Insuring Agreement provides in relevant part:

I. INSURING AGREEMENT
A. Coverage
We will pay those sums the Insured becomes legally obligated to pay as Damages due to a Claim arising from a Wrongful Act in the rendering of or the failure to render Professional Services or due to a Pollution Incident arising from the rendering of or failure to render Professional Services to which this insurance applies.
1. This coverage applies to Wrongful Acts or Pollution Incidents taking place during the Policy Period, but then only if the Claim is first made against the Insured and reported to Us during the Policy Period or Extended Reporting Period, if applicable, in accordance with Section VI, Condition N, Reporting of Potential Claims and Actual Claims.
2. This coverage applies to Wrongful Acts or Pollution Incidents taking place prior to the effective date of this Policy, but after the Retroactive Date, if any, stated in the Declarations, provided that
a. As of the effective date of this Policy, an Insured does not have actual or constructive knowledge of any circumstances, Wrongful Act or Pollution Incident which could reasonably be expected to result in a Claim;
b. There is no other valid and collectible insurance available to the Insured for any such Wrongful Act or Pollution Incident; and c. The Claim is first made against the Insured and reported to Us during the Policy Period or Extended Reporting Period, if applicable.
B. Defense, Investigation and Settlement of a Claim 1. We have the right and duty to defend the Insured against any Suit for which coverage under this Policy applies. However, We will have no duty to defend the Insured against any Suit for which there is no coverage under this Policy. . . .[19]

         The Policy's Definitions section provides in relevant part:

III. DEFINITIONS
B. Claim means:
1. Any written demand the Insured receives for Damages due to a Wrongful Act or Pollution Incident arising out of Professional Services, including but not limited to, the institution of arbitration proceedings against the Insured; 2. Any Suit seeking Damages against the Insured due to a Wrongful Act or Pollution Incident arising out of Professional Services, commenced by the service of a complaint or similar pleading; or
D. Damages means compensatory damages, whether part of an award or settlement.…Damages shall include attorney's fees of the person or organization bringing the Claim only if such fees are awarded in conjunction with, or are part of a settlement of a Claim covered under this Policy, all costs awarded against the Insured in a Suit, and prejudgment interest and post judgment interest on that portion of the Damages We pay…
K. Policy Period means the period of time from the Inception date of this Policy to the Expiration date stated in the Declarations, or, if applicable, any earlier termination date. The Policy Period does not include the Extended Reporting Period, if any. [ITEM 4. POLICY PERIOD: FROM: 04/15/2015 12:01 A.M. TO: 4/15/2016 12:01 A.M.]
N. Professional Services means services rendered by or on behalf of the Insured for others in the conduct of the Named Insured's profession as a land surveyor, landscape architect, civil engineer, or photogrammetrist. …
P. Retroactive Date means 1. The date stated under Retroactive Date in the Declarations… [ITEM 7. RETROACTIVE Dated: 4-15-2015]
Q. Suit means a civil proceeding seeking compensatory monetary damages.
S. Wrongful Act means any actual or alleged negligent act, error or omission, or negligent misstatement or misleading statement by the Insured in the rendering of or failure to render Professional Services.[20]
The Policy's Conditions section provides in relevant part:
J. Extended Reporting Periods
4. Basic Extended Reporting Period
a. A Basic Extended Reporting Period is automatically provided without additional charge. This period starts at the date of Policy termination or the end of the Policy Period, whichever is earlier, and lasts for sixty (60) days.
b. The Basic Extended Reporting Period applies to Claims arising out of a Wrongful Act that was committed or Pollution Incident that took place during the Policy Period or after the Retroactive Date, if any, stated in the Declarations, and which are first made against the Insured during the Policy Period and reported to Us, in writing, within sixty (60) days after Policy termination or the end of the Policy Period, whichever is earlier.
K. Legal Action Against Us

         No one shall sue Us unless the following conditions precedent have been met:

1. There has been full compliance with all the terms of this Policy; and, 2. The amount of the Insured's obligation to pay shall have been finally determined either by judgment against the Insured after actual and contested trial on the merits, or by written agreement of the Insured, the claimant, and Us.
Any person or organization or the legal representative thereof who has secured such judgment or written agreement shall thereafter be entitled to recover under this Policy to the extent of the insurance afforded by this policy.
N. Reporting of Potential Claims and Actual Claims
2. Reporting of Actual Claims The Insured shall provide notice to Us as soon as practicable after a Claim is first made against the Insured, and in no event after the end of the Policy Period or Extended Reporting Period, if applicable. This notice shall be deemed sent to Us only if it is received by Us via facsimile or electronic mail or sent by the Insured by prepaid registered or return-receipt-requested mail properly addressed to Us at the address shown in or attached to this Policy.[21]

         The Policy's 60-day Basic Extended Reporting Period expired on June 15, 2016.

         Rainmaker Surveying performed Professional Services for Aspen Square between March 1, 2015 and March 15, 2016, at the Corbin Park Dave & Buster's construction site in Overland Park, Kansas. Rainmaker Surveying was first notified on or after July 21, 2016 that its negligent conduct at the ...


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