Salerno v. Family Heritage Life Insurance Company of America

PEARSON, J.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

LAWRENCE SALERNO, et al., )

) CASE NO. 1:23-CV-01419

Plaintiffs, )

)

v. ) JUDGE BENITA Y. PEARSON

)

FAMILY HERITAGE LIFE INSURANCE )

COMPANY, ) MEMORANDUM OF OPINION AND

) ORDER

Defendant. ) [Resolving ECF Nos. 51 and 52]

Pending are Plaintiffs Lawrence Salerno, Dynasty Financial Group LLC, and Pinnacle

Brokerage Firm LLC’s (collectively “Plaintiffs”) Motion for Partial Summary Judgment Against

Defendant Family Heritage Life Insurance Company (“Family Heritage”). See Plaintiffs’

Motion for Partial Summary Judgment *SEALED*, ECF No. 51 and Plaintiffs’ Motion for

Partial Summary Judgment (Redacted), ECF No. 52. Defendant responded in opposition. See

Defendant’s Brief in Opposition, ECF No. 58 and Defendant’s Brief in Opposition *SEALED*,

ECF No. 59. Plaintiff replied. See Plaintiff’s Reply in Support, ECF No. 66 and Plaintiff’s

Reply in Support *SEALED*, ECF No. 65. The Court has been advised, having reviewed the

record, the parties’ briefs, and the applicable law. For the reasons below, the motion is denied.

I. Background

In July 2020, Combined Insurance Company of America (“Combined”) filed with the

American Arbitration Association a demand to arbitrate various claims against respondents,

Family Heritage and four Dynasty sales agents who sold Family Heritage products. See

Defendant’s Brief in Opposition *SEALED*, ECF No. 59 at PageID #: 1131. “Neither Pinnacle

nor Salerno were parties to the arbitration and Dynasty was dismissed as a party before the

arbitrator issued her final [a]ward and rulings on motions for summary judgment.” ECF No. 59

at PageID #: 1132 n.3. Relevant here, “Combined alleged breach of contract against the four

Dynasty sales agents, [and] tortious interference against all respondents.” ECF No. 59 at PageID

#: 1131. The four Dynasty sales agents were former Combined employees who had been in

employment contracts with Combined that contained restrictive covenants. ECF No. 59 at

PageID ##: 1131–32. “Combined brought its claims, in part, because alleged that its former

agents were solicited to sign marketing agreements with Family Heritage in violation of the non-

solicit[ation] covenants with Combined.” ECF No. 59 at PageID #: 1132. Family Heritage

alleges that it was Plaintiffs, and specifically Salerno, who solicited the former Combined sales

agents and recruited the agents to sell Family Heritage products in violation of their contracts,

resulting in the Combined arbitration. ECF No. 59 at PageID ##: 1132–35. Family Heritage

avers that it “had no intent to interfere with the agreements between Combined and its

employees.” ECF No. 59 at PageID #:1135.

The arbitrator ruled against Family Heritage. ECF No. 59 at PageID #: 1136.

In coming to her decision, the arbitrator made a series of factual

findings. Importantly, the [a]rbitrator found that Salerno was

directly involved in the recruitment of Hernandez. Specifically,

“[o]n January 28, 2020, Hernandez flew from Texas to Florida to

meet with Azuero, Urgelles, and Larry Salerno, who ran a team for

Family Heritage in Florida. Urgelles and Azuero provided

Hernandez with the compensation package offered by Family

Heritage.” (Ex. A-2 at 1). The arbitrator further found that “Larry

Salerno and other Family Heritage Agents participated with the

individual Respondents in the solicitation of Combined agents.” (Id.

at 2).

Additionally, the arbitrator determined that Urgelles and

Pineda were responsible for at least 150 Combined employees

leaving to join Family Heritage. (Ex. A-2 at 8). Put differently,

Salerno was responsible for recruiting the individuals who, in turn,

recruited over 150 Combined sales agents.

ECF No. 59 at PageID #: 1136. The arbitrator “awarded damages to Combined in the amount of

$3,524,877” and “Family Heritage paid Combined the total amount of the arbitration award.”

ECF No. 59 at PageID #: 1137.

Plaintiffs’ Marketing Agreements with Family Heritage contain broad indemnification

clauses that require Plaintiffs to indemnify Family Heritage “against and hold Family Heritage

harmless from and against any and all liabilities, costs, expenses, or damages caused by or

resulting from negligent or fraudulent acts or omissions or willful misconduct of the Sales

Director or his subordinate representatives.” ECF No. 59 at PageID #: 1138 (emphasis

removed).

Plaintiffs now move the Court for partial summary judgment on Count One of their

Complaint, which seeks declaratory judgment stating that Plaintiffs need not indemnify Family

Heritage for the Combined Arbitration under the Marketing Agreements. See Plaintiffs’ Motion

for Partial Summary Judgment *SEALED*, ECF No. 51; Compl., ECF No. 1 at PageID ##: 33–

36, ¶¶ 95–108. Family Heritage brought a counterclaim, Count Two, for breach of contract

seeking indemnification from Plaintiffs under the Marketing Agreements. See First Amended

Counterclaim, ECF No. 36 at PageID ##: 709–10, ¶¶ 93–101.

II. Standard of Review

A party may move for partial summary judgment by “identifying each claim or defense—

or the part of each claim or defense—on which summary judgment is sought.” FED. R. CIV. P.

56(a). “When a party moves for summary judgment on a part of a claim, the party is seeking a

decision on a particular element.” Glob. Digit. Sols., Inc. v. Grupo Rontan Electro Metalurgica,

S.A., No. 18-80106-Civ-Middlebrooks/Brannon, 2019 WL 8275153, at *2 (S.D. Fla. Nov. 27,

2019); see also Hudak v. Clark, No. 3:16-cv-288, 2018 WL 1785865, at *2 (M.D. Pa. April 13,

2018) (“Rule 56 contemplates the possibility that summary judgment may be entered on less than

a full claim and on one or fewer than all of the elements necessary to establish a claim.”).

“[C]ourts throughout the country have held that Rule 56 does not authorize a motion which is

solely intended to establish the truth of particular facts.” Robertson v. F. Martin, No. CV 20-

4173-JLS(E), 2021 WL 545895, at *2 (C.D. Cal. Jan. 4, 2021) (collecting cases). “Partial

summary judgment is often sought on matters such as liability or with respect to a particular

claim or defense. It is not typically used to seek a judgment that a particular fact occurred,

especially when that fact does not even establish an entire element of the underlying claim.”

Samuels v. Arnold, No. 11-cv-0201, 2012 WL 6020089, at *2 (W.D. La. Nov. 19, 2012), report

and recommendation adopted, No. 11-cv-0201, 2012 WL 6020084 (W.D. La. Dec. 3, 2012)

(denying plaintiff’s motion for partial summary judgment).

As the Seventh Circuit has noted, the label “‘partial summary judgment’ is, of course,

consistent with section (d) of Rule 56, which allows a court to establish facts prior to trial over

which there is no ‘substantial controversy.’” ODC Commc’ns Corp. v. Wenruth Invs., 826 F.2d

509, 515 (7th Cir.1987). Partial summary judgment is an appropriate mechanism for resolving

core, undisputed issues to bring about more efficient and focused trials. See Bonasera v. New

River Elec. Corp., 518 F. Supp. 3d 1136, 1152-1157 (S.D. Ohio 2021) (granting motion for

partial summary judgment on whether the decedent was occupying a truck at the time of an

accident); Comer v. Shrum, 4:18-cv-58, 2021 WL 2210592, at *2-3 (E.D. Tenn. June 1, 2021)

(plaintiffs moved for partial summary judgment against all three defendants and court granted

partial summary judgment on whether “a bullet fired from [a single defendant’s] gun” was “the

cause of death” of plaintiffs’ decedent because that defendant was estopped from disputing the

cause-of-death issue); Bowling v. CSX Transp., Inc., No. 1:11-cv-598-HJW, 2013 WL 866459, at

*6 (S.D. Ohio Mar. 7, 2013) (“Absent any genuine disputes of material fact on this issue,

plaintiff[] is entitled to partial summary judgment on the element of negligence per se”) (italics

added). “The freedom to use summary judgment procedure to address particular issues or

elements of a claim is an important feature of Rule 56, making it a much more useful case

management device. . . .” 11 JAMES WILLIAM MOORE, ET AL., MOORE’S FEDERAL PRACTICE

§ 56.122[2] (Matthew Bender 3d ed. 2024).

A motion for partial summary judgment should be granted when there is no genuine

dispute as to any material fact with respect to the part of the claim at issue. FED. R. CIV. P. 56(a).

There is no genuine factual dispute if the opposing party cannot present “significant probative

evidence” to show that “there is [more than] some metaphysical doubt as to the material facts” at

issue in the case. Blume v. Potter, 289 F. App’x. 99, 102 (6th Cir. 2008) (brackets in original)

(quoting Moore v. Philip Morris Cos., 8 F.3d 335, 340 (6th Cir. 1993)).

III. Analysis

Plaintiffs move for partial summary judgment against Family Heritage with respect to

Count One, which seeks a declaration that Family Heritage is not entitled to indemnification for

any liabilities, losses, costs, or expenses Family Heritage allegedly incurred in connection with

the arbitration between Family Heritage and Combined. See Compl., ECF No. 1 at PageID #:

34–35. Plaintiffs argue that because Family Heritage was found liable by an arbitrator for

intentionally interfering with Combined’s contracts which brought about the intended result, and

because Ohio generally prohibits indemnification for damages caused by intentional torts on

public policy grounds, they should be granted judgment in their favor as to Count One. See

Plaintiff’s Motion for Partial Summary Judgment *SEALED*, ECF No. 51 at PageID #: 920.

Overall, Family Heritage argues that the law is not settled prohibiting indemnification or

that factual disputes exist which do not entitle Plaintiffs to summary judgment. Family Heritage

claims that the law relied upon by Plaintiffs about public policy prohibiting indemnification for

intentional torts is unpersuasive authority and does not stand for the blanket prohibition that

Plaintiffs claim. See Defendant’s Brief in Opposition, ECF No. 59 at PageID #: 1139. Family

Heritage also claims that there is a factual dispute over whether Family Heritage had the

requisite intent to cause harm as required to find that it committed an intentional tort. ECF No.

59 at PageID #: 1140. Family Heritage further claims that there is also a factual dispute

regarding whether “the actors” of the intentional torts, which Family Heritage argues are the

plaintiffs because they were the ones who recruited the sales representatives, intended to cause

harm. ECF No. 59 at PageID #: 1142.

Unless there are specific public policy exceptions, an agreement to indemnify is generally

enforceable. See Brown v. Gallagher, 902 N.E.2d 1037, 1040 (Ohio App. 2008) (citing Worth v.

Aetna Cas. & Sur. Co., 513 N.E.2d 253 (Ohio 1987)). “Ohio law, on public policy grounds,

generally prohibits indemnification for damages caused by intentional torts. Where [ ] the actor

does something which brings about the exact result desired, i.e., intentional acts that are designed

and calculated to accomplish the disruption, interference or destruction of the business

relationship or contract, a contract purporting to obligate a party to indemnify the actor against a

civil action for those intentional acts violates public policy, and is, therefore, unenforceable to

that extent.” Diamond Wine & Spirits, Inc. v. Datyon Heidelberg Distrib. Co., 774 N.E.2d 775,

781 (Ohio App. 2002).

Additionally, the “public policy of Ohio forbids the enforcement of those provisions on

the grounds that an intentional tortfeasor may not seek indemnification through insurance.”

Lumbermens Mut. Cas. Co. v. S-W Indus., Inc., 39 F.3d 1324, 1327 (6th Cir. 1994). “A specific

intent to injure is not an essential element of an intentional tort where the actor proceeds despite

a perceived threat of harm to others which is substantially certain, not merely likely, to occur. It

is this element of substantial certainty which distinguishes a merely negligent act from

intentionally tortious conduct.” Id. at 1328 (quoting Jones v. VIP Dev. Co., 472 N.E.2d 1046,

1051 (Ohio 1984) (superseded by statute on separate grounds)). That said, Ohio’s public policy

does not have a “blanket prohibition” but holds that “the better view is to prohibit insurance only

for those intentional torts where the fact of insurance coverage can be related in substantial way

to the commission of wrongful acts . . . performed with the knowledge that injury was

substantially certain to occur.” Id. at 1328–29 (quoting Harasyn v. Normandy Metals, Inc., 551

N.E.2d 962, 965–66 (Ohio 1990)). “[A]n intent to injure, not merely an intentional act, is a

necessary element to uninsurability. Whether the insured had the necessary intent to cause injury

is a question of fact.” Right-Now Recycling, Inc. v. Ford Motor Credit Co., No. 1:11-cv-364,

2012 WL 13026793, at *3 (N.D. Ohio Nov. 19, 2012) (citing Buckeye Union Ins. Co. v. New

England Ins. Co., 720 N.E.2d 495, 499 (Ohio 1999)).

At issue is whether the intentional tort has the intent required to bar indemnification.

Family Heritage was found to have tortiously interfered with Combined’s contractual agreements

with the former Combined agents and the finding was based on Family Heritage’s knowledge of

the restrictive covenants applicable to the former Combined agents. See Plaintiffs’ Motion for

Partial Summary Judgment *SEALED*, ECF No. 51 at PageID #: 917. Family Heritage was

found to be aware of the restrictive covenants and to have proceeded with its culpable actions

despite that knowledge. The arbitrator’s findings characterize Family Heritage’s action as

“presumed intent—proceeding in the face of a risk that a particular risk is substantially certain to

occur.” Lumbermens Mut. Cas. Co., 39 F.3d at 1328. Presumed intent falls outside of a blanket

prohibition made for “‘direct intent’ intentional torts.” See id. at 1329 (“[P]ublic policy does not

prohibit an employer from securing insurance against compensatory damages sought by an

employee in tort where the employer’s tortious act was performed with the knowledge that injury

was substantially certain to occur.”).

In this case, the nature of the intent is a question of fact. See Right-Now Recycling, No.

1:11-cv-364, 2012 WL 13026793, at *3. If, as Family Heritage argues, its intent is “presumed

intent” rather than “direct intent” as Plaintiffs argue, the blanket prohibition that public policy

provides against indemnification would not apply. Because intent is a question of fact and it is

disputed, Plaintiffs are not entitled to summary judgment on Count One, seeking declaratory

relief.

IV. Conclusion

For the reasons above, Plaintiffs’ Motion for Partial Summary Judgment (ECF Nos. 51

and 52) against Family Heritage is denied.

IT IS SO ORDERED.

March 18, 2025 /s/ Benita Y. Pearson

Date Benita Y. Pearson

United States District Judge