Nationwide Mutual Insurance Company v. Frost

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

MIDDLE DIVISION

NATIONWIDE MUTUAL INSURANCE )

COMPANY, )

)

Plaintiff, )

)

v. ) Case No. 4:17-CV-1986-KOB

)

DAVID FROST, JUDY FROST, AND )

NORMA JEAN SARTIN, )

)

Defendants. )

MEMORANDUM OPINION

This matter comes before the court on “Plaintiff’s Motion for Summary Judgment,” in

which Plaintiff Nationwide Mutual Insurance Company moves for summary judgment against

Defendants David and Judy Frost. (Doc. 39). More specifically, Nationwide asks this court to

enter a declaratory judgment that Nationwide has no legal obligation to defend or indemnify

either of the Frosts for claims related to an incident that took place on the Frosts’ property. (See

Doc. 1 at ¶ 34). For the reasons stated below, the court WILL GRANT Nationwide’s motion and

WILL ENTER JUDGMENT for Nationwide and against the Frosts.

I. Factual Background

David Frost purchased a Premier Businessowners Policy from Nationwide for the period

of July 15, 2015 to July 15, 2016. (Doc. 1 at ¶ 11). David Frost is the only Named Insured in the

policy. (Doc. 1-1 at 6–7). The policy defines “you” and “your” as referring “to the Named

Insureds shown in the Declarations.” (Doc. 1-1 at 14).

The policy provides, in relevant part, that Nationwide would defend and indemnify an

insured against claims for “‘bodily injury’ . . . caused by an ‘occurrence’ that takes place in the

‘coverage territory.’” (Doc. 1-1 at 56). But, to trigger this obligation, the insured must notify

Nationwide “as soon as practicable of an ‘occurrence’ . . . that may result in a claim.” (Doc. 1-1

at 72). The policy defines “insured” to include David Frost and his spouse, “but only with respect

to the conduct of a business of which [Mr. Frost, the named insured, was] the sole owner.” (Doc.

1-1 at 69).

The Frosts jointly own commercial property in Leesburg, Alabama, where several

businesses lease space. (Doc. 42-2; Doc. 42-3 at 19:18–20:20). Neither of the Frosts incorporated

a business to own the property and both Mr. and Mrs. Frost are parties to the commercial leases.

(Doc. 42-3 at 14:6–14, 15:9–12). Mrs. Frost also owns Daymaker Salon, which operates without

a lease on the same property. (Doc. 42-3 at 20:15–16).

On June 9, 2016, Mrs. Frost, in her individual capacity, had a “yard sale” at the Leesburg

property, selling “clothes, shoes, [and] stuff [she] was trying to get rid of.” (Doc. 42-3 at 30:5–

14). For this yard sale, Mrs. Frost set up tables on the sidewalk in front of Daymaker Salon, but

the salon was not otherwise involved with the yard sale. (Doc. 42-3 at 30:21–23, 32:17–19).

Defendant Norma Jean Sartin attended the yard sale and fell in the parking lot, suffering a

severe cut to her arm and a broken shoulder. Mrs. Frost witnessed the fall, saw Ms. Sartin’s cut,

and offered to call 911. (Doc. 42-3 at 40:19–41:3). Ms. Sartin declined the offer, and no one

called 911. (Doc. 42-3 at 29:21–22). Mrs. Frost did not learn of the severity of Ms. Sartin’s

injuries until almost two weeks later, when Ms. Sartin’s daughter came in for a salon

appointment and told Mrs. Frost that Ms. Sartin had broken her shoulder. (Doc. 42-3 at 39:17–

40:1). The Frosts did not notify Nationwide of the accident when it occurred, nor two weeks later

when they learned how severe the injury was.

On September 12, 2017, about fifteen months after the incident, Ms. Sartin filed suit

against Daymaker Salon, the Frosts, and multiple fictitious defendants responsible for the

property in the Cherokee County Circuit Court, alleging premises liability based on the

conditions that caused her fall. (Doc. 1 at ¶ 27; Doc. 1-2 at 2, ¶ 9). Upon receiving notice of the

complaint, Mr. Frost immediately notified Nationwide, marking the first notice of the incident

Nationwide received. (Doc. 1 at ¶ 29).

Nationwide subsequently filed this lawsuit seeking declaratory judgment that it has no

obligation to indemnify the Frosts under the policy. The complaint raises three arguments: first,

the Frosts breached the policy by failing to provide Nationwide notice as required under the

policy’s terms; second, Nationwide is not required to indemnify Mrs. Frost with respect to any

business not solely owned by Mr. Frost; and, third, Ms. Sartin’s claims fall within the exclusions

to the policy. (Doc. 1 at ¶¶ 31-33). Plaintiff Nationwide now moves for summary judgment,

arguing that no genuine issue of material fact exists as to its theories. Nationwide asserts, among

other things, that the policy was not triggered because the Frosts do not qualify as covered

insureds for the incident at issue, as Ms. Sartin’s fall did not occur as part of the conduct of a

business of which Mr. Frost is the sole owner. (Doc. 42 at 8–9; Doc. 44 at 2–3).

II. Standard of Review

Summary judgment allows a trial court to decide cases when no genuine issues of

material fact are present and the moving party is entitled to judgment as a matter of law. See Fed.

R. Civ. P. 56. When a district court reviews a motion for summary judgment, it must determine

two things: whether any genuine issues of material fact exist, and whether the moving party is

entitled to judgment as a matter of law. Id.

The moving party “always bears the initial responsibility of informing the district court of

the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes

demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S.

317, 323 (1986) (quoting Fed. R. Civ. P. 56).

Once the moving party meets its burden of showing the district court that no genuine

issues of material fact exist, the burden then shifts to the non-moving party “to demonstrate that

there is indeed a material issue of fact that precludes summary judgment.” Clark v. Coats &

Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). Disagreement between the parties is not

significant unless the disagreement presents a “genuine issue of material fact.” Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 251–52 (1986). But, inferences can create genuine issues of

material fact. Carlson v. FedEx Ground Package Systems, Inc., 787 F.3d 1313, 1318 (11th Cir.

2015).

In response, the non-moving party “must do more than simply show that there is some

metaphysical doubt as to the material fact.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

475 U.S. 574, 586 (1986). The non-moving party must “go beyond the pleadings and by [its]

own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’

designate ‘specific facts showing that there is a genuine issue for trial.’” Celotex, 477 U.S. at

324 (quoting Fed. R. Civ. P. 56(e)) (emphasis added).

The court must “view the evidence presented through the prism of the substantive

evidentiary burden,” to determine whether the non-moving party presented sufficient evidence

on which a jury could reasonably find for the nonmoving party. Anderson, 477 U.S. at 254. The

court must refrain from weighing the evidence and making credibility determinations because

these decisions belong to a jury. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

Further, all evidence and inferences drawn from the underlying facts must be viewed in

the light most favorable to the non-moving party. See Graham v. State Farm Mut. Ins. Co., 193

F.3d 1274, 1282 (11th Cir. 1999). After both parties have addressed the motion for summary

judgment, the court must grant the motion only if no genuine issues of material fact exist and

if the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56.

III. Discussion

Nationwide raises two independent reasons that it has no obligation under the policy to

indemnify the Frosts for any liability connected to Ms. Sartin’s injury: (1) the policy does not

cover Ms. Sartin’s accident, as the Frosts do not constitute covered insureds for the incident at

issue because the yard sale was not connected to a business owned solely by Mr. Frost, and (2)

the Frosts did not provide Nationwide timely notice of Ms. Sartin’s accident. Because the court

finds Nationwide’s first argument persuasive and sufficient for summary judgment, it declines to

take up the second issue.

Plaintiff Nationwide’s first argument in its motion for summary judgment is that neither

Daymaker Salon nor Mrs. Frost qualify as insureds under the terms of the policy, because the

coverage for Mr. Frost’s spouse arises “only with respect to the conduct of a business of which

David Frost is the sole owner.” (Doc. 42 at 8). Nationwide argues that, because the yard sale was

connected to Daymaker Salon—a business owned by Mrs. Frost—instead of a business solely

owned by Mr. Frost, this court should enter judgment against the Frosts. (Doc. 42 at 9). This

argument assumes that Daymaker Salon is the premises at issue in Ms. Sartin’s lawsuit.

In response, the Frosts assert that the yard sale was not held by Daymaker Salon, but,

rather, by the Frosts personally “on the commercial property owned by them.” (Doc. 43 at 4).

The Frosts ask the court to interpret the exclusions to the policy “as narrowly as possible in order

to provide maximum coverage to the insured.” (Doc. 43 at 4) (citing Brown Mach. Works &

Supply Co. v. Ins. Co. of N. Am., 659 So. 2d 51, 59 (Ala. 1995)). Specifically, the Frosts assert

that they should be covered as insureds because they were acting as a husband and wife selling

personal items at their commercial property. (Doc. 43 at 4).

In its reply, Nationwide argues that, even if the yard sale was connected to the

commercial property and not Daymaker Salon, the Frosts are not insureds under the terms of the

policy because the Frosts admitted that the property was jointly owned. Nationwide asserts that,

therefore, the yard sale did not occur in the conduct of a business solely owned by Mr. Frost.

(Doc. 44 at 2).

The provision at issue provides that “you and your spouse are insureds, but only with

respect to the conduct of a business of which you are the sole owner.” (Doc. 1-1 at 69) (emphasis

added). The policy defines “you” and “your” as referring “to the Named Insureds shown in the

Declarations.” (Doc. 1-1 at 14). The Common Declarations page identifies only “David Frost” as

a Named Insured, and the Schedule of Named Insureds includes only David Frost. (Doc. 1-1 at

6–7). So, the policy does include both Mr. and Mrs. Frost as insureds, “but only with respect to

the conduct of a business of which [Mr. Frost is] the sole owner.” (Doc. 1-1 at 69).

The Frosts would have this court find that both Mr. and Mrs. Frost are protected insureds

because the yard sale at which Ms. Sartin fell was not conducted in connection with Daymaker

Salon, Mrs. Frost’s business, but, rather, was conducted by the Frosts personally in connection

with their commercial property. By separating the yard sale from Daymaker Salon, the Frosts

seek to remain covered by the policy through Mr. Frost’s involvement in the commercial

property.

However, the Frosts’ argument overlooks a key component of the policy. The policy

covers the Frosts for the conduct of a business of which Mr. Frost is the sole owner. (Doc. 1-1 at

69) (emphasis added). The Frosts have failed to identify any business of which Mr. Frost is the

sole owner, much less one connected to the events giving rise to Ms. Sartin’s accident and

lawsuit. The deed to the commercial property shows that Mr. and Mrs. Frost own the property

jointly. (Doc. 42-2). Mrs. Frost admitted in her deposition that the commercial leasing business

was never incorporated and that she and Mr. Frost conduct the business together. (Doc. 42-3 at

14:6–14, 15:9–12; Doc. 43 at 4). The Frosts’ assertion that the yard sale constituted “a husband

and wife selling personal items,” even if true, tends to show, if anything, a jointly owned venture

and not something Mr. Frost solely owned.

Even interpreting the policy language to provide maximum coverage, the court’s

interpretation of a contract must still be reasonable. Cf. Homes of Legend, Inc. v. McCollough,

776 So. 2d 741, 745 (Ala. 2000) (defining unambiguous contract terms as those “susceptible of

only one reasonable meaning”) (emphasis added). Under the unambiguous terms of the policy,

neither Mrs. Frost’s Daymaker Salon nor the commercial property jointly owned by Mr. and

Mrs. Frost is solely owned by Mr. Frost. Because the policy unambiguously defines the Frosts as

insureds only with respect to businesses Mr. Frost solely owns, the Frosts have failed to raise a

genuine issue of material fact as to whether the Frosts were insured for the yard sale at issue. For

this reason alone, the court WILL GRANT Plaintiff Nationwide’s motion for summary judgment

and WILL ENTER JUDGMENT for Nationwide and against the Frosts.

IV. Conclusion

For the reasons stated above, the court WILL GRANT Plaintiff Nationwide’s motion for

summary judgment and WILL ENTER JUDGMENT for Plaintiff Nationwide and against

Defendants David and Judy Frost. So, Plaintiff Nationwide does not have any obligation under

the policy at issue to indemnify the Frosts in connection with Ms. Sartin’s accident or lawsuit.

DONE and ORDERED this 5th day of September, 2019.

____________________________________

KARON OWEN BOWDRE

CHIEF UNITED STATES DISTRICT JUDGE