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Nationwide Mutual Insurance Co., Successor By v. David Randall Associates

January 24, 2013

NATIONWIDE MUTUAL INSURANCE CO., SUCCESSOR BY MERGER TO HARLEYSVILLE MUTUAL INSURANCE CO. PLAINTIFF,
v.
DAVID RANDALL ASSOCIATES, INC., AND RAYMOND H. MILEY, III, DEFENDANTS.



The opinion of the court was delivered by: Joyner, C.J.

MEMORANDUM AND ORDER

Before the Court are the Plaintiff's Motion for Summary Judgment (ECF No. 14) and the Defendants' Cross-Motion for Summary Judgment (ECF No. 16). For the reasons set forth in this Memorandum, we grant the Plaintiff's Motion and deny the Defendants' Motion.

I. BACKGROUND

In this insurance coverage dispute, the Plaintiff, Nationwide Mutual Insurance Company ("Nationwide") seeks a declaratory judgment pursuant to 28 U.S.C. § 2201 (2006) that it has no obligation to defend or indemnify the Defendants, David Randall Associates, Inc. ("DRA") and Raymond Miley III, in connection with a lawsuit presently pending in the United States District Court for the District of New Jersey. (Pl.'s Mot. for Summ. J. (the "Pl.'s MSJ") ¶ 1.) The Defendants have counterclaimed for a declaratory judgment stating that Nationwide is so obligated. (Counterclaim ¶¶ 1-3.)

The parties do not dispute the relevant facts. Nationwide, by virtue of its succession-in-interest to Harleysville Mutual Insurance Company, insured the Defendants through a commercial general liability policy effective between July 1, 2005 and July 1, 2006 (the "Policy"). (Pl.'s MSJ ¶ 2.)

The Policy provides coverage for, among other things, "'bodily injury' and 'property damage' . . . if . . . [t]he 'bodily injury' or 'property damage' is caused by an 'occurrence' that takes place in the 'coverage territory'." (Pl.'s MSJ Ex. B (the "Policy"), at 1.) The Policy defines an "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Id. at 14.

The Policy expressly excludes coverage for "'[b]odily injury' or 'property damage' expected or intended from the standpoint of the insured." Id. at 2. Finally, the Policy defines "property damage" to mean "[p]hysical injury to tangible property, including all resulting loss of use of that property. . . . [and] [l]oss of use of tangible property that is not physically injured." Id. at 14-15.

By a putative class action complaint filed on May 10, 2011 in the United States District Court for the District of New Jersey, City Select Auto Sales, Inc. ("City Select") sued the Defendants for violations of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, and conversion based on the receipt of unsolicited facsimile transmissions advertising the Defendants' business. (See generally Def.'s Response Ex. A (the "Underlying Compl.").) City Select asserted that Miley, as a director and officer of DRA, "approved, authorized and participated in a scheme to broadcast faxes by (a) directing a list to be purchased and assembled; (b) directing and supervising employees and third parties to send the faxes; (c) creating and approving the form of faxes to be sent; (d) determining the number and frequency of the facsimile transmissions; and (e) approving and paying third parties to send the faxes." Id. ¶ 12.

As to the TCPA claim, City Select asserted, in relevant part, that the Defendants "knew or should have known that (a) [City Select] and the other class members had not given express invitation or permission for Defendants or anybody else to fax advertisements about Defendants' goods or services, (b) that [City Select] and the other class members did not have an established business relationship, and (c) that [the facsimile transmission] is an advertisement." Id. ¶ 27. As to the conversion claim, City Selected asserted, in relevant part, that the Defendants "knew or should have known that their misappropriation of paper, toner, and employee time was wrongful and without authorization." Id. ¶ 38.

On July 24, 2012, presumably having been informed of the existence of the underlying lawsuit, Nationwide initiated this action pursuant to 28 U.S.C. § 2201, seeking a declaratory judgment that the Policy does not require it to defend or indemnify the Defendants in the underlying lawsuit. (See generally Compl.) The parties now each move for summary judgment based on their preferred interpretation of the scope of the Policy with respect to the underlying lawsuit.

II. STANDARD OF REVIEW

A. Summary Judgment

The standard for considering the parties' cross-motions for

summary judgment is familiar. The Court shall grant such a motion "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In making this determination, "inferences to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (alteration in original) (internal quotation marks omitted). "[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The party opposing summary judgment "may not rest upon the mere allegations or denials of the . . . pleading; its response, by affidavits or as ...


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