Auto-Owners Insurance Company et al v. Southwest Nut Company, Inc. et al, No. 1:2010cv00009 - Document 105 (M.D. Ga. 2013)
Court Description: ORDER granting 67 Motion for Summary Judgment; denying 76 Motion for Summary Judgment. Plaintiff's Complaint is dismissed.Ordered by Judge W. Louis Sands on 3/27/13 (wks)
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Auto-Owners Insurance Company et al v. Southwest Nut Company, Inc. et al Doc. 105 IN TH E U N ITED STATES D ISTRICT COU RT FOR TH E MID D LE D ISTRICT OF GEORGIA ALBAN Y D IVISION AUTO-OWNERS INSURANCE : COMPANY and GEORGE M. MARTIN : FAMILY INVESTMENT LTD., : : Plaintiffs, : : v. : : SOUTHWEST NUT COMPANY, INC. : and TRAVELERS PROPERTY : CASUALTY COMPANY OF AMERICA : : Defendants. : : CASE NO.: 1:10 -CV-0 0 9 (WLS) ORD ER Before the Court is Travelers Property Casualty Com pany of Am erica’s Motion for Sum m ary J udgm ent (Doc. 67) and Auto-Owners Insurance Com pany and George M. Martin Investm ent LTD.’s Motion for Sum m ary J udgm ent (Doc. 76). For the following reasons, Travelers Property Casualty Com pany of Am erica’s Motion for Sum m ary J udgm ent (Doc. 67) is GRAN TED and Auto-Owners Insurance Com pany and George M. Martin Investm ent LTD.’s Motion for Sum m ary J udgm ent (Doc. 76) is D EN IED . PROCED U RAL AN D FACTU AL BACKGROU N D On December 5, 20 0 7, Southwest Nut Com pany, Inc., leased space in a warehouse in Cam illa, Georgia (hereinafter “the Warehouse”), owned by Plaintiff 1 Dockets.Justia.com George M. Martin Fam ily Investm ent, LTD. (“Martin”).1 (Doc. 77 ¶ 1; Doc. 68 ¶ 2.) Specifically, Southwest Nut leased four bays, Bays 1, 2, 3, and 4, com prising approxim ately 24,0 0 0 square feet in floor size, and associated loading dock area. (Doc. 71-2.) The Warehouse facility totals approxim ately 60 ,0 0 0 square feet and has a total of 9 Bays. (Doc. 75-1 at 10 .) It appears that the portion of the Warehouse unoccupied by Southwest Nut is leased to another com pany, Cam illa Com m odity Services, Inc. (Doc. 83 at 2; see also Doc. 75-1 at 62-72.) Cam illa Com m odity’s lease agreem ent states that it encom passes Bays 5, 6, 7, 8, and 9, com prising of 45,0 0 0 square feet in floor size, and associated loading dock area. (Doc. 75-1 at 62.) On J anuary 14, 20 0 8, a fire of unknown origin dam aged the Warehouse. (Id.) At the tim e of the fire, Southwest Nut had an insurance policy with Travelers, effective from Septem ber 30 , 20 0 7 to Septem ber 30 , 20 0 8. (Doc. 68 ¶ 14.) The lease agreem ent between Martin and Southwest Nut contained a number of provisions requiring that Southwest Nut procure various kinds of insurance in connection with its use of the Warehouse. (See generally Doc. 71-2 at 32-46.) Nevertheless, the Cam illa Warehouse was not listed on the Statem ent of Values for the Travelers policy at the tim e of the fire. (Id. ¶¶ 15-16; Doc. 83 ¶ 8.) The Travelers policy includes a provision offering coverage for “[b]uildings the insured [Southwest Nut] becom es newly required to insure under a written contract” unless “the property is m ore specifically insured elsewhere.” (Doc. 83 ¶ 9.) Even if an insured does not report the new building, coverage under this provision 1 The following facts are derived from the Com plaint (Doc. 1); Travelers’ and Southwest Nut’s Answers (Docs. 8, 10 ); Travelers’ Statement of Undisputed Material Facts (Doc. 68) and Auto-Owners and Martin’s Responsive Statem ent of Facts (Doc. 87); and Auto-Owners and Martin’s Statem ent of Undisputed Material Facts (Doc. 77) and Travelers’ Responsive Statem ent of Facts (Doc. 83), all of which were subm itted pursuant to Local Rule 56; and the record in this case. Where relevant, the factual sum m ary also contains undisputed and disputed facts derived from the pleadings, the discovery and disclosure m aterials on file, and any affidavits, all of which are construed in a light m ost favorable to Plaintiff as the nonmoving party. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Fed. R. Civ. P. 56. 2 exists for a 120 -day period following the acquisition. (Doc. 83 ¶ 12.) The lim it of coverage for such property is $ 2,50 0 ,0 0 0 . (Doc. 77 ¶ 10 .) On J anuary 15, 20 0 8, Southwest Nut inform ed its broker Michael Madey that there was a fire at the Warehouse. (Doc. 71-2 at 9.) On that sam e day, Mr. Madey inform ed Travelers that Southwest Nut had a lease agreem ent in place to lease space at the Warehouse. (Doc. 71-2 at 6.) He then stated that it seem ed like Southwest Nut would qualify for the “newly acquired lim its of $ 2.5m m.” (Id.) Travelers then inform ed Plaintiff that it would need a “no loss” letter from Southwest Nut to add the Warehouse to the policy. (Id.) On J anuary 15, 20 0 8, the President of Southwest Nut, Chris Spence, inform ed Travelers via letter that Southwest did not suffer any losses, nor was it aware of any circum stances that m ay lead to any losses to the “newly added location.” (Doc. 71-2 at 8.) On J anuary 18, 20 0 8, Travelers received a copy of the lease agreem ent for the Warehouse. (Doc. 71-2 at 30 .) Subsequent to these com m unications, Travelers states that it added an endorsem ent to Southwest Nut’s policy to add “stock coverage” for the Warehouse to the Statem ent of Values, with an effective date of coverage of Decem ber 1, 20 0 7. (Doc. 83 ¶ 17.) The “stock coverage” lim it provided for up to $ 6,0 0 0 ,0 0 0 . (Doc. 77 ¶ 17.) Pursuant to this endorsem ent, Southwest Nut subm itted a claim for its product and other personal property that was dam aged by the fire. (Doc. 83 ¶ 18.) Travelers paid Southwest Nut approxim ately $ 57,0 0 0 for the pecan stock and other property lost in the fire. (Doc. 77 ¶ 18.) After the fire, Auto-Owners’ and Martin’s representatives requested a copy of the policy from Travelers. (Doc. 77 ¶ 19; Doc. 83 ¶ 19.) Travelers did not provide a copy of the policy because Southwest Nut asked it not to. (Doc. 83 ¶ 19.) Travelers also inform ed Auto-Owners’ representative that the policy did not contain coverage for the 3 Warehouse. (Doc. 83 ¶ 20 .) After finally getting a copy of the policy, Auto-Owners and Martin sent Travelers dem and letters, on J une 4, 20 0 9 and J anuary 12, 20 10 , respectively. (Doc. 77 ¶ 21.) Travelers did not pay the claim or accept the dem and. (Doc. 83 ¶ 21.) Martin was also insured through a policy with Auto-Owners, effective February 26, 20 0 7 to February 26, 20 0 8. (Doc. 77 ¶ 22.) Martin subm itted a claim to AutoOwners for the Warehouse fire. To cover the loss of the Warehouse, Auto-Owners paid Martin $ 1,269,0 0 0 for the “actual cash value” of the property at the tim e of the loss, plus $ 99,60 0 for debris rem oval. (Id. ¶ 24.) Auto-Owners estim ates that the replacem ent value of the Warehouse is currently estim ated to be $ 2,738,623.40 . (Id. ¶ 26.) The Warehouse is currently being reconstructed. (Id. ¶ 27.) Auto-Owners and Martin filed a Com plaint in the above-captioned m atter on J anuary 13, 20 10 . (Doc. 1.) In the Com plaint, Plaintiffs allege a breach of contract claim for dam ages arising from a fire loss to a Warehouse owned by Martin and leased by Southwest Nut. (Id.) Auto-Owners alleges that it is entitled to subrogation of Martin’s rights to indem nification from Southwest Nut to the extent Auto-Owners has m ade or will m ake paym ents to Martin arising from the fire loss. (Id.) Both Southwest Nut and Travelers are nam ed as defendants in Plaintiffs’ Com plaint.2 (Id.) Plaintiff Martin, individually, also alleges a claim for bad faith against Travelers. (Id.) On March 12, 20 12, Travelers m oved for sum m ary judgm ent as to the claim s pleaded against it as a defendant. (Doc. 67.) According to Travelers, sum m ary judgm ent in its favor is appropriate because 1) Martin is not an insured under the Travelers policy, 2) the lease between Martin and Southwest Nut did not require 2 Southwest Nut has alleged a crossclaim against Travelers. (Doc. 10 .) 4 Southwest Nut to provide coverage for the loss at issue since the fire did not arise out of Southwest Nut’s “use or occupancy” of the Warehouse, and 3) because the Warehouse was “m ore specifically insured” pursuant to the Auto-Owners policy, the Warehouse does not qualify as “Newly Constructed or Acquired Property” under the Policy. Travelers also argues that Martin’s bad faith claim fails because Martin was not an insured under the policy, and even if he could otherwise m aintain an action for bad faith against Travelers, the claim fails because Travelers had a reasonable basis for denying Martin’s dem and for coverage. Both Martin and Auto-Owners responded in opposition to Travelers’ Motion for Sum m ary J udgm ent. Because Auto-Owners did not join Martin’s bad faith claim against Travelers, Martin separately subm itted its own response brief addressing that claim but also joining the argum ents presented in Auto-Owners’ response in opposition. (Doc. 86 at 2 n.1.) In opposition to Travelers’ Motion, Auto-Owners and Martin argue that the lease agreement between Martin and Southwest Nut unam biguously required Southwest Nut to obtain insurance for the Warehouse, that the “newly required” provision does indeed cover the dam age to the Warehouse, and that the “m ore specifically insured elsewhere” provision only applies to other insurance that Southwest Nut, the insured, m ay otherwise have. (See generally id.) Auto-Owners and Martin also argue that, despite not being listed as an insured under the Travelers policy, Martin and Auto-Owners still have the right to m aintain an action against Travelers for recovery. (Id.) As to the bad faith claim , Martin argues 1) that Travelers failed to fully investigate Martin’s claim s and 2) that Travelers has asserted no reasonable grounds for denying Martin’s claim . (See generally Doc. 88.) Travelers replied in support of its Motion on May 21, 20 12. (Doc. 98.) 5 On March 12, 20 12, Auto-Owners and Martin filed their own Motion for Sum m ary J udgm ent. (Doc. 76.) Auto-Owners and Martin allege that they are entitled to sum m ary judgm ent against Southwest Nut and Travelers because the undisputed facts show that the dam ages to the Warehouse were plainly covered under a policy of insurance issued by Travelers to Southwest Nut and that Plaintiffs are entitled to recover from Travelers for those dam ages. (See generally id.) Plaintiffs argue that the Warehouse qualified as “newly acquired property” under the Policy’s provision that defines “Newly Constructed or Acquired Property” as “Buildings newly acquired by the insured at locations other than the insured’s prem ises.” (Doc. 76-1 at 9-10 .) Even if this provision does not require, Plaintiffs state that the provision offering coverage to “[b]uildings the Insured becom es newly required to insure under a written contract” would apply. (Id. at 10 .) Plaintiffs also restate, in m ore detail, the argum ents m ade in opposition to Travelers’ sum m ary judgm ent m otion. (See generally id.) Travelers filed its response in opposition to this m otion on April 2, 20 12. (Doc. 82.) Plaintiffs replied in support on May 3, 20 12. (Doc. 92.) The briefing on these m otions has now concluded, and the Court finds that the respective Motions for Sum m ary J udgm ent (Docs. 67, 76) are now ripe for review. D ISCU SSION I. SU MMARY JU D GMEN T STAN D ARD Pursuant to Fed. R. Civ. P. 56, sum m ary judgm ent is proper “if the pleadings, depositions, answers to interrogatories, and adm issions on file, together with the affidavits, if any, show that there is no genuine issue as to any m aterial fact and that the m oving party is entitled to judgment as a m atter of law.” Celotex Corp., 477 U.S. at 322. An issue is “genuine” if the quantum and quality of proof necessary to support liability 6 under the claim is raised. Allen v. Ty son Foods, 121 F.3d 642, 646 (11th Cir. 1997). A fact is “m aterial” if it hinges on the substantive law at issue and it m ight affect the outcom e of the nonm oving party’s claim . Anderson v. Liberty Lobby , 477 U.S. 242, 248 (1986); see also Allen, 121 F.3d at 646. On a m otion for sum m ary judgm ent, the Court m ust view all the evidence and all factual inferences drawn therefrom in the light m ost favorable to the nonm oving party and determ ine whether that evidence could reasonably sustain a jury verdict. See Celotex Corp., 477 U.S. at 322-23. The m ovant bears the initial burden of showing that there is no genuine issue of m aterial fact. Id. at 323. The m ovant can m eet this burden by presenting evidence showing there is no dispute of m aterial fact or by pointing out to the district court that the nonm oving party has failed to present evidence in support of som e element of its case on which it bears the ultim ate burden of proof. Id. at 322-24. Once the m ovant has m et his burden, the nonm oving party is required “to go beyond the pleadings” and identify “specific facts showing that there is a genuine issue for trial.” Id. at 324. A judgm ent is appropriate “as a m atter of law” when the nonm oving party has failed to meet its burden of persuading the Court on an essential elem ent of the claim . See Cleveland v. Policy Mgm t Sy s. Corp., 526 U.S. 795, 80 4 (1999); Celotex, 477 U.S. at 323. To avoid sum m ary judgm ent, the nonm oving party m ust do m ore than sum m arily deny the allegations or ‘show that there is som e m etaphysical doubt as to the m aterial facts.” Matsuhita Elec. Indus. Co. v. Zenith Radio Corp., 418 U.S. 574, 586 (1986). II. AN ALYSIS In addressing the parties’ m otions for sum m ary judgm ent, the Court believes that the starting point of its analysis is 1) whether the lease agreem ent required that Southwest Nut indem nify Martin for the losses suffered to the Warehouse and 2) 7 whether the lease required Southwest Nut to provide coverage to the Warehouse for all losses, rather than just any losses to the portion of the warehouse Southwest used. A. “En tire ” W are h o u s e Th e o ry Auto-Owners and Martin argue that Southwest Nut was required to indem nify Martin against any dam ages to the “entire” Warehouse. (Doc. 92 at 6.) The Court disagrees that the language of the agreem ent supports Auto-Owners and Martin’s interpretation. Im portantly, there is no evidence from the contract to support the notion that Southwest Nut is obligated to cover dam ages to the entire Warehouse. In the “defined term s” section, section 1.0 1(D), of the Warehouse Lease, “[t]he Warehouse (the prem ises being leased hereunder)” is defined as “a refrigerated bulk com m odity storage facility consisting of three cold storage bays and one dry storage bay with office [depicted as Bays 1, 2, 3 and 4 on the attached Exhibit A] com prising approxim ately 24, 0 0 0 square feet in floor size, and associated loading dock area.” (Doc. 71-2 at 32.) A diagram of the Warehouse indicates that the Warehouse is approxim ately 60 ,0 0 0 square total feet. (Doc. 75-1 at 16.) Also, the diagram attached to the lease agreem ent reflects that the Warehouse is com prised of a total of 9 “bays.” (Doc. 71-2 at 44.) If Martin, as the landlord and drafter of the agreem ent, sought only to define the “Warehouse” in the lease agreem ent in term s of Bays 1, 2, 3 and 4, approxim ately 24,0 0 0 square feet, and associated loading dock area, there is no support for his argum ent that the contract was intended to bind Southwest Nut to the entire Warehouse, even to the portions that Southwest Nut did not occupy. Notably, at least 36,0 0 0 square feet of the Warehouse and Bays 5, 6, 7, 8, and 9 were never accounted for by the parties in drafting the lease agreem ent; these other bays were, however, 8 accounted for in Cam illa Com m odity’s lease agreem ent. Thus, the Court reads the unam biguous language of the definition of “Warehouse” as reflecting the parties’ intent to m ake the subject of the lease agreem ent only those portions of the Warehouse for which Southwest Nut occupied and would therefore be responsible. Forsy th Cnty . v. W aterscape Servs., LLC, 30 3 Ga. App. 623, 632 (20 10 ) (“Where the term s of a written contract are clear and unam biguous, the court will look to the contract alone to find the intention of the parties.”); Griffin v. Adam s, 175 Ga. App. 715, 715 (1985) (“It is wellestablished that no construction of a contract is required or is even perm issible when the language used by the parties is plain, unam biguous and capable of only one reasonable interpretation. In such a case, the language used is given its literal m eaning, and plain ordinary words are given their usual significance.”) Moreover, the other provisions to which Plaintiffs cite in support of their “entire” Warehouse theory do not change the Court’s analysis. To show that Southwest Nut is liable for the Warehouse in its entirety, Plaintiffs cite to sections 5.0 2 and 7.0 2 of the agreem ent. Section 5.0 2 states, in part: In s u ran ce Re te n tio n an d Te n an t’s Ris k: N o Lan d lo rd Liability. Tenant agrees to procure and m aintain full insurance coverage for absolutely all losses, liabilities, dam ages, or claim s that m ay occur in connection with Tenant’s use of t h e W a r e h o u s e and Tenant’s obligations under this Lease. (Doc. 71-2 at 34, em phasis added). Again, as an initial m atter, even if this section of the lease is read as requiring Southwest Nut to indem nify Martin for any losses suffered by the Warehouse, as defined, the term “Warehouse” only includes the portions specified in the agreement—Bays 1, 2, 3 and 4, com prising approxim ately 24, 0 0 0 square feet in floor size, and associated loading dock area. As the parties are well aware, the purpose of a “defined term s” section is to im pute the definition of a term to any section of the 9 contract where that term m ay be later used, where appropriate.3 Plaintiffs m ay not avoid their own definition of the term “Warehouse” for the purpose of trying to expand the scope of Southwest Nut’s contractual liability to areas of the Warehouse it did not occupy. Plaintiffs also argue that section 7.0 2 required Southwest Nut to insure “the entire structure.” (Doc. 92 at 6.) This Court again disagrees. Section 7.0 2 states, in part: Te n an t Re s p o n s ibilitie s . . . . Tenant shall be solely responsible for m aintenance, repair and replacem ent of all other elem ents of, im provem ents to and operation of t h e W a r e h o u s e and its contents. Tenant is fully responsible for and will prom ptly pay for any dam age done to (or repairs and replacem ents m ade necessary by any dam age done to) personal and real property with out [sic] lim itation to doors, walls, roof, foundation or equipm ent (including refrigeration equipm ent) installed at or associated with the use of t h e W a r e h o u s e . (Doc. 71-2 at 37, em phasis added). Plaintiffs argue that “[t]he entire structure was part of the sam e ‘real property.’” (Doc. 92.) Such an argum ent is, however, com pletely at odds with the definition of “Warehouse” set forth in the policy. In fact, in the “Mem orandum of Lease,” attached to the lease agreem ent, the “real property” is described as “[a] portion of w arehouses located at 5630 Baggs Ferry Rd, Cam illa, Georgia 31730 .” (Doc. 71-2 at 45, em phasis added.) This is evidence w ithin the agreem ent itself showing that the “real property,” in term s of the lease agreem ent, was not intended to encom pass the “entire structure.” Thus, instructed by the “Defined Term s” section of the lease agreem ent, the Court finds that if Southwest Nut is liable for any dam ages, said liability only extends to the portions of the Warehouse that 3 Martin appears to have understood the im pact that “defined term s” would have on the agreem ent. In the “Memorandum of Lease” section of the lease agreem ent, the Martin-Southwest Nut agreem ent m akes clear that “defined term s used herein with their initial letters capitalized which are specifically defined in the Lease [s]hall have the sam e m eanings herein as are set forth in the Lease.” (See Doc. 71-2 at 45.) 10 Southwest Nut rented and occupied, to w it, the sections of the Warehouse identified in the lease agreem ent. B. Th e Le as e ’s In d e m n ificatio n Pro vis io n s Plaintiffs argue that the lease agreem ent required that Southwest Nut insure the Warehouse. In support of this argum ent, Plaintiffs point to sections 5.0 2 and 9.0 3 of the lease agreem ent, which state, in part: § 5.0 2 . In s u ran ce Re te n tio n an d Te n an t’s Ris k: N o Lan d lo rd Liability. Tenant agrees to procure and maintain full insurance coverage for absolutely all losses, liabilities, damages, or claim s that m ay occur in connection with Tenant’s use of the Warehouse and Tenant’s obligations under this Lease. § 9 .0 3 . Fire o r Oth e r Cas u alty an d Pe rs o n al Pro p e rty In s u ran ce . Tenant agrees that it will at all tim es during the term of this Lease insure and keep in effect on the Warehouse and contents fire, extended coverage and all other endorsem ents to cover the full range of losses for which Tenant is responsible hereunder. (Doc. 71-2 at 33, 38.) Plaintiffs argue that, regardless of the cause of the fire and regardless of fault, these provisions m andate that Southwest Nut is liable for dam ages to the Warehouse. First, as noted previously, the Court does not find that the lease agreem ent provides for any Southwest Nut liability beyond the scope of the areas it leased. Second, since the Court has already concluded that lease agreem ent does not apply to other areas of the Warehouse, the Court does not read these liability provisions as deem ing Southwest Nut liable for any thing that m ight happen any w here in the Warehouse. Specifically, section 5.0 2 states that Southwest Nut would procure insurance for “absolutely all losses, liabilities, dam ages, or claim s that m ay occur in connection with Tenant’s use of the W arehouse.” In the “Defined Term s” section, “perm itted use” is defined as follows: “The Warehouse m ay be used by the Tenant only for bulk food 11 product storage and for any other activities incidental or related thereto.” Reading both of these sections of the lease agreem ent, in conjunction with the Warehouse definition as only including those portions of the Warehouse rented by Southwest Nut, the Court does not find that the lease agreem ent was intended to m ake Southwest Nut liable for losses to the Warehouse w ithout regard for whether those losses were incurred through Southwest Nut’s “use of the Warehouse.” It is axiom atic that a contract is supposed to be considered on the whole in arriving to the construction of any part. Georgia Farm Bureau Mut. Ins. Co. v . Ray , 148 Ga. App. 85, 86 (1978). In drafting the agreem ent, Martin chose to qualify the language in section 5.0 2 with the words “losses . . . that m ay occur in connection with the Tenant’s use of the W arehouse.” If Martin, as the drafter, sought to m ake Southwest Nut responsible for any dam age occurring, without regard for whether it occurred through use, he should have om itted that contractual language. Since he did not, and this Court finds that the contract language unam biguously puts Southwest Nut only on the hook for losses associated with its use of the Warehouse, Martin m ay not now argue that he intended that Southwest Nut incur liability for losses not arising out of its use. See, e.g., In re Club Assocs., 951 F.2d 1223, 1231 n.10 (11th Cir. 1992) (noting that, if drafter wanted a contractual provision to include certain language, they should have included said language in the contract; because they did not, the drafter “m ust abide by the contract provision that it prepared and executed”). Plaintiffs argue that the additional statem ent, “Tenant’s obligations under this lease,” broadens the scope of Southwest Nut’s liability to losses not necessarily occurring in connection with Southwest Nut’s use of the property. (Doc. 86 at 6.) The Court just does not agree. Specifically, the clause sought to include “obligations under this lease.” 12 This m eans that for the obligation to m anifest, it m ust still have som e basis in the lease. Even if this clause is considered a “catchall” provision for all other losses that m ight not arise out of Southwest Nut’s use of the Warehouse, the Court finds no policy provision in the lease agreem ent creating an obligation on the part of Southwest Nut to incur liability for losses 1) occurring in areas of the Warehouse not identified in the lease agreem ent and 2) not arising out of Southwest Nut’s “use of the Warehouse.” Thus, Martin’s alleged catchall provision cannot capture what does not exist. Moreover, the Court finds the clause—“Tenant’s obligations under this lease”—to be am biguous. The rules of contract interpretation require that am biguous contract provisions should be construed against Martin as the draftsm an. See Club Assocs., 951 F.2d at 1231 (“As a general rule the provisions of a contract will be construed against the draftsm an . . . .”) (citing Stern’s Gallery of Gifts, Inc. v. Corporate Property Investors, Inc., 176 Ga. App. 586, 593 (1985)); see also O.C.G.A. § 13-2-2 (“If the construction is doubtful, that which goes m ost strongly against the party executing the instrum ent or undertaking the obligation is generally to be preferred”). Such a rule is definitely applicable here where the drafter (Martin) is requesting that the Court apply the am biguous provision to im pose substantive liability that does not em anate from the lease agreem ent. Therefore, the clause—“Tenant’s obligations under this lease”—m ay not be used by Martin to create liability on the part of Southwest Nut, under these facts. Sim ply put, application of the lease agreem ent under Plaintiffs’ construction would lead to unfair, absurd results as to Southwest Nut. To dem onstrate, if another tenant’s use of the Warehouse in their ow n bay (i.e., Bays 5, 6, 7, 8, or 9) led to a fire that dam aged the Warehouse, Southwest Nut could still be held liable, despite obvious evidence that it did nothing to cause the fire. Though, in this case, it is unfortunate that 13 the origins of the fire are unknown, the facts dem onstrate that Southwest Nut only entered into an agreem ent to incur liability for liability arising out of its own “use of the Warehouse.” Therefore, just as it would be unfair to im pose liability for the fire on Southwest Nut if another were at fault, it is equally as unfair to im pose liability on Southwest Nut by m ere virtue of the fact that the origins of the fire are unknown. 4 Therefore, the Court finds that the policy only required that Southwest Nut provide insurance coverage for losses occurring as a result of its own use of the Warehouse. CON CLU SION For all of the aforementioned reasons, Auto-Owners and Martin’s Motion for Sum m ary J udgm ent (Doc. 76) is D EN IED . Having concluded, as a m atter of law, 1) that the lease agreement did not require Southwest Nut to provide insurance coverage for the entire Warehouse and 2) that the lease agreem ent did not require Southwest Nut to cover any dam ages not arising out of its own use of the Warehouse, and there being no evidence that Southwest Nut’s use of the Warehouse caused the fire, the Court need not reach the m erits of all other argum ents m ade by the parties. The Court does conclude that none of the policy provisions of the Travelers policy are applicable since 1) Southwest Nut could not have “acquired” the entire Warehouse, based on the lim ited scope of the lease agreem ent, and 2) the contract did not require that Southwest Nut insure the entire Warehouse. Based on these findings, there is no evidence to support the argum ent that Travelers’ refusal to subm it to Plaintiffs’ dem and 4 The Court notes that Plaintiffs have failed to even present evidence that the fire was concentrated in Southwest Nut’s area of the Warehouse. Based on the facts presented to the Court, Plaintiffs’ liability argum ents as to Southwest Nut appear to stem prim arily from Southwest Nut’s status as a tenant of the Warehouse. However, the undisputed evidence shows that a larger portion of the Warehouse was leased to another tenant, Cam illa Com m odity, at the time of the fire. (See Doc. 75-1 at 62-78.) Interestingly enough, at the tim e of the fire, the President of Cam illa Com m odity was Newell Atkinson (Doc. 75 at 4 12:23-13:8), the individual who negotiated the 20 0 7 lease with Southwest Nut on behalf of Martin (Id. at 9, 30 :7-18). 14 was m ade in bad faith. Therefore, Travelers is entitled to judgm ent as a m atter of law. Accordingly, Travelers’ Motion for Sum m ary J udgm ent (Doc. 67) is GRAN TED . Because the Court has found that there is no basis for im puting liability to Southwest Nut and/ or Travelers, Plaintiffs’ Com plaint (Doc. 1) is D ISMISSED . SO ORD ERED , this 27th day of March, 20 13. / s/ W. Louis Sands TH E H ON ORABLE W . LOU IS SAN D S, U N ITED STATES D ISTRICT COU RT 15
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