The opinion of the court was delivered by: Susan O. Hickey United States District Judge
AMENDED MEMORANDUM OPINION
By its Memorandum Opinion on April 11, 2013, the Court granted Plaintiff Harleysville Worchester Insurance Company's Motion for Summary Judgment. (ECF No. 51). The Court declared as a matter of law that Harleysville has no duty to defend or indemnify Defendant Diamondhead Property Owners Association, Inc. in a separate state court action involving the personal injuries and property damage of Defendants Jerry Chambliss and Cynthia Nelson. The Court, however, neglected to specify that Harleysville also owes no duty to defend or indemnify Diamondhead employee, Fred Ensminger, in that state court action. The Court's Opinion is amended as follows:
Before the Court is Plaintiff Harleysville Worchester Insurance Company's Motion for Summary Judgment. (ECF No. 38). This case involves an insurance contract dispute between Harleysville and Diamondhead Property Owners Association, Inc. Harleysville, the insurer, asks the Court to declare as a matter of law that it has no duty to defend or indemnify Diamondhead, the insured, or its employee, Fred Ensminger, in a separate personal injury lawsuit in an Arkansas state court. Defendants have not responded to Harleysville's motion.*fn1 The matter is ripe for the Court's consideration.
The Court grants Harleysville's motion because the undisputed facts show that the parties' insurance contract unambiguously excludes the coverage sought by Diamondhead in the underlying state court action.
The parties in this case dispute whether Harleysville owes certain duties to Diamondhead under their insurance contract. Harleysville filed this declaratory judgment action seeking to avoid coverage for personal injuries and property damage suffered by Defendants Jerry Chambliss and Cynthia Nelson on Diamondhead's premises.
In July 2010, Ensminger was involved in a "shoot-out" with Chambliss and Nelson outside of their home within the Diamondhead community. Ensminger, an employee of the Diamondhead Police Department, brought suit against Chambliss for his injuries during the incident, and Nelson was later joined in the lawsuit as a Defendant. Chambliss and Nelson then filed a counterclaim against Ensminger for their injuries and property damage during the incident and joined Diamondhead as a third-party Defendant.
The third-party complaint alleges nine claims: (1) assault and battery; (2) property damage; (3) malicious prosecution/abuse of process and false imprisonment; (4) gross negligence; (5) negligence; (6) negligent hiring; (7) negligent retention; (8) negligent supervision; and (9) outrage. Most of these claims are brought against Diamondhead under a theory of vicarious liability because Ensminger was allegedly acting within the scope of his employment as a Diamondhead law enforcement officer when the incident occurred. The remaining claims, however-such as the negligent hiring, negligent retention, and negligent supervision claims-are brought under a theory of direct liability for Diamondhead's own unlawful conduct.
When the incident occurred, Diamondhead had a commercial general liability insurance policy (the "CGLP") issued by Harleysville.*fn2 The CGLP provides that Harleysville has a duty to defend and indemnify Diamondhead in any lawsuit asserting "bodily injury" or "property damage" to which the insurance applies.*fn3 The policy further provides that coverage extends to the actions of Diamondhead's employees when acting within the scope of their employment.
Chambliss and Nelson's third-party complaint against Diamondhead and Ensminger includes recovery for their personal injuries and property damage. Thus, according to the terms of the CGLP, Harleysville is required to defend and indemnify Diamondhead and Ensminger in the underlying state court action, unless a relevant exclusion of coverage applies.
When Harleysville issued the CGLP to Diamondhead, the parties inadvertently omitted an exclusion of law enforcement coverage from the policy. The parties, however, clearly intended for the policy to contain a law enforcement exclusion at the time of contracting. Accordingly, in its previous order, the Court reformed the parties' insurance contract to give effect to their true intent. (ECF No. 37). As reformed, the CGLP excludes coverage for any acts of Diamondhead employees "arising out of" the community's law enforcement activities. (ECF No. 39).
Harleysville now argues that each of the claims against Diamondhead and Ensminger in the underlying state court action arose out of Diamondhead's law enforcement activities. Harleysville contends that the law enforcement exclusion in the CGLP applies, thus relieving it of its duty to defend and indemnify Diamondhead or Ensminger.
The standard of review for summary judgment is well established. When a party moves for summary judgment, "[t]he court shall grant summary judgment 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); Krenik v. County of LeSueur, 47 F.3d 953 (8th Cir. 1995). This is a "threshold inquiry of.whether there is a need for trial-whether, in other words, there are genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); see also Agristor Leasing v. Farrow, 826 F.2d 732 (8th Cir. 1987). A fact is material only when its ...