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IMG Worldwide, Inc. v. Westchester Fire Ins. Co.

IMG Worldwide, Inc. v. Westchester Fire Ins. Co.

United States Court of Appeals for the Sixth Circuit

July 15, 2014, Filed

File Name: 14a0513n.06

Nos. 13-3832, 13-3837

Opinion

 [*404]  CLAY, Circuit Judge. In this insurance coverage case, both parties appeal the order of the district court finding in favor of Defendant Westchester Fire Insurance Company ("Westchester") as to the claim that Westchester breached its contractual duty to defend Plaintiffs IMG Worldwide, Inc. and IMG Academies, LLP (collectively, "IMG") in connection with a lawsuit, and upholding a jury verdict in favor of IMG as to the claim that Westchester breached its contractual duty to indemnify IMG for a payment made to settle that same lawsuit. For the reasons set forth below, we AFFIRM in part, REVERSE in part, and REMAND to the district court for further proceedings.

BACKGROUND

Procedural History

IMG filed this insurance coverage action against its excess insurer, Westchester, on August 2, 2011, alleging that Westchester breached the parties' commercial general liability ("CGL") insurance agreement by refusing to indemnify IMG for a settlement payment made, and defense costs incurred, in connection with a lawsuit filed against IMG. The district court entertained  [**3] numerous pre-trial motions from both parties, and the case ultimately proceeded to a jury trial on the issue of indemnity. The court reserved for post-trial decision the issue of defense costs. After a three-day trial, the jury returned a special verdict in favor of IMG, finding Westchester liable, under the terms of the policy, to indemnify IMG for part of the $5 million settlement payment. In so finding, the jury awarded $3.9 million in damages to IMG.

Westchester immediately challenged the jury verdict in a Rule 50(b) motion for judgment as a matter of law, and also moved for leave to file a third-party complaint against IMG's primary insurer, Great Divide Insurance Company ("Great Divide"). In addition, Westchester moved for a declaratory judgment for reimbursement from Great Divide. Great Divide filed a motion to intervene, which the district court granted. IMG filed a separate motion for judgment on its claim that Westchester is liable for reimbursement of defense costs incurred in connection with the underlying suit.

The district court denied Westchester's Rule 50(b) motion as well as IMG's motion for judgment, upholding the jury verdict in favor of IMG on the indemnification  [**4] claim, and entering judgment against IMG on the duty-to-defend claim. The court denied as moot Westchester's motions for declaratory judgment and leave to file a third-party complaint against Great Divide. Westchester appealed the denial of its Rule 50(b) motion, and IMG cross-appealed, challenging the denial of its motion for judgment.

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572 Fed. Appx. 402 *; 2014 U.S. App. LEXIS 13703 **; 2014 FED App. 0513N (6th Cir.); 2014 WL 3409044

IMG WORLDWIDE, INC.; IMG ACADEMIES, LLP, Plaintiffs-Appellees/Cross-Appellants, v. WESTCHESTER FIRE INSURANCE COMPANY, Defendant-Appellant/Cross-Appellee, and GREAT DIVIDE INSURANCE COMPANY, Intervenor-Appellee.

Notice: NOT RECOMMENDED FOR FULL-TEXT PUBLICATION. SIXTH CIRCUIT RULE 28 LIMITS CITATION TO SPECIFIC SITUATIONS. PLEASE SEE RULE 28 BEFORE CITING IN A PROCEEDING IN A COURT IN THE SIXTH CIRCUIT. IF CITED, A COPY MUST BE SERVED ON OTHER PARTIES AND THE COURT. THIS NOTICE IS TO BE PROMINENTLY DISPLAYED IF THIS DECISION IS REPRODUCED.

Subsequent History: Summary judgment granted, in part, summary judgment denied, in part by IMG Worldwide, Inc. v. Westchester Fire Ins. Co., 2015 U.S. Dist. LEXIS 114659 (N.D. Ohio, Aug. 28, 2015)

Prior History:  [**1] ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO.

IMG Worldwide, Inc. v. Westchester Fire Ins. Co., 945 F. Supp. 2d 873, 2013 U.S. Dist. LEXIS 67618 (N.D. Ohio, 2013)

Disposition:  The court affirmed the order denying the excess insurer's Fed. R. Civ. P. 50(b) motion for judgment as a matter of law, reversed the order entering judgment in favor of the excess insurer on the insured's duty-to-defend claims, and remanded the case with instructions to enter judgment in the insured's favor on the insured's motion for judgment on the excess insurer's duty to defend, and for further proceedings consistent with the court's opinion.

CORE TERMS

coverage, occurrence, property damage, insurer, damages, duty to defend, defense costs, district court, settlement, misrepresentation, breached, lawsuit, reimbursement, undertake, million dollars, matter of law, motion for judgment, contractual, contributed, defended, underlying insurance, subrogation rights, primary insurer, deny coverage, legal basis, abandonment, obligations, triggering, ambiguous, indemnify

Civil Procedure, Appeals, Standards of Review, De Novo Review, Trials, Judgment as Matter of Law, General Overview, Judgment Notwithstanding Verdict, Insurance Law, Property Insurance, Coverage, Loss of Use, Liability & Performance Standards, Good Faith & Fair Dealing, Duty to Defend, Contracts Law, Contract Interpretation, Ambiguities & Contra Proferentem, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Bad Faith & Extracontractual Liability, Settlements