The opinion of the court was delivered by: Judge Mattice
Plaintiff CBL & Associates Management, Inc. ("CBL") brings this action against Defendants Lumbermens Mutual Casualty Company ("Lumbermens") and Travelers Property Casualty Company of America ("Travelers"), alleging that Lumbermens and Travelers breached their respective insurance contracts by refusing to provide a defense in an underlying state court action. In addition to damages resulting from such breaches of contract, Plaintiff seeks a declaration of Defendants' rights and duties under their respective insurance contracts. Before the Court are Lumbermens' Motion for Judgment on the Pleadings and Travelers' Motion for Judgment on the Pleadings.
For the reasons explained below, Lumbermens' Motion for Judgment on the Pleadings is GRANTED, and Travelers' Motion for Judgment on the Pleadings is GRANTED.
The standard of review applicable to a motion for "judgment on the pleadings" pursuant to Federal Rule of Civil Procedure 12(c) is the same as the standard of review applicable under Rule 12(b)(6). Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. 1998).
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint that fails to state a claim upon which relief can be granted. The purpose of Rule 12(b)(6) is to permit a defendant to test whether, as a matter of law, the plaintiff is entitled to relief even if everything alleged in the complaint is true. Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993). A complaint should not be dismissed for failure to state a claim unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Arrow v. Fed. Reserve Bank, 358 F.3d 392, 393 (6th Cir. 2004). The complaint must contain either "direct or inferential allegations respecting all the material elements to sustain a recovery . . . ." Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988) (internal quotations and citations omitted). The Court must determine not whether the plaintiff will ultimately prevail but whether the plaintiff is entitled to offer evidence to support his claims. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). In making this determination, the Court must construe the complaint in the light most favorable to plaintiff and accept as true all well-pleaded factual allegations. Arrow, 358 F.3d at 393; Mixon v. Ohio, 193 F.3d 389, 400 (6th Cir. 1999). The Court need not accept as true mere legal conclusions or unwarranted factual inferences. Id.
Viewing the facts in the light most favorable to Plaintiff and accepting as true all well-pleaded factual allegations*fn1 , the relevant facts are as follows.
CBL operates and manages the Cherryvale Mall (the "Mall") in Rockford, Illinois, which is owned by CBL/Cherryvale I, LLC ("CBL/Cherryvale"). (Court Doc. No. 1, Compl. ¶ 6.) CBL/Cherryvale acquired the Mall on January 31, 2001, and CBL has been managing the Mall since that time. (Id. ¶ 7.) At the time CBL/Cherryvale acquired the Mall, space F34 was leased to American Vision Centers, Inc. ("AVC") and subleased to Donald Wight. (Id. ¶ 9.) The lease to AVC (the "AVC Lease") was entered into on January 28, 1997, between the then-owner and AVC. (Id. ¶ 10.) The sublease to Wight was entered into on February 1, 1997, and incorporated into the AVC Lease. (Id.) CBL/Cherryvale assumed the AVC Lease when it purchased the Mall in 2001. (Id.)
At the time of the execution of the AVC Lease in 1997, both the then-owner and AVC were aware of a plumbing problem, and the AVC Lease provided that the "LANDLORD agrees to promptly repair the existing plumbing problem at the PREMISES, at LANDLORD's expense, whereby the storm sewer is mistakenly connected to the PREMISES sewer system." (Id. ¶ 11; id. Ex. A.)
In 2002, Wight vacated space F34. (Id. ¶ 13.) On April 10, 2003, CBL/Cherryvale and AVC entered into a Lease Termination Agreement which terminated the AVC Lease.
(Id. ¶ 14.) Also on April 10, 2003, CBL/Cherryvale and AVC entered into a Release and Indemnity Agreement which released and discharged AVC from various claims related to the plumbing problems. (Id.)
On April 29, 2003, Wight filed an action in the Circuit Court for Winnebago County in Rockford, Illinois. (Id. ¶ 16; see also Court Doc. No. 1, Notice of Removal Ex. B.) In that action, Wight seeks damages for breach of contract, breach of fiduciary duty, negligence, breach of the covenant of quiet enjoyment, fraud in the inducement, negligent infliction of emotional distress, and negligent misrepresentation against AVC and other defendants, all stemming from the plumbing problem in space F34 that "caused sewage, debris, waste and water to shoot out of the sink drains and flood [space F34] during rainfalls" (Notice of Removal, Ex. B ¶ 11) and AVC's failure to correct the plumbing problem (id. ¶ 15). CBL has been providing a defense to AVC in this Illinois litigation. (Compl. ¶ 19.)
Lumbermens and Travelers each issued insurance contracts to CBL for certain periods of time, and CBL claims that these insurance contracts obligate Lumbermens and Travelers to provide a defense to AVC on behalf of CBL in this underlying Illinois litigation. (Id. ¶¶ 21, 28, 39, 46.)
Lumbermens issued Policy No. 5AA 059 240-00 to CBL with effective dates from 12/31/2001 to 12/31/2002. (Id. ¶ 21; id. Ex. B.) Travelers issued Policy No. TJ-GLSA-487D7495-TIL-02 to CBL with effective dates from 12/31/2002 to 12/31/2003. (Id. ¶ 39; id. Ex. C.) Both policies provide coverage, albeit for different periods of time, for bodily injury and property damage. (Id. Exs. B, C.) In order for "bodily injury" and "property damage" to be covered under the policies, such "bodily injury" or "property damage" must have (1) been caused by an "occurrence" that takes place in the "coverage territory" and (2) occurred during the policy period. (Id.) "Bodily injury" is defined under both policies as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." (Id.) "Property damage" is defined under both policies as "[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.) Both insurance contracts contain a pollution exclusion related to bodily injury and property damage, which provides that bodily injury and property damage "arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants . . . [a]t or from any premises, site or location which is or was at any time owned or occupied by or rented or loaned to [or managed by*fn2 ], any insured . . . ." (Id.) In both policies, the term "pollutants" is defined as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste." (Id.)
Both policies also provide coverage, albeit for different periods of time, for personal and advertising injury liability. (Id.) To be covered under the policies, "personal injury" must have been caused by "an offense arising out of your business, excluding advertising, publishing, broadcasting or telecasting done by you or for you." (Id.) "Advertising injury" under the policies must have been caused by "an offense committed in the course of advertising your goods, products or services." (Id.) In addition, the offense related to either a personal or advertising injury must have been committed in the "coverage territory" during the policy period. (Id.) "Personal injury" is defined as follows in both policies:
injury, other than "bodily injury," arising out of one or more of the following offenses:
a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor;
d. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or
e. Oral or written publication of material that violates a person's right of privacy. (Id.) "Advertising injury" is defined as follows in both policies: injury arising out of one or more of the following offenses:
a. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's ...