The opinion of the court was delivered by: James H. Jarvis United States District Judge
This is a declaratory judgment action brought pursuant to 28 U.S.C. § 2201 in which plaintiff, Great American Insurance Company, seeks a declaration that claims alleged in an underlying lawsuit are not covered by a policy of insurance issued by Great American and that it therefore does not owe the insured the duty to defend and/or indemnify. There is also a third-party complaint in which the third-party plaintiffs seek to recover against the agency which sold the insurance policy under theories of negligence, breach of fiduciary duty, and violations of the Tennessee Consumer Protection Act, T.C.A. § 56-8-104. Currently pending are motions for summary judgment by plaintiff Great American and defendant Barnes Equine Insurance Agency, a defendant which purchased the assets of the agency which initially sold the policy. For the reasons that follow, both motions for summary judgment [Court Files #20, #26] will be denied.
The following factual allegations are considered in the light most favorable to the non-movants.
Scott and Kathy Potter have owned a horse farm in Bedford County, Tennessee, since 1999. They board their own horses there and from time to time have boarded other people's horses on the farm. In 1999, they first obtained the insurance policy in question issued by Great American through the Liddell Insurance Agency and its agent Holly Liddell. Initially, there was no request to insure any horses located on the property.
Sometime later, John Puckett, a horse trainer, entered into an agreement with the Potters to board and train horses on their property. When the Potters and Mr. Puckett reached this agreement, defendants contend that Kathy Potter contacted Holly Liddell to obtain insurance for the horse boarding and training that Mr. Puckett was to be involved in. Ms. Potter claims that she told Ms. Liddell that Mr. Puckett was training and sometimes boarding horses on their property and that he needed to be added to the policy. Ms. Liddell replied that she would take care of it. The policy is titled under the type of farm, "Horse Boarding and Training." The policy also, under its "General Liability Coverage Declarations Supplement Schedule," identifies "Stables-Training/Breeding/Racing" as one classification of anticipated uses.
One of the horses brought to the property was named "The Lady Doc," which was owned by Paulette and Charles Cheek and had been purchased for $100,000. While the horse was in Puckett's care and on the Potters' property, it became injured and lost a hoof and thereafter had to be euthanized. On August 24, 2004, the Cheeks filed the underlying lawsuit in this court against the Potters and Puckett, alleging bailment, negligence, and breach of contract theories arising from the loss of the horse. That underlying lawsuit, Civil Action No. 4:04-cv-73, was settled between the parties.
Great American, on December 13, 2004, filed the instant lawsuit for declaratory judgment seeking a declaration that it had no duty to defend and/or indemnify any of the defendants with regard to the underlying lawsuit. The third-party defendants then filed a third-party complaint against Holly Liddell, the Liddell Insurance Agency, and the Barnes Equine Insurance Agency, which had later purchased the assets of the Liddell agency.
The Insurance Policy in Question
The policy in question is titled under the type of farm, "Horse Boarding and Trading." The policy also identifies "Stables-Training/Breeding/Racing" as one use of the property. The policy provides that Great American "will pay those sums that the 'insured' becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies." According to the policy, Great American has "no duty to defend any 'insured' against a 'suit' seeking damages for 'bodily injury' or 'property damage' to which this insurance does not apply."
The policy also contains the following exclusion: