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Great Lakes Reinsurance (UK) PLC v. MP&T Hotels, LLC

United States District Court, M.D. Tennessee, Nashville Division

February 10, 2015

GREAT LAKES REINSURANCE (UK) PLC Plaintiff,
v.
MP&T HOTELS, LLC d/b/a KNIGHTS INN LEBANON, THOMAS SUTHERLAND, and CHARLES STEWART d/b/a STEWART AND SONS TERMITE AND PEST CONTROL, Defendants.

MEMORANDUM

ALETA A. TRAUGER, District Judge.

Pending before the court is a Motion to Dismiss filed by defendant Charles Stewart (Docket No. 13), which has been joined in by defendants Thomas Sutherland (Docket No. 21) and MP&T Hotels, LLC ("MP&T Hotels") (Docket No. 18) (together, the "defendants"). The plaintiff, Great Lakes Reinsurance (UK) PLC ("Great Lakes") filed a Response in opposition to the Motion (Docket No. 17). For the reasons discussed herein, the defendants' Motion to Dismiss will be granted in part and denied in part. The court will also stay this action pending resolution of the underlying state tort action in the Circuit Court for Wilson County, Tennessee.

BACKGROUND[1]

This declaratory judgment action involves a simple question: is the plaintiff, an insurance company, obligated by its general liability policy with an insured, defendant MP&T Hotels, to defend and indemnify the insured with respect to an underlying personal injury action? Despite this seemingly simple question, the issue presently before the court is whether, given the pendency of a related state court proceeding, this court should decline to exercise its discretionary jurisdiction over Great Lakes' request for declaratory relief. The court will briefly recite the facts as they relate to the motion before the court.

I. The Parties

Great Lakes is an insurance company based in London, England, that provides insurance coverage to MP&T Hotels under Policy No. GLG005531 (the "Policy"). The Policy provides general liability coverage in accordance with its expressed terms, conditions, definitions, and exclusions. MP&T Hotels operates a hotel, the Knights Inn, which is located in Lebanon, Tennessee. Defendant Charles Stewart, who does business as Stewart & Son Termite and Pest Control, has performed pest extermination services at the Knights Inn.

On September 23, 2013, Thomas Sutherland was a guest of the hotel. Currently, Sutherland is the plaintiff in a negligence action in the Circuit Court for Wilson County, Tennessee, against MP&T Hotels and Stewart & Son (the "Sutherland Litigation").

II. The Sutherland Litigation

On March 20, 2014, Sutherland filed a Complaint in the Circuit Court for Wilson County against MP&T Hotels. (Docket No. 1, Ex. 2.) In his original Complaint, Sutherland alleged that, as a paying guest of MP&T Hotels, he was injured as a result of exposure to a noxious fume or chemical odor. (Id. ) Sutherland's original Complaint alleges three claims against MP&T: negligence, gross negligence, and breach of contract. It requests money damages, including compensatory damages for Sutherland's medical expenses and pain and suffering, and punitive damages related to MP&T Hotels' alleged gross negligence.

On September 2, 2014, MP&T Hotels answered the Complaint and generally denied all of Sutherland's allegations, except the allegation that Sutherland was a registered guest on March 23, 2013. The Answer also raised an affirmative defense of comparative fault on the part of Stewart. Based on the hotel's comparative fault defense, Sutherland amended his Complaint to join Stewart as an additional defendant. (Docket No. 1, Ex. 3.) The general allegations of Sutherland's pleading did not change with his amendment, but he added Stewart as a defendant to each cause of action.

III. Facts Relevant to the Declaratory Judgment Action[2]

On May 1, 2012, Great Lakes issued the Policy to MP&T Hotels. The Policy, which is attached to the Complaint, provides general liability coverage to MP&T Hotels, subject to its detailed terms, conditions, definitions, and exclusions. Generally, the Policy provides that Great Lakes

[w]ill 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. [Great Lakes] will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result.

(Docket No. 1, Ex. 1.) In short, in order for coverage to apply under the Policy, there must be "bodily injury" caused by an "occurrence" during the policy period.

The Policy defines "bodily injury" as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at a time." "Occurrence" means an accident, including the continuous and repeated exposure to substantially the same general harmful conditions. The Policy also includes exceptions to coverage for injuries that are "expected or intended" by the insured (for instance, those caused by intentional acts) and "contractual liability." Another exception to coverage, relevant here, is the "Absolute Pollution Exception." The exception states:

It is agreed that the exclusion relating to the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants is replaced by the following; or in the event no exclusion exists then the following exclusion applies nevertheless:
1. to bodily injury or property damage arising out of the actual, alleged, or threatened discharge, dispersal, release or escape of pollutants;
a. at or from premises owned, rented or occupied by the named insured;
...
Pollutants mean any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes ...

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