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United States Specialty Insurance Company v. N602DW, LLC

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

October 5, 2017

UNITED STATES SPECIALTY INSURANCE COMPANY, Plaintiff,
v.
N602DW, LLC, et al., Defendants.

          MEMORANDUM OPINION

          WAVERLY D. CRENSHAW, JR. CHIEF UNITED STATES DISTRICT JUDGE.

         The United States Specialty Insurance Company (“Specialty Insurance”) filed this declaratory judgment action against N602DW, LLC (the “Owner”) and Bank of America, N.A., seeking a declaration that it is not required to reimburse the Owner for damage to an airplane under an insurance policy. (Doc. No. 1.) The Court has diversity jurisdiction over this action. 28 U.S.C. § 1332(a); (Doc. No. 1 at 2-3.) Before the Court is Specialty Insurance's Motion for Summary Judgment. (Doc. No. 39.) For the following reasons, Specialty Insurance's Motion is GRANTED.

         I. UNDISPUTED FACTS

         On September 29, 2011, Robert Turner, a member of the Owner, flew a 1968 Beech Baron B55 Aircraft with Registration Number N602DW (the “Baron”) to the Northwest Florida Beaches International Airport (aka, “Panama City Airport”). (Doc. No. 45 at 1, 5; Doc. No. 50 at 1, 6.) As it was landing, the Baron's right engine failed, but Turner was able to land the airplane safely.[1](Doc. No. 45 at 5-6; Doc. No. 50 at 6-7.) Turner left the Baron on the runway ramp at the Panama City Airport, and returned to Nashville using alternative means. (Doc. No. 45 at 6; Doc. No. 50 at 7.) Within a few days, Turner notified Danny Wayne Brazzell, a member or former member of the Owner, about the incident.[2] (Doc. No. 45 at 2, 6; Doc. No. 50 at 2, 7.)

         Shortly after the incident, Turner contacted Chad Goddard, a licensed aircraft mechanic who formerly owned Cumberland Avionics, and asked him to remove the damaged right engine from the Baron, which Cumberland Avionics did. (Doc. No. 45 at 2, 7; Doc. No. 50 at 2, 7.) Goddard shipped the damaged engine to Western Skyways in Colorado for inspection, which Western Skyways received on October 3, 2011. (Doc. No. 45 at 6; Doc. No. 50 at 8.)

         At some point, someone accessed the Baron and removed at least the engine bracket and the avionics (the “theft”).[3] (Doc. No. 45 at 8; Doc. No. 50 at 9.) However, the Baron remained parked outside at the Panama City Airport until roughly August 2015, during which time Brazzell never contacted the airport about moving the Baron to an indoor hangar. (Doc. No. 45 at 8; Doc. No. 50 at 10.) After ninety days from the date the Baron landed at the Panama City Airport, the Owner was supposed to pay the airport its ramp fees, but it did not do so. (Doc. No. 41-1 at 57.) At that time, Michael Lerma, the General Manager at Sheltair Aviation Services, which is the Fixed Base Operator for the Panama City Airport, [4] contacted Brazzell, who indicated that the aircraft was sold to Turner. (Id.) Lerma attempted to contact Turner, but never received any response calls and as of March 20, 2017, never spoke to Turner. (Id.) On March 21, 2012, Brazzell contacted Turner expressing his concern that the airplane should not be left outside in the salty Florida air, but Turner replied that lots of airplanes are left outside in Florida. (Doc. No. 45 at 10; Doc. No. 50 at 12.)

         Brazzell flew in and out of the Panama City Airport several times since September 29, 2011, and never visited, inspected, or checked on the Baron. (Doc. No. 45 at 8; Doc. No. 50 at 10.) Turner flew in and out of the Panama City Airport at least once, maybe twice, and never went near to or in the Baron. (Doc. No. 41-1 at 67.) Goddard attempted to contact Turner numerous times about finalizing repairs for the Baron prior to Cumberland Avionics closing in October 2014, but Turner did not respond. (Doc. No. 45 at 9; Doc. No. 50 at 11; Doc. No. 41-1 at 52.) The Owner never repaired or replaced the right engine on the Baron. (Doc. No. 45 at 9; Doc. No. 50 at 11.)

         On August 27, 2015, Brazzell contacted Specialty Insurance to notify it about the theft, but Brazzell does not know when it occurred. (Doc. No. 45 at 11; Doc. No. 50 at 13.) Brazzell attempted to claim the damage from the theft based on the Owner's insurance policy, number GA00171130-00 (the “Policy”), which was effective from July 1, 2011 until July 1, 2012. (Doc. No. 50 at 4.) Under the Policy, the Owner was required to do all it can do to protect the Baron from further loss, and Specialty Insurance will pay for all reasonable expenses the Owner incurs in protecting it. (Doc. No. 50 at 7.) Otherwise, Specialty Insurance will not be responsible for further loss. (Doc. No. 50 at 7.) The Policy also requires the Owner to give Specialty Insurance a “sworn Proof of Loss statement within 90 days of the loss.” (Doc. No. 50 at 7.) The Owner has not provided Specialty Insurance with a sworn Proof of Loss statement. (Doc. No. 45 at 12; Doc. No. 50 at 14.)

         When the Policy was issued, it did not list any lienholders. (Doc. No. 50 at 4-5.) On April 5, 2012, Brazzell contacted Specialty Insurance to add Bank of America and Brazzell as the Baron's lienholders. (Doc. No. 50 at 5.) Bank of America first presented its claim to Specialty Insurance on October 6, 2016. (Doc. No. 50 at 14.) Prior to Bank of America making its claim, on August 10, 2016, Specialty Insurance initiated this declaratory judgment action, seeking an order from the Court that the damage from the theft is not a covered loss under the Policy. (Doc. No. 1.)

         II. STANDARD OF REVIEW

         This is a case where a lack of evidence by the nonmoving party bearing the burden of proof at trial entitles the moving party to summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Muhammad v. Close, 379 F.3d 413, 416 (6th Cir. 2004) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)). “[S]ummary judgment will be granted unless the opposing party offers some competent evidence that could be presented at trial showing that there is a genuine dispute to a material fact.” C. Wright & A. Miller, Federal Practice and Procedure § 2727.2, at 497 (2016). “In this way, the burden of producing evidence is shifted to the party opposing the motion.” Id. at 497-99. The nonmoving party must “show specific facts, as opposed to general allegations, that present a genuine issue worthy of trial.” Id. at 501. However, the nonmoving party “does not need to show that the dispute as to material facts will be resolved in its favor.” Id. Federal Rule of Civil Procedure 56(c) “provides that a party opposing summary judgment and arguing that a material fact is genuinely disputed must support that contention either by citing to materials in the record supporting a genuine factual dispute or by showing that the material in the record does not establish the absence of a genuine dispute.” Id. at 507. The nonmovant “cannot satisfy [its] burden by relying on mere allegations in the pleadings to show that there is a triable issue.” Id. at 508-09. The Court must determine whether sufficient evidence has been presented to make the material issue of fact a proper jury question. Liberty Lobby, 477 U.S. at 248. The mere existence of a scintilla of evidence in support of the nonmoving party's position will be insufficient to survive summary judgment; rather, there must be evidence on which the jury could reasonably find for the nonmoving party. Rodgers v. Banks, 344 F.3d 587, 595 (6th Cir. 2003).

         III. ANALYSIS

         Specialty Insurance moves for summary judgment against both the Owner and Bank of America, arguing that the loss from the theft is not covered under the Policy. (Doc. No. 40.) Both the Owner (Doc. No. 45) and Bank of America (Doc. No. 48) argue that there are issues of disputed fact that preclude summary judgment.

         1. Claim ...


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