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Greenwich Ins. Co. v. Med. Mut. Ins. Co.

United States District Court, E.D. North Carolina, Western Division

January 27, 2015


For Greenwich Insurance Company, Plaintiff, Counter Defendant: Daniel J. Standish, John E. Barry, LEAD ATTORNEYS, Wiley Rein LLP, Washington, DC; Joseph W. Eason, Nelson Mullins Riley & Scarborough, LLP, Raleigh, NC.

For Medical Mutual Insurance Company of North Carolina, Defendant, Counter Claimant: R. Steven DeGeorge, LEAD ATTORNEY, Robinson, Bradshaw & Hinson, P.A., Charlotte, NC.

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JAMES C. DEVER, III, Chief United States District Judge.

On May 23, 2014, Greenwich Insurance Company (" Greenwich" or " plaintiff" ) filed a complaint for declaratory judgment [D.E. 1]. Greenwich contends that the " Errors and Omissions" clause in its insurance contract with Medical Mutual Insurance Company of North Carolina (" Medical Mutual" or " defendant" ) relieves Greenwich of any duty to defend or indemnify Medical Mutual concerning an underlying lawsuit that Dr. Arleen Thom filed against Medical Mutual. On August 25, 2014, Greenwich filed a motion for judgment on the pleadings or, alternatively, a motion for summary judgment [D.E. 15]. On August 25, 2014, Medical Mutual filed a motion for summary judgment [D.E. 17]. Thereafter, each party responded and replied. As explained below, the court grants Greenwich's motion for summary judgment and denies Medical Mutual's motion for summary judgment.


Medical Mutual is a North Carolina insurance company that offers medical malpractice insurance coverage. Pl.'s Compl. [D.E. 1] ¶ 6. Medical Mutual issued a medical malpractice insurance policy to Dr. Arleen Thom. Def.'s Countercl. [D.E. 8] ¶ 4. The insurance policy provided coverage to Dr. Thorn for up to $1,000,000 in malpractice liability. Id. In May 2008, Stephen Nicholson, in his individual capacity and on behalf of the estate of his late wife Geraldine Nicholson, sued Dr. Thorn for medical malpractice in Robeson County Superior Court (" the Nicholson action" ). Id. ¶ 5; Pl.'s Compl. ¶ 12. As Dr. Thorn's insurer, Medical Mutual defended the lawsuit on Dr. Thorn's behalf. Def.'s Countercl. ¶ 6. As part of the defense, Medical Mutual hired two attorneys to defend the malpractice action, and Medical Mutual rejected

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multiple settlement offers that Nicholson made. See Pl.'s Compl. ¶ 14. The settlement offers all fell within the coverage limits of Dr. Thorn's policy. Id. The Nicholson action proceeded to trial. Def.'s Countercl. ¶ 6. On October 12, 2012, the jury in the Nicholson action found Dr. Thorn liable for medical malpractice and awarded Nicholson $4,650,000 in damages, plus prejudgment and postjudgment interest. Id.

On November 4, 2013, Dr. Thorn filed suit against Medical Mutual in Cumberland County Superior Court (" the Thom action" ). Def.'s Countercl. ¶ 7. Dr. Thorn seeks damages against Medical Mutual for: (1) bad faith refusal to settle; (2) breach of fiduciary duty; (3) constructive fraud; (4) intentional and/or negligent infliction of emotional distress; and (5) unfair and deceptive trade practices. See Thom Compl. [D.E. 15-2] ¶ ¶ 96-125.

Medical Mutual has a reinsurance policy with Greenwich (" the Greenwich policy" ). See Def.'s Countercl. ¶ 10. On November 12, 2013, Medical Mutual tendered the Thom action to Greenwich and claimed that Greenwich had a duty to defend Medical Mutual in the Thom action. Id. ¶ 13. On January 27, 2014, Greenwich sent a letter to Medical Mutual denying coverage for the Thom action, citing the Greenwich policy's Errors and Omissions exclusionary clause. Pl.'s Compl. ¶ 20. On February 19, 2014, Medical Mutual responded to Greenwich, asserting that Greenwich was obligated to defend and potentially indemnify Medical Mutual in the Thom action. Id. ¶ 21.

On May 23, 2014, Greenwich filed a declaratory judgment action in this court. On June 13, 2014, Medical Mutual answered Greenwich's complaint and filed a counterclaim seeking declaratory judgment. On July 14, 2014, the parties filed a joint report under Rule 26(f) of the Federal Rules of Civil Procedure and agreed that " the disputes encompassed by their respective pleadings are legal in nature, narrow, and amenable to efficient resolution on the merits by the Court based on case-dispositive motion practice." See [D.E. 13] 1. On July 25, 2014, the court ordered the parties to file cross-motions for dispositive relief and stayed discovery pending resolution of the motions. See [D.E. 14]. On August 25, 2014, the parties filed cross-motions for summary judgment.


Summary judgment is appropriate if the moving party demonstrates that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The party seeking summary judgment bears the initial burden of showing an absence of genuine dispute of material facts or the absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett,477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If a moving party meets its burden, the nonmoving party must " come forward with specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quotation and emphasis omitted). There is a genuine issue for trial if there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. Anderson v. Liberty Lobby. Inc.,477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). " The mere existence of a scintilla of evidence in support of the ...

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