United States District Court, W.D. North Carolina, Charlotte Division
Cogburn Jr., United States District Judge
MATTER is before the court on plaintiff's Motion
for Summary Judgment. The deadline for a response has passed,
no response has been filed, and defendants are represented by
counsel. For the reasons that follow, it appears that no
genuine issues of fact remain and that defendants are
entitled to the declaratory judgment they seek as a matter of
action, plaintiff seeks a determination that they are not
obligated to defend or indemnify defendants under a policy of
insurance in a related civil action filed in this district.
In the underlying lawsuit, defendants herein are the
plaintiffs and counterclaim-defendants. Seventeen
counterclaims have been asserted against them, including
breach of contract claims, theft of trade secrets, trademark
infringement, false advertising, and unfair and deceptive
trade practices. Plaintiff contends that, under the terms of
the policy of insurance it issued, they have no obligation to
defend or indemnify because the claims do not amount to
accidents as defined under applicable North Carolina law.
of the insurance policy reveals that it covers legal
obligations as a result of bodily injury or property damage.
Specifically, coverage is triggered when “bodily
injury” or “property damage” is caused by
an “occurrence” that “occurs during the
policy period.” (Doc. #16 at 6-7). The policy defines
an occurrence as “an accident, including continuous or
repeated exposure to substantially the same general harmful
conditions.” Id. Specific exclusions to this
policy include property damage to “personal property in
the care, custody or control of others” and
“‘bodily injury' or ‘property
damage' expected or intended from the standpoint of the
insured.” Id. While “accident” is
not defined within the policy, North Carolina law provides
the definition of “an unforeseen event, occurring
without the will or design of the person whose mere act
causes it; an unexpected, unusual, or undesigned occurrence;
the effect of an unknown cause, or, the cause being known, an
unprecedented consequence of it; a casualty.” Waste
Mgmt. of the Carolinas, Inc. v. Peerless Ins. Co., 315
N.C. 688, 694 (1986).
judgment is warranted “if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). A factual dispute is genuine “if
the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is
material only if it may affect the suit's outcome under
governing law. Id. The movant has the “initial
responsibility of informing the district court of the basis
for its motion, and identifying those portions of the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
which it believes demonstrate the absence of a genuine issue
of material fact.” Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986) (internal citations omitted). The
burden then shifts to the nonmoving party. That party
“must set forth specific facts showing that there is a
genuine issue for trial.” Id. at 322 n.3. The
nonmoving party may not rely upon mere allegations or denials
of allegations in pleadings to defeat a motion for summary
judgment. Id. at 324. Instead, that party must
present sufficient evidence from which “a reasonable
jury could return a verdict for the nonmoving party.”
Anderson, 477 U.S. at 248; accord Sylvia Dev.
Corp. v. Calvert Cnty., Md., 48 F.3d 810, 818 (4th Cir.
court views evidence and any inferences from evidence in the
light most favorable to the nonmoving party.
Anderson, 477 U.S. at 255. “‘Where the
record taken as a whole could not lead a rational trier of
fact to find for the nonmoving party, there is no genuine
issue for trial.'” Ricci v. DeStefano, 557
U.S. 557, 586 (2009) (quoting Matsushita v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986)). The question posed by
summary judgment is whether the evidence “is so
one-sided that one party must prevail as a matter of
law.” Anderson, 477 U.S. at 252.
North Carolina Law Controls
the Court finds that North Carolina law controls. North
Carolina courts interpret insurance contracts according to
the law of the place where the policy is made. Roomy v.
Allstate Ins. Co., 256 N.C. 318, 322 ( N.C. 1962);
see also NC. Gen. Stat. § 58-3-1 (2017)
(“All contracts of insurance . . . in this State shall
be deemed to be made therein . . . and are subject to the
laws thereof”). Under these rules, “substantive
law of the state where the last act to make a binding
contract occurred, usually delivery of the policy, controls
the interpretation of the contract.” Fortune Ins.
Co. v. Owens, 351 N.C. 424, 428 (2000). Here, the policy
in question was delivered to defendants in North Carolina
and, as a result, North Carolina law controls in this matter.
Summary Judgment is Appropriate
court also finds that summary judgment is appropriate, as
North Carolina courts recognize that issues concerning the
coverage provided by insurance are properly determined at the
summary judgment stage rather than trial. Certain
Underwriters at Lloyd's London v. Hogan, 147
N.C.App. 715, 718 (2001). “An insurer's duty to
defend is ordinarily measured by the facts as alleged in the
pleadings.” Waste Mgmt., 315 N.C. at 691. When
the pleadings state facts demonstrating that the alleged
injury is covered by the policy, then the insurer has a duty
to defend, whether or not the insured is ultimately liable.
Id. (citing Strickland v. Hughes, 273 N.C.
481, 487 (1968). Conversely, when pleadings allege facts that
indicate the event in question is not covered, and the
insurer has no knowledge that the facts are otherwise, it is
not bound to defend. Id.
Coverage for the ...