Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-07-02061/USCOURTS-ca8-07-02061-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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1

The Honorable John A. Jarvey, United States District Judge for the Southern

District of Iowa, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 07-2061

___________

Medical Liability Mutual Insurance *

Company, *

 *

Plaintiff - Appellee, *

*

v. *

*

Alan Curtis LLC; Alan Curtis; *

Evergreene Properties of North * Appeal from the United States

Carolina, LLC; Alan Curtis * District Court for the

Enterprises, Inc., * Eastern District of Arkansas.

*

Defendants - Appellants, *

*

------------------------- *

*

Arkansas Advocates for Nursing *

Home Residents, *

*

Amicus Curiae. *

___________

Submitted: January 14, 2008

Filed: March 10, 2008

___________

Before LOKEN, Chief Judge, MURPHY, Circuit Judge, and JARVEY,1

 District

Judge.

___________

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2

The Honorable James M. Moody, United States District Judge for the Eastern

District of Arkansas.

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MURPHY, Circuit Judge.

Medical Liability Mutual Insurance Company (Insurer) brought this action

against Alan Curtis and Evergreene Properties of North Carolina, LLC (Evergreene)

seeking a declaratory judgment regarding its duties to defend and indemnify them

against claims in an Arkansas state court action brought by the estate of Annie

Redden. All parties filed motions for summary judgment. The district court2

concluded that Insurer had no duty to defend or indemnify Curtis, that it had a duty

to defend Evergreene on all claims in the underlying lawsuit, and that its duty to

indemnify Evergreene extended only to any judgment against it for breach of contract.

Curtis and Evergreene appeal. We affirm.

I.

Annie Redden entered into a contract with Evergreene and moved into its

Crestpark Inn of Marianna (Crestpark) nursing home facility in 1997. Evergreene

holds the medical needs license for Crestpark and contracted with Alan Curtis

Enterprises, Inc. (Curtis Enterprises) to provide onsite management and operational

services at Crestpark and seven other Evergreene nursing home facilities in Arkansas.

Redden moved out of Crestpark on January 9, 2003 and died in November 2003. 

On March 3, 2005 Redden's estate initiated a state court action in Arkansas

against Evergreene, Curtis Enterprises, and Alan Curtis, an employee of Curtis

Enterprises, seeking compensatory and punitive damages for negligence, wrongful

death, medical malpractice, and violations of the Arkansas Long Term Care Resident's

Rights Act (RRA) (Ark. Code § 20-10-1201 et seq.) and other regulations. The

estate's fourth amended complaint, filed on December 20, 2006, upon which this

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action is based named Evergreene and Alan Curtis, but not Curtis Enterprises as

defendants and added a breach of contract claim against "Defendant." 

Evergreene is the named insured under a primary policy and a supercover

umbrella policy originally issued by Fireman's Fund Insurance Company, but later

acquired by Insurer which succeeded to all of the obligations under the policies. The

primary policy covers claims on an "occurrence" basis, that is claims are covered only

if they arise "from incidents that occur while the policy is in force." The policy was

in force from January 15, 2000 to January 15, 2001 and therefore does not cover any

claim arising from incidents which occurred outside that period. The underlying

lawsuit was initiated on March 3, 2005, after which Evergreene notified Insurer and

demanded that it provide coverage under the primary policy both for its defense and

indemnity. 

Insurer brought this action for a declaratory judgment regarding its rights and

obligations under the policies. Both sides moved for summary judgment. Insurer

argued that each of the estate claims has a two or three year limitations period. Claims

with a two year statute of limitations would be timely only if they had arisen from

incidents occurring on or after March 3, 2003, since the state court action was initiated

on March 3, 2005. Timely claims with three year statutes of limitation must have

arisen from incidents occurring on or after March 3, 2002. Since the policy does not

cover claims which arise from incidents occurring after the policy period ended on

January 15, 2001, Insurer asked the court to declare that it was not obligated to defend

or indemnify on any of the estate claims. Appellants countered that some of the estate

claims should be subject to a five year limitations period, which would trigger

coverage under the policy because they could arise from incidents occurring as early

as March 3, 2000, a date within the policy period. Appellants also argued that the

continuous treatment doctrine tolled the statute of limitations on the estate's

negligence claims because the estate alleged injuries resulting from a continuous

course of treatment, part of which may have occurred during the policy period.

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The district court concluded that the estate's breach of contract claim against

"Defendant" had a five year limitations period under Arkansas Code § 16-56-111 and

that it applied only to Evergreene because Redden never contracted with Curtis.

Although Insurer was held to have a duty to defend and indemnify Evergreene against

the contract claim because that claim may be based on an incident which occurred

during the policy period, Insurer has no duties to Curtis with regard to that claim. The

court also decided that the duty to defend Evergreene on the contract claim triggered

a duty to defend against all of the estate's claims, but not necessarily to indemnify it.

The estate's other claims were barred by applicable statutes of limitation or were based

on incidents occurring outside the policy period, and Insurer thus had no duty to

indemnify Evergreene or Curtis on any of them. 

Since the original complaint was filed on March 3, 2005, and the covered

period for occurrences ended on January 15, 2001, the court concluded the case was

filed too late to obligate Insurer to cover the wrongful death and medical malpractice

claims which have a two year limitations period. That was also true for negligence,

statutory and regulatory violations, and claims under the RRA which the court

concluded have a three year limitations period. In addition, the continuous treatment

doctrine was held not to toll any of the statutes of limitation. Evergreene and Curtis

appeal.

On appeal Evergreene and Curtis argue that once the district court determined

that Insurer had a duty to defend Evergreene on the contract claim, triggering a duty

to defend on all of the estate claims, it should not have reached any questions

regarding the duty to indemnify on the negligence, wrongful death, and RRA claims

or the duties to defend or indemnify Curtis. They contend that resolution of those

coverage questions turns on factual issues to be presented in the underlying lawsuit;

to answer the questions in this action raises the risk of inconsistent judgments. Insurer

counters that the district court acted within its discretion by resolving all questions

about the scope of its duties to defend and indemnify appellants and points out that it

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is not a party to the underlying lawsuit where different interests and issues are

involved. 

The RRA does not include a limitations provision, and Evergreene, Curtis, and

Amicus Arkansas Advocates for Nursing Home Residents (Advocates) argue that the

district court erred by concluding that claims under it are subject to a three year

limitations period under Arkansas Code § 16-56-105. Evergreene and Curtis argue

for a five year limitations period, either under § 16-56-111 on the theory that the claim

sounds in contract or under § 16-56-115 because the claim does not fall under any

other Arkansas statute of limitations. Advocates urge us to certify the RRA

limitations period question to the Arkansas Supreme Court and argue alternatively that

claims under the RRA should have no limitations period or five years. Insurer argues

that a party may not request certification after an adverse judgment, that Advocates

do not have standing to request certification of an issue to the Arkansas Supreme

Court, and that the district court did not err in concluding that the RRA claim has a

three year statute of limitations because it either sounds in tort or is a statutory source

of liability, both of which have a three year limitations period under Arkansas law.

Evergreene and Curtis argue that the district court also erred by concluding that

the continuous treatment doctrine did not toll the statute of limitations on the

negligence and RRA claims and by deciding the issue because it involves a factual

dispute which should be resolved in the underlying lawsuit. Insurer counters that the

district court was correct in concluding that the complaint did not allege facts which

could have implicated the continuous treatment doctrine and that regardless, the

doctrine would not apply as a matter of law to a relationship between a nursing home

and its client.

Curtis argues that the district court erred by concluding that Insurer does not

have a duty to defend him coextensive with its duty to defend Evergreene. Curtis says

that because Curtis Enterprises acted as Evergreene's agent in the management and

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operation of Crestpark, the policy obligates Insurer to defend him to the same extent

it must defend Evergreene. Insurer counters that Curtis was not a party to the contract

between Redden and Evergreene on which the breach of contract claim and the duty

to defend are based.

II.

We review for an abuse of discretion a district court's decision to exercise

jurisdiction over a declaratory judgment action in which there are parallel state court

proceedings, giving great deference to its analysis and conclusions. See Wilton v.

Seven Falls Co., 515 U.S. 277, 283, 286, 288 (1995); Scottsdale Ins. Co. v. Detco

Indus., Inc., 426 F.3d 994, 997 (8th Cir. 2005). An insurer who is not a party to the

parallel proceeding "is entitled to have the extent of the coverage of its policy

declared," Scottsdale Insurance Co. v. Flowers, 513 F.3d 546, 559 (6th Cir. 2008),

quoting American States Insurance Co. v. D'Atri, 375 F.2d 761, 763 (6th Cir. 1967),

and a district court is not prohibited from answering all questions presented to it on

declaratory judgment, see Royal Indemnity Co. v. Apex Oil Co., 511 F.3d 788, 793

(8th Cir. 2008). Insurer is not a party to the underlying lawsuit, which involves

different interests and issues than those presented here, and the district court did not

abuse its discretion by resolving all of Insurer’s questions regarding the scope of its

duties to defend and indemnify Evergreene and Curtis in the underlying lawsuit.

We review a district court's grant of summary judgment de novo, "viewing the

record in the light most favorable to the nonmoving party; summary judgment is

proper if there are no genuine issues of material fact and the moving party is entitled

to judgment as a matter of law." R.D. Offutt Co. v. Lexington Ins. Co., 494 F.3d 668,

672 (8th Cir. 2007). We review the district court's determinations of law de novo.

Highland Indus. Park, Inc. v. BEI Def. Sys. Co., 357 F.3d 794, 796 (8th Cir. 2004).

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A.

In the fourth amended complaint in the underlying lawsuit the estate seeks

compensatory and punitive damages based on its claim that Evergreene and Curtis

negligently, willfully, and recklessly violated the RRA resulting in Redden's injuries

and eventual death. The RRA, Arkansas Code § 20-10-1201 et seq., seeks to protect

residents of long term care facilities by requiring licensed facilities to meet certain

requirements, § 20-10-1203, and by granting rights to residents. Residents now have

the right to receive information about the facility, control their own finances, choose

their physicians, access information about their medical condition and treatment, and

receive adequate and appropriate healthcare. § 20-10-1204. Residents are also

provided a civil remedy for violation of any enumerated right or for a failure of "an

employee of the long-term care facility. . .to do something which a reasonably careful

person would do or did something which a reasonable person would not do. . . ," § 20-

10-1209. 

Arkansas courts have not explicitly addressed which limitations period should

apply to claims brought under the RRA. Amicus Advocates urge us to certify this

question to the Arkansas Supreme Court. Insurer attacks both Advocates' standing to

raise the issue as an amicus and the propriety of requesting certification after an

adverse judgment. Certification of the RRA limitations question at this stage, after

the district court has issued its judgment and after we have had full briefing and oral

argument, would cause undue delay. The task of a "federal court[] sitting in diversity

[is to] attempt to predict how the [forum] state's highest court would resolve [a]

question" which it has not squarely decided. Highland, 357 F.3d at 798. By ruling

on the limitations issue, the district court helped move this litigation forward. We

review its determination of state law de novo. Salve Regina Coll. v. Russell, 499 U.S.

225, 231 (1991); Whirlpool Corp. v. Ritter, 929 F.2d 1318, 1321 n.4 (8th Cir. 1991).

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Chapter 56 of Arkansas Code Title 16 contains the limitation periods for actions

brought in Arkansas. § 16-56-101 et seq. These statutes of limitation do not apply

if a statute already includes a limitations period, § 16-56-103, but they do apply to all

other common law and statutory actions. The statutes of limitation include § 16-56-

104 (one year for actions including assault, battery, and slander), § 16-56-105 (three

years for actions including trespass, libel, and "[a]ll actions founded on any contract

or liability, expressed or implied"), § 16-56-106 (two years for medical malpractice),

§ 16-56-111 (five years for actions to enforce written agreements), and § 16-56-115

(catchall period of five years for actions not described by other sections in Chapter

56). The district court concluded that RRA claims have a three year limitations period

under § 16-56-105, either because they sound in tort or because they are express

liabilities by reason of the legislature's expression of liability.

Based on our review of Arkansas law we conclude that the Arkansas Supreme

Court, if presented with the issue of which limitations period applies to an RRA claim,

would decide that such a claim is subject to a three year limitations period under § 16-

56-105. This conclusion does not of course foreclose the Arkansas Supreme Court

from issuing an authoritative decision on this question of state law in a future case. 

As early as 1890 the Arkansas Supreme Court ruled that a statutorily created

liability had a three year limitations period unless that liability was part of a written

agreement which would then have a five year limitations period under what is today

§ 16-56-111. Davis' Estate v. Herrington, 13 S.W. 215, 215-16 (Ark. 1890) (liability

to pay child support created by bastardy statute has three year limitations period under

what is now Arkansas Code § 16-56-105). The supreme court has continued to

recognize that the statutory liability to pay child support in a divorce or bastardy

proceeding has a three year limitations period. Winston v. Robinson, 606 S.W.2d

757, 759-60 (Ark. 1980); Wilder v. Garner, 360 S.W.2d 192, 194 (Ark. 1962); but see

Green v. Bell, 826 S.W.2d 226, 228-29 (Ark. 1992) (questioning whether limitations

period for child support has been statutorily changed to ten years by 1987 amendment

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For example, a statutorily created liability which is recognized in a written

agreement would likely have a five year limitations period under § 16-56-111.

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to § 9-10-109). This precedent was then applied by the same court in a different type

of case in Nebraska National Bank v. Walsh, 59 S.W. 952 (Ark. 1900). 

Nebraska National Bank involved a statute which made corporate presidents

and secretaries liable for corporate debts incurred during any period in which the

officers failed to file certain financial information with the county clerk. The supreme

court decided that a three year limitations period applies, for "[h]aving reached the

conclusion that this is a statutory liability . . . , the statute of limitations would be [the

three year limitation] applicable to 'all actions founded upon any contract or liability,

expressed or implied, not in writing.'" Id., citing Sand. & H. Dig. § 4822; Rev. St.

1837, c. 91, § 6 (now Ark. Code § 16-56-105). Numerous Arkansas decisions have

relied on Nebraska National Bank in holding that claims under that and similar

corporate officer liability statutes have a three year limitations period. See Love v.

Couch, 28 S.W.2d 1067, 1071 (Ark. 1930) ("period of limitation applicable for the

enforcement of statutory liabilities is three years"); McDonald v. Mueller, 183 S.W.

751, 752 (Ark. 1916) (former § 859 creates statutory liability which has three year

limitations period under what is now§ 16-56-105); Zimmerman v. W. & S. Fire Ins.

Co., 181 S.W. 283 (Ark. 1915) (claim under former § 863 has three year statute of

limitations based on Nebraska National Bank).

Although the Arkansas Supreme Court has not squarely decided which

limitations period applies to an RRA claim, it has explicitly referred to an "[RRA]

claim [as] a statutory claim," Koch v. Northport Health Servs. of Ark., LLC, 205

S.W.3d 754, 762 (Ark. 2005). We have found no Arkansas case questioning the

general proposition that where a statute creates a liability but does not include a

limitations provision and no other statute of limitations applies,3

 a claim to enforce the

statutory liability is an action "founded on . . . liability, expressed or implied" under

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§ 16-56-105 and is subject to a three year limitations period. Other recent cases

support the district court's application of § 16-56-105 to the estate's RRA claim. See

Highland, 357 F.3d at 798 (§ 16-56-105 applies to private suits brought under

Arkansas Hazardous Waste Management Act); Chalmers v. Toyota Motor Sales,

USA, Inc., 935 S.W.2d 258, 261 (Ark. 1996) (§ 16-56-105 applies to statutory

liability under Arkansas franchise law), citing Winston, 606 S.W.2d at 759-60. We

conclude that the Arkansas Supreme Court would likely hold that an RRA claim is an

action based on a statutory liability which has a three year limitations period under §

16-56-105.

We also agree with the district court that it is possible that Arkansas courts

might determine that an RRA claim sounds in tort and is therefore subject to a three

year limitations period under Arkansas Code § 16-56-105. As Insurer argued in the

district court, the RRA essentially codifies the common law negligence standard. The

estate's complaint alleged that Redden's injuries were the "result of employees and/or

agents of Defendants, failing to do that, which a reasonably careful person would do

under [similar circumstances] . . . ." In Arkansas "[i]t is well settled that the gist of the

action as alleged [in the complaint] determines which statute of limitations applies."

Shelter Ins. Co. v. Arnold, 940 S.W.2d 505, 506 (Ark. App. 1997) (emphasis added);

see Ernest F. Loewer, Jr. Farms, Inc. v. Nat'l Bank of Ark., 870 S.W.2d 726, 728 (Ark.

1994); O'Bryant v. Horn, 764 S.W.2d 445, 445 (Ark. 1989).

Advocates argue that the RRA is more in the nature of a "privately enforceable"

civil rights law "than a codification of ordinary duties of care," however, because it

gives residents a remedy for deprivation of a wide range of enumerated rights

including freedom of choice in selecting a physician and the right to participate in

social and religious activities. If the Arkansas Supreme Court were to characterize

RRA claims as civil rights actions, it would no doubt look at the limitation periods

applied to such cases in Arkansas. A review of those cases suggests that a civil rights

action would likely be treated as a tort for limitations purposes. 

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The Arkansas Civil Rights Act, § 16-123-101 et seq., includes a one year

limitation period for employment discrimination claims, but none for other

enumerated rights under the act. Section 16-123-105(c) "specifically provides that

[Arkansas] state courts may look to state and federal decisions which interpret the

federal civil rights laws as persuasive authority" in guiding their interpretation of the

act. Faulkner v. Ark. Children's Hosp., 69 S.W.3d 393, 401 (Ark. 2002). The

Supreme Court has ruled that in diversity cases brought in federal court under 42

U.S.C. § 1983, the forum state's statute of limitations for tort actions should be

applied. Wilson v. Garcia, 471 U.S. 270, 276 (1985); see Ketchum v. City of W.

Memphis, Ark., 974 F.2d 81, 82 (8th Cir. 1992) (applying Arkansas's three year

personal injury statute of limitations to § 1983 action). We accordingly relied on

Wilson in concluding that Arkansas civil rights claims other than for employment

discrimination should be treated as torts for limitations purposes. See Birmingham

v. Omaha Sch. Dist., 220 F.3d 850, 855 (8th Cir. 2000). RRA actions would thus

likely be governed by the three year limitations period in § 16-56-105 if they are

reviewed under Arkansas law as civil rights actions.

Evergreene, Curtis, and Advocates argue that the RRA claim should be subject

either to a five year or to an indefinite limitations period, which could make at least

some of the incidents occurring during the policy period actionable, triggering

Insurer's duty to defend and indemnify Evergreene and possibly Curtis. Appellants

argue that the five year statute of limitations in § 16-56-111 for written contracts

should apply, because many of the rights under the RRA were included in the contract

between Redden and Evergreene. The RRA claim in the estate's fourth amended

complaint does not allege facts which could support a conclusion that the claim is

rooted in contract, however. Arkansas is a fact pleading state and looks to the facts

alleged in the complaint to determine the gist of the action. See McQuay v. Guntharp,

963 S.W.2d 583, 584-85 (Ark. 1998). The district court did not err in rejecting this

argument. See Ernest F. Loewer, Jr. Farms, 870 S.W.2d at 727-28 (facts alleged in

complaint indicated claim was for conversion despite party's characterization as

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contract action); O'Bryant, 764 S.W.2d at 445-46 (attaching bill of sale to complaint

did not convert action for fraud, misrepresentation, or negligence into a contract

action). 

Another argument Evergreene, Curtis, and Advocates advance for a five year

statute of limitations on the RRA claim is that such a claim is not described explicitly

by any limitations provision in Chapter 56 and so falls under the five year catchall in

§ 16-56-115. Alternatively, they argue where there is doubt as to which statute of

limitations applies, the question should be resolved in favor of the longer limitation.

Ballheimer v. Serv. Fin. Corp., 728 S.W.2d 178, 179 (Ark. 1987). Because we

conclude that the Arkansas Supreme Court would likely hold that the estate's RRA

claim has a three year statute of limitations under § 16-56-105, we need not look to

the catchall statute. 

Advocates argue in the alternative that an RRA claim should not have a

limitations period at all. In support of this argument they cite Acxiom Corp. v.

Leathers, 961 S.W.2d 735 (Ark. 1998), where the court held that the Arkansas

legislature did not include a limitations period in a tax refund statute because it did not

want to limit taxpayers' ability to claim a refund. Arkansas courts have recognized,

however, that where a statute contains no specific statute of limitations, claims arising

under it may still be time barred, e.g., Winston, 606 S.W.2d at 759-60, and that

statutes of limitation "encourage the prompt filing of claims by allowing no more than

a reasonable time within which to make a claim so a defendant is protected from

having to defend an action in which the truth-finding process would be impaired by

the passage of time." McEntire v. Malloy, 707 S.W.2d 773, 776 (Ark. 1986). In

Acxiom there were no adverse parties and therefore no risk that one party would be

prejudiced by having to defend itself against a stale claim as there is in this case. We

find no support for the argument that the legislature would have intended to have no

limitation period and to allow a party to file an RRA claim even decades after the

alleged injuries. 

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We conclude that the district court did not err in its conclusions that a three year

limitations period applied to the estate's RRA claim and that Insurer had no duty to

indemnify Evergreene and Curtis in respect to it.

B.

Arkansas courts recognize the continuous treatment doctrine, "which tolls the

two-year statute of limitations for medical-malpractice actions until the medical

treatment is discontinued." Posey v. St. Bernard's Healthcare, Inc., 226 S.W.3d 757,

761 (Ark. 2006); Lane v. Lane, 752 S.W.2d 25, 27 (Ark. 1988) ("continuous treatment

doctrine becomes relevant when the medical negligence consists of a series of

negligent acts, or a continuing course of improper treatment" (emphasis added)). A

thorough search of case law from Arkansas and other jurisdictions across the country

has not produced a single case in which this doctrine has tolled the limitations period

on a claim other than malpractice, and its application in Arkansas appears to be

limited to medical malpractice claims. See Howard v. Ozark Guidance Ctr., 930

S.W.2d 341, 342 (Ark. 1996); FDIC v. Deloitte & Touche, 834 F.Supp. 1129, 1148

(E.D. Ark. 1992) (recognizing that only two states extend the doctrine to accounting

malpractice and Arkansas is not one of them).

Arkansas imposes a two year limitations period on medical malpractice actions,

which runs from the date of the alleged wrongful act, Arkansas Code § 16-114-203(b),

or from the end of a continuous course of medical treatment under the continuous

treatment doctrine, Wright v. Sharma, 956 S.W.2d 191, 193 (Ark. 1997). Even if we

assumed that the continuous treatment doctrine applied based on the facts alleged by

Redden's estate, it could not have tolled the statute of limitations on the medical

malpractice claim beyond January 9, 2003, Annie Redden's last day in residence and

the last day on which she received any care from defendants. The original complaint

was filed more than two years later on March 3, 2005. Accordingly, the estate's

medical malpractice claim is time barred regardless of whether the continuous

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treatment doctrine would operate to toll the statute of limitations. The district court

did not err in concluding that Insurer had no duty to indemnify Evergreene or to

defend or indemnify Curtis on that claim.

C.

The pleadings against an insured determine an insurer's duty to defend, which

is broader than the duty to indemnify because it arises where there is a possibility that

the injury or damages may fall within the policy coverage. Ison v. S. Farm Bureau

Cas. Co., 221 S.W.3d 373, 378 (Ark. App. 2006). The fourth amended complaint in

the underlying lawsuit alleges breach of contract against "Defendant," stating that

"[u]pon becoming a resident at Crestpark, Ms. Redden entered into an express or

implied contract with Defendant, whereby for consideration duly paid by her . . .

Defendant was to provide her a place of residence and to provide her nutrition,

personal care, and nursing care." Redden's contract was with Evergreene, and Curtis

makes no claim that Redden and Curtis Enterprises ever entered into a contract. The

fourth amended complaint therefore makes a breach of contract claim only against

defendant Evergreene. A provision in Section D of the Insurer policy states that

"[e]ach [insured] is covered separately," so even if an Arkansas court found that Curtis

were an "insured" under the policy Insurer's duty to defend Evergreene on the breach

of contract claim would not create a derivative duty to defend Curtis on any of the

claims against him. 

Curtis appears to argue that Insurer's duty to defend him is coextensive with its

duty to defend Evergreene because Curtis and Evergreene have an agency relationship

and the policy states that Insurer will defend and indemnify against alleged injuries

resulting from the actions of Evergreene's agents. The breach of contract claim which

triggered Insurer's duty to defend Evergreene was only brought against Evergreene,

however, not Curtis or Curtis Enterprises. Accordingly, the district court did not err

in concluding that Insurer has no duty to defend Curtis in the underlying lawsuit.

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III.

For these reasons we conclude that the district court did not err by deciding that

the only claim in the underlying lawsuit covered under Insurer's policy is the Redden

estate's breach of contract claim against Evergreene, that Insurer has a duty to defend

and indemnify Evergreene on that claim and therefore also a duty to defend it on all

of the estate's claims against it, and that Insurer has no duty to defend or indemnify

Curtis. Accordingly, we affirm the judgment of the district court.

JARVEY, District Judge, dissenting.

Under Arkansas law, the pleadings determine an insurer’s duty to defend and

that duty arises when there is a possibility that the injury or damage may fall within

the policy coverage. Madden v. Continental Cas. Co., 922 S.W.2d 731, 734 (Ark. Ct.

App. 1996) (emphasis added). “It is the allegations made against the insured, however

groundless, false, or fraudulent such allegations may be, that determine the duty of the

insurer to defend the litigation against its insured.” Id. The uncertainty regarding the

statute of limitations applicable to the claims in the underlying lawsuit causes me to

conclude that coverage is still possible. For that reason, I respectfully dissent.

The underlying lawsuit alleges that Ms. Redden was harmed by Evergreene and

Curtis’ negligent acts and omissions to act, which occurred at least weekly, if not

daily, throughout her stay at the Crestpark Retirement Inn from 1997 to 2003. The

policy periods on both the primary and the excess liability policies in this case are

January 15, 2000 to January 15, 2001. The policies at issue in this lawsuit provide:

We will pay damages and defend you and others covered

under this section only when:

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• the providing or failure to provide professional

services occures [sic] during the policy period shown

on the Declarations;

• the providing or failure to provide professional

services took place in the coverage territory.

We will defend any claim brought against you and others

covered under this policy seeking damages that are covered

under any section of this policy. We will do this even if the

allegations of the claim are groundless, false or fraudulent.

The district court and this court make good arguments in favor of a three-year

statute of limitations. I do not believe that this is enough to relieve the insurer of its

duty to defend both Evergreene and Curtis in this matter. The arguments in favor of

a five year statute of limitations pursuant to Arkansas Code § 16-56-111 or § 16-56-

115 are not frivolous. To say that the Arkansas Supreme Court would likely find a

three year statute of limitations, does not foreclose the possible application of a longer

statute. As set forth above, the policy requires that the Insurer defend even

“groundless, false, or fraudulent” claims, which is consistent with an insured’s duty

to defend under Arkansas law when there is any possibility that injury falls within the

policy coverage. 

I believe the district court erred in deciding that the Insurer had no duty to

defend Curtis against the tort claims and, therefore, all claims in this matter. Whether

or not there is a duty to indemnify Curtis and/or Evergreene depends on the facts

established in the underlying trial, making summary judgment inappropriate. Madden,

922 S.W.2d at 734. Accordingly, I would reverse the judgment of the district court.

 

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Appellate Case: 07-2061 Page: 16 Date Filed: 03/10/2008 Entry ID: 3410942