Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_07-cv-00809/USCOURTS-almd-2_07-cv-00809-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:2201 Declaratory Judgement

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IN THE DISTRICT COURT OF THE UNITED STATES FOR THE

MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

NATIONWIDE PROPERTY AND )

CASUALTY COMPANY, )

)

Plaintiff, )

) CIVIL ACTION NO.

v. ) 2:07cv809-MHT

) (WO) 

LEO LACAYO and M.F., a )

minor, by and through her )

parent and next friend, )

Vicki Flowers, )

)

Defendants. )

OPINION

Relying on the Declaratory Judgment Act, 28 U.S.C.

§ 2201, plaintiff Nationwide Property and Casualty

Company brings this lawsuit against defendant Leo Lacayo

and defendant M.F., a minor, by and through her parent

and next friend, Vicki Flowers, concerning the nature and

extent of Lacayo’s insurance coverage with Nationwide and

the nature and extent of any coverage obligations in

favor of M.F. This court’s jurisdiction is properly

invoked pursuant to 28 U.S.C. § 1332 (diversity). 

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Based on the evidence presented at a nonjury trial,

the court finds that Lacayo’s insurance policy

unambiguously precludes coverage for this incident with

the exception of an allotment of up to $ 1,000 for

potential damage to M.F.’s property.

I. FACTS

In April 2007, seven-year-old M.F. was riding her

bicycle on the sidewalk when she saw a barking dog on a

chain at the far end of the driveway belonging to 3106

Brentwood Drive. She turned her bicycle around and

started back down the sidewalk, but the dog broke free of

his chain and began to chase her. The dog then attacked

M.F., who was left with two deep puncture wounds in her

upper right arm, a puncture wound and laceration on both

shoulders, and a puncture wound on the back of her left

thigh. When M.F.’s grandmother went back to 3106

Brentwood Drive to retrieve M.F.’s bicycle, she confirmed

that the occupants of the house had a big dog. The dog

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turned out to be Lacayo’s pet dog, a Bullmastiff named

Moses. 

Montgomery Police Department Animal Control records

indicate that Moses had attacked a woman and her dog in

July 2006; Moses inflicted a puncture wound to the back

of the woman’s left arm. Lacayo notified Nationwide,

with whom he had homeowner’s insurance, about the attack

on M.F. a few months after it occurred. Nationwide

responded with a reservation of rights letter discussing

potential coverage issues. Later, Nationwide filed the

instant suit to determine its liabilities under Lacayo’s

policy. M.F. has not yet filed a state-court lawsuit

seeking damages.

II. DISCUSSION

A. Court’s Discretion to Hear 

Declaratory-Judgment Action

 Before turning to the substance of this case, the

court must address its discretion to entertain this

action under the Declaratory Judgment Act. A federal

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district court has broad discretion in the exercise of

its jurisdiction over declaratory-judgment actions. See,

e.g., Brillhart v. Excess Insurance Co., 316 U.S. 491

(1942); Angora Enterprises, Inc. v. Condominium Ass’n of

Lakeside Village, Inc., 796 F.2d 384, 387-88 (11th Cir.

1986) (per curiam). The terms of the Declaratory

Judgment Act establish this discretion: “In a case of

actual controversy within its jurisdiction, ... any court

of the United States, upon the filing of an appropriate

pleading, may declare the rights and other legal

relations of any interested party seeking such

declaration.” 28 U.S.C. § 2201. 

This discretion becomes particularly important if the

action in federal court raises issues of state law that

are “being presented contemporaneously to state courts.”

Michigan Tech Fund v. Century Nat’l Bank of Broward, 680

F.2d 736, 742 (11th Cir. 1982). Where, as here, there is

no underlying state-court proceeding, the Eleventh

Circuit Court or Appeals has held that a district court

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* This conclusion, based on a per se rule, strikes

the court as being contrary to the Supreme Court’s

emphasis on the district court’s discretion to hear

declaratory judgment actions. See Sherwin-Williams Co.

v. Holmes County, 343 F.3d 383, 394 (5th Cir. 2003)

(“This court finds that a per se rule requiring a

district court to hear a declaratory judgment action is

inconsistent with the discretionary Brillhart and Wilton

standard. ... The lack of a pending parallel state

proceeding should not automatically require a district

court to decide a declaratory judgment action, just as

the presence of a related state proceeding does not

automatically require a district court to dismiss a

federal declaratory judgment action.”). However, even in

the absence of the Eleventh Circuit’s per se rule, this

court would still entertain this declaratory-judgment

action. 

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abuses its discretion by choosing to “dismiss a

declaratory judgment action in favor of a state court

proceeding that does not exist.” Federal Reserve Bank of

Atlanta v. Thomas, 220 F.3d 1235, 1247 (11th Cir. 2000).

This court is therefore bound by Eleventh Circuit

precedent to decide this declaratory-judgment action.*

See Michigan Tech Fund, 680 F.2d at 742 (11th Cir. 1982).

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B. Insurance Policy Coverage

The court may now turn to the meat of this dispute:

whether Lacayo’s insurance policy covers harms arising

from the dog-bite incident. 

Under Alabama law, clear and unambiguous policy

language must be enforced by the court. Am. & Foreign

Ins. Co. v. Tee Jays Manuf. Co., Inc., 699 So.2d 1226,

1228 (Ala. 1997). If, however, “an insurance policy is

ambiguous in its terms, the policy must be construed

liberally in favor of the insured, and exceptions to

coverage must be interpreted as narrowly as possible in

order to provide maximum coverage to the insured.”

Allstate Indem. Co. v. Lewis, 985 F.Supp. 1341, 1345

(M.D. Ala. 1997) (Thompson, J.). The only dispute

between the parties in this suit is whether the insurance

policy is wholly unambiguous in its exclusions of any

claims that could be brought by M.F. against Lacayo or

whether it contains ambiguities such that Nationwide

would be liable for those claims. 

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The court finds that the language of the policy is

unambiguous. Each provision is discussed in turn.

1. Liability exclusions to coverage agreements

Liability Exclusion (o) provides that the policy does

not cover personal liability (under Coverage E) or

medical payments to others (under Coverage F) “caused by

... any dog with a prior history of causing bodily injury

to a person ... established through insurance claim

records, or through the records of local public safety,

law enforcement, or other similar regulatory agency.”

Homeowners Policy, Pl.’s Ex. 1 at H3. The evidence is

undisputed that Lacayo’s dog, Moses, had previously

caused bodily injury to another person. 

M.F. disputes the applicability of this exclusion,

arguing that it applies only if the animal is the “sole”

cause of the injury, Def’s. Proposed Findings (Doc. No.

44), at 3-4. M.F. argues that Lacayo’s negligence in

tying up the dog constitutes an additional cause of the

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injury that renders the exclusion inapplicable.

Regardless of whether Lacayo’s negligence constitutes an

additional cause, the court sees no evidence for the

“sole cause of the injury” proposition in the language of

the policy itself. Instead, the plain language of the

policy shows that it does not cover personal liability or

medical payments caused by Moses’s attacking M.F., and it

is therefore necessary to examine what is and is not

included in the definition of those terms. 

a. Personal liability under Coverage E

Coverage E states that Nationwide “will pay damages

an insured is legally obligated to pay due to an

occurrence resulting from negligent personal acts or

negligence arising out of the ownership, maintenance, or

use of real or personal property.” Homeowners Policy,

Pl.’s Ex. 1 at G1. The operative word in this provision

is “occurrence,” which is defined as “bodily injury or

property damage resulting from an accident.” Id.

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“Bodily injury” includes “resulting care, sickness or

disease, loss of services, or death” but explicitly

excludes “emotional distress, mental anguish,

humiliation, mental distress or injury, or any similar

injury unless the direct result of bodily harm.” Id.

As a result of the language of these provisions,

emotional distress is not covered under Coverage E, and,

therefore, M.F. argues, it is not among those damages

made unavailable to her by the operation of Liability

Exclusion (o). The flaw in this reasoning is that no

other provision in the policy establishes Nationwide’s

liability to pay for emotional distress. Indeed, it

appears that Nationwide--by limiting its personal

liability coverage to that arising out of an

“occurrence,” defining “occurrence” to include only

“bodily injury” and “property damage,” and defining

“bodily injury” to exclude emotional distress--has

crafted a policy that protects it from ever having to pay

damages for emotional distress. In Alabama, insurance

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companies “have the right to limit their liability and to

write policies with narrow coverage.” Altiere v. Blue

Cross and Blue Shield of Alabama, 551 So.2d 290, 292

(Ala. 1989). Nationwide has done just that. Exclusion

(o) thus protects it from liability for damages for

bodily injury, and the policy as a whole protects it from

liability for damages for emotional distress. 

b. Medical payments to others under Coverage F

Coverage F provides that Nationwide will pay “the

necessary medical and funeral expenses incurred within

three years after an accident causing bodily injury,” and

it includes injuries “caused by an animal owned by or in

the care of an insured.” Liability Exclusion (o),

however, serves to make this entire section off-limits to

those seeking repayment of medical expenses caused by a

dog with a prior history of causing bodily injury to a

person. 

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2. Claims arising under “Additional Liability

Coverages”

In addition to Coverages E and F, the Nationwide

policy includes several other categories of coverage

which, notably, are not subject to liability exclusions,

including Exclusion (o). Of potential relevance to this

action is additional coverage for “first aid expenses”

and “damage to the property of others.” Pl.’s Ex. 1 at

G2. Under “first aid expenses,” the policy provides that

Nationwide “will pay expenses for first aid to others

incurred by an insured for bodily injury covered under

this policy.” Id. (emphasis added). The evidence shows,

however, that the insured, Lacayo, has incurred no

expenses for M.F.’s treatment. Moreover, there is no

evidence that M.F. even received any first-aid treatment;

the only evidence in the record are actual medical bills

from subsequent treatment in the emergency room. Absent

both evidence of expenses incurred by the insured and

evidence of the administration of first aid, there can be

no recovery under Nationwide’s policy.

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For “damage to the property of others,” Nationwide

will pay for damage “caused by an insured regardless of

legal liability,” up to $ 1,000 per occurrence. Counsel

for Nationwide agreed at trial that Nationwide would be

liable here for damages under this provision. This

provision is narrow, but nothing in the policy prevents

M.F. from recovering pursuant to its terms. 

* * *

For the foregoing reasons, a declaration should be

entered that, as stated above, Lacayo’s insurance policy

unambiguously precludes coverage with the exception of an

allotment of up to $ 1,000 for potential damage to M.F.’s

property. An appropriate judgment will be entered.

DONE, this the 3rd day of November, 2008.

 /s/ Myron H. Thompson 

UNITED STATES DISTRICT JUDGE

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