Court Opinion

ID: 44982
Source: CourtListenerOpinion
Date Created: 2010-04-25 22:31:14+00
Date Added: 2024-06-11T14:56:19.640056
License: Public Domain

[DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT           FILED
                    ________________________ U.S. COURT OF APPEALS
                                                       ELEVENTH CIRCUIT
                                                          NOV 2, 2006
                            No. 06-12697
                                                        THOMAS K. KAHN
                       Non-Argument Calendar
                                                            CLERK
                     ________________________
                 D. C. Docket No. 02-02874-CV-AR-S

DAVID KING, an individual,
MICHAEL FOSTER, an individual,
SUNCOAST FRINGE BENEFITS, INC.,
a corporation,
CONSOLIDATED MARKETING GROUP, INC.,
a corporation,

                                                         Plaintiffs-Appellants,

                                versus

NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PENNSYLVANIA, at al.,

                                                         Defendants,

NATIONWIDE MUTUAL INSURANCE COMPANY,

                                                         Defendant-Appellee.
                     ________________________

              Appeal from the United States District Court
                 for the Northern District of Alabama
                    _________________________

                         (November 2, 2006)
Before TJOFLAT, DUBINA and MARCUS, Circuit Judges.

PER CURIAM:

       David King, Michael Foster, Suncoast Fringe Benefits, Inc., and Consolidated

Marketing Group, Inc. (collectively, “King Plaintiffs” or “Appellants”) appeal the

district court’s partial summary judgment in favor of Nationwide Union Insurance

Company (“Nationwide”) in this indemnification action alleging violations of

Alabama and Florida law,1 including that Nationwide breached its insurance contracts

with the Plaintiffs and engaged in fraud, tortious interference, bad faith, negligence,

and wantonness, in connection with its failure to indemnify or defend the Plaintiffs

in the underlying tort action, McFarlin v. Conseco, Inc., Case No. CV-99-AR-2282-S

(N.D. Ala. filed Apr. 14, 2000).2 The district court held that the King Plaintiffs’ bad-

faith claim failed under Alabama law, based both on the merits and for lack of

standing, and that the negligence and wantonness claims were only attempts, that the

       1
          In an earlier order, the district court determined that Alabama law controlled the underlying
torts claims and Florida law applied to interpretation of the insurance contracts.
       2
          Generally, appeals may be taken only from “final decisions of the district courts” which end
the litigation. 28 U.S.C. § 1291. When a district court grants judgment with respect to fewer than
all of the claims or parties involved in an action, an immediate appeal is proper when the court
directs that its judgment be deemed final in accordance with Rule 54(b) of the Federal Rules of Civil
Procedure. Rule 54(b) permits “the entry of a final judgment as to one or more but fewer than all
of the claims or parties only upon an express determination that there is no just reason for delay and
upon an express direction for the entry of judgment.” In the present case, we have jurisdiction to
review the district court’s partial summary judgment because the district court made the proper
certification and entered a separate judgment as to the claims addressed in its partial summary
judgment, pursuant to Fed. R. Civ. P. 54(b).

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court termed “transparent,” by the King Plaintiffs to reassert the unsuccessful bad-

faith claim. We affirm.

      We review the district court’s order granting summary judgment de novo. See

Madray v. Publix Supermarkets, Inc., 208 F.3d 1290, 1296 (11th Cir. 2000). A

motion for summary judgment should be granted “if the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56 (c). “Where the

record taken as a whole could not lead a rational trier of fact to find for the non-

moving party, there is no ‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v.

Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting First Nat’l Bank of Arizona

v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).

      The parties are familiar with the lengthy procedural history and the relevant

underlying facts and thus we only summarize them here. In the underlying McFarlin

action, which was filed on August 31, 1999, the plaintiffs (“McFarlin Plaintiffs”)

sued the King Plaintiffs for fraud, tortious interference, conspiracy, breach of

contract, and unjust enrichment/restitution, and asserted a RICO claim. Nationwide

subsequently denied the King Plaintiffs’ demand that Nationwide provide defense and

coverage under four insurance policies, on the ground that the acts underlying the

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McFarlin suit had occurred prior to the effective dates of its policies with the King

Plaintiffs. After the district court found that Nationwide had a duty to defend the

King Plaintiffs in the McFarlin action, the parties ultimately settled that case.

      In the instant action, the King Plaintiffs initially asserted claims for only breach

of contract and bad faith against Nationwide. After the district court had granted

partial summary judgment in favor of the King Plaintiffs on the “duty to defend” issue

in the McFarlin suit, the King Plaintiffs amended their complaint to also allege claims

for negligent failure to defend, negligent failure to indemnify, wanton failure to

defend, and wanton failure to indemnify (collectively, the “Amended Claims”). After

discovery, Nationwide moved for summary judgment, which the district court granted

on all claims except for the breach-of-contract claim. This appeal followed.

      On appeal, the King Plaintiffs challenge the district court’s entry of summary

judgment on the claims, under Alabama law, for bad faith and the Amended Claims.

The district court found the following:

             Before discussing the viability of the claims added by amendment
      on September 10, 2004, the court ventures to guess why the King
      plaintiffs added claims for alleged negligence and wanton conduct. The
      King plaintiffs knew that this court had not made a final ruling on the
      indemnity question. The court had only required Nationwide to provide
      a defense, and even on that question, the court had never expressed a
      lack of the slightest of doubts about Nationwide’s obligation to defend.
      In fact, the court agonized over the question in a lengthy opinion. There
      was certainly a legitimate debate over the question even though this

                                           4
      court resolved it in favor of the King plaintiffs. The mere fact that this
      court ordered Nationwide to provide a defense did not constitute or
      imply a holding that the interpretation of the insurance contracts had not
      been fairly debatable as regards the obligation to defend, much less that
      the obligation to indemnify was not a fairly debatable issue.

             The law of Alabama recognizes the peculiar tort of bad faith only
      against insurance companies, and then only if the insurance company’s
      refusal to defend and/or indemnify has no legitimately arguable basis.
      The absolute nature of Nationwide’s defense to the bad faith claim, to
      the extent it is brought by the individual plaintiffs . . . is made even more
      obvious when it is realized that [they] were officers of the named
      insureds and only enjoyed coverage by virtue of their offices. They
      themselves were not parties to the insurance contracts. Their standing
      to complain of bad faith is even more tenuous than that of the
      corporations that were the named insureds.

(citations omitted). As for the Amended Claims -- the negligence and wantonness

claims -- the court held the following:

      At the time the King plaintiffs added these claims, they must have
      anticipated the insurmountable obstacle they faced in their pursuit of a
      bad faith claim under Alabama law. Yet either they thought that such
      negligence and wantonness claims arose from the insurance contracts
      and would therefore be governed by the law of Florida, a state they may
      have thought recognizes such causes of action in tort, or that they would
      convince this court to become the first court in Alabama to recognize
      such causes of action under the law of Alabama. . . . If these new
      allegations constitute torts, they are, of course, governed by Alabama
      law because the torts occurred in Alabama. But, Alabama recognizes no
      such torts. The citations of authority put forward by the King plaintiffs
      on this subject either are totally inapposite or are easily distinguishable.
      ....

             It appears to this court that the King plaintiffs have dressed up
      their abortive bad faith claim in the new but transparent clothes of

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       negligence/wantonness. . . . [T]he law of Alabama does not recognize
       negligence/wantonness as a substitute for bad faith where the coverage
       question is fairly debatable.

Based upon our review of the record and the district court’s thorough and well-

reasoned order applying Alabama law, to the largely undisputed facts and addressing

many of the arguments raised in this appeal,3 and in light of the district court’s

particular familiarity with both this action and the underlying McFarlin case -- these

cases have been pending before the district court since August 31, 1999, when the

McFarlin complaint was filed -- we can discern no reversible error in the district

court’s disposition of this case and affirm its partial summary judgment in all

respects.

       AFFIRMED.

       3
         To the extent that the King Plaintiffs have raised entirely new arguments in support of their
position, we will not consider them for the first time at this late juncture. Access Now, Inc. v.
Southwest Airlines Co., 385 F.3d 1324, 1331 (11th Cir. 2004); see also Denis v. Liberty Mut. Ins.
Co., 791 F.2d 846, 849 (11th Cir. 1986) (holding that “factual assertions that defeat a summary
judgment cannot be presented for the first time to an appellate court, and only those matters properly
before the district court for summary judgment consideration are subject to appellate review”).

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