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Safeco Insurance Company of Illinois v. Hicks

United States District Court, N.D. Iowa, Cedar Rapids Division

April 17, 2018

SAFECO INSURANCE COMPANY OF ILLINOIS Plaintiff,
v.
PAUL HICKS and JANE GOSCH, Defendants.

          MEMORANDUM OPINION AND ORDER ON MOTION FOR SUMMARY JUDGMENT

          Leonard T. Strand, Chief Judge.

         I. INTRODUCTION

         This case is presently before me on a motion (Doc. No. 23) for summary judgment by plaintiff Safeco Insurance Company of Illinois (Safeco). Defendant Jane Gosch has filed a resistance (Doc. No. 26) and Safeco has filed a reply (Doc. No. 29). I find that oral argument is not necessary.

         II. PROCEDURAL HISTORY AND RELEVANT FACTS

         A. Procedural History

         This case arises from a motorcycle insurance policy issued to defendant Paul Hicks and a subsequent motorcycle accident involving both Hicks and Gosch. On December 2, 2016, Safeco filed a complaint (Doc. No. 2) for declaratory judgment establishing its obligations for payment under that policy. Doc. No. 2. Hicks failed to appear. As such, on March 24, 2017, I entered a judgment by default against Hicks. Doc. No. 13. On May 12, 2017, I amended the default judgment at Gosch's request to make it clear that it applied only to Hicks. Doc. No. 20. The order stated, in relevant part:

Judgment by default is hereby entered against defendant Paul Hicks and in favor of Safeco on Safeco's Complaint for Declaratory Judgment (Doc. No. 2), declaring that:
1. Defendant Paul Hicks may not assert that the policy issued by Safeco to Paul R. Hicks, Motorcycle Insurance Policy Number Z4809468, with a policy period of March 14, 2016, to March 14, 2017, provides coverage for the claims in the case filed by Jane Gosch in the Iowa District Court in and for Linn County, Iowa, styled Jane E. Gosch v. Paul R. Hicks, No. LACV086005 (the Underlying Lawsuit).
2. Defendant Paul Hicks may not assert that Safeco is obligated to defend the claims in the Underlying Lawsuit as to liability coverage.

Id. at 1-2. On December 15, 2017, Safeco filed its motion for summary judgment.

         Neither party filed a jury demand. As such, this case is scheduled for a bench trial beginning November 28, 2018.

         B. Relevant Facts

         Except as otherwise noted, the following facts are undisputed: On March 14, 2016, Safeco issued a Motorcycle Insurance Policy, Policy Number Z4809468, with a policy period of March 14, 2016, to March 14, 2017 (the Policy), to Hicks. On April 22, 2016, Gosch and Hicks were involved in a motorcycle accident (the Accident). Gosch then initiated a lawsuit against Hicks in the Iowa District Court for Linn County styled Jane E. Gosch v. Paul R. Hicks, No. LACV086005 (the Underlying Lawsuit). In the Underlying Lawsuit, Gosch alleges that she was riding on the motorcycle with Hicks and he lost control, which caused her to be ejected from the vehicle and suffer bodily injuries.

         Hicks is designated as the “named insured” on the Declaration page of the Policy. Gosch claims that she is entitled to payment under the Policy's Liability Coverage. The Liability Coverage section of the Policy contains an exclusion that Safeco will not owe such coverage for a “domestic partner” of Hicks. Safeco contends that this exclusion applies in this case.

         Hicks is Gosch's boyfriend and has been since before the Accident. Gosch first met Hicks in May 2013 and has resided with him since June 2013. Hicks and Gosch are not related, nor are they mere roommates. They have a sexual relationship and have since before the Accident. They share a bedroom and have since before the Accident. Hicks' believes that their relationship is “mostly” monogamous.

         Gosch and Hicks share household responsibilities and work as a team in a joint effort. They have done so since before the Accident. Gosch does the laundry, vacuuming, cleans, tends the plants, and washes dishes, and has been doing so since prior to the Accident. Hicks mows and trims the lawn. Hicks paid off the mortgage for the home at which Hicks and Gosch reside. Gosch does not pay rent to Hicks but contends that the household services she performs act as rental payments.

         Gosch and Hicks jointly own a 2014 Chevy Cruise Diesel, which was purchased before the Accident. Gosch's and Hicks' names both appear on the title and the registration for the vehicle. Both of their names also appear as named insureds on the insurance for the 2014 Chevy Cruise. The loan for the vehicle is in Hicks' name.

         Since at least October 5, 2015, six months before the Accident, Hicks has been the primary beneficiary of Gosch's 401(k) account. Gosch listed Hicks as her “boyfriend” on her 401(k) Beneficiary Form as of December 15, 2015. As of November 18, 2014, over one year prior to the Accident, Gosch was listed as Hicks' emergency contact at his employer. Similarly, Hicks is listed as Gosch's emergency contact at her employer. Hicks is listed as a contributor on Gosch's Health Savings Account. They have taken at least two vacations together, one in 2013 and one in 2017.

         Additional relevant facts will be discussed as necessary, below.

         III. SUMMARY JUDGMENT STANDARDS

         Any party may move for summary judgment regarding all or any part of the claims asserted in a case. Fed.R.Civ.P. 56(a). Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         A material fact is one that “‘might affect the outcome of the suit under the governing law.'” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Thus, “the substantive law will identify which facts are material.” Id. Facts that are “critical” under the substantive law are material, while facts that are “irrelevant or unnecessary” are not. Id.

         An issue of material fact is genuine if it has a real basis in the record, Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)), or when “‘a reasonable jury could return a verdict for the nonmoving party' on the question.” Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005) (quoting Anderson, 477 U.S. at 248). Evidence that only provides “some metaphysical doubt as to the material facts, ” Matsushita, 475 U.S. at 586, or evidence that is “merely colorable” or “not significantly probative, ” Anderson, 477 U.S. at 249-50, does not make an issue of material fact genuine.

         As such, a genuine issue of material fact requires “sufficient evidence supporting the claimed factual dispute” so as to “require a jury or judge to resolve the parties' differing versions of the truth at trial.” Anderson, 477 U.S. at 248-49. The party moving for entry of summary judgment bears “the initial responsibility of informing the court of the basis for its motion and identifying those portions of the record which show a lack of a genuine issue.” Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at 323). Once the moving party has met this burden, the nonmoving party must go beyond the pleadings and by depositions, affidavits, or otherwise, designate specific facts showing that there is a genuine issue for trial. Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th Cir. 2005). The nonmovant must show an alleged issue of fact is genuine and material as it relates to the substantive law. If a party fails to make a sufficient showing of an essential element of a claim or defense with respect to which that party has the burden of proof, then the opposing party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 322.

         In determining if a genuine issue of material fact is present, I must view the evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 587-88. Further, I must give the nonmoving party the benefit of all reasonable inferences that can be drawn from the facts. Id. However, “because we view the facts in the light most favorable to the nonmoving party, we do not weigh the evidence or attempt to determine the credibility of the witnesses.” Kammueller v. Loomis, Fargo & Co., 383 F.3d 779, 784 (8th Cir. 2004). Instead, “the court's function is to determine whether a dispute about a material fact is genuine.” Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376-77 (8th Cir. 1996).

         IV. DISCUSSION

         In its complaint (Doc. No. 2), Safeco requested declaratory relief that (1) it has no obligation to defend or indemnify Hicks in the Underlying Lawsuit and (2) any liability it may have to Gosch is limited to $20, 000. With regard to Gosch, there are two relevant provisions of the Policy - the Liability Coverage provision and the Underinsured Motorist (UIM) Coverage provision. Safeco argues that Gosch is covered only under the UIM provision and that the Policy's UIM coverage is limited to a maximum of $20, 000.

         A. Liability Coverage

         Safeco presents two reasons that Gosch is not entitled to payment under the Liability Coverage provision. First, Safeco claims that the default judgment I entered against Hicks precludes Gosch from satisfying any judgment she obtains against Hicks from Safeco. Doc. No. 23-1 at 1-2. Second, Safeco argues that Gosch is excluded from Liability Coverage because she is Hicks' “domestic partner, ” and had that status at the time of the Accident.

         1. Default judgment

         a. Parties' arguments

         Safeco argues that Gosch's rights as against Safeco are measured by the rights Hicks has against Safeco, as evidenced by Iowa Code § 516.1. Doc. Nos. 23-1 at 4; 29 at 2. Therefore, according to Safeco, Gosch can pursue a claim only to the extent that Hicks has a claim under the Policy. Doc. No. 23-1 at 5. Safeco argues that because I entered a default judgment against Hicks-precluding him from asserting an indemnity claim under the Policy-Gosch is also prohibited from asserting any ...


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