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BURLINGTON INSURANCE COMPANY v. OKIE DOKIE

October 18, 2005.

BURLINGTON INSURANCE COMPANY, Plaintiff,
v.
OKIE DOKIE, INC. and C.J. THOMAS, INC Defendants.



The opinion of the court was delivered by: RICARDO URBINA, District Judge

MEMORANDUM OPINION

GRANTING IN PART AND DENYING IN PART THE PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT; DENYING C.J. THOMAS' CROSS-MOTION FOR SUMMARY JUDGMENT
I. INTRODUCTION
This case is before the court on the plaintiff's motion for summary judgment and on defendant C.J. Thomas, Inc.'s cross-motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. The plaintiff asserts that it is entitled to summary judgment on its claims against both defendants because there is no genuine issue of material fact. Because the plaintiff has not shown that defendant C.J. Thomas, Inc. ("C.J. Thomas") violated a duty of care, the court denies summary judgment as to the negligent misrepresentation claim. The court grants the plaintiff's motion for a declaration that D.C. Code § 31-4314 defeats coverage under the insurance policy because that insurance application contained a false statement that materially affected the plaintiff's decision to insure the defendant. Because the plaintiff has met its burden with respect to its unjust enrichment claim against defendant Okie Dokie, Inc., ("Okie Dokie") the court grants the plaintiff's motion for summary judgment as to that claims. Because the defendants have not provided any substantive justification for withholding an award of prejudgment interest, the court grants the plaintiff's motion for an award of prejudgment interest.

  II. BACKGROUND

  A. Factual History

  Defendant Okie Dokie is the owner and operator of Dream, a nightclub in the District of Columbia. Compl. ¶¶ 8, 10. Defendant C.J. Thomas, an insurance broker, prepared an application for insurance on behalf of Okie Dokie for a general commercial liability insurance policy to cover Dream. Id. ¶¶ 23, 24. The application described Dream as a "Restaurant/Bar with Dance Floor," and stated that: (1) the previous insurance carrier cancelled its policy primarily because Dream had a dance floor; (2) Dream does not sponsor "Social Events;" and (3) Dream's $4 million in total sales is comprised of $3 million in food sales and $1 million in liquor sales. Id. ¶¶ 25-30. The plaintiff, Burlington Insurance Company ("Burlington"), alleges that it relied on the statements in the application when it issued a commercial general liability policy to Okie Dokie on June 28, 2002. Id. ¶¶ 34, 36.

  On August 10, 2002, an underaged drunk driver who had allegedly been drinking at Dream, struck and killed a police officer named Hakim Farthing. Id. ¶ 44. Farthing's estate sued Okie Dokie for $50 million on October 1, 2003 ("Farthing Action"). Id. ¶¶ 42, 45. Burlington settled the Farthing action for $410,000 on August 21, 2004. Pl.'s Mot. For Summ. J. ("Pl.'s Mot.") at 5. The plaintiff also alleges that it incurred legal costs to defend Okie Dokie in the Farthing action. Id. B. Procedural History

  In response to the Farthing Action, Burlington filed this action against Okie Dokie and C.J. Thomas on September 26, 2003. See generally Compl. With regard to Okie Dokie, Burlington seeks: (1) a declaration that Burlington had no duty to defend or indemnify Okie Dokie in the Farthing Action; (2) rescission of the insurance policy; and (3) restitution for all costs Burlington has paid with respect to the Farthing Action. Id. ¶¶ 58, 64, 69. Burlington moves for summary judgment on the declaratory relief and unjust enrichment counts. Pl.'s Mot. at 2.

  With regard to C.J. Thomas, Burlington seeks damages stemming from alleged negligent misrepresentation in the insurance application. Compl. ¶ 76. The complaint also alleges that C.J. Thomas failed to disclose that Dream: (1) is a nightclub, (2) hosts concerts, (3) seeks the patronage of eighteen to twenty year olds, (4) derives over 25% of its revenue from the sale of alcoholic beverages, and (5) regularly features an "open bar." Id. ¶ 72. The plaintiff asserts that "C.J. Thomas was under a duty to disclose one or more" of these facts. Id. ¶ 73. The complaint further alleges that these "false statements and omissions were material" to the plaintiff's decision to issue the policy to Okie Dokie. Id. ¶ 74. The plaintiff claims that it "reasonably relied on one or more of the false statements and omissions. Id. ¶ 75.

  Burlington moves for summary judgment on its claims against Okie Dokie and C.J. Thomas.*fn1 C.J. Thomas cross-moves for summary judgment on the negligent misrepresentation claim. The court now turns to these motions. III. ANALYSIS

  A. Legal Standard for a Motion for Summary Judgment

  Summary judgment is appropriate when "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); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Diamond v. Atwood, 43 F.3d 1538, 1540 (D.C. Cir. 1995). To determine which facts are "material," a court must look to the substantive law on which each claim rests. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A "genuine issue" is one whose resolution could establish an element of a claim or defense and, therefore, affect the outcome of the action. Celotex, 477 U.S. at 322; Anderson, 477 U.S. at 248.

  In ruling on a motion for summary judgment, the court must draw all justifiable inferences in the nonmoving party's favor and accept the nonmoving party's evidence as true. Anderson, 477 U.S. at 255. A nonmoving party, however, must establish more than "the mere existence of a scintilla of evidence" in support of its position. Id. at 252. To prevail on a motion for summary judgment, the moving party must show that the nonmoving party "fail[ed] to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. By pointing to the absence of evidence proffered by the nonmoving party, a moving party may succeed on summary judgment. Id.

  In addition, the nonmoving party may not rely solely on allegations or conclusory statements. Greene v. Dalton, 164 F.3d 671, 675 (D.C. Cir. 1999); Harding v. Gray, 9 F.3d 150, 154 (D.C. Cir. 1993). Rather, the nonmoving party must present specific facts that would enable a reasonable jury to find in its favor. Greene, 164 F.3d at 675. If the evidence "is merely colorable, or is not significantly ...


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