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Burlington Insurance Co. v. Okie Dokie

July 17, 2006

BURLINGTON INSURANCE COMPANY, PLAINTIFF,
v.
OKIE DOKIE, INC. AND C.J. THOMAS, INC., DEFENDANTS.



The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge

Document Nos. 73, 75

MEMORANDUM OPINION

GRANTING DEFENDANT OKIE DOKIE,INC.'SMOTION TO ALTER OR AMEND THE JUDGMENT; DENYING THE PLAINTIFF'S MOTION TO ALTER THE COURT'S INTERLOCUTORY ORDER

I. INTRODUCTION

This matter comes before the court on defendant Okie Dokie, Inc.'s ("Okie Dokie") motion to alter or amend the court's partial grant of summary judgment to the plaintiff,*fn1 Burlington Insurance Company ("Burlington"), and on the plaintiff's motion to alter or amend an interlocutory judgment. The court previously granted the plaintiff's motion for summary judgment against defendant Okie Dokie because Okie Dokie's insurance application contained a false statement that materially affected the plaintiff's decision to insure Okie Dokie. Defendant Okie Dokie now contends that new evidence demonstrates a dispute of material fact which undermines this court's grant of summary judgment. Because the new evidence materially alters the court's previous analysis, the court vacates its order granting summary judgment against Okie Dokie.

The court also previously denied the plaintiff's motion for summary judgment on its negligent misrepresentation claim against defendant C.J.Thomas, Inc. ("C.J. Thomas") because the plaintiff failed to provide any evidence regarding C.J. Thomas' duty of care. The plaintiff now moves to alter or amend the court's ruling denying summary judgment against defendant C.J. Thomas, arguing that evidence regarding an insurance broker's professional duty of care is unnecessary. Because the plaintiff fails to show that justice requires revising the court's ruling, the court denies the plaintiff's motion to alter or amend the interlocutory judgment.

II. BACKGROUND

A. Factual Background

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 Dream's application for a general commercial liability insurance policy. Id. ¶¶ 23, 24. The application described Dream as a "Restaurant/Bar with Dance Floor," and explained 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 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 underage 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. The plaintiff settled the Farthing Action for $410,000 on August 21, 2004. Pl.'s Mot. for Summ. J. at 5.

B. Procedural History

In response to the Farthing Action, Burlington filed this action against Okie Dokie and C.J. Thomas on September 26, 2003. With regard to Okie Dokie, Burlington's complaint 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. Compl. ¶¶ 58, 64, 69. Burlington moved for summary judgment on the declaratory relief and unjust enrichment counts. Pl.'s Mot. for Summ. J. at 2. The court granted Burlington's motion on both counts because D.C. Code § 31-4314 defeats coverage under an insurance policy when an insurance application contains a false statement that materially affects the insurer's decision to insure the applicant. Mem. Op. (Oct. 18, 2005) ("Mem. Op.") at 1. The court also granted Burlington's motion for summary judgment on its unjust enrichment claim against Okie Dokie and awarded Burlington prejudgment interest. Id. at 1-2.

With regard to C.J. Thomas, Burlington seeks damages stemming from alleged negligent misrepresentation in the insurance application. Compl. ¶ 76. The complaint 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.

On June 16, 2005, Burlington moved for summary judgment against C.J. Thomas, Pl.'s Mot. for Summ. J. at 1, and on July 11, 2005, defendant C.J. Thomas cross-moved for summary judgment on the plaintiff's negligent misrepresentation claim, Def. C.J. Thomas' Opp'n to Pl.'s Mot. for Summ. J. at 1-2. The court denied Burlington's motion for summary judgment on its negligent misrepresentation claim because Burlington failed to show that defendant C.J. Thomas violated a duty of care. Mem. Op. ...


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