Medical Liability Mutual Insurance v. Alan Curtis LLC

JARYEY, District Judge,

dissenting.

Under Arkansas law, the pleadings determine an insurer’s duty to defend and that duty arises when there is a possibility that the injury or damage may fall within the policy coverage. Madden v. Continen*477tal Cas. Co., 53 Ark.App. 250, 922 S.W.2d 731, 734 (1996) (emphasis added). “It is the allegations made against the insured, however groundless, false, or fraudulent such allegations may be, that determine the duty of the insurer to defend the litigation against its insured.” Id. The uncertainty regarding the statute of limitations applicable to the claims in the underlying lawsuit causes me to conclude that coverage is still possible. For that reason, I respectfully dissent.

The underlying lawsuit alleges that Ms. Redden was harmed by Evergreene and Curtis’ negligent acts and omissions to act, which occurred at least weekly, if not daily, throughout her stay at the Crestpark Retirement Inn from 1997 to 2003. The policy periods on both the primary and the excess liability policies in this case are January 15, 2000 to January 15, 2001. The policies at issue in this lawsuit provide:

We will pay damages and defend you and others covered under this section only when:
the providing or failure to provide professional services occures [sic] during the policy period shown on the Declarations;
the providing or failure to provide professional services took place in the coverage territory.
We will defend any claim brought against you and others covered under this policy seeking damages that are covered under any section of this policy. We will do this even if the allegations of the claim are groundless, false or fraudulent.

The district court and this court make good arguments in favor of a three-year statute of limitations. I do not believe that this is enough to relieve the insurer of its duty to defend both Evergreene and Curtis in this matter. The arguments in favor of a five year statute of limitations pursuant to Arkansas Code § 16-56-111 or § 16-56-115 are not frivolous. To say that the Arkansas Supreme Court would likely find a three year statute of limitations, does not foreclose the possible application of a longer statute. As set forth above, the policy requires that the Insurer defend even “groundless, false, or fraudulent” claims, which is consistent with an insured’s duty to defend under Arkansas law when there is any possibility that injury falls within the policy coverage.

I believe the district court erred in deciding that the Insurer had no duty to defend Curtis against the tort claims and, therefore, all claims in this matter. Whether or not there is a duty to indemnify Curtis and/or Evergreene depends on the facts established in the underlying trial, making summary judgment inappropriate. Madden, 922 S.W.2d at 734. Accordingly, I would reverse the judgment of the district court.