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Nationwide Affinity Insurance Co. v. Laderoute

United States District Court, W.D. Missouri, St. Joseph Division

December 7, 2017

NATIONWIDE AFFINITY INSURANCE COMPANY, Plaintiff and Counter-claim Defendant,



         This declaratory judgment action concerns insurance coverage for a lawsuit filed by Defendant Porters Building Centers Inc. (“Porters”) against Defendant Scott Laderoute (“Laderourte”) in the United States District Court for the Western District of Missouri, Case No. 16-cf-6055 (“the underlying suit”). The underlying suit alleges Laderoute conspired with several of Porters' employees to steal proprietary information from Porters, and then used the information to solicit business for Laderoute's business, Sprint Lumber.

         Plaintiff Nationwide Affinity Insurance Company (“Nationwide”) provided Laderoute's home owner's insurance during the relevant time. Nationwide provided a defense in the underlying suit to Laderoute under a reservation of rights. It filed this lawsuit seeking a declaration that Laderoute is not entitled to coverage or indemnification in the underlying suit.

         Now before the Court is Nationwide's Motion for Summary Judgment (Doc. 10). The Court GRANTS the motion because the “business pursuits” exclusion in Nationwide's policy denies coverage, and Laderoute's proffered affirmative defenses fail as a matter of law.

         Summary Judgment Standard

         A moving party is entitled to summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The nonmoving party may resist summary judgment by asserting affirmative defenses, but it must support these defenses with specific facts. Hiland Partners GP Holdings, LLC v. Nat'l Union Fire Ins. Co., 847 F.3d 594, 601 (8th Cir. 2017).

         Undisputed Facts

         The facts here are not in dispute.

         Chronology of Events

         Nationwide issued homeowners policy number HOA 0050277429 (the “Policy”) to Laderoute. The Policy was in effect from December 17, 2015, to December 17, 2016.

         On May 9, 2016, Porters filed the underlying suit against Laderoute. On August 10, 2016, Nationwide sent what it purports is a reservation of rights letter to Laderoute's attorney. Nationwide's six-page letter accurately summarized the allegations made in Porters' initial Petition as follows:

The Complaint includes claims for (1) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030; (2) violation of the Sherman Antitrust Act, (3) computer tampering (4) violation of the Missouri Uniform Trade Secrets Act; (5) breach of restrictive covenants (6) breach of the duty of loyalty; (7) tortious interference with a business expectancy; (8) trespass; and (9) civil conspiracy.
The Complaint alleges that former employees of Porters Building Centers, Inc. resigned to work for a competitor, Sprint Lumber. (Plf.s' Compl. ¶¶ 26, 27). The Complaint alleges that the former employees had planned to begin working for Spring Lumber months prior to resigning their positions at Porters. (Plf.'s Compl. ¶¶ 28). During these months the former employees were allegedly directly competing against Porters while employed with Porters. (Plf.'s Compl. ¶¶ 28).
In addition to naming the former employees as defendants, the suit also names your client as a defendant. The Complaint contains the following allegations against your client:
• Defendants solicited business of Porters' customers on behalf of Sprint Lumber. (Plf.'s Compl. ¶¶ 46, 54).
• Trespass by Defendant Downer, on behalf of Defendant Laderoute and Sprint Lumber, where Mr. Downer entered the Porters store located in Elwood, Kansas, and accessed a file cabinet containing customer files. (Plf.'s Compl. ¶ 56).
• Defendants attempted to form a monopoly that puts Porters out of business (Plf.'s Compl. ¶¶ 36-38, 40).
• Defendant Reynolds prepared and Defendant Downey sent Defendant Laderoute confidential information to Sprint Lumber about Porters' operations, including current employee salaries, rental costs, and business structure. (Plf.'s Compl. ¶ 39).
• Defendant Laderoute affirmatively pressed the former employees to bring their customers to Sprint Lumber. (Plf.'s Compl. ¶ 43, 44).
• Sprint Lumber agreed to set up Sprint e-mail accounts, cell phones, and business cards for the former employees. (Plf.'s Compl. ¶ 44).
• Defendants planned to copy Porters' protected trade secrets and confidential information. (Plf.'s Compl. ¶ 47).
• Defendant Downey sent Defendant Laderoute an email with detailed information about Porters' inventory, its delivery operation, and strategies for serving various localities. (Plf.'s Compl. ¶ 52).
• Defendants Sprint Lumber and Defendant Laderoute knowingly conspired with Defendant Downy and Higdon to access Porters' computers and mobile devices, delete Porters' proprietary information, and take Porters' proprietary information. (Plf.'s Compl. ¶ 84).
• Defendants disclosed and used Porters' trade secrets without consent and used trade secrets to compete against Porters. (Plf.'s Compl. ¶ 90).
• Defendants intentionally interfered with Porters' business expectancy by undercutting Porters' business and destroying Porters' information pertaining to its customers. (Plf.'s Compl. ¶ 110).
• Defendants coordinated and agreed to engage in a course of conduct in violation of statutory and common-law duties. (Plf.'s Compl. ¶121).

         Letter at 4-5 (Doc. 11-4). After stating that the damages claimed in the underlying suit were not covered under the policy, the letter also identified “multiple applicable exclusions.” Id. at 5. For example,

First, the policy excludes from coverage any damages which arise out of or in connection with a “business” conducted by your client, Scott Laderoute. From the Complaint, it appears that all of the damages either arise out of or in connection with Sprint Lumber, which is owned by Mr. Laderoute. Accordingly, this exclusion bars coverage for such damages.

Id. at 5-6.

         Nationwide began providing Laderoute with a defense after it received the initial Petition, and it is still providing him with a defense.

         On October 3, 2016, Porters filed its Second Amended Petition (“the Amended Petition”). The Amended Petition was very similar to the initial Petition, but brought one less count. It alleged claims for violating the Computer Fraud and Abuse Act (Count I), Computer Tampering (Count II), violating the Missouri Uniform Trade Secrets Act (Count III), Breach of Restrictive Covenants (Count IV), Breach of the Duty of Loyalty (Count V), Tortious Interference with Business Expectancy (Count VI), and Civil Conspiracy (Count ...

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