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Shelby v. Oak River Insurance Co.

United States District Court, W.D. Missouri, Western Division

April 30, 2018

QUENTON SHELBY, Individually and on Behalf of Others Similarly Situated, Plaintiff,



         This lawsuit is an attempt to recover on an uncontested judgment entered in state court. This dispute originated in a separate lawsuit (“the underlying litigation”) brought by a used car dealer, Miller Investment Group (“MIG”), against Plaintiff Quenton Shelby (“Shelby”) for a deficiency on his secured car loan. In response to MIG's suit, Plaintiff filed a class-action counter-claim alleging MIG violated the UCC and engaged in a deceptive pattern in repossessing cars. MIG subsequently entered into a class-wide settlement with Plaintiff and assigned any claims it had against its insurers to Plaintiff and the other class members. Plaintiff subsequently filed this lawsuit seeking to recover under insurance policies issued by Defendant Oak River Insurance Company (“Oak River”) for a “garage business.” Now before the Court is Oak River's motion for summary judgment (Doc. 23). Holding that Oak River owed no duty to defend or indemnify MIG because the underlying claims did not stem from “garage operations, ” the motion is GRANTED.

         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

         For purposes of resolving this motion, the Court finds the material, undisputed facts to be as follows.[1] The Court acknowledges the parties submitted numerous other facts which are relevant to Oak River's many arguments concerning summary judgment. Because the Court holds Oak River's first argument is dispositive, it includes only those facts relevant to its first argument.

         The Policies

         Oak River issued a series of Commercial Garage Liability Policies to MIG from 2008 to 2013 (“the Policies”). The policy terms at issue in this litigation are the same in all of the Policies.

         The Declarations page of the Policies accurately described MIG's business as a used car dealer. The Insuring Agreement stated that Oak River will “pay all sums an ‘insured' legally must pay as damages because of ‘bodily injury' or ‘property damage' . . . caused by an ‘accident' and resulting from ‘garage operations' . . .”

         The Policies defined “garage operations” as:

the ownership, maintenance, or use of locations for garage business and that portion of the roads or other accesses that adjoin these locations. “Garage operations” includes the ownership, maintenance or use of the “autos” indicated in Section I of this coverage form as covered “autos.” “Garage operations” also include all operations necessary or incidental to the performance of “garage operations.”

         The Underlying Litigation

         MIG is a used car dealer with locations in Kansas and Missouri which also finances purchases for its customers. MIG sells used cars to many customers by having the customer enter into a retail installment contract and security agreement.

         Shelby purchased a car from MIG and entered into a form retail installment contract and security agreement for that purpose (“the security agreement”). Shelby allegedly failed to make payments as required under the security agreement, and so MIG accelerated Shelby's payments, repossessed the car, and initiated the underlying litigation against Shelby seeking the deficiency balance.

         In response, Shelby filed a one count class action counterclaim against MIG alleging that MIG failed to comply with the UCC. The counterclaim specifically alleged that after repossessing his car, MIG sent Shelby and numerous other class members presale notices, a/k/a notices of sale, that did not comply with the UCC adopted by each class member's state.[2] The counterclaim primarily concerned the presale notices, [3] although it included other UCC violations. The counterclaim did not contain any claim for negligence, [4] nor did it allege causes of action for wrongful repossession, libel, slander, defamation, or invasion of privacy. The counterclaim sought “statutory minimum damages in the amount provided by § 9-625(c)(2) of the UCC, ” damages equal to the “time price differential, delinquency and collection charges” under § 365.145 Mo. ...

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