The opinion of the court was delivered by: George C. Smith, Judge United States District Court
This matter is before the Court on Third-Party Defendant Owners Insurance Co.'s Motion for Summary Judgment (Doc. 65), Defendant/Third-Party Plaintiff Phyllis Hardy's Motion for Summary Judgment (Doc. 69), Defendants' Objections to the Magistrate's August 13, 2004 Order (Doc. 43), Plaintiffs' Motion for Sanctions (Doc. 49), and Plaintiffs' Motion for Costs and Attorneys Fees (Doc. 55). For the reasons that follow, the Court GRANTS Defendant Third-Party Plaintiff Phyllis Hardy's Motion for Summary Judgment; DENIES Third-Party Defendant Owners Insurance Co.'s Motion for Summary Judgment; GRANTS Plaintiffs' Motion for Ruling on Sanctions Issue and OVERRULES Defendants' Objections to the Magistrate Judge's August 13, 2004 Order; and GRANTS Plaintiffs' Motion for Attorneys' Fees and Costs.
The Plaintiffs Fair Housing Advocates Association, Inc. ("Fair Housing"), Karen Brown, and Loretta Brown ("the Browns") initiated this declaratory judgment action against Defendants Terrace Plaza Apartments ("Terrace Plaza"), Martha Fattler ("Fattler"), Carla Myers ("Myers"), and Phyllis Hardy ("Hardy") on June 20, 2003. Plaintiffs claimed that Defendants discriminated against the Browns on the basis of familial status, specifically that they refused to rent to them because they had small children, in violation of Federal and Ohio Fair Housing Acts, 42 U.S.C. §§ 3604 and 3618 and Ohio Revised Code § 4112 et seq.
During the course of discovery, it was revealed that the Plaintiffs' claims were based on certain statements made by Carla Myers, the manager of the Terrace Plaza Apartments, to Plaintiffs Karen and Loretta Brown, implying that Terrace Plaza would not rent apartments to people with children. After this was revealed, the parties were able to reach a settlement in this matter. There is no dispute that Plaintiffs are entitled to attorneys' fees as it is statutorily guaranteed in 42 U.S.C. § 3604, the federal and state fair housing laws. The only issue remaining in this case is whether the insurance policy for Terrace Plaza covers Plaintiffs' attorneys' fees.
Defendant Hardy is insured with Owners Insurance Company for her operation of Terrace Plaza. Owners issued a commercial property and commercial general liability policy to Ms. Hardy, policy number 004603-05204971-01, with a personal injury limit of one million dollars (the "Policy"). The Policy is subject to an endorsement entitled Commercial General Liability Plus Endorsement, number 55091. It is under this endorsement that Owners is defending the action because paragraph 5 includes personal injury extension coverage which includes discrimination and humiliation within the definition of personal injury.
The parties agree upon the applicable Policy sections in this case, but the dispute arises over the scope of coverage under the Policy. The applicable sections of the Policy are as follows:
Section I, Coverage B specifically states:
We will pay those sums that the insured becomes legally obligated to pay as damages because of "personal injury" to which this coverage part applies. We will have the right and duty to defend any "suit" seeking those damages. We may at our discretion investigate any "occurrence" or offense and settle any claim or "suit" that may result. But:
(1) The amount we will pay for damages is limited as described in LIMITS OF INSURANCE (Section III); and
(2) Our right and duty to defend end when we have used up the applicable limit of insurance in the payment of judgments or settlements under Coverage A or B or medical expenses under Coverage C.
No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under SUPPLEMENTARY PAYMENTS COVERAGE A AND B.
Supplementary Payments-coverage A and B specifically states: We will pay with respect to any claim or "suit" we defend:
1. All expenses we incur.
2. Up to $250 for cost of bail bonds required because of accidents or traffic law violations arising out of the use of any vehicle to which the Bodily Injury Liability Coverage applies. We do not have to furnish these bonds.
3. The cost of bond to release attachments, but only for bond amounts within the applicable limit of insurance. We do not have to furnish these bonds.
4. All reasonable expenses incurred by the insured at our request to assist us in the investigation or defense of the claim or "suit," including actual loss of earnings up to $100 a day because of time off from work.
5. All costs taxed against the insured in the "suit."
6. Prejudgment interest awarded against the insured on the party of the judgment we pay. If we make an offer to pay the applicable limit of insurance, we will not pay any prejudgment interest based on that period of time after the offer.
7. All interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in court the part of the judgment ...