FST LOGISTICS, INC., Plaintiff vs. ESSEX INSURANCE COMPANY, et al., Defendants

Case No. 10CVH-11-16975

STATE OF OHIO, COURT OF COMMON PLEAS, FRANKLIN COUNTY, CIVIL DIVISION

Schneider, J.

This matter is before the Court on the motion of defendant Essex Insurance Company for summary judgment on plaintiff FST Logistics, Inc.’s claim seeking a declaratory judgment that its claim is covered under a policy of insurance issued by Essex. FST filed an agreed motion for an extension of time in which to file its memorandum contra Essex’s motion. FST then opposed the motion for summary judgment and filed a cross-motion for summary judgment. Essex filed a reply in support of its motion for summary judgment and opposed FST’s cross-motion for summary judgment. For the following reasons, FST’s motion for extension is granted, Essex’s motion for summary judgment is granted, and FST’s cross-motion for summary judgment is denied.

 

I. Motion for Extension

The motion for extension is unopposed. It is  [*2] granted. Accordingly, the Court considered FST’s memorandum opposing Essex’s motion for summary judgment.

 

II. Summary Judgment Standard

[HN1] Pursuant to Civ.R. 56(C), summary judgment is appropriate only when “(1) No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party.” Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 364 N.E.2d 267. [HN2] The party moving for summary judgment must inform the trial court of the basis for the motion and point to parts of the record that demonstrate the absence of a genuine issue of material fact. Dresher v. Burt (1996), 75 Ohio St.3d 280, 292-93, 1996 Ohio 107, 662 N.E.2d 264. This evidence must be of the type described by Civ.R. 56(C); that is, “the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any[.]” The moving party cannot carry this burden with conclusory assertions that the non-moving  [*3] party has no evidence to support its case. Castrataro v. Urban, 10th Dist. No. 03AP-128, 2003 Ohio 4705, at ¶14. Once the moving party has met this burden, the non-moving party’s reciprocal burden is triggered. Id. at 293. The non-moving party “may not rest upon the mere allegations or denials of his pleadings but his response, by affidavit or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.” Civ.R. 56(E).

 

III. Background

FST is a freight broker hired by third parties to arrange for the pick-up and delivery of various shipments. In this instance, Bloomfield Bakers hired FST to arrange the shipment of a truckload of PowerBars from California to Ohio. FST attempted to engage the services of Navin Transportation. However, Navin’s fax number had apparently been hijacked and FST communicated only with an impostor. A driver posing as an employee of Navin picked up the shipment, which has never been located. FST later communicated with Navin and learned that Navin was unaware of any arrangement between itself and FST. FST sought coverage  [*4] under the policy and Essex denied the claim. FST then instituted this declaratory action.

 

IV. The Opposing Motions for Summary Judgment

Because the parties each moved for summary judgment based upon differing interpretations of the same policy language, the Court considers the motions together.

[HN3] Insurance policies are contracts between the insurer and the insured. Pilkington N. Am., Inc. v. Travelers Cas. & Sur. Co., 112 Ohio St. 3d 482, 2006 Ohio 6551, at ¶23, 861 N.E.2d 121. If the language of a policy is clear and unambiguous, interpretation of its terms is a matter of law and there is no issue of fact to be determined. Alexander v. Buckeye Pipe Line Co. (1978), 53 Ohio St.2d 241, 246, 374 N.E.2d 146. Words and phrases are to be given their ordinary and commonly-accepted meanings except where defined otherwise. Hybud Equip. Corp. v. Sphere Drake Ins. Co. (1992), 64 Ohio St.3d 657, 665, 597 N.E.2d 1096. Courts should seek to effectuate the intentions of the parties, id., although ambiguous provisions of a policy must be strictly construed against the insurer and liberally construed in favor of the insured. Westfield Ins. Co. v. Hunter, 128 Ohio St. 3d 540, 2011 Ohio 1818, at ¶11, 948 N.E.2d 931. However, a party seeking to recover on an insurance policy  [*5] bears the burden of proving a loss covered under the policy.” Sharonville v. Am. Emps. Ins. Co., 109 Ohio St. 3d 186, 2006 Ohio 2180, at ¶19, 846 N.E.2d 833. In this case, the language at issue is unambiguous and the Court gives all undefined terms their ordinary meaning.

The first step in determining coverage is to review the insuring clause, which provides:

“[Essex] will pay for loss to Covered Property, caused by the Covered Perils set forth in paragraph II for which [FST], acting as a transportation broker, ha[s] contracted to effect delivery between points and places within the Continental United States and Canada, but only while the Covered Property is in or on a vehicle in the due course of transit and in the exclusive physical custody of a motor carrier that [FST] ha[s] directly engaged. The coverage afforded herein does not attach in the absence of full compliance with the warranties set forth below in paragraph VIII and is subject to the valuation provision of paragraph VI.” (Emphasis sic.)

The relevant warranties included in paragraph VIII are:

“A. [FST] will obtain and keep on file in [its] office at all times a current Certificate of Motor Truck Cargo Insurance for any motor carrier [FST] engage[s]  [*6] to perform transportation or related services. * * *

“B. [FST] will obtain and keep on file in [its] office at all times a current copy of the motor carrier’s federal or state operating authority which confirms the motor carrier’s authority to transport the Covered Property for which a claim is presented under the policy.” (Emphasis sic.)

“Due Course of Transit” is defined to mean: “From the time the covered property is in the exclusive custody and control of the motor carrier directly engaged by you for direct transportation and continuing while the covered property is actually moving to destination, including reasonable, ordinary and customary stops.” (Emphasis sic.)

Essex argues that in order to recover under the policy, FST was required to prove that 1) the shipment was on a vehicle in the due course of transit; 2) that the shipment was in the exclusive physical custody of the motor carrier that FST engaged; and 3) that FST obtained and kept on file the motor carrier’s insurance certificate and federal or state operating authority. Essex further contends that FST cannot meet all three requirements under any set of circumstances. In support of its motion, Essex attached the complaint,  [*7] to which FST attached a copy of the insurance contract at issue, as well as numerous discovery responses provided by FST. Although the discovery responses are not separately certified or authenticated beyond the electronic signature of plaintiff’s counsel, plaintiff has not objected to the Court’s consideration of these attachments; the Court considered them. New Falls Corp. v. Russell-Seitz, 10th Dist. No. 08AP-397, 2008 Ohio 6514, at ¶12 (“A trial court * * * can consider non-complying documents in adjudicating a summary judgment motion when no objection to the documents is raised.”).

Under the contractual terms, FST faces an impossible situation. No matter how the impostor is classified, whether as the motor carrier engaged by FST or as a thief, FST cannot demonstrate compliance with all of the prerequisites to coverage. If Navin is the motor carrier engaged by FST, then the PowerBars were not stolen in the “due course of transit.” Essex points to the allegations of the complaint, as well as the claim testimony attached to FST’s response to Essex’s request for production of documents to establish that Navin never took possession of the shipment. FST’s affidavit in support of its  [*8] cross-motion for summary judgment similarly acknowledges that the impostor picked up the shipment. For the shipment to have been in the due course of transit, and thereby subject to the insuring clause, it had to have been “in the exclusive custody and control of the motor carrier directly engaged by [FST] * * *.” Therefore, if Navin was the motor carrier engaged by FST, then the insuring clause was not triggered because Navin never had custody or control of the shipment.

On the other hand, if the impostor is considered to be the motor carrier directly engaged by FST, FST cannot demonstrate compliance with the warranties found in paragraph VIII of the contract. The insuring clause provides that “The coverage afforded herein does not attach in the absence of full compliance with the warranties set forth below in paragraph VIII[.]” As listed above, the relevant warranties in paragraph VIII required FST to obtain and keep on file a current certificate of motor truck cargo insurance for any motor carrier it engaged, as well as a copy of the motor carrier’s federal or state operating authority. Essex pointed to FST’s interrogatory responses, which established that FST obtained and kept on  [*9] file the required documents from Navin. Essex also pointed to Navin’s certificate of motor truck cargo insurance and federal or state operating authority, which FST provided in response to the requests for production of documents. FST’s affidavit in support of its cross-motion for summary judgment also states that “FST verified Navin’s operating authority as well as its filing of motor truck cargo insurance.” The evidence demonstrates that FST complied with the warranties of paragraph VIII with respect to Navin. FST has failed to demonstrate compliance with either of the warranties regarding the impostor. Compliance with the warranties is required in order to satisfy the insuring clause. Therefore, if the impostor was the motor carrier engaged by FST, then the insuring clause was not triggered because FST did not fully comply with the required warranties.

Regardless of whether Navin or the impostor is considered to be the motor carrier engaged by FST, FST cannot demonstrate compliance with the requirements of the insuring clause to invoke coverage. Essex is entitled to summary judgment on FST’s claim. FST is not entitled to summary judgment. The Court need not address Essex’s contingent  [*10] argument for summary judgment with respect to the theft exclusions found in paragraph II F.

 

V. Conclusion

Essex’s motion for summary judgment is GRANTED. FST’s cross-motion for summary judgment is DENIED. Counsel for defendant shall prepare an appropriate entry and submit the proposed entry to counsel for the adverse party pursuant to Loc. R. 25.01. A copy of this decision shall accompany the proposed entry when presented to the Court for signature.