NATIONAL AMERICAN INSURANCE COMPANY and STATE NATIONAL INSURANCE COMPANY, Plaintiffs, vs. HARLEYSVILLE LAKE STATE INSURANCE COMPANY, Defendant.
CAUSE NO. 1:13-cv-1297-WTL-MJD
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF INDIANA, INDIANAPOLIS DIVISION
2014 U.S. Dist. LEXIS 160593

November 14, 2014, Decided November 14, 2014, Filed

COUNSEL:  [*1] For NATIONAL AMERICAN INSURANCE COMPANY, STATE NATIONAL INSURANCE COMPANY, Plaintiffs: James P. Strenski, Tara Stapleton Lutes, CANTRELL STRENSKI & MEHRINGER, LLP, Indianapolis, IN.
For HARLEYSVILLE LAKE STATE INSURANCE COMPANY, Defendant: Brian H. Sanchez, SANCHEZ DANIELS & HOFFMAN, Chicago, IL; John J. Piegore, PRO HAC VICE, Timothy V. Hoffman, SANCHEZ DANIELS & HOFFMAN LLP, Chicago, IL.
JUDGES: Hon. William T. Lawrence, United States District Judge.
OPINION BY: William T. Lawrence
OPINION
ENTRY ON CROSS MOTIONS FOR SUMMARY JUDGMENT     This cause is before the Court on the Defendant’s motion for summary judgment (dkt. no. 48) and the Plaintiffs’ motion for summary judgment (dkt. no. 52). The motions are fully briefed, and the Court, being duly advised, GRANTS the Defendant’s motion and DENIES the Plaintiffs’ motion for the reasons, and to the extent, set forth below.
I. STANDARD     Federal Rule of Civil Procedure 56(a) provides that summary judgment is appropriate “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.” In ruling on a motion for summary judgment, the admissible evidence presented by the non-moving party must be believed and all reasonable inferences must be drawn [*2]  in the non-movant’s favor. Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 490 (7th Cir. 2007); Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009) (“We view the record in the light most favorable to the nonmoving party and draw all reasonable inferences in that party’s favor.”). However, “[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial.” Id. Finally, the non-moving party bears the burden of specifically identifying the relevant evidence of record, and “the court is not required to scour the record in search of evidence to defeat a motion for summary judgment.” Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001).    The fact that the parties have filed cross motions for summary judgment does not alter the standard set forth in Federal Rule of Civil Procedure 56. When evaluating each side’s motion, the Court simply “construe[s] all inferences in favor of the party against whom the motion under consideration is made.” Metro Life. Ins. Co. v. Johnson, 297 F.3d 558, 561-62 (7th Cir. 2002) (quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)).
II. BACKGROUND     This insurance dispute arises out of an accident that occurred on February 10, 2009, in Indianapolis, Indiana. The relevant facts follow.    Venture Logistics, Inc. (“Venture Logistics”) offers trucking, freight, warehouse, and brokerage services to its clients. Indy Powder Coatings was [*3]  a customer of Venture Logistics. On February 10, 2009, Trevell Lasha Parker, a truck driver for Venture Logistics, went to Indy Powder Coatings to complete its trucking and hauling jobs. Robert Harden was a forklift operator for Indy Powder Coatings at the time and was unloading skids from the Venture Logistics tractor-trailer driven by Parker. After he had unloaded a few skids, Parker asked Harden if he was finished. Harden replied “no.” Nevertheless, Parker began to drive the tractor-trailer away. Worried that the forklift would fall off of the tractor-trailer as it went up a hill, Harden got off the forklift and tried to get Parker’s attention. The forklift subsequently slid down the tractor-trailer and pinned Harden against the wall. Harden was able to get one leg free, and partially fell out of the tractor-trailer. Eventually, someone honked their horn at Parker and she stopped the tractor-trailer. As a result of the accident, Harden’s leg, among other things, was seriously injured. Harden filed suit against Venture Logistics and Parker in Marion County Superior Court on February 10, 2010 (“the Harden lawsuit”).    At the time of the accident, Venture Logistics was insured by two [*4]  insurance companies: State National Insurance Company (“State National”) and Harleysville Lake State Insurance Company (“Harleysville”). State National issued a Commercial Truckers Coverage Policy (“the State National Policy”) to Venture Logistics. The pertinent portions of this policy are as follow: 
SECTION II – LIABILITY COVERAGE 
A. Coverage    We will pay all sums an “insured” legally must pay as damages because of “bodily injury” or property damage” to which this insurance applies, caused by an “accident” and resulting from the ownership, maintenance or use of a covered “auto.”    . . .
B. Exclusions     This insurance does not apply to any of the following:    . . .
8. Movement Of Property by Mechanical Device     “Bodily injury” or “property damage” resulting from the movement of property by a mechanical device (other than a hand truck) unless the device is attached to the covered “auto.”
Dkt. No. 53-6.    Harleysville issued a Commercial Lines Policy (“the Harleysville Policy”) to Venture Logistics. The pertinent portions of this policy are as follow: 
SECTION I – COVERAGES 3 
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY 
1. Insuring Agreement    a. We will pay those sums that the insured becomes legally [*5]  obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies.    . . .
2. Exclusions     This insurance does not apply to:    . . .
g. Aircraft, Auto Or Watercraft     “Bodily injury” or “property damage” arising out of the ownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and “loading and unloading.”    . . .    “loading or unloading” does not include the movement of property by means of a mechanical device, other than a hand truck, that is not attached to the aircraft, watercraft or “auto.”
Dkt. No. 53-8.    On or about February 11, 2009, Venture Logistics reported the accident to National American Insurance Company (“NAICO”), who had agreed to handle State National’s claims. Thereafter, NAICO defended Venture Logistics in the Harden lawsuit without reservation until late 2012, when it raised the “Movement Of Property by Mechanical Device” exclusion in the State National Policy. It realized this exclusion may apply when another NAICO claim involving a forklift implicated the same exclusion.    Therefore, on November 30, 2012, NAICO notified Harleysville [*6]  that it may have potential coverage liability for the accident. On December 18, 2012, after conducting a coverage analysis, Harleysville denied coverage for the accident pursuant to the “Aircraft, Auto or Watercraft” exclusion.    On or about May 25, 2013, the Harden lawsuit settled and NAICO paid Harden $800,000 on behalf of Venture Logistics. On August 15, 2013, NAICO and State National filed the present lawsuit. Count I of the Amended Complaint seeks a declaration that coverage for the Harden lawsuit is excluded under the State National Policy; correspondingly, it seeks a declaration that coverage for the Harden lawsuit is provided by the Harleysville Policy. Counts II and III seek subrogation or, alternatively, contribution from Harleysville.
III. DISCUSSION     The crux of this dispute is “whether the relevant exclusions found in the Harleysville and State National Policies clearly and unambiguously exclude coverage for the Harden Lawsuit under the unique set of facts that led to Mr. Harden’s injuries.” Dkt. No. 60 at 4. As an initial matter, the Court notes that it will apply Indiana law to this dispute. See Hahn v. Walsh, 762 F.3d 617, 629 (7th Cir. 2014) (“[T]he Erie doctrine provides that federal courts sitting in diversity apply state [*7]  substantive law and federal procedural law.”) (internal quotation marks omitted). “Indiana’s choice of law rule for contract actions calls for applying the law of the forum with the most intimate contacts to the facts.” Nautilus Ins. Co. v. Reuter, 537 F.3d 733, 737 (7th Cir. 2008). Both insurance policies were issued in Indiana, the accident occurred in Indiana, and the Harden lawsuit was filed in Indiana. Harleysville also believes Indiana law should apply, and the Plaintiffs offer no argument to the contrary. With this established, the Court now turns to the parties’ arguments.    As noted above, Count I of the Plaintiffs’ Amended Complaint seeks declaratory judgment in two respects: 1) “that coverage for the Underlying Lawsuit is excluded under” the State National Policy’s “movement of property by mechanical device” exclusion; and 2) “that coverage for the Underlying Lawsuit is provided by the Harleysville Policy[.]” Dkt. No. 16 ¶ 34, 37. Both of these requests are premised on State National’s belief that “the ‘bodily injury’ in the Underlying Lawsuit occurred while Harden was using a forklift to load or unload property from a covered ‘auto'” as described in both policies. Id. ¶ 32, 35. Therefore, it appears to the Court that this case boils [*8]  down to whether Harden’s injuries occurred due to his use of forklift to load and/or unload skids from the tractor-trailer (meaning Harleysville would be liable), or if his injuries arose from Parker’s premature use of the tractor-trailer (meaning the Plaintiffs would be liable).    Predictably, Harleysville argues that “Mr. Harden’s injuries arose out of Ms. Parker’s use (operation) of an auto [and therefore] the underlying suit is excluded from coverage under the Harleysville policy.” Dkt. No. 49 at 17. The Plaintiffs, however, argue that “it can hardly be disputed that but for Mr. Harden’s movement of the property with a forklift, his injuries would not have occurred, and thus the injuries ‘result from’ the mechanical device.” Dkt. No. 57 at 8. The parties direct the Court to two seemingly different standards in order to determine what caused Harden’s injuries. Harleysville urges the Court to use the “efficient and predominating cause” standard. See Keckler v. Meridian Sec. Ins. Co., 967 N.E.2d 18, 23 (Ind. Ct. App. 2012) (“In Indiana, the phrase ‘arising out of’ [or ‘resulting from’] as used in insurance policies long has been construed to mean that one thing must be the ‘efficient and predominating’ cause of something else.”) (citing Indiana Lumbermens Mut. Ins. Co. v. Statesman Ins. Co., 260 Ind. 32, 291 N.E.2d 897, 899 (Ind. 1973)). The Plaintiffs, [*9]  however, urge this Court to use a different standard–the “efficient proximate cause rule.” See Hartford Cas. Ins. Co. v. Evansville Vanderburgh Pub. Library, 860 N.E.2d 636, 646 (Ind. Ct. App. 2007) (“The efficient proximate cause rule states that where a peril specifically insured against sets other causes into motion which, in an unbroken sequence, produce the result for which recovery is sought, the loss is covered, even though other events within the chain of causation are excluded from coverage.”) (quoting McDonald v. State Farm Fire & Casualty Co., 119 Wn.2d 724, 837 P.2d 1000, 1004 (Wash. 1992)). It appears to the Court, however, that the distinction between the two tests is irrelevant as “the ‘efficient and predominating’ cause of the accident under Indiana law [is] that which sets in motion the chain of circumstances leading up to the injury.” Westfield Ins. Co. v. Herbert, 110 F.3d 24, 26 (7th Cir. 1997).    Ultimately, the Court agrees with Harleysville that what set in motion the chain of circumstances leading up to Harden’s injury was Parker’s use of the tractor-trailer, specifically, when she prematurely pulled away:    Ms. Parker’s operation of the tractor-trailer set into motion the circumstances leading to Mr. Harden’s injury. . . . Without Ms. Parker’s operation of the tractor-trailer while Mr. Harden and his forklift are inside, Mr. Harden is not faced with any circumstances leading to injury at all. It is only the moment [*10]  that Ms. Parker drives away from the dock that the circumstances leading to Mr. Harden’s injury are set into motion.
Dkt. No. 49 at 22-23. There simply was no injury that occurred when property was being moved, i.e. during the loading/unloading process. It is true that Harden was unloading skids prior to the accident; however, as soon as Parker began to drive the trailer away, he stopped. As the Plaintiffs’ themselves note:   Mr. Harden then took off his seat belt, put the emergency brakes on the forklift, ran to the end of the trailer and waved his hand out the back of the trailer to get Ms. Parker’s attention. The forklift then slid down the length of the trailer and pushed Mr. Harden up against the wall.
Dkt. No. 53 at 5. Harden’s injuries did not result from the unloading of the skids; his injuries resulted from Parker negligently, and prematurely, driving the tractor-trailer away, causing the forklift to pin Harden against the wall of the tractor-trailer. In other words, had Parker not driven away, Harden would never have been injured.    Some of the cases the Plaintiffs cite illustrate why the facts of this case do not implicate the exclusion under the State National Policy, i.e. why [*11]  the injury did not occur during the loading/unloading process. For example, in Travelers Indem. Co. v. Gen. Star Indem. Co., 157 F. Supp. 2d 1273, 1287-88 (S.D. Ala. 2001), the court noted that “the evidence indicates that Buckman’s fall and resulting injuries arose out of the loading of the trailer and was directly caused, not by some independent or intervening cause wholly disassociated from, independent of and remote from the use of the [trailer], but by the alleged negligent placement of a pin routinely placed in the trailer to effect the loading of the trailer.” (internal citations and quotation marks omitted). Similarly, in Dauthier v. Pointe Coupee Wood Treating Inc., 560 So. 2d 556, 557 (La. Ct. App. 1990), the court found that Mr. Dauthier’s death occurred during the movement of property when the forklift itself became unbalanced and tilted forward, throwing Mr. Dauthier to the ground. Finally, in Shell Oil Co. v. Employers Ins. of Wausau, 69 Ore. App. 179, 684 P.2d 622, 623 (Or. Ct. App. 1984), an injury that occurred “when a forklift, operated by one of plaintiff’s employes [sic], struck a barrel jack” was found to be during the process of moving property, specifically, during the process of loading oil drums onto a truck. Unlike the present case, in all of these cases, the injuries arose directly from actions taken during the loading/unloading process or from the forklifts themselves.    Seemingly recognizing this, in their Response, the Plaintiffs [*12]  argue that    [u]nder Indiana law, loading and unloading includes preliminary and subsequent measures proximate in time related to loading and unloading. Because Ms. Parker’s negligent conduct occurred during the “loading and unloading” process, the exception to the 2(g) exclusion found in the Harleysville Policy operates to provide coverage for the Harden Lawsuit.
Dkt. No. 57 at 5. As Harleysville notes, this ignores the issue in this case. The question is not whether Harden was loading/unloading skids prior to the accident; it is undisputed that he was. The question is what caused his injuries–the fact that he was loading/unloading skids or the fact that Parker negligently operated the tractor-trailer. As explained above, both the efficient proximate cause and the efficient predominating cause test necessitate answering that question with the latter explanation. Accordingly, the Defendant’s motion for summary judgment on Count I is GRANTED.1
1   The Plaintiffs also argue that the “Aircraft, Auto, or Watercraft” exclusion is ambiguous and/or provides illusory coverage as “applied to the unique facts of the Harden Lawsuit.” Dkt. No. 60 at 7. Their argument is premised on the belief that “Mr. Harden’s [*13]  injuries arose out of both his unloading of the trailer with a forklift as well as Ms. Parker’s moving the trailer while Mr. Harden was unloading.” Dkt. No. 53 at 24. Inasmuch as the Court has found that Harden’s injuries were not caused by his use of a forklift during the loading/unloading of the skids, this argument need not be addressed further.    Counts II and III of the Plaintiffs’ Amended Complaint alternatively seek subrogation or contribution from Harleysville. As the Court has found that Harleysville has no liability for the Harden lawsuit because the accident falls under the “Aircraft, Auto, or Watercraft” exclusion, it is not required to subrogate or contribute to the Plaintiffs. Accordingly, summary judgment is GRANTED in favor of Harleysville on Counts II and III of the Plaintiffs’ Amended Complaint.2
2   As the Court has found that Harleysville is entitled to summary judgment because the facts of the accident fall into the “Aircraft, Auto, or Watercraft” exclusion, it need not address Harleysville’s other arguments for why it is entitled to summary judgment.
IV. CONCLUSION     For the foregoing reasons, the Defendant’s motion for summary judgment (dkt. no. 48) is GRANTED. The Plaintiffs’ [*14]  motion for summary judgment (dkt. no. 53) is DENIED.    SO ORDERED: 11/14/14    /s/ William T. Lawrence    Hon. William T. Lawrence, Judge    United States District Court    Southern District of Indiana    

GREAT WEST CASUALTY COMPANY, Plaintiff, vs. LAKEVILLE MOTOR EXPRESS, INC., et al., Defendants.

 

Cause No. 1:13-cv-198-WTL-MJD

 

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF INDIANA, INDIANAPOLIS DIVISION

 

2014 U.S. Dist. LEXIS 163935

 

 

November 21, 2014, Filed

 

NOTICE:

Decision text below is the first available text from the court; it has not been editorially reviewed by LexisNexis. Publisher’s editorial review, including Headnotes, Case Summary, Shepard’s analysis or any amendments will be added in accordance with LexisNexis editorial guidelines.

 

OPINION

[*1] ENTRY ON CROSS MOTIONS FOR SUMMARY JUDGMENT

This cause is before the Court on the various motions for summary judgment filed by the parties. The motions are fully briefed, and the Court, being duly advised, rules as follows:

– The motion of Defendant Pamela K. Robbins, as Administratrix of the Estate of Mike Douglas Robbins, Deceased (dkt. no. 148) is DENIED;

– The motion of Defendant Continental Western Insurance Company (“Continental”) (dkt. no. 147) is DENIED;1

– The motion of Plaintiff Great West Casualty Company (“Great West”) (dkt. no. 152) is

GRANTED; and

– The motion of Defendant Wren Equipment, LLC (“Wren”) (dkt. no. 158) is

GRANTED.2

The Court’s reasoning is set forth below.

1 In making its motion for summary judgment and responding to the various other motions for summary judgment, Continental fully incorporates Mrs. Robbins’ motion for summary judgment and related filings.

2 In making its motion for summary judgment and responding to the various other motions for summary judgment, Wren fully incorporates Great West’s motion for summary judgment and related filings.

I.  STANDARD

Federal Rule of Civil Procedure 56(a) provides that summary judgment is appropriate “if the movant shows that there is no genuine dispute as to [*2]  any material fact and the movant is entitled to judgment as a matter of law.” In ruling on a motion for summary judgment, the Court accepts as true the admissible evidence presented by the non-moving party and draws all reasonable inferences in the non-movant’s favor. Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009). However, “[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial.” Id. Finally, the non-moving party bears the burden of specifically identifying the relevant evidence of record, and “the court is not required to scour the record in search of evidence to defeat a motion for summary judgment.” Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001).

II.  BACKGROUND

On January 4, 2011, in Richmond, Indiana, Mike Douglas Robbins was fatally injured when the vehicle he was driving was struck by a tractor-trailer driven by Linda K. Phillips. At the time of the accident, Phillips was driving the tractor-trailer in the course and scope of her employment with Hoker Trucking, LLC (“Hoker”). The Peterbuilt tractor involved in the accident was owned by Hoker, and the Wabash National trailer being pulled by the tractor [*3]  was owned by Wren. As of July 1, 2001, however, Wren, an equipment leasing company, had leased the trailer to Lakeville Motor Express, Inc. (“Lakeville”). Lakeville, in turn, leased the trailer to Hoker on August 21, 2006, pursuant to a Trailer Interchange Agreement.

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Prior to that, Great West issued a Commercial Lines Insurance Policy to Lakeville (the “Policy”). The Policy provided commercial automobile liability coverage to Lakeville between September 1, 2010, and September 1, 2011.3

After the accident, Pamela K. Robbins, as administratrix of Mr. Robbins’ estate, filed a negligence suit against Hoker, Phillips, and Lakeville in state court. Lakeville was subsequently dismissed from the lawsuit. This declaratory judgment suit brought by Lakeville’s insurer, Great West, followed.

Interestingly, this case is not about Lakeville’s coverage under the Policy. Rather, Great West is seeking a declaration from the Court that:

· Hoker and Phillips are not “insureds” under the Great West Policy; therefore, the Great West Policy does not provide any coverage to Hoker or Phillips for the Accident.

· Great West is not liable to defend or indemnify Hoker or Phillips for any judgment that may be entered [*4]  against either of them in the underlying lawsuit.

· Great West is entitled to recover the costs of [its] declaratory judgment action and all other appropriate relief.

Great West’s Br. at 2, Dkt. No. 153. Mrs. Robbins disagrees and strongly insists that Hoker and Phillips are “insureds” under Lakeville’s Policy with Great West. Thus, according to Mrs. Robbins, Great West is required to defend and/or indemnify Hoker and Phillips in relation to the underlying state court action.4

The Policy defines an insured as follows:

3 Wren was identified as an additional insured under the Great West Policy.

4 Hoker’s insurer, Northland Insurance Co. is currently providing a defense to Phillips and Hoker in the underlying state court action. Northland also provided a defense to Lakeville prior to its dismissal from the suit. It is also noteworthy that the per occurrence limit under Northland’s policy is $1,000,000, whereas the per occurrence limit under Great West’s Policy is $5,000,000.

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A.  COVERAGE

. . .

1.  WHO IS AN INSURED

The following are “insureds”:

a. You for any covered “auto.”5

b. Anyone else while using with your permission a covered “auto” you own, hire or borrow except:

(1) The owner or anyone [*5]  else from whom you hire or borrow a covered “private passenger type” “auto.”

(2) Your “employee” or agent if the covered “auto” is a “private passenger type” “auto” and is owned by that “employee” or agent or a member of his or her household.

(3) Someone using a covered “auto” while he or she is working in a business of selling, servicing, repairing, parking or storing “autos” unless that business is yours.

(4) Anyone other than your “employees,” partners (if you are a partnership), members (if you are a limited liability company), or a lessee or borrower or any of their “employees,” while moving property to or from a covered “auto.”

(5) A partner (if you are a partnership), or a member (if you are a limited liability company), for a covered “private passenger type” “auto” owned by him or her or a member of his or her household.

(6) Anyone described in paragraphs c., d. or e. below.

Dkt. No. 109-6 at 33. An endorsement in the Policy further modified this provision as follows:

The following is added to Section II – Liability Coverage – Paragraph A.1.b. – Who Is An Insured:

1. Anyone who has leased, hired, rented, or borrowed an “auto” from you that is used in a business other than yours.

5 It [*6]  is undisputed that a trailer is an “auto” under the Policy. 4

2. Anyone that is using an “auto” of yours under a written Trailer Interchange Agreement.

Id. at 21 (emphasis added). Great West denies coverage to Phillips and Hoker pursuant to this

endorsement.6

III.  DISCUSSION

Mrs. Robbins argues that the Great West Policy provides coverage to Hoker and Phillips

because: (1) The Policy is literally ambiguous and must be construed in favor of coverage; (2)

any alleged limitations in the “Who Is An Insured” endorsement are not enforceable because the

policy is structurally ambiguous; (3) assuming the policy and endorsement are not ambiguous,

the specific facts of this case require coverage under the Policy; and/or (4) regardless of the

Policy, Great West is statutorily required to provide liability coverage to Hoker and Phillips.

Each of Mrs. Robbins’ arguments is discussed below.

A. Literal Ambiguity

First, Mrs. Robbins argues that, taken together, the Policy and the endorsement are

literally ambiguous. Specifically, Mrs. Robbins argues that, because subsection A.1.b. already

has subparagraphs (1) and (2), it is unclear exactly where subparagraphs 1. and 2. from the

endorsement should be added. Although Great [*7]  West concedes that, for purposes of clarity, it

should have numbered the subparagraphs (7) and (8), it is clear that the subparagraphs should be

added to the end of subsection A.1.b. and further limit who is an insured under the Policy. The

Court agrees.

6 Great West objects to and moves to strike the “Facts” section in Mrs. Robbins’ brief (dkt. no. 155 at 8). The Court need not and does not resolve Great West’s objection and motion, as the Court is capable of determining supported factual evidence from argument and rhetoric, and, even considering Mrs. Robbins’ designated facts, Great West is entitled to summary judgment as a matter of law.

5

Under Minnesota law,7 “[i]nsurance coverage issues and the interpretation of insurance

contract language are questions of law.” Jenoff, Inc. v. New Hampshire Ins. Co., 558 N.W.2d

260, 262 (Minn. 1997).

When insurance policy language is clear and unambiguous, “the language used must be given its usual and accepted meaning.” Lobeck v. State Farm Mut. Auto. Ins. Co., 582 N.W.2d 246, 249 (Minn. 1998) (citing Bobich v. Oja, 258 Minn. 287, 294, 104 N.W.2d 19, 24 (1960)). If policy language is ambiguous, it must be interpreted in favor of coverage. Nordby v. Atlantic Mut. Ins. Co., 329 N.W.2d 820, 822 (Minn. 1983).

Wanzek Const., Inc. v. Employers Ins. of Wausau, 679 N.W.2d 322, 324-25 (Minn. 2004).

In deciding whether an ambiguity truly exists, . . . a policy must be read as a whole. The language must be considered within its context, and [*8]  with common sense. If a phrase is subject to two interpretations, one reasonable and the other unreasonable in the context of the policy, the reasonable construction will control and no ambiguity exists.

Mutual Serv. Cas. Ins. Co. v. Wilson Twp., 603 N.W.2d 151, 153 (Minn. Ct. App. 1999).

As noted above, Great West argues that the proper and most reasonable interpretation of

the policy and the endorsement is effectively as follows:

1.  WHO IS AN INSURED

The following are “insureds”:

a. You for any covered “auto.”

b. Anyone else while using with your permission a covered “auto” you own, hire or borrow except:

(1) The owner or anyone else from whom you hire or borrow a covered “private passenger type” “auto.”

(2) Your “employee” or agent if the covered “auto” is a “private passenger type” “auto” and is owned by that “employee” or agent or a member of his or her household.

7 The parties agree that Minnesota law applies to this case. Accordingly, the Court has not undertaken an independent choice of law analysis.

6

(3) Someone using a covered “auto” while he or she is working in a business of selling, servicing, repairing, parking or storing “autos” unless that business is yours.

(4) Anyone other than your “employees,” partners (if you are a partnership), members (if you are a limited [*9]  liability company), or a lessee or borrower or any of their “employees,” while moving property to or from a covered “auto.”

(5) A partner (if you are a partnership), or a member (if you are a limited liability company), for a covered “private passenger type” “auto” owned by him or her or a member of his or her household.

(6) Anyone described in paragraphs c., d. or e. below.

(7) Anyone who has leased, hired, rented, or borrowed an “auto” from you that is used in a business other than yours.

(8) Anyone that is using an “auto” of yours under a written Trailer Interchange Agreement.

Mrs. Robbins argues that this interpretation is not reasonable. She does not, however, provide

any support or explanation as to why this interpretation is unreasonable. Rather, Mrs. Robbins

argues that the “more logical interpretation of the endorsement” is as follows:

1.  WHO IS AN INSURED

The following are “insureds”:

a. You for any covered “auto.”

b. 1. Anyone who has leased, hired, rented, or borrowed an “auto” from you that is used in a business other than yours.

2. Anyone that is using an “auto” of yours under a written Trailer Interchange Agreement.

Anyone else while using with your permission a covered “auto” you [*10]  own, hire or borrow except:

(1) The owner or anyone else from whom you hire or borrow a covered “private passenger type” “auto.”

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(2) Your “employee” or agent if the covered “auto” is a “private passenger type” “auto” and is owned by that “employee” or agent or a member of his or her household.

(3) Someone using a covered “auto” while he or she is working in a business of selling, servicing, repairing, parking or storing “autos” unless that business is yours.

(4) Anyone other than your “employees,” partners (if you are a partnership), members (if you are a limited liability company), or a lessee or borrower or any of their “employees,” while moving property to or from a covered “auto.”

(5) A partner (if you are a partnership), or a member (if you are a limited liability company), for a covered “private passenger type” “auto” owned by him or her or a member of his or her household.

(6) Anyone described in paragraphs c., d. or e. below.

Robbins’ Br. at 12. Under the foregoing approach, the endorsement actually grants coverage to

Hoker and Phillips. This interpretation, however, is hardly logical. It is clear that the clauses in

the endorsement are meant to limit coverage and not grant coverage [*11]  to those remote third parties

contemplated by the clauses. Thus, as Great West argues, the subparagraphs should be added to

the end of subsection A.1.b. Great West’s interpretation is reasonable and Mrs. Robbins’

interpretation is not. Accordingly, the policy is not literally ambiguous.

B. Structural Ambiguity

Next, Mrs. Robbins argues that the Policy is structurally ambiguous because “a

reasonable person would not realize [the endorsement’s] existence and application.” Id. at 13.

Thus, she argues that the endorsement should be disregarded. To the extent the Minnesota

Supreme Court would adopt such a principle, the Court does not agree that it would be used to

invalidate the endorsement in this case.

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Mrs. Robbins relies mostly on an Indiana case, Nat’l Mut. Ins. Co. v. Curtis, 867 N.E.2d 631 (Ind. Ct. App. 2007) (finding that trampoline exclusion in homeowner’s policy was not enforceable because it was “obscured”), to support her argument. In Curtis, the court concluded that “if an insurance carrier desires to exclude coverage, this should be spelled out for the policyholder in clear and unmistakable language with conspicuous and plain positioning.” Id. at 637. Otherwise, the exclusion will be deemed ambiguous. Mrs. Robbins also cites to two Wisconsin cases: Folkman v. Quamme, 665 N.E.2d 857 (Wis. 2003), where a “contextual [*12]  ambiguity” voided a provision in an insurance policy, and Dowhower v. Marquez, 674 N.W.2d 906 (Wis. Ct. App. 2003), where a policy was deemed too “organizationally complex” for an insured to navigate.

First and foremost, Minnesota courts have not recognized any similar doctrine. Nonetheless, even assuming Minnesota courts did recognize such a doctrine, it would not be used to invalidate the endorsement in this case. Mrs. Robbins argues that the endorsement at issue “can only be uncovered after mining through the Policy.” Robbins’ Br. at 15. In fact, it took Great West’s own employees “more than five minutes” to locate the endorsement. Id. These arguments, however, are not persuasive. Unfortunately, these facts would likely be true of most commercial insurance policies. The Court will not invalidate an endorsement simply because it is located deep within a several hundred page policy-that would have the effect of making only the first few pages of a policy enforceable. More importantly, no one, other than Mrs. Robbins (and Continental), question the endorsement’s existence and application. In this regard, all of the parties to the Policy believe that Hoker and Phillips are not “insureds” under the Policy. The endorsement clearly states in [*13]  bold language: “THIS ENDORSEMENT CHANGES THE

POLICY. PLEASE READ IT CAREFULLY. CHANGES – WHO IS AN INSURED.” Dkt.

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No. 109-6 at 21. The endorsement’s form number is also listed on the declarations page. Based on the foregoing, the Court will not invalidate the endorsement on the basis of structural ambiguity.

C. Facts/Policy Interpretation

Mrs. Robbins further argues that, even if the endorsement is valid, Great West cannot “demonstrate that the Trailer was being used in a business other than Lakeville/Wren’s and/or that the alleged exception for a trailer being used pursuant to a written trailer interchange agreement applies.” Robbins’ Br. at 17. The Court does not agree.

“Anyone who has leased, hired, rented, or borrowed an ‘auto’ from [Lakeville] that is used in a business other than [Lakeville’s]” is not an insured under the Policy. Dkt. No. 109-6 at 21. It is undisputed that, at the time of the accident, Phillips was driving the tractor-trailer in the course and scope of her employment with Hoker, and was hauling a load under Hoker’s direction and in furtherance of Hoker’s business. Hoker had also been the lessee of the trailer for almost five years prior to the accident. Mrs. Robbins [*14]  appears to argue that the trailer was also “simultaneously” being used in Lakeville’s business at the time of the accident, because Lakeville, a motor carrier like Hoker, had a leasehold interest in the trailer. While the Court does not find much merit in this argument, the Court need not address whether Lakeville’s leasehold interest created a “simultaneous” business interest, because the second clause in the endorsement is easily satisfied.

Indeed, “[a]nyone that is using an ‘auto’ of [Lakeville’s] under a written Trailer Interchange Agreement” is also not an insured under the Policy. Id. Hoker leased the trailer from

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Lakeville pursuant to a Trailer Interchange Agreement dated August 21, 2006.8 Although the Trailer Interchange Agreement did not specify the exact trailers covered by the lease, it stated that it applied to trailers “owned by” Lakeville or “under long term lease to” Lakeville. Mrs.

Robbins argues that the trailer in question was not “under long term lease to” Lakeville. Rather, at the time of the accident, the lease was month-to-month. While this is true, the trailer was leased by Wren to Lakeville from 2001 to 2013. Despite the month-to-month nature of the lease at [*15]  the time of the accident, this twelve-year span (and the approximate ten-year span at the time of the accident) satisfies the “long term lease” requirement of the Trailer Interchange Agreement. Additionally, Mrs. Robbins’ argument that the trailer was not a part of the Trailer Interchange Agreement because Wren did not lease it to Lakeville until 2009 (thus, it was not covered by the 2006 Trailer Interchange Agreement) is unavailing. Although a new lease was executed on December 18, 2009, Lakeville clearly leased the trailer (VIN # 1JJV532W6XL546134) from Wren beginning on July 1, 2001.

Mrs. Robbins’ final argument that the lease agreement was a “complete sham that should be disregarded” is also futile (and, in the Court’s perspective, hard to understand). She argues that “[t]he [2009] Lease was executed by the same person for both Wren and Lakeville, and provided no benefit to Wren. Lakeville merely agreed to purchase insurance for the Trailers. Wren could have accomplished the same benefit by simply parking all of its trailers.” Robbins’ Br. at 20. Mrs. Robbins, however, provides no legal support for these arguments, and, as Great West notes, Wren’s and Lakeville’s similarity in owners [*16]  “does not defeat the independence of

8 The Trailer Interchange Agreement was “in effect from the moment” Hoker took possession of the trailer in question and terminated “at such time as the trailer [was] returned” to Lakeville. Dkt. No. 109-12.

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those two separate companies nor does it invalidate the lease.” Great Wests’ Resp. at 16. Thus,

the argument is ineffective.

D. Statutory Arguments

Lastly, Mrs. Robbins argues that Great West is statutorily required to provide coverage to

Hoker and Phillips. Both Lakeville and Wren are Minnesota companies. However, under an

endorsement in the Great West Policy, Great West was required to comply with the financial

responsibility laws of several states, including Wisconsin. Thus, according to Mrs. Robbins,

Wisconsin Statute §§ 194.41 and 632.32 are applicable and require Great West to provide

coverage to Hoker and Phillips. Robbins’ Br. at 21. Great West insists that the Wisconsin

Statutes are not applicable. The Court agrees with Great West.

Wisconsin Statute § 194.41(1) provides as follows:

No permit or vehicle registration may be issued to a common motor carrier of property, contract motor carrier, or rental company, no permit or vehicle registration may remain in force to operate any motor vehicle under the authority [*17]  of this chapter, and no vehicle registration may be issued or remain in force for a semitrailer unless the carrier or rental company has on file with the department and in effect an approved certificate for a policy of insurance or other written contract in such form and containing such terms and conditions as may be approved by the department issued by an insurer authorized to do a surety or automobile liability business in this state under which the insurer assumes the liability prescribed by this section with respect to the operation of such motor vehicles. The certificate or other contract is subject to the approval of the department and shall provide that the insurer shall be directly liable for and shall pay all damages for injuries to or for the death of persons or for injuries to or destruction of property that may be recovered against the owner or operator of any such motor vehicles by reason of the negligent operation thereof in such amount as the department may require. Liability may be restricted so as to be inapplicable to damage claims on account of injury to or destruction of property transported, but the department may require, and with respect to a carrier transporting [*18]  a building, as defined in s. 348.27 (12m) (a) 1., shall require, a certificate or other contract protecting the owner of the property transported by carriers from loss or damage in the amount and under the conditions as the department may require. No permit or vehicle registration may be issued to a common motor carrier of passengers by any motor vehicle, or other carrier of passengers by motor bus, except those registered in accordance with s. 341.26 (2)

(a) and (d), and no permit or vehicle registration may remain in force to operate any

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motor vehicle unless it has on file with the department a like certificate or other contract in the form and containing the terms and conditions as may be approved by the department for the payment of damages for injuries to property and injuries to or for the death of persons, including passengers, in the amounts as the department may require. This subsection does not apply to a motor carrier that is registered by another state under the unified carrier registration [UCR] system consistent with the standards under 49 USC 13908 and 14504a.

(emphasis added). Great West argues that this statute does not apply because (1) the accident

happened in Indiana, not Wisconsin, [*19]  and Lakeville and Wren are Minnesota companies, (2)

Lakeville was registered under the UCR with its base state being Minnesota, and (3) the Trailer

Interchange Agreement required Hoker to hold Lakeville harmless and indemnify Lakeville for

Hoker’s negligence.

The Court agrees that the Wisconsin Statute § 194.41(1) is not applicable to the instant

case because Lakeville is registered under the UCR in Minnesota. The foregoing statute clearly

states that it does not apply “to a motor carrier that is registered by another state under the

[UCR].” Wis. Stat. § 194.41(1). It appears that it is also inapplicable to Wren, as Wren is not a

motor carrier.

Mrs. Robbins, however, also argues that “Great West must comply with Wisconsin’s

Omnibus Statute, Wis. Stat. § 632.32, which requires that insurers provide the same liability

coverage to permissive users as insurers provide to named insureds.” Robbins’ Br. at 24. In

response, Great West argues that the statute is not applicable because the Policy was not issued

or delivered in Wisconsin. Indeed, the statute reads in relevant part: “Except as otherwise

provided, this section applies to every policy of insurance issued or delivered in this state . . . .”

Wis. Stat. § 632.32(1). It is undisputed that Great West is a Nebraska insurer and Lakeville is [*20]  a

Minnesota corporation. Thus, the Policy was issued in Nebraska and delivered in Minnesota.

Clearly, Wisconsin Statute § 632.32 does not apply. See Sisson v. Hansen Storage Co., 756

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_______________________________

Hon. William T. Lawrence, Judge United States District Court Southern District of Indiana

N.W.2d 667, 675-76 (Wis. Ct. App. 2008) (applying plain language of statute); Danielson v. Gasper, 623 N.W.2d 182, 185-86 (Wis. Ct. App. 2000) (“Wisconsin Stat. § 632.32(1) does not require a Minnesota insurer issuing a policy in Minnesota to comply with statutes established for policies issued in Wisconsin.”).

Based on the foregoing, the Court finds that Hoker and Phillips are not insureds under the Great West Policy, and Great West is not required to defend or indemnify Hoker or Phillips in relation to the underlying state court action. Thus, Great West and Wren are entitled to summary judgment.

IV. CONCLUSION

For the reasons set forth above, Defendant Mrs. Robbins’ motion (dkt. no. 148) is

DENIED, Defendant Continental’s motion (dkt. no. 147) is DENIED, Plaintiff Great West’s motion (dkt. no. 152) is GRANTED, and Defendant Wren’s motion (dkt. no. 158) is

GRANTED.

The Court, however, is withholding final judgment in this matter until the claims against the defaulted Defendants are resolved.9 Great West [*21]  has not yet moved for default judgment

against those parties.10

SO ORDERED: 11/21/14

Copies to all counsel of record via electronic communication.

9Clerk’s entry of default was entered against Lakeville, Phillips, and Hoker on September 27, 2013 (dkt. nos. 67-69).

10Although the docket text indicates that Great West filed motions for default judgment (see dkt nos. 60, 62, 64), the motions requested only an entry of default (per the Court’s entry at dkt. no. 58).

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