AIM LEASING COMPANY, et al., Plaintiffs, v. RLI CORP., et al., Defendants.

 

CASE NO. 4:14CV2161

 

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO, EASTERN DIVISION

 

2015 U.S. Dist. LEXIS 56780

 

 

April 30, 2015, Decided

April 30, 2015, Filed

 

 

COUNSEL:  [*1] For Aim Leasing Company, doing business as AIM NationaLease, AIM Leasing Drivers Company, doing business as AIM Dedicated Logistics, AIM Integrated Logistics, Inc., Plaintiffs: Richard G. Witkowski, LEAD ATTORNEY, Nicholas J. Dertouzos, Nicola, Gudbranson & Cooper, Cleveland, OH.

 

For RLI Insurance Company, Safe Fleet Insurance Services, Inc., David Williams, Defendants: Brett K. Bacon, Jennifer L. Isaacs, Frantz Ward, Cleveland, OH.

 

For Main Street America MGA Inc., Rick Walker, Defendants: Jason D. Winter, Julian T. Emerson, Reminger & Reminger – Cleveland, Cleveland, OH; John C. Albert, Crabbe, Brown & James, Columbus, OH.

 

For Harbor America Speciality Brokerage, LLC, Harbor America Speciality Brokerage, LLC, CT Corporation System, Defendants: Joseph F. Nicholas, Jr., Mazanec, Raskin & Ryder, Cleveland, OH.

 

For Harbor America East, Inc., Defendant, Cross Defendant, 3rd Party Plaintiff: John C. Albert, Crabbe, Brown & James, Columbus, OH.

 

For Safe Fleet Insurance Services, Inc., David Williams, 3rd Party Plaintiffs, Cross-Claimants: Brett K. Bacon, Jennifer L. Isaacs, Frantz Ward, Cleveland, OH.

 

For RJL Insurance Services, Inc, 3rd Pty Defendant: Larry C. Greathouse, Gallagher Sharp – Cleveland, [*2]  Cleveland, OH.

 

For Harbor America Speciality Brokerage, LLC, Cross Defendant: Joseph F. Nicholas, Jr., Mazanec, Raskin & Ryder, Cleveland, OH.

 

For Main Street America MGA Inc., Cross Defendant: John C. Albert, Crabbe, Brown & James, Columbus, OH.

 

For Richard J Leibfried, 3rd Pty Defendant: Larry C. Greathouse, Gallagher Sharp – Cleveland, Cleveland, OH.

 

For Safe Fleet Insurance Services, Inc., 3rd Pty Defendant: Brett K. Bacon, Jennifer L. Isaacs, Frantz Ward, Cleveland, OH.

 

JUDGES: Benita Y. Pearson, United States District Judge.

 

OPINION BY: Benita Y. Pearson

 

OPINION

 

MEMORANDUM OF OPINION AND ORDER

[Resolving ECF No. 14]

Pending before the Court is a motion to dismiss filed by Defendant RLI Insurance Company (“RLI”). ECF No. 14. For the reasons provided below, the Court grants Defendant RLI’s Motion to Dismiss.

 

I. Factual and Procedural History

The genesis of this lawsuit is the alleged failure of Plaintiffs’ workers’ compensation insurance, provided by non-party Ullico Company (“Ullico”), to fully cover Plaintiffs’ workers’ compensation costs and exposure. Aim Leasing Company, AIM Leasing Drivers Company, and AIM Integrated Logistics, Inc., (collectively, “Plaintiffs”) allege the following facts. See ECF No. 1. Between [*3]  2009 and 2013, Defendant Safe Fleet Insurance Services, Inc. (“Safe Fleet”), one of Plaintiffs’ insurance brokers, brokered and/or placed various types of insurance for Plaintiffs through RLI and Ullico. RLI provided Plaintiffs with general liability, business automobile, cargo, and other loss coverage. Defendant David Williams (“Williams”), Vice President and General Manager of Safe Fleet, was primarily responsible for designing, managing, brokering, and placing insurance for Plaintiffs. Plaintiffs also allege that David Williams (“Williams”) is an executive with RLI. ECF No. 1 at Page ID#: 5, ¶ 13. Plaintiffs relied upon Safe Fleet and Williams to design, place, and broker their general liability, business automobile, cargo, and workers’ compensation insurance. Defendant Main Street America MGA Inc. (“Main Street”), an insurance producer and agency, provided workers’ compensation insurance quotes to Plaintiffs at the direction of Safe Fleet, Williams, and Defendant Rick Walker (“Walker”), President of Defendant Harbor America Specialty Brokerage, LLC (“Harbor”). Harbor, another insurance broker for Plaintiffs, is responsible for receiving Plaintiffs’ wired deposits and premium payments [*4]  and also serving as a managing general agent and/or underwriter for Ullico’s workers’ compensation insurance program.

Safe Fleet, Main Street, Williams, Walker, and Harbor presented to Plaintiffs insurance quotes, including a guaranteed cost program, from Ullico and RLI as a package deal that would allow Plaintiffs to save on premiums of insurance coverage if Plaintiffs secured from RLI and Ullico simultaneously. Plaintiffs purchased insurance coverage from RLI and Ullico. Williams served as Plaintiffs’ contact person for RLI and Ullico. Ullico issued four annual Workers’ Compensation & Employer’s Liability Policies to Plaintiffs for the policy periods August 1, 2009 through February 1, 2013.1 On February 1, 2012, Plaintiffs made a deposit payment to Ullico for the policy period February 1, 2012 to February 1, 2013, in an amount in excess of $193,275. At the conclusion of the policy period, Ullico was required to adjust and/or refund to Plaintiffs any overpayment of premium payments based upon actual payroll or remuneration amounts made during the period. During the contract renewal, Safe Fleet, Williams, and Walker advised Plaintiffs that Ullico’s financial strength rated at B+ (good), [*5]  but on February 7, 2012, Ullico’s financial strength was downgraded to a B (fair). During a telephone conference call on March 7, 2012, Williams, as a representative of Safe Fleet, Walker, as a representative of Main Street, and Harbor advised and recommended that Plaintiffs nonetheless stay with Ullico, advice that Plaintiffs adopted. Defendants Williams and Walker advised Plaintiffs that if Ullico was unable to satisfy Plaintiffs’ workers’ compensation claims, each state in which Plaintiffs conducted business offered a “guarantee fund” with no limits on claim coverage, serving as a back-up or additional last-resort insurer of workers’ compensation claims.

 

1   The Complaint contains no further information regarding the general liability, business automobile, and cargo insurance provided by RLI.

In early 2013, Ullico was placed into receivership and the Court of Chancery in Delaware allegedly froze Plaintiffs’ premium deposit paid to Harbor on behalf of Ullico. On or about March 13, 2013, all claim payments on Plaintiffs’ policies were suspended, despite numerous pending and new claims. Meanwhile, Plaintiffs learned that they exceeded the net worth limit or were otherwise subject to restrictions [*6]  imposed by several states regarding their workers’ compensation claims, contrary to the advice Plaintiffs received. Illinois’s guarantee fund denied coverage for three of Plaintiffs’ workers’ compensation claims in excess of $292,000 based on a net worth exclusion. Plaintiffs incurred uninsured legal fees in excess of $6,500. Indiana has placed a $100,000 maximum on a workers’ compensation claim that is anticipated to be in excess of $500,000, plus legal fees and expenses.

Williams informed Plaintiffs that he was unaware of the net worth maximum exclusion and apologized for Plaintiffs’ liability exposure. Plaintiffs also learned that John Doe Defendant 1, an unknown company owned and controlled by Harbor, reinsured losses owned by Ullico. Plaintiffs are not privy to the reinsurance, however, due to Ullico’s insolvency and receivership.

Based on the problems with Ullico’s workers’ compensation coverage, Plaintiffs brought the following five claims against all Defendants: (1) fraud/misrepresentation; (2) broker/agent/producer negligence; (3) breach of fiduciary duty; (4) breach of contract; and (5) unjust enrichment. ECF No. 1. There are no attachments to Plaintiffs’ Complaint. On November [*7]  5, 2014, Plaintiffs voluntarily dismissed their claims against Defendants RLI Corporation and RLI Transportation. ECF No. 11. Defendant RLI Insurance Company filed a Motion to Dismiss. ECF No. 14. Plaintiffs filed an opposition, to which they attached six exhibits. ECF No. 32. RLI filed a reply. ECF No. 36. The motion is now ripe for adjudication.

 

II. Standard of Review

To survive a Rule 12(b)(6) motion, the complaint must allege enough facts to “raise a right to relief above the speculative level” and “state a claim to relief that is plausible on its face.” Bell Atlantic v. Twombly, 550 U.S. 544, 555, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). “In reviewing a dismissal under Rule 12(b)(6), all allegations in the complaint should be taken as true, and the complaint is to be construed liberally in favor of the party opposing the motion to dismiss.” Scott v. Ambani, 577 F.3d 642, 646 (6th Cir. 2009). A court may order dismissal “if on the face of the complaint there is an insurmountable bar to relief indicating that the plaintiff does not have a claim.” Ashiegbu v. Purviance, 76 F. Supp. 2d 824, 828 (S.D. Ohio 1998), aff’d 194 F.3d 1311 (6th Cir. 1999), cert. denied, 529 U.S. 1001, 120 S. Ct. 1287, 146 L. Ed. 2d 215 (2000).. Although “[a] district court is not permitted to consider matters beyond the complaint”, Mediacom Southeast LLC v. BellSouth Telecommunications, Inc., 672 F.3d 396, 399 (6th Cir. 2012), a court may consider “the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant’s motion to dismiss [*8]  so long as they are referred to in the [c]omplaint and are central to the claims contained therein.” Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426, 430 (6th Cir. 2008) (emphasis added). “While a complaint need not set down in detail all the particularities of a plaintiff’s claim, the complaint must give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” Lillard v. Shelby County Bd. Of Educ., 76 F.3d 716, 724 (6th Cir. 1996) (internal quotation marks omitted). The plaintiff must do more than make bare legal conclusions. Id. at 725. The Court does not accept “conclusory legal allegations that do not include specific facts necessary to establish the cause of action.” New Albany Tractor, Inc. v. Louisville Tractor, Inc., 650 F.3d 1046, 1050 (6th Cir. 2011).

 

III. Discussion

 

A. Plaintiffs Have Failed to Make a Valid Fraud or Misrepresentation Claim

Plaintiffs allege that RLI made certain fraudulent promises and misrepresentations regarding Ullico’s solvency and state guarantee funds, promises upon which Plaintiffs relied. In order to establish a claim for intentional misrepresentation or fraud under Ohio law, a party must show (1) a representation or, where there is a duty to disclose, concealment of a fact, (2) which is material to the transaction at hand, (3) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false [*9]  that knowledge may be inferred, (4) with the intent of misleading another into relying upon it, (5) justifiable reliance upon the representation or concealment, and (6) a resulting injury proximately caused by the reliance. Carpenter v. Scherer-Mountain Ins. Agency, 135 Ohio App. 3d 316, 733 N.E.2d 1196, 1205 (Ohio Ct. App. 1999); see also Aetna Cas. and Sur. Co. v. Leahey Const. Co., 219 F.3d 519, 540 (6th Cir. 2000) (citing Cohen v. Lamko, Inc., 10 Ohio St. 3d 167, 10 Ohio B. 500, 462 N.E.2d 407, 409 (Ohio 1984)).

The very first prong presents a roadblock for Plaintiffs. In their Complaint, Plaintiffs have failed to state what representation RLI made about Ullico and the workers’ compensation insurance it provided Plaintiffs. The matter before the Court deals with workers’ compensation insurance provided by Ullico and makes no allegations regarding the general insurance provided to Plaintiffs by RLI. Plaintiffs allege that Williams, an insurance agent for Safe Fleet, is also an “executive” of RLI. No factual allegations exist, however, about the allegedly fraudulent statements that RLI made, or that Williams may have made on RLI’s behalf. The Complaint itself presents the theory that Williams acted on behalf of Safe Fleet, not RLI, when he presented Plaintiffs with Ullico’s workers’ compensation insurance program and when he encouraged Plaintiffs to remain with Ullico. The Complaint lacks any allegation that RLI made a misrepresentation or concealed information [*10]  which it was obliged to disclose. In their opposition memorandum, Plaintiffs attempt to introduce an e-mail in which Williams discussed the prepaid workers’ compensation insurance premium deposit paid by Plaintiffs, an e-mail that he signed “VP Marketing/Sales RLI Transportation Insurance.” ECF No. 14-3. Because a district court can only consider matters beyond the complaint in a limited set of circumstances not applicable here, the Court will not consider any new evidence or factual allegations that Plaintiffs present in their opposition memorandum. See Winget v. JP Morgan Chase Bank, N.A., 537 F.3d 565, 576 (6th Cir. 2008) (stating that a district court is limited to the complaint when reviewing a motion to dismiss); see also Dana Ltd v. Aon Consulting, Inc., 984 F. Supp. 2d 755, 770, n. 2 (N.D. Ohio 2013) (stating that “a complaint cannot be amended by briefs in opposition to a motion to dismiss”) (citation omitted).

Federal Rule of Civil Procedure 9(b) requires parties to “plead fraud . . . with particularity.” As interpreted by the Sixth Circuit, the provision requires that, “at a minimum . . . the time, place, and content of the alleged misrepresentation” must be alleged. Coffey v. Foamex L.P., 2 F.3d 157, 161-62 (6th Cir. 1993) (emphasis added). Plaintiffs’ allegations against RLI have not met this minimum standard. Because Plaintiffs have failed to plead with sufficient particularity, the Court dismisses the misrepresentation [*11]  and fraud claims against Defendant RLI.

 

B. Plaintiffs Have Failed To Make A Valid Negligence Claim

Plaintiffs allege that RLI owed them certain duties with respect to Ullico’s workers’ compensation insurance program. Under Ohio law, in order to make a claim for negligence, a plaintiff must prove that the defendant (1) owed a duty of care to the plaintiff; (2) breached that duty and (3) the breach of that duty proximately caused (4) injury to the plaintiff. Nye v. CSX Transp., Inc., 437 F.3d 556, 563 (6th Cir. 2006) (citing Texler v. D.O. Summers Cleaners & Shirt Laundry Co., 81 Ohio St. 3d 677, 1998 Ohio 602, 693 N.E.2d 271, 274 (Ohio 1998)). Plaintiffs have not alleged facts to show that RLI owed Plaintiffs a duty of care regarding the workers’ compensation insurance coverage provided to them by Ullico. Plaintiffs allege that “Williams, as a representative of Safe Fleet . . . advised and recommended that Aim stay with Ullico.” ECF No. 1 Page ID #: 9, ¶ 45. Nowhere in the Complaint do Plaintiffs ask the Court to make the leap to the conclusory allegation that Williams advised Plaintiffs about Ullico on RLI’s behalf. The Court will not do so now.

Plaintiffs argue that Ohio law recognizes a tort claim against insurance agents for negligent procurement. Emahiser v. Complete Coverage Ins., LLP, Case No. 14-267, 2014 U.S. Dist. LEXIS 143506, 2014 WL 5037993, at *2 (N.D. Ohio, Oct. 8, 2014). “An agent will be held liable if ‘as a result of his or her negligent failure to perform that obligation to procure [*12]  insurance, the other party to the insurance contract suffers a loss because of a want of insurance coverage contemplated by the agent’s undertaking.'” Id. (quoting Robson v. Quentin E. Cadd Agency, 179 Ohio App. 3d 298, 2008 Ohio 5909, 901 N.E.2d 835, 841 (Ohio Ct. App. 2008)). As an initial matter, Plaintiffs bring forth a general claim for negligence, not negligent procurement. See Clark v. National Travelers Life Ins. Co., 518 F.2d 1167, 1168 (1975) (stating that “there is no duty (on the part) of the trial court or the appellate court to create a claim which appellant has not spelled out in his pleading”) (internal quotation marks omitted). Furthermore, Plaintiffs are asserting a negligence claim against RLI, an insurance company, not an insurance agent. Emahiser, therefore, is not applicable to the matter before the Court.

In their opposition, Plaintiffs further allege that “RLI is liable for the actions taken by its executive/insurance agent, Williams, who was obligated to advise Aim of the conflict presented by the complex relationship between defendants, including RLI, and obtain informed consent of the risks presented by Ullico’s credit downgrade.” ECF No. 32 at PageID#: 151. In their Complaint, however, Plaintiffs allege that Williams acted as a representative of Safe Fleet, not RLI, in recommending that Plaintiffs remain with Ullico. ECF No. 1 at PageID#:9, [*13]  ¶ 45. Nor do Plaintiffs bring claims against RLI based on RLI’s status as the corporate parent of Safe Fleet. The Court dismisses Plaintiffs’ negligence claim against RLI.

 

C. Plaintiffs Have Failed To Make A Valid Breach of Fiduciary Duty Claim

Plaintiffs assert that RLI breached its fiduciary duty to Plaintiffs by failing to provide appropriate insurance advice and failing to disclose conflicts of interest. In order to establish a claim for breach of fiduciary duty, a plaintiff must demonstrate: (1) the existence of a fiduciary duty; (2) a breach of that duty; and (3) injury proximately caused by the breach. Wells Fargo Bank, N.A. v. Sessley, 188 Ohio App. 3d 213, 2010 Ohio 2902, 935 N.E.2d 70 (Ohio Ct. App. 2010). Plaintiffs have failed to provide factual allegations for the contention that RLI owed Plaintiffs a fiduciary duty beyond the scope of the general liability, business automotive, or cargo insurance provided by RLI to Plaintiffs. The Court therefore dismisses Plaintiffs’ breach of fiduciary duty claim against RLI.

 

D. Plaintiffs Have Failed To Make A Valid Breach of Contract Claim

Plaintiffs allege that RLI breached its contract with Plaintiffs by a) failing to obtain adequate insurance coverage b) collecting and retaining amounts from Plaintiffs to which RLI was not entitled, including [*14]  advance premiums; c) performing and providing inadequate work and failing to remedy the work; and d) failing to properly advise Plaintiffs regarding the financial risks associated with Ullico’s deteriorating financial condition reflected by Ullico’s credit downgrade. ECF No. 1 at PageID#:14, ¶ 82. In order to establish a breach of contract claim, a party must demonstrate: 1) the existence of a valid contract; 2) performance by the plaintiff; 3) breach by the defendant; and 4) damage or loss to the plaintiff. Samadder v. DMF of Ohio, Inc., 154 Ohio App. 3d 770, 2003 Ohio 5340, 798 N.E.2d 1141 (Ohio Ct. App. 2003); Doner v. Snapp, 98 Ohio App. 3d 597, 649 N.E.2d 42 (Ohio Ct. App. 1994); Thomas v. Publishers Clearing House, Inc., 29 F. App’x 319, 322 (6th Cir. 2002). Plaintiffs do not allege that RLI breached the insurance contract that provided Plaintiffs with general liability, business automobile, and cargo insurance. Plaintiffs fail to point to any contractual provision with RLI regarding Ullico. This omission is fatal to Plaintiffs’ breach of contract claim, as it falls short of the requirements imposed by the Iqbal-Twombly line of cases. Additionally, Plaintiffs appear to abandon this claim in their memorandum in opposition to RLI’s motion to dismiss. See Bazinski v. JPMorgan Chase Bank, N.A., Case No. 13-14337, 2014 U.S. Dist. LEXIS 50238, 2014 WL 1405253, *2 (E.D. Mich. April 11, 2014) (“[c]laims left to stand undefended against a motion to dismiss are deemed abandoned”) (citation omitted). Accordingly, the Court dismisses Plaintiffs’ breach of contract claim against [*15]  RLI.

 

E. Plaintiffs Have Failed to Make a Valid Unjust Enrichment Claim

Plaintiffs allege that RLI has derived value and retained benefits in a manner not consistent with Plaintiffs’ interests. They argue that it would be unjust for RLI “to retain the benefits gained through wrongful misconduct, including the retention of Aim’s advance insurance premium for which Aim is entitled to a refund.” ECF No. 1 at PageID #: 14, ¶ 86. The requirements of a valid unjust enrichment claim are 1) plaintiff conferred a benefit on defendant; 1) defendant knew of such benefit; 3) defendant retained the benefit under circumstances where it would be unjust to do so without payment. Hambleton v. R.G. Barry Corp., 12 Ohio St. 3d 179, 12 Ohio B. 246, 465 N.E.2d 1298 (Ohio 1984); Andersons, Inc. v. Consol, Inc., 348 F.3d 496, 501 (6th Cir. 2003). The existence of an express contract precludes claims for unjust enrichment. See Davis & Tatera, Inc. v. Gray-Syracuse, Inc., 796 F.Supp. 1078 (S. D. Ohio 1992). Because there exists a valid contract between Plaintiffs and RLI, Plaintiffs’ claims are precluded. Plaintiffs nonetheless allege that RLI was unjustly enriched through the “‘package deal’ arrangement with Ullico that tied both insurers together in a quasi-contractual relationship to purportedly provide full coverage to Aim . . . RLI’s relationship with Ullico created an improper incentive for RLI’s executive, Williams, to continue to recommend [*16]  renewal to Aim even after Ullico’s credit rating was downgraded.” ECF No. 32 at 8-9. Plaintiffs’ Complaint fails to allege sufficient facts that RLI and Ullico were related or had a quasi-contractual relationship. Plaintiffs merely state that Safe Fleet and Williams presented insurance quotes, including a guaranteed cost program, as a package deal that afforded Plaintiffs lower premiums. ECF No. 1 at PageID#: 7, ¶ 31. The Court, therefore, will not consider any allegations regarding a quasicontractual relationship.

Plaintiffs ask the Court to infer from their vague pleadings that RLI received a benefit from Plaintiffs’ decision to renew Ullico’s contract because the insurance options were presented in tandem. Plaintiffs, however, have failed to show how, if such a benefit existed, it would be unjust. RLI provides Plaintiffs with general liability, business automotive, and cargo insurance. Plaintiffs’ allegations center on the workers’ compensation insurance provided by Ullico and Ullico’s eventual placement into receivership. Again, Plaintiffs seek to use Williams as the bridge between Ullico and RLI because he worked for Safe Fleet, which brokered the Ullico deal for Plaintiffs and [*17]  RLI. Plaintiffs argue in their opposition memorandum that “[t]he evidence will reflect that [Plaintiffs] would not have selected RLI but for the package arrangement with Ullico and the guaranteed cost program offered as part of the deal.” ECF No. 32 at 8-9. Regardless of what the evidence might show, this theory is missing from Plaintiffs’ Complaint. Plaintiffs fail to present a plausible unjust enrichment claim against RLI based on the facts alleged in its Complaint.

Plaintiffs further argue that despite their best efforts, they were not able to discern the relationships between all the defendants prior to filing the Complaint. Seeking to amend a complaint with leave of court is a litigative tool known to Plaintiffs. See Fed. R. Civ. P. 15(a). The last sentence of Plaintiffs’ opposition states “[a]lternatively, Aim should be permitted to file an amended complaint to cure any deficiency in the pleadings.” ECF No. 32 PageID#: 12. Although Fed. R. Civ. P. 15 instructs courts to “freely give leave” to amend, that liberal policy does not apply to Plaintiffs’ one sentence request. A “request for leave to amend almost as an aside, to the district court in a memorandum in opposition to the defendant’s motion to dismiss is . . . not a motion to amend.” [*18]  La. Sch. Emps.’ Ret. Sys. v. Ernst & Young, LL P, 622 F.3d 471, 486 (6th Cir. 2010) (internal quotation marks omitted).

 

IV. Conclusion

For the reasons stated, Plaintiffs have failed to plead plausible allegations against RLI and failed to properly seek to amend their Complaint. Accordingly, RLI’s Motion to Dismiss (ECF No. 14) is granted in its entirety.

IT IS SO ORDERED.

April 30, 2015

Date

/s/ Benita Y. Pearson

Benita Y. Pearson

United States District Judge

CASTLEPOINT NATIONAL INSURANCE COMPANY F/K/A SUA INSURANCE COMPANY, Plaintiff v. INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, Defendant

 

Civ. No. 1:14-cv-0792

 

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

 

2015 U.S. Dist. LEXIS 62525

 

 

May 13, 2015, Decided

May 13, 2015, Filed

 

 

COUNSEL:  [*1] For Castlepoint National Insurance Company, formerly known as SUA Insurance Company, Plaintiff: Jay Barry Harris, LEAD ATTORNEY, Hema P. Mehta, Fineman, Krekstein & Harris, P.C., Philadelphia, PA.

 

For Insurance Company of the State of Pennsylvania, Defendant: Joel Max Eads, Trenk DiPasquale Webster Della Fera & Sodono, P.C., Ardmore, PA.

 

JUDGES: Sylvia H. Rambo, United States District Judge.

 

OPINION BY: Sylvia H. Rambo

 

OPINION

 

MEMORANDUM

In this declaratory judgment action between two insurance companies brought pursuant to 28 U.S.C. § 2201, Plaintiff seeks a declaration as to Defendant’s duty to provide a defense to certain parties in an underlying personal injury action. Presently before the court are cross-motions for summary judgment as to Defendant’s responsibility of coverage. For the following reasons, the court concludes that the relevant insurance policy places Defendant under an obligation to defend four of the parties in the underlying action, but imposes no duty with respect to the defense and indemnification of the remaining two parties at issue. Plaintiff’s motion as it relates to Defendant’s duty to indemnify the four parties to which it has a duty to defend will be denied without prejudice pending a final judgment [*2]  in the underlying action.

 

I. Background

 

A. Factual Background

For purposes of the matter sub judice, the following facts are undisputed. Castlepoint National Insurance Company f/k/a SUA Insurance Company (“Castlepoint”) and Insurance Company of the State of Pennsylvania (“ISOP”) are insurance companies that sell truckers’ liability insurance. Castlepoint issued an insurance policy to East-West Hauling, Inc. (“East-West”), and ISOP issued an insurance policy (“the ISOP policy”) to Single Source Transportation, Inc. (“Single Source”).

On November 6, 2009, Kasablanca, Inc. (“Kasablanca”) leased a 2000 Volvo tractor (“Volvo tractor”) to East-West pursuant to an indefinite lease agreement. The lease agreement provided that East-West, as the lessee, “agree[d] to assume possession of the vehicle . . . for its exclusive use and control,” to “provide all identification required by the Federal Highway Administration, the US Department of Transportation and any other government agencies to be affixed to the vehicle,” and “to furnish and pay the cost of all public liability, property damage and cargo insurance on the vehicle, while the vehicle is operated in the service of the company.” (Doc. 15-1, p. 28 [*3]  of 30.) The lease agreement further provided that Kasablanca, as the lessor, could not “maintain or enter into any contract or exclusive agreement with any other carrier or forwarder for the uses of the [tractor]” while the lease agreement was in force. (Id.)

On March 19, 2010, Single Source received a bill of lading directing it to haul a load on behalf of The Hub Group, Inc. (“HUB”) from Ontario, California to Pennsylvania, pursuant to a transportation services contract whereby Single Source, as a registered carrier, agreed to provide transportation services to HUB on an ongoing basis. Shortly after departure, however, Single Source’s tractor experienced some difficulty and the trailer affixed thereto was rerouted to a facility owned by both Single Source and East-West in Montebello, California. Thereafter, Onkar Singh, the owner of both Single Source and East-West, directed Javier Barbecho-Quinche (“Javier”), an employee of East-West, to take the trailer, owned by MidEast Transportation, Inc. (“Mid-East”), to Pennsylvania using the Volvo tractor leased to East-West.

On March 22, 2010, as the tractor-trailer operated by Javier and his brother, Lenin Barbecho (“Lenin”), approached its [*4]  destination, a collision occurred on Interstate-80 in Centre County, Pennsylvania, between it and another tractor-trailer operated by Lawrence Rosenthal (“Rosenthal”). At the time of the collision, the tractor operated by Javier and Lenin displayed a U.S. Department of Transportation (“DOT”) number owned by E&K Trucking, Inc. (“E&K”).1

 

1   The underlying complaint does not specify whether the DOT number appeared on the tractor or the trailer. However, Castlepoint represents in its statement of material facts that the number appeared on the tractor (see Doc. 15, ¶7), and ISOP admits this fact in its counter-statement of facts (see Doc. 25, ¶ 7).

However, based on the representations made by Castlepoint in its motion for summary judgment and supporting brief, the court will assume that the number appeared on the tractor. (See Doc. 15, ¶ 7; Doc. 16, p. 2 of 23)

Rosenthal allegedly sustained injuries in the collision and commenced suit in the Centre County Court of Common Pleas on July 29, 2011 (the “underlying action”).2 All of the parties referenced herein are involved in that suit, which is still pending, either as named defendants or as the defendants’ insurance carriers.

 

2   The lawsuit is captioned: [*5]  Lawrence A. Rosenthal and Judy Rosenthal v. Kasablanca, Inc., et al., Court of Common Pleas of Centre County, Pennsylvania, Civil Division No. 2011-3218.

 

B. Procedural History

On April 24, 2014, Castlepoint filed a declaratory judgment complaint against ISOP seeking a declaration that ISOP has a duty to defend and indemnify Javier, Lenin, Kasablanca, East-West, Mid-East, and E&K in the underlying action presently defended by Castlepoint. (Doc. 1.) On June 27, 2014, Defendant ISOP filed an answer denying all of the allegations in the complaint. (Doc. 10.) On December 12, 2014, Castlepoint filed a motion for summary judgment with a statement of relevant facts incorporated therein.3 (Doc. 15.) A supporting brief followed on December 15, 2014. (Doc. 16.) Castlepoint argues that ISOP has a duty to provide a defense to those underlying defendants because (1) the Volvo tractor is a covered “auto” as defined by ISOP’s insurance policy; (2) the Volvo tractor was being used by Javier and Lenin at the time of the accident; and (3) Javier, Lenin, Kasablanca, East-West, Mid-East, and E&K (“the underlying defendants”) each qualify as an “insured” under the terms of the ISOP insurance policy. (Doc. [*6]  15, p. 19 of 38.)

 

3   In contravention to Local Rule 56.1, which requires a motion for summary judgment to be “accompanied by a separate, short and concise statement of material facts, in numbered paragraphs,” Castlepoint incorporated its statement of material facts into its motion for summary judgment. (See Doc. 15.) Because Castlepoint’s statement of material facts otherwise conforms to the rule, however, the court will disregard Castlepoint’s mere technical noncompliance of the rule as the purpose of the rule is fulfilled by Castlepoint’s inclusion of material facts in its motion.

On January 23, 2015, after being granted an extension of time, ISOP timely filed a brief in opposition to Castlepoint’s motion for summary judgment (Doc. 23) and a counter statement of material facts (Doc. 25). In addition, ISOP filed a cross-motion for summary judgment (Doc. 22), a statement of material facts (Doc. 26), and a supporting brief incorporated within its brief in opposition (Doc. 23). ISOP avers that, based on the evidence obtained in the underlying action indicating that Single Source may have been hauling the load on behalf of HUB pursuant to the transportation services contract, ISOP has agreed to defend Javier, [*7]  Lenin, East-West, and Mid-East under a reservation of rights because they may each qualify as an “insured” under its policy with Single Source. (Doc. 26, ¶ 12.) ISOP, however, denies any obligation to defend and indemnify E&K and Kasablanca. (Doc. 23, pp. 4-5 of 18.)

On February 5, 2015, Castlepoint filed a brief in opposition to ISOP’s motion for summary judgment with a counter statement of material facts incorporated therein. (Doc. 29.) ISOP filed a reply brief on February 19, 2015. (Doc. 30.) Therefore, the cross-motions have been fully briefed and are ready for consideration.

 

II. Legal Standard

 

A. Summary Judgment

Summary judgment may only be granted where the moving party shows that there is no genuine dispute as to any material fact and that judgment as a matter of law is warranted. Fed. R. Civ. P. 56(a). Pursuant to Federal Rule of Civil Procedure 56, the court must enter summary judgment against a party who fails to make a showing sufficient to establish an element essential to that party’s case and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In evaluating the evidence, the court must interpret the facts in the light most favorable to the nonmoving party, drawing all reasonable inferences in that party’s favor. Montville Twp. v. Woodmont Builders LLC, 436 F. App’x 87, 89 n.4 (3d Cir. 2011) (citing [*8]  Kossler v. Crisanti, 564 F.3d 181, 186 (3d Cir. 2009)). There is no genuine issue for trial only when the record taken as a whole could not lead a rational trier of fact to find for the non-moving party. Id. (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986)).

The standard for addressing cross-motions for summary judgment remains the same as if only one motion was filed. See Lawrence v. City of Phila., 527 F.3d 299, 310 (3d Cir. 2008). When confronted with cross-motions for summary judgment, the “court must rule on each party’s motion on an individual and separate basis, determining for each side, whether a judgment may be entered in accordance with the Rule 56 standard.” Schlegel v. Life Ins. Co. of N. Am., 269 F. Supp. 2d 612, 615 n.1 (E.D. Pa. 2003) (quoting 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2720 (1998)).

 

B. Choice of Law

In cases such as this one where the federal court’s jurisdiction lies in diversity, the court will procedurally apply the choice of law principals of the forum state. Hammersmith v. TIG Ins. Co., 480 F.3d 220, 226 (3d Cir. 2007). The parties rely on New Jersey law in their written submissions to the court, indicating their agreement that New Jersey law governs this matter. The court agrees with the parties’ assessment.

Pennsylvania applies a flexible, interest/contacts methodology under the Restatement (Second) Conflict of Laws, to contract choice of law questions, “bearing in mind that ‘we are concerned with the contract [*9]  of insurance’ and not the underlying tort.” Hammersmith, 480 F.3d at 232-33. Pennsylvania applies Section 193 of the Restatement (Second) of Conflict of Laws when the insured has a principal place of insured risk, stating “the rights created thereby are determined by the local law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy . . . .” Specialty Surfaces Int. Inc. v. Continental Cas. Co., 609 F.3d 223, 233 (3d Cir. 2010). When the insured has no principal place of risk, Pennsylvania courts apply Section 188(2) of the Restatement (Second) of Conflict of Laws, to determine which state has greater contacts with the contract at issue. Id. The factors include the place of contracting and negotiating, the place of performance, and the place of the subject matter of the contract. Id.

Single Source, as the named insured under the ISOP policy, is a New Jersey corporation with a principal place of business located in Cateret, New Jersey. Performance occurred in New Jersey, as New Jersey state taxes, fees, and surcharges were applied to the contract. (See Doc. 23-7, p. 3 of 51.) The covered vehicles under the policy were listed as registered in New Jersey (see id. at p. 7 of 51), and certain modifications, including uninsured and underinsured motorist coverage, were added to the contract [*10]  pursuant to New Jersey law (see id. at p. 11 of 51). Therefore, as both parties agree, New Jersey law governs the interpretation of the policy issued to Single Source.

 

III. Discussion

The questions presented herein regarding ISOP’s duty to defend and indemnify the underlying defendants require the court to interpret the ISOP policy under applicable New Jersey law. Under New Jersey law, an insurance policy is a contract that will be enforced as written when its terms are clear in order to give effect to the intention of the parties. Flomerfelt v. Cardiello, 202 N.J. 432, 997 A.2d 991, 996 (N.J. 2010). In considering the meaning of an insurance policy, the court should interpret the language “according to its plain and ordinary meaning,” id. (quoting Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 607 A.2d 1255, 1259 (N.J. 1992)), and “avoid writing a better insurance policy than the one purchased,” Pizzullo v. New Jersey Mfrs. Ins. Co., 196 N.J. 251, 952 A.2d 1077, 1089 (N.J. 2008). However, if the policy contains an ambiguity, it should be interpreted “to comport with the reasonable expectations of the insured, even if a close reading of the written text reveals a contrary meaning.” Id.

An insurer’s duty to defend arises when the complaint states a claim constituting a risk to the insured. Voorhees, 607 A.2d at 1259. “[T]he duty to defend is generally determined by comparing the allegations in the complaint with the language of the policy. When the two correspond, [*11]  the insurer must defend the suit,” irrespective of the claim’s actual merit. SL Indus., Inc. v. Am. Motorists Ins. Co., 128 N.J. 188, 607 A.2d 1266, 1271 (N.J. 1992) (internal citation omitted); Voorhees, 607 A.2d at 1259. “In making that comparison, it is the nature of the claim asserted, rather than the specific details of the incident or the litigation’s possible outcome, that governs the insurer’s obligation.” Flomerfelt, 997 A.2d at 998.

An insurer’s duty to defend, however, is broader than its duty to indemnify. Polarome Int’l v. Greenwich Ins. Co., 404 N.J. Super. 241, 961 A.2d 29, 47 (N.J. App. Div. 2008). While the duty to defend “comes into being when the complaint states a claim constituting a risk insured against,” the duty to indemnify arises when that potentially covered claim has been proven and falls within the coverage of the insurance policy. Mem’l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 46 A.3d 525, 535 (N.J. 2012) (quoting Voorhees, 607 A.2d at 1259). As the New Jersey Supreme Court has explained:

 

Th[e] duties [to defend and indemnify] are neither identical nor coextensive, and therefore must be analyzed separately. Although a definitive conclusion that a policy by its terms affords no coverage, and therefore that there is no duty of indemnification, also means that there is no duty to defend, coverage questions may not have clear answers in advance of discovery or trial. As a result, courts are often required to evaluate whether [*12]  the insurer owes its insured a duty to defend in advance of a conclusive decision about coverage. In those circumstances, the separate principles that govern the duty to defend must be considered and applied.

 

 

Flomerfelt, 997 A.2d at 997-98.

 

A. ISOP’s Duty to Indemnify

Turning to the matter sub judice, the underlying action is still pending in the Centre County Court of Common Pleas and there remain disputed factual issues therein. As such, there is no present basis to determine that ISOP must indemnify any of the underlying defendants. That duty, if one exists, must await discovery and trial. Accordingly, the court will deny Castlepoint’s motion insofar as it seeks a declaration that ISOP must provide indemnification, and will therefore evaluate whether ISOP owes any of the underlying defendants a duty to defend in advance of a conclusive decision about coverage. see id.

 

B. ISOP’s Duty to Defend

Applying the principles governing an insurer’s duty to defend, if a claim against any of the underlying defendants could potentially come within the coverage of the ISOP policy, ISOP has a duty to provide a defense to that defendant in the underlying state court proceeding. Thus, as with all disputes regarding an insurer’s duty [*13]  to defend, this matter turns on the particular language of the policy that defines the coverage. The relevant provisions of the ISOP policy provide as follows:

 

 

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”.

* * *

We have the right and duty to defend any “insured” against a “suit” asking for such damages or a “covered pollution cost or expense”. However, we have no duty to defend any “insured” against a “suit” seeking damages for “bodily injury” or “property damage” or a “covered pollution cost or expense” to which this insurance does not apply. We may investigate and settle any claim or “suit” as we consider appropriate. Our duty to defend or settle ends when the Liability Coverage Limit of Insurance has been exhausted by payment of judgments or settlements.

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:

* * *

c. The owner or anyone [*14]  else from whom you hire or borrow a covered “auto” that is a “trailer” while the “trailer” is connected to another covered “auto” that is a power unit

* * *

d. The owner or anyone else from whom you hire or borrow a covered “auto” that is not a “trailer” while the covered “auto”:

 

(1) Is being used exclusively in your business as a “trucker”; and

(2) Is being used pursuant to operating rights granted to you by a public authority.

 

 

e. Anyone liable for the conduct of an “insured” described above but only to the extent of that liability.

 

 

 

 

(Doc. 23-7, pp. 13-14 of 51.)

The central issue presented herein is whether any of the underlying defendants qualify as an “insured” under the ISOP policy such that ISOP owes that defendant a defense. The court will address each defendant in turn.

 

1. Javier, Lenin, East-West, and Mid-East

ISOP has agreed to defend Javier, Lenin, East-West, and Mid-East under a reservation of rights because each may qualify as an insured under ISOP’s policy. (See Doc. 23, p. 8 of 18.) The court will therefore grant Castlepoint’s motion for summary judgment without further discussion insofar as it seeks a declaration that ISOP owes a duty to defend those four underlying defendants. [*15]

 

2. Kasablanca

Whether Kasablanca is likewise entitled to a defense by ISOP hinges on Section II.A.1.d.’s definition of a covered insured as “[t]he owner or anyone else from whom you [Single Source] hire or borrow a covered ‘auto.'” (Doc. 23-7, p. 14 of 51.) Emphasizing the provision’s use of the word “owner,” Castlepoint argues that Kasablanca, as the owner of a covered auto,4 is entitled to coverage under the policy. Conversely, ISOP emphasizes the provision’s use of the modifying clause “from whom you hire or borrow a covered ‘auto'” and urges that Kasablanca is not entitled to coverage because Single Source did not borrow the tractor from Kasablanca. Rather, Single Source borrowed the tractor from Kasablanca’s lessee, East-West. In response, Castlepoint argues that Single Source borrowed the tractor from its owner, albeit indirectly, as evidenced by Single Source’s possession of the tractor at the time of the collision.

 

4   It is undisputed that the Volvo tractor is a covered auto under the ISOP policy.

Based on the parties’ arguments, the court’s assessment of whether Kasablanca is entitled to coverage under the ISOP policy is initially dependent upon the court’s interpretation of the clause [*16]  “from whom you hire or borrow a covered ‘auto.'”5 Significant here is the policy’s use of the word “from.” Read alone, the word “from” does not reveal whether it refers to the proximate source of the auto or whether it could also refer to a distant, original source of the auto. As the D.C. Circuit recently explained:

 

Among the dictionary definitions of “from” is “a function word to indicate the source or original or moving force of something: as . . . the place of origin, source, or derivation of a material or immaterial thing.” WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 913 (1981). Thus, W.B. Yeats may proclaim, “All creation is [from] conflict,” and not necessarily mean that creation springs directly from conflict rather than through the intermediate consequences of conflict, while one who states that a man “took a dime [from] his pocket” could only be understood to mean that the dime originated from a specific location on a specific person.

 

 

Nat’l Ass’n of Clean Water Agencies v. E.P.A., 734 F.3d 1115, 1125, 407 U.S. App. D.C. 73 (D.C. Cir.

2013).

 

5   Both parties appear to agree that the clause “from whom you hire or borrow a covered ‘auto'” modifies both “owner” and “anyone else,” and the court agrees. The term “owner” is not defined in the contract. The modifying clause [*17]  thus serves to define the owner as the owner of a covered auto, and then narrows the scope of coverage to an owner from whom Single Source hires or borrows a covered auto. The modifying clause serves a similar function in regard to “anyone else,” defining the term as a party from whom Single Source hires or borrows a covered auto.

As the court read’s the ISOP policy, however, this particular provision’s use of the word “from” is not susceptible to either sense of the word. In its ordinary meaning, “from whom you borrow” requires a proximate source interpretation. In other words, “from whom you hire or borrow a covered ‘auto'” is akin to a man who took a dime from his pocket, and is plainly understood to mean the specific party from whom the insured directly acquired the vehicle.6 See Pizzullo, 952 A.2d at 1089 (stating that the terms in an insurance policy “are to be given their plain, ordinary meaning”).

 

6   The court notes that it has reviewed the insurance policy in its entirety and considered the usage of the clause “from whom you hire or borrow a covered ‘auto'” and similar clauses throughout the contract.

Further supporting this interpretation is the clause’s inclusion of the disjunctive “or” within the phrase [*18]  “owner or anyone else.” Although both parties seemingly overlooked the policy’s use of “or” here, as a matter of New Jersey law, the court is bound to give effect to the words used in the insurance policy. See Krosnowski v. Krosnowski, 22 N.J. 376, 126 A.2d 182, 188 (N.J. 1956) (“Individual clauses and particular words must be considered in connection with the rest of the agreement, and all parts of the writing and every word of it, will, if possible, be given effect.”) The plain meaning of the word “or” is well settled. Where it is used, it generally connotes an alternative between two or more things. See, e.g., Acosta v. City of Mesa, 718 F.3d 800, 815 (9th Cir. 2013) (“In its ordinary sense, the function of the word ‘or’ is to make an alternative such as this or that.”) (quoting In re Jesusa V., 32 Cal. 4th 588, 10 Cal. Rptr. 3d 205, 85 P.3d 2, 24 (Cal. 2004)); Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 158 (3d Cir. 2009) (noting difference between the disjunctive “or” and the conjunctive “and” and finding that the insurance provision’s use of the word “or” plainly invokes the disjunctive); Martin v. AmeriPride Servs. Inc., Civ. No. 08cv440-MMA, 2011 U.S. Dist. LEXIS 61796, 2011 WL 2313604, *4 (S.D. Cal. June 9, 2011) (providing definition of “or” as “used as a function word to indicate an alternative” and finding that the use of the word “or” in a contract indicates that the subsections are alternatives to one another); In re G-I Holdings, Inc., 369 B.R. 832, 840 (D.N.J. 2007) (“The use of the disjunctive ‘or’ indicates that the two options are . . . mutually exclusive and [*19]  may not be combined.”) Thus, the disputed provision covers the owner or anyone else from whom Single Source hires or borrows a covered auto, in the disjunctive.

Castlepoint’s desired interpretation of the provision, which would have the court find that ISOP must provide a defense to both the owner and the party from whom Single Source borrowed the vehicle, i.e., East-West, reads the meaning out of the use of the word “or” between the two terms. Although the word “or” may be construed to mean “and,” and vice versa, in order to carry out the evident intent of the parties, no such intent is present here. Noell v. Am. Design, Inc., 764 F.2d 827, 833 (11th Cir. 1985); see Razin v. A Milestone, LLC, 67 So.3d 391, 397 n.3 (Fla. Dist. Ct. App. 2011) (“The use of the word or generally means that an alternative option is being presented, though it can be the equivalent of the word and where it is clear it is being used in the copulative and not the disjunctive sense.”) The more logical interpretation is that ISOP will cover only the party from whom its insured borrowed the vehicle, either the owner or another party. Here, the undisputed facts show that Single Source borrowed the tractor from East-West, the lessee to whom Kasablanca gave exclusive use and control of the tractor.

In light of the plain language of the policy and [*20]  the contextual clarity provided by the provision’s use of the word “or,” coupled with the absence of any reasonable alternative interpretation of the coverage language, the policy is unambiguous and does not require ISOP to provide a defense to Kasablanca.7

 

7   Single Source’s argument that ISOP owes Kasablanca a duty to defend under Section II.A.1.e. is likewise untenable. That section provides coverage to “[a]nyone liable for the conduct of an ‘insured’ . . . but only to the extent of that liability.” (Doc. 23-7, p. 14 of 51.) Single Source argues that, as evidenced by the underlying complaint, “Javier was allegedly negligent in driving the 2000 Volvo truck, and [Kasablanca,] as a motor carrier, was responsible for Javier’s conduct.” (Doc. 29, p. 14 of 16.) However, the underlying complaint alleged that Javier was an employee of East-West (see Doc. 1-2 ¶ 25), and East-West’s employee file supports this allegation (see generally Doc. 30-2). As there is neither evidence nor allegation that Kasablanca had any relationship with Javier, Kasablanca is not liable for his conduct, and, therefore, Kasablanca does not qualify as an “insured” under Section II.A.1.e.

 

3. E&K

E&K also fails to qualify as an “insured” [*21]  under the ISOP policy. To qualify as an insured under the policy, E&K must be either: (1) anyone else while using with Single Source’s permission a covered auto owned, hired, or borrowed by Single Source; (2) the owner or anyone else from whom Single Source hires or borrows a covered auto that is a trailer; (3) the owner or anyone else from whom Single Source hires or borrows a covered auto that is not a trailer while that covered auto is being used exclusively in Single Source’s business as a trucker; or (4) anyone liable for the conduct of an insured. (See Doc. 23-7, p. 14 of 51.)

The only allegation linking E&K to the underlying accident is that E&K’s Federal DOT number appeared on the tractor. (See Doc. 1-2 ¶¶ 42-43.) There is no allegation or extrinsic evidence that E&K was using the tractor with Single Source’s permission, that E&K loaned the tractor to Single Source, or that E&K was in any way liable for the conduct of an insured. Accordingly, E&K does not qualify as an insured under the ISOP policy and ISOP is not obligated to provide a defense to E&K.8

 

8   As ISOP has no obligation to defend or indemnify either Kasablanca or E&K, there is no merit to Castlepoint’s alternative argument [*22]  in favor of shared primary coverage under the ISOP policy’s “other insurance” provision.

 

IV. Conclusion

Based on the foregoing, Castlepoint’s motion for summary judgment will be granted in part and denied in part. The court concludes that ISOP is responsible to provide a defense to Javier, Lenin, East-West, and Mid-East, and, therefore, Castlepoint’s motion will be granted in this regard. A decision as to ISOP’s duty to indemnify those four parties, however, will be denied without prejudice pending resolution of the Rosenthal action. On the other hand, the court concludes that ISOP owes no duty to either defend or indemnify Kasablanca and E&K because neither party qualifies as an “insured” under the ISOP policy. The court will therefore deny Castlepoint’s motion insofar as it seeks a declaration that ISOP owes a duty to defend and indemnify Kasablanca and E&K. ISOP’s cross-motion for summary judgment will be granted.

/s/ Sylvia H. Rambo

United States District Judge

Dated: May 13, 2015.

 

ORDER

In accordance with the accompanying memorandum of law, IT IS HEREBY ORDERED that Castlepoint National Insurance Company’s (“Castlepoint”) motion for summary judgment (Doc. 15) is GRANTED IN PART AND DENIED [*23]  IN PART as follows:

 

1) Castlepoint’s motion for summary judgment is GRANTED to the extent it seeks a declaration that the Insurance Company of the State of Pennsylvania (“ISOP”) owes a duty to defend East-West Hauling, Inc., Mid-East Transportation, Inc., Javier Barbecho-Quinche, and Lenin Barbecho, in the underlying action, Lawrence A. Rosenthal and Judy Rosenthal v. Kasablanca, Inc., et al., Court of Common Pleas of Centre County, Pennsylvania, Civ. Div. No. 2011-3218;

2) Castlepoint’s motion for summary judgment is DENIED WITHOUT PREJUDICE to the extent it seeks a declaration that ISOP owes a duty to indemnify East-West Hauling, Inc., Mid-East Transportation, Inc., Javier Barbecho-Quinche, and Lenin Barbecho, in the underlying action;

3) Castlepoint’s motion for summary judgment is DENIED to the extent it seeks a declaration that ISOP owes a duty to defend and indemnify Kasablanca, Inc. and E&K Transportation, Inc. in the underlying action;

 

 

IT IS FURTHER ORDERED that ISOP’s cross-motion for summary judgment (Doc. 22) is GRANTED.

The Clerk of Court shall DEFER the entry of judgment until the conclusion of this case.

Finally, IT IS ORDERED that the captioned case is STAYED pending resolution [*24]  of the underlying action.

/s/ Sylvia H. Rambo

United States District Judge

Dated: May 13, 2015.