Cases

Brad Hall & Assocs., Inc. v. RSUI Indem. Co.

United States District Court, D. Nevada.

BRAD HALL & ASSOCIATES, INC., et al., Plaintiffs

RSUI INDEMNITY COMPANY, Defendant

Case No. 2:23-cv-00213-APG-DJA

Signed January 26, 2024

Attorneys and Law Firms

Joe Ramirez, Shawn Anthony Eady, Sydney Gambee, Holland & Hart LLP, Denver, CO, Las Vegas, NV, for Plaintiff.

Gena L. Sluga, Tyler J. Watson, Christian, Kravitz, Dichter, Johnson & Sluga, LLC, Las Vegas, NV, Nancy Joy Brown, Musick, Peeler & Garrett LLP, for Defendant.

Order Granting in Part and Denying in Part Motions for Summary Judgment

ANDREW P. GORDON, UNITED STATES DISTRICT JUDGE

*1 This is an insurance coverage dispute between the plaintiffs (collectively, Teton) and their excess insurer, defendant RSUI Indemnity Company (RSUI). The parties filed summary judgment motions seeking a ruling on how to interpret the language in RSUI’s excess policy. I held a hearing on the motions on January 25, 2024. For the reasons explained at the hearing and in this order, I grant in part both sides’ motions.

I. BACKGROUND

On February 7, 2021, Teton’s driver was driving a tractor hauling two trailers containing fuel when he caused an accident that resulted in property damage, bodily injuries, and two separate fuel spills. One fuel spill came from the tractor on one side of the highway, while the spill on the other side of the highway came from the trailers. When the accident occurred, the Nevada Department of Transportation dispatched Clean Harbors, an emergency response contractor, to perform emergency pollution mitigation work. ECF No. 24-1 at 9.

On February 9, the Nevada Division of Environmental Protection (NDEP) sent Teton a letter requesting an evaluation of the spill under various sections of the Nevada Administrative Code. ECF No. 24-4. That letter advised Teton that it “may be required per [the Nevada Administrative Code] to perform cleanup activities related to the Release.” Id. at 2. The letter told Teton that it “should make every effort to assess the site and conduct cleanup as quickly as possible.” Id. at 3.

According to Teton’s executive vice president of legal affairs and general counsel, Teton engaged environmental contractors on February 7 to provide emergency response and cleanup services before it heard from NDEP. ECF No. 29-3 at 3. He states that the trucking company took action to clean up and remediate the fuel spills because of the accident, not because of any communication it received from NDEP. Id.

Teton hired Environmental Technology, Inc. (EN TECH) to perform mitigation measures from March 8 to 12. ECF No. 24-1 at 12. EN TECH also engaged in cleanup and remediation activities from August to November 2021, and conducted groundwater monitoring for several months thereafter. Id. at 16; ECF No. 24-5 at 5. In November 2022, NDEP sent a letter to Teton indicating that no further action was needed at the site. ECF No. 24-6. Total cleanup and remediation costs exceeded $4 million. ECF No. 26-3 at 3.

Teton had three insurance policies relevant to the accident. First, it had a policy with Crum & Forster that provided coverage for pollution. ECF No. 24-2. Second, it had a policy with Zurich for business automobile coverage. ECF No. 26-2. Finally, it had an excess policy with RSUI. ECF No. 26-1. The RSUI policy is excess to the Zurich policy only. Id. at 4. I therefore do not discuss the Crum & Forster policy further.

Zurich accepted and paid coverage for property damage to the tractor and trailers, personal injuries to the other driver, and remediation costs for the fuel spilled from the tractor, but not for the fuel spilled from the trailers. ECF Nos. 26-4 at 3; 26-9 at 6. The Zurich policy limit was exhausted upon paying out these claims. ECF No. 26-4 at 3.

*2 RSUI accepted coverage as the excess insurer for personal injuries to the other driver and property damage to the tractor and trailers. ECF No. 26-5 at 14. But it declined to accept coverage for any remediation. Id. at 16. As to the fuel spill from the trailers, RSUI asserted that its policy followed form with Zurich’s, and Zurich provided no coverage for the spill from the trailers. Id. at 3, 14. Additionally, it asserted that although Zurich covered the remediation costs for the fuel spilled from the tractor, RSUI would not because its policy has a pollution exclusion. Id. at 15.

Teton thereafter sued RSUI, asserting claims for breach of contract, declaratory judgment, bad faith, and unfair claims practices. ECF No. 1. The parties agreed that rather than engage in discovery, they would file early summary judgment motions on the issue of the excess policy’s coverage, because that is a question of law for the court. ECF No. 20. Those summary judgment motions are now before me.

II. ANALYSIS

Summary judgment is appropriate if the movant shows “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the non-moving party to set forth specific facts demonstrating there is a genuine issue of material fact for trial. Sonner v. Schwabe N. Am., Inc., 911 F.3d 989, 992 (9th Cir. 2018) (“To defeat summary judgment, the nonmoving party must produce evidence of a genuine dispute of material fact that could satisfy its burden at trial.”). I view the evidence and reasonable inferences in the light most favorable to the non-moving party. Zetwick v. Cnty. of Yolo, 850 F.3d 436, 440-41 (9th Cir. 2017).

The parties agree I should apply Nevada law regarding the interpretation of an insurance contract. Under Nevada law, the interpretation of an insurance policy is a question of law for the court. Starr Surplus Lines Ins. Co. v. Eighth Jud. Dist. Ct. in & for Cnty. of Clark, 535 P.3d 254, 260 (Nev. 2023) (en banc). “The purpose of contract interpretation is to determine the parties’ intent when they entered into the contract.” Century Sur. Co. v. Casino West, Inc., 329 P.3d 614, 616 (Nev. 2014) (en banc). I interpret the policy language “from the perspective of one not trained in law or in insurance, with the terms of the contract viewed in their plain, ordinary and popular sense.” Id. (quotation omitted). I view “the policy as a whole to give reasonable and harmonious meaning to the entire policy.” Id. (quotation omitted). An interpretation “should not lead to an absurd or unreasonable result.” Id.

If the policy’s language is unambiguous, I “interpret it according to the plain meaning of its terms.” Id. A policy is considered ambiguous if “it creates [multiple] reasonable expectations of coverage as drafted.” Id. (quotation omitted). Ambiguities are construed against RSUI as the drafter. Id. If “an insurance policy has any ambiguous terms,” then I must “interpret the policy to effectuate the insured’s reasonable expectations.” Id.

*3 I interpret clauses providing coverage broadly “to afford the greatest possible coverage to the insured, [and] clauses excluding coverage are interpreted narrowly against the insurer.” Id. (quotation omitted). Exclusions must be “narrowly tailored” to “clearly and distinctly communicate[ ] to the insured the nature of the limitation, and specifically delineate[ ] what is and is not covered.” Id. (quotation omitted). “To preclude coverage under an insurance policy’s exclusion provision, an insurer must (1) draft the exclusion in obvious and unambiguous language, (2) demonstrate that the interpretation excluding coverage is the only reasonable interpretation of the exclusionary provision, and (3) establish that the exclusion plainly applies to the particular case before the court.” Id. (quotation omitted).

I begin with the excess policy’s language. The insuring clause states that RSUI “will pay those sums in excess of [Zurich’s policy] that [the insured] become[s] legally obligated to pay as damages because of injury to which this insurance applies, providing that [Zurich’s policy] also applies, or would apply but for the exhaustion of its applicable Limits of Insurance.” ECF No. 26-1 at 19. The excess policy is “subject to the same terms, conditions, agreements, exclusions and definitions” as the Zurich policy, except “[w]ith respect to any provisions to the contrary” in the excess policy. Id. In other words, the Zurich policy defines the coverage, exclusions, and exceptions to the exclusions, unless something contrary appears in the excess policy, in which case the excess policy’s language controls.

Turning to Zurich’s policy, the coverage provision states that Zurich “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’.” ECF No. 26-2 at 54. There is no dispute that the tractor is a covered auto.

The insuring clause also states that Zurich will “pay all sums an ‘insured’ legally must pay as a ‘covered pollution cost or expense’ to which this insurance applies, caused by an ‘accident’ and resulting from the ownership, maintenance or use of covered ‘autos’.” Id. It defines a “covered pollution cost or expense” to mean “any cost or expense arising out of … [a]ny request, demand, order or statutory or regulatory requirement that any ‘insured’ or others” test, monitor, or clean up pollutants; or a claim or suit by a governmental authority “for damages because of” testing, monitoring, or cleaning up a pollutant. Id. at 62. The parties do not dispute that the fuels spilled from the tractor and the trailers qualify as pollutants.

The Zurich policy has numerous exclusions from coverage. As relevant here, exclusion 11.a states that Zurich will not pay for bodily injury or property damage arising out of the seepage or release of pollutants:

a. That are, or that are contained in any property that is:

(1) Being transported or towed by, handled or handled for movement into, onto or from the covered “auto”;

(2) Otherwise in the course of transit by or on behalf of the “insured”; or

(3) Being stored, disposed of, treated or processed in or upon the covered “auto”.

Id. at 54. Paragraph 11.a thus excludes coverage for the fuel spilled from the trailers because the covered auto was towing the trailers. Zurich denied coverage for the fuel spilled from the trailers on this basis. ECF No. 26-9 at 4-6. And because the excess policy adopts this exclusion, coverage for the fuel spilled from the trailers is also excluded under RSUI’s excess policy unless something in the excess policy provides for coverage.

As for the fuel spilled from the tractor, Zurich accepted coverage under the exception to the exclusion in paragraph 11.a, which provides that paragraph 11.a does not exclude fuels “that are needed for or result from the normal electrical, hydraulic or mechanical functioning of the covered ‘auto’ or its parts” if the pollutants are released “directly from an ‘auto’ part designed by its manufacturer to hold … such ‘pollutants.’ ” ECF No. 26-2 at 54. The fuel spilled from the tractor’s gas tank falls under this exception, so Zurich covered it. ECF No. 26-9 at 6. Because the RSUI excess policy has the same coverage, exclusions, and exceptions as the Zurich policy, it therefore covers the fuel spilled from the tractor unless something in the excess policy excludes it.

*4 The heart of the parties’ dispute revolves around an exclusion in RSUI’s policy. The excess policy has an endorsement entitled “Total Pollution Exclusion-With Collision/Upset Exception.” ECF No. 26-1 at 14. The Total Pollution Exclusion states:

This insurance shall not apply to:

1. Any liability which would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants” at any time.

2. Any loss, cost or expense arising out of any:

a. Request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of “pollutants”; or

b. Claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of “pollutants.”

However, insofar as coverage is afforded by the [Zurich policy], for the full limits shown therein, paragraph 1. of this exclusion does not apply to any liability arising out of the collision or upset of a motor vehicle.

Id.

Teton argues that the “however” paragraph creates coverage under the excess policy that is broader than Zurich’s policy because that paragraph states that the pollution exclusion does not apply to “any liability” arising out of the upset of a vehicle, and that is what happened here. I reject that reading of the policy as contrary to its plain and unambiguous language. The endorsement is an exclusion, and the “however” paragraph is an exception to that exclusion. It is not a coverage provision. The language in the “however” paragraph merely states that the exclusion in paragraph 1 does not apply when liability arises out of the upset of a vehicle. In other words, it eliminates exclusion 1 from the policy. But it does not write in coverage for any liability arising out of the upset of a vehicle. No reasonable reading of the language would support a finding that this exception to an exclusion is actually a coverage clause creating broader coverage than that provided under the Zurich policy. So, the fuel spilled by the trailers is not covered by the excess policy because it was not covered by the Zurich policy and the elimination of paragraph 1 of the pollution exclusion in the excess policy does not create coverage that did not exist under the Zurich policy.

That leaves the fuel spilled from the tractor. RSUI contends that even if paragraph 1 is read out of the policy, paragraph 2 to this endorsement still applies and excludes coverage. Teton argues that paragraph 2 does not apply because Teton’s liability was not triggered by a governmental demand that it clean up the fuel. Rather, it contends that the circumstances of the accident required it to clean up the fuel. Teton contends that regardless of a government request or order, it would have had to clean up the spill. And it contends that this is shown by the fact that it contacted contractors to remediate the spill before it heard from NDEP. RSUI responds that paragraph 2.a does not require that the request come from a governmental authority. Rather, anyone requesting or demanding Teton to clean up the fuel would trigger the exclusion. RSUI also notes that NDEP made a request within two days of the accident, so the costs were incurred arising out of a request or demand to clean up the spill.

*5 The Zurich policy provided coverage for the tractor fuel spill as a “covered pollution cost or expense,” which the policy defined as a cost arising out of “[a]ny request, demand, order or statutory or regulatory requirement” that the insured clean up a pollutant. The excess policy’s pollution exclusion excluded costs arising from a request, demand, or order to clean up a pollutant. But it did not exclude costs arising from a statutory or regulatory requirement to clean up. RSUI mirrored this section of the Zurich policy almost verbatim, with the lone difference being that it struck the phrase “statutory or regulatory requirement” that was in the Zurich policy. I must take the policies by their plain language, construe any ambiguities against RSUI, and read any exclusion narrowly. So, comparing the language of the excess policy’s total pollution exclusion to the Zurich policy’s definition of a covered pollution expense, RSUI excluded costs arising from a request, demand, or order, but not costs arising from a statutory or regulatory obligation. If RSUI meant to also exclude costs arising from a statutory or regulatory requirement, it could and should have clearly and distinctly communicated that in the policy. RSUI’s interpretation excluding all coverage is not the only reasonable interpretation of paragraph 2 because paragraph 2 does not clearly and unambiguously exclude costs arising from a statutory or regulatory requirement. Therefore, the excess policy covers the fuel spilled from the tractor if the costs to clean up the tractor’s fuel arose from a statutory or regulatory obligation but not if the costs arose from a request, demand, or order to clean up.

III. CONCLUSION

I THEREFORE ORDER that the defendant’s motion for summary judgment (ECF No. 23) is GRANTED in part as described above.

I FURTHER ORDER that the plaintiffs’ motion for summary judgment (ECF No. 25) is GRANTED in part as described above.

All Citations

End of Document

Daniels v. A.E.N. Asphalt, Inc.

Superior Court of Connecticut,

J.D. OF NEW LONDON.

AT NEW LONDON.

DANIELS, JACK

A. E. N. ASPHALT, INC.

NO. KNL-CV23-6060505-S

JANUARY 30, 2024

MEMORANDUM OF DECISION MOTION TO STRIKE

Angelica N. Papastavros, Judge

*1 The issue presented is whether the court should grant the defendant’s motion to strike count six of the plaintiff’s complaint, which alleges violations of the Federal Motor Carrier Safety Regulations (FMCSR), on the ground that the FMCSR does not create a private right of action for personal injury suits and, therefore, count six is legally insufficient.

FACTS

The plaintiff, Jack Daniels, in a revised complaint filed on June 6, 2023, alleges that on or about April 6, 2021, the defendant-employee, Michael Collins, was operating a truck owned by the defendant-owner A.E.N. Asphalt, Inc. (A.E.N.) in Gales Ferry, Connecticut. A.E.N. used the vehicle in question as a commercial truck to deliver its products and as a family vehicle. At all relevant times, Collins was an agent, servant, and/or employee of A.E.N. and was acting within the scope of his employment when operating the truck. Collins was also a family member of A.E.N. and was operating the truck within his general authority to do so. At that time and place, the plaintiff was operating his motor vehicle on Route 12 and had stopped while waiting for traffic to pass. Collins was also operating his truck on Route 12, directly behind the plaintiff, and collided with the rear of the vehicle driven by the plaintiff. Due to Collins’ alleged negligence and carelessness, the plaintiff suffered physical injuries and incurred medical care expenses.

The plaintiff alleges negligence and recklessness as to Collins and negligence, direct liability regarding training and supervision, negligent entrustment, and violations of the Federal Motor Carrier Safety Regulations as to A.E.N. On July 5, 2023, the defendant filed a motion to strike count six of the complaint on the ground that the FMCSR does not create a private right of action for personal injury suits and, therefore, this count is legally insufficient. The motion is accompanied by a memorandum of law. The plaintiff filed a memorandum of law in opposition to the motion to strike on December 13, 2023.

DISCUSSION

“The purpose of a motion to strike is to contest … the legal sufficiency of the allegations of any complaint … to state a claim upon which relief can be granted.” (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). “A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged.” (Internal quotation marks omitted.) Santorso v. Bristol Hospital, 308 Conn. 338, 349, 63 A.3d 940 (2013). “Practice Book … § 10-39, allows for a claim for relief to be stricken only if the relief sought could not be legally awarded.” Pamela B. v. Ment, 244 Conn. 296, 325, 709 A.2d 1089 (1998). “In ruling on a motion to strike, the court is limited to the facts alleged in the complaint.” (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). “If any facts provable under the express and implied allegations in the plaintiff’s complaint support a cause of action… the complaint is not vulnerable to a motion to strike.” Bouchard v. People’s Bank, 219 Conn. 465, 471, 594 A.2d 1 (1991).

*2 In the present case, in count six of the complaint, the plaintiff alleges that A.E.N. violated the Federal Motor Carrier Safety Regulations. The defendant filed a motion to strike count six, arguing that the FMCSR does not create a private right of action for personal injury suits and, therefore, the count is legally insufficient. In opposition to the motion, the plaintiff argues that, regardless of whether there is a private right of action under the FMCSR, the regulations may still be used as evidence of negligence in a personal injury case.

“[P]rivate rights of action to enforce federal law must be created by Congress. The judicial task is to interpret the statute Congress has passed to determine whether it displays an intent to create not just a private right but also a private remedy. Statutory intent on this latter point is determinative. Without it, a cause of action does not exist, and courts may not create one, no matter how desirable that might be as a policy matter, or how compatible with the statute.” (Citations omitted.) Alexander v. Sandoval, 532 U.S. 275, 286-87, 121 S. Ct. 1511, 149 L. Ed. 2d 517 (2001).

“[I]n the context of plaintiffs who have been injured due to violations of that statute, courts have held that there is no private right to bring an FMCSA claim.” Dighello v. Thurston Foods, Inc., 307 F. Supp. 3d 5, n.26 (2d Cir. 2018). “[T]here is no private right of action to enforce alleged violations of the [FMCSA] ….” Gilbert v. Zablauskas, Superior Court, judicial district of Waterbury, Docket No. CV-18-6041805-S (April 29, 2022, Roraback, J.). Across other jurisdictions, most courts that have considered the issue have come to the same conclusion. See, e.g., Kavulak v. Laimis Joudzevicius, A. V, Inc., 994 F. Supp. 2d 337, 343-44 (W.D.N.Y. 2014) (statute does not create private right of action to recover for personal injuries sustained by motorist struck by tractor-trailer driver); Courtney v. Ivanov, 41 F. Supp. 3d 453, 457-58 (W.D. P.a. 2014) (adopting majority position that motor carrier regulations do not create private cause of action for personal injuries); Dumas v. Albaier, United States District Court, Docket No. 1:20- CV-00387 (6th Cir. October 7, 2020) (FMCSR does not create private right of action); Albuquerque v. Achane, United States District Court, Docket No. 19-13901 (SDW) (3d Cir. August 12, 2019) (plaintiff’s claim for violation of FMCSA must be dismissed because FMCSA does not provide for private right of action for personal injury suits); Bales v. Green, United States District Court, Docket No. 16-CV-106-GKF-JFJ (10th Cir. March 2, 2018) (clear majority of courts to consider issue concluded Motor Carrier Act and other Federal Motor Carrier Safety Regulations do not create private right of action for damages in personal injury claims).

In the present case, the plaintiff alleges violations of the FMCSR after his vehicle was struck by a vehicle owned and operated by the defendant. Connecticut courts that have addressed the issue have concluded that the FMCSR does not create a private right of action for personal injury claims such as the one in the present case. Dighello v. Thurston Foods, Inc., supra, 307 F. Supp. 3d 5, n.26; Gilbert v. Zablauskas, supra, Superior Court, judicial district of Waterbury, Docket No. CV18-6041805-S. Further, other jurisdictions that have considered the issue have also concluded that the FMCSR does not create a private right of action and provide guidance on the issue. See, e.g., Kavulak v. Laimis Joudzevicius, A. V., Inc., supra, 994 F. Supp. 2d 343-44; Courtney v. Ivanov, supra 41 F. Supp. 3d 457-58; Dumas v. Albaier, supra, United States District Court, Docket No. 1:20-CV-00387; Albuquerque v. Achane, supra, United States District Court, Docket No. 19-13901 (SDW); Bales v. Green, supra, United States District Court, Docket No. 16-CV-106-GKF-JFJ. The facts of the present case are similar to Gilbert, in which the plaintiff suffered injuries from a motor vehicle incident, where the court concluded that there was no private right of action to enforce alleged violations of the FMCSR. Gilbert v. Zablauskas, supra, Superior Court, judicial district of Waterbury, Docket No. CV18-6041805-S. Therefore, the facts of the present case, in which the plaintiff alleges that he suffered injuries as a result of a motor vehicle accident caused by the defendant, do not support a finding that the plaintiff can bring a private right of action under the FMCSR.

*3 In support of his opposition to the motion to strike, the plaintiff cites to jury instructions given in Amparo v. Ayala, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-16-6029461-S (December, 27, 2019,¹ Hernandez, J.), in which Judge Hernandez stated, in relevant part: “If you find that the defendants violated an FMCSR safety standard, you may consider this as a guide in determining the appropriate standard of care. Therefore, a violation of such a standard may be considered by you as evidence of negligence.” Though Judge Hernandez determined that a violation of the FMCSR could be considered as evidence of negligence in that case, the discretionary use of these instructions has no binding authority on the present case.

The plaintiff also cites to Byrne v. Avery Center for Obstetrics & Gynecology, P. C., 327 Conn. 540, 175 A.3d 1 (2018), which can be distinguished from the present case. In Byrne, the court addressed alleged violations of HIPAA in the context of a health care provider’s breach of its duty of confidentiality in the course of complying with a subpoena. In that context, the court concluded: “to the extent it has become the common practice for Connecticut health care providers to follow the procedures required under HIPAA in rendering services to their patients, HIPAA and its implementing regulations may be utilized to inform the standard of care applicable to such claims arising from allegations of negligence in the disclosure of patients’ medical records pursuant to a subpoena.” (Emphasis added.) Id., 557. The court’s decision to allow HIPAA and its regulations to be used as evidence in a negligence claim was made after consideration of the specific facts of that case and in the context of the alleged disclosure of patients’ medical records pursuant to a subpoena. Byrne differs from the present case not only in the type of regulations at issue but also the facts from which the negligence claim arises. The plaintiff does not provide any other authority to support his argument that the FMSCR may be used as evidence of negligence in a personal injury claim.

CONCLUSION

For the foregoing reasons, the court grant the defendant’s motion to strike count six of the plaintiff’s complaint.

All Citations

Footnotes

Decision due date. Action was withdrawn on October 31, 2019.

End of Document