Coverage - Central Analysis Bureau

Clark v. Progressive Cnty. Mut. Ins. Co.

United States District Court for the Western District of Louisiana, Lafayette Division

May 30, 2024, Decided; May 30, 2024, Filed

CIVIL DOCKET NO. 6:23-cv-00625

Reporter

2024 U.S. Dist. LEXIS 96604 *

LINDA CLARK VERSUS PROGRESSIVE COUNTY MUTUAL INSURANCE COMPANY, ET AL

Core Terms

cancellation, Trucking, Endorsement, insured, summary judgment, effective, mailing, notice, argues, cancellation notice, insurance policy, effective date, subject accident, motor carrier, Declarations, Certificate, non-moving, damages

Counsel: [*1] For Linda Clark, Plaintiff: Scott F Higgins, LEAD ATTORNEY, Laborde Earles Law Firm (LAF), Lafayette, LA.

For Progressive County Mutual Insurance Co, Defendant: Rachel Marie Anderson, LEAD ATTORNEY, Robin Danielle Cassedy, Strauss Massey & Dinneen, New Orleans, LA; Guy D Perrier, Sean Paul Rabalais, Perrier & Lacoste, New Orleans, LA.

For Yannier Casas Sosa, Kyan Trucking L L C, Defendants: Ian A MacDonald, LEAD ATTORNEY, Jones Walker (LAF), Lafayette, LA.

For State Farm Mutual Automobile Insurance Co, Defendant: Sarah Eilts Assad, LEAD ATTORNEY, Casten & Pearce, Shreveport, LA.

Judges: DAVID C. JOSEPH, UNITED STATES DISTRICT JUDGE. MAGISTRATE JUDGE DAVID J. AYO.

Opinion by: DAVID C. JOSEPH

Opinion

MEMORANDUM RULING

Before the Court is a MOTION FOR SUMMARY JUDGMENT (the “Motion”) [Doc. 43] filed by Progressive County Mutual Insurance Company (“Progressive”). Progressive seeks dismissal of all claims against it on grounds that the commercial auto insurance policy issued by Progressive to defendant Kyan Trucking, LLC (“Kyan Trucking”), was cancelled prior to the automobile accident at issue. After careful consideration, and for the reasons set forth below, Progressive’s Motion is GRANTED. Specifically, the Court finds [*2] that Kyan Trucking is not an insured under the Progressive insurance policy in connection with the subject accident, and that Progressive therefore has no duty to defend Kyan Trucking or defendant Yannier Casas Sosa.

Factual Background and Procedural History

This lawsuit arises out of a motor vehicle collision that occurred on July 14, 2022, in which a truck driven by defendant Yannier Casas Sosa (“Sosa”), an alleged employee of defendant Kyan Trucking, struck Plaintiff Linda Clark’s (“Plaintiff”) vehicle in a parking lot, causing her injuries.¹

Prior to the accident, on September 17, 2021, Kyan Trucking applied for an insurance policy with Progressive. [Doc. 43-2, p. 1, ¶ D(1); pp. 3-8]. In the Application for Insurance, Kyan Trucking listed its address as “716 S. Eagle St., Weimar, TX 78962” (the “Weimar address”). Thereafter, Progressive issued Texas commercial auto insurance policy number 04078762-0 (the “Policy”) to Kyan Trucking with an effective date of September 22, 2021. [Doc. 43-2, pp. 31-98]. The Policy contained a Form MCS-90 — Endorsement for Motor Carrier Policies of Insurance for Public Liability under Sections 29 and 30 of the Motor Carrier Act of 1980 (the “MCS-90 Endorsement”),² [Doc. 43-2, ¶ D(2)], as well as a “Form [*3] F — Uniform Motor Carrier Bodily Injury and Property Damage Liability Insurance Endorsement” (the “Form F Endorsement”).³ [Doc. 43-2, pp. 17-30]. The Form F Endorsement provides:

FORM F

UNIFORM MOTOR CARRIER BODILY INJURY AND PROPERTY DAMAGE LIABILITY INSURANCE ENDORSEMENT

It is agreed that:

1. The certification of the policy, as proof of financial responsibility under the provisions of any State motor carrier law or regulations promulgated by any State Commission having jurisdiction with respect thereto, amends the policy to provide insurance for automobile bodily injury and property damage liability in accordance with the provisions of such law or regulations to the extent of the coverage and limits of liability required thereby; provided only that the insured agrees to reimburse the company for any payment made by the company which it would not have been obligated to make under the terms of this policy except by reason of the obligation assumed in making such certification.

2. The Uniform Motor Carrier Bodily Injury and Property Damage Liability Certificate of Insurance has been filed with the State Commissions indicated below.

3. This endorsement may not be cancelled without cancellation [*4] of the policy to which is it attached. Such cancellation may be effected by the company or the insured giving thirty (30) days notice in writing to the State Commission with which such certificate has been filed, such thirty (30) days notice to commence to run from the date the notice is actually received in the office of such Commission.

Attached to and forming part of policy No. CA 04078762-0 issued by Progressive County Mutual Ins Co, herein called Company, of PO BOX 94739, CLEVELAND, OH 44101 to KYAN TRUCKING LLC of 18190 HOLLY FOREST DR, KATY, TX 77084-0000.

[Doc. 43-2, p. 18].

The Policy also contains the following cancellation provision:

CANCELLATION AND NONRENEWAL ENDORSEMENT

…

CANCELLATION

You may cancel this policy by calling or writing us, and stating the future date that you wish the cancellation to be effective.

We may cancel this policy by mailing a notice of cancellation to the first named insured shown on the declarations page at the last known address appearing in our records. Notice of cancellation, with the reasons for cancellation, will be mailed at least 10 days before the effective date of cancellation.

…

With respect to cancellation, [*5] this policy is neither severable nor divisible. Any cancellation will be effective for all coverage for all persons and all autos.

If this policy is canceled, coverage will not be provided as of the effective date and time shown in the notice of cancellation.

[Docs. 43-2, pp. 82-83].

On November 8, 2021, Progressive issued a new Policy Declarations page, effective November 7, 2021, which includes the following changes to the Policy: (i) auto coverage schedule; (ii) driver information; (iii) radius of operation for an auto; and, importantly, (iv) Kyan Trucking’s mailing address. [Doc. 46-1, p. 12]. The new mailing address for Kyan Trucking is listed as “18190 Holly Forest Dr., Katy, TX 77084-0000” (the “Holly Forest Drive address”).

On June 9, 2022, Progressive mailed a Notice of Cancellation of the Policy to Kyan Trucking at the Holly Forest Drive address, with an effective date of cancellation on July 13, 2022 (the day before the subject accident) at 12:01 a.m. [Doc. 43-2, p. 99]. The reason for the cancellation was “nonpayment of premium.” The subject motor vehicle accident occurred on July 14, 2022. On March 8, 2023, Plaintiff filed suit against Progressive, Mr. Sosa, Kyan Trucking, [*6] and State Farm Mutual Automobile Insurance Company (“State Farm”)⁴ in the 15th Judicial District Court for the Parish of Lafayette, Louisiana, alleging that the defendants are solidarily liable for the full amount of damages for her personal injuries. Progressive removed the matter to this Court on May 10, 2023. [Doc. 1].

On April 30, 2024, Progressive filed the instant Motion, arguing that it is entitled to summary dismissal of all claims against it on grounds the Policy issued by Progressive to Kyan Trucking was cancelled prior to the auto accident at issue and, therefore, Progressive has no duty to defend Kyan Trucking or defendant Yannier Casas Sosa, nor any obligation to pay for the Plaintiff’s damages, except to the extent Plaintiff proves the MCS-90 Endorsement attached to the policy was in effect and triggered by the accident. Plaintiff opposed the Motion on May 17, 2024 [Doc. 45], and Progressive filed a Reply brief on May 22, 2024 [Doc. 46]. All issues having been fully briefed, the Motion is now ripe for review.

Law and Analysis

I. Summary Judgment Standard

A court should grant a motion for summary judgment when the pleadings, including the opposing party’s affidavits, “show [*7] that there is no dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56; see also Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In applying this standard, the Court should construe “all facts and inferences in favor of the nonmoving party.” Deshotel v. Wal-Mart Louisiana, L.L.C., 850 F.3d 742, 745 (5th Cir. 2017); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986) (“The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.”). The party moving for summary judgment bears the burden of demonstrating that there is no genuine issue of material fact as to issues critical to trial that would result in the movant’s entitlement to judgment in its favor, including identifying the relevant portions of pleadings and discovery. Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995). If the movant fails to meet this burden, the court must deny the moving party’s motion for summary judgment. Id.

If the movant satisfies its burden, however, the non-moving party must “designate specific facts showing that there is a genuine issue for trial.” Id. (citing Celotex, 477 U.S. at 323). In evaluating motions for summary judgment, the court must view all facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). There is no genuine issue for trial — and a grant of summary judgment is warranted — when the record as a whole “could not lead a rational [*8] trier of fact to find for the non-moving party[.]” Id.

II. Analysis

A. Texas Law Governs

The parties do not dispute that Texas law applies to this insurance contract dispute.⁵ Under Texas law, insurance policies are interpreted using the general principles of contract construction. Terry Black’s Barbecue, L.L.C. v. State Farm Auto. Mut. Ins. Co., 22 F.4th 450, 454 (5th Cir. 2022). Thus, when interpreting an insurance policy, courts must first look to the language in the policy, “because it is ‘presume[d] parties intend what the words of their contract say.’ ” Id., quoting Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126 (Tex. 2010). The court “must give ‘effect to each word, clause, and sentence, and avoid making any provision within the policy inoperative.’ ” Terry Black’s Barbecue, 22 F.4th at 455, quoting State Farm Lloyds v. Page, 315 S.W.3d 525, 527 (Tex. 2010). Under Texas law, cancellation is an affirmative defense which must be proved by the insurer at trial. Republic W. Ins. Co. v. Rockmore, 2005 U.S. Dist. LEXIS 327, 2005 WL 57284, at *6 (N.D. Tex. Jan. 10, 2005), citing Shaller v. Commercial Standard Insurance Co., 158 Tex. 143, 309 S.W.2d 59, 66 (Tex. 1958); Anchor Casualty Co. v. Crisp, 346 S.W.2d 364, 367 (Tex.Civ.App.-Amarillo 1961). Therefore, in order to obtain summary judgment, Progressive must conclusively establish that it complied with the requirements for sending a cancellation notice and that its stated reason for cancellation was proper. Rockmore, 2005 U.S. Dist. LEXIS 327, 2005 WL 57284, at *6.

Tex. Ins. Code § 551.103 requires that “[n]ot later than the 10th day before the date on which the cancellation of a liability insurance or commercial property insurance policy takes effect, an insurer must deliver or mail written notice of the cancellation to the first-named [*9] insured under the policy at the address shown on the policy.” Tex. Ins. Code Ann. § 551.103 (West). Tex. Ins. Code § 551.104(b) states that an insurer may cancel any policy if: “(1) the named insured does not pay any portion of the premium when due; (2) the insured submits a fraudulent claim; or (3) the department determines that continuation of the policy would result in a violation of this code or any other law governing the business of insurance in this state.” Tex. Ins. Code Ann. § 551.104(b) (West).

B. Cancellation of the Policy

As an initial matter, the Court notes that the defendants are alleged to be solidarily liable for Plaintiff’s damages, and Kyan Trucking has not asserted a cross claim against Progressive for defense and indemnity. Nevertheless, Progressive argues in the instant Motion that it has no duty to defend or indemnify Kyan Trucking or Sosa. Progressive also argues that it has no obligation to pay for the Plaintiff’s damages, except to the extent Plaintiff proves the MCS-90 Endorsement attached to the Policy was in effect and triggered by the accident.

In its Motion, Progressive argues and provides evidence that it cancelled the Policy, effective July 13, 2022, the day before the subject accident occurred on July 14, 2022. Progressive contends that [*10] it complied with the requirements of the Policy and Texas law to cancel the Policy by sending a “Notice of Cancellation, Nonrenewal or Declination of Insurance” (“Notice of Cancellation”) to the first named insured, Kyan Trucking, at its last known address — the Holly Forest Drive address — more than one month before the effective cancellation date.

In support of its argument, Progressive submits the unsworn affidavit of David J. Hale, a Business Systems Consultant at Progressive with knowledge of the records regularly kept in the course of Progressive’s business. Mr. Hale attaches to his affidavit a copy of the “Notice of Cancellation, Nonrenewal or Declination of Insurance” which states that Kyan Trucking’s Policy “will cease” on July 13, 2022, at 12:01 a.m. Mr. Hale confirms in another Unsworn Declaration, filed with Progressive’s Reply brief, that on November 8, 2021, Progressive received notice of a new address for Kyan Trucking, which prompted Progressive to issue a new Declarations Page acknowledging the change of address. [Doc. 46-1, pp. 1-2, ¶ D(3); 46-1, p. 12]. Mr. Hale also attaches a copy of a Certificate of Mailing from the United States Postal Service, which is postmarked [*11] June 9, 2022, and which evidences the mailing of the Notice of Cancellation to Kyan Trucking at the Holly Forest Drive address. [Doc. 43-2, p. 100].

Mr. Hale also attaches a Texas Department of Motor Vehicles (“DMV”) form, which indicates the Texas DMV received notice of the cancellation of the Form F Endorsement on June 10, 2022, with an effective cancellation date of July 15, 2022. [Doc. 43-3, p. 101]. Kyan Trucking’s address on that notice is listed as the Weimar address. Finally, Mr. Hale attaches a “Federal Motor Carrier Safety Administration Acceptance Report” (“FMCSA”), which shows that Progressive cancelled the MCS-90 Endorsement to the Policy, effective July 15, 2022, which was transmitted to, and accepted by, the FMCSA on June 10, 2022. Therefore, Progressive argues that the Policy was not in effect at the time of the subject accident, and it therefore has no liability for any damages caused by the subject accident.

In response, Plaintiff argues that summary judgment cannot be granted because there are questions of fact with respect to two main issues. First, Plaintiff argues that Progressive has offered no evidence that the Holly Forest Drive address was the last known address [*12] for Kyan Trucking, contending that the Weimar address was used on Kyan Trucking’s insurance application and is the address listed in the cancellation confirmations from both the Texas DMV and the FMCSA. Plaintiff argues that these “multiple addresses” for Kyan Trucking create an issue of fact as to whether Progressive strictly complied with the Policy’s cancellation requirements. Second, Plaintiff argues that the cancellation confirmation documentation from both the Texas DMV and the FMCSA reflect an effective date of cancellation of the Policy as July 15, 2022, while the Notice of Cancellation that Progressive provided to Kyan Trucking shows that cancellation was effective on July 13, 2022. Plaintiff argues that these conflicting dates create a question of fact as to the effective date of the cancellation of the Policy.

Plaintiff’s arguments are without merit. With respect to the last known address for Kyan Trucking, Progressive provides evidence that Kyan Trucking’s Policy Declarations Page was changed on November 8, 2021 (effective November 7, 2021) to reflect a new mailing address for Kyan Trucking at the Holly Forest Drive address. [Doc. 46-1, pp. 1-2, ¶ D(3); 46-1, p. 12]. Plaintiff [*13] has not controverted this fact, and therefore, there is no question of fact as to the proper mailing address for Kyan Trucking. Furthermore, the Court does not credit Plaintiff’s argument that the “July 15, 2022” termination date in the Form F Endorsement and the FMCSA’s acceptance of cancellation creates a genuine dispute of fact. Confirmations to third parties (Texas DMV and FMCSA) that Policy endorsements were cancelled — and the effective dates of those cancellations — are immaterial to whether the Policy itself was properly cancelled between Progressive and its insured, Kyan Trucking.

Considering the foregoing, the Court finds that Progressive complied with all of the requirements of cancellation under the Policy and Texas law, and that Kyan Trucking was therefore not covered under the Progressive Policy on July 14, 2022. Because the Progressive policy was not in effect at the time of the accident, Kyan Trucking is not an insured under the Progressive for the claims asserted.

Conclusion

Accordingly,

IT IS HEREBY ORDERED that the MOTION FOR SUMMARY JUDGMENT [Doc. 43] filed by Progressive County Mutual Insurance Company is GRANTED. Specifically, the Court finds that Kyan Trucking is [*14] not an insured under the Progressive insurance policy in connection with the subject accident, and that Progressive therefore has no duty to defend Kyan Trucking or defendant Yannier Casas Sosa.

THUS, DONE AND SIGNED in Chambers on this 30th day of May 2024.

/s/ David C. Joseph

DAVID C. JOSEPH

UNITED STATES DISTRICT JUDGE

End of Document

¹Specifically, Plaintiff alleges that Sosa was operating a truck pulling a utility trailer, when the trailer struck the Plaintiff’s vehicle. [Doc. 1-4, ¶¶ 3-5].

²The MCS-90 endorsement makes an insurer liable to third parties for any liability resulting from the negligent use of any motor vehicle by the insured, even if the vehicle is not covered under the insurance policy. Republic W. Ins. Co. v. Rockmore, 2005 U.S. Dist. LEXIS 327, 2005 WL 57284, at *9 (N.D. Tex. Jan. 10, 2005), citing T.H.E. Insurance Co. v. Larsen Intermodal Services, Inc., 242 F.3d 667, 672 (5th Cir. 2001). Some courts, including the Fifth Circuit, have described the obligation placed upon the insurer by the MCS-90 endorsement as one of suretyship. T.H.E. Insurance, 242 F.3d at 672, quoting Canal Insurance Co. v. Carolina Casualty Insurance Co., 59 F.3d 281, 283 (1st Cir. 1995) (“[W]e consider the ICC endorsement to be, in effect, suretyship by the insurance carrier to protect the public — a safety net … [I]t simply covers the public when other coverage is lacking.”). Furthermore, the majority of federal courts have held that the MCS-90 does not affect the obligations between the insurer and its insured or between joint insurers. See, e.g., Carolina Casualty. Ins. Co. v. Underwriters Ins. Co., 569 F.2d 304, 313 (5th Cir. 1978); California Casualty Ins. Co. v. Ins. Co. of N. America, 595 F.2d 128 (3rd Cir. 1999); California Casualty Ins. Co. v. Transport Indem. Co., 533 F. Supp. 22 (D.S.C. 1981), aff’d 676 F.2d 690 (4th Cir. 1982); Travelers Ins. Co. v. Transport Ins. Co., 787 F.2d 1133 (7th Cir. 1986); Grinnell Mut. Reinsurance Co. v. Empire Fire & Marine Ins. Co., 722 F.2d 1400 (8th Cir. 1983); and Harco National Ins. Co. v. Bobac Trucking, Inc., 1995 U.S. Dist. LEXIS 21722, 1995 WL 482330,*5 (N.D. Cal. 1995), aff’d 107 F.3d 733 (9th Cir. 1997) (“[t]he endorsement is intended for the protection of the public only, and does not affect the obligations between the insurer and the insured or between joint insurers”).

Here, Progressive does not seek summary judgment on the issue of whether the MCS-90 Endorsement attached to the Policy was in effect on the date of the accident or applicable to the claims at issue. Nor does Kyan Trucking or the Plaintiff argue or provide evidence that the MCS-90 Endorsement was operative at the time of the subject accident or triggered by the facts alleged. Accordingly, the existence of the MCS-90 Endorsement does not preclude summary judgment on Progressive’s Motion.

³A “Form F” Endorsement is the counterpart under Texas state law to the MCS-90 Endorsement. T.H.E. Ins. Co. v. Larsen Intermodal Servs., Inc., 242 F.3d 667, 671 n.1 (5th Cir. 2001).

⁴Plaintiff alleges she had an uninsured motorist policy with State Farm.

⁵The Policy provides: “Any disputes as to the coverages provided or the provisions of this policy shall be governed by the law of the state listed on your application as your business location.” [Doc. 43-2, p. 61]. In this case, the address listed on the application for insurance is in Weimar, Texas. Plaintiff does not dispute that Texas law applies to the issue of cancellation of the Policy.

Diamond Transp. Logistics, Inc. v. Kroger Co.

United States Court of Appeals for the Sixth Circuit

May 13, 2024, Decided; May 13, 2024, Filed

Reporter

2024 U.S. App. LEXIS 11561 *; 2024 FED App. 0108P (6th Cir.) **; __ F.4th __; 2024 WL 2127126

DIAMOND TRANSPORTATION LOGISTICS, INC., Plaintiff-Counter Defendant-Appellant, v. THE KROGER COMPANY, Defendant-Counter Claimant-Appellee.

Prior History: [*1] Appeal from the United States District Court for the Southern District of Ohio at Columbus. No. 2:19-cv-05448—Sarah Daggett Morrison, District Judge.

Core Terms

sole negligence, indemnity, transportation, indemnify, indemnification, indemnity provision, hiring, ordinary meaning, subcontractors, indemnitee

LexisNexis® Headnotes
Governments > Courts > Judicial Precedent

HN1 Courts, Judicial Precedent

Bound by Ohio law, the Ohio Court of Appeals must follow any decisions from the Ohio Supreme Court that address the issue before it. If none exist, the Court of Appeals must predict how the Supreme Court would rule.

Contracts Law > Contract Interpretation > Ambiguities & Contra Proferentem

Contracts Law > Contract Interpretation > Intent

HN2 Contract Interpretation, Ambiguities & Contra Proferentem

Ohio law directs the court to determine and give effect to the parties’ intent. To do so, the court begins with the agreement’s text — in which the parties’ intent is presumed to reside. If the agreement’s text is unambiguous, the court’s interpretive task also ends with the text, and the court applies the agreement as written. If, however, one can reasonably read the text multiple ways, a court can consider extrinsic evidence. Courts may also construe an ambiguous agreement against the drafter.

Contracts Law > Contract Interpretation

HN3 Contracts Law, Contract Interpretation

In ascertaining plain and ordinary meaning, Ohio courts commonly turn to dictionaries.

Torts > Business Torts > Negligent Hiring, Retention & Supervision > Elements

HN4 Negligent Hiring, Retention & Supervision, Elements

To succeed on a negligent hiring or retention claim, a plaintiff must show, among other things, the employer’s negligence in hiring or retaining the employee and an employee’s act or omission.

Torts > Business Torts > Negligent Hiring, Retention & Supervision > Elements

HN5 Negligent Hiring, Retention & Supervision, Elements

Regarding a claim for negligent hiring, supervision, and retention, there must be two negligent parties — the employer and the employee.

Counsel: ON BRIEF: Gerhardt A. Gosnell II, ARNOLD & CLIFFORD LLP, Columbus, Ohio, Dan J. Binau, HARRIS, MCCLELLAN, BINAU & COX P.L.L., Columbus, Ohio, for Appellant.

Kevin L. Murch, Rebecca J. Johnson, PEREZ MORRIS LLC, Columbus, Ohio, for Appellee.

Judges: Before: GIBBONS, McKEAGUE, and STRANCH, Circuit Judges.

Opinion by: McKEAGUE

Opinion

[**1] McKEAGUE, Circuit Judge. Was Diamond Transportation Logistics contractually required to cover Kroger’s costs in settling a claim for negligent selection, hiring, and retention? The district court said yes. We agree and affirm.

[**2] I. BACKGROUND

This case’s material facts are undisputed.
A.

In 2010, Diamond Transportation Logistics and Kroger joined forces. They entered an agreement for Diamond to transport Kroger goods. They entered another in 2016, along largely the same terms.

The parties’ transportation agreement contained several different provisions. Among them was one providing Kroger set-off rights. That provision allowed Kroger to withhold shipping payments from Diamond for claims it had against Diamond if certain conditions were [*2] met. The agreement also discussed indemnification. It stated:

[Diamond] does hereby expressly agree to indemnify, defend and hold harmless [Kroger], its affiliates and subsidiaries and their respective directors, officers, employees, agents, successors and assigns (“Indemnit[e]es”) from and against any and all suits, actions, liabilities, judgments, claims, demands, or costs or expenses of any kind (including attorney’s fees) resulting from (i) damage or injury (including death) to the property or person of anyone, whomsoever they may be, arising or resulting at any time or place from any operations hereafter performed either by [Diamond], its agents, employees or subcontractors in performing services for Kroger or (ii) the negligence, willful misconduct or violation of law by [Diamond], its agents, employees or subcontractors except to the extent that such liability is caused by the sole negligence or willful misconduct of Kroger.

2010 Transp. Agreement, R.1-1 at PageID 29.

The agreement’s set-off and indemnification provisions proved particularly salient starting in 2015. That December, one of Diamond’s subcontractors hit a minivan head-on while hauling Kroger goods through Missouri. [*3] The truck driver survived, but the minivan’s three passengers passed away. Diamond told Kroger about the collision. It did not, however, mention the deaths.

Three months later, the decedents’ family sued for wrongful death in state court. At first, the family sued Diamond, the truck driver, and a few others. Once the family members learned [**3] that Diamond was shipping Kroger goods during the collision, they also sued Kroger. To do so, they amended their complaint on July 12, 2017. The new complaint added Kroger as a defendant and alleged that it was negligent and reckless in selecting, hiring, and retaining Diamond as a shipper.

Kroger turned to Diamond to cover its legal expenses. After all, it believed the transportation agreement’s indemnity provision required Diamond to do so. Kroger made its first demand on September 8, 2017. Some two months later, Diamond and Kroger entered an indemnity agreement. ¹ Diamond agreed to “indemnify and hold [Kroger] harmless from any claim or liability arising from” the December 2015 collision. 2017 Indemnity Agreement, R.1-1 at PageID 51. Still, by June 2018, Diamond hadn’t reimbursed Kroger. Kroger reached out again, specifying its legal fees. But that [*4] demand, too, proved fruitless.

Kroger then took matters into its own hands. Starting in July 2018, it withheld shipping payments from Diamond. Kroger ended up withholding nearly $1.8 million. Diamond quickly realized it wasn’t getting paid but didn’t know why. In a September letter to Diamond, Kroger explained: it thought Diamond was “obligated to defend and indemnify Kroger.” Sept. 2018 Letter, R.145-1 at PageID 2763. By failing to do so, Kroger said Diamond was breaching their agreements. Kroger stated that it would continue to withhold payment until things changed.

One month later, Diamond took action. Though its insurer refused to provide Kroger coverage, Diamond said it would “defend, hold harmless and indemnify Kroger” in the family’s suit per the parties’ transportation agreement. Oct. 11, 2018 Letter, R.145-1 at PageID 2764. Diamond even retained local defense counsel for Kroger. But by then, according to Kroger, it was too late. Over the past year, Kroger’s counsel had interviewed several witnesses and handled extensive discovery requests. Further, within the next month, Kroger’s corporate designee would be deposed, and Kroger would mediate with the family. Diamond asked Kroger [*5] [**4] to delay mediation so it could get up to speed. But Kroger pressed on and settled with the decedents’ family for over $2 million.

That brings us to this case. Come December 2019, Kroger still hadn’t paid Diamond the money it withheld. Diamond sued to try to recoup those funds. In response, Kroger filed claims of its own, including one for breach of the transportation agreement’s indemnity provision. Kroger sought the difference between what it withheld and what it ultimately settled the family’s claims for—roughly $600,000.

Both parties moved for summary judgment. Relevant here, as to Kroger’s claim for breach of the agreement’s indemnity provision, the district court ruled in Kroger’s favor and awarded it $612,429.45 plus interest. Diamond appeals.

II. ANALYSIS

Diamond raises only one question ² : Was it required, under the parties’ transportation agreement, to indemnify Kroger for the family’s claim? No one disputes that the family’s claim triggers clause (i) of the indemnity provision, which indemnifies Kroger from damage or injury (including death) to a person while a Diamond subcontractor ships Kroger goods. Instead, the issue is whether the indemnity provision’s exception for “liability [*6] . . . caused by the sole negligence or willful misconduct of Kroger” relieves Diamond of its obligation. 2010 Transp. Agreement, R.1-1 at PageID 29.

The district court, for two reasons, thought the exception did not. To start, it held that the exception applied only to clause (ii), not clause (i). Recall, clause (ii) indemnifies Kroger from Diamond or its subcontractors’ negligence, willful misconduct, or violation of law. Even if the exception applied to both clauses, the court didn’t think Diamond fared any better. It held that the exception applies only to “instances of Kroger’s ‘sole negligence.'” Op. & Order, R.205 at PageID 6432. The family’s claim against Kroger, however, required “the negligence of two or more parties.” Id. at 6433 (emphasis omitted). So either way, Diamond was on the hook. [**5] Having reviewed the district court’s conclusion de novo, we see no error. See Wilmington Tr. Co. v. AEP Generating Co., 859 F.3d 365, 370 (6th Cir. 2017); see also Royal Ins. of Am. v. Orient Overseas Container Line Ltd., 525 F.3d 409, 421 (6th Cir. 2008).

In interpreting the parties’ transportation agreement, we apply Ohio law. See Westfield Nat’l Ins. v. Quest Pharms., Inc., 57 F.4th 558, 561 (6th Cir. 2023). This case, after all, is in federal court based on diversity jurisdiction. SHH Holdings, LLC v. Allied World Specialty Ins., 65 F.4th 830, 836 (6th Cir. 2023).HN1 Bound by Ohio law, we must follow any decisions from the Ohio Supreme Court that address the issue before us. Savedoff v. Access Grp., Inc., 524 F.3d 754, 762 (6th Cir. 2008). If none exist, we must predict [*7] how that court would rule. Id.

HN2 Ohio law directs us to determine and give effect to the parties’ intent. Hamilton Ins. Servs. Inc. v. Nationwide Ins. Cos., 86 Ohio St. 3d 270, 1999 Ohio 162, 714 N.E.2d 898, 900 (Ohio 1999). To do so, we begin with the agreement’s text—in which the parties’ intent is “presumed to reside.” Graham v. Drydock Coal Co., 76 Ohio St. 3d 311, 1996- Ohio 393, 667 N.E.2d 949, 952 (Ohio 1996). If the agreement’s text is unambiguous, our interpretive task also ends with the text, and we apply the agreement as written. City of St. Marys v. Auglaize Cnty. Bd. of Commrs., 115 Ohio St. 3d 387, 2007- Ohio 5026, 875 N.E.2d 561, 566 (Ohio 2007). If, however, one can reasonably read the text multiple ways, a court can consider extrinsic evidence. Shifrin v. Forest City Enters., Inc., 64 Ohio St. 3d 635, 1992- Ohio 28, 597 N.E.2d 499, 501 (Ohio 1992); see Lager v. Miller-Gonzalez, 120 Ohio St. 3d 47, 2008- Ohio 4838, 896 N.E.2d 666, 669 (Ohio 2008). Courts may also construe an ambiguous agreement against the drafter. See Cent. Realty Co. v. Clutter, 62 Ohio St. 2d 411, 406 N.E.2d 515, 517 (Ohio 1980).

Applying Ohio law, we hold that the indemnity provision’s exception does not relieve Diamond of its indemnity obligation. Its terms are unambiguous. Even assuming the exception applies to clause (i), it excepts indemnification only for “liability . . . caused by the sole negligence . . . of Kroger.” 2010 Transp. Agreement, R.1-1 at PageID 29 (emphasis added). And Kroger’s liability for the family’s negligent selection, hiring, and retention claim was not caused by its “sole negligence.”

[**6] 1.

Three things inform our understanding of what “sole negligence” means: (1) precedent from the Ohio Supreme Court; (2) the phrase’s plain and ordinary meaning; and (3) our caselaw.

Begin with [*8] Ohio Supreme Court precedent. See Savedoff, 524 F.3d at 762. Though that court hasn’t defined “sole negligence,” it hinted at what it thought the phrase meant in Kendall v. U.S. Dismantling Co., 20 Ohio St. 3d 61, 20 Ohio B. 360, 485 N.E.2d 1047 (Ohio 1985). There, the court held that an Ohio statute covering construction contracts barred indemnification regardless of whether an indemnitee’s negligence was sole or concurrent. Id. at 1049. The court thought an interpretation barring only sole negligence would be unjust or unreasonable. Id. at 1050. After all, if the statute was so limited, the court said an indemnitee would be absolved “of all liability if its negligence fell short of one hundred percent by any fraction, however small.” Id.; see also id. at 1049-50 (noting that the indemnity exception covered “damages or [costs] caused by the sole negligence” of the indemnitee). The Ohio Supreme Court thus seems to interpret indemnity exceptions for “sole negligence” to apply only when an indemnitee is the lone negligent party.

Now consider the plain and ordinary meaning of “sole negligence.” See Alexander v. Buckeye Pipe Line Co., 53 Ohio St. 2d 241, 374 N.E.2d 146, 150 (Ohio 1978) ([C]ommon words . . . are to be given their plain and ordinary meaning . . . .”). HN3 In ascertaining plain and ordinary meaning, Ohio courts commonly turn to dictionaries. See, e.g., Athens v. McClain, 163 Ohio St. 3d 61, 2020- Ohio 5146, 168 N.E.3d 411, 419 (Ohio 2020). Relevant here, Merriam-Webster defines “sole” as “being the only [*9] one” and “having no sharer.” Sole, Merriam-Webster Unabridged, https://unabridged.merriam-webster.com /collegiate/sole (last visited May 10, 2024). The Oxford English Dictionary similarly says “sole” means “[o]ne and only” and “[u]naccompanied by other things or qualities; standing alone.” Sole, Oxford Eng. Dictionary, https://www.oed.com/dictionary/sole_adj (last visited May 10, 2024). As a result, the plain and ordinary meaning of “sole negligence,” like the Ohio Supreme Court’s understanding, requires that Kroger be the only negligent party for the exception to apply.

Our last consideration—our caselaw—suggests a similar meaning. In Thompson v. Budd Co., we interpreted a “sole negligence” exception to require that an indemnitee be “100% [**7] responsible for the plaintiff’s injuries.” 199 F.3d 799, 811 (6th Cir. 1999) (citing Burdo v. Ford Motor Co., 828 F.2d 380, 381 (6th Cir. 1987)). Granted, we were applying Kentucky law and a slightly different indemnification exception—one focused on “loss or damage” caused by sole negligence and not “liability.” Id. at 810-11. So the takeaway here is slightly different but still analogous: Kroger must be 100% responsible for its liability for the “sole negligence” exception to apply.

Based on these three considerations, we think the Ohio Supreme Court [*10] would interpret the transportation agreement’s “sole negligence” exception to apply only when the liability at issue stems from Kroger’s negligence alone.

But Diamond’s negligence played at least a part in Kroger’s liability for the family’s claim. Claims of negligent selection, hiring, and retention take two to tango—negligent parties, that is. See Lehrner v. Safeco Ins./Am. States Ins., 171 Ohio App. 3d 570, 2007- Ohio 795, 872 N.E.2d 295, 305 (Ohio Ct. App. 2007). The claim’s elements tell the story. HN4 To succeed, a plaintiff must show, among other things, “the employer’s negligence in hiring or retaining the employee” and an “employee’s act or omission.” Jones v. MTD Consumer Grp., Inc., 2015- Ohio 1878, 32 N.E.3d 1030, 1042 (Ohio Ct. App. 2015). Kroger’s liability, therefore, was “not viable without an underlying act of negligence by [Diamond].” Lehrner, 872 N.E.2d at 305. ³ Because Diamond must have also been negligent for Kroger to be liable, the “sole negligence” exception does not relieve Diamond of indemnification.

* * *

In sum, for the indemnity provision’s exception to apply, Kroger’s liability needed to stem from its negligence alone. But it didn’t, so Diamond needed to cover Kroger’s costs in settling the family’s negligent selection, hiring, and retention claim.

[**8] B.

Diamond disagrees with our conclusion. In its view, our interpretation of “sole negligence” prevents the indemnity exception from ever being [*11] triggered “because it requires the existence of two mutually exclusive things.” Appellant’s Br. 14. Diamond’s reasoning, taken at face value, appears logical. It says that clause (ii) requires Diamond to indemnify Kroger for claims resulting from Diamond’s negligence. Yet the indemnity exception applies only if “the same underlying claim” is caused by Kroger’s negligence alone. ⁴ Id. at 15. Those two things cannot co-exist. Id. As a result, Diamond contends that our interpretation effectively renders the exception meaningless—contrary to Ohio precedent requiring otherwise. Id. at 14-17 (citing, among other cases, Wohl v. Swinney, 118 Ohio St. 3d 277, 2008- Ohio 2334, 888 N.E.2d 1062, 1066 (Ohio 2008), and Hybud Equip. Corp. v. Sphere Drake Ins., 64 Ohio St. 3d 657, 597 N.E.2d 1096, 1103 (Ohio 1992)).

But Diamond makes two oversights. First, it reads clause (ii) of the indemnity provision too narrowly. That clause doesn’t only apply to claims resulting from Diamond’s negligence. It also extends to those from Diamond’s “violation of law.” 2010 Transp. Agreement, R.1-1 at PageID 29. That phrase could include claims for strict liability, which don’t involve negligence. Zavinski v. Ohio Dep’t of Transp., 2019- Ohio 1735, 135 N.E.3d 1170, 1179 (Ohio Ct. App. 2019) (“Strict liability ‘is liability that does not depend on actual negligence or intent to harm.'”). There lies at least one scenario where the exception (under our interpretation) alongside [*12] clause (ii) still has bite. Second, Diamond overlooks the use of different language in the indemnity provision’s opening clause and its exception. The opening clause provides indemnification for, among other things, “suits, actions . . . claims, [and] demands . . . resulting from” Diamond’s negligence, which involve mere allegations. 2010 Transp. Agreement, R.1-1 at PageID 29. The exception, however, refers to “liability,” which turns on ultimate responsibility. Id. Kroger could thus face a suit, action, claim, or demand resulting from Diamond’s negligence—based on a plaintiff’s allegations—but still not be entitled to indemnification under the exception because Kroger [**9] proved solely negligent for the liability. For these two reasons, our interpretation of the “sole negligence” exception controls.

III. CONCLUSION

Kroger wasn’t solely negligent for its liability. We affirm.

End of Document

¹This agreement proved to be of little value to Kroger. To the extent that it indemnified Kroger for its own negligence, the district court held that it was void under Ohio Revised Code § 2305.52. That statute, effective March 23, 2016, makes agreements “collateral to . . . a motor carrier transportation contract” that indemnifies a party “against any liability . . . resulting from [its own] negligence” void as against public policy. Ohio Rev. Code § 2305.52(A). Kroger doesn’t challenge that conclusion.

²Diamond initially raised three issues for review. But in its reply brief, it withdrew two of them.

³As Diamond observes, Lehrner involved a different indemnity exception than the one here. See Lehrner, 872 N.E.2d at 302 (addressing an exception “for a bodily injury arising out of the operation of an automobile”). But that doesn’t render the opinion inapposite. HN5 In addressing a claim for negligent hiring, supervision, and retention, the court generally explained that there must be two negligent parties—the employer and the employee. Id. at 305. That proposition alone shows that Kroger’s liability did not turn exclusively on its own negligence.

⁴Diamond contends that the only way to avoid this dilemma is to define “sole negligence” to refer to “negligence that is direct, and ‘not vicarious’ or ‘not derivative.'” Appellant’s Br. 22 (citing Brown-Spurgeon v. Paul Davis Sys. of Tri-State Area Inc., No. CA2012-09-069, 2013 Ohio 1845, 2013 WL 1883214, at *10 (Ohio Ct. App. 2013)); see also id. at 23. Under that definition, Diamond wouldn’t be responsible for covering any liabilities from Kroger’s breach of an independent duty, even if Diamond were also negligent.