Great West Cas. Co. v. TERMINAL TRUCKING CO., LLC

Citations: 803 F. Supp. 2d 389; 2011 U.S. Dist. LEXIS 30356; 2011 WL 1085006Docket: 7:10-cr-00121

Court: District Court, D. South Carolina; March 22, 2011; Federal District Court

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Great West Casualty Company filed a declaratory judgment action against Terminal Trucking Company, LLC, Wellman, Inc., and others, seeking a ruling that it has no obligation to provide coverage for liabilities stemming from an accident involving a trailer loaded with bales of fabric. The incident resulted in serious injury to Wilson Sutton, an employee of Milliken Company, who was hurt while attempting to unlatch a trailer door, mistakenly believing the trailer was empty. The trailer had been unloaded and left on Milliken's property by a Terminal driver after delivery. Sutton subsequently sued Terminal and Wellman for damages.

Great West, which provided commercial general liability and commercial auto insurance policies to Terminal, contended it should not have to cover either Terminal or Wellman under these policies. The court reviewed motions for summary judgment from all parties and granted in part and denied in part Great West’s motion, which resolved the remaining motions. The legal standard applied was based on Rule 56(a) of the Federal Rules of Civil Procedure, asserting that summary judgment is appropriate when there are no genuine disputes over material facts, entitling the moving party to judgment as a matter of law.

The court evaluates whether evidence necessitates jury submission or if one party must prevail legally based on the clarity of facts, as established in Anderson v. Liberty Lobby, Inc. and McKinney v. Bd. of Trustees of Mayland Community College. Summary judgment is warranted when there is no genuine dispute regarding material facts, and the judge's role is to identify if a legitimate issue exists for trial.

Regarding coverage under the commercial general liability policy issued by Great West to Terminal, the policy mandates payment for damages related to 'bodily injury' or 'property damage' caused by an 'occurrence,' defined as an accident or similar harmful conditions. Great West argues that coverage is excluded by the "Aircraft, Auto, or Watercraft" exclusion, which denies coverage for injuries or damages arising from the ownership, maintenance, or use of vehicles or watercraft by any insured, even if negligence is alleged. The definition of 'auto' includes trailers, and since Mr. Sutton's injury is linked to the use of a trailer, the court concludes that Great West is not obligated to cover Terminal for any damages. Consequently, the court grants Great West’s motion for summary judgment and denies the Defendants' motions concerning this claim.

In the case of Wellman, Inc., Terminal added Wellman as an additional insured under the policy. This endorsement provides coverage for liabilities arising from Terminal’s acts or omissions, but remains subject to all policy terms and exclusions. Wellman was an additional insured at the time of the accident.

Great West's additional insured endorsement includes all exclusions from its commercial general liability policy, specifically the Aircraft, Auto, and Watercraft exclusion, which prevents coverage for Wellman, even if liable for Mr. Sutton's injuries due to Terminal's actions. Consequently, Great West’s motion for summary judgment is granted, while the Defendants’ motions for summary judgment regarding this claim are denied.

Regarding coverage under the commercial auto insurance policy issued to Terminal, Great West asserts there is no coverage because there is insufficient evidence linking Terminal or its employees to Mr. Sutton's injuries, which is currently being litigated in state court. Even assuming Terminal is liable, Great West argues that the 'Complete Operations' exclusion applies, stating no coverage exists for injuries or damages arising after the work has been completed. This definition of completion includes various scenarios, such as when work called for in a contract is finished or when work at a job site is completed and used by someone other than another contractor.

Great West claims Terminal's work was completed when its driver left the loaded trailer at Milliken's plant, while Terminal argues the work was not complete until Milliken had inspected and unloaded the shipment. Terminal's position is supported by the deposition of its President, who stated that although the driver had no further tasks on the day of delivery, he believed the job was not completed until the trailer was unloaded and removed. Great West seeks a declaration of no obligation to provide coverage to Terminal under the auto insurance policy.

At the hearing, Terminal asserted that its responsibilities were fulfilled once its driver left Milliken's plant, which the court accepts as a finding. This indicates that Terminal's operations were completed at the time of Mr. Sutton's injury, barring coverage under the auto policy. Consequently, the court grants Great West's motion for summary judgment regarding this claim while denying the Defendants' motion.

Regarding Wellman, Inc., it was added as an additional insured under Terminal's auto insurance policy, with coverage applicable to all vehicles listed in the endorsement. The policy stipulates that coverage for an additional insured only applies if they are liable for the actions of the named insured, and this coverage ceases when the additional insured is no longer liable or when the policy expires.

Great West argues that it is not required to cover Wellman since Wellman was solely responsible for loading the trailer, with no fault attributed to Terminal for Mr. Sutton's injuries. Wellman contends it qualifies as an insured under the policy as a "permissive user" of the trailer. It cites a provision stating that anyone using a covered auto with permission is an insured, except for certain exclusions. Wellman claims it was a borrower of Terminal's trailer during the loading process.

Great West counters this claim, arguing that the Transportation Agreement between Terminal and Wellman clarifies that Wellman did not borrow the trailer, as Terminal was contractually obligated to provide trailers for Wellman’s goods. The court agrees with Great West, noting that Wellman was explicitly designated as an additional insured, which clarifies the insurer's obligations to Wellman.

Great West acknowledges Wellman as an additional insured but asserts that coverage for Wellman is excluded under the Completed Operations and Contractual Liability exclusions of the auto insurance policy. However, Great West fails to demonstrate how these exclusions pertain to Wellman as an additional insured. The court notes that the auto policy's additional insured endorsement does not incorporate all policy terms and exclusions, unlike the commercial general liability policy. Consequently, the court determines that the endorsement clearly outlines Wellman's coverage, limited to its liability for the actions of an 'insured' as defined in the policy.

The endorsement specifies that 'Who is an Insured' includes entities named in the liability coverage section, which does not encompass Wellman, as it is referenced separately as an 'Additional Insured.' The court rejects Wellman's argument that the endorsement is ambiguous; it confirms that Wellman's coverage applies only if it is liable for Terminal's conduct. The primary intent of the policy was to cover Terminal's liabilities, and Great West's agreement to cover Wellman is contingent upon Wellman's liability arising from Terminal's actions.

In Mr. Sutton's complaint, allegations include improper loading of cargo and inadequate driver training by Terminal, which may impact liability findings. The court concludes that Great West must cover Wellman under the auto policy, but only if Wellman is found liable for damages stemming from Terminal's actions. Ultimately, the court rules that Great West has no obligation to cover Terminal under either policy but does have a duty to cover Wellman under the auto coverage policy, limited to liabilities arising from Terminal. The order finalizes the case, and the court does not address the issue of excess coverage.