Johnson, Drake & Piper, Inc. v. Liberty Mutual Insurance Co.

• Decision Date: 23 September 1966
• Docket Number: No. 4-63-Civ-325.,4-63-Civ-325.
• Parties: JOHNSON, DRAKE & PIPER, INC., Modern Erecting Co., Harlan Stowe and Wesley P. Janshen, Plaintiffs, and Continental Casualty Company and Aetna Casualty & Surety Company, Additional Plaintiffs, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Minnesota

258 F. Supp. 603

JOHNSON, DRAKE & PIPER, INC., Modern Erecting Co., Harlan Stowe and Wesley P. Janshen, Plaintiffs, and Continental Casualty Company and Aetna Casualty & Surety Company, Additional Plaintiffs, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant.

No. 4-63-Civ-325.

United States District Court D. Minnesota, Fourth Division.

September 23, 1966.

William P. Westphal, Minneapolis, Minn., for plaintiffs Johnson-Drake & Piper, Inc., and Continental Casualty Co.

Wright W. Brooks, Minneapolis, Minn., for Modern Erecting Co. and Aetna Casualty & Surety Co.

Leonard E. Lindquist, Minneapolis, Minn., for Harlan Stowe.

John D. Rice, Minneapolis, Minn., for Wesley Janshen.

Francis W. Van Eps, Minneapolis, Minn., for defendant Liberty Mutual Ins. Co.

MEMORANDUM

DEVITT, Chief Judge.

This action, under the Declaratory Judgments Act, for interpretation of an insurance policy, comes to the Court by way of a stipulated statement of facts accompanied by briefs. Diversity jurisdiction is established.

In a prior Minnesota state court action plaintiffs were adjudged liable to one Edward Thill for injuries resulting from an industrial accident on June 23, 1960. The Minnesota Supreme Court affirmed, Thill v. Modern Erecting Co., 272 Minn. 217, 136 N.W.2d 677 (1965). The original plaintiffs, along with the additional plaintiffs, Continental Casualty Co. (Continental), the comprehensive general automobile liability insurer of Johnson, Drake & Piper, Inc. (Johnson-Drake), and Aetna Casualty and Surety Co. (Aetna), the general comprehensive liability insurer of Modern Erecting Co. (Modern), now claim the Liberty Mutual Insurance Co. (Liberty), through the automobile liability policy it issued to the J. L. Shiely Co. (Shiely), is the party ultimately responsible to pay the damages, plus interest and taxable costs, awarded to Edward Thill in the state court verdict.

The injury to Edward Thill in June, 1960, occurred at the site of a Western Airlines building then under construction by the Minneapolis-St. Paul Metropolitan Airport Commission at Wold-Chamberlain Airport. Johnson-Drake was the general contractor in charge of the whole project. Johnson-Drake, by agreement with Jesco, Inc., the subcontractor for concrete work, employed Modern to supply the crane to transport concrete from the Shiely ready-mix trucks to the building roof being poured on the morning of the accident. At the time the concrete pouring operation was in progress, Thill, the employee of yet another subcontractor handling the excavation and earth-moving work, was back-filling an excavation near the crane. After two Shiely trucks were emptied and a third partially emptied through use of the crane and bucket, the accident occurred. The crane, while moving a loaded bucket of concrete to the building roof, tipped over striking and injuring Thill.

Most of the evidence and findings in the state court as to the causes of the accident are not pertinent to the issues here. It suffices to note that the state court found negligence on the part of Modern and its employees, Harlan Stowe, the crane operator, and Wesley Janshen, the crane oiler, and on the part of Johnson-Drake, the general supervisor on the job. In addition the Minnesota Supreme Court concluded that the jury was justified in finding a breach of statutory duty of bailor for hire on the part of Modern. No negligence was found on the part of Shiely or the driver of the ready-mix truck. These findings as to negligence and proximate cause are not in dispute in the present action.

Judgment was ordered in Thill's favor against Johnson-Drake and Modern for $642,400 accompanied by an order of indemnity in Modern's favor against Harlan Stowe and Wesley Janshen. Thill later consented to a reduction of the verdict to $375,000 upon the court's order that without such consent motions for a new trial would be granted. Following appeals to the Minnesota Supreme Court, Continental, as the insurer of Johnson-Drake, and Aetna, as the insurer of Modern, each paid $213,390.44, or one-half the total verdict plus interest and taxable costs, in full satisfaction of the verdict recovered by Thill.

The parties have stipulated that the plaintiffs, Johnson-Drake, Modern, Harlan Stowe and Wesley P. Janshen, gave timely notice to Liberty of their claims to coverage under Liberty's policy with Shiely and tendered to defendant the defense on their behalf of Thill's state court action. Defendant Liberty denied these tenders.

Plaintiffs, and the additional plaintiffs by way of subrogation to the rights of their insureds, now claim coverage as additional insureds under Liberty's liability policy with Shiely. The specific provisions of the Liberty policy giving rise to this claim read as follows:

DEFINITION OF INSURED With respect to the insurance for bodily injury liability and for property damage liability the unqualified word "insured" includes * * * any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission * * *.

* * * * * *

Use of the automobile for the purposes stated includes the loading and unloading thereof.

In addition to the claimed coverage under the Liberty policy, plaintiffs rely on provisions excluding or limiting coverage in the Continental and Aetna policies. Condition 14 of the Continental policy with Johnson-Drake and condition 17 of the Aetna policy with Modern read identically, as follows:

OTHER INSURANCE If the insured has other insurance against a loss covered by this policy the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss; provided, however, the insurance under this policy with respect to loss arising out of the maintenance or use of any hired automobile insured on a cost of hire basis or the use of any non-owned automobile shall be excess insurance over any other valid and collectible insurance. (Emphasis added.)

All plaintiffs thus claim coverage, either directly or by way of subrogation, under the omnibus insureds and the loading-unloading clauses of the Liberty policy. Also, Continental and Aetna claim their insurance provides only excess or secondary coverage in light of the other insurance clauses in their policies. Aetna further asserts that since their policy with Modern does not cover employees such as Stowe and Janshen and since Modern is entitled to indemnity from these employees, Aetna, as subrogee of Modern, is entitled to recover from Liberty because Stowe and Janshen are covered by Liberty's policy with Shiely. This latter assertion is only relevant in the event that the various insurers are obligated in some manner on a pro rata basis, or if in some manner Stowe and Janshen qualify as additional insureds under Liberty's policy while Modern, in its own right, does not.

Liberty contends in defense against these claims (1) the tipping of the crane and the resultant injuries to Thill did not "arise out of" the "use" of the Shiely truck—or, more specifically, did not arise out of the unloading of the truck— within the meaning of the Liberty policy, and (2) no causal relation exists between any use of the truck and an accident caused by an instrumentality under the operation and control of separate and independent parties. Liberty further argues (1) the inapplicability of the "loading and unloading" clause of a truck insurance policy to an organization guilty of a breach of statutory duty with regard to the erection, inspection and operation of a crane, and (2) the remoteness in time and place, presumably from the Shiely truck and/or the "use" thereof, of the negligence causing the accident precludes recovery under the Liberty policy.

The question of whether or not plaintiffs were additional insureds under Liberty's policy with Shiely turns, as the parties apparently agree, on whether or not plaintiffs were "users" of the ready-mix truck under the loading and unloading clause. No further definition of the intended scope of this "use" is given in the policy itself. Unfortunately, a multitude of judicial decisions in this area present little in the way of consistency in determining the scope of "loading and unloading" as those terms are used in automobile liability insurance policies.

Those cases finding a very broad scope of coverage based on loading and unloading clauses most generally adopt the so-called "complete operation" rule. Under this view the unloading process includes not only the actual removal of goods from a vehicle, but also all steps in the delivery of the goods to their intended place, including the use of any necessary conduit, albeit controlled and operated independent of the vehicle. See, e. g., St. Paul Mercury Ins. Co. v. Huitt, 336 F.2d 37 (6th Cir. 1964) (applying Michigan law); Travelers Ins. Co. v. Employers Cas. Co., 380 S.W.2d 610 (Sup.Ct. Tex.1964); Travelers Ins. Co. v. W. F. Saunders & Sons, Inc., 18 A.D.2d 126, 238 N.Y.S.2d 495, aff'd 13 N.Y.2d 1019, 1021, 245 N.Y.S.2d 597, 195 N.E.2d 303 (1963); Lamberti v. Anaco Equipment Corp., 16 A.D.2d 121, 226 N.Y.S.2d 70 (1962). These cases are almost identical on their facts to the instant case. Under the authority of these cases it is apparent that, if Minnesota expressly or impliedly follows the "complete operation" rule, the accident causing injury to Thill falls within the coverage provided by Liberty's policy to Shiely. The final resting place of the goods, and hence the completion of the unloading, would be the roof of the building, not the bucket of the crane. The factors of lack of control and/or lack of negligence by Shiely and its employees and the established negligence and control of parties independent of Shiely would not alter this conclusion.

A theory...