Amerisure Mut. Ins. Co. v. QBE Ins. Corp.

• Decision Date: 05 September 2012
• Docket Number: CASE NO. CV-11-J-1751-NE
• Parties: AMERISURE MUTUAL INSURANCE COMPANY, Plaintiff, v. QBE INSURANCE CORPORATION, and ZURICH AMERICAN INSURANCE COMPANY, Defendants.
• Court: U.S. District Court — Northern District of Alabama

AMERISURE MUTUAL INSURANCE COMPANY, Plaintiff,

v.QBE INSURANCE CORPORATION, and ZURICH AMERICAN INSURANCE COMPANY, Defendants.

CASE NO. CV-11-J-1751-NE

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA NORTHEASTERN DIVISION

Dated: September 5, 2012

MEMORANDUM OPINION

Pending before the court are cross-motions for summary judgment, evidence, and memoranda of law.¹ QBE filed a response in opposition to Amerisure's motion (doc. 28); Amerisure filed a response in opposition to both defendants' motions (doc. 29); and Zurich filed a response to Amerisure's motion (doc. 33). Thereafter, Amerisure filed a reply to the defendants' opposition (doc. 36), Zurich filed a reply to Amerisure's response (doc. 37), Amerisure filed an additional reply to defendants' oppositions (doc. 38) and QBE filed a reply to Amerisure's opposition (doc. 39). Also pending is a motion by Amerisure to order disclosure of the Amerisure-Bungesettlement agreement (doc. 31) which was entered in the underlying state court litigation.

Having considered the cross-motions of the parties, the evidence submitted, and the relevant law, the court finds as follows:

I. Factual Background

The plaintiff filed this diversity action seeking contribution from the defendants based on sums it paid defending an action in state court. Complaint, ¶¶ 13-15. The underlying action² arose from an injury sustained by Kim Dodson while working for Insulation & Refactories Services, Inc. ("IRS"). In turn, IRS was a contractor to Bunge North America ("Bunge") and Dodson was injured at Bunge's plant in Decatur, Alabama. Id., ¶ 7. Non-parties Hubbard & Drake General/ Mechanical Contractors, Inc. ("H&D"), and Contractor Service & Fabrication, Inc. ("CS&F") were also named in the state court action. Complaint, ¶ 8.

Plaintiff Amerisure provided a policy of insurance to IRS, on which Bunge was an additional insured, at the time of Dodson's injury. Affidavit of Kevin Swan, ¶ 2 (doc. 22-9). CS&F had a policy of insurance with defendant QBE, on which Bunge appeared as an additional insured.³ Complaint, ¶ 11. Similarly, H&D was insured viaa policy from defendant Zurich, on which Bunge was again named as an additional insured. Zurich ex. B. (doc. 21-1). Neither Zurich nor QBE contributed to the sums Amerisure provided on behalf of Bunge as part of defending or in settlement of the state court action.⁴ Complaint, ¶ 16. Plaintiff Amerisure now seeks contribution from defendants Zurich and QBE for the settlement and defense costs of the state court action as they related to Amerisure's providing the same on behalf of Bunge. The undisputed facts are as follows:

H&D performed work for Bunge on a contractual basis. See Amerisure ex. 1 (doc. 22-1). Pursuant to that contract, H&D was required to maintain insurance for bodily injury, death and property damage, and was required to name Bunge as an additional insured on such a policy. Id., at ZURICH 0659. Additionally, H&D agreed to

save and hold [Bunge] .... harmless from and against all liability, claims and demands on account of personal injuries, including death or property loss or damage to others (including but not limited to the Contractor and his employees) arising out of or in any manner connected with the performance of this Agreement, whether such injury, loss or damage shall be caused by the negligence of the Contractor, hissubcontractor, or any other party for whom the Contractor is responsible.

Id., at ZURICH 0660. The same clause also required H&D to defend all actions arising from the same. Id.

Bunge also had a Construction Agreement with CS&F, specifically for purposes of replacing the conveyor system at issue in the underlying action. Amerisure ex. 8 (doc. 22-10). As with the H&D contract, the CS&F agreement had a clause which required CS&F to maintain insurance which named Bunge as an additional insured, and an indemnification and hold harmless clause in favor of Bunge. Id., at QBE - 0115-0116.

The parties to this action agree that Dodson was injured on September 5, 2007, when a lanyard on his safety harness became entangled on the drive shaft of the conveyor belt system around which Dodson was installing insulation. Dodson was employed by IRS, which had contracted with Bunge to install insulation on the conveyor system in question. Depo. of Kim Dodson, at 35, 42 (doc. 21-2). The guard on the drive shaft had been removed, allowing the lanyard to become ensnared. Eugene Moore, the plant manager at the Bunge facility, noted that the lanyard could have become entangled in the drive shaft whether or not the guard was in place, but a guard may have reduced the chance of it happening. Depo. of Eugene Moore, at 19, 218 (doc. 21-1); 115 (doc. 23-1).

The parties further agree CS&F installed the conveyor, and H&D aligned the coupling from the motor of the conveyor to its drive shaft after the installation. Moore depo. at 15 (doc. 23-1); 194-195 (doc. 21-1). Both CS&F and H&D had completed their contract work prior to the time IRS and hence Dodson began the installation of insulation. Undisputed evidence supports that Bunge was notified that the guard was missing prior to the date of Dodson's accident. Moore believes CS&F was responsible for installation of the guard as part of its contractual obligations when it was hired to replace the conveyor, reusing the pre-existing drive. Moore depo. at 15-16 (doc. 23-1). He agrees the guard was not in place at the time that H&D began its work, after CS&F had finished. Moore depo. at 195 (doc. 21-1); see also depo. of Doug Fromhold,⁵ at 29 (doc. 21-2); depo. of Raymond Gandlin, at 15-16 (doc. 23-2). According to Fromhold CS&F - and not H&D - was responsible for replacing the guard. Fromhold depo. at 109, 119 (doc. 21-2). According to CS&F, no guard was in place when it first began the replacement work nor was fabrication of a guard within CS&F's scope of work. Depo. of Gary Lafavor, Jr., at 37-38, 46 (doc. 23-1). CS&F completed all work for Bunge by August 16, 2007, and left the facility on that date. See QBE exs. E and F.

The underlying state court action was ultimately settled. The plaintiff now seeks repayment of some of the funds it spent defending and indemnifying Bunge on behalf of IRS. The parties do not dispute that this case is governed by Alabama law and hinges exclusively on contract interpretation.

The QBE Policy

The insurance policy issued by QBE to CS&F reads as follows in relevant part:

ADDITIONAL INSURED - OWNERS, LESSEES OR CONTRACTORS - AUTOMATIC STATUS WHEN REQUIRED IN CONSTRUCTION AGREEMENT WITH YOU

This endorsement modifies insurance provided under the following

COMMERCIAL GENERAL LIABILITY COVERAGE PART

A. Section II - Who is An Insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability for "bodily injury", "property damage" or "personal and advertising injury" caused, in whole or in part, by:

1. Your acts or omissions; or

2. The acts or omissions of those acting on your behalf;

In the performance of your ongoing operations for the additional insured.

A person's or organization's status as an additional insured under this endorsement ends when your operations for that additional insured are completed.

Plaintiff ex. 10 (doc. 22-13).

QBE provided a defense to its own insured, CS&F, in the underlying state court case under a reservation of rights. See QBE's motion for summary judgment, at 6. However, QBE denied Bunge's claim for indemnity. Id., at 7. In the underlyingstate court litigation, CS&F filed a cross-claim against Bunge, asserting that it had a right to indemnity from Bunge and that Bunge had no right to indemnity from CS&F. QBE's motion for summary judgment, at 7. Bunge made a similar cross-claim against CS&F. Id; see also QBE ex. J.

The Zurich Policy

The insurance policy issued by Zurich to H&D reads as follows in relevant part:

Additional Insured - Automatic - Owners, Lessees Or Contractors -Broad Form

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

This endorsement modifies insurance provided under the:

Commercial General Liability Coverage Part

A. WHO IS AN INSURED (Section II) is amended to include as an insured any person or organization whom you are required to add as an additional insured on this policy under a written contract or written agreement.

B. The insurance provided to additional insureds applies only to "bodily injury", "property damage" or "personal and advertising injury" covered under Section I, Coverage A, BODILY INJURY AND PROPERTY DAMAGE LIABILITY and Coverage B, PERSONAL AND ADVERTISING INJURY LIABILITY, but only if:

1. The "bodily injury" and "property damage" results from your negligence; and

2. The "bodily injury", "property damage" or "personal and advertising injury" results directly from:

a. Your ongoing operations; or

b. "Your work" completed as included in the "products-completed operations hazard," performedfor the additional insured, which is the subject of the written contract or written agreement.

....

D. The insurance provided to the additional insured person or organization does not apply to:

1. "Bodily injury", "property damage" or "personal and advertising injury" that results solely from negligence of the additional insured; or

....

E. The additional insured must see to it that:

1. We are notified as soon as practicable of an "occurrence" or offense that may result in a claim;

2. We receive written notice of a claim or "suit" as soon as practicable; and

3. A request for defense and indemnity of the claim or "suit" will promptly be brought against any policy issued by another insurer under which the additional insured also has rights as an insured or additional insured.

Plaintiff ex. 2 (doc. 22-2), at 17 of...