Armstrong v. U.S. Fire Ins. Co.

• Decision Date: 27 March 2009
• Docket Number: No. 2:07-CV-104.,No. 2:08-CV-55.,2:07-CV-104.,2:08-CV-55.
• Citation: 606 F.Supp.2d 794
• Parties: Edward Dean ARMSTRONG, Jr., et al. v. UNITED STATES FIRE INSURANCE COMPANY, et al. and United States Fire Insurance Company, et al. v. World Trucking, Inc., et al.
• Court: U.S. District Court — Eastern District of Tennessee

606 F.Supp.2d 794

Edward Dean ARMSTRONG, Jr., et al. v. UNITED STATES FIRE INSURANCE COMPANY, et al. and United States Fire Insurance Company, et al. v. World Trucking, Inc., et al.

No. 2:07-CV-104.

No. 2:08-CV-55.

United States District Court, E.D. Tennessee, at Greeneville.

March 27, 2009.

Robert E. Pryor, Pryor, Flynn, Priest & Harber, Knoxville, TN, for Edward Dean Armstrong, Jr., et al.

Brian S. Martin, Jamie R. Carsey, Thompson, Coe, Cousins & Irons, LLP, Houston, TX, Clarence Risin, R. Brad Morgan, Baker Donelson Bearman Caldwell & Berkowitz, P.C., Benjamin W. Jones, Richard W. Krieg, Lewis, King, Krieg & Waldrop, P.C., Weldon E. Patterson, Spicer, Flynn & Rudstrom, Melinda Meador, Bass, Berry & Sims, PLC, H. Douglas Nichol, Nichol & Associates, Knoxville, TN, Matthew S. Shorey, Armstrong Teasdale LLP, St. Louis, MO, John T. Rogers, Rogers, Laughlin, Nunnally, Hood & Crum, Greeneville, TN, for United States Fire Insurance Company, et al.

MEMORANDUM OPINION

J. RONNIE GREER, District Judge.

In these judgment declaratory actions, all parties have moved for summary judgment or judgment as a matter of law. Currently pending before the Court is the motion of Edward D. Armstrong, Jr., et al. (the "Armstrong plaintiffs") for summary judgment, [Doc. 177], the motion for summary judgment filed by William and Karen Harmon, (the "Harmon plaintiffs") [Doc. 179], the motion for summary judgment filed by Valerie Carlson, ("Carlson"), [Doc. 181], North River Insurance Company's ("North River") motion for judgment as a matter of law, [Doc. 183], the motion for judgment as a matter of law filed by United States Fire Insurance Company ("U.S. Fire"), [Doc. 185], and the motion of XTRA, Inc. and XTRA Lease, LLC (jointly referred to as "XTRA") for summary judgment. [Doc. 84]. Responses and replies have been filed, and the Court heard oral argument on the motions on February 17, 2009. The motions are now ripe for disposition.¹ For the reasons which follow, the Carlson, Harmon plaintiffs' and Armstrong plaintiffs' motions will be denied and the motions of North River, U.S. Fire and XTRA will be granted.

I. Factual and Procedural Background

On March 7, 2004, Nasko Nazov ("Nazov") was operating a tractor-trailer rig northbound on Interstate 81 in Greene County, Tennessee when he drove, apparently at a high rate of speed, into the rear of vehicles which were stopped as the result of an unrelated traffic accident. As a result of the collision, Edward Dean Armstrong, III, his wife, Melissa Carlson Armstrong, and his two minor children, Brittany Nicole Armstrong and Edward Dean Armstrong, IV, occupants of one of the automobiles, were killed. Also struck was an automobile driven by William Harmon and occupied by his wife, Karen Harmon, who suffered serious personal injury as a result of the collision.

At the time of the accident, Nazov was an employee of World Trucking Inc. and/or World Trucking Express, Inc. (jointly referred to as "World Trucking"), which was the lessee of the tractor-trailer. Marjan Milev ("Milev") owned the tractor involved in the collision and XTRA was the owner and lessor of the trailer involved in the collision.² Dobrin Zahariev Dobrikov and Stanislava Z. Dobrikov are the owners of World Trucking.

Thereafter, three separate diversity lawsuits were filed in this Court: Valerie Carlson³ v. World Trucking, Inc., Nasko Nazov and Marjan Milev, No. 2:05-CV-44; Edward Dean Armstrong, Jr., Kathy Lynn Chesney⁴, and Susan Kay Smith Armstrong v. World Trucking, Inc., World Trucking Express, Inc., Nasko Nazov, Marjan Milev, Dobrin Zahariev Dobrikov and Stanislava Z. Dobrikov, No. 2:05-CV-62; and William Harmon and Karen Harmon v. World Trucking, Inc., World Trucking Express, Inc, Nasko Nazov, Marjan Milev, Dobrin Zahariev Dobrikov and Stanislava Z. Dobrikov, No. 2:05-CV-65. XTRA, the owner and lessor of the trailer involved in the collision, is not a defendant in any of these lawsuits.⁵

Collectively, these lawsuits will be referred to as the "tort cases." The tort cases were reported settled⁶; however, the plaintiffs have refused to complete those settlements and dismiss the tort cases because, they allege, they discovered the insurance policy which is the subject of this lawsuit after entering into those settlement agreements. The tort cases, therefore, remain pending, although they have been stayed pending resolution of these declaratory judgment actions.

On March 9, 2007, U.S. Fire and North River filed a declaratory judgment action in the United States District Court for the District of New Jersey which named as defendants World Trucking, Inc., World Trucking Express, Inc. and XTRA Corporation. The subject of the New Jersey declaratory judgment action is a liability policy issued by U.S. Fire to XTRA Corporation and an umbrella liability policy issued by North River to XTRA Corporation. U.S. Fire sought a declaration from that court that U.S. Fire has no duty to defend or indemnify World Trucking, Inc. and/or World Trucking Express, Inc. for the claims in the tort cases filed in this Court and for a declaration that World Trucking, Inc. and World Trucking Express, Inc. are not additional insureds under the U.S. Fire policy. North River seeks a declaration from the Court that North River has no duty to indemnify World Trucking, Inc. and/or World Trucking Express, Inc. for the claims made by the plaintiffs in the underlying tort cases and a declaration that World Trucking, Inc. and World Trucking Express, Inc. are not additional insurers under the North River policy.

On May 9, 2007, the Armstrong plaintiffs filed a complaint for declaratory judgment in this Court against U.S. Fire, North River, Nazov, Milev, World Trucking, the Dobrikovs, XTRA, Carlson and the Harmon plaintiffs. The declaratory judgment action filed in this Court involves the same policies issued by U.S. Fire and North River to XTRA which are referenced in the New Jersey declaratory judgment action. The Armstrong plaintiffs seek a declaration of the Court that U.S. Fire and North River have a duty to indemnify the defendants in the tort cases for the use and benefit of the plaintiffs in those tort cases and that Nazov, Milev, World Trucking, Inc. and World Trucking Express, Inc. are additional insureds under the insurance policies issued by U.S. Fire and North River.

On February 13, 2008, the United States District Court for the District of New Jersey

sua sponte transferred venue of the New Jersey action to this Court, where it was consolidated with the action filed by the Armstrong plaintiffs.

II. The Insurance Policies at Issue

A. The U.S. Fire Policy

Policy # 1380265299 was issued by U.S. Fire to XTRA Corporation⁷ for the policy period from December 1, 2003, to October 1, 2004. The policy provides Commercial Auto (Business or Truckers) Coverage with liability limits of $1,000,000.00 for any one accident or loss. The policy provides liability coverage and obligates U.S. Fire to "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'". U.S. Fire Policy, Sec. II, A.

The policy contains the following provisions relevant to the issues in this case:

I. Who is an Insured

The following are "insureds":

a. You for any covered "auto".

b. Anyone else while using with your permission a covered "auto" you own, hire or borrow . . .⁸

Id., Sec. II, A, 1.

"Insured" means any person or organization qualifying as an insured in the Who Is An Insured provision of the applicable coverage. . . .

Id., Sec. V, G.

"Auto" means a land motor vehicle, "trailer" or semi-trailer designed for travel on public roads but does not include "mobile equipment".

Id., Sec. V, B.

"Trailer" includes semitrailer.

Id., Sec. V, P.

5. Other Insurance

a. For any covered "autos" you own, this Coverage Form provides primary insurance. For any covered "auto" you don't own, the insurance provided by this Coverage Form is excess over any other collectible insurance. However, while a covered "auto" which is a "trailer" is connected to another vehicle, the Liability Coverage this Coverage Form provides for the "trailer" is:

(1) Excess while it is connected to a motor vehicle you do not own.

(2) Primary while it is connected to a covered "auto" you own.

Id., Sec. IV, 5, a.

The U.S. Fire policy contains two endorsements which are relevant to this case. The policy contains an "Endorsement No. CO-013 which provides: "IT IS AGREED THAT THE LESSEES OF VEHICLES, LEASED TO THEM BY THE NAMED INSURED, ARE NOT AN INSURED UNDER THIS POLICY." The policy also contains an "ENDORSEMENT FOR MOTOR CARRIER POLICIES OF INSURANCE FOR PUBLIC LIABILITY UNDER SECTIONS 29 AND 30 OF THE MOTOR CARRIER ACT OF 1980," commonly known as an MCS-90 endorsement." The MCS-90 endorsement reads as follows:

The insurance policy to which this endorsement is attached provides automobile liability insurance and is amended to assure compliance by the insured, within the limits stated herein, as a motor carrier of property, with Sections 29 and 30 of the Motor Carrier Act of 1980 and the rules and regulations of the Federal Highway Administration (FHWA) and the Interstate Commerce Commission (ICC).

In consideration of the premium stated in the policy to which this 6 endorsement is attached, the insurer (the company) agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980 regardless of whether or not each motor vehicle is specifically described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the...