Atain Speciality Ins. Co. v. Tribal Constr. Co.

• Decision Date: 14 December 2012
• Docket Number: No. CIV–11–1379–D.,CIV–11–1379–D.
• Parties: ATAIN SPECIALITY INSURANCE COMPANY, formerly known as USF Insurance Company, Plaintiff, v. TRIBAL CONSTRUCTION COMPANY; Native American Services Corp.; and Milissa Lawson, Personal Representative of the Estate of Jason Lawson, Deceased, Defendants.
• Court: U.S. District Court — Western District of Oklahoma

912 F.Supp.2d 1260

ATAIN SPECIALITY INSURANCE COMPANY, formerly known as USF Insurance Company, Plaintiff,

v.TRIBAL CONSTRUCTION COMPANY; Native American Services Corp.; and Milissa Lawson, Personal Representative of the Estate of Jason Lawson, Deceased, Defendants.

No. CIV–11–1379–D.

United States District Court,

W.D. Oklahoma.

Dec. 14, 2012.

Sarah J. Timberlake, William C. McAlister, Abowitz Timberlake & Dahnke PC, Oklahoma City, OK, for Plaintiff.

David E. Jones, Logan & Lowry, Grove, OK, Donna L. Smith, Logan & Lowry, Vinita, OK, John C. Lennon, Peter L. Wheeler, Pierce Couch Hendrickson Baysinger & Green, Oklahoma City, OK, Scott R. Jackson, Martin Jean & Jackson, Ponca City, OK, for Defendants.

ORDER

TIMOTHY D. DeGIUSTI, District Judge.

This is an action between an insurer and its insureds concerning whether a particular loss is covered under the relevant provisions of an underlying insurance policy. Before the Court are Plaintiff Atain Speciality Insurance Company's (“Atain”) Motion for Summary Judgment [Dkt. # 46] and Defendant Native American Services Corp.'s (“NASCO”) Motion for Summary Judgment [Dkt. # 48], filed pursuant to Fed.R.Civ.P. 56(c). Atain seeks a declaratory judgment that the Commercial General Liability Policy No. LGBGL92263 (“CGL Policy”) it issued to Defendant Tribal Construction Company (“Tribal”), and to which NASCO was named an additional insured, does not provide coverage for the death of Jason Lawson (“Lawson”) because certain coverage exclusions apply. Atain seeks a declaration that it does not have a duty to defend either Tribal or NASCO in any subsequent lawsuit brought on behalf of Lawson's estate, and that it does not have a duty to indemnify either Tribal or NASCO for any judgment that may be entered in connection with Lawson's death. Conversely, NASCO asks this Court to find as a matter of law that the CGL Policy provides coverage for Lawson's death and to hold that Atain owes a duty to defend and indemnify NASCO, as its insured, in the underlying lawsuit filed by Milissa Lawson as Personal Representative of the Estate of Jason Lawson in the district court of Noble County, Oklahoma. The motions are fully briefed and at issue. For the reasons set forth herein, Attain's Motion for Summary Judgment [Dkt. # 46] is granted and NASCO's Motion for Summary Judgment [Dkt. # 48] is denied.

I. Background

The following facts are uncontested, except where noted. Atain issued the CGL Policy at issue to Tribal on August 6, 2010. Pl.'s Statement of Material Facts (“Pl.'s Facts”) at 1; Def's Resp. to Pl.'s Material Facts (“Def's Resp. to Pl.'s Facts”) at 1. The CGL Policy was effective during the period from August 6, 2010, to August 6, 2011. Id. NASCO was added as an additional insured on August 30, 2010. Id. at 2. The instant dispute concerns whether the CGL Policy provides coverage for the death of Jason Lawson, an employee of a third-party company, who died on November 5, 2010, while delivering gravel ordered for use as backfill in a construction project undertaken by NASCO and Tribal to rehabilitate the sewer main at the Tribal Housing Complex for the Otoe Missouria Indian Tribe in Red Rock, Oklahoma. See Am. Compl. ¶¶ 10–14. Atain asserts that the CGL Policy does not provide coverage because one or both of two coverage exclusions apply: the Aircraft, Auto, or Watercraft Exclusion (“Auto Exclusion”) and the Employees, Subcontractors, Independent Contractors, Leased Workers or Volunteers Exclusion (“Employee Exclusion”). Id. ¶ 16. The parties do not dispute that the CGL Policy was in effect at the time of Lawson's death, or that Lawson sustained “bodily injury” within the “coverage territory.” The sole question is whether the Auto Exclusion and/or the Employee Exclusion apply on the particular facts.

A. The CGL Policy and the Relevant Exclusions to Coverage

The CGL Policy provides insurance coverage for “bodily injury” and “property damage” that is caused by an “occurrence” that takes places in the “coverage territory” during the policy period and to which the insurance applies.¹See Pl.'s Mot. for Summ. J. (“Pl.'s Mot.”) at Ex. 1. Coverage under the CGL Policy is subject to several exclusions, including an Auto Exclusion and an Employee Exclusion. See id. at Ex. 14, 15.

In relevant part, the Auto Exclusion provides:

g. Aircraft, Auto Or Watercraft

This insurance does not apply to:

...

(2) “Bodily injury” or “property damage” arising out of or in connection with any “auto”.

(3) The “loading or unloading” of any ... “auto” ...

This exclusion applies to “bodily injury” or “property damage” arising out of any ... “auto” ..., whether or not owned, maintained, used, rented, leased, hired, loaned, borrowed, or entrusted to others or provided to another by any insured.

This exclusion applies even if the claims allege negligence or other wrongdoing in the supervision, sums within the policy limits that the insured becomes legally obligated to pay as damages and “will have the right and duty to defend the insured against any ‘suit’ seeking those damages.” Pl.'s Mot. at Ex. 1. However, Atain “will have no duty to defend the insured against any ‘suit’ seeking damages for ‘bodily injury’ or ‘property damage’ to which this insurance does not apply.” Id. hiring, employment, entrustment, permitting, training or monitoring of others by an insured.

This exclusion does not apply to:

...

(3) Parking an “auto” on, or on the ways next to, premises you own or rent, provided the “auto” is not owned by or rented or loaned to you or any insured.

...

(5) “Bodily injury” or “property damage” arising out of:

(A) The operation of machinery or equipment that is attached to, or part of, a land vehicle that would qualify under the definition of “mobile equipment” if it were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged; or

(B) The operation of any of the machinery or equipment listed in Paragraph f(2) or f(3) of the definition of “mobile equipment.” ²

See id. at Ex. 14. “Auto” is defined in the CGL Policy as:

a. A land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment; or

b. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged.

See id. at Ex. 1. However, the term “auto” does not include “mobile equipment,” which means any of the following types of land vehicles, including the attached machinery or equipment:

a. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads;

b. Vehicles maintained for use solely on or next to premises you own or rent;

c. Vehicles that travel on crawler treads;

d. Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted:

(1) Power cranes, shovels, loaders, diggers or drills; or

(2) Road construction or resurfacing equipment such as graders, scrapers or rollers;

e. Vehicles not described in Paragraph a., b., c, or d. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types:

(1) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment; or

(2) Cherry pickers and similar devices used to raise and lower workers;

f. Vehicles not described in Paragraph a., b., c, or d. above maintained primarily for purposes other than the transportation of persons and cargo.

...

However, “mobile equipment” does not include any land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered “autos”.

See id.

The Employee Exclusion exempts from coverage:

e. Employer's Liability

1. “Bodily injury” to an “employee”, subcontractor, employee of any subcontractor, “independent contractor”, employee of any “independent contractor”, “leased worker”, or “volunteer worker” of the insured arising out of and in the course of employment by or service to the insured for which the insured may be held liable as an employer or in any other capacity;

2. Any obligation of the insured to indemnify or contribute with another because of damages arising out of “bodily injury” to an “employee”, subcontractor, employee of any subcontractor, “independent contractor”, employee of any “independent contractor”, “leased worker”, or “volunteer worker” of the insured arising out of and in the course of employment by or service to the insured for which the insured may be held liable as an employer or in any other capacity;

...

For the purposes of this endorsement, “independent contractor” means one that contracts to do work or perform a service for another and that retains control over the means or methods used in doing the work or performing the service. “Independent contractor” includes, but is not limited to, subcontractors and any employees of a subcontractor, any employee of an independent contractor, and “employees” of the insured, agents, representatives, volunteers, spouses, family members of the insured or any Additional Insureds to this policy.

This exclusion applies to all causes of action arising out of “bodily injury” to any “employee”, subcontractor, employee of any subcontractor, “independent contractor”, employee of any “independent contractor”, “leased worker”, or “volunteer worker” by any person or organization for damages because of “bodily injury”, including care and loss of service.

See id. at Ex. 15.

B. Relevant Facts³

On September 13, 2010, NASCO contracted with the Indian Health Service to rehabilitate the sewer main...