Axis Ins. Co. v. Stewart
| Decision Date | 29 July 2016 |
| Docket Number | 7:15-CV-1131 |
| Citation | 198 F.Supp.3d 4 |
| Parties | AXIS INSURANCE COMPANY, Plaintiff, v. Anthony Wayne STEWART, Defendant. Anthony Wayne Stewart, Counter-Claimant, v. Axis Insurance Company, Counter-Defendant. |
| Court | U.S. District Court — Northern District of New York |
CARROLL, McNULTY LAW FIRM OF COUNSEL: CHRISTOPHER R. CARROLL, ESQ.,
KRISTIN V. GALLAGHER, ESQ., JOSEPH P. FUSCO, ESQ., 120 Mountain View Blvd. Basking Ridge, NJ 07920, Attorneys for Plaintiff/Counter-Defendant
WOODS OVIATT GILMAN LLP OF COUNSEL: BRIAN D. GWITT, ESQ., 1900 Main Place Tower Buffalo, NY 14202, Attorneys for Defendant/Counter-Claimant
ICE MILLER LAW FIRM OF COUNSEL: ANGELA P. KRAHULIK, ESQ., NICHOLAS B. REUHS, ESQ., Box 82001 One American Square, Suite 2900 Indianapolis, IN 46282, Attorneys for Defendant/Counter-Claimant
This is an insurance coverage dispute between plaintiff/counter-defendant Axis Insurance Company ("Axis") and defendant/counter-claimant Anthony Wayne Stewart ("Stewart"). Axis seeks a judgment declaring that it is not obligated to defend or indemnify Stewart, a professional race car driver, in connection with a wrongful death lawsuit that has been brought against him by the estate of Kevin A. Ward, Jr. ("Ward"), a fellow driver who was killed when Stewart's car struck him during a race. Stewart contests Axis's refusal of coverage and has asserted counter-claims for breach of contract and bad faith.
The parties have both moved pursuant to Federal Rule of Civil Procedure ("Rule") 56 seeking a summary determination of the coverage issue.1 Both motions were fully briefed and oral argument was heard on June 6, 2016 in Utica, New York. Decision was reserved.
In October 2013, Tony Stewart Racing Enterprises ("TSRE"), through its insurance broker, submitted an application to Axis seeking commercial general liability, business auto, and umbrella coverage policies for its race team operations. On December 31, 2013, Axis responded to TSRE's insurance application with a "Proposal For Insurance," which was formally accepted by TSRE's representative the same day. As a result, Axis issued three policies to Stewart's race team, each effective between January 1, 2014 and January 1, 2015. See Reuhs Aff. Ex. C (the "Policy").3
The first of these was a primary commercial general liability policy issued under policy number AXGL01105050-14 (the "CGL Policy"). See Policy at 1-74. As relevant here, "Coverage A" of this CGL Policy promised that Axis would "pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies." Id. at 26.
According to Axis, two important endorsements modified the CGL Policy. The first of these, entitled "Schedule of Event(s)," listed 105 "Specified Event(s)"— 65 World of Outlaws events, 30 USA Sprint events, and 10 USAC Silver Crown events. Policy at 71. This Schedule of Events endorsement warned that:
Coverage provided by this policy applies only to the event(s) listed in the above Schedule, and only for the specific date(s) or said event(s). In the event of complete and total postponement of any of the event(s) shown in the Schedule, from the specific event date(s), upon sufficient prior notification by you to us or our representative, such coverages as afforded by this policy, and for which premium has been received by us, shall be provided for said event(s) on a reassigned date, with no additional premium due. All other terms and conditions remain unchanged.
Id. at 71 (emphases added). The second endorsement, entitled "Participant Legal Liability—Motorsports" (the "PLL endorsement"), modified the CGL Policy in relevant part so that:
Id. at 68-69 (emphases added).
Stewart disputes the relevance of these two endorsements to the instant dispute and instead points to a different pair of endorsements found in the CGL Policy to support his position that coverage is warranted under the contract. The first of these, entitled "Race Team," modified the CGL Policy by deleting Exclusion H(2), which ordinarily excluded coverage for bodily injury/property damage claims arising out of any "prearranged racing, speed, demolition, or stunting activity," from "Section I—Coverages." Policy at 70. The second, entitled "Limitation of Coverage to Designated Premises or Project" (the "Premises or Project endorsement"), further modified the CGL Policy to include coverage for the "[i]nsured's motorsports team operations," which were defined to include "testing, tuning or on-track operations." Id. at 51.
Axis also issued a commercial excess liability policy to TSRE under policy number AXXS01102903-14. Policy at 75-100; see also Reuhs Aff. Ex. F (the "Excess Policy"). The Excess Policy included, in relevant part, a "follow form" provision:
The insurance provided under this Coverage Part will follow the same provisions, exclusions and limitations that are contained in the applicable "controlling underlying insurance", unless otherwise directed by this insurance. To the extent such provisions differ or conflict, the provisions of this Coverage Part will apply. However, the coverage provided under this Coverage Part will not be broader than that provided by the applicable "controlling underlying insurance".
Policy at 86. In other words, the Excess Policy applied in excess of, and followed the terms and provisions of, the CGL Policy discussed above.
These policies were in effect the evening of August 9, 2014, when Stewart struck and killed Ward during an Empire Super Sprint ("ESS") Event being held at Canandaigua Motorsports Park in Canandaigua, New York.
According to the four-count complaint later filed by Ward's estate (the "Ward Action"), Ward, Stewart, and twenty-two other drivers were participating in the final race of this ESS Event when Stewart and Ward's race cars made contact, wrecking Ward's vehicle. See Ward v. Stewart, 133 F.Supp.3d 455, 459 (N.D.N.Y.2015). At or around this time, the race track came under a "yellow caution" flag, understood by the drivers as a signal that required them to "slow down and move away" from the hazard on the track—in this case, Ward's wrecked vehicle. Id.
While the remaining drivers, including Stewart, continued to race, Ward exited his now-disabled race car, walked down the track on foot, and was fatally injured when Stewart's car struck him. Stewart, 133 F.Supp.3d at 459. The Ward Action alleges Stewart was negligent and/or reckless in striking Ward. Id. Stewart has denied the central allegations of the complaint as well as any liability for the incident. See id.
On August 17, 2015, TSRE's insurance broker notified Axis of the Ward Action and requested that Axis provide Stewart with coverage under the terms of the Axis policies set forth above. However, on September 18, 2015, Axis issued a letter to Stewart disclaiming coverage on the grounds that: (1) the ESS event was not one of the "Specified Event(s)" listed in the CGL Policy's Schedule of Events endorsement; (2) the claims asserted in the Ward Action fell within the exclusion for claims "brought by one racing vehicle driver against another racing vehicle driver" contained in the PLL endorsement; (3) the vehicle Stewart was driving when he struck Ward was not a qualified "auto" under the Axis Auto Policy; and (4) coverage under the Axis Auto Policy was precluded under the "Racing" exclusion.4
It is against this backdrop that the parties have cross-moved for summary judgment.
The entry of summary judgment is warranted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (citing FED. R. CIV. P. 56(c) ); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
A fact is "material" for purposes of this inquiry if it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248, 106 S.Ct. 2505 ; see also Jeffreys v. City of New York, 426 F.3d 549, 553 (2d Cir.2005). A material fact is genuinely in dispute "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.
The moving party bears the initial burden of demonstrating that there is no genuine issue of material fact to be decided with respect to any essential element of the claim. Anderson, 477 U.S. at 250 n. 4, 106 S.Ct. 2505. T he failure to meet this burden warrants denial of the motion. Id. However, in the event this initial burden is met, the opposing party must then show, through affidavits or otherwise, that there is a material issue of fact for trial. Id. at 250, 106 S.Ct. 2505.
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