Cairo Marine Serv. Inc. v. Homeland Ins. Co. of N.Y.
| Decision Date | 10 May 2011 |
| Docket Number | Case No. 4:09CV1492 CDP |
| Parties | CAIRO MARINE SERVICE, INC., Plaintiff, v. HOMELAND INSURANCE COMPANY OF NEW YORK, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
The parties have filed motions seeking to join additional parties, to remand to state court, to dismiss due to parallel state proceedings, and for summary judgment on various claims and counterclaims. In this litigation, plaintiff Cairo Marine Service, Inc. and defendant Homeland Insurance Company of New York dispute whether the parties' insurance policy provides coverage for the claims against Cairo in an underlying state case. Both parties have moved for summary judgment on the issue of whether Homeland owes Cairo a duty to defend in the underlying state suit. Cairo has also filed a motion to add a defendant, to remand, and to dismiss this case, while Homeland moves for summary judgment on Cairo's claim of bad faith and seeks to file an additional statement of material facts. For the reasons stated below, I will deny plaintiff's motion to add a defendant in thiscase because the party Cairo wishes to join is not an indispensable party. I will deny Cairo's motions to remand and to dismiss because there is no parallel state action. I will grant Cairo's motion for partial summary judgment because the claims against Cairo in the underlying state suit are potentially covered by the parties' insurance policy, and so Homeland owes Cairo a duty to defend. Conversely, I will deny Homeland's motion on the same issue. Finally, I will deny defendant's motion for leave to file an amended statement of material facts as moot.1
Cairo Marine inspects construction equipment. In September of 2007, Cairo inspected and certified a crane in Louisiana. Approximately five months after Cairo's inspection, the crane's counterweight collapsed, crushing a man's legs and pinning him beneath another counterweight. In a separate action, not before this Court, the injured man brought suit against the owner of the crane and against Cairo Marine claiming that the structure of the crane had been altered before Cairo's inspection, that this alteration made the crane unsafe, and that Cairo'sinspection should have detected the danger.
The injured man was severely injured by the counterweight. He states that he has "undergone more than a dozen surgeries" including a partial amputation of his foot and that it is "reasonable" that his right leg will be amputated. In Section XXVII, he also states that he "has been diagnosed with post-traumatic stress disorder, anxiety and depression."2 As a result, he seeks compensation for "severe and permanent injuries to his body and mind" including:
In response to the claims against it, Cairo contacted it's insurer, Homeland. Cairo notified Homeland of the litigation, asserted that the claims against it fell within the coverage of the policy, and requested that Homeland defend and indemnify it in the crane-injury litigation. Homeland denied coverage and refused to defend or indemnify Cairo.
Homeland denied coverage based on an exclusion in the policy for "bodily injuries." The Homeland policy is a "Miscellaneous Professional Liability Policy" and states that Homeland will indemnify Cairo for claims against it arising out of "Wrongful Acts," which include "any actual or alleged act, error or omission in the performance of, or any failure to perform, Professional Services," or services performed for a fee. Cairo states that its inspection of the crane was a professional service and Homeland admits that, under the general agreement, the policy would provide coverage for the claims against Cairo in the crane-injury case. However, the policy includes an amended exclusion of claims "for bodily injury, sickness, disease or death of any person, or damages to or destruction of any property, including the loss of use thereof." The amended exclusion is narrower than the original provision, which is listed in the main body of the policy. The original exclusion disclaims coverage for claims "based upon, arising out of, directly or indirectly resulting from... or in any way involving bodily injury...." At the time of Cairo's initial request for coverage, Homeland cited the language of the amended exclusion as its basis for its refusal to defend. The policy is stamped on the cover as being "procured and developed under Missouri Surplus Lines Law."
Cairo's insurance broker is the Charles L. Crane Agency Company, a Missouri corporation. Cairo claims that it hired the Crane Agency to obtain fullinsurance coverage on its behalf. Consequently, the Crane Agency negotiated and obtained an insurance policy from Homeland.
Homeland removed this action from state court in September of 2009. Cairo attempted to remand the case in October of 2009, but did not give notice that it intended to join the Crane Agency as a party until October of 2010, more than a year later. Cairo now moves to assert a claim against the Crane Agency for negligence and breach of fiduciary duty for failing to obtain full coverage, if this Court finds that Cairo's policy with Homeland does not cover the claims against Cairo in the underlying state suit.
The injured man recently joined Homeland as Cairo's insurer in the crane-injury suit. However, the complaint does not seek a declaratory judgment that Homeland owes Cairo a duty to defend or indemnify and it does not address any claims between Cairo and Homeland, such as Cairo's claim that Homeland denied coverage in bad faith. The only mention of Homeland in the complaint simply states that "[a]t all times relevant to the events of this lawsuit, defendant Homeland Insurance Company was defendant Cairo Marine Service, Inc.'s professional liability insurer." The crane-injury litigation is ongoing and, at present, there has been no determination of Cairo's liability in the matter.
On a motion for summary judgment, the facts and inferences are viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The moving party has the burden to establish both the absence of a genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Cairo seeks the dismissal or remand of this case on a variety of grounds. It claims that this Court should abstain from hearing this case due to a parallel state proceeding and, alternatively, Cairo seeks to join a non-diverse party that would require dismissal or remand, if allowed. For the reasons stated below, remand and dismissal are not appropriate in this case because there is no parallel state proceeding and joinder of the non-diverse party is not appropriate because the party that Cairo seeks to join is not necessary or indispensable.
This is the second time that Cairo has argued that this Court should abstain from hearing this case due to a parallel state proceeding. I denied Cairo's first motion on this issue because there was no parallel state proceeding and there wereno other factors indicating that abstention was appropriate. Cairo asks that the Court reconsider its previous order because the crane-injury case now qualifies as a parallel state proceeding. When determining whether parallel state action exists, courts consider whether there is parallel state action at the time when the declaratory judgment action was filed. Fru-Con Const. Corp. v. Controlled Air, Inc., 574 F.3d 527, 537-38 (8th Cir. 2009); Continental Cas. Co. v. Advance Terrazzo & Tile Co., Inc., 462 F.3d 1002, 1006 (8th Cir. 2006); Scottsdale Ins. Co. v. Detco Industries, Inc., 426 F.3d 994, 997 (8th Cir. 2005); but see Royal Indem. Co. v. Apex Oil Co., 511 F.3d 788, 794 (8th Cir. 2008). Since there was no parallel action when the declaratory judgment action was filed the first time Cairo raised this issue, it is unnecessary to reconsider my previous decision on this issue, whether or not the crane-injury case has now become parallel.
In addition, the crane-injury case is not a parallel state proceeding, despite Cairo's argument to the contrary. Suits "are parallel if substantially the same parties litigate substantially the same issues in different forums."3Scottsdale, 426 F.3d at 997; see also Fru-Con, 574 F.3d at 535 ). Here, the crane-injury litigation will determine Cairo's liability for a man's physical and emotional injuries, while this litigation will determine whether Homeland must defend Cairo in that suit and whether Homeland denied coverage in bad faith. Despite the fact that Homeland is now a party in the crane-injury case, neither of the claims being litigated in this case are currently at issue in the crane-injury case. In the state suit, there are no declaratory judgment claims against Homeland and no party currently asserts that Homeland owes Cairo a duty to defend and no party asserts a claim against Homeland for bad faith refusal to pay. As a result, there is not a substantial likelihood that the proceedings in the crane-injury case will fully dispose of the claims in this Court. Abstention is not inappropriate.
Cairo also seeks remand of this case as a result of its motion to join...
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