Cincinnati Ins. Co. v. Federal Ins. Co.
| Decision Date | 27 September 2001 |
| Docket Number | No. 00-73415.,00-73415. |
| Citation | 166 F.Supp.2d 1172 |
| Parties | CINCINNATI INSURANCE COMPANY, Plaintiff, v. FEDERAL INSURANCE COMPANY, as Subrogee of Visioneering, Inc., and Galaxy Machine and Retrofit, a Michigan Corporation, Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
The operative facts of this case are as follows: Defendant Galaxy Machine and Retrofit ("GMR") purchased a Commercial General Liability Policy from Plaintiff Cincinnati Insurance Company ("CIC"). Defendant Federal Insurance Company ("FIC") insured Visioneering, Inc. GMR and Visioneering entered into a service contract under which GMR was to perform work at the Visioneering facility. In the process, a motor assembly unit was damaged on Visioneering's property. Defendant FIC paid Visioneering for damages and lost business income ($642,716.16). Defendant FIC then filed suit in state court against Defendant GMR for reimbursement of the amount it paid to Visioneering. Defendant GMR requested Plaintiff CIC to defend and indemnify it if it is found liable in that state court action. CIC refused. Instead, it filed this federal court action. CIC seeks a declaratory judgment that it has no responsibility to defend and indemnify GMR, based on certain exclusions in the Commercial General Liability Policy it issued. Before the Court are motions for Summary Judgment filed by all parties.
For the reasons stated below, the Court DENIES Plaintiff CIC's Motion for Summary Judgment [Doc. # 39] and GRANTS Defendants' FIC's and GMR's [Doc. # 22 and Doc. # 5] Motions for Summary Judgment.
Visioneering is an engineering company located in Fraser, Michigan which manufactures parts for the automobile and aerospace industries. In 1996, Visioneering purchased a milling machine known as a Cincinnati 5 Axis Profiler. It was manufactured by Cincinnati Machine in 1967. In 1984, it was retrofitted, with the original hydraulic motor drive system being replaced by electric motor drives with electronic controls.
Visioneering contracted with GMR for reassembly and installation of the machine at the Visioneering facility. GMR submitted a proposal to Visioneering on September 11, 1996, which outlined the services to be performed. (See Exhibit A attached to Plaintiff's Motion for Summary Judgment & Exhibit 1 attached to GMR's Motion for Summary Judgment). Since one of the exclusions (j (4)) in the CIC policy precludes coverage to GMR if the milling machine was in GMR's care, custody or control at the time of the accident, each party puts a different spin on the amount and degree of control GMR and/or Visioneering had over the project.
Notwithstanding, the contract between GMR and Visioneering delineates the duties and responsibilities of Visioneering and GMR. It provides that: (1) all major components will be assembled by GMR, including ball screws, motors, and support bearing, way removal/installation not accounted for; (2) all documentation will be supplied by Visioneering; (3) all parts, electrical, electronic and mechanical, that are required will be supplied by Visioneering; (4) final leveling and squaring will be performed by GMR; (5) and, GMR will not be responsible for OSHA requirements. Further, any prior modifications made or required, in the future, will be the responsibility of Visioneering and/or machine seller; (6) GMR will cover overtime costs to 50 hours per man per week. Additional overtime required by Visioneering will be charged 18.00 per hour; (7) GMR will perform setup and debug of the machine and control; (8) GMR will remain in Visioneering's Facility for three days after running to assist with any minor problems; (9) GMR will clean and flush all hydraulic units and way lube systems; (10) GMR will reassemble the tilt axis and accessories, indicating fixtures to be manufactured by Visioneering per GMR specifications; (11) due to the fact that all services will be billed on a time and material basis, GMR technicians will punch in and out at Visioneering Facility; (12) Visioneering will be responsible for all parts and laser calibration service; (13) GMR will be supplied a minimum of one person to assist in the rebuild; (14) Visioneering agreed to pay one hour of travel time per person per day and mileage expense of .35 per mile for one vehicle; and, (15) services will be billed at GMR's discounted service rates. Id.
On January 20, 1997, near the end of the project, Valent Bachleda, a GMR employee who worked on the project on a daily basis, was preparing to test and power up the motor. In order to do this it was necessary to remove the five separate motors on the machine. Mr. Bachleda had already separated several motors and was separating the motor on the A-axis. He pulled a shaft through that was in the brake assembly, which disabled the brake in that axis, (Exhibit 2 of GMR's Motion for Summary Judgment, Bachleda Dep., pp. 41-42). When the brake assembly became disengaged, the motor instantly fell all the way down the axis. Id. At 46-47. The motor struck Mr. Bachleda in the shoulder and caused him to fall where he became trapped. Another much larger motor also fell and crushed his leg. Id. at 47-48. The motor had to be removed from Mr. Bachleda's leg with a crane. Id. At 49-50. An ambulance was called. Mr. Bachleda was rushed to the hospital. Id. At 52-53. Mr. Bachleda suffered severe cuts on his elbow, shoulder, and head, requiring stitches. Id. He broke his right leg in two places, shattered his knee and broke two fingers. Id. He had extensive reconstructive surgery on his knee; pins and screws were installed to hold his leg together. Id.
There was extensive damage to the machine as a result of this accident. GMR offered to repair the damage and complete the project. (See Exhibit 3 of GMR's Motion for Summary Judgment, Passmore's Dep. pg. 25). However, Visioneering fired GMR from the project and GMR did not perform any more work. Id. at 25-26. Instead of accepting GMR's offer, Visioneering submitted a claim to its insurer, FIC, for $355,486.16 in repair costs, and $294,358.00 for business interruption losses totaling, $642,716.16. GMR employees had no access to the machine after the accident occurred. Id. at 26. FIC paid on Visioneering's claim. It is this amount that is at issue in the state court action.
CIC asserts here that it has no obligation to defend or indemnify under the CIC policy pursuant to Exclusion j(4) and Exclusion j(6).1 These exclusions are as follows:
j(4) This insurance does not apply to ... Property damage to pesonal property in the care, custody or control of an insured;
j(6) This insurance does not apply to ... Property damage to that particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it.
Summary judgment is appropriate only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c). The central inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury, or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). After adequate time for discovery and upon motion, Rule 56(c) mandates summary judgment against a party who fails to establish the existence of an element essential to that party's case and on which that party bears the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The movant has an initial burden of showing "the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Once the movant meets this burden, the non-movant must come forward with specific facts showing that there is a genuine issue for trial. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
The non-moving party must do more than show that there is some metaphysical doubt as to the material facts. Pierce v. Commonwealth Life Ins. Co., 40 F.3d 796, 800 (6th Cir.1994) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538(1986)). It must present significant probative evidence in support of its opposition to the motion for summary judgment in order to defeat the motion for summary judgment. Moore v. Philip Morris Companies, 8 F.3d 335, 339-40 (6th Cir.1993). If, after adequate time for discovery, the party bearing the burden of proof fails to make a showing sufficient to establish an essential element of his claim summary judgment is appropriate. Celotex, 477 U.S. at 322-24, 106 S.Ct. 2548.
Michigan law applies in this case. Aetna Cas. & Sur. Co. v. Dow Chem. Co., 883 F.Supp. 1101 (E.D.Mich.1995). A federal court deciding a diversity case under state law must apply the law of the state's highest court. If the state's highest court has not decided the applicable law, the federal court must ascertain the state law from "all relevant data." Bailey v. V. & O Press Co., 770 F.2d 601, 604 (6th Cir.1985). A state's intermediate appellate court decision is a "datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise." FL Aerospace v. Aetna Casualty & Sur. Co., 897 F.2d 214, 218-19 (6th Cir.) (quoting West v. American Tel. & Tel. Co., 311 U.S. 223, 237, 61 S.Ct. 179, 85 L.Ed. 139 (1940)) A federal court may also consider decisions from other jurisdictions. Bailey, 770 F.2d at 604.
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