Essex Ins. Co. v. Detroit Bulk Storage, U.S. Steel Corp

Decision Date23 July 2014
Docket NumberCase No. 11-13277
CourtU.S. District Court — Eastern District of Michigan

Paul D. Borman

United States District Judge

Michael J. Hluchaniuk

United States Magistrate Judge




(Dkt. No. 184); AND


Now before the Court is Plaintiff Essex Insurance Company's ("Essex") Motion for Summary Judgment filed on November 22, 2013. (Dkt. No. 215).1 Defendant Detroit Bulk Storage, Inc. filed a response on December 16, 2013. (Dkt. No. 202). Defendant Praxair, Inc. and Defendant United States Steel Corporation also filed responses. (Dkt. Nos. 204 & 206). Thereafter, Essex filed its replies. (Dkt. Nos. 205 & 207).

A hearing on this matter was held on May 14, 2014 at 2 PM.

A. Procedural History

This action arises from the structural failure of a dock which collapsed and created an open void on January 28, 2011. (Dkt. No. 118, giving date of incident). In addition to the structural failure of the dock, the salt which had been unloaded on to the dock prior to the collapse, fell into the void.

On July 27, 2011, Essex filed its original complaint seeking a declaratory judgment against Defendants Detroit Bulk Storage, Inc. ("DBS") and the Morton Salt Company ("Morton").2 (Dkt. No. 1). Essex filed an amended complaint on August 17, 2011, adding United States Steel Corporation ("US Steel") and Praxair, Inc. ("Praxair") as defendants. (Dkt.No. 7). The Amended Complaint seeks a declaratory judgment against all defendants regarding Essex's obligations pursuant to a marine insurance policy issued to DBS.3

Thereafter, DBS filed a counter complaint against Essex and also a cross complaint against Frankenmuth Mutual Insurance Company ("Frankenmuth"),4 US Steel, and Praxair. (Dkt. No. 55). Defendant Morton also filed a cross claim against Frankenmuth, Praxair, and Essex. (Dkt. No. 52). However, all of Morton's claims against these parties have been dismissed, as have Essex's claims against Morton. (Dkt. Nos. 123, 174, 176). As a result, Morton is no longer a party in this action. Defendant US Steel also filed a cross claim against DBS which it later voluntarily dismissed. (Dkt. Nos. 36, 131).

On May 23, 2012, the Court denied Defendant Morton's motion to dismiss based on lack of subject matter jurisdiction (or seeking abstention in the alternative) and held that admiralty jurisdiction applied to the marine insurance policy at issue because "the principal objective of the contract is to insure against loss to ships and their cargo and equipment while they are docked at the wharf." (Dkt. No. 47, at 6). Then, on December 28, 2012, this Court recognized that "[t]he sole basis for federal jurisdiction that has been asserted in this matter is Plaintiff's claim of admiralty jurisdiction under 18 U.S.C. § 1333(1). There are no claims arising underfederal statutes, and there is no diversity of citizenship among [any of] the parties." (Dkt. No. 113, at 5). The Court further noted that:

Plaintiff's claims in the instant matter are [] limited to the dispute regarding coverage of the marine insurance policy between Plaintiff and Defendants DBS and Morton. This is not a general negligence action. Furthermore, neither Defendants Praxair nor Frankenmuth [nor US Steel] is a party to the contract of marine insurance at issue.

(Id.). For these reasons, this Court found that the "relevant inquiry in this matter is therefore whether the incident on January 28, 2011, involved any ship, ship's cargo, or ship's equipment, and whether the incident arose out of Defendant DBS's mooring and docking operations." (Id. at 6). The Court then ordered the parties to only conduct discovery on the issue of Essex's liability under the admiralty wharfinger insurance contract at issue and stayed all other pending matters. (Id.). Specifically, the Court noted that after the limited discovery was competed the parties could file "motions regarding Plaintiff's liability under the Essex wharfinger insurance contract." (Id.).

At this point in time the only actions left are: (1) Essex's declaratory judgment against Defendants DBS, Praxair, and US Steel (Dkt. No. 7); and (2) DBS's cross action against Essex, Praxair, Frankenmuth, and US Steel (Dkt. No. 55). However, DBS's cross claims against Praxair, Frankenmuth and US Steel were stayed by the Court's December 28, 2012 opinion and order (Dkt. No. 113). The Court notes that Essex's current motion seeks summary judgment on all claims asserted by Essex against DBS and all claims DBS has asserted in its counter-complaint against Essex. (Dkt. No. 215, at 1).

There is also an outstanding Objection by Essex to a Magistrate's Order which denied Essex's motion for a protective order. (Dkt. No. 184). On June 4, 2013, DBS requested thedeposition of Essex's claims examiner who made the decision to deny the insurance claim. In response, Essex filed a motion for protective order seeking to prevent DBS from taking the deposition arguing that the request was outside the relevant scope of discovery. (Dkt. No. 158). The motion was referred to Magistrate Judge Hluchaniuk, who held a telephonic hearing on the matter after it was fully briefed. In the October 3, 2013 Order, Magistrate Judge Hluchaniuk denied Essex's requested protective order, holding that:

There has been no finding by the Court as to ambiguity regarding the wharfinger policy at issue, and no likely finding by the Court any time soon, as there is no pending dispositive motion regarding the ambiguity of the policy. Accordingly, the undersigned finds that there is no basis to limit discovery as contended by plaintiff's motion. Although the determination of whether a contract is ambiguous is a question of law for the court to decide, plaintiff here is putting the cart before the horse, presuming the contract is not ambiguous and thus no extrinsic evidence will be allowed and no discovery of the claims examiner is necessary.

(Dkt. No. 183, at 6).

The Court finds that this Objection is subsumed (and therefore mooted) by the current motion for summary judgment because the motion for summary judgment encompasses DBS's argument that the policy is ambiguous and this Court ultimately addresses the issue of whether there is coverage provided by the policy. Indeed, the Magistrate Judge anticipated this, noting that he had attempted to wait for the Essex's motion for summary judgment prior to issuing his the ruling.

The Court also recognizes that Defendants Praxair and US Steel have both submitted responses to Essex's current motion for summary judgment in which both Defendants dispute Essex's factual findings regarding the cause of the dock failure at issue in this action.

B. Wharfinger Insurance Policy and Collapse of Dock

The pertinent insurance policy in this action is a "Wharfinger's legal liability" policy issued by Essex to DBS and Morton (which was listed as an additional insured on the policy). (Pl.'s Br. Ex. I, Policy No. 9CC4502-3, Eff. Date 7/16/2010 - 7/16/2011)5. On June 21, 2004, DBS submitted an application for insurance to Essex through its insurance agent, J.M. Wilson, for wharfinger's legal liability coverage. (Ex. A).

DBS is a limestone supply company which purchases and stores limestone. (Ex. L, Noel Frye Dep. at 11). DBS also stores products that it does not own such as coal and salt. (Id.). DBS operates from a fifteen acre dock located at 530 E. Great Lakes Ave., River Rouge, MI 48218. (Id. at 12-13). DBS leases this dock from US Steel ("River Rouge Dock"). (Id.; Ex. K, Lease).

Noel Frye, Vice President of Marine Traffic at DBS, testified that in an average year, fifteen to thirty vessels dock at DBS - approximately one every ten days. (N. Frye Dep. at 16). Generally, the vessels that dock at DBS are "self-unloading vessels".6 (Id. at 7, 17:6-7). When a vessel arrives at the River Rouge Dock, typically the crew of the vessel will throw out heaving lines. (Id. at 18). These heaving lines are then attached to cables, which are attached to the winches on the vessel itself. (Id.). The cables are secured onto "tie-ins" on the dock and then vessel is considered to be secured to the dock. (Id. at 18, 23). The product is then unloadeddirectly on to the River Rouge Dock. (Id. at 26). If there is product already on the dock and a second vessel arrives with the same product, that product will be unloaded onto the existing pile of product. (Id.). After the product is unloaded, the vessel departs usually "within fifteen, twenty minutes." (N. Frye Dep. at 28). When salt is unloaded, DBS then must tarp the salt and also "take the peaks and valleys out of it" by shaping the salt piles with a bulldozer. (Id. at 30).

Morton and DBS have had a contractual, business relationship for approximately twenty years. (Id. at 12). DBS stores Morton's salt at its River Rouge Dock pursuant to the terms of a Salt Storage Handling Agreement ("Salt Agreement"). (Ex. J, Salt Agreement). Pursuant to the Salt Agreement, Morton required that DBS acquire a "wharfinger's legal liability" policy and list Morton as an extra insured on the policy. (Ex. J, at 9, 20). The Salt Agreement noted that DBS needed "[c]overage for loss or damage to vessels while in Contractor's care, custody and control, as well as damage to other real personal property caused by such vessels". (Id. at 9).

1. Collapse of Dock

On January 27, 2011 at 5:00 AM, a self-unloading vessel, the Mississagi, docked at the River Rouge Dock. (Ex. N, Morton Salt...

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