Great W. Cas. Co. v. Ace Am. Ins. Co.
| Decision Date | 30 September 2022 |
| Docket Number | 1:21CV338 |
| Parties | GREAT WEST CASUALTY COMPANY, Plaintiff, v. ACE AMERICAN INSURANCE COMPANY and PACKAGING CORPORATION OF AMERICA, Defendants. ACE AMERICAN INSURANCE COMPANY, Third-Party Plaintiff, v. SALEM CARRIERS, INC., and GEMINI INSURANCE COMPANY, Third-Party Defendants. |
| Court | U.S. District Court — Middle District of North Carolina |
Presently before this court are Plaintiff Great West Casualty Company's Motions for Judgment on the Pleadings and Motions to Dismiss, (Docs. 61, 74) Defendant ACE American Insurance Company's counterclaim, (Doc. 64), and Defendant Packaging Corporation of America's counterclaim, (Doc. 59). As ACE and PCA allege similar counterclaims, this court will address both of Great West's Motions for Judgment on the Pleadings and Motions to Dismiss together. For the reasons set forth herein, this court will deny Great West's motions.
On a motion for judgment on the pleadings, “the court must accept all of the non-movant's factual averments as true.” SmithKline Beecham Corp. v. Abbott Lab'ys., No. 1:15CV360, 2016 WL 922792, at *3 (M.D. N.C. Mar. 10, 2016). The same standard applies to a motion to dismiss. See Ray v. Roane, 948 F.3d 222, 226 (4th Cir. 2020). The facts taken in the light most favorable to PCA and ACE-the two defendant/counter-plaintiffs, and thus the non-moving parties-are as follows.
Plaintiff Great West Casualty Company (“Great West”) is a Nebraska Corporation authorized to conduct insurance business in the State of North Carolina. (See Great West's First Am. Compl. For Declaratory J. and Other Relief (“Great West's First Am. Compl.”) (Doc. 57) ¶ 1.) Defendant Packaging Corporation of America (“PCA”) is incorporated in Delaware with its principle place of business in Illinois. (See Great West's First Am. Compl. (Doc. 57) ¶ 3.) Defendant ACE American Insurance Company (“ACE”) is a Pennsylvania corporation.
In October 2015, Great West issued a commercial auto insurance policy (“Insurance Policy”) to Salem Carriers, Inc. (“Salem”) for a policy period of October 1, 2015 to October 1, 2016.
The complaint and counterclaims in this case arise out of an accident in which a Salem employee, Kellie Wallace, was injured; she subsequently filed a complaint in state court to recover for injuries sustained. (See ACE's Answer and Countercl. (Doc. 64) at 21-22; PCA's Answer and Countercl. (Doc. 59) at 19.)
In May 2007, Salem entered into an annually-renewing contract with PCA to perform cargo delivery services (“Transportation Agreement”). (See ACE's Answer and Countercl. (Doc. 64) at 15-16.) Under the Transportation Agreement, PCA was the “shipper,” and Salem was the “carrier.” (See ACE's Answer and Countercl. (Doc. 64) at 15.)
The Transportation Agreement required Salem to defend and indemnify PCA against personal injury claims stemming from transportation of PCA's goods, so long as those claims did not arise from PCA's sole negligence. (See id. at 16.) The indemnification provision of the Transportation Agreement states:
(Ex. B (“Transportation Agreement”) (Doc. 57-2) ¶ 5(a).)
Under the Transportation Agreement, Salem was deemed an independent contractor to PCA, and Salem was considered to have exclusive control over its employees or agents. (See ACE's Answer and Countercl. (Doc. 64) at 16-17.)
PCA was named as an additional insured under the Insurance Policy issued by Great West to Salem via an endorsement.[1] (See ACE's Answer and Countercl. (Doc. 64) at 18; PCA's Answer and Countercl. (Doc. 59) at 19.) The insurance endorsement included a provision defining when an additional insured party would receive coverage under the primary insured's policy:
On October 2, 2015, a Salem employee was transporting cargo for PCA in a Salem-owned trailer from a PCA facility in Honea Path, South Carolina to a PCA facility in Salisbury, North Carolina, pursuant to the Transportation Agreement. Allegedly, neither the Salem employee driving the trailer, nor any other Salem employee, inspected the cargo inside the trailer, ensured that the goods were properly distributed or secured, or adjusted the cargo to properly secure it within the trailer at any point during the journey, including at loading in Honea Path, during the drive, or upon arrival in Salisbury. (See id. at 19-20.) At PCA's Salisbury facility, a Salem employee, Kellie Wallace, opened the back doors of the trailer-allegedly without discussion or planning with the driver-after which a 500-pound pallet fell off the tractor-trailer and struck her.[2] (See id. at 21-22 .)
On August 13, 2018, Ms. Wallace sued PCA for negligence in North Carolina state court (“Underlying Lawsuit”) to recover for her injuries resulting from the pallet that struck her. (See PCA's Answer and Countercl. (Doc. 59) at 19.) Salem was not included as a party in the Underlying Lawsuit.[3] (See ACE's Answer and Countercl. (Doc. 64) at 22.) Subsequently, all parties to the Underlying Lawsuit settled. (See id. at 22.)
PCA alleges that the Insurance Policy obligates Great West to defend PCA in the Underlying Lawsuit, but that Great West nevertheless insists it is not required to do so. Instead, Great West alleges that ACE issued a policy insuring PCA, ultimately contending that ACE must provide coverage and defend PCA. (See Great West's First Am. Compl. (Doc. 57) at ¶¶ 41-44.) Despite Great West's determination that it has no duty to defend PCA, it has nonetheless provided for PCA's defense in the Underlying Lawsuit under a reservation of rights. (See id. ¶ 19.)
In December 2018, Great West filed a declaratory judgment action in this court under 28 U.S.C § 2202. (See Great West Cas. Co. v. Packaging Corp. of Am., Docket No. 18-CV-01026 (M.D. N.C. case dismissed Oct. 18, 2021); see also Complaint at 10-11, Great West Cas. Co., No. 18-CV-01026.) Great West sought a declaration that it was not obligated to provide coverage to PCA under the Insurance Policy in connection with the Underlying Lawsuit and that Salem was not obligated to defend or indemnify PCA under the Transportation Agreement in connection with the Underlying Lawsuit. (See Great West Cas. Co., Docket No. 18-CV-01026; see also Complaint at 10-11, Great West Cas. Co., No. 18-CV-01026.) Several days later, PCA filed a complaint against Great West for declaratory judgment, breach of contract, and extra-contractual relief in the U.S. District Court for the Northern District of Illinois. (See Packaging Corp. of Am. v. Great West Cas. Co., Docket No. 18-CV-08400, (N.D. Ill. case dismissed Sept. 30, 2021); see also Complaint at 4-7, Packaging Corp. of Am., Docket No. 18-CV-08400.) Ultimately, both lawsuits were dismissed without prejudice in 2021.
In April 2021, Great West filed a Complaint for Declaratory Judgment against PCA and ACE in this court seeking an order declaring that neither the Transportation Agreement nor the Insurance Policy imposed upon Great West a duty-to-defend or duty-to-indemnify PCA in connection with the Underlying Lawsuit. Subsequently, Great West filed its First Amended Complaint for Declaratory Judgment, seeking a judgment declaring that (I) Great West has no duty-to-defend or duty-to-indemnify PCA in connection with the underlying lawsuit; (II) if Great West does owe any duty to PCA, ACE, as PCA's insurer, also owes a duty to defend and indemnify PCA such that ACE is obligated to reimburse Great West for its pro rata share of the litigation costs and settlement; and (III) if Great West does owe any duty to PCA, ACE is obligated to reimburse Great West for its pro rata share of the litigation costs and settlement under the principle of equitable contribution. (See Great West's First Am. Compl. (Doc....
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