Great West Cas. Co. v. Gen. Cas. Co. of Wis.

Decision Date16 August 2010
Docket NumberCivil No. 09-555 (MJD/SRN)
PartiesGREAT WEST CASUALTY COMPANY, Plaintiff, v. GENERAL CASUALTY COMPANY OF WISCONSIN; Holicky Bros., Inc.; Nathan Peterson; and Ann Hill Peterson, Defendants.
CourtU.S. District Court — District of Minnesota

Andrea E. Resibord and Michael W. McNee, Cousineau McGuire Chartered, for Plaintiff, Great West Casualty Company.

Timothy P. Tobin and Lynn Schmidt Walters, Gislason & Hunter LLP, for Defendant, General Casualty Company of Wisconsin.

John M. Riedy, Maschka Riedy & Ries, PLLP, for Defendant, Holicky Bros., Inc.

No appearance by Nathan Peterson.

Andrew L. Davick, Meshbesher & Spence, Ltd., for Defendant, Ann Hill Peterson.

MEMORANDUM OF LAW & ORDER

MICHAEL J. DAVIS, Chief Judge.

II. BACKGROUND

This case involves an insurance coverage dispute related to a 2005 vehicle accident.

A. The Accident

On June 30, 2005, Defendant Nathan Peterson was driving a 1997 Freightliner semi-tractor, which he owned, and was hauling freight in an attached 1998 East dump trailer owned by Defendant Holicky Bros., Inc. ("Holicky"). (Stip.¶¶ 3-4.) On that day, Nathan Peterson was involved in a single-vehicle roll-over accident in Carlton County, Minnesota (the "Accident"). ( Id. ¶ 3.) His passenger, Defendant Ann Hill Peterson, was injured and her left hand was amputated. ( Id. ¶ 5.)

B. The Independent Contractor Agreement

Before the Accident, Nathan Peterson and Holicky had entered into an Independent Contractor Agreement, effective April 22, 2005. (Stip. ¶ 1; Stip., Ex. A.) Under the Independent Contractor Agreement, Nathan Peterson agreed to provide a truck "of sufficient size and capacity" to haul Holicky's trailers, as directed by Holicky. (Stip., Ex. A ¶ 1.) Additionally, Nathan Peterson agreed to be responsible for payment of casualty and liability insurance covering the truck that he used to pull Holicky's trailer, with minimum liability limits of $1 million. ( Id.)

The Independent Contractor Agreement provided that Nathan Peterson agreed to hold Holicky "harmless and free and clear in connection with any and all liability in connection with the operation of [Nathan Peterson's] truck and pulling of [Holicky's] trailers during the term of this Contract and shall indemnify [Holicky] for any loss occasioned thereby including reasonable attorneys fees and costs." ( Id.) The parties agree that the Accident occurred while Nathan Peterson was transporting freight in interstate commerce pursuant to the Independent Contractor Agreement. (Stip.¶ 3.)

C. Progressive Policy

At the time Nathan Peterson entered into the Independent Contractor Agreement, he was insured under a Commercial Auto Policy issued by Progressive Classic Insurance Company ("Progressive Policy"). (Stip. ¶ 6; Stip., Ex. 2.) The Progressive Policy requires Progressive to "pay damages ... for which an insured is legally liable because of an accident." (Stip., Ex. 2 at 13 of 33.) It has a liability limit of $1 million. ( Id. at 1 of 33.)

The Progressive Policy defines the "insured" to mean the named insured-Nathan Peterson-and, among others, "any other person or organization, but only with respect to the legal liability of that person or organization for the acts or omissions of any person otherwise covered under [the liability provisions of the policy] while driving your insured auto." (Stip., Ex. 2 at 13 of 33.)

The term "your insured auto" is defined to include, among other things, "[a]ny auto described in the Declarations." ( Id. at 10 of 33.) It further is defined to include trailers, even if not listed in the declarations, "but only while upon a public road and connected to your insured auto." ( Id. at 11 of 33.) The 1997 Freightliner tractor is specifically listed in the policy declarations, as are all nonowned attached trailers. (Stip., Ex. 2 at 3 of 33.) Nathan Peterson's 1997 Freightliner tractor is listed as the only scheduled vehicle, and a liability premium of $3,497.00 was charged for the Freightliner. ( Id.) The ProgressivePolicy charged an additional liability premium of $798.00 for non-owned attached trailer liability coverage. ( Id.) In total, including other coverage, such as uninsured/underinsured motorist ("UM/UIM") coverage, and a $25 fee, the premium for the policy was $5,554. ( Id. at 1 of 33.)

Nathan Peterson obtained an endorsement naming Holicky as an additional insured, effective April 29, 2005. (Form No. 1198 (8-93), Stip., Ex. 2 at 2, 4 of 33.) The endorsement provides that the insurance applies only to the extent that Holicky is liable for the conduct of another insured. ( Id.) The endorsement further provides: "We also agree with you that insurance provided by this agreement will be excess insurance over any other valid and collectible insurance." ( Id.)

On the other hand, the Progressive Policy's "other insurance" provision provides that "[t]his coverage is primary when your insured auto which is a trailer is attached to an insured auto you [Nathan Peterson] own." (Stip., Ex. 2 at 17 of 33.) It further provides that, if there is other applicable liability insurance for a covered accident, Progressive will pay the proportionate share that its limit of liability bears to the total of all applicable liability limits. ( Id.)

D. General Casualty Policies
1. General Casualty Commercial Automobile Policy

At the time of the Accident, Holicky was insured under a Commercial Auto Policy issued by Defendant General Casualty Company of Wisconsin ("General Casualty") ("General Casualty Auto Policy"). (Stip. ¶ 8; Stip., Ex. 3.) The policy provides a schedule of covered vehicles owned by Holicky and insured under the General Casualty Auto Policy, which lists multiple tractors and trailers, including the 1998 East end dump trailer Nathan Peterson was hauling at the time of the Accident. (Stip. ¶ 10; Declarations and End. No. 001, Stip., Ex. 3 at 3, 6 of 53.)

The General Casualty Auto Policy requires General Casualty to "pay all sums an 'insured' legally must pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies, caused by an 'accident' and resulting from the ownership, maintenance or use of a covered 'auto.' " (Stip., Ex. 3 at 14 of 53.) With regard to liability coverage, the phrase "Covered Autos" is defined by symbol "01." ( Id. at 2 of 53.) The Business Auto Coverage Form states that "01" corresponds to "Any 'Auto.' " ( Id. at 13 of 53.) " 'Auto' means a land motor vehicle, 'trailer' or semitrailer designed for travel on public roads, but does not include' mobile equipment.' " ( Id. at 21 of 53.)

The General Casualty Auto Policy includes statutorily required liability, personal injury protection ("PIP") and UM/UIM coverages. (Declarations, Stip., Ex. 3 at 31-42 of 53.) The policy includes a liability limit of $1 million. ( Id. at 2 and 6 of 53.) Holicky paid $3,941.00 in liability premiums for the General Casualty policy. ( Id. at 2 of 53.) Overall, including premiums for PIP, UM/UIM, physical damage, etc., it paid $7,810.00 in premiums. ( Id.)

The General Casualty Auto Policy "other insurance" clause states that it "provides primary insurance" for "any covered 'auto' you own." ( Id. at 20 of 53.) It also states:

[W]hile a covered "auto" which is a "trailer" is connected to another vehicle, the Liability Coverage this Coverage Form provides for the "trailer" is
(1) Excess while it is connected to a motor vehicle you do not own.
(2) Primary while it is connected to a covered "auto" you own.

( Id.)

The "other insurance" section further provides:

When this Coverage Form and any other Coverage Form or policy covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms and policies covering on the same basis.

( Id. at 21 of 53.)

2. General Casualty Commercial Umbrella Liability Policy

Effective during the time of the Accident, Holicky also purchased a Commercial Umbrella Policy from General Casualty ("General Casualty Umbrella Policy"), which provided an additional $1 million in liability coverage. (Stip. ¶ 11; Stip., Ex. 4 at 4 of 36.) Holicky paid a premium of $1,500 for the umbrella policy. (Stip., Ex. 4 at 4 of 36.)

E. Great West Policy
1. Explanation of a Filings Only Policy

Holicky also purchased a policy from Defendant Great West Casualty Company ("Great West"), effective March 11, 2005, the same effective date as the General Casualty Auto Policy and General Casualty Umbrella Policy, through March 11, 2006. (Stip. ¶ 12; Stip., Ex. 5; Gilreath Aff. ¶ 2.) Great West characterizes this policy as a "filings only" policy and this designation appears throughout the policy. ( See, e.g., Policy, Stip., Ex. 5 at 9 of 52 (listing, under "Special Provisions:" "Motor Carrier-Filings Only"); Gilreath Aff. ¶ 4.)

According to Great West, filings only policies are issued for motor carriers, such as Holicky, to comply with the United States Department of Transportation ("DOT") proof of minimum financial security requirements, so that the insured can maintain operating authority. (Gilreath Aff. ¶ 4.) Filings only policies are intended to act as sureties and are to be used as a last resort when no other coverage is available, for the protection of the public. ( Id. ¶ 5.)

Great West avers that the intent of the policy is only to ensure the availability of a minimum level of protection for the public rather than to provide true insurance coverage, as demonstrated by the terms of the policy; the lack of a premium; the lack of no-fault and UM/UIM coverage, which is required by state law; the inclusion of an endorsement requiring Holicky to reimburse Great West for...

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