Hanover Ins. Co. v. Honeywell, Inc.

• Decision Date: 24 April 2002
• Docket Number: No. 00CV0584H(J).,No. 01CV0152H(E).,00CV0584H(J).,01CV0152H(E).
• Citation: 200 F.Supp.2d 1305
• Parties: HANOVER INSURANCE COMPANY and Wolf Point Industrial Warehouse, Inc., Plaintiff, v. HONEYWELL, INC., and Circle International, Inc., Defendants. T.L.C. International, Inc., Plaintiff, v. Circle International, Inc., a/k/a and/or d/b/a Circle International Group, Inc., EGL, Inc., Wolf Point Industrial Warehouse, Inc., a/k/a and/or d/b/a Wolf Creek Industrial Warehouse, Inc., Tulsa Properties, Inc., Fleming Building Company, Inc., and Honeywell, Inc., Defendants.
• Court: U.S. District Court — Northern District of Oklahoma

200 F.Supp.2d 1305

HANOVER INSURANCE COMPANY and Wolf Point Industrial Warehouse, Inc., Plaintiff, v. HONEYWELL, INC., and Circle International, Inc., Defendants.

T.L.C. International, Inc., Plaintiff, v. Circle International, Inc., a/k/a and/or d/b/a Circle International Group, Inc., EGL, Inc., Wolf Point Industrial Warehouse, Inc., a/k/a and/or d/b/a Wolf Creek Industrial Warehouse, Inc., Tulsa Properties, Inc., Fleming Building Company, Inc., and Honeywell, Inc., Defendants.

No. 00CV0584H(J).

No. 01CV0152H(E).

United States District Court, N.D. Oklahoma.

April 24, 2002.

Brian Russell Huddleston, Carr & Carr, Tulsa, OK, Dennis Duane King, King Taylor & Ryan, Tulsa, OK, Jennifer L. Duncan, William T. Sebesta, Cozen & O'Connor, Dallas, TX, for Wolf Point Industrial Warehouse, Inc., plaintiff, counter-defendant, Massachusetts Bay Ins. Co., plaintiff.

Brian Russell Huddleston, Carr & Carr, Tulsa, OK, Dennis Duane King, Ashley Melissa Bibb, King Taylor & Ryan, Tulsa, OK, Jennifer L. Duncan, William T. Sebesta, Cozen & O'Connor, Dallas, TX, for Wolf Point Industrial Warehouse, Inc., counter-defendant.

Daniel David Draper, III, Rhodes Hieronymus Jones Tucker & Gable, Tulsa, OK, Keith A Wilkes, Newton O'Connor, Turner & Auer, Tulsa, OK, William Suttle Leach, Eldridge Cooper Steichen & Leach, PLLC, Tulsa, OK, for Circle International, Inc., defendant, cross-defendant, cross-claimant, counter-claimant.

Daniel David Draper, III, Rhodes Hieronymus Jones Tucker & Gable, Tulsa, OK, William Suttle Leach, Eldridge Cooper Steichen & Leach, PLLC, Tulsa, OK, for EGL, Inc., cross-defendant, cross-claimant, consolidated defendant, Circle International, Inc., consolidated defendant, cross-defendant, cross-claimant.

Harry Anthony Parrish, John F McCormick, Jr., Gregory Jon Crawford, Kaycee Lyn Deen, Pray Walker Jackman Williamson & Marlar, Tulsa, OK, Brendan M Hare, Kathleen A Kelley, Hare & Chaffin, Boston, MA, William J George, Wayzata MN, for Honeywell, Inc., cross-defendant & consolidated cross-defendant, consolidated defendant, cross-claimant.

Harry Anthony Parrish, John F McCormick, Jr., Kaycee Lyn Deen, Pray Walker Jackman Williamson & Marlar, Tulsa, OK, Brendan M Hare, Kathleen A Kelley, Hare & Chaffin, Boston, MA, William J George, Wayzata, MN, for Honeywell, Inc., cross-claimant.

Gregory Jon Crawford, Kaycee Lyn Deen, Pray Walker Jackman Williamson & Marlar, Tulsa, OK, William J George, Wayzata, MN, for Honeywell, Inc., cross-claimant, cross-defendant.

Mark Alan Warman, Wilkerson Wassall & Warman, Tulsa, OK, Christopher N Hug, Glenda Ganem, McGovern Hug & Ganem, Boston, MA, for T.L.C. International, Inc., consolidated plaintiff, counter-defendant.

Dennis Duane King, Neil D Van Dalsem, King Taylor & Ryan, Tulsa, OK, for Wolf Point Industrial Warehouse, Inc., cross-defendant, cross-claimant, counter-claimant.

Dennis Duane King, King Taylor & Ryan, Tulsa, OK, Paul R. Williams, III, Tulsa, OK, for Tulsa Properties, Inc., consolidated defendant, cross-defendant.

Dennis Duane King, Ashley Melissa Bibb, King Taylor & Ryan, Tulsa, OK, Paul R. Williams, III, Tulsa, OK, for Tulsa Properties, Inc., cross-defendant.

ORDER

HOLMES, District Judge.

This matter came before the Court for hearing on April 11, 2002, upon Defendant Circle International, Inc.'s ("Circle") First Motion for Summary Judgment Against Hanover Insurance Company and Massachusetts Bay Insurance Company.¹ For the reasons set forth herein, the Court finds that Circle's motion should be granted.

FACTS

This case arises out of a March 6, 1999 fire in a Tulsa warehouse building owned by Plaintiff/Co-Defendant Wolf Point Industrial Warehouse, Inc. ("Wolf Point"), and leased by Circle for commercial warehousing purposes. Prior to September 8, 1998, Circle had leased and occupied only a portion of the Wolf Point building, approximately one-fourth to one-third of the entire facility. However, on September 8, 1998, Circle and Wolf Point entered into a new commercial lease agreement for the entire building.

The terms of the commercial lease included a provision whereby Wolf Point agreed "to insure the Leased Premises for fire, casualty, and public liability."² Wolf Point obtained Hanobusiness Policy No. ODT 5168314-03 ("Hanover Policy") from Plaintiff. The Hanover Policy provided coverage to the building structure in the amount of $359,000.00, as well as loss of business income coverage for actual business losses not exceeding twelve (12) consecutive months. The terms of the Hanover Policy included a subrogation provision wherein the rights of Hanover's insured, Wolf Point, would be transferred to Hanover upon Hanover's payment of a covered claim under the Hanover Policy. The subrogation provision also provided that Wolf Point could waive its rights, and consequently, Hanover's subrogation rights, against another party in writing prior to a loss to the covered property.

On or about March 6, 1999, the entire building owned by Wolf Point and leased to Circle was destroyed by fire. Pursuant to Wolf Point's claim under the Hanover Policy, Plaintiff paid Wolf Point $348,090.00 as reimbursement for Wolf Point's damages to the structure and $20,963.46 as reimbursement for Wolf Point's lost business income. In total, Plaintiff paid Wolf Point $369,053.46 in losses arising out of the subject fire. Plaintiff, via its alleged right of subrogation, now seeks $369,053.46 in damages from Circle, Wolf Point's tenant, for the sums paid by Plaintiff to Wolf Point to rebuild the structure and for Wolf Point's business income losses.

Circle filed its motion for summary judgment alleging two propositions: (1) Plaintiff's subrogation claims fail as a matter of law, as Circle, Wolf Point's tenant, was an implied co-insured under the Hanover Policy; and (2) Wolf Point waived Plaintiff's subrogation rights in writing pursuant to the insurance provision contained in the commercial lease agreement, ¶ 8(d). See note 2, supra. For the reasons set forth herein, Circle is entitled to summary judgment pursuant to Proposition I of Circle's motion. For that reason, the issues set forth in Proposition II of Circle's brief need not be addressed and are deemed moot.

STANDARD FOR SUMMARY JUDGMENT

Motions for summary judgment should be granted if the movant clearly establishes that no material issue of fact remains to be resolved and that the movant is entitled to judgment as a matter of law. Lambert v. Inryco, Inc., 569 F.Supp. 908, 912 (W.D.Okla.1980). If the issue is purely a question of law, it is appropriate for the Court to dismiss the claim if no genuine issue of fact remains. Bethel v. American Intern. Mfg. Corp., 768 F.Supp. 327, 328 (W.D.Okla.1991). A court may dismiss a complaint if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984).

A court should grant summary judgment if no genuine issue of material fact exists. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The substantive law governing the suit dictates which facts are material or not. Id. at 248, 106 S.Ct. 2505. "Only disputes over facts that might affect the outcome of the suit under the governing law will ... preclude summary judgment." Id. "Factual disputes that are irrelevant or unnecessary will not be counted." Id. More than a "disfavored procedural shortcut," summary judgment is an important procedure "designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

SUBROGATION IS NOT AVAILABLE TO PLAINTIFF AGAINST WOLF POINT'S TENANT, CIRCLE.

Subrogation is the equitable right of an insurer to be put in the position of its insured so that it may pursue recovery from any third parties who are legally responsible to the insured for a loss paid by the insurer. 16 Couch on Insurance § 222:5 (Rev.3rd ed.2000). The subrogated insurer "stands in the shoes of an insured, and has no greater rights than the insured...." Id. However, "[a] co-insured is immune from liability on an insurer's subrogation claim." Travelers Ins. Cos. v. Dickey, 799 P.2d 625, 627 (Okla.1990).

In Sutton v. Jondahl, 532 P.2d 478 (Okla.App.1975), the Oklahoma Court of Appeals concluded that a tenant was a co-insured under the lessor/landlord's insurance policy despite the fact that the tenant was not a named insured under the policy. In Sutton, a landlord's fire insurance carrier sued the tenant under claim of subrogation to recover damages caused to the structure by a fire allegedly started by the tenant's 10 year old son. Similar to Plaintiff's claims in the present case, the insurer claimed the tenant was negligent in allegedly contributing to the cause of the fire. See Id., 532 P.2d at 479. Upon the tenant's appeal of a jury verdict in favor of the insurer, the Oklahoma Court of Appeals, reversed holding that, if the landlord had procured fire insurance coverage for the leased property, the tenant was a co-insured under the landlord's policy and that no subrogation could lie against the co-insured tenant absent an "express agreement" to the contrary, stating:

Under the facts and circumstances in this record the subrogation should not be available to the insurance carrier because the law considers the tenant as a co-insured of the landlord absent an express agreement between them to the contrary, comparable to the permissive-user feature of automobile insurance. This principle is derived from a recognition of a relational reality, namely, that both landlord and tenant have an insurable interest in the rented premises— the former owns the fee and the latter has a possessory interest. Here the landlords (Suttons) purchased the fire insurance from Central Mutual Insurance Company to protect such interests in the property against loss from fire....