Hulcher Servs., Inc. v. Great Am. Ins. Co.
| Decision Date | 25 June 2015 |
| Docket Number | CASE NO. 4:14-CV-231 |
| Parties | HULCHER SERVICES, INC. v. GREAT AMERICAN INSURANCE COMPANY |
| Court | U.S. District Court — Eastern District of Texas |
MEMORANDUM OPINION AND ORDER
Pending before the Court are Defendant Great American Insurance Company's Motion for Summary Judgment (Dkt. #27) and Plaintiff's Motion for Partial Summary Judgment (Dkt. #31). After considering the motions, the responses, and the relevant pleadings, the Court finds that Defendant's motion should be granted in part and denied in part, and Plaintiff's motion should be denied.
Plaintiff Hulcher Services, Inc. ("Hulcher") provides derailment and rerailment services to various railroads, including Union Pacific Railroad ("Union Pacific"), pursuant to written contracts. Hulcher's headquarters are in Denton, Texas. On or about May 1, 2002, Hulcher entered into a derailment cleanup contract with Union Pacific, which required Hulcher to: (1) maintain insurance, including liability insurance with at least $5 million of limits per occurrence, and include Union Pacific as an additional insured; and (2) indemnify Union Pacific against loss "caused by [Hulcher's] breach of the agreement or the failure to observe the health and safety provisions of the agreement or any negligent activity or omission arising out of performance or nonperformance of this agreement" (Dkt. #27 at Ex. C, at 3-4, 10; Dkt. #31 at Ex. A-1 at 11). To satisfy the Union Pacific contract's insurance obligation, Hulcher purchased primary and umbrella liability policies. For the January 1, 2003 to January 1, 2004 policy period, Hulcherobtained a CGL policy from Continental Casualty Company ("CNA") with limits of $1 million per occurrence (the "CNA Policy") (Dkt. #31, Ex. A-2). The CNA Policy provides coverage for "those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies." Id. at 5. Union Pacific is an additional insured under the CNA Policy.
Hulcher also purchased an umbrella policy from Defendant Great American with $25 million limits per occurrence (the "Great American Policy") . The insuring agreement of the Great American Policy provides, in pertinent part:
We will pay on behalf of the "Insured" those sums in excess of the "Retained Limit" that the "Insured" becomes legally obligated to pay by reason of liability imposed by law or assumed by the "Insured" under an "insured contract" because of "bodily injury," ... that takes place during the Policy Period and is caused by an "occurrence" happening anywhere.
(Dkt. #27, Ex. A at 19; Dkt. #31, Ex. A-3 at 24).
In September of 2003, James Collins ("Collins"), a Hulcher employee, was injured while moving equipment to the site of a Union Pacific train collision near Beaumont, California, causing the derailment of more than twenty (20) cars. Collins v. Union Pacific R. Co., 207 Cal.App.4th 867, 873 (Cal.App.4th Dist. 2012). Collins was a member of the crew Hulcher assigned to the Beaumont derailment. Id. On September 8, 2003, Collins was guiding and directing a sideboom, operated by another Hulcher employee, under a power line when the sideboom's block fell and struck him on the head. Id. Collins filed a worker's compensation claim against Hulcher and received benefits through Hulcher's worker's compensation insurer Continental Casualty Company ("CNA"). Id. at 876-78. Collins filed suit against Union Pacific in California state court under the Federal Employers Liability Act ("FELA") alleging that (a) hewas an employee of Union Pacific at the time of his injuries; and (b) his injuries were caused by Union Pacific's negligence. Hulcher was not a party to the Collins Lawsuit.
Union Pacific and Hulcher notified CNA, who is also the commercial general liability insurer, of the Collins Lawsuit after it was filed, and CNA agreed to provide a defense to Union Pacific (Dkt. #31, Ex. B-1). Union Pacific and Hulcher also notified Great American of the Collins Lawsuit. Great American issued a reservation of rights letter to Union Pacific and based its reservation on the Great American Policy's Employee Exclusion (Dkt. #31, Ex. A-6 at 4-11).
In March of 2010, the Collins Lawsuit proceeded to trial. The jury was presented with three (3) issues for determination in the liability phase of the trial: (a) whether Collins was an employee of Union Pacific; (b) whether Union Pacific was negligent; and (c) whether Collins was also negligent. The jury determined that Collins was an employee of Union Pacific at the time of his injuries, Union Pacific was negligent, and Collins was not negligent. In a special verdict following the liability phase of the trial, the jury awarded Collins $3,945,493.93 for past and future economic loss and past and future non-economic loss. Collins later accepted a remittitur of this award in the amount of $2,695,493.93. After subtracting from the amount of the worker's compensation lien from the remitted amount, the trial court entered an amended judgment in favor of Collins in the amount of $2,558,826.93, together with pre- and post-judgment interest and costs (the "Collins Judgment") (Dkt. #27, Ex. F). Union Pacific appealed the trial court's judgment, but the appellate court affirmed (Dkt. #27, Ex. A-8). Collins, 207 Cal.App.4th at 885. After the appeal, CNA contributed its policy limits (plus accrued interest) on Union Pacific's behalf toward satisfying the judgment. Great American refused to provide coverage to Union Pacific for the judgment amount (plus accrued interest) above the CNA Policy's $1 million limits. Union Pacific demanded that Hulcher indemnify it for the judgmentamount above the CNA policy, and Hulcher did so in the amount of $1,980,833.40. Thereafter, Hulcher sought coverage from Great American, which denied coverage based on the Cross-Suits Exclusion.
Hulcher now brings suit against Great American for (1) breaching its insurance policy with Hulcher by refusing to pay the amount Hulcher assumed under an "insured contract"; (2) in the alternative, under the equitable subrogation doctrine for refusing to indemnify Hulcher for its payment to another party following Great American's wrongful denial of coverage to that party; (3) for violating Chapter 541 and 542 of the Texas Insurance Code; (4) for pre-judgment interest; and (5) for Hulcher's reasonable and necessary attorneys' fees. In its motion for partial summary judgment, Hulcher also reserves the right to seek a factual determination regarding the amount of damages recoverable for any alleged breach of contract and Texas Insurance Code violations, including the amount of attorneys' fees.
On February 13, 2015, Great American filed its motion for summary judgment (Dkt. #27). On March 9, 2015, Hulcher filed its response (Dkt. #35), and on March 23, 2015, Great American filed its reply (Dkt. #40).
On February 20, 2015, Hulcher filed its motion for partial summary judgment - Hulcher did not move for summary judgment on its claims for statutory bad faith (Dkt. #31). On March 20, 2015, Great American filed its response (Dkt. #39). Hulcher filed its reply on March 27, 2015 (Dkt. #41). On that same date, Hulcher also filed a motion for leave to supplement its summary judgment evidence (Dkt. #43), and leave was granted (Dkt. #47, #48). On May 13, 2015, Great American filed a motion for leave to file a surreply, and its proposed surreply (Dkt. #49, #50). The Court granted the motion for leave (Dkt. #52).
The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment is proper if the pleadings, the discovery and disclosure materials on file, and any affidavits "[show] that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The trial court must resolve all reasonable doubts in favor of the party opposing the motion for summary judgment. Casey Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981) (citations omitted). The substantive law identifies which facts are material. Anderson, 477 U.S. at 248.
The party moving for summary judgment has the burden to show that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Id. at 247. If the movant bears the burden of proof on a claim or defense on which it is moving for summary judgment, it must come forward with evidence that establishes "beyond peradventure all of the essential elements of the claim or defense." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). But if the nonmovant bears the burden of proof, the movant may discharge its burden by showing that there is an absence of evidence to support the nonmovant's case. Celotex, 477 U.S. at 325; Byers v. Dallas Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000). Once the movant has carried its burden, the nonmovant must "respond to the motion for summary judgment by setting forth particular facts indicating there is a genuine issue for trial." Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at 248-49). The nonmovant must adduce affirmative evidence. Anderson, 477 U.S. at 257. The Court must consider all of the evidence but refrainfrom making any credibility determinations or weighing the evidence. See Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).
In this lawsuit, Hulcher sued Great American in two separate capacities: (1) in its individual capacity; and (2) as an equitable subrogee of Union Pacific. In its individual capacity, Hulcher asserts that it is entitled to coverage as...
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