Itrich v. Huron Cement Div. Of Nat. Gypsum Co.

• Decision Date: 25 February 1987
• Docket Number: Civ. A. No. 86-30069 PH.
• Parties: Dennis C. ITRICH, Plaintiff, v. HURON CEMENT DIVISION OF NATIONAL GYPSUM COMPANY, et al., Defendants.
• Court: U.S. District Court — Western District of Michigan

670 F. Supp. 199

Dennis C. ITRICH, Plaintiff, v. HURON CEMENT DIVISION OF NATIONAL GYPSUM COMPANY, et al., Defendants.

Civ. A. No. 86-30069 PH.

United States District Court, E.D. Michigan, S.D.

February 25, 1987.

D. Michael O'Bryan, O'Bryan Law Center, Birmingham, Mich., for plaintiff.

Gene B. George, Wm. D. Carle, III, Ray, Robinson, Hanninen & Carle, Cleveland, Ohio, Marlin F. Scholl, Scholl & Stieg, Detroit, Mich., for defendants.

MEMORANDUM OPINION AND ORDER

JAMES HARVEY, District Judge.

Plaintiff brought this action seeking recovery for injuries suffered as a result of his exposure to auditory concussive trauma created by the blowing of "unseaworthy tubes" while working as a crewman aboard the S/S J.B. Ford. Defendant Huron Cement Division, National Gypsum Company (National) is the owner of the S/S J.B. Ford and is insured by defendant American Steamship Owners Mutual Protection Indemnity Associates, Inc. (American Steamship). Plaintiff alleges in his complaint that he is a third-party beneficiary under the policy issued to National and that the Michigan Third-Party Beneficiary Statute, Mich.Comp.Laws Ann. § 600.1405 (West 1981) empowers plaintiff to join American Steamship as a defendant.¹ The matter is now before the Court on American Steamship's motion pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(f) requesting that it be dismissed from the suit and that all references to insurance be struck from plaintiff's complaint.

Attached to defendant's motion is the affidavit of an employee of American Steamship stating that the policy at issue is one of indemnification for the insured's loss, and not for liability. Accordingly, defendant's motion shall be treated as one for summary judgment. F.R.Civ.P. 12(b); Mozert v. Hawkins City Public Schools, 765 F.2d 75, 78 (6th Cir.1985).

I.

American Steamship claims that it is entitled to be dismissed from this action because the Third-Party Beneficiary Statute does not vest any rights in an injured claimant against an insurer where the policy is one of indemnity as opposed to one of liability. The policy at issue provides indemnity coverage against those claims covered under the policy which National becomes liable for and actually pays. Capitalized and printed in bold face type, the following paragraph is contained in the first page of the policy:

The association agrees to indemnify the assured against any loss, damage or expense which the assured shall become liable to pay and shall pay by reason of the fact that the assured is the owner (or operator, manager, charterer, mortgagee, trustee, receiver or agent, as the case may be) of the insured vessel and which shall result from the following liabilities, risks, events, occurrences and expenditures....

The policy proceeds to list and describe fifteen types of losses, damages or expenses which are covered under the policy. Important to this dispute is paragraph (1) which provides coverage against "liability for ... personal injury to, or illness of any person."² Because the policy is to indemnify the insured, argues defendant, "There is no promise to plaintiff or for his benefit, only a promise to reimburse the shipowner after it has paid a proper claim."

American steamship also claims that a direct action against an insurer is prohibited by Mich.Comp.Laws Ann. § 500.3030 (West 1983) when the insurance is casualty insurance. Section 3030 is contained in Chapter 30 of the Michigan Insurance Code which pertains to casualty insurance. Section 3030 provides that "the insurer shall not be made or joined as a party defendant, nor shall any reference whatever be made to such insurer or to the question of carrying of such insurance during the course of trial." American Steamship maintains that the policy of indemnity in this case applies to any liability of National to plaintiff for bodily injury and is, therefore, "casualty insurance" as defined in Section 624 of the Insurance Code. Section 624(1)(b) defines casualty insurance to include, in part, "insurance of any person, partnership, or corporation against loss or damage on account of the bodily injury or death by accident of any person ... for which loss or damage said person, partnership or corporation is responsible ..."

Plaintiff contends that all insurance policies in Michigan are contracts of indemnity against contingent law suits and are deemed to be property recoverable by a third-party beneficiary. Plaintiff also argues that joinder of American Steamship is not prohibited by Section 3030 since that section only applies to casualty insurance and the policy issued to plaintiff, as a form of marine insurance, falls within the definition of property insurance as defined in Section 610 of the Insurance Code.³

II.

Summary judgment is appropriate where no genuine issue of material fact remains to be decided and the moving party is entitled to judgment as a matter of law. Willets v. Ford Motor Co., 583 F.2d 852, 855 (6th Cir.1978); Ghandi v. Police Dept. of City of Detroit, 747 F.2d 338, 345 (6th Cir.1984); F.R.Civ.Pro. 56. In applying this standard, the Court must view all materials offered in support of a motion for summary judgment, as well as, all pleadings, depositions, answers to interrogatories, and admissions properly on file in the light most favorable to the party opposing the motion. Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974); United States v. Diebold, 368 U.S. 894, 82 S.Ct. 171, 7 L.Ed.2d 91 (1961); Smith v. Hudson, 600 F.2d 60 (6th Cir.1979).

The party moving for summary judgment "bears the burden of clearly establishing the non-existence of any genuine issue of fact material to a judgment in his favor." United States v. Articles of Device, Etc., 527 F.2d 1008, 1011 (6th Cir. 1975). If the moving party satisfies that burden, the opposing party must come forward with "specific facts showing there is a genuine issue for trial." First National Bank of Arizona v. Cities Services Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1967), reh. denied, 393 U.S. 901, 89 S.Ct. 63, 21 L.Ed.2d 188 (1968); Ghandi v. Police Dept. of City of Detroit, 747 F.2d at 345. Plaintiffs are not entitled "to get to the jury on the basis of the allegations in their complaints, coupled with the hope that something can be developed at trial...." First National Bank of Arizona v. Cities Services Co., 391 U.S. at 289-90, 88 S.Ct. at 1593.

III.

American Steamship's motion must be granted if, as it claims, the policy in question is by definition "casualty insurance." For if the policy is a type of casualty insurance, not only does Section 3030 preclude a direct action against American Steamship, but in accordance with the Michigan Supreme Court's decision in Lieberthal v. Glen Falls Indemnity Co., 316 Mich. 37, 24 N.W.2d 547 (1946), the Third-Party Beneficiary Statute does not alter the effect of Section 3030.

In Lieberthal the court affirmed the dismissal of an action by a Michigan resident, naming as the sole defendant the liability insurer of the other driver involved in an automobile accident which had occurred in Wisconsin. The court refused to apply the Wisconsin direct action statute since it violated Michigan public policy. Basing its decision upon then Section 12460 of the Insurance Code, a predecessor of Section 3030, the court stated: "The public policy sought to be sustained in this State by the statute and judicial decisions is that a plaintiff shall not be permitted to inject into his suit the element of insurance and thereby obtain an excessive and unjust verdict." Lieberthal, 316 Mich. at 41-42, 24 N.W.2d at 549.

The importance of Lieberthal to the present case goes beyond its discussion of the policy supporting Section 3030; the major import of Lieberthal to this case lies in the Court's conclusion regarding the relationship between Section 3030 and the Third-Party Beneficiary Statute. Although the court did not review in detail the contention that the Third-Party Beneficiary Statute provided a basis for maintaining the suit, the court explicitly stated that the statute did not repeal Section 12460 or the policy behind it.

A.

In determining whether the policy at issue is casualty insurance as defined in Section 624(1)(b), it is important to note that the question is not whether the policy is marine or casualty insurance. The insurance at issue clearly is marine insurance. The question, therefore, is whether in addition to being considered marine insurance the policy can also be construed as casualty insurance, at least for purposes of Section 3030, because it covers liability for bodily injury as defined in Section 624(1)(b). Whether marine insurance, to the extent that it provides coverage for liability for personal injury, should, for purposes of Section 3030, also be construed as a form of casualty insurance has not been decided by the Supreme Court of Michigan. Where the State's highest court has not spoken, "the federal court must ascertain from all available data what the state law is and apply it." Bailey v. V & O Press Co., 770 F.2d 601, 604 (6th Cir.1985). A decision by an intermediate appellant state court is datum "which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise." Commission v. Bosch, 387 U.S. 456, 465, 87 S.Ct. 1776, 1782, 18 L.Ed.2d 886 (1967) (quoting West v. A.T. & T. Co., 311 U.S. 223, 237, 61 S.Ct. 179, 183, 85 L.Ed. 139 (1940)). Although the decrees of lower state courts should be attributed some weight, they are not controlling where the highest court of the state has not spoken on the point. Commission, 387 U.S. at 465, 87 S.Ct. at 1782. See Bailey, 770 F.2d at 604.

Applying these guidelines to the present case, the Court believes that the Michigan Supreme Court would find that the insurance policy issued to National, although technically marine insurance and, thus, by definition...