James River Ins. Co. v. Ultratec Special Effects, Inc.
| Decision Date | 27 March 2020 |
| Docket Number | Civil Action Number 5:16-cv-00949-AKK |
| Court | U.S. District Court — Northern District of Alabama |
| Parties | JAMES RIVER INSURANCE COMPANY, Plaintiff, v. ULTRATEC SPECIAL EFFECTS, INC., et al., Defendants Ultratec Special Effects, Inc., Third-Party Plaintiff v. Britton-Gallagher & Associates, Inc., et al., Third-Party Defendants. |
Aaron Warren, Pro Hac Vice, Sina Bahadoran, Clyde & Co., US LLP, Miami, FL, C. Peter Bolvig, III, Whitaker Mudd Luke & Wells, Birmingham, AL, for Plaintiff.
Bryan A. Grayson, E. Britton Monroe, Sarah Grey Redmond, Lloyd, Gray, Whitehead & Monroe, PC, Birmingham, AL, for Third-Party Defendant Britton-Gallagher & Associates, Inc.
Emily Sides Bonds, Jones Walker LLP, Birmingham, AL, for Third-Party Defendant Fountain, Parker, Harbarger and Associates, Inc.
W. Brad English, Maynard, Cooper & Gale, PC, Huntsville, AL, Joshua R. Hess, Joshua B. Baker, Maynard Cooper & Gale PC, Birmingham, AL, for Defendant/Third-Party Plaintiff Ultratec Special Effects Inc.
Edward E. Wilson, Jr., William B. Tatum, Tatum Wilson PC, Huntsville, AL, for Defendant MST Properties LLC.
James H. Richardson, Richardson Maples, P.C., Huntsville, AL, for Defendants Robert Holland, John Anthony.
Joshua B. Baker, Maynard Cooper & Gale PC, Birmingham, AL, W. Brad English, Maynard, Cooper & Gale, PC, Huntsville, AL, for Defendants Randy Moore, Mike Thouin.
David H. Marsh, Jeffrey C. Rickard, Richard J. Riley, Roger Lee Lucas, Marsh Rickard & Bryan PC, Birmingham, AL, for Defendant David J. Cothran.
Marcus J. E. Helstowski, McDaniel & McDaniel LLC, Huntsville, AL, William Todd Atkinson, Atkinson, Atkinson & Burt, LLC, Winfield, AL, Richard J. Riley, Marsh, Rickard & Bryan P.C., Birmingham, AL, for Defendant Donald Ray Sanderson.
Mark A. Jackson, Mark A. Jackson PC, Huntsville, AL, Richard J. Riley, Marsh, Rickard & Bryan P.C., Birmingham, AL, for Defendant Coleen McKenna Whorton.
This declaratory judgment action arises from a tragic explosion at a pyrotechnics facility operated by Ultratec Special Effects, Inc. ("Ultratec") and its subsidiary, Ultratec Special Effects HSV, Inc. ("Ultratec HSV"). The explosion killed two individuals, and seriously injured a third, who were all employees of Ultratec HSV.1 Following the explosion, the Employees or their representatives each filed suit in Alabama state court against Ultratec, Ultratec HSV, and several entities and individuals associated with the Ultratec entities.
James River Insurance Company, Inc. issued a surplus lines, commercial general liability policy to Ultratec HSV, providing coverage for claims of bodily injuries during the period at issue and naming Ultratec as an additional insured. James River filed this action pursuant to 28 U.S.C. § 2201 against various defendants,2 seeking a declaration that (1) it has no duty to defend or indemnify Ultratec, MST, Holland, Moore, Thouin, and Anthony against the Employees’ lawsuits based on an exclusion in the policy (Count I), and (2) Holland, Moore, Thouin, and Anthony do not qualify as insureds under the policy (Count II). Doc. 1. For its part, Ultratec seeks an order (1) declaring that James River has a duty to defend it against the Employees’ lawsuits (Amended Counterclaim, Count I), and (2) reforming the policy to remove the exclusion at issue due to a mutual mistake of the parties (Amended Counterclaim, Count II). Doc. 33.3
James River and the Defendants have filed cross-motions for summary judgment. Docs. 133; 135; 139; 140. James River seeks judgment in its favor on all counts in the Complaint and Amended Counterclaim, except its claim that Thouin does not qualify as an insured, doc. 139, while the Defendants seek judgment on Count I in the Complaint and Amended Counterclaim, regarding James River's duty to defend, docs. 133; 135; 140.4 In a nutshell, the dispute centers on whether the Employer's Liability Exclusion Endorsement precludes coverage for the Employees’ claims when the endorsement is read in conjunction with the separation of insureds provision. For the reasons discussed below, and particularly because the court must read the policy as a whole and construe exclusions narrowly in favor of coverage, the court finds that the endorsement does not preclude coverage for the Employees’ claims. As a result, James River's motion is due to be denied as to the duty to defend claims, and the Defendants’ motions are due to be granted.
Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56. " Rule 56 [ ] mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (alteration in original). The moving party bears the initial burden of proving the absence of a genuine issue of material fact. Id. at 323, 106 S.Ct. 2548. The burden then shifts to the nonmoving party, who is required to "go beyond the pleadings" to establish that there is a "genuine issue for trial." Id. at 324, 106 S.Ct. 2548 (citation and internal quotation marks omitted). 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, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
On summary judgment motions, the court must construe the evidence and all reasonable inferences arising from it in the light most favorable to the non-moving party. Adickes v. S. H. Kress & Co. , 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). See also Anderson , 477 U.S. at 255, 106 S.Ct. 2505. Any factual disputes will be resolved in the non-moving party's favor when sufficient competent evidence supports the non-moving party's version of the disputed facts. See Pace v. Capobianco , 283 F.3d 1275, 1276, 1278 (11th Cir. 2002) (). However, "mere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion." Ellis v. England , 432 F.3d 1321, 1326 (11th Cir. 2005) (per curiam) (citing Bald Mountain Park, Ltd. v. Oliver , 863 F.2d 1560, 1563 (11th Cir. 1989) ). Moreover, the simple fact that the plaintiff and several defendants have filed cross-motions for summary judgment does not alter the ordinary standard of review. See Chambers & Co. v. Equitable Life Assurance Soc. , 224 F.2d 338, 345 (5th Cir. 1955) (). Rather, the court will consider each motion separately " ‘as each movant bears the burden of establishing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law.’ " 3D Med. Imaging Sys., LLC v. Visage Imaging, Inc. , 228 F. Supp. 3d 1331, 1336 (N.D. Ga. 2017) (quoting Shaw Constructors v. ICF Kaiser Eng'rs, Inc. , 395 F.3d 533, 538–39 (5th Cir. 2004) ).
James River issued a surplus lines, commercial general liability insurance policy to Ultratec HSV as the first named insured, effective during the relevant time,5 and Ultratec is an additional named insured.6 Docs. 1-4 at 90; 137-4 at 2, 6. The Policy provides that James River "will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies." Doc. 137-4 at 6. Under the Policy, insureds include employees of the named insured for "acts within the scope of their employment ...," but "none of these ‘employees’ [ ] are insureds for [ ] ‘bodily injury’ ... to a co-‘employee’ while in the course of his or her employment ...." Id. at 14. Relevant to this case, the Policy contains a separation of insured, or severability, provision providing that "this insurance applies [ ] [a]s if each Named Insured were the only Named Insured; and [s]eparately to each ‘insured’ against whom ‘claim’ is made or ‘suit’ is brought." Id. at 17, 36.7
The Policy's General Liability Coverage Form contains numerous exclusions, including a Workers’ Compensation Exclusion denying coverage for "[a]ny obligation of the insured under a workers’ compensation [or] disability benefits ... law," and an Employer's Liability Exclusion providing that the Policy does not apply to " ‘[b]odily injury’ to [ ] [a]n ‘employee’ of the insured arising out of and in the course of [ ] [e]mployment by the insured ...." Id. at 7.8 The Policy also includes a separate Employer's Liability Exclusion Endorsement that expressly deletes and replaces the Standard EL Exclusion in the Coverage Form. Id. at 66. The Endorsement changes the Policy's Standard EL Exclusion to provide that the Policy does not apply to " ‘bodily injury’ " to "[a]ny employee of any Insured arising out of or in the course of [ ] [e]mployment by any insured ...."9 Id.
Ultratec and its wholly-owned subsidiary, Ultratec HSV, operate a fireworks and pyrotechnics manufacturing facility in Owens Cross Road, Alabama. Docs. 137-1 at 2, 15-31; 138-4 at 5. A tragic explosion occurred at the facility in 2015, killing two employees of Ultratec HSV, and seriously injuring a third. Doc. 137-1 at 2-3. At the time of the explosion, the Ultratec entities operated the facility pursuant to a sublease agreement between Ultratec HSV and MST. Docs. 137-1 at 34-57; 138-4 at 4-5.
The Employees or their representatives...
To continue reading
Request your trial