Liberty Mut. Ins. Co. v. Harco Nat'l Ins. Co.

• Decision Date: 30 December 2013
• Docket Number: Civil Action No. 3:11–CV–00460 (VLB).
• Citation: 990 F.Supp.2d 194
• Parties: LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff, v. HARCO NATIONAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Connecticut

990 F.Supp.2d 194

LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff,

v.HARCO NATIONAL INSURANCE COMPANY, Defendant.

Civil Action No. 3:11–CV–00460 (VLB).

United States District Court,

D. Connecticut.

Dec. 30, 2013.

William J. Shea, Law Offices of Turret & Rosenbaum, Wallingford, CT, for Plaintiff.

Ira S. Lipsius, Lipsius–Benhaim Law LLP, Kew Gardens, NY, Mark A. Perkins, Thomas M. Murtha, Maher & Murtha, Bridgeport, CT, for Defendant.

MEMORANDUM OF DECISION GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [Dkt. # 63] AND DENYING PLAINTIFF'S SECOND MOTION FOR SUMMARY JUDGMENT [Dkt. # 57]

VANESSA L. BRYANT, District Judge.

I. Introduction

The Plaintiff, Liberty Mutual Insurance Company (“Liberty”), brings this action against Defendant, Harco National Insurance Company (“Harco”), for reimbursement of settlement costs and fees in an underlying wrongful death action defended by Liberty. The Plaintiff has moved for summary judgment pursuant to Fed.R.Civ.P. 56, asserting that there are no issues of material fact in dispute and that the claims can be decided as a matter of law. The Defendant filed a cross motion for summary judgment on the same grounds. For the following reasons, the Plaintiff's motion for summary judgment is DENIED, and the Defendant's cross motion for summary judgment is GRANTED.

II. Background

Around April 23, 1997, Endico Potatoes, Inc. (“Endico”) entered into a lease agreement with AA Truck Renting Corporation (“AA”) for the long-term lease of a Mac tractor (“Lease Agreement”). [Dkt. # 63–2, Defendant's Statement of Undisputed Material Facts, ¶ 1]. The Lease Agreement was extended multiple times including on October 30, 1997, February 10, 1998, and May 19, 1998, each time to add additional tractors to the lease. [ Id. at ¶ 2]. In the May 1998 rider, Endico leased a 1999 Mac tractor with Vehicle Identification Number ending in 7704 (the “Tractor”) from AA. [ Id, at ¶ 3].

The Lease Agreement provided, in relevant part,

7(A) The Lessor, at its own expense, agrees to furnish and maintain for Lessee's benefit, automobile liability insurance coverage for injury, (1) for any one person injured or killed not less than $1,000,000.00.... Lessee agrees to pay any amount in excess of the aforementioned coverage....

1. The weekly fixed rental charge for the vehicles leased hereunder, may be adjusted upward to reflect (a) any change in premium rates applicable to the locality where the vehicles are principally stored based upon the latest data published by the insurance rating board, or (b) any change in premium rates attributable to the vehicles leased hereunder whether by reason of the Lessee's experience in the operation of the same, or otherwise or

2. Lessor may cause said insurance to be terminated upon 30 days' prior written notice to Lessee of its intention to do so....

If Lessor causes such insurance to be terminated, it shall have no further responsibility to provide insurance hereunder, but such termination shall in no respect alter any of the other terms and conditions of this agreement, and it shall be Lessee's obligation, at its sole cost and expense, to obtain and keep in force the insurance in accordance with the provisions of this subparagraph. If the Lessor shall cancel such insurance, the weekly fixed rental charge shall be reduced by the amount shown on Schedule “A” of this agreement or any amendment thereto.

[Dkt. # 60–2, Lease Agreement, ¶ 7]. The Lease Agreement also provided in paragraph 32

[i]n the event that Lessee elects to provide its own liability, property damage and/or fire, theft and collision coverage, the following conditions will apply. The Lessee will, at its own cost and expense, provide liability and property damage insurance in the limits set forth in paragraph 7(A) and full fire, theft and collision subject to provisions of paragraph 7(B). The insurance company must be authorized to do business in the state of New York and have the Lessor named as an additional insured and loss payee under said policy(ies).

[ Id. at ¶ 32].

AA leased the Tractor to Endico pursuant to the standard lease agreement with an attached Schedule A that stated in relevant part, “[t]he Lessee to provide liability & property damage insurance in the limits set forth in paragraph 7(A) & full fire, theft, collision & comprehensive subject to provision [sic] of paragraph 7(B) & the conditions set forth in paragraph 32 of this Agreement.” [Dkt. # 59, Plaintiff's Local Rule 56.1 Statement of Material Facts, ¶ 4; Dkt. # 60–3, Rider to Lease Agreement, p. 1]. Paul Lanciotti, AA's Controller, averred that this practice of amending the standard lease agreements by subsequent additions or strikeouts was standard. [Dkt. # 62, Deposition of Paul Lanciotti, 42:17–25]. Generally, the parties agree that Endico's lease agreements with AA always provided that the Lessee would be responsible for providing its own insurance. [Dkt. # 63–2, ¶ 3]. This was affirmed by the Lease Agreement billing documents which never listed charges for insurance premiums and stated “Insurance Provided by Lessee.” [Dkt. # 62, Lanciotti Deposition, Exhibits 5, 6, 8]. Pursuant to the Lease Agreement, therefore, Endico purchased its own insurance coverage from Liberty. [Dkt. # 63–2, ¶¶ 6–7].

Endico's policy with Liberty provided that Liberty “will pay all sums an ‘insured’ legally must pay as damages because of the 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.” [Dkt. # 58, Plaintiff's Memorandum in Support of Motion for Summary Judgment, p. 7]. The Liberty policy also provided that “[f]or any covered auto you own, this Coverage Form provides primary insurance. For any covered auto you don't own, the insurance provided by this coverage form is excess over any other collectible insurance.” [ Id.]. Subsequent to the signing of the Lease Agreement, Endico added AA as an additional insured, and all autos leased from AA to Endico were added as “leased autos.” [Dkt. # 60–6, Business Auto Insurance Auto Policy AS1–121–091034–024, Additional Insured and Loss Payee, p. 3]. The definition section for this addendum stated that “[a]ny ‘leased auto’ designated or described in the Schedule will be considered a covered ‘auto’ you own and not a covered ‘auto’ you hire or borrow. For a covered ‘auto’ that is a ‘leased auto’ Who is An Insured is changed to include as an ‘insured’ the lessor named in the Schedule.” [ Id, at p. 2].

At the same time, AA had a business auto policy with Harco which provided in relevant part:

Section II—LIABILITY COVERAGE

Coverage

We will 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”, ...

Who Is An Insured

The following are “insureds”;

a. You for any covered “auto”.

b. Anyone else while using with your permission a covered “auto” you own, hire or borrow ...

c. Anyone liable for the conduct of an “insured” described above but only to the extent of that liability.

[Dkt. # 63–2, ¶ 14]. “Covered Auto” is later defined to include “lease and rental units per schedule on file with the company.” [ Id, at ¶ 17]. The Harco policy also contained an endorsement titled “Leasing or Rental Concerns—Contingent Coverage” (the “Endorsement”). [ Id, at ¶ 18]. The Endorsement modified the underlying contract in several facets, but was limited to applying when “the ‘lease or rental agreement’ in effect at the time of an ‘ accident’ specifies that the lessee or rentee is responsible for providing primary liability insurance or primary physical damage insurance.” [ Id.]. It further stated that “[c]overage is not provided for ‘autos' included on the ‘lease and/or rental receipts report’ showing ‘No Insurance’....” [ Id.]. Under this Endorsement,

liability insurance and any required no-fault, uninsured motorist and underinsured motorist insurance provided by the policy for a covered ‘auto’ which is a ‘leased auto’ or ‘rented auto’ applies subject to the following provisions:

1. At the time of an accident the insurance or indemnity as required in the “lease or rental agreement” is not collectible....

4. The insurance provided by this endorsement does not apply if any other insurance is collectible.

5. The insurance provided by this endorsement does not apply as excess insurance to any other policy.

[Dkt. # 60–9, Business Automobile Insurance Policy, LR–0005278 03, Leasing or Rental Concerns—Contingent Coverage, pp. 1–2]. The definitions section of the Endorsement stated that “[l]eased auto' means an ‘auto’ you lease to a customer (lessee) for one year or more, including any substitute or extra ‘auto’ you provide under a lease agreement where the lessee is providing primary insurance for you.” [ Id. at 2]. It is undisputed that the Lease Agreement met this definition.

While the above policies and contracts were in effect, on March 2, 2005, Prentice Borden, an employee of Endico, was operating the Tractor when he was involved in a vehicular collision with James Braaten on Interstate 95 in Orange, Connecticut. [Dkt. # 59, ¶ 6]. As a result of the accident, Braaten died, and his estate commenced a lawsuit against Borden, Endico, and AA seeking to recover damages for the wrongful death. [ Id, at ¶¶ 7–8]. Pursuant to its insurance policy with Endico, Liberty defended the lawsuit and settled the wrongful death claim in the amount of $1.2 million. [ Id. at ¶ 9]. Liberty now seeks contribution for the settlement costs from Harco.

III. Legal Standard

Summary judgment should be granted “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(a). The moving party bears the burden of proving that no factual issues exist. Vivenzio v. City of Syracuse, 611 F.3d 98, 106 (2d...