Lincoln Elec. Co. v. St. Paul Fire and Marine Ins.
| Decision Date | 03 February 1998 |
| Docket Number | No. 96-CV-0537.,96-CV-0537. |
| Parties | The LINCOLN ELECTRIC COMPANY, Plaintiff, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, et al., Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
Robert S. Walker, Brian F. Toohey, Stephan Isaiah Voudris, Mark J. Andreini, Jones, Day, Reavis & Pogue, Cleveland, Michael H. Ginsberg, Peter D. Laun, Jones, Day, Reavis & Pogue, Pittsburgh, PA, for Plaintiff.
James C. Zacharski, Bethany K. Culp, Thomas P. Kane, Elliot M. Flies, Oppenheimer, Wolff & Donnelly, St. Paul, MN, for Defendants.
On August 1, 1997, Defendants St. Paul Fire and Marine Insurance Co. and The St. Paul Companies, Inc. (collectively "St. Paul"), filed a motion for partial summary judgment against Plaintiff Lincoln Electric Company [Doc. 131]. The Plaintiff filed its opposition on August 29, 1997 [Doc. 140]. In their motion, Defendants ask the Court to construe certain language relating to insurance policy deductibles as set forth in a "$25,000.00 Deductible Agreement" entered by the parties herein for the years 1979 through 1985. For the reasons that follow, the Court denies Defendants' motion for partial summary judgment.
Plaintiff Lincoln Electric manufactures welding products. From approximately 1973 to 1995, St. Paul issued to Lincoln Electric primary general liability insurance policies, which included product liability coverage. Beginning in the early 1970s, Lincoln Electric was named as a defendant in lawsuits throughout the country whereby plaintiffs alleged injury resulting from long-term exposure to fumes generated by welding products manufactured by Lincoln.1 By the mid-1970s, both St. Paul and Lincoln expressed concern about Lincoln's potential exposure on these claims.
For the period 1973 to 1979, Lincoln's insurance policies with St. Paul required Lincoln to pay a $5,000 per claim deductible. However, in 1979, St. Paul offered to renew Lincoln's coverage only if Lincoln agreed to increase its share of the risk associated with claims presented to St. Paul on or after August 1, 1979. The parties memorialized renewal of Lincoln's coverage on this basis in the "Deductible Agreement" endorsements presently at issue.
The "$25,000 Deductible Agreement" at issue reads as follows:
In consideration of the Company agreeing to provide coverage to the Insured for this policy period, the Insured agrees to pay the following for:
Bodily injury liability arising ...$25,000 deductible
out of inhalation of toxic per claim applicable
chemicals, including, but not to the payment of the
limited to fumes and gases, claim and allocated
which are caused from welding claims expense
products manufactured, sold, Allocated claims
handled, or distributed by the expense shall not
insured or the insured's include any expenses
vendors on any and all claims incurred by Insured
first presented to the Company except as agreed to
on or after August 1, 1979, by the Company
regardless of when the claim
first arose
Under the agreement, the Defendants argue for construing the terms strictly so to require Lincoln Electric to pay a $25,000 deductible on all welding fumes claims presented on or after August 1, 1979, "regardless of when the claim first arose." In this regard, Defendants St. Paul say that they intended the agreement to have retroactive effect, thus effectively trumping any previously existing policy deductible created under an earlier (pre-1979) policy.
Plaintiff Lincoln Electric disagrees, contending that the Defendants' position does not properly reflect the parties' intentions or understanding of the agreement when they entered into it in 1979. Rather, Lincoln Electric argues that the "$25,000 Deductible Agreement" requires it only to pay the higher $25,000 deductible on any claim filed on or after August 1, 1979. In this respect, Plaintiff maintains the previously existing insurance policies (such as the 1973-1979 $5,000 deductible policies) are not subject to the "$25,000 Deductible Agreement."2
The Defendants say they are entitled to partial summary judgment for the following reasons: (1) in 1979, Plaintiff Lincoln Electric and St. Paul Fire and Marine Insurance Co. entered a binding and independent insurance agreement which obligated Lincoln to pay a $25,000 deductible for each welding fumes claim first presented to St. Paul on or after August 1, 1979; (2) this "specifically negotiated agreement" was independent from the standard terms and conditions of the policies previously issued by St. Paul to Lincoln Electric; (3) the "$25,000 Deductible Agreement was attached to each insurance policy that St. Paul to Lincoln from August 1, 1979 through August 1, 1985"; (4) the plain language of the agreement is explicit and clearly mandates that any welding claim, regardless of when the claim arose, is subject to the $25,000 deductible if presented to St. Paul after August 1, 1979, and until August 1, 1985, when such claims became subject to a $50,000 deductible; and (5) that the terms of the Deductible Agreement require Plaintiff Lincoln Electric to pay the $25,000 deductible with respect to each individual person's claim.
Defendant St. Paul Fire and Marine Insurance Company further says that it, and not The St. Paul Companies, Inc., is the issuer of the policies here at issue. As such, Defendants contend that The St. Paul Companies, Inc. is not a proper party defendant.3
Fed.R.Civ.P. 56(c) states the procedure for granting summary judgment and says in pertinent part:
[t]he judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
In considering a motion for summary judgment, the court must view the facts and all inferences to be drawn therefrom in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); 60 Ivy Street Corp. v. Alexander, 822 F.2d 1432, 1435 (1987); SEC v. Blavin, 760 F.2d 706, 710 (6th Cir.1985). The moving party has the burden of showing conclusively that no genuine issue of material fact exists. 60 Ivy Street Corp., 822 F.2d at 1435. Not every factual dispute between the parties will prevent summary judgment. Rather, the disputed facts must be material. They must be facts which, under the substantive law governing the issue, might affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).4
The dispute must also be genuine. The facts must be such that if they were proven at trial a reasonable jury could return a verdict for the non-moving party. Id. 477 U.S. at 248. The disputed issue does not have to be resolved conclusively in favor of the non-moving party, but that party is required to present some significant probative evidence which makes it necessary to resolve the parties' differing versions of the dispute at trial. 60 Ivy Street, 822 F.2d at 1435 (citing First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)). See also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
Thus, the judge's function at the point of summary judgment is limited to determining whether sufficient evidence has been presented to make the issue a proper jury question, and not to judge the evidence and make findings of fact.5
The Sixth Circuit has clearly held firm to the traditional rules of construction when interpreting insurance contracts. When interpreting the plain meaning of an insurance contract or policy, "the contract should be read as a whole and each word given its appropriate meaning." Burdett Oxygen Co. v. Employers Surplus Lines Ins. Co., 419 F.2d 247, 249 (6th Cir.1969).6 Furthermore, a court "must adopt the construction of the insurance contract which most nearly corresponds with the intention of the parties as ascertained from the words employed by them in their plain, ordinary and usual meaning." River Servs. Co. v. Hartford Accident and Indem. Co., 449 F.Supp. 622, 626 (N.D.Ohio 1977) (citing Essex House v. St. Paul Fire & Marine Ins. Co., 404 F.Supp. 978 (S.D.Ohio 1975)). It is a well-recognized rule of construction that the terms of an insurance policy shall be construed in the plain, ordinary, and popular sense of the language and words used. It is implicit in this rule of construction that a court should not read ambiguity, doubt, and equivocation into words of common meaning and understanding. Elston-Richards Storage Co. v. Indemnity Ins. Co. of North America, 194 F.Supp. 673, 679 (W.D.Mich. 1960). See also Bergholm v. Peoria Life Ins. Co., 284 U.S. 489, 492, 52 S.Ct. 230, 76 L.Ed. 416 (1932); Sterneck v. Equitable Life Ins. Co. of Iowa, 237 F.2d 626, 629 (8th Cir.1956).
It is also well-recognized that in cases of ambiguity or doubt as to the meaning of language used in an insurance policy, as is the case here, the contract should be construed to the favor of the insured, and that exceptions to the liability provided for in the policy are to be construed against the insurer. Elston-Richards, 194 F.Supp. at 679 (citing Aschenbrenner v. United States Fidelity & Guaranty Co., 292 U.S. 80, 85, 54 S.Ct. 590, 78 L.Ed. 1137 (1934)); Fireman's Fund Insurance Company of San Francisco v. Hanley, 252 F.2d 780, 785-86 (6th Cir. 1958).
The rules of construction under Ohio law are similar. In Ohio, insurance contracts must be construed under the same rules as other written contracts. Affiliated FM Ins. Co. v. Owens-Corning Fiberglas Corp., No. 3:96CV7594, 1992 WL 404399 (N.D.Ohio, Sept.17,...
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