Nat'l Indep. Truckers Ins. Co. v. Gadway

• Decision Date: 12 March 2012
• Docket Number: No. 8:10–CV–253.,8:10–CV–253.
• Parties: NATIONAL INDEPENDENT TRUCKERS INS. CO., Plaintiff, v. Kelly GADWAY and Bruce W. Larson, Defendants.
• Court: U.S. District Court — District of Nebraska

860 F.Supp.2d 946

NATIONAL INDEPENDENT TRUCKERS INS. CO., Plaintiff,
v.
Kelly GADWAY and Bruce W. Larson, Defendants.

No. 8:10–CV–253.

United States District Court,
D. Nebraska.

March 12, 2012.

[860 F.Supp.2d 948]

Mary M. Schott, William H. Selde, Sodoro, Daly Law Firm, Omaha, NE, for Plaintiff.

Kelly Gadway, Omaha, NE, pro se.

Bruce W. Larson, Grand Island, NE, pro se.

MEMORANDUM AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT AND MOTION TO DISMISS COUNTERCLAIM
JOHN M. GERRARD, District Judge.

This matter is before the Court on three motions filed by the plaintiff, National Independent Truckers Ins. Co. (hereinafter, National): a motion for summary judgment as to one defendant, Bruce W. Larson (filing 85); a motion for summary judgment as to the other defendant, Kelly Gadway (filing 90); and a motion to dismiss Gadway's counterclaim (filing 53) with prejudice (filing 92). National's motions are denied as set forth in this memorandum and order.

I. BACKGROUND

The underlying events of this case are essentially undisputed. Gadway, an over-the-road trucker, filed an application with National, a New Jersey insurance company, for commercial insurance coverage. See filing 1 at 1, filing 1–1. Gadway was the sole proprietor of his trucking operation, and Larson was his employee. See, filing 1 at 2; filing 1–2 at 26; filing 81–2 at 4; filing 95–3 at 9. The policy was to cover two Peterbilt tractors: one garaged in Hershey, Nebraska, where Gadway lived, and the other garaged in Tucson, Arizona, where Larson lived. See filing 1–1 at 5, 7. The drivers reported for the policy were Gadway and Larson. See, filing 1–1 at 7; filing 1–2 at 21.

A “Supplemental Questionnaire” attached to the policy instructed Gadway to list the date, place, driver, and description for “all accidents, regardless of fault, that occurred during the past 5 years involving the applicant and any person who will be listed as a driver.” Filing 1–2 at 33. Gadway wrote “none” on the form, and signed and dated it on January 15, 2009. Filing 1–2 at 33.

Gadway had, however, been involved in an automobile accident in Ohio on September 2, 2008. See filing 95–5. The Toledo Police Division Traffic Crash Report establishes that Gadway's tractor-trailer had attempted a right turn from the center westbound lane of a five-lane divided street, despite being in a straight-only lane. See filing 95–5 at 3. Gadway's tractor-trailer struck a passenger vehicle that had been stopped in the right lane. See filing 95–5 at 3. Gadway was cited for a traffic violation. See, filing 95–4; filing 95–5 at 1; see also, Toledo, Ohio Municipal Code § 331.09(a) (2011); Ohio Revised Code § 4511.33 (2004). After initially failing to appear, Gadway pled guilty in Toledo Municipal Court on October 10 and was sentenced to fines and costs. See filing 95–4.

The evidence establishes that had National been informed of the Ohio accident, the policy for which Gadway applied would not have been issued. National's underwriting guidelines for the policy at issue provide that an applicant must have no at-fault accidents within the 3–year period preceding the application; if an accident is

[860 F.Supp.2d 949]

listed on the applicant's driving record, a copy of the police report must be submitted. See filing 95–6 at 1. And Michael Poller, a principal in National, averred that had National been informed of the Toledo accident, it would not have issued the policy to Gadway. See filing 95–6.

Nonetheless, the policy was issued effective January 16, 2009. See filing 1–1 at 1. An MCS–90 endorsement was attached to the policy.¹ Larson was involved in a multiple-vehicle accident in Denton, Maryland on May 23. See, filing 81–2 at 4; filing 95–3 at 9. National canceled the policy on June 15. See, filing 1 at 3; filing 53 at 1. Then, National filed a complaint (filing 1) against Gadway and Larson in this court on July 8, 2010, seeking declaratory relief with respect to National's liability under the policy for the Maryland accident. Generally, National alleged that Gadway's failure to disclose the Ohio accident was a material misrepresentation entitling National to rescission of the policy, and sought a declaration that National has no duty to defend or indemnify the defendants for claims made against them relating to the Maryland accident. See filing 1.

Larson has made no appearance in this case, and Gadway is appearing pro se. As a result, the pleading and discovery stages of this proceeding have not passed without complication. As pertinent, Gadway filed a “Brief for Evidence” and “Supporting Brief” (filing 46) which were construed by the Magistrate Judge as Gadway's answer to the complaint. See filing 55. Gadway then filed a “Motion for Relief from Court Concerning Lack of Sufficient Premium Refund” (filing 53) which the Magistrate Judge construed as a counterclaim for refund of premiums paid before cancellation of the policy. See filing 55.

National served requests for admissions, pursuant to Fed. R. Civ. Pro. 36, on both Gadway and Larson. Larson did not respond. See filing 71–1. Gadway responded (filing 73), although he did not always clearly admit or deny the matters National asked him to admit; his responses can be fairly characterized as admitting most of the material facts that have been alleged, but offering his own interpretation of many of them. See filing 73. National moved the Court to deem each of its requests for admissions to have been admitted; the Magistrate Judge granted the motion with respect to Larson, but denied the motion with respect to Gadway. See filings 74 and 83.

Finally, National filed the motions for summary judgment and to dismiss counterclaim that are the subject of this memorandum and order. See filings 85, 90, and 92. Neither defendant filed a brief in opposition, so National's motions are now ripe for disposition.

II. ANALYSIS

The Court's analysis begins with some well-established propositions. 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. SeeFed.R.Civ.P. 56(c)(2). The movant bears the initial responsibility of informing the Court of the basis for the motion, and must identify those portions of the record which the movant believes demonstrate the absence of a genuine issue of material fact. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir.2011) (en banc). If the movant does so, the

[860 F.Supp.2d 950]

nonmovant must respond by submitting evidentiary materials that set out specific facts showing that there is a genuine issue for trial. Id.

On a motion for summary judgment, facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts. Id. Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the evidence are jury functions, not those of a judge. Id. But the nonmovant must do more than simply show that there is some metaphysical doubt as to the material facts. Id. In order to show that disputed facts are material, the party opposing summary judgment must cite to the relevant substantive law in identifying facts that might affect the outcome of the suit. Quinn v. St. Louis County, 653 F.3d 745, 751 (8th Cir.2011). The mere existence of a scintilla of evidence in support of the nonmovant's position will be insufficient; there must be evidence on which the jury could conceivably find for the nonmovant. Barber v. C1 Truck Driver Training, LLC, 656 F.3d 782, 791–92 (8th Cir.2011). Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial. Torgerson, supra, 643 F.3d at 1042.

Rule 56 also allows the Court to grant summary judgment as to some issues but not as to others. SeeFed.R.Civ.P. 56(a). Upon doing so, the Court may “enter an order stating any material fact—including an item of damages or other relief—that is not genuinely in dispute,” and thereby treat such a fact “as established in the case.” Fed.R.Civ.P. 56(g). And after giving notice and a reasonable time to respond, the Court may take other actions dictated by its findings—it may grant summary judgment for a nonmovant, grant the motion on grounds not raised by a party, or consider summary judgment on its own after identifying for the parties material facts that may not be genuinely in dispute. SeeFed.R.Civ.P. 56(f).

1. Motion for Summary Judgment as to Gadway

The Court begins with National's motion for summary judgment as to Gadway, because that motion presents most of the substantive issues that will be important to disposing of National's other motions. This analysis is controlled by Nebraska's substantive law.² The initial question is whether, under Nebraska law, National is entitled to rescission of the policy. Beyond that, however, the questions are whether such rescission entitles National to disclaim liability for losses that had already occurred before the policy was cancelled, and what effect such rescission would have on the MCS–90 endorsement attached to the policy.

(a) Rescission

Under Nebraska law, National's claim is for equitable rescission based upon fraud in the inducement. See, generally, Gonzalez v. Union Pacific R.R. Co., 282 Neb. 47, 803 N.W.2d 424 (2011). Fraud in the inducement goes to the means used to induce a party to enter into a contract. The contract may be voidable if the party's consent was obtained by false representations—for instance, as to the nature and value of the consideration, or other material

[860 F.Supp.2d 951]

matters. Id. at 442. But no oral or written misrepresentation made in the negotiation for a contract or policy of insurance by the insured, or in his behalf, shall be deemed material or defeat or avoid the policy, or prevent its attaching, unless any such misrepresentation or warranty...