Nautilus Ins. Co. v. Pro-Set Erectors, Inc.
| Decision Date | 01 March 2013 |
| Docket Number | Case No. 2:11–cv–00420–MHW. |
| Citation | 928 F.Supp.2d 1208 |
| Court | U.S. District Court — District of Idaho |
| Parties | NAUTILUS INSURANCE COMPANY, Plaintiff, v. PRO–SET ERECTORS, INC., and Idaho corporation, and Leone & Keeble, Inc., a Washington Corporation, Defendants. |
OPINION TEXT STARTS HERE
David S. Perkins, Richard L. Stubbs, Carey Perkins LLP, Kevin Alan Griffiths, Duke Scanlan & Hall, PLLC, Boise, ID, for Plaintiff.
Scott L. Poorman, Beck & Poorman, LLC, Hayden, ID, Andrew C. Bohrnsen, Law Office of Andrew C. Bohrnsen, PS, Spokane, WA, for Defendants.
Pending before the Court are a Motion for Summary Judgment (Dkt. 20) and Motionto Strike Affidavit (Dkt. 43) filed by Plaintiff Nautilus Insurance Company (“Nautilus”).1 Having considered the record, including the briefs and affidavits of the parties, and having considered the oral arguments heard on January 16, 2013, the Court will grant Nautilus' Motion for Summary Judgment. The Court will resolve the issues raised in the Motion to Strike within the analysis of the summary judgment motion rather than addressing it separately.
After considering the parties' statements of fact and their respective objections, as well as rejecting any legal conclusions or unsupported factual statements identified in the Motion to Strike, the Court finds the following facts.
This case involves a dispute about whether or not Leone & Keeble, Inc. (“L & K”) was an additional insured under a commercial general liability insurance policy issued to Pro–Set Erectors, Inc. (“Pro–Set”). In order to place the dispute in context, it is necessary to discuss the business relationship between L & K and Pro–Set, the circumstances surrounding the purported issuance of an additional insured endorsement to L & K, and the subsequent injury to one of Pro–Set's employees, Delbert Williams.
On November 10, 2006, L & K, as the general contractor, entered into a contract with the Lakeland School District to construct a building for the Twin Lakes School District (the “Lakeland project” or the “Project”) in Rathdrum, Idaho. Pl.'s Statement of Facts ¶ 1. In March of 2007, L & K entered into a subcontract with Pro–Set whereby Pro–Set agreed to provide structural steel, steel joints, and other metal fabrication for the Project. Id. ¶ 2.
Even before these events had occurred, on October 16, 2006, Pro–Set had purchased a commercial general liability insurance policy (the “Policy”) from Nautilus to cover its business operations naming Pro–Set as the primary insured and several entities as additional insureds. Id. ¶¶ 3, 4, and 11. Pro–Set had obtained this policy through the Jerry S. Carlson Insurance Agency (the “Carlson Agency”) which was located in Hayden Lake, Idaho, and described by the parties as an “insured producer” or “retail producer” or “retail agent.” Am. Compl., Ex. A, Dkt. 1–1. Affidavit of Michelle R. Nelson ¶ 4 (Dkt. 33); Affidavit of Sharon Bruce ¶ 3 (Dkt. 34). The Carlson Agency obtained the insurance policy from Nautilus' designated Idaho agent, Hull & Company.
When Pro–Set later entered into its business arrangement with L & K, it became contractually required to be insured, which it was through Nautilus, and to obtain and provide to L & K an additional insured endorsement and certificate of liability under the Policy. Pl.'s Statement of Facts ¶ 15; Nelson Aff. ¶ 3. On March 27, 2007, Michelle Nelson, Pro–Set's bookkeeper and corporate Secretary, requested the Carlson Agency to add L & K and the Lakeland School District to Pro–Set's commercial general liability policy. Nelson Aff. ¶ 5. On March 29, 2007, Ms. Nelson received from the Carlson Agency an additional insured endorsement and a certificate of liability indicating that those entities had been added as additional insureds on the Policy. Nelson Aff. ¶ 6.
In August of 2007, Delbert Williams was working for Pro–Set on the Lakeland project. He was working on scaffolding approximately40 feet from the ground when he fell and sustained various injuries. Pl.'s Statement of Facts ¶ 8. After his injuries, which were undisputedly incurred in the course of his employment on the Lakeland project, Williams filed for and received workers' compensation benefits from the State of Idaho through the coverage carried by Pay Check Connection. Jost Depo. Excerpt at 8. Pro–Set had entered into an agreement with Pay Check Connection whereby Pay Check Connection agreed to provide human resource services for Pro–Set employees, such as Delbert Williams, by issuing paychecks and providing workers' compensation coverage through the Idaho State Insurance Fund.2Jost Depo. at 6–8.
In June of 2008, Williams filed a lawsuit in the Washington Superior Court in Spokane County against general contractor L & K alleging claims of negligence. Pl.'s Statement of Facts ¶ 7. More specifically, Williams alleged he was injured because L & K had failed to take the proper steps to provide for his safety while he was working on the scaffolding during the Project. Id. ¶ 9. See Washington Compl., Dkt. 1–1 at 97–99.
L & K tendered the defense of the Washington case to Pro–Set. Both L & K and Pro–Set then tendered the defense to Nautilus on the grounds that L & K was an additional named insured under Pro–Set's Nautilus policy.3 Nautilus denied coverage on several grounds, primarily that L & K was never properly designated as additional insured under the Policy because the Carlson Agency was never authorized to issue such endorsement without approval from Nautilus' designated agent, Hull & Company. Additionally, Nautilus denied coverage based on two exclusions in the Policy. Pl.'s Statement of Facts ¶¶ 5–6. First, the Nautilus policy contains an exclusion for “Employer's Liability,” which excludes coverage for bodily injury sustained by an employee of any insured arising out of and in the course of employment by any insured or performing duties related to the conduct of any insured's business. Id. ¶ 5. Second, the Nautilus policy contains an exclusion for “Worker's Compensation and Similar Laws,” which excludes coverage for any obligation of the insured under a workers' compensation, disability benefits, or unemployment compensation law or any similar law. Id. ¶ 6.
When Nautilus filed its application to do business in the State of Idaho, it designated Hull & Company (“Hull”) of Kalispell, Montana (presumably registered to do business in the State of Idaho), as its agent. Pl.'s Statement of Facts ¶ 4. Hull, in turn, did business with insured producers such as the Carlson Agency.
Pro–Set was one of the Carlson Agency's larger commercial accounts and had been its customer for several years prior to 2006. Nelson Aff. ¶ 4; Bruce Aff. ¶ 3. Sharon Bruce, former office manager of the Carlson Agency, frequently handled requests from Pro–Set to name parties to the Nautilus policy as additional insureds. Bruce Aff. § 3. Because of Pro–Set's numerous additional insured requests, Hull provided the Carlson Agency with blank endorsement forms to complete when Pro–Set requested an additional insured endorsement. Affidavit of Jerry S. Carlson ¶ 7.
It was the Carlson Agency's “regular practice and procedure” to issue additional insured certificates and then send a copy to Hull. Bruce Aff. ¶¶ 6–7. Carlson Aff. ¶ 8. Hull never objected to the “dozens” of additional insured certificates issued by the Carlson Agency. Bruce Aff. ¶ 8; Carlson Aff. ¶ 9. However, there is no direct evidence that the additional insured endorsement and certificate of liability naming L & K were ever faxed or otherwise sent to Hull or to Nautilus.
The Carlson Agency did not have any business relationship with Nautilus. Pl.'s Statement of Facts ¶ 14. The Carlson Agency admittedly had no need or reason to communicate directly with Nautilus. Bruce Aff. ¶ 10. Additionally, Nautilus never made Carlson its designated agent in the State of Idaho, did not file a notice of appointment of the Carlson Agency with the Idaho Department of Insurance, did not authorize Carlson to act as its agent, did not have any known contact with Carlson, did not know that Carlson was holding itself out as Nautilus' agent or agree that Carlson could do so, and did not know that Carlson purported to issue additional insured endorsements or certificates of liability insurance. Pl.'s Statement of Facts ¶¶ 17–23.
As will be discussed more fully below, the Washington Superior Court dismissed Delbert Williams' action on grounds of lack of jurisdiction based on the Idaho Industrial Commission's decision to award him workers' compensation benefits. See Williams v. Leone & Keeble, Inc., 171 Wash.2d 726, 254 P.3d 818, 823 n. 6 (2011) (“Williams I ”). Alternatively, the court found that Idaho law would apply to issues raised in the tort action if the court did not lack subject matter jurisdiction barring the action. Id. The Washington Court of Appeals affirmed. However, on June 9, 2011, the Washington Supreme Court reversed and remanded to the Court of Appeals for review of the trial court's determination that Idaho law applied. Id. On September 12, 2012, the Court of Appeals ultimately determined that Washington law should be applied. See Williams v. Leone & Keeble, Inc., 170 Wash.App. 696, 285 P.3d 906 (2012) ( “Williams II ”).
Nautilus initially filed a complaint against Pro–Set and L & K in the district court of the First Judicial District of the State of Idaho in and for the County of Kootenai in 2009. See Notice of Removal, Ex. C, Kootenai County Docket, Dkt. 1–3. The case was stayed from May of 2009 through August of 2011 while the appeals worked their way through the Washington courts. Id.; Pl.'s Brief at 4. On August 8, 2011, after the Washington Supreme Court ruled that the Williams action was not barred under Washington law, Nautilus...
To continue reading
Request your trial
- Cayanan v. Citi Holdings, Inc.
- Bingham Mech., Inc. v. CNA Ins. Co.
-
WSP U.S. Inc. v. Nautilus Ins. Co.
... ... events at issue, and underlying lawsuits); Nautilus Ins ... Co. v. Pro-Set Erectors, Inc. , 928 F.Supp.2d 1208, 1218 ... (D. Idaho 2013) (Idaho law applies where named insured was ... Idaho corporation, doing ... ...
-
Chapter 6
...Hanover Insurance Co. v. Jones, 979 F. Supp.2d 1210 (D. Kan. 2013). Ninth Circuit: Nautilus Insurance Co. v. Pro-Set Erectors, Inc., 928 F. Supp.2d 1208 (D. Idaho 2013); Evanston Insurance Co. v. American Remedial Technologies International, Inc., 2010 WL 1816713 (C.D. Cal. May 3, 2010). El......