Norfolk S. Ry. Co. v. Nat'l Union Fire Ins. of Pittsburgh
| Decision Date | 26 February 2014 |
| Docket Number | Civil Action No. 2:12–cv–05183. |
| Citation | 999 F.Supp.2d 906 |
| Court | U.S. District Court — Southern District of West Virginia |
| Parties | NORFOLK SOUTHERN RAILWAY COMPANY, Plaintiff, v. NATIONAL UNION FIRE INSURANCE OF PITTSBURGH, PA, et al., Defendants. |
Donald R. McMinn, John M. McNulty, Stephen A. Klein, Hollingsworth, Washington, DC, Nicholas S. Preservati, Charleston, WV, for Plaintiff.
Bryan P. Vezey, Joseph A. Ziemianski, Cozen O'Connor, Houston, TX, Charles R. Steele, Steele Law Offices, Clarksburg, WV, Christopher A. Wadley, Garret E. Glass, Robert P. Arnold, Walker Wilcox Matousek, Chicago, IL, for Defendants.
Pending before the court are Norfolk Southern Railway Company's Motion for Partial Summary Judgment [Docket 71] and Westchester Fire Insurance Company's Cross–Motion for Partial Summary Judgment [Docket 76]. For the reasons stated below, Norfolk Southern Railway Company's motion [Docket 71] is GRANTED and Westchester Fire Insurance Company's motion [Docket 76] is DENIED without prejudice with respect to Norfolk Southern's bad faith claim and DENIED otherwise.
The plaintiff, Norfolk Southern Railway Company (“Norfolk Southern”), filed this lawsuit seeking coverage as an additional insured for damages resulting from a railroad derailment. Norfolk Southern alleges that it is an additional insured under a policy issued by Westchester Fire Insurance Company (“Westchester”).
The following facts are undisputed. On July 21, 2009, employees of Norfolk Southern and Cobra Natural Resources, LLC, (“Cobra”) were positioning a train under a coal loading facility (the “loadout”) in order to fill rail cars with coal. As the train passed under the loadout, a Cobra employee noticed that Cobra's scanning device was not properly scanning rail cars. Cobra's loadout operator asked that Norfolk Southern pull the train clear of the loadout and then return it so the cars could be rescanned. As the train was backed through the loadout, a rail broke, derailing several cars (the “derailment”). One of the derailed cars struck the loadout's support beams, causing the loadout to collapse.
Several lawsuits were filed against Norfolk Southern for damages sustained during the derailment and loadout collapse. Norfolk Southern contends that it incurred substantial liability as a result of these lawsuits. Norfolk Southern accordingly brought this lawsuit, alleging, among other things, that it should be indemnified under an insurance policy issued by Westchester, policy number G21979727004 (the “Westchester policy”).
In its motion for summary judgment, Norfolk Southern contends that the Westchester policy, obtained by Alpha Natural Resources, Inc., (“Alpha”) for Cobra, includes Norfolk Southern as an additional insured and covers Norfolk Southern for its liability arising out of the derailment. Conversely, Westchester argues that Norfolk Southern is not an additional insured, and even if Norfolk Southern was an additional insured, the Westchester policy does not cover Norfolk Southern's liability arising out of the derailment.
Westchester also moves for summary judgment on a portion of the allegations that make up Norfolk Southern's bad faith claim. Norfolk Southern alleges in its Amended Complaint that Westchester breached an implied covenant of good faith and fair dealing by, among other things, violating “the public policy prohibition against subrogation against one's own insured and its duty to act in its insured's best interest.” (Am. Compl. for Damages and Equitable Relief [Docket 60] ¶ 301). The complaint continues that “[u]pon information and belief, Westchester paid some or all of Cobra's damages allegedly arising from the Derailment and then sought to recover such payments from its insured Norfolk Southern through the Cobra Action [a suit brought by Cobra against Norfolk Southern in the Circuit Court of Mingo County, West Virginia], while at the same time wrongfully denying the existence of that insurance relationship.” (Id. ).
To obtain summary judgment, the moving party must show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). In considering a motion for summary judgment, the court will not “weigh the evidence and determine the truth of the matter.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Instead, the court will draw any permissible inference from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587–88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
Although the court will view all underlying facts and inferences in the light most favorable to the nonmoving party, the nonmoving party nonetheless must offer some “concrete evidence from which a reasonable juror could return a verdict in his [or her] favor.” Anderson, 477 U.S. at 256, 106 S.Ct. 2505. Summary judgment is appropriate when the nonmoving party has the burden of proof on an essential element of his or her case and does not make, after adequate time for discovery, a showing sufficient to establish that element. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The nonmoving party must satisfy this burden of proof by offering more than a mere “scintilla of evidence” in support of his or her position. Anderson, 477 U.S. at 252, 106 S.Ct. 2505. Likewise, conclusory allegations or unsupported speculation, without more, are insufficient to preclude the granting of a summary judgment motion. See Felty v. Graves–Humphreys Co., 818 F.2d 1126, 1128 (4th Cir.1987) ; Ross v. Comm'ns Satellite Corp., 759 F.2d 355, 365 (4th Cir.1985), abrogated on other grounds by Price Waterhouse v. Hopkins, 490 U.S. 228, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989).
As I have previously decided, West Virginia law applies to the insurance policies at issue in this litigation. (See Mem. Op. & Order [Docket 56] ). In West Virginia, “[d]etermination of the proper coverage of an insurance contract when the facts are not in dispute is a question of law.” Marlin v. Wetzel Cnty. Bd. of Educ., 212 W.Va. 215, 569 S.E.2d 462, 464 (2002). “Language in an insurance policy should be given its plain, ordinary meaning.” Syl. Pt. 1, Mylan Labs., Inc. v. Am. Motorists Ins. Co., 226 W.Va. 307, 700 S.E.2d 518, 520 (2010) . “Where the provisions of an insurance policy contract are clear and unambiguous they are not subject to judicial construction or interpretation, but full effect will be given to the plain meaning intended.” Syl. Pt. 2, W. Va. Fire & Cas. Co. v. Stanley, 216 W.Va. 40, 602 S.E.2d 483, 486 (2004). However, when “the language of an insurance policy provision is reasonably susceptible of two different meanings or is of such doubtful meaning that reasonable minds might be uncertain or disagree as to its meaning, it is ambiguous.” Syl. Pt. 3, id. When an insurance provision is ambiguous, “it is construed against the drafter, especially when dealing with exceptions and words of limitation.” Boggs v. Camden–Clark Mem'l Hosp. Corp., 225 W.Va. 300, 693 S.E.2d 53, 58 (2010) (quoting Payne v. Weston, 195 W.Va. 502, 466 S.E.2d 161, 166 (1995) ).
Norfolk Southern and Westchester each move for summary judgment on the issue of whether Norfolk Southern is an additional insured under Westchester's policy.
Cobra, through its parent company, Alpha, obtained the Westchester policy pursuant to a 2008 lease agreement (the “2008 Lease Agreement”) between Cobra and Norfolk Southern. Under that agreement, Norfolk Southern leased to Cobra property at Ben Creek Spur to construct the loadout. Further, Cobra agreed to purchase liability insurance. In relevant part, the agreement read:
Tenant [Cobra] shall procure and maintain, at all times and at its expense, in a form and with an insurance company acceptable to Landlord [Norfolk Southern], Commercial General Liability Insurance for the Premises. Such coverage shall (a) have a single limit of not less than $2,000,000 for each occurrence (or such greater amount over time so as to be commercially reasonable) and shall provide for a deductible of not more than $5,000.00, (b) cover Tenant's contractual liability hereunder, (c) cover Tenant and Landlord for liability arising out of work performed by any third parties for Tenant in or about the Premises, (d) name the Landlord Entities as additional insureds, and (e) be considered primary and noncontributory, regardless of any insurance carried by Landlord.
(2008 Lease Agreement [Docket 76–4] ¶ 21). Norfolk Southern contends that the 2008 Lease Agreement obligated Cobra to maintain general liability insurance that named Norfolk Southern as an additional insured. Cobra obtained a primary insurance policy from National Union Fire Insurance of Pittsburgh, PA (“National Union”) with a limit of $2 million and an umbrella policy with a limit of $10 million from Westchester that sat above the National Union policy. (See Westchester's Mem. in Supp. of its Cross–Mot. for Partial Summ. J. [Docket 77], at 3).
The issue here is whether Norfolk Southern is an additional insured under the Westchester policy. That policy stated that it covered Alpha and its subsidiaries (Cobra), as well as:
(a) any person, organization, trustee or estate that has obligated you by written contract to provide the insurance that is afforded by this policy, but only with respect to liability arising out of “Your Work”, “Your...
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