Phila. Indem. Ins. Co. v. Fedex Freight, Inc.

Decision Date08 November 2017
Docket NumberNo. 2:16–cv–02600–cgc,2:16–cv–02600–cgc
Citation297 F.Supp.3d 795
Parties PHILADELPHIA INDEMNITY INSURANCE COMPANY, Plaintiff/Counter–Defendant v. FEDEX FREIGHT, INC., David F. Rickman, Defendants/Counter–Plaintiffs Maggie Shorter, and David Shorter, Defendants.
CourtU.S. District Court — Western District of Tennessee



Before the Court are Plaintiff/Counter–Defendant Philadelphia Indemnity Insurance Company's ("Philadelphia") Motion for Summary Judgment (Docket Entry "D.E." # 34) and Defendants/Counter–Plaintiffs FedEx Freight, Inc. ("FedEx Freight") and David F. Rickman's ("Rickman") Motion for Summary Judgment (D.E. # 36). The parties have consented to the jurisdiction of the United States Magistrate Judge. (D.E. # 33). For the reasons set forth herein, Philadelphia's Motion for Summary Judgment is GRANTED and FedEx Freight and Rickman's Motion for Summary Judgment is DENIED.

I. Background and Findings of Fact

The underlying action arises was filed by Defendants Maggie Shorter and David Shorter in Tennessee state court against FedEx Freight and Rickman ("State Complaint"). (D.E. # 1–1). The State Complaint alleges that, on or about July 8, 2015, Mrs. Shorter was working as a security guard for Universal Protection Service, LLC ("Universal") at a FedEx Freight facility located at 461 Winchester Road in Memphis, Tennessee. (State Compl. ¶ 3) The State Complaint alleges that Mrs. Shorter sustained severe and permanent injuries, including the amputation of her right leg from the knee down and the permanent disfigurement of her left leg, after being struck by a FedEx Freight vehicle operated by Rickman. (State Compl. ¶¶ 6, 10). The State Complaint alleges that Ms. Shorter's injuries were proximately caused by Rickman's negligent operation of the FedEx Freight vehicle. (State Compl. ¶ 10). The State Complaint alleges that FedEx Freight is vicariously liable for Rickman's negligence under the doctrine of respondent superior. (State Compl. ¶ 6).

After the State Complaint was filed, FedEx Freight and Rickman tendered the Shorters' suit to Philadelphia and demanded a defense and indemnification. Philadelphia refused asserting that the Policy did not cover either. On July 20, 2016, Philadelphia filed a Complaint for Declaratory Judgment ("Complaint") in this Court pursuant to 28 U.S.C. §§ 2201 – 2202 and Rule 57 of the Federal Rules of Civil Procedure (D.E. # 1). FedEx Freight and Rickman then filed a Counter–Complaint under 28 U.S.C. § 2201 and Rule 57 for Declaratory Judgment (D.E. # 22). The Complaint alleges that, prior to the incident complained of in the State Complaint, on or about November 2013, FedEx Freight and Universal entered into a General Guard Security Agreement ("Agreement"). (Agreement, filed at D.E. # 1–2, at 1, 9). Under the Agreement, Universal agreed to provide security services for FedEx Freight facilities throughout the United States. (Agreement at 1). Section 9 of the Agreement, entitled "Indemnification," provides as follows:

Section 9. Indemnification. [Universal] agrees to indemnify, defend and hold harmless FedEx [Freight], its directors, officers, and employees from any and all liabilities, damages, losses, expenses, demands, claims, suits, or judgments, including reasonable attorneys' fees and expenses, to the extent resulting from [Universal]'s negligence or willful misconduct in the performance of its obligations under this Agreement, including, but not limited to any claim for payment by a subcontractor, agent, or employee of [Universal]. [Universal]'s obligation to so indemnify, defend and hold harmless FedEx [Freight] shall survive the expiration or earlier termination of this Agreement.

(Agreement at 3–4).

Additionally, the Agreement provides that Universal shall "maintain Commercial General Liability insurance for bodily injury, and property damage, including contractual liability, products and completed operations; Broad Form Property Damage; Workers Compensation at statutory limits; Employers Liability Insurance; Personal Injury insurance, and Commercial Liability insurance if operating automotive vehicles as set out in attached Exhibit C." (Agreement at 4, § 10).

Exhibit A to the Agreement provides the Security Guard Responsibilities. (Agreement at 13). Of central importance to the instant case, the Agreement provides in Paragraph 19 as follows: "For Safety reasons do not walk between double trailers unless Tractor is "shut off and parking brake is applied. ALL units exiting service center will stop to allow Security Officer to verify equipment information, record the tractor, trailer(s) and dolly numbers for units exiting truck gate on truck registration log." (Exh. A. at 13). Exhibit C to the Agreement further provides, in pertinent part, as follows:

(c) Commercial Automobile Liability Insurance covering [Universal]'s owned, and non-owned and hire vehicles, naming FedEx [Freight] and affiliated companies, and their respective officers, directors, and employees as additional insured, as their interests may appear under the terms of this Agreement, including bodily injury and property damage endorsements, with a combined single limit of not less than $1,000,000.00.

(Agreement at Exh. C).

Further, in order to comply with their requirements under the Agreement, Universal procured a policy of insurance from Philadelphia bearing the policy number PHPK1224836 ("Policy"), which provided commercial auto insurance coverage for a policy period of September 1, 2014 to September 1, 2015. (D.E. # 1–3). There is no dispute that the Policy was in full force on or about July 8, 2015 when Mrs. Shorter sustained injuries after being struck by the FedEx Freight truck. (Id. ) The Policy issued by Philadelphia to Universal consists of the Business Auto Declarations and the Business Auto Coverage Form. (Id. ). The Policy states, in pertinent part:

A. 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".
We have the right and duty to defend any "insured" against a "suit" asking for such damages or a "covered pollution cost or expense." However, we have no duty to defend any "insured" against a "suit" seeking damages for "bodily injury" or "property damage" or a "covered pollution cost or expense" to which this insurance does not apply. We may investigate and settle any claim or "suit" as we consider appropriate. Our duty to defend or settle ends when the Liability Coverage Limit of Insurance has been exhausted by payment of judgments or settlements.
1. 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 except:
(1) The owner or anyone else from whom you hire or borrow a covered "auto".
This exception does not apply if the covered "auto" is a "trailer" connected to a covered "auto" you own.
(2) Your "employee" if the covered "auto" is owned by that "employee" or a member of his or her household.
(3) Someone using a covered "auto" while he or she is working in a business of selling, servicing, repairing, parking or storing "autos" unless that business is yours.
(4) Anyone other than your "employees", partners (if you are a partnership), members (if you are a limited liability company) or a lessee or borrower or any of their "employees", while moving property to or from a covered "auto".
(5) A partner (if you are a partnership) or a member (if you are a limited liability company) for a covered "auto" owned by him or her or a member of his or her household.
c. Anyone liable for the conduct of an "insured" described above but only to the extent of that liability.
B. Exclusions
The insurance does not apply to any of the following:
2. Contractual
Liability assumed under any contract or agreement.
But this exclusion does not apply to liability for damages:
a. Assumed in a contract or agreement that is an "insured contract" provided the "bodily injury" or "property damage" occurs subsequent to the execution of the contract or agreement; or
b. That the "insured" would have in the absence of the contract or agreement.
4. Employee Indemnification And Employer's Liability
"Bodily injury" to:
a. An "employee" of the "insured" arising out of and in the course of:
(1) Employment by the "insured"; or
(2) Performing the duties related to the conduct of the "insured's" business; or
This exclusion applies:
(1) Whether the "insured" may be liable as an employer or in any other capacity; and
(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.
But this exclusion does not apply to "bodily injury" to domestic "employees" not entitled to workers' compensation benefits or to liability assumed by the "insured" under an "insured contract." For the purposes of the Coverage Form, a domestic "employee" is a person engaged in household or domestic work performed principally in connection with a residence premises.
SECTION V—Definitions
A. "Accident" includes continuous or repeated exposure to the same conditions resulting in "bodily injury" or "property damage".
B. "Auto" means:
1. A land motor vehicle, "trailer" or semitrailer designed for travel on public roads; or
2. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged.
However, "auto" does not include "mobile equipment".
C. "Bodily injury" means bodily injury, sickness or disease sustained by a person including death resulting from any of these.

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