St. Paul Fire & Marine Ins. Co. v. Schilli Transp. Servs. Inc.

• Decision Date: 13 February 2012
• Docket Number: No. 11–2307.,11–2307.
• Parties: ST. PAUL FIRE & MARINE INSURANCE COMPANY, Plaintiff–Appellee, v. SCHILLI TRANSPORTATION SERVICES INC., Atlantic Inland Carriers, Inc. and WVT of Texas, Inc., Defendants–Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

672 F.3d 451

ST. PAUL FIRE & MARINE INSURANCE COMPANY, Plaintiff–Appellee,

v.SCHILLI TRANSPORTATION SERVICES INC., Atlantic Inland Carriers, Inc. and WVT of Texas, Inc., Defendants–Appellants.

No. 11–2307.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 26, 2011.Decided Feb. 13, 2012.

James H. Austen (argued), Attorney, Starr, Austen & Miller, LLP, Logansport, IN, for Plaintiff–Appellee.

Gregg S. Theobald, Attorney, Jerome L. Withered (argued), Attorney, Withered Burns & Persin, Lafayette, IN, for Defendants–Appellants.

Before RIPPLE and HAMILTON, Circuit Judges, and MYERSCOUGH, District Judge.^*MYERSCOUGH, District Judge.

In this diversity action, the district court granted summary judgment in favor of the plaintiff. The district court rejected the defendants' contention that the insurance policy at issue was ambiguous and concluded that the policy imposed joint and several liability on the defendants for the payment of the deductible called for under the policy. Because we conclude the insurance policy was ambiguous as to the nature of the defendants' liability for the deductible, we reverse and remand.

I. BACKGROUND

Plaintiff, St. Paul Fire & Marine Insurance Company (St. Paul), issued insurance policies to Defendants Schilli Transportation Services, Inc. (Schilli Transportation), Atlantic Inland Carriers, Inc. (Atlantic), WVT of Texas, Inc. (WVT), and several other corporations not involved in this appeal, for the time periods of June 1, 2000 to June 1, 2001, and June 1, 2001 to June 1, 2002. ¹ Schilli Transportation, Atlantic, and WVT are separate corporations. Schilli Transportation is a freight broker who arranges freight for other trucking companies and provides risk management services for claims asserted against other trucking companies. Schilli Transportation has never owned tractor-trailers or employed truck drivers. Atlantic was an interstate motor carrier but has been defunct since 2003. WVT is an operating interstate motor carrier.

The dispute in this case is over who is responsible to pay the deductibles on six separate claims brought against one or more of the defendants for accidents that occurred during the duration of the Policy and for which St. Paul advanced funds to defend and/or settle. Under the Policy, St. Paul had the right and duty to defend any claim or suit for bodily injury or property damage made or brought against any protected person. St. Paul would “do so even if any of the allegations of any such claim or suit are groundless, false or fraudulent.” The Policy had a limit of coverage of $1,000,000 for each accident and a $100,000 basket deductible per occurrence.

The payment of the deductible was addressed in the “Repayment of Expenses” provision. The “Repayment of Expenses” provision, included in the Policy as part of the “Basket Deductible Endorsement,” states that St. Paul “will pay all expenses to settle a claim or suit. You'll be responsible for the amount of expenses within the deductible. As soon as we notify you of a payment, you agree to reimburse us for any such expenses until the total amount of reimbursed damages and expenses exceeds the deductible amount shown in the coverage summary....” The Policy further provides that “[y]ou agree to repay us up to this deductible amount for all damages caused by any one accident, as soon as we notify you of the judgment or settlement.”

The “Introduction” section of the Policy defines “you, your and yours” as follows: “[t]he words you, your and yours mean the insured named here, which is a CORPORATION.” The Policy then lists Schilli Transportation's name and address. Underneath Schilli Transportation's name and address, the Policy states “Insured Names Continued on Back.” On the back of that page, the Policy provides: “Insured Names Continued:” and lists eight more companies, but not their addresses, including Atlantic and WVT.

The Policy also contains a “Separation of Protected Persons” clause, located in the part of the Policy dealing with automobile coverage, which states that St. Paul will apply the agreement “to each protected person named in the Introduction as if that protected person was the only named one there; and separately to each other protected person.” The provision also states the limit of coverage is shared by all protected persons.

The facts related to the six claims at issue in this case are as follows:

1. Claim 1

On June 22, 2000, Albert Kozusko, a WVT employee, was injured when an Owens Corning employee ran over his foot with a forklift while Kozusko was attempting to unload a semi-tractor trailer. Kozusko asserted a claim against St. Paul for uninsured motorist coverage under the Policy. Kozusko voluntarily dismissed the complaint. St. Paul incurred costs of $13,161.70 to defend the claim.

2. Claim 2

On January 18, 2001, Heather Thompson, Kale Thompson, and Kendra Thompson were involved in an accident with Henry Owens. The Thompsons brought a claim against Owens, Schilli Transportation, Atlantic, Schilli Leasing, Inc., Schilli Specialized, Inc., and Whiteford Services, Inc. The Thompsons alleged Owens was an employee of one or more of the other defendants, including Schilli Transportation and Atlantic, and was driving in the course of his employment at the time of the collision. St. Paul eventually settled the claim for more than $100,000 in exchange for the release of the Thompsons' claims against Schilli Transportation, Atlantic, WVT, and several other parties.

3. Claim 3

On May 8, 2011, Leah Ann and Christopher Wurslin were in an automobile accident with Scott Yake. The Wurslins filed a complaint against Schilli Transportation to recover for injuries Leah Ann Wurslin sustained in the accident. The complaint alleged that Schilli Transportation was Yake's employer and was also the owner/lessor of the vehicle involved in the May 2001 automobile accident. According to the complaint, Yake, while in the course of his employment with Schilli Transportation, operated the vehicle in a negligent manner causing him to collide with Leah Ann Wurslin's vehicle. St. Paul settled the Wurslins' claims for $135,000 in exchange for the release of the Wurslins' claims against Yake, Schilli Transportation, and St. Paul.

4. Claim 4

On October 25, 2001, Andrea Johnson was involved in an accident with a semi-tractor trailer driven by an Atlantic employee. St. Paul negotiated a $16,000 settlement of Johnson's claim. Johnson executed a release which named Atlantic and Schilli Transportation as two of the parties released from all claims.

5. Claim 5

On January 6, 2002, Allison Bergner was in a three-vehicle collision that involved a semi-tractor trailer driven by Donald Indorf. Indorf gave a recorded statement to a claims adjuster for St. Paul in which he stated he was an employee of Schilli Transportation. St. Paul incurred $25,971.61 in the defense and settlement of this claim.

6. Claim 6

On February 25, 2002, Otilio Aguilar and Maria Fuentas were in an automobile collision. Aguilar and Fuentas brought suit against Dale Brown and Schilli Transportation as a result of the accident. The plaintiffs alleged Brown was an employee of Schilli Transportation and was driving a vehicle owned by Schilli Transportation when Brown collided with them. St. Paul negotiated $62,500 settlements with both Aguilar and Fuentas. The release and indemnity agreement executed by Aguilar and Fuentas released all claims against Brown, WVT, and Schilli Transportation.

St. Paul communicated with Schilli Transportation multiple times regarding the developments in the handling and settlement of each respective claim that resulted from the above-described accidents. St. Paul sent Schilli Transportation invoices seeking reimbursement for the amounts, up to the $100,000 deductible, that St. Paul advanced in defending and settling each case. Schilli Transportation refused to pay.

St. Paul brought suit against Schilli Transportation, Atlantic, and WVT seeking reimbursement, up to the deductible amount, for the administration, investigation, adjustment, settlement, and disposition of each claim. In granting summary judgment in favor of St. Paul, the district court stated that “[t]he [P]olicy clearly and unambiguously defines ‘you’ as all of the corporations by specifically listing each corporation, and therefore, provisions containing the term ‘you’ pertain to all of the listed corporations.” According to the district court, inserting that definition into the Policy's repayment of expenses provision, “the [P]olicy would read that a corporation Schilli [Transportation], Atlantic, [WVT], and the other named insureds, would be responsible for the amount of expenses within that deductible.... For this reason, all of the listed corporations are liable under the repayment of expenses provision, and for the deductible at issue.”

This appeal followed.

II. ANALYSIS

On appeal, Defendants maintain the district court erred by granting summary judgment in favor of St. Paul. Specifically, Defendants contend that the Policy does not contain any language imposing joint and several liability on each insured for the deductibles or claim expenses of the other insureds. Defendants also argue that the Policy contains a “Separation of Protected Persons” clause that mandates each insured be responsible only for the deductible on claims against that particular insured. Finally, Defendants maintain that there are questions of fact regarding each of the six claims mentioned above.

To resolve the issues on appeal, this Court must interpret the provisions of the insurance policy at issue. The parties agree that Indiana law governs the interpretation of the Policy.

Insurance contracts are governed by the same rules of construction as other contracts. Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind.1997). “When interpreting an insurance contract courts must look at the contract as a whole.” Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249, 252 (Ind.2...