Thunder Basin Coal Co. v. Zurich Am. Ins. Co.

• Decision Date: 02 May 2013
• Docket Number: Case No. 4:12CV231 CDP.
• Citation: 943 F.Supp.2d 1010
• Parties: THUNDER BASIN COAL COMPANY, L.L.C., Plaintiff, v. ZURICH AMERICAN INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

943 F.Supp.2d 1010

THUNDER BASIN COAL COMPANY, L.L.C., Plaintiff,

v.ZURICH AMERICAN INSURANCE COMPANY, et al., Defendants.

Case No. 4:12CV231 CDP.

United States District Court,

E.D. Missouri,

Eastern Division.

May 2, 2013.

Laura J. Spencer, Dennis E. O'Connell, Bryan Cave, LLP, St. Louis, MO, for Plaintiff.

Anna M. Wenzel, Bradley J. Baumgart, Larry D. Fields, Eric J. Aufdengarten, Kutak Rock, LLP, Laurence R. Tucker, Armstrong Teasdale, LLP, Kansas City, Michael D. Cerulo, Baty and Holm., P.C., St. Louis, MO, Matthew J. Fink, Charles A. Hafner, Bates, Carey, Nicolaides, LLP, Chicago, IL, for Defendants.

MEMORANDUM AND ORDER

CATHERINE D. PERRY, District Judge.

Plaintiff Thunder Basin Coal Company, L.L.C. seeks a declaratory judgment that defendant National Union Fire Insurance Company of Pittsburgh is required to defend and indemnify it against a separate lawsuit, under an “additional insured” provision of a commercial umbrella policy. Thunder Basin was sued in the United States District Court for the District of Wyoming for injuries suffered by two individuals when a crane collapsed at its Black Thunder Mine. National Union moves for judgment on the pleadings, arguing, among other things, that its policy could only cover Thunder Basin for any vicarious liability, and that vicarious liability is precluded as a matter of law. I conclude that Thunder Basin has not shown that it is entitled to judgment on the pleadings.

Background

Thunder Basin operates the Black Thunder Mine, located in Wyoming. It entered into a contract with The Industrial Company of Wyoming, Inc. (TIC) for TIC to construct a coal handling railway expansion project. The contract required TIC to obtain primary and excess insurance and to name Thunder Basin as an additional insured. To complete the project, TIC leased a crane and crane operators from Lampson International. One of the cranes used by Lampson collapsed on May 31, 2008, injuring two employees of TIC: Andrew Milonis and Federico Salinas. Milonis then filed suit against Lampson, Earth Work Solutions,¹ and Thunder Basin in the District of Wyoming. Salinas filed suit against Lampson and Earthworks, Inc., and later filed a separate suit against Thunder Basin.

Thunder Basin now seeks an order requiring National Union to defend and indemnify it against these lawsuits as an additional insured under the policy issued to TIC. The National Union insurance policy at issue defines an “insured” as “any person or organization ... included as an additional insured under Scheduled Underlying Insurance, but not for broader coverage than would be afforded by such Scheduled Underlying Insurance.” (Doc. # 36–5, at 38). The scheduled underlying insurance in this case is TIC's policy issued by Zurich American Insurance Company. The Zurich policy includes an endorsement that contains the following provisions relevant to coverage for an additional insured:

A. Section II—Who Is An Insured is amended to include as an insured any person or organization who you are required to add as an additional insured on this policy under a written contract or written agreement.

B. The insurance provided to the additional insured person or organization applies ... only with respect to liability for “bodily injury,” “property damage” or “personal and advertising injury” caused, in whole or in part, by:

1. Your acts or omissions; or

2. The acts or omissions of those acting on your behalf....

(Doc. # 36–5, at 18).²

In Count VII of the amended complaint, Thunder Basin seeks a declaratory judgment that National Union is obligated to defend and indemnify it in both of the underlying suits. National Union moves for judgment on the pleadings, arguing that Thunder Basin's liability was not caused by TIC's acts or omissions, as required under the Zurich policy.

Discussion

Judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is appropriate “where no material issue of fact remains to be resolved and the movant is entitled to judgment as a matter of law.” Minch Family LLLP v. Buffalo–Red River Watershed Dist., 628 F.3d 960, 965 (8th Cir.2010). “The facts pleaded by the non-moving party must be accepted as true and all reasonable inferences from the pleadings should be taken in favor of the non-moving party.” Mills v. City of Grand Forks, 614 F.3d 495, 498 (8th Cir.2010). In ruling on a motion for judgment on the pleadings, a court “may consider the pleadings themselves, materials embraced by the pleadings, exhibits attached to the pleadings, and matters of public record.” Id.

Thunder Basin brought this case based on diversity jurisdiction under 28 U.S.C. § 1332. “A district court sitting in diversity must apply the conflict of law rules for the state in which it sits.” Inacom Corp. v. Sears, Roebuck & Co., 254 F.3d 683, 687 (8th Cir.2001). In deciding choice of law questions for insurance cases, Missouri applies § 193 of the Restatement (Second) of Conflict of Laws “[i]f the insurance contract does not specify which state's law applies, or if the policy insures risks located in a state other than Missouri.” Curran Composites, Inc. v. Liberty Mut. Ins. Co., 874 F.Supp. 261, 264 (W.D.Mo.1994). Under § 193, Missouri courts will apply the law of the state where “the principal location of the insured risk” is located, unless another state has a more significant relationship to the transaction and the parties. Restatement (Second) of Conflict of Laws § 193.

In this case, the National Union policy does not specify which state's law applies to its interpretation, and the policy insures risks located outside of Missouri.³ When a policy “insure[s] against risks located in several states,” each risk is treated as if it was insured under a separate policy. Restatement (Second) of Conflict of Laws § 193 cmt. f. Because the risk at issue in this case involves a single facility located in Wyoming, this court will apply Wyoming law based on Missouri's conflict of law rules.

Under Wyoming law, “[t]he interpretation and construction [of an insurance contract] is done by the court as a matter of law.” Amoco Prod. Co. v. Stauffer Chemical Co. of Wyo., 612 P.2d 463, 465 (Wyo.1980). The Wyoming Supreme Court has set out several tenets for the interpretation of insurance contracts, as follows:

(1) words must be given their common and ordinary meaning, and courts may not torture policy language to create an ambiguity; (2) the parties' intention, ascertained from the policy language when viewed in the light of what the parties must reasonably have intended, receives primary consideration; (3) the policy must not be construed so strictly as to contradict the policy's general object; (4) courts may not rewrite lawful policy terms; (5) absent ambiguity, courts must enforce the policy according to its terms and not engage in construction; (6) if the policy is ambiguous, courts must construe the contract liberally in favor of the insured and strictly against the insurer.

Mena v. Safeco Ins. Co., 412 F.3d 1159, 1163 (10th Cir.2005)(citing Aaron v. State Farm Mut. Auto. Ins. Co., 34 P.3d 929, 933 (Wyo.2001)).

1. Policy Language

As required under Wyoming law, the interpretation of this insurance contract must begin with its plain language. The parties offer different interpretations of the relevant portion of the Zurich policy. The pertinent phrase states that insurance is only provided “with respect to liability for bodily injury,' property damage' or personal and advertising injury' caused, in whole or in part, by” the acts or omissions of TIC or those acting on its behalf. The parties dispute whether the emphasis in this phrase is on “liability” or “bodily injury,” and they also raise arguments concerning the “in whole or in part” language.

National Union argues that the policy only covers Thunder Basin if it is held vicariously liable for the acts of TIC, and that as a matter of Wyoming law, it cannot be vicariously liable for TIC's acts, so there is no coverage. Thunder Basin, on the other hand, argues that coverage is provided because the plaintiffs in the underlying suits allege that a party acting on behalf of TIC is also alleged to have caused the plaintiffs' bodily injuries. ⁴ I conclude that the plain language of the policy does not support National Union's interpretation.

As to the dispute between whether “liability” or “bodily injury” is the focus of the first part of this phrase, National Union argues that coverage is only provided for liability caused by the acts or omissions of TIC or those acting on its behalf, such that the policy would only cover Thunder Basin for vicarious liability, which is not permitted under Wyoming law. To interpret the policy as National Union suggests would essentially eliminate all meaning of the phrase, “for bodily injury,' property damage' or personal and advertising injury.” ' Rather, National Union's interpretation would read, “The insurance provided to the additional insured person or organization applies ... only with respect to liability ... caused, in whole or in part, by” the acts or omissions of TIC or those acting on its behalf. Such an interpretation isolates certain parts of the language, rather than reading the policy as a whole, which is impermissible under Wyoming principles of contract interpretation. See State ex rel. Arnold v. Ommen, 201 P.3d 1127, 1138 (Wyo.2009)(stating that Wyoming courts “interpret contracts a whole, reading each provision in light of all the others to find the plain and ordinary meaning of the words” and “are reluctant to read parts of an insurance contract in isolation”).

When reading the clause as a whole, I conclude that the plain language unambiguously does not limit coverage to situations involving vicarious liability. The key term in the contract provision at issue is the “bodily injury” caused by TIC or those working on its behalf.⁵ National Union's attempt to focus on the term “liability” controverts the plain meaning of the language at issue.⁶...