United Capitol Ins. Co. v. Special Trucks, Inc.

Citation918 F. Supp. 1250
Decision Date30 January 1996
Docket NumberNo. 1:95-CV-148.,1:95-CV-148.
PartiesUNITED CAPITOL INSURANCE COMPANY, Plaintiff, v. SPECIAL TRUCKS, INC., Defendant.
CourtU.S. District Court — Northern District of Indiana

COPYRIGHT MATERIAL OMITTED

Catherine C. Ediger, G. Martin Cole, Rothberg, Gallmeyer, Fruechtenicht and Logan, Fort Wayne, IN, Robert B. Lueck, Kristin L. Jenny, Boornazian, Jensen and Garthe, Walnut Creek, CA, for plaintiff.

Thomas M. Shoaff, Jeffrey A. Townsend, Baker and Daniels, Fort Wayne, IN, for defendant.

MEMORANDUM OF DECISION AND ORDER

WILLIAM C. LEE, District Judge.

This case is before the Court on cross-motions for summary judgment. Plaintiff United Capitol Insurance Company ("United Capitol") filed a Declaratory Judgment action on May 19, 1995, and Defendant Special Trucks, Inc. ("Special Trucks") filed an Answer on June 30, 1995. On October 6, 1995, Plaintiff filed a Motion for Summary Judgment. Defendant filed its Motion for Summary Judgment on October 10, 1995. Defendant also filed, on December 12, 1995, a Motion for Leave to File Amended Answer With Counterclaim. For the following reasons, plaintiff's Motion for Summary Judgment is GRANTED in part and DENIED in part, and defendant's Motion for Summary Judgment is GRANTED in part and DENIED in part. Defendant's Motion for Leave to File Amended Answer with Counterclaim is DENIED.

FACTUAL BACKGROUND

Considering the complex nature of the issues raised in this summary judgment action and the contentious manner in which they are being debated, the underlying facts in this case are actually straightforward and, for the most part, undisputed. Defendant Special Trucks, an Indiana corporation, contracted with Calavar Corporation ("Calavar"), a Texas corporation, to build a truck chassis (including chassis, driveline and cab) onto which Calavar would add an "aerial boom." The truck would then be used by Pacific Utility Equipment Company ("Pacific Utility") for servicing power lines and equipment in Oregon. Special Trucks completed the chassis and shipped the finished truck to Calavar. Calavar completed the addition of the aerial boom assembly. Pacific Utility took delivery of the vehicle in Texas and intended to drive it to Oregon. Somewhere near Albany, Oregon, the truck crashed and was severely damaged. Pacific Utility sued Calavar and Special Trucks in U.S. District Court in Oregon, alleging that the crash was the result of defects in the work of Special Trucks and Calavar. Pacific Utility argued at trial that the crash was the result of a wheel which broke, causing the truck to veer out of control. A jury found for the plaintiff and awarded damages of $457,310.00.1 Prior to trial, Special Trucks and Calavar entered into an agreement whereby United Capitol, on behalf of Special Trucks, paid Calavar $43,020.00 to settle any indemnity claims Calavar might have against Special Trucks.

At the time of the accident, Special Trucks was covered by a commercial general liability policy. The insurer, United Capitol, tendered a defense on behalf of Special Trucks pursuant to a reservation of rights. At some point (Special Trucks claims it was during the trial), United Capitol informed Special Trucks that it was denying coverage pursuant to certain exclusionary language in the policy. United Capitol maintains that approximately $288,900.60 in damages are covered by the policy and $168,409.40 in damages are not covered. In addition, United Capitol claims that it is entitled to recover from Special Trucks the $43,020.00 it paid in settlement to Calavar. The current Declaratory Judgment action was filed to determine the coverage and damages issues.

SUMMARY JUDGMENT STANDARD

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). However, Rule 56(c) is not a requirement that the moving party negate his opponent's claim. Fitzpatrick v. Catholic Bishop of Chicago, 916 F.2d 1254, 1256 (7th Cir. 1990). Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery, against a party "who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and in which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The standard for granting summary judgment mirrors the directed verdict standard under Rule 50(a), which requires the court to grant a directed verdict where there can be but one reasonable conclusion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). A scintilla of evidence in support of the non-moving party's position is not sufficient to successfully oppose summary judgment; "there must be evidence on which the jury could reasonably find for the plaintiff." Id. at 252, 106 S.Ct. at 2512; In re Matter of Wildman, 859 F.2d 553, 557 (7th Cir.1988); Klein v. Ryan, 847 F.2d 368, 374 (7th Cir.1988); Valentine v. Joliet Township High Sch. Dist. No. 204, 802 F.2d 981, 986 (7th Cir.1986). No genuine issue for trial exists "where the record as a whole could not lead a rational trier of fact to find for the nonmoving party." Juarez v. Ameritech Mobile Communications, Inc., 957 F.2d 317, 322 (7th Cir.1992) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986)).

Initially, Rule 56 requires the moving party to inform the court of the basis for the motion, and to identify those portions of the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. at 2553. The non-moving party may oppose the motion with any of the evidentiary materials listed in Rule 56(c), but reliance on the pleadings alone is not sufficient to withstand summary judgment. Goka v. Bobbitt, 862 F.2d 646, 649 (7th Cir.1988); Guenin v. Sendra Corp., 700 F.Supp. 973, 974 (N.D.Ind.1988); Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). In ruling on a summary judgment motion the court accepts as true the non-moving party's evidence, draws all legitimate inferences in favor of the non-moving party, and does not weigh the evidence or the credibility of witnesses. Anderson, 477 U.S. at 249-251, 106 S.Ct. at 2511. However, "it is a gratuitous cruelty to parties and their witnesses to put them through the emotional ordeal of a trial when the outcome is foreordained" and in such cases summary judgment is appropriate. Mason v. Continental Illinois Nat'l Bank, 704 F.2d 361, 367 (7th Cir.1983).

Substantive law determines which facts are material; that is, which facts might affect the outcome of the suit under the governing law. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. Irrelevant or unnecessary facts do not preclude summary judgment even when they are in dispute. Id. The issue of fact must be genuine. Fed.R.Civ.P. 56(c), (e). To establish a genuine issue of fact, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586, 106 S.Ct. at 1356; First Nat'l Bank of Cicero v. Lewco Sec. Corp., 860 F.2d 1407, 1411 (7th Cir. 1988). The non-moving party must come forward with specific facts showing that there is a genuine issue for trial. Id. A summary judgment determination is essentially an inquiry as to "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-252, 106 S.Ct. at 2512.

DISCUSSION

The CGL policy that Special Trucks purchased from United Capitol is a standard form policy and contains language presently found in many such policies. The dispute in this suit involves only a few of the policy provisions. The policy states that the insurer "will pay those sums that the insured becomes legally obligated to pay as damages because of `bodily injury' or `property damage' included within the `products-completed operations hazard' to which this insurance applies." Policy, Section I, 1.a. The policy then states in Section I, 2.h. that the coverage does not apply to "`property damage' to `your product' arising out of it or any part of it." The policy contains another exclusion in Section I, 2.i., which states that the insurance coverage does not apply to "`property damage' to `your work' arising out of it or any part of it and included in the `products-completed operations hazard.' This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor."

Also very relevant to this case is the language in the policy's "Definitions" section. The policy at issue here contains the following definitions:

"`Products-completed operations hazard' includes all `bodily injury' and `property damage' occurring away from premises you own or rent and arising out of `your product' or `your work....'" Section V, 11.a.
"`Property damage' means: Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it...." Section V, 12.a.
"`Your product' means: Any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by you...." Section V, 15.a.
"`Your work' means: Work or operations performed by you or on your behalf; and materials, parts or equipment furnished in connection with such work or operations." Section V, 16.a. and b.

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