United Fin. Cas. Co. v. Morales

• Decision Date: 24 February 2022
• Docket Number: Civ. 20-0867 RB/CG
• Parties: UNITED FINANCIAL CASUALTY COMPANY, Plaintiff, v. DIANA MORALES d/b/a ROBERG TRUCKING, TODD M. LOPEZ, as Personal Representative of the Estate of ERICK EDUARDO AVILA-GRADO, Decedent, YULMA FERNANDEZ-RENTERIA, as Next Friend of ERICK ADRIAN AVILA-FERNANDEZ, DILAN STEEVEN AVILA-FERNANDEZ and YAHIR EDUARDO AVILA-FERNANDEZ, minor children, MARIA GUADALUPE GRADO-SANCHEZ, PATRICK SMITH, and WPX ENERGY PERMIAN, LLC, Defendants.
• Court: U.S. District Court — District of New Mexico

UNITED FINANCIAL CASUALTY COMPANY, Plaintiff,
v.
DIANA MORALES d/b/a ROBERG TRUCKING, TODD M. LOPEZ, as Personal Representative of the Estate of ERICK EDUARDO AVILA-GRADO, Decedent, YULMA FERNANDEZ-RENTERIA, as Next Friend of ERICK ADRIAN AVILA-FERNANDEZ, DILAN STEEVEN AVILA-FERNANDEZ and YAHIR EDUARDO AVILA-FERNANDEZ, minor children, MARIA GUADALUPE GRADO-SANCHEZ, PATRICK SMITH, and WPX ENERGY PERMIAN, LLC, Defendants.

Civ. No. 20-0867 RB/CG

United States District Court, D. New Mexico

February 24, 2022

MEMORANDUM OPINION AND ORDER

ROBERT C. BRACK, SENIOR U.S. DISTRICT JUDGE.

Plaintiff United Financial Casualty Company (UFCC) issued a New Mexico Commercial Auto Policy to Defendant Diana Morales d/b/a Roberg Trucking (Roberg Trucking). On July 18, 2018, Roberg Trucking was hired to send a truck to skim oil from water tanks at WPX Energy Permian, LLC's Saltwater Disposal Facility (SWDF). Roberg Trucking sent employee Erick Avila-Grado to the SWDF. Avila-Grado drove a truck with an attached trailer, both of which were covered by the Policy. At the job site, Avila-Grado exited the truck and trailer, went onto a catwalk, and placed a gauge line into a water tank. Because Avila-Grado failed to ground the gauge line, an explosion occurred, killing Avila-Grado and injuring Defendant Patrick Smith.

Several of the defendants named in this case have filed two lawsuits against Roberg Trucking and others in state court. UFCC is defending Roberg Trucking under a reservation of rights in both lawsuits. UFCC filed a declaratory judgment action in this Court and seeks a

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determination of whether the Policy obligates it to defend or indemnify Roberg Trucking.

Before the Court are two motions. First, UFCC moves for default judgement on the issue of whether it has a duty to defend Roberg Trucking, which has failed to enter an appearance or answer the Complaint in this lawsuit. The Court finds that UFCC fails to allege facts sufficient to show that it has no duty to defend Roberg Trucking and will deny the motion for default judgment. Second, UFCC moves for summary judgment on the issue of whether the accident is excluded from coverage under the “Operations Exclusion.” Smith opposes the motion. The Court finds that under the facts alleged in the state court complaint and the parties' original briefing on this issue, UFCC has not established that the accident is precluded by the Operations Exclusion and will deny the motion for summary judgment.

I. Factual Background

On July 18, 2018, Roberg Trucking had been contracted to skim oil from water tanks at the SWDF. (Doc. 74-C at 3.) The SWDF site includes, in relevant part, a well and eight waste water tanks. (See id. at 6.) “The well at the site produces a mixture of waste water and oil which accumulates in the [eight] waste water tanks.” (Id.) To skim the oil, a vacuum truck driver uses a gauge line to measure how much oil to skim from the waste water tank, then uses a vacuum truck to suck the oil from the tank. (See, e.g., Doc. 84 at 2 (citing Doc. 84-A at 5, 7^[1]).)

Avila-Grado, Roberg Trucking's employee, drove a truck and attached tanker^[2] to the

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SWDF to skim oil from the tanks. (See Doc. 74-C at 3, 6.) Avila-Grado exited his truck and walked onto a catwalk adjacent to a water tank. (See, e.g., id. at 1, 8.) He opened the tank and put a gauge line into it, but contrary to required procedure, he failed to ground the gauge line. (See id. at 1, 4, 8, 13.) Other workers on site at the time confirmed that Avila-Grado did not ground the gauge line. One worker said, “I never saw the gauge line the truck driver was using being grounded. It would have been easy to tell if the gauge was grounded, it has a long line (grounding wire) coming from it.” (Id. at 8; see also id. at 12 (“the grounding line was hanging from the gauge line not attached (unbonded) to anything.”).) Avila-Grado's truck, though, was grounded. (See id. at 13, 18.)

When Avila-Grado placed the ungrounded gauge line into the water tank, workers heard a whistling noise, and then the tank exploded. (See id. at 13.) “After the first tank exploded, the other seven tanks began to explode in sequence.” (Id.) Avila-Grado was killed in the explosion, and Smith was severely injured. (Id. at 8-9, 13-14.) “The only equipment involved in the Accident was a gauge line and the SWDF's water tank.”^[3] (Doc. 74 at 7.) It is unclear from the state court complaint or from the parties' original summary judgment briefs, however, whether the gauge line was attached or connected to the truck or trailer. UFCC insured Roberg Trucking under a Commercial Auto Policy that was in effect on the date of the accident. (See Docs. 1-A; 74-C at 3.) The relevant portions of the Policy include:

GENERAL DEFINITIONS

1. “Accident” means a sudden unexpected and unintended event, or a continuous or repeated exposure to that event, that causes bodily injury or property damage.

2. “Auto” means a land or motor vehicle or trailer designed for travel on public

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roads, or any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state or province where it is licensed or principally garaged. It does not include mobile equipment. Self-propelled vehicles with the following types of permanently attached equipment are autos, not mobile equipment:

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c. air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well-servicing equipment.

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8. “Mobile equipment” means any of the following

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