W. Heritage Ins. Co. v. Cyril Hoover Dba Okanogan Valley Transp., Case No. C15-1154RSM
| Decision Date | 30 March 2016 |
| Docket Number | Case No. C15-1154RSM |
| Court | U.S. District Court — Western District of Washington |
| Parties | WESTERN HERITAGE INSURANCE COMPANY, an Arizona corporation, Plaintiff, v. CYRIL HOOVER DBA OKANOGAN VALLEY TRANSPORTATION; ERIC MALKUCH; and ALBERT SLATER, Defendants. |
THIS MATTER comes before the Court on Plaintiff Western Heritage Insurance Company's ("WHIC") and Defendant Albert Slater's ("Slater") Cross-Motions for Summary Judgment. Dkts. #24 and #31. These parties both seek judgments as a matter of law with respect to coverage under a Commercial General Liability ("CGL") policy issued by WHIC to Defendant Cyril Hoover d/b/a/ Okanogan Valley Transportation (hereinafter collectively "Mr. Hoover" or "Defendant Hoover"). Defendant Hoover has opposed Plaintiff's Motion for Summary Judgment, arguing that issues of material fact preclude judgment as a matter of law, or, in the alternative, that further discovery must occur and therefore a stay of the motion under Federal Rule of Civil Procedure 56(d) is appropriate. Dkt. #29.
Having reviewed the record before it, and having determined that oral argument is not necessary on these motions, the Court now GRANTS IN PART and DENIES IN PART Plaintiff's Motion for Summary Judgment and DENIES Defendant Slater's Cross-Motion for Summary Judgment for the reasons discussed herein.
The sequence of events leading up to this action is largely undisputed. In August of 2010, Mr. Hoover applied for a Commercial General Liability policy with WHIC to cover the business premises located at 32156 Hwy 97, Tonasket, WA 98855. Dkt. #26, Ex. B at 3-12. Mr. Hoover provides cab services to, inter alia, those with medical needs. Id. at 7 and 11. WHIC issued CGL Policy No. SCP0817517 to named Insured Okanogan Valley Transportation/Cyril K. Hoover DBA effective August 26, 2010 to August 26, 2011. Dkt. #26, Ex. C, at 1 and 43-44. The WHIC Policy had limits of $1 million per occurrence. Id. at 9. The Policy contained a "Limitation to Designated Premises or Project" Endorsement which purports to limit coverage under the policy to the Tonasket property listed in the Declarations Page and in the schedule on that Endorsement. Id. at 31. The policy required Mr. Hoover to "have auto limits equal to or greater then [sic] the GL limits." Dkt. #26, Ex. B at 2. In addition, the policy excluded products-completed operations coverage (which generally covers losses away from the insured premises), and Mr. Hoover was required to secure separate coverage for commercial auto risks. Id. at 2, 13, and 16. The WHIC Policy also contained an "auto exclusion" that precluded coverage for liability arising from the "use" of an auto loaned to an "insured." Dkt. #26, Ex. C at 16. The policy defined the term "insured" to include, inter alia, employees of Mr. Hoover acting within the course and scope of their employment. Id. at 21.
On March 10, 2011, Defendant Eric Malkuch was driving a 2000 Subaru Outback that he borrowed from his step father-in-law, Randy Stevenson. Mr. Malkuch's wife, Becky, and Defendant Slater were passengers in the vehicle. See Dkt. #25, Ex. D. Mr. Malkuch was driving southbound on Road SR 31, at Mile Post 88 near Lakeview, Oregon. The vehicle was involved in a single-vehicle rollover accident. Id., Ex. D at ¶ 13. The cause of the accident is in dispute; however, for the reasons discussed below, the cause is immaterial to the instant matter. Mr. Slater alleges that he sustained serious and ongoing injuries in the accident, totaling more than $400,000 in medical costs to date. Id., Ex. D at ¶ 18 and Dkt. #31 at 3. According to Mr. Slater, Mr. Hoover is liable for the underlying auto accident because the accident occurred while Mr. Malkuch and Mr. Slater were on their way to Arizona to pick up a tow truck, which Mr. Slater alleges was for the benefit of Mr. Hoover. Dkt. #25, Ex. D at ¶ 15.
PEMCO issued an Auto Liability Policy No. CA 0555071 to named Insured Randy Stevenson, effective from June 10, 2010 to June 10, 2011. Dkt. #26, Ex. A and 1 and 3-27. By its terms, the PEMCO Policy was primary. Id. at 25. It covered the 2000 Subaru Legacy Outback involved in the accident. Id. at 3. The "bodily injury" limits were $250,000 per person. Id. The PEMCO Policy contained an "omnibus" provision under which permissive users of the auto and those alleged to be legally liable for such permissive user's acts qualified as Insureds. Id. at 10.
On January 9, 2013, Mr. Slater filed a Complaint against Mr. Hoover, Mr. Malkuch, and others in Snohomish County Superior Court. See Albert Slater v. Eric Malkuch, et al., Case No. 13-2-01938-6.; Dkt. #25, Ex. A. The Complaint alleged that Mr. Slater was a passenger lying on the rear seat of the vehicle that Mr. Malkuch was driving in Oregon when Mr. Malkuch fell asleep at the wheel. Dkt. #25, Ex. A at ¶ 11. It further alleged that Mr.Malkuch, as the agent and/or employee of Mr. Hoover, was to drive Mr. Slater to purchase a tow truck and drive the truck back to Washington. Dkt. #25 at ¶ 13. Mr. Slater alleged that Mr. Hoover arranged this for his own business interests. Id. Mr. Hoover disputes that. Dkt. #24 at 3 fn. 5. The Complaint set forth a single cause of action for Negligence. Dkt. #25 at ¶ ¶ 11-18. Mr. Slater alleged that Mr. Malkuch was working for Mr. Hoover at the time of the accident such that the doctrine of vicarious liability applied. Id. at ¶ 15.
On February 6, 2015, Mr. Slater filed an Amended Complaint ("FAC"). Dkt. #25, Ex. D. It alleged that Mr. Malkuch borrowed the vehicle from Mr. Stevenson "for the purpose of driving down to Arizona on behalf of and in connection with Mr. Malkuch's business, defendant Okanogan Valley Transportation." Id. at ¶ 14. The FAC further alleged that Mr. Hoover and his business entered into an independent contractor agreement with Mr. Slater to provide maintenance to the fleet of business vehicles, to loan him money to purchase a tow truck, and "by and through its partner, agent and/or employee, defendant Eric Malkuch, to drive plaintiff Slater in Mr. Stevenson's vehicle. . . to purchase the tow truck and to drive it back to Washington." Id. at ¶ 15. Mr. Slater also alleged that "[a]ll acts of negligence by defendant Malkuch are the acts of all other and remaining defendants by virtue of all theories of vicarious liability including but not limited to Partnership, Master/Servant Liability, Agent/Principal liability, Owner/Operator liability, Joint Venture liability and Negligent Entrusting holding defendants, and each of them, jointly and severally liable for plaintiff's injuries." Id. at ¶ 17.
PEMCO agreed to defend all defendants in the underlying state court action under a reservation of rights, and is currently defending. See Dkt. #25, Ex. C. WHIC also elected to retain separate defense counsel for Mr. Hoover under a reservation of rights. Id. In its original reservation, WHIC indicated that if Mr. Malkuch is found not to have acted in the course andscope of employment for Mr. Hoover, there can be no liability on Mr. Hoover's part and therefore no duty to indemnify. Dkt. #25, Ex. C at 12, ¶ 2. WHIC further indicated that if Mr. Malkuch is found to have acted in the course and scope of his employment for Mr. Hoover, the "auto exclusion" applies to bar coverage. Id., Ex. C, p. 12, ¶ 2 and Dkt. #26, Ex. C at 16 and 21. WHIC further reserved rights under the Designated Premises Limitation Endorsement, on the ground the policy was not intended to cover offsite auto accidents like the one in question. Dkt. #25, Ex. C at 12, ¶ 4 - 13, ¶ 1. On March 5, 2015, WHIC sent an amended reservation of rights letter regarding the FAC, reiterating the same bases for its reservation. Dkt. #25, Ex. G. WHIC also noted that its policy could at best be excess to auto policies issued by PEMCO and GEICO. Id. at 12, ¶ ¶2-3 and 13, ¶ 2.
In the meantime, WHIC brought the instant Declaratory Relief Action against Defendants Hoover, Malkuch and Slater in this Court, on July 20, 2015. Dkt. #1. WHIC alleges that it owes no coverage for the offsite accident in Oregon based on, inter alia, its "auto exclusion" and "designated premises limitation." Dkt. #1 at ¶ ¶ 24, 26 and 27. WHIC further alleges that, as of right, it voluntarily elected to defend the underlying action despite the lack of coverage. Id. at ¶ 14. In addition, WHIC alleges that even if the Court were to find it owed coverage, such coverage would be strictly excess to that of PEMCO and GEICO. Id. at ¶ 29. WHIC seeks a declaration that it owes no duty to defend or indemnify. Dkt. #1, Section VIII.
Defendant Slater has Answered the Complaint and brings a Counterclaim alleging that the WHIC policy does provide coverage for the underlying auto accident, and asking the Court to issue a declaratory judgment that WHIC has a duty to indemnify in the underlying action regardless of any coverage by PEMCO or GEICO. Dkt. #10, Section III.
Defendant Hoover has Answered the Complaint and brings a Counterclaim alleging that the WHIC policy does provide coverage for the underlying auto accident, and asking the Court to issue a declaratory judgment that WHIC has a duty to defend and indemnify in the underlying action regardless of any coverage by PEMCO or GEICO. Dkt. #13, Counterclaim at ¶ ¶ 1-4.
Mr. Malkuch has been voluntarily dismissed as a Defendant to this action under an agreement that he will be bound by any final judgment issued in this matter. Dkt. #28.
Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). In ruling on summary judgment, a court does not weigh evidence to...
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