Wells Dairy v. Travelers Indemnity Co. of Illinois
| Decision Date | 31 January 2003 |
| Docket Number | No. C01-4097MWB.,C01-4097MWB. |
| Citation | 241 F.Supp.2d 945 |
| Parties | WELLS DAIRY, INC., Plaintiff, v. TRAVELERS INDEMNITY COMPANY OF ILLINOIS, Travelers Insurance Company, and Travelers Property Casualty Corporation, Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
Marvin S. Berenstein, Richard H. Moeller, Berenstein, Moore, Berenstein, Heffernan & Moeller, LLP, Sioux City, IA, Mary Rose Alexander, Rene M. Devlin, Arthur F. Foerster, Adam S. Ryan, Latham & Watkins, Chicago, IL, for Wells Dairy Inc.
Jaki K. Samuelson, Whitfield & Eddy, PLC, Des Moines, IA, Steven E. Goldman, Frank F. Coulom, Jr., Gerald P. Dwyer, Jr., Robinson & Cole, LLP, Hartford, CT, for Travelers Indemnity Co. of Ill., Travelers Ins. Co.
On August 7, 2001, plaintiff Wells Dairy, Inc. ("Wells") filed this lawsuit in the Iowa District Court In And For Plymouth County against several of its insurers, Travelers Indemnity Company of Illinois, Travelers Insurance Company, and Travelers Property Casualty Corporation (collectively "Travelers" unless otherwise indicated). Travelers removed this case to this court on September 13, 2001, pursuant to 28 U.S.C. § 1441. On January 17, 2002, Wells filed an amended complaint. On September 5, 2002, Wells filed a second amended complaint. In its second amended complaint, Wells asserts claims for breach of contract, declaratory judgment, promissory estoppel and bad faith against Travelers. Specifically, Wells asserts that Travelers has breached a commercial general liability policy, a commercial excess insurance policy, and a deluxe income business policy by failing to defend or agree to indemnify Wells against claims made by two customers, Pillsbury Company ("Pillsbury") and Eskimo Pie Corporation ("Eskimo Pie"), resulting from an explosion and fire that occurred at Wells's South Ice Cream Plant in Le Mars, Iowa, on March 27, 1999. Wells also seeks declarations that Travelers has an obligation under the policies to defend Wells against lawsuits brought by Pillsbury and Eskimo Pie. Wells further asserts a claim of promissory estoppel based on Travelers's representations that certain costs would be covered as "extra expenses" under the Business Income Policy. Finally, Wells contends that Travelers acted in bad faith in failing to afford Wells any defense in the litigation with Eskimo Pie and Pillsbury.
On July 17, 2002, Travelers filed a motion for partial summary judgment. In its motion, Travelers moves for summary judgment on the claims alleged in Counts I, II, IV, V, and VII of the amended complaint.1 On August 30, 2002, Wells filed its motion to strike the affidavit of Richard Jensen and cross-motion for partial summary judgment. In its motion for partial summary judgment, Wells seeks summary judgment on its claims alleged in Counts I, II, and part of Counts IV, V, and VIII of the second amended complaint on the ground that Travelers is obligated as a matter of law to defend Wells in the underlying lawsuits. The parties subsequently filed their respective resistances. O n August 30, 2002, Wells filed its Motion For A Partial Stay, requesting the court to stay discovery and adjudication of all aspects of this case other than those issues raised in the parties' cross-motions for partial summary judgment regarding Travelers's duty to defend. In its motion, Wells contends that an insured should not be required to litigate issues of indemnity in a declaratory judgment action with its insurer while engaged in litigation with entities asserting legal claims against it. On September 27, 2002, United States Magistrate Judge Paul A. Zoss denied Wells's Motion For A Partial Stay, concluding that Wells had failed to establish an adequate basis for the requested stay. On October 11, 2002, Wells filed an appeal of Judge Zoss's order denying Wells's Motion For A Partial Stay. In the alternative, Wells filed a motion to bifurcate. Travelers filed a resistance to Wells's appeal and alternative motion to bifurcate on October 29, 2002.
Pursuant to the parties' requests, the court held oral arguments on the parties' respective cross-motions for summary judgment and Wells's appeal of Judge Zoss's denial of Wells's Motion For A Partial Stay on January 21, 2003. At the oral arguments, plaintiff Wells was represented by Mary Rose Alexander and Adam S. Ryan of Latham & Watkins, Chicago, Illinois, and Richard H. Moeller of Berenstein, Moore, Berenstein, Heffernan & Moeller, L.L.P., Sioux City, Iowa. Defendant Travelers was represented by Stephen G. Goldman and Gerald P. Dwyer, Jr. of Robinson & Cole, L.L.P., Hartford, Connecticut, and Jaki K. Samuelson of Whitfield & Eddy, P.L.C., Des Moines, Iowa. The parties have filed thorough and extensive briefs in support of their respective positions and the oral arguments were among the finest this court has ever heard. The court turns first to Wells's motion to strike the affidavit of Richard Jensen. Upon resolution of that motion, the court will turn to a discussion of the undisputed facts as shown by the record, then to the standards applicable to motions for summary judgment and, then, to the legal analysis of whether either of the parties are entitled to summary judgment on any of the claims at issue in this litigation. Finally, the court will consider Wells's appeal of Judge Zoss's decision on Wells's Motion For A Partial Stay, and Wells's alternative motion to bifurcate.
The following facts are undisputed. Wells Dairy, Inc. is a manufacturer of dairy products and frozen deserts including ice cream. Wells is incorporated under the laws of the State of Iowa, and has its principal place of business in Le Mars, Iowa.
Travelers issued a primary insurance policy ("Primary Policy") and a commercial excess insurance policy ("Umbrella Policy") to Wells for the period of September 15, 1998 to September 15, 2001. The Primary Policy includes a commercial general liability coverage part ("CGL coverage part") and a first-party property damage part ("property coverage part"). The CGL coverage part, subject to its terms and conditions, provides liability coverage, for among other things, "bodily injury," "property damage," "advertising injury" and "personal injury."
The CGL coverage part provides coverage for "property damage" pursuant to the following clause:
We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply.
Property damage is defined under the CGL coverage part as:
a. 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; or
b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occurrence" that caused it.
Defendants' App. at 122. The CGL coverage part also contains a number of exclusions under which the insurance policy does not apply. Section I(2)(b) of the CGL coverage part excludes coverage for certain contractual liability:
"Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages:
(1) Assumed in a contract or agreement that is an "insured contract," provided the "bodily injury" or "property damage" occurs subsequent to the execution of the contract or agreement; or
(2) That the insured would have in the absence of the contract or agreement.
Section j of the CGL coverage part excludes, in pertinent part coverage for: "Property damage" to:
(1) Property you own, rent, or occupy;
(4) Personal property in the care, custody or control of the insured;
Defendants' App. at 114. Section I(m) of the CGL coverage part excludes coverage for:
m. Damage to Impaired Property or Property Not Physically Injured.
"Property damage" to "impaired property" or property that has not been physically injured arising out of:
(1) A defect, deficiency, inadequacy or dangerous condition in "your product" or "your work"; or
(2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms.
This exclusion does not apply to the loss of use of other property arising out of sudden and accidental physical injury to "your product" or "your work" after it has been put to its intended use.
The umbrella policy, like the CGL coverage part, provides liability coverage for, among other things, "bodily injury," "property damage," "advertising injury" and "personal injury." Defendants's App. at 157. The Umbrella Policy provides coverage for property damage pursuant to the following insuring clause:
We will pay on behalf of the insured the "ultimate net loss" in excess of the "applicable underlying limit" which the insured becomes legally obligated to pay as damages because of "bodily injury," "property damage," "personal injury" or "advertising injury" to which this insurance applies.
Defendants' App. at 157. The umbrella policy defines "property damage" as follows:
"Property damage" means physical injury to tangible property, including all resulting loss of use of that property.
Like...
To continue reading
Request your trial
-
Central States Indus. Supply, Inc. v. McCullough
...1417, 1422 (10th Cir.1995); Slowiak v. Land O'Lakes, Inc., 987 F.2d 1293, 1295 (7th Cir.1993). Wells Dairy, Inc. v. Travelers Indemnity Co. of Illinois, 241 F.Supp.2d 945, 956-57 (N.D.Iowa 2003); see also Helm Fin. Corp. v. Iowa Northern Ry. Co., 214 F.Supp.2d 934, 952-54 (N.D.Iowa 2002) (s......
-
Pioneer Hi-Bred Intern. v. Ottawa Plant Food, Inc.
...1417, 1422 (10th Cir.1995); Slowiak v. Land O'Lakes, Inc., 987 F.2d 1293, 1295 (7th Cir.1993). Wells Dairy, Inc. v. Travelers Indemnity Co. of Illinois, 241 F.Supp.2d 945, 956-57 (N.D.Iowa 2003); see also Helm Fin. Corp. v. Iowa Northern Ry. Co., 214 F.Supp.2d 934, 952-54 (N.D.Iowa 2002) (s......
-
Schmidt v. Fortis Ins. Co.
...applied these Iowa rules of interpretation of insurance contracts on many prior occasions. See Wells Dairy, Inc. v. Travelers Indemnity Co. of Illinois, 241 F.Supp.2d 945, 960-61 (N.D.Iowa 2003); National Union Fire Ins. Co. of Pittsburgh, P.A. v. Terra Industries, Inc., 216 F.Supp.2d 899, ......
-
Federal Ins. Co. v. Sammons Financial Group, Inc.
...tort-based Class Actions. 13. Defendants rely heavily on the analysis employed by the Northern District of Iowa in Wells Dairy, Inc. v. Travelers Indem. Co. of Ill., a decision issued before the Eighth Circuit adopted the Scottsdale analysis. 241 F.Supp.2d 945 (N.D.Iowa 2003). The Wells Dai......
-
Liability Insurance Coverage for Breach of Contract Damages - February 2007 - Tort and Insurance Law
...note 12 at 1201. 23. Id. 24. Id. 25. Id. 26. See id. at 1202. Hottenstein distinguished Wells Dairy, Inc. v. Travelers Indem. Co., 241 F.Supp.2d 945 (N.D. Iowa 2003), which found coverage for breach of contract damages because the damages arose from an explosion, fire, and ensuing property ......