Westchester Fire Insurance Company v. Continental Casualty Company, No. A05-556 (MN 3/28/2006), A05-556.
| Decision Date | 28 March 2006 |
| Docket Number | No. A05-556.,A05-556. |
| Parties | Westchester Fire Insurance Company, et al., Respondents, v. Continental Casualty Company, Appellant, Ryan Companies US, Ins., et al., Defendants. |
| Court | Minnesota Supreme Court |
Appeal from the District Court, Hennepin County, File No. CT 03-010121.
Keith J. Kerfeld, Chad D. Dobbelaere, Tewksbury Kerfeld & Zimmer, and Jonathan Schapp (pro hac vice), Lustig & Brown, LLP, (for respondents).
Eric J. Magnuson, Stephen O. Plunkett, Rider Bennett, LLP, (for appellant).
Considered and decided by Minge, Presiding Judge; Randall, Judge; and Crippen, Judge.*
UNPUBLISHED OPINION
On appeal from summary judgment finding that respondent company was an additional insured under policies issued by appellant insurer and that appellant's coverage was primary, appellant argues that the district court erred in finding (a) respondent company was an additional insured under the lessor of leased equipment endorsement, where respondent was not the lessor of the cranes and where it failed to establish that the accident arose out of the general contractor's use of the crane; (b) respondent was an additional insured under the blanket additional insured endorsement, where respondent failed to establish an agreement that it be made an additional insured and failed to present evidence that the general contractor was performing work for respondent at the time of the accident; (c) in finding that appellant's coverage was primary to the coverage provided by respondent insured to respondent company; and (d) respondent was entitled to coverage under the umbrella policy. We conclude that respondent is entitled to coverage under the blanket additional insured endorsement. Affirmed.
In the spring of 1998, Ryan Companies U.S., Inc. (Ryan) was hired to act as the general contractor for the Piper Jaffray Center Office Tower construction project (the project). Ryan subcontracted the steel work to Lejeune Steel, who, in turn, subcontracted the steel erection work to respondent L.H. Sowles Company (Sowles). Ryan also contracted with Northwest Tower Cranes (Northwest) for the rental of two cranes, which were to be used for the project. The cranes were leased pursuant to the terms of a Crane Rental Agreement executed by Ryan and Northwest. Notably, Northwest is a wholly owned subsidiary of Sowles.
On December 2, 1998, two employees of Hunt Electric Company (Hunt Electric), Darryl Hilgendorf and Steven Marschel, were accidentally killed while working on the project. At the time of the accident, Tim Dalzell, an employee of Sowles, was directing Don Vandermey, an employee of Ryan who was operating a crane, to lift to the eighth floor a several thousand pound bolt bin that had been designed by Sowles for the project. Because the building's elevator core obstructed Vandermey's view, limiting his ability to see the work area, Dalzell instructed Vandermey by radio where to place the bolt bin. Relying on Dalzell's directions, Vandermey placed the bolt bin between the structural beams on the decking next to a decking seam, despite the fact that the bolt bin had been designed by Sowles to rest across two structural beams.
After the bolt bin was placed on the eighth floor, Dalzell instructed Vandermey to lift a steel column into position on the eighth floor. The column, which had previously been stored on the eighth floor in the horizontal position, was lifted into a vertical position. As the column was being lifted, its supporting structure, called dunnage, failed, allowing the column to puncture the decking. The column then damaged a beam, which caused the decking to fail and the bolt bin to fall through a separation in the decking. Hilgendorf and Marschel were working on the sixth floor of the building and were crushed by the falling bin.
As a result of the accident, Sowles and Ryan conducted investigations to determine what had occurred and what had caused the accident. Both companies determined that neither Vandermey nor any other Ryan employee had acted negligently. Instead, investigators determined that a combination of three things caused the accident: (1) the decking on the eighth floor had only been tack-welded; (2) there was inadequate dunnage, constructed by Sowles, to support the column as it was being lifted to an upright position; and (3) the bolt bin was improperly placed on the eighth floor at the direction of Dalzell.
The families of Hilgendorf and Marschel, as well as the workers' compensation carrier, presented claims against Sowles, seeking payment and reimbursement for the accidental deaths. At the time of the accident, Sowles was insured by USF&G for general liability with a limit of $1 million per occurrence. Sowles also carried excess insurance with respondent Westchester Fire Insurance Company with a limit of $20,000,000 per occurrence. Ryan was insured at the time of the accident under insurance policies issued by appellant Continental Casualty Company (Continental) for both commercial general liability with limits of $1,000,000 per occurrence, and commercial umbrella liability with limits of $24,000,000 per occurrence.
In November 1999, Sowles and its carriers settled the Hilgendorf claim for $2,075,000. A few months later, Sowles and its carriers settled the Marschel claim for $2 million. USF&G assumed responsibility for making all workers' compensation payments on behalf of Hunt Electric, and in return for USF&G's payments, Hunt Electric and its insured, Transportation Insurance Company (Transportation), assigned to Sowles and Westchester their rights of subrogation pursuant to Minn. Stat. § 176.061 (2004). Sowles and Westchester state that all claims were settled for $4,784,180, inclusive of the workers' compensation claims.
In March 2001, Sowles and Westchester brought a declaratory judgment action against Continental, alleging (1) Sowles was an additional insured under two endorsements to Continental's CGL policy, the Lessor of Leased Equipment endorsement and the Blanket Additional Insured endorsement; and (2) Continental's coverage was primary. Both parties moved for summary judgment, and, in granting summary judgment in favor of Sowles and Westchester, the district court determined that Sowles was an additional insured under the Continental policies pursuant to the terms of the Lessor of Leased Equipment endorsement and the Blanket Additional Insured endorsement. The district court further held that the coverage afforded Sowles under the Continental policies was primary to the coverage afforded under the Westchester policy. This appeal followed.
Summary-judgment motions are granted when the pleadings, depositions, answers to interrogatories, and admissions, together with any affidavits, show that there is no genuine issue of material fact and a party is entitled to judgment as a matter of law. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). On a motion for summary judgment, "a court may not weigh the evidence or make factual determinations." State ex rel. Hatch v. Allina Health Sys., 679 N.W.2d 400, 406 (Minn. App. 2004) (quoting Fairview Hosp. & Health Care Servs. v. St. Paul Fire & Marine Ins. Co., 535 N.W.2d 337, 341 (Minn. 1995)). "[T]he reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted." Fabio, 504 N.W.2d at 761. A reviewing court need not defer to a district court's decision on a pure question of law. Frost-Benco Elec. Ass'n v. Minn. Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984). Interpretation of an insurance policy and application of the policy to the facts in a case are questions of law that this court reviews de novo. Am. Family Ins. Co. v. Walser, 628 N.W.2d 605, 609 (Minn. 2001).
Continental argues that the district court erred in concluding that Sowles was an additional insured under the lessor of the leased equipment endorsement. Continental's Commercial General Liability policy provides in relevant part:
COVERAGE A. BODILIY INJURY AND PROPERTY DAMAGE LIABILTY
1. Insuring Agreement
a. 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 . . . .
The policy contains an endorsement entitled "ADDITIONAL INSURED — LESSOR OF LEASED EQUIPMENT," which provides:
WHO IS AN INSURED (Section II) is amended to include as an insured the person(s) or organization(s) shown in the Schedule, but only with respect to their liability arising out of the maintenance, operation or use by you of equipment leased to you by such person(s) or organization(s), subject to the following exclusions:
This insurance does not apply:
1. To any "occurrence" which takes place after the equipment lease expires;
2. To "bodily injury" or "property damage" arising out of the sole negligence of the person or organization shown in the Schedule.
It is undisputed that neither party could produce a schedule, nor is there any evidence of record that a schedule ever existed.
At issue is the Crane Rental Agreement. The first page of the rental agreement identifies Northwest as the "lessor," and Ryan as the "lessee." The agreement goes on to provide in paragraph nine that:
INDEMNITY AND INSURANCE: Lessee shall defend, indemnify and hold forever harmless Lessor, L.H. Sowles Co. and their officers, agents, and employees from against all loss, liability and expense by reason of any violation of any rule, regulation or law, by reason of bodily injury including death, and property damage, sustained by any person or persons, including but not limited to Lessee's employees, as a result of the maintenance, use, operation, and on site storage, of Equipment. In addition, Lessee shall maintain insurance covering the aforesaid risks in a company acceptable to...
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