Source: http://thecabadvantage.com/articles/category/cases-from-bits/c168-volume-16-edition-2-cases/
Timestamp: 2019-04-19 20:47:43+00:00

Document:
Custom Companies, Inc. v. North River Ins. Co.
The NORTH RIVER INSURANCE COMPANY d/b/a Crum & Forster, Defendant.
George P. Apostolides, Jennifer H. Sarhaddi, Christopher S. Naveja, Michael A. Abramson, Arnstein & Lehr, LLP, Chicago, IL, for Plaintiff.
James R. Swinehart, Keith G. Flanagan, Craig A. Jacobson, Clausen Miller P.C., Chicago, IL, for Defendant.
RONALD A. GUZMAN, District Judge.
*1 This action involves an insurance claim by The Custom Companies, Inc., d/b/a Custom Cartage, Inc.FN1 and CDN Logistics (collectively, “CDN”), shipping brokers, for the theft of a shipment of athletic shoes. CDN reimbursed the party that consigned the shoes to it and received partial payment for the loss from the trucking company it had contracted to transport the shoes. In this lawsuit, CDN seeks coverage for its loss through a policy it purchased from North River Insurance Company (“North River”). The parties both move for summary judgment. For the reasons stated herein, CDN’s motion is denied and North River’s motion is granted in part and denied in part.
FN1. The defendant contends that The Custom Companies, Inc. d/b/a Custom Cartage, Inc. is not a proper party as it is not the entity that suffered the loss and is not a named insured under the relevant insurance policy. The Court refers to the plaintiffs collectively for purposes of this motion and leaves for a later date resolution of that issue.
Covered Property means lawful goods and merchandise of others that you have accepted for transportation under a bill of lading, tariff, shipping receipt or contract of carriage as a common or contract motor carrier or when you trip lease to another motor carrier. Such property is covered while in due course of transit in your care, custody or control or in the custody of a connecting carrier.
3. The insurance provided by this endorsement is excess over any other collectible insurance, whether primary, excess or contingent, unless such insurance is specifically written to apply in excess of this policy. Any amount payable under this endorsement shall be reduced by all sums paid by or on behalf of the “trucker”.
“Trucker” means any person or organization engaged in the business of transporting property as a common carrier or contract carrier for hire.
(Id. ¶ 23.) CDN seeks coverage under both the CCL Endorsement and the MTC Form.
Summary judgment is proper “if 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); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Thus, in order to withstand a motion for summary judgment, the nonmoving party must show that a dispute about a genuine issue of material fact exists. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The nonmoving party may not merely rest upon the allegations or details in his pleading, but instead, must set forth specific facts showing there is a genuine issue for trial. See Celotex, 477 U.S. at 322; Anderson, 477 U.S. at 248. To succeed on a summary judgment motion, the evidence must be such “that [no] reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. In Illinois, the interpretation of an insurance policy is a question of law that is appropriately resolved by summary judgment. River v. Commercial Life Ins. Co., 160 F.3d 1164, 1169 (7th Cir.1998).
*4 “An insurance policy is a contract, and the general rules governing the interpretation of other types of contracts also govern the interpretation of insurance policies.” Hobbs v. Hartford Ins. Co. of the Midwest, 214 Ill.2d 11, 291 Ill.Dec. 269, 823 N.E.2d 561, 564 (Ill.2005). When the terms of an insurance policy are clear, courts should ascertain the intent of the parties solely from the language of the policy. La Salle Nat’l Trust, N.A. v. ECM Motor Co., 76 F.3d 140, 144 (7th Cir.1996). If the language of the policy is ambiguous, it must be interpreted against the insurer. Travelers Ins. Co. v. Eljer Mfg., Inc., 197 Ill.2d 278, 258 Ill.Dec. 792, 757 N.E.2d 481, 491 (Ill.2001).
B. Are Plaintiffs entitled to coverage?
CDN contends that it is entitled to coverage under both the MTC Form and the CCL Endorsement. North River asserts that CDN has waived its right to rely on the MTC Form but agrees that it is liable under the CCL Endorsement. However, North River contends that CDN’s claim pursuant to the CCL Endorsement is subject to a $100,000 .00 limitation for “thefts of wearing apparel” which amount, in turn, must be reduced pursuant to the setoff provision by the $100,000.00 that CDN received from Quality Freight. Therefore, North River contends that it is has no obligation to make any payment to CDN pursuant to the Policy.
As to the coverage claimed by CDN under the MTC Form, North River contends that because CDN alleged in its amended complaint that it sought coverage only under the CCL Endorsement, characterized its loss as one falling under the CCL Endorsement in its communications with North River, and CDN’s attorneys represented to those involved in the loss that CDN was seeking coverage under the CCL Endorsement, CDN is now precluded from seeking coverage under the MTC Form.
The argument is unavailing. CDN’s reference to the MTC Form is not a new claim, it is an alternative basis for relief under the already-asserted breach of contract claim. The Court recognizes that in another breach of contract case, the Seventh Circuit held that a district court did not err in finding that a plaintiff had waived alternative bases for relief for its breach of contract claim by raising it for the first time in its sur-reply during summary judgment. Trade Fin. Partners, LLC v. AAR Corp., 573 F.3d 401, 412 (7th Cir.2009). While the circumstances in the Trade Finance case may not have lent themselves to allowing the plaintiff to argue an alternative basis of relief, the Court concludes that the circumstances in this case do.
*5 For its part, North River fails to point to any interrogatory in which it sought to identify the specific bases for CDN’s breach of contract claim or any authority that CDN is limited to the insurance provisions it identifies in its communications with the insurer or complaint. Given the numerous references to the MTC Form during discovery, including a specific question by CDN’s attorney to Gaertner regarding whether the stolen property could also fit within the coverage provided by the MTC Form, and North River’s failure to nail down the specific bases for CDN’s claim, the Court, in its discretion, concludes that CDN may seek coverage under the MTC Form.
… lawful goods and merchandise of others that you have accepted for transportation under a bill of lading, tariff, shipping receipt or contract of carriage as a common or contract motor carrier or when you trip lease to another motor carrier. Such property is covered while in due course of transit in your care, custody or control or in the custody of a connecting carrier.
North River fails to address the merits of whether coverage exists under the MTC Form. According to CDN, because it trip leased FN3 the cargo and maintained control over the goods while in Quality Freight’s custody, the loss is covered under the MTC Form or at least a genuine issue of material fact exists as to whether the loss is so covered. (Pls.’ Resp. Court’s Direct., Dkt. # 44, Ex. B, Guthman Dep. at 12 (testifying that CDN had arranged to “trip lease” the load of the Nike shoes at issue pursuant to its agreement with Quality Freight)); (id., Ex. A, Gaertner Dep. at 81 (“[W]hen CDN accepted the low [sic], okay, they still—it was still in a sense in their—within their custody, because they were still controlling the load.”).) While North River does not contest CDN’s evidence with its own citations to the record, the Court concludes that, given the lack of definitive evidence by CDN as to whether the load was trip leased and remained in CDN’s control and custody or in the control or custody of a connecting carrier, as required for coverage under the MTC Form, a trial is necessary to resolve these genuine issues of material fact.
FN3. The Illinois Supreme Court describes a “trip lease” as “a common practice in the trucking industry whereby a lessor would lease the vehicle to another company for a single trip to a specified location.” MWM Trucking Co. v. Indus. Comm’n, 62 Ill.2d 245, 342 N.E.2d 17, 19 (Ill.1976). See also The International Risk Management Institute, http:/ / www.irmi.com/online/insurance-glossary/terms/t/trip-lease.aspx (“a lease of vehicular equipment to a motor carrier (lessee) for a single [trip]”) (last visited February 5, 2013).
CDN’s and North River’s cross-motions for summary judgment as to the applicability of the MTC Form are denied.
As already noted, North River acknowledges that it is liable under the CCL Endorsement in the Policy, but states that CDN’s claim is subject to the $100,000.00 limitation for “thefts of wearing apparel” which amount, in turn, must be reduced pursuant to the setoff provision by the $100,000.00 that CDN received from Quality Freight.
*6 However, as the parties acknowledge and as briefly discussed earlier, two endorsements (other than the CCL Endorsement) are at issue. One, located at NR00018, indicates at the top of the page that it is an “Endorsement” and then states that the “Coverage Parts Affected” are the “Motor Truck Cargo & Contingent Cargo Liability.” (Def.’s Ex. 16 at 19, Bates NR00018) (emphasis added) (“First Endorsement.”) It then lists various coverage limits including “$100,000 as respects theft of wearing apparel,” among other things. Two pages later, at NR00020, another page entitled “Endorsement” states under “Coverage Parts Affected” only the “Motor Truck Cargo Liability Coverage Form” and states that “Paragraph C.3. of the Motor Truck Liability Coverage Form [limit for theft of wearing apparel] is amended to $100,000.” (Def .’s Ex. 16 at 21, Bates NR00020.) (“Second Endorsement”). Both endorsements are dated July 1, 2010.
It is not clear why the Second Endorsement specifying the change only to the Motor Truck Liability Coverage Form exists separately from the First Endorsement. The existence of the separate Second Endorsement, however, does not eliminate the effect of the First Endorsement, which, by its terms, expressly applies to the Motor Truck Cargo and Contingent Cargo Liability forms. National Cas. Co. v. Jewel’s Bus Co., 880 F.Supp.2d 914, 2012 WL 3023315, at *2 (N.D.Ill. Jul.24, 2012) (“If the words in the policy are unambiguous, a court must afford them their plain, ordinary, and popular meaning”) (emphasis, citation and internal quotation marks omitted).
This is true despite Best’s statement that the First Endorsement applies to the MTC Form. While Best so stated, she also acknowledged in response to another question that under “Coverage Parts Affected,” the First Endorsement states “Motor Truck Cargo & Contingent Cargo Liability.” (Def.’s Ex. 18, Best Dep. at 63.) Moreover, Best does not appear to have been specifically asked why she stated that the First Endorsement applied only to the MTC Form when it also indicated it applied to the CCL Endorsement.
CDN’s arguments that the $100,000.00 limit specified in the First Endorsement is inapplicable are unpersuasive. CDN first asserts that the MTC Form identifies only one limit: $10,000,000.00 for all covered property. (Def.’s Ex. 16 at 11, Bates NR00010.) While the first page of the MTC Form states that the limit of the Policy is $10,000,000.00 for all Covered Property, the MTC Form later states under a section entitled “Limits of Insurance” that the “most [North River] will pay for ‘loss’ in any one occurrence: … For theft of one or more of the following commodities is $10,000 [subsequently amended to $100,000.00]: a. wearing apparel.” (Id. at 13, Bates NR00012.) The insurance contract must be read as a whole, American Zurich Ins. Co. v. Wilcox & Christopoulos, L.L.C., ––– N.E.2d ––––, 2013 WL 212024, at ––––9–10 (Ill.App.Ct. Jan.17, 2013), and the Court cannot ignore the specific limitation provided for theft of wearing apparel. Nor does the Court read these provisions as incompatible. Although the Policy’s limit for all covered property is $10,000,000.00, it will cover a theft of wearing apparel only up to $10,000.00 (which was subsequently amended to $100,000.00).
(b) the amount shown in the Declarations.
(Def.’s Ex. 16 at 26, Bates NR00025.) According to CDN, the brokerage agreements did not contain a limit of $100,000.00; thus, the $100,000.00 limit for theft of wearing apparel cannot apply to the CCL Endorsement. As an initial matter, both agreements between CDN and Expeditors and Quality Freight required $100,000.00 in cargo coverage. (Pl’s. Ex. C, Dkt. # 38–3, at 5; Def.’s Ex. 7, Dkt. # 34–7, at 7.) In any event, CDN’s interpretation again ignores, without a legal basis, the application of the endorsement limiting liability under the CCL Endorsement for thefts of wearing apparel to $100,000.00.
(Def.’s Ex. 16, Dkt. # 34–16, at 26, Bates NR00025.) While CDN focuses on the meaning of the first part of the provision, it completely ignores the second sentence that “[a]ny amount payable under the endorsement shall be reduced by all sums paid by or on behalf of the ‘trucker’ [Quality Freight].” Even assuming that the CCL Endorsement provides excess coverage as CDN contends, it is excess coverage subject to the setoff in the second sentence based on the plain and ordinary meaning of the section read as a whole. CDN’s assertions of ambiguity are unpersuasive. Thus, while North River acknowledges that CDN is entitled to $100,000.00 for theft of the athletic shoes under the CCL Endorsement, that amount is subject to a setoff of the $100,000.00 paid by Quality Freight to CDN, which leaves the amount payable under the CCL Endorsement at zero.
For the reasons stated above, CDN’s motion for summary judgment [37–1] is denied and North River’s motion for summary judgment [33–1] is granted in part and denied in part. The only issue left for trial is whether coverage exists under the MTC Form. The parties shall appear for a status on February 20, 2013, at 9:30 a.m. in order to set a trial date.
Appeal from the Fifteenth Judicial District Court, Parish of Lafayette, Div. J, No. C–20046151 c/w C–20046153, Honorable Kristian Dennis Earles, District Judge.
Lee Ann Archer, Law Office of Lee A. Archer, Lake Charles, LA, for Plaintiffs–Appellants, Ralph Coleman, Dejuana Hightower.
Mark Gerard Artall, Attorney at Law, Lafayette, LA, for Plaintiffs–Appellants, Ralph Coleman, Dejuana Hightower.
William Compton Helm, Helm & Jacobs, LLC, Baton Rouge, LA, for Defendant–Appellee, Jerry Groshans d/b/a J & L Trucking Co.
Donald Russell Smith, Attorney at Law, Baton Rouge, LA, for Defendant–Appellee, Progressive Security Insurance Co.
Court composed of ELIZABETH A. PICKETT, JAMES T. GENOVESE, and SHANNON J. GREMILLION, Judges.
*1 Ralph Coleman and Dejuana Hightower, acting individually and on behalf of their incapacitated major daughter, Heather Coleman (collectively referred to hereinafter as Coleman), appeal the trial court’s grant of summary judgment in favor of Paul Girard “Jerry” Groshans, doing business as J & L Trucking Company, and his insurer, Progressive Security Insurance Company (Progressive).
On December 18, 2003, Robert Jackson drove his motorcycle eastbound on U.S. Highway 90. Heather Coleman rode as a passenger on Jackson’s motorcycle. As Jackson made a right turn into the parking lot of a truck stop, a motorcycle operated by Gregory Landry collided with the motorcycle operated by Jackson. Heather Coleman was thrown from the motorcycle and suffered grievous brain injuries as a result of the collision. She is permanently disabled.
Ralph Coleman and Dejuana Hightower, Heather Coleman’s parents, filed two separate lawsuits to recover for the damages suffered by Heather and themselves as a result of the accident. They filed one suit against Jackson and Landry and their insurers, alleging negligence in the operation of the motorcyles on the night in question. In a separate suit, they sued Jerry Groshans d/b/a J & L Trucking Company (Groshans) and his insurer, Progressive, alleging that Jackson and/or Landry were employees of Groshans, acting in the course and scope of their employment on the night of the accident, and that the insurance policy issued by Progressive covered the injuries sustained by Heather Coleman. The suits were consolidated for trial.
Groshans filed a motion for summary judgment, arguing that Jackson was never his employee, and therefore, he was not vicariously liable for the injuries sustained by Heather Coleman. Progressive filed a motion for summary judgment alleging that its insurance policy did not cover the injuries sustained by Heather Coleman. The trial court granted both motions for summary judgment and dismissed Groshans and Progressive from the suit. Coleman now appeals.
1. The district court erred in granting defendants’ motions for summary judgment and dismissing plaintiffs’ claims against Progressive Security Insurance Company and Jerry Groshans d/b/a J & L Trucking Company.
2. The district court erred in determining the disputed issue of vicarious liability on summary judgment.
3. The district court erred in weighing the evidence and disregarding the testimony of four witnesses on the disputed issue of vicarious liability.
4. The district court erred in deciding that only the “first-hand” testimony of defendants Jackson and Groshans was admissible: statements of a party are not hearsay [sic].
*2 6. The district court erred in failing to recognize that disputed issues of material fact precluded summary judgment upon the employee status of Jackson and Landry under the Progressive policy.
7. The district court erred in failing to recognize that under the ambiguous policy provision regarding “temporary substitute vehicle,” the policy must be construed to cover the motorcycles.
In reviewing judgments granting a motion for summary judgment, this court uses a de novo standard of review. Gray v. Am. Nat’l Prop. & Cas. Co., 07–1670 (La.2/26/08), 977 So.2d 839. Where 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 material fact, and that mover is entitled to judgment as a matter of law,” then summary judgment is appropriate. La.Code Civ.P. art. 966(B). In determining if there is a genuine issue of material fact for the purposes of a motion for summary judgment, a court does not make credibility determinations or evaluate the weight of the evidence. Indep. Fire Ins. Co. v. Sunbeam Corp., 99–2181, 99–2257 (La.2/29/00), 755 So.2d 226.
In the second assignment of error, Coleman argues that the trial court improperly disregarded the deposition of Ralph Coleman and the affidavits of Dejuana Hightower, Susan Piccione, Jackson’s sister, and Robert M. Jackson, Jackson’s father. In its reasons for judgment, the trial court clearly stated that it gave more weight to the “first-hand” testimony Groshans and Jackson. In the second assignment of error, Coleman argues that the trial court improperly excluded the deposition of Ralph Coleman and the affidavits of Hightower and Jackson’s sister and father. We find nothing in the record indicating that this evidence was ever subject to an objection or excluded by the trial court. In reviewing the evidence de novo, then, we will review all the evidence in the record, including these depositions and affidavits.
Coleman argues that Jackson and Landry were on an errand for Groshans when they were pulling into the truck stop when the accident occurred, therefore Groshans is vicariously liable for the injuries sustained by Heather Coleman. The key question, then, is whether Jackson or Landry were employees of Groshans acting in the course and scope of their employment at the time of the accident. Jackson and Groshans flatly deny that there was ever a master-servant or employment relationship. They also both stated that Jackson was not delivering an alternator for a 1996 Peterbilt tractor to Groshans when the collision occurred. Groshans testified that he himself was in the process of installing the alternator, which he had picked up from the parts store, when he heard the motorcycles approaching and looked up to see the collision.
To support the claim that Jackson or Landry were employees of Groshans, Coleman points to the deposition Ralph Coleman and the affidavits of Hightower, Piccione, and Robert M. Jackson. Hightower stated that Jackson told her after the accident that he was delivering an alternator to Groshans at the truck stop, and that he was supposed to repair Groshans’ truck. She stated that Jackson told her that he regularly bartered his services to Groshans in exchange for Groshans allowing him to use his shop. Ralph Coleman testified in his deposition that Jackson told him they were on way to the truck stop to deliver an alternator or repair Groshans’ truck. In virtually identical language, both Jackson’s sister and father state that Jackson told them that he was delivering a part to Groshans at the time of the accident.
*3 Clearly there is a disputed issue of fact about whether Jackson was delivering an alternator at the time of the accident. The critical, material issue of fact that Coleman must provide some evidence of, however, is whether Jackson or Landry were employees of Groshans at the time of the accident. To determine whether an employee-employer relationship exists, the supreme court has held that the most important issue to be considered is the right of control and supervision over an individual. Savoie v. Fireman’s Fund Ins. Co., 347 So.2d 188 (La.1977). “Factors to be considered in assessing the right of control are the selection and engagement of the worker, the payment of wages and the power of control and dismissal.” Id. at 191.
We find that even if Jackson or Landry was delivering an alternator to Groshans, there is no evidence in the record that either of them was an employee or servant of Groshans. The evidence is clear that Jackson and Groshans were long-time friends. Groshans allowed Jackson to use space in his shop to tinker with his motorcycles and store a welding machine and a drill press. Jackson occasionally did small jobs for Groshans personally, but Jackson was never paid for his services. Groshans barely knew Landry. There is no scintilla of evidence that Groshans exercised any control over Jackson or Landry. We find that even if Jackson or Landry was delivering an alternator to Groshans at the time of the accident, it was not as an employee but as a friend doing another friend a favor. The trial court did not err in granting summary judgment in favor of Groshans and dismissing Coleman’s claims.
Likewise the trial court did not err in granting summary judgment in favor of Progressive. In order for the Progressive policy issued to Groshans to provide coverage, the first inquiry is whether Jackson or Landry were employees of Groshans. As we have determined that they were not employees, we find no coverage.
The judgment of the trial court is affirmed. Costs of this appeal are assessed to Ralph Coleman and Dejuana Hightower.
This opinion is NOT DESIGNATED FOR PUBLICATION.
Uniform Rules—Courts of Appeal, Rule 2–16.3.

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