Opinion ID: 866581
Heading Depth: 3
Heading Rank: 2

Heading: Facts Show Causation

Text: Applying these principles to this case, we conclude the undisputed facts establish as a matter of law that PDSI or “those acting on [PDSI’s] behalf” at least partly “caused” Hughes’ “‘bodily injury’” within the terms of Harleysville’s policy.
Our conclusion flows, first, from the “plain, ordinary, and popular meaning,” Minn. Mining, 457 N.W.2d at 179, of the operative words in the insurance policy. The undisputed facts show Chapman, PDSI’s “lead man” at the Nitro facility, acted -12- “on behalf of” PDSI.11 See, e.g., Webster’s Third New International Dictionary 198 (1993) (defining “on behalf of” as “in the interest of,” “as the representative of,” and “for the benefit of”). Although Harleysville makes much of the facts that Chapman’s supervisory authority overlapped with the authority of Miller supervisors on site and Chapman directed the PDSI employees in accordance with Miller’s directions, these facts do not bear the enormous weight Harleysville places upon them. Viewing these facts in Harleysville’s favor, we cannot reasonably infer the overlap in supervisory 11 Because our analysis relies on Chapman’s role in partly causing Hughes’ injuries, we need not decide whether Hughes himself was acting “on behalf of” PDSI. To the extent Harleysville separately argues the PDSI employees at the Miller site did not act on PDSI’s behalf, an argument which Harleysville bases on the “loaned servant” doctrine as outlined in Nepstad v. Lambert, 50 N.W.2d 614 (Minn. 1951), we reject that argument. As our court has previously noted, on questions of Minnesota law, “Nepstad is not controlling because it applied Wisconsin law.” Lundstrom v. Maguire Tank, Inc., 509 F.3d 864, 867 (8th Cir. 2007). Harleysville has not cited a single case interpreting Minnesota’s loaned servant doctrine. Cf., e.g., Danek v. Meldrum Mfg. & Eng’g Co., 252 N.W.2d 255, 258 (Minn. 1977) (considering “for the first time the ‘loaned-servant doctrine’ with respect to that subclass of general employers known as labor brokers, who supply temporary workers to special employers”). Harleysville’s “loaned servant” argument would fail even if it had cited a relevant case because Harleysville misinterprets the scope and application of the doctrine. Under Minnesota law, the loaned servant doctrine provides that an employee of a “general” employer may, in certain circumstances, be considered an employee of the “special” employer to whom she is loaned. Id. The loaned servant doctrine expands liability rather than constricts it—both general and special employers become liable for compensating the injured worker. Id. Minnesota law does not support Harleysville’s argument, the Wisconsin law interpreted in Nepstad does not apply, and Harleysville has waived any argument that West Virginia law might control the issue. See, e.g., Portell v. AmeriCold Logistics, LLC, 571 F.3d 822, 826 n.3 (8th Cir. 2009) (holding an argument not raised in opening brief “is waived”). -13- authority meant Chapman was no longer acting “in the interest of,” “as the representative of,” or “for the benefit of” PDSI. The only reasonable interpretation of the record is Chapman worked “on behalf of” PDSI by complying with PDSI’s contractual obligation to provide certain services to Miller—a task that necessarily required taking some directions from Miller. Accepting Harleysville’s contention to the contrary would require us to say (1) consultants working with a client no longer work “on behalf of” their consulting firm if the consultants follow the client’s instruction to remove sensitive information from a report; or (2) a computer business technician who travels to a company to fix a broken computer no longer works “on behalf of” his computer business if the technician fixes a particular computer as directed by the company’s receptionist or secretary. The summary judgment standard is generous to the non-movant, but it does not require us to forego common sense. See Westchester Fire, 563 F.3d at 712. The undisputed facts also show Chapman partly “caused” Hughes’ injuries by instructing Hughes to perform the task which led to the injuries—clean resin out of a chemical tanker in a bay using high ladders without fall protection or a fixed stairway. See American Heritage Dictionary of the English Language 295 (5th ed. 2011) (defining “caused” as “[t]o be the cause of or reason for; result in”); Webster’s Third New International Dictionary 356 (1993) (defining “cause” as “to serve as cause or occasion of” or to “bring into existence”);12 see also id. at 1648 (defining “partly” as “in some measure or degree”). By instructing Hughes to work outside the chemical tanker in unsafe conditions, Chapman “in some measure” brought Hughes’ injuries “into existence.”13 That much is plain. 12 The Minnesota Supreme Court relied on precisely these definitions to interpret the word “caused” in Bolduc. See 825 N.W.2d at 708. 13 That Chapman partly caused Hughes’ injuries is not to say Chapman and PDSI were necessarily negligent, but Chapman’s instruction to Hughes—an -14-
Second, “the policy as a whole,” Cement, Sand & Gravel, 30 N.W.2d at 345, supports our plain reading of the particular provisions at issue in this case. Aside from the causation requirement, the policy as a whole places few limits on Harleysville’s obligation to cover insured contracts like the one between PDSI and Miller. In sharp contrast to the insurance contract interpreted by the Minnesota Supreme Court in Bolduc, the contract in this case does not exclude coverage for the indemnitee’s “independent acts or omissions,” Bolduc, 825 N.W.2d at 705-06. Neither does Harleysville’s contract exclude the category of damages at issue, unlike the contract in Bolduc. Cf. id. at 709-10. Harleysville’s reliance on Bolduc is misplaced. To be sure, the Minnesota Supreme Court in Bolduc interpreted an additional insured provision to cover only an indemnitee’s vicarious liability for the indemnitor’s fault. Id. at 707. But the Bolduc court expressly noted its interpretation was “properly based on [its] reading of the precise wording of the [Bolduc] provision as a whole, in the context of th[e] particular insurance policy [at issue in Bolduc].” Id. at 707 n.8 (emphasis added). The Minnesota Supreme Court reached its conclusion through a process of elimination—the Bolduc contract covered only vicarious liability because the insurance contract expressly excluded coverage for every other form of liability.14 Id. at 707-10. Of particular relevance to this case, the Bolduc contract excluded coverage for the indemnitee’s direct liability (i.e., liability imposed “when one party instruction given on PDSI’s behalf—moves beyond but-for causation. We thus find it unnecessary to specify the exact level of causation required by PDSI’s insurance contract with Harleysville. 14 Unlike this case, Bolduc involved property damage. See Bolduc, 825 N.W.2d at 707. The Minnesota Supreme Court found only three ways the indemnitee in Bolduc could become liable for property damage: (1) direct liability, (2) vicarious liability for the indemnitor’s fault, and (3) contractual liability to a third party. See id. at 707-09. The Bolduc contract expressly excluded coverage for the first and third paths to liability. See id. at 710. -15- has breached a personal duty . . . through his own negligence,” Sutherland v. Barton, 570 N.W.2d 1, 5 (Minn. 1997)). See Bolduc, 825 N.W.2d at 707. And in Bolduc, a jury found the indemnitor was not negligent. See id. at 701. This case differs on both counts. PDSI’s insurance contract with Harleysville does not exclude coverage for Miller’s liability to Hughes. And though Miller settled Hughes’ claims, no jury has found either PDSI or Miller not negligent. Both PDSI and Miller now agree that PDSI partly “caused” Hughes’ injuries. Far from excluding coverage for PDSI’s liability to Miller, other parts of the policy impliedly include such coverage. Although the policy broadly excludes coverage for bodily injury to “[a]n ‘employee’ of the insured arising out of and in the course of . . . [e]mployment by [PDSI],” the policy expressly exempts PDSI’s liability to Miller from this exclusion: “[t]his exclusion does not apply to liability assumed by the insured under an ‘insured contract.’” The policy ordinarily would exclude coverage for Hughes’ bodily injuries because he was a PDSI employee. Cf. id. at 70910. But the policy expressly did not apply this exclusion to contractually assumed liabilities, which strongly implies the contract covers PDSI’s contractually assumed liability for bodily injuries to PDSI employees. Because the liability at issue in this case arises directly from PDSI’s agreement with Miller, the contract covers Hughes’ injuries despite the fact that the injuries occurred while Hughes was working for PDSI. On the whole, the policy covers PDSI’s liability to Miller for Hughes’ settlement.
Third, “[c]ommon sense tells us” our plain reading of the insurance contract is correct. Engel v. Redwood Cnty. Farmers Mut. Ins. Co., 281 N.W.2d 331, 332 (Minn. 1979). Both PDSI and Harleysville were sophisticated parties—each was in the business of providing products and services in exchange for fees according to terms set by contract. In this context, common sense weighs most heavily in favor of giving the parties the benefits—and misfortunes—of the clear terms of their bargain. Here -16- there is no notable imbalance of power or experience, and Harleysville is hardly the less sophisticated party. Harleysville’s business is to write and sell contracts of the sort we are interpreting here. Having sold PDSI—a company in the business of contracting workers to other entities—a commercial general liability insurance policy which by its plain terms covers contractually assumed liability for injury to PDSI’s workers, Harleysville now asks our court to deny PDSI coverage for contractually assumed liability for injury to a PDSI worker. We decline to adopt Harleysville’s reading of the policy. We give the Harleysville insurance contract a “sound, common sense construction,” Sleeter v. Progressive Assur. Co., 253 N.W. 531, 533 (Minn. 1934), and hold Harleysville must cover PDSI’s liability to Miller for Hughes’ injuries.