Laurie Smith Camp, Chief United States District Judge.
This matter is before the Court on the Motion for Summary Judgment (Filing
The following facts are those stated in the parties' briefs, supported by pinpoint citations to evidence in the record, and admitted or not properly resisted by the opposing party as required by NECivR 56.1
On or about June 20, 2007, Graham Contracting, Inc. ("Graham Contracting") and Wal-Mart Stores, Inc. ("Wal-Mart") entered into a contract ("Wal-Mart Contract") for the construction of a Wal-Mart Supercenter in Omaha, Nebraska ("Wal-Mart Project"), for which Graham Contracting would be the general contractor. (Filing No. 25-7 at ECF 5.) On or about September 24, 2007, Graham Contracting assigned the Wal-Mart Contract and all related subcontracts to Graham (the "Assignment"). (Filing No. 27 ¶ 12; 25-6 at ECF 2.)
On or about January 18, 2008, Graham Contracting and D & BR Building Systems, Inc. ("D & BR") entered into a subcontract ("Subcontract") for the purpose of providing certain steelwork for the Wal-Mart Project. (Filing No. 23 ¶ 3.) The Subcontract was assigned to Graham pursuant to the terms of the Assignment. (Id. ¶ 4.) At all relevant times, Graham was insured by Arch, and D & BR was insured by Markel. (Filing No. 23 ¶¶ 1-2.)
§ 18 of the Subcontract stated:
(Filing No. 25-4 at ECF 10 § 18.) § 29 of the Subcontract stated:
(Id. at ECF 12 § 29.)
Markel issued an insurance policy to D & BR for the period of August 27, 2007, to August 27, 2008 ("Markel Policy"). (Filing No. 27 ¶ 29.) The Markel Policy provided coverage for bodily injury subject to a $1,000,000 each-occurrence limit. The Markel Policy's Bodily Injury and Property Damage Liability Coverage Insuring Agreement stated in part that:
(Filing Nos. 27 ¶ 31; 25-1 at ECF 68.)
The Markel Policy contained a Products-Completed Operations Endorsement ("Completed Operations Endorsement"), which stated that the policy included Graham "as an additional insured ... but only with respect to liability for `bodily injury' or `property damage' caused, in whole or in part, by `your work'
(Filing Nos. 23 ¶ 9; 25-1 at ECF 119 § XIII.)
On or about January 9, 2008, D & BR provided Graham with a Certificate of Liability Insurance ("Certificate"). (Filing Nos. 23 ¶ 7; 27 ¶ 33.) The Certificate stated that "[Graham] and others required by contract are included as additional insured on general liability (coverage is primary and non-contributory and includes completed operations)." (Filing No. 25-5 at ECF 2.) The Certificate also stated it was "issued as a matter of information only and confer[red] no rights upon the certificate holder." (Id.)
On January 27, 2008, Jose Sanchez Dominguez ("Sanchez") was working on the Wal-Mart Project for D & BR when he fell off the roof of the structure and suffered fatal injuries. (Filing No. 23 ¶ 10.) On or about December 8, 2008, Guadalupe Gaytan ("Gaytan"), as Special Administrator of the estate of Sanchez, filed a lawsuit against Graham and D & BR in the District Court of Douglas County, Nebraska ("First Gaytan Action"). (Id.) Gaytan named D & BR for subrogation purposes of Nebraska Workers' Compensation Act.
On or about January 26, 2010, Gaytan filed a second action, which is currently pending in the District Court of Douglas County, Nebraska, against Wal-Mart, Graham,
As to D & BR, Gaytan alleged that at the time of the accident, "[Sanchez] was an employee of Stellar Staffing who contracted with [D & BR] to provide laborers.... [D & BR] was a sub-contractor for [Graham].... [D & BR] is named as a Defendant because it, or its insurance carrier, may have a subrogation claim for workers compensation benefits." (Id. at ECF 4 ¶ 7.) On May 19, 2010, Graham filed an answer and cross-claim for indemnity against D & BR, pursuant to the Subcontract, alleging that Sanchez's death was proximately caused by the negligence of D & BR. (Filing No. 23 ¶ 17.)
On July 18, 2011, the District Court of Douglas County entered an order sustaining Wal-Mart's and Graham's motions for summary judgment on all of Gaytan's claims. (Id. ¶ 18.) The court held that Wal-Mart did not owe Sanchez any duty based on the control-over-the-work exception to the rule of a general contractor's non-liability for its subcontractor's negligence; that Graham did not exercise sufficient control over D & BR's work to give rise to a duty to protect Sanchez; and that neither Wal-Mart nor Graham breached any of the nondelegable duties recognized under Nebraska law. (Id.) On July 10, 2012, the court dismissed Graham's cross-claim. (Id. ¶ 19.)
Gaytan appealed, and the Nebraska Supreme Court reversed the District Court of Douglas County's order and remanded for further proceedings with respect to Gaytan's claim that Graham retained sufficient control over D & BR's use of safety equipment on the Wal-Mart Project.
On May 20, 2015, Plaintiffs filed this action in the District Court of Douglas County, Nebraska. (See Filing No. 1.) On July 23, 2015, Markel removed the action to this Court pursuant to 28 U.S.C. §§ 1441(a) and 1446, invoking this Court's diversity jurisdiction under 28 U.S.C. § 1332(a). (Id. at ECF 2 ¶¶ 9-12.) On November 3, 2015, Graham filed an amended complaint with this Court seeking a declaratory judgment that (i) Graham is an additional insured under the Markel Policy; (ii) Markel is obligated to provide a defense to Graham in the Second Gaytan Action by
"Summary judgment is appropriate when, construing the evidence most favorably to the nonmoving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Crozier v. Wint, 736 F.3d 1134, 1136 (8th Cir.2013) (citing Fed. R. Civ. P. 56(c)). "[S]ummary judgment is not disfavored and is designed for every action." Briscoe v. Cnty. of St. Louis, 690 F.3d 1004, 1011 n. 2 (8th Cir.2012) (internal quotation marks omitted) (quoting Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir.2011) (en banc) cert. denied, ___ U.S. ___, 132 S.Ct. 513, 181 L.Ed.2d 349 (2011)). In reviewing a motion for summary judgment, the Court will view "all facts and mak[e] all reasonable inferences favorable to the nonmovant." Gen. Mills Operations, LLC v. Five Star Custom Foods, Ltd., 703 F.3d 1104, 1107 (8th Cir.2013). "[W]here the nonmoving party will bear the burden of proof at trial on a dispositive issue ... Rule 56(e) permits a proper summary judgment motion to be opposed by any of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings themselves." Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party need not negate the nonmoving party's claims by showing "the absence of a genuine issue of material fact." Id. at 325, 106 S.Ct. 2548. Instead, "the burden on the moving party may be discharged by `showing' ... that there is an absence of evidence to support the nonmoving party's case." Id. (quoting Fed. R. Civ. P. 56(c)).
In response to the movant's showing, the nonmoving party's burden is to produce specific facts demonstrating "`a genuine issue of material fact' such that [its] claim should proceed to trial." Nitro Distrib., Inc. v. Alticor, Inc., 565 F.3d 417, 422 (8th Cir.2009) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). The nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts, and must come forward with specific facts showing that there is a genuine issue for trial." Briscoe, 690 F.3d at 1011 (internal quotation marks omitted) (quoting Torgerson, 643 F.3d at 1042). "[T]he mere existence of some alleged factual dispute between the parties" will not defeat an otherwise properly supported motion for summary judgment. Quinn v. St. Louis Cty., 653 F.3d 745, 751 (8th Cir.2011) (internal quotation marks omitted) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).
In other words, in deciding "a motion for summary judgment, facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts." Guimaraes v. SuperValu, Inc., 674 F.3d 962, 972 (8th Cir.2012) (internal quotation marks omitted) (quoting Torgerson, 643 F.3d at 1042). Otherwise, where the Court finds that "the record taken as a whole could not lead a
A review of the record reveals that there are no disputes of material fact and disposition by summary judgment is appropriate. See Moller v. State Farm Mut. Auto. Ins. Co., 252 Neb. 722,566 N.W.2d 382, 385 (1997) ("[When] there are no material issues of fact in dispute, [a court's] interpretation of the terms and conditions of [an] insurance policy is a question of law.").
In determining whether Markel is obligated to defend or indemnify Graham or Arch, the first question is whether Graham is an insured under the Markel Policy for purposes of the Second Gaytan Action. See Federated Serv. Ins. Co. v. All. Const., LLC, 282 Neb. 638,805 N.W.2d 468, 474 (2011) ("Whether an insurer has a duty to indemnify and defend an insured depends upon whether the insured's claimed occurrence falls within the terms of the insurer's coverage as expressed in the policy."). Plaintiffs argue that Graham is covered under the policy by operation of the Completed Operations Endorsement and the Additional Insured Endorsement. If Graham is not an insured under either endorsement for purposes of the Second Gaytan Action, then no duty by Markel to indemnify or defend Graham can arise.
The Markel Policy contained an endorsement that named Graham Construction as an insured, "but only with respect to liability for `bodily injury' or `property damage' caused ... by `your work' ... and included in the `products completed operations hazard'." (Filing No. 25-1 at ECF 183.) Markel argues that this endorsement covers Graham only for "completed operations" as opposed to "ongoing operations." (Filing No. 29 at 13-14.) Thus, because Sanchez died in the course of an ongoing operation, the Wal-Mart Project, Graham is not an insured pursuant to the Completed Operations Endorsement for the purposes of the Second Gaytan Action.
Plaintiffs argue that the language of the Completed Operations Endorsement is ambiguous, and should be construed in favor of Graham. This Court finds no ambiguity in the endorsement. See Callahan v. Washington Nat. Ins. Co., 259 Neb. 145, 608 N.W.2d 592, 598 (2000) (citing Ray Tucker & Sons v. GTE Directories Sales
The next question before the Court is whether the Additional Insured Endorsement requires Markel to indemnify or defend Graham. The endorsement states that "any person or organization for whom [D & BR] is required by written contract ... to provide insurance is an Insured...." (Filing No. 25-1 at ECF 119.) There is no dispute that, because of the operation of the Subcontract, this language includes Graham, however Markel argues that two distinct limitations within the endorsement preclude coverage for Graham for the Second Gaytan Action.
First, the endorsement states that "[Graham] is an insured only to the extent [D & BR is] held liable due to: ... [D & BR's] ongoing operations for [Graham]..." ("Held Liable Limitation"). (Id. at ECF 119.) Second, the endorsement states "[n]o coverage will be provided if, in the absence of this endorsement, no liability will be imposed by law on [D & BR]. Coverage will be limited to the extent of [D & BR's] negligence or fault according to the applicable principles of comparative fault" ("No Liability Limitation"). (Id. at ECF 120.)
Markel argues that according to the plain meaning of "held liable," the endorsement provides coverage only to the extent D & BR could be found liable in a court of law. Because Gaytan's exclusive remedy against D & BR is through the Nebraska Workers' Compensation Act,
Plaintiffs argue that coverage extends to Graham to the extent of D & BR's actual negligence or fault for Sanchez's death. (Filing No. 28 at 7-12.) Specifically, Plaintiffs argue that the second sentence of the No Liability Limitation, which states "[c]overage will be limited to the extent of your negligence or fault according to the applicable principles of comparative fault," indicates that the limitation as a whole is not intended to limit coverage according to principles of legal liability, but rather, actual fault. (See Filing No. 28 at 8-9.) Plaintiffs argue that, at the very least, the endorsement is ambiguous, and must be interpreted in favor of Graham as the additional insured. (Id. at 9 (citing Poulton v. State Farm Fire & Cas. Companies, 267 Neb. 569, 675 N.W.2d 665, 673 (2004)) ("[A]n ambiguous insurance policy will be construed in favor of the insured....").)
Plaintiffs rely primarily on two cases from the U.S. District Court for the District of Oregon to support their position, Richardson v. Wright Constr., No. CV-05-1419-ST, 2007 WL 1467411 (D.Or. May 18, 2007) and Clarendon Nat'l Ins. Co. v. American States Ins. Co., 688 F.Supp.2d 1186 (D.Or.2010). In both cases, the district court found that the exclusivity of Oregon's workers' compensation statute did not remove a general contractor from coverage by a subcontractor's insurance for injuries sustained by the subcontractor's employees to the extent of the subcontractor's fault, even though the subcontractor could not held liable to the employee.
In Richardson, the plaintiff, an employee of a subcontracting painting company, was injured on a job site. Richardson, 2007 WL 1467411, at *2. The plaintiff brought a negligence action against the general contractor, who in turn sought indemnification from the subcontractor's insurer. Id. The general contractor and subcontractor had previously agreed that the subcontractor would maintain insurance and indemnify the general contractor "only to the extent of [the] negligence of [the subcontractor]." Id. The subcontractor waived any immunity granted to it under Oregon's workers' compensation statute. Id. at *3. The insurance policy procured by the subcontractor contained an endorsement naming the general contractor as an additional insured but subject to language identical to that of the Held Liable and No Liability Limitations. Id. The subcontractor's insurer argued that it was not required to defend or indemnify the general contractor because the subcontractor could not be held liable under Oregon law.
In holding that the endorsement could give rise to the insurer's duty to defend the general contractor under the facts of the case, the magistrate judge interpreted the language of the No Liability Endorsement:
Richardson, 2007 WL 1467411, at *8-9.
In Clarendon, a general contractor's insurer sought indemnification and defense from a subcontractor's insurer for injuries incurred by the subcontractor's employee on the job site. 688 F.Supp.2d at 1187-88. Interpreting language identical to that in Richardson,
Conversely, another case from the District Court for the District of Oregon supports Markel's interpretation of the Additional Insured Endorsement. See Columbia River Rentals, LLC v. Phillips, No. CV-08-395-HU, 2009 WL 632933, at *7 (D.Or. Jan. 14, 2009), report and recommendation adopted, No. CV 08-395-HU, 2009 WL 598014 (D.Or. Mar. 6, 2009). In Columbia River Rentals, a construction equipment rental company brought suit against a quarry company, the quarry company's owner, to whom the construction equipment rental company had rented an industrial truck, and the quarry company's insurer. 2009 WL 632933, at *1. The rental company sought a declaration that the insurer was obligated to defend it in separate suits brought by the quarry company's owner and an employee at the quarry, both of whom were injured in an accident involving the rented truck. Id. at *2. The defendants asserted that language in the governing insurance policy identical to the Held Liable
In interpreting the Held Liable Limitation, the magistrate judge concluded that "the primary meaning of `liable' is to mean a legal obligation. While `responsible' is another definition, it is not the primary one and thus, not the ordinary or popular meaning." Id. (emphasis supplied) ("Thus, the plain, ordinary, and popular meaning of `liable' in this provision is a legal obligation. Plaintiff is an insured only to the extent that [Defendant] has a legal obligation to pay someone damages as a result of his use of the leased equipment. Because [Defendant] cannot be legally obligated to pay himself damages, plaintiff is not an insured under the endorsement.").
The Montana Supreme Court reached conclusions similar to that in Columbia River Rentals in two cases interpreting policy language identical to the Held Liable Endorsement and No Liability Endorsement at issue here. See F.H. Stoltze Land & Lumber Co. v. Am. States Ins. Co., 379 Mont. 409, 352 P.3d 612 (2015); Plum Creek Mktg., Inc. v. American Econ. Ins. Co., 352 Mont. 56, 214 P.3d 1238 (2009).
In F.H. Stoltze, the court applied its earlier reasoning in Plum Creek
Id.
Applying Nebraska law, this Court must strive to interpret the Additional Insured Endorsement as would a Nebraska court. Although the parties have not submitted — and this Court has not found — Nebraska case law interpreting the specific language at issue, the Nebraska Supreme Court has interpreted the phrase "person liable" to refer to one who is exposed to legal liability and thus exclusive of those shielded from liability by the Nebraska Workers' Compensation Act. See Downey v. W. Cmty. Coll. Area, 282 Neb. 970, 808 N.W.2d 839, 852 (2012) (holding that an employer was not a "person liable" under Nebraska law "because an employer covered by workers' compensation has no liability in tort"). The Nebraska Supreme Court's reasoning in Downey most closely aligns with that of Columbia River Rentals and F.H. Stoltze, i.e., that the term "held liable" refers solely to a legal obligation. Consequently, because no such liability can attach to D & BR in the Second Gaytan Action, Graham is not covered as an additional insured under the Additional Insured Endorsement.
Plaintiffs note that under their interpretation of the Additional Insured Endorsement, the Markel Policy provides the type and extent of coverage to which the parties agreed in the Subcontract. Whether this is accurate or not, the Court cannot look past the plain language of the Markel Policy to provide such coverage. Federated, 805 N.W.2d at 474 ("[Nebraska courts] construe insurance contracts like other contracts, according to the meaning of the terms that the parties have used."). The Subcontract and the Markel Policy are independent agreements negotiated by sophisticated parties,
Because neither the Completed Operations Endorsement nor the Additional Insured Endorsement extends coverage to Graham for purposes of the Second Gaytan Action, Graham is not an additional insured under the Markel Policy, and no duty to indemnify or defend Graham or Arch in the Second Gaytan Action can arise.
For the reasons discussed herein, Plaintiffs Graham Construction, Inc. and Arch
IT IS ORDERED:
The parties filed competing motions for summary judgment and substantially complied with NECivR 56.1(b) with respect to the presentation of their facts and evidence.
(Filing No. 25-1 at ECF 80 § 16.)
Id. at *8.
