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MARYLAND CAS. CO. v. CITY DELIVERY SERV.

February 22, 1993

MARYLAND CASUALTY COMPANY, Plaintiff
v.
CITY DELIVERY SERVICE, INC., Defendant and Third Party Plaintiff v. AMERICAN CASUALTY CO. OF READING, Third Party Defendant



The opinion of the court was delivered by: JAMES F. MCCLURE, JR.

 February 22, 1993

 BACKGROUND

 In this subrogation action, plaintiff Maryland Casualty Co. (Maryland) seeks indemnification from the defendant, City Delivery Service, Inc. (City Delivery) for claims arising out of a motor vehicle accident which occurred in Lackawanna County, Pennsylvania on March 11, 1988. *fn1"

 Maryland filed this action to recover the settlement amount and its legal expenses *fn4" from City Delivery under an indemnity clause in a lease agreement which City Delivery had with Maryland's insured. *fn5" City Delivery is an interstate contract carrier licensed by the Interstate Commerce Commission (ICC) to transport goods over authorized routes. Maryland's insured, Keller, is an independent trucking company, which leases trucks and supplies drivers to authorized ICC carriers such as City Delivery. Keller is not an authorized ICC carrier.

 City Delivery and Keller entered into a master lease agreement on July 14, 1987. *fn6" Keller, the lessor, supplied the tractors and drivers. City Delivery, the lessee, supplied the trailers and the loads to be transported. Without City Delivery's ICC authorization, Keller had no right to transport goods in interstate commerce. When transporting goods for City Delivery, Keller displayed on its tractor a placard bearing City Delivery name. The truck which collided with the Douaihy vehicle was leased to City Delivery, was transporting goods under the City Delivery lease and displayed a City Delivery placard at the time of the accident.

 Under its lease agreement with Keller, City Delivery assumed the obligation of providing primary insurance coverage for injuries arising out of the operation of Keller tractors operated by Keller drivers while under lease to City Delivery. In exchange for that promise, Keller paid City Delivery 3% of its gross revenues from lease operations. *fn7"

 City Delivery does not dispute that it had an obligation under the lease to provide coverage for Keller tractors and drivers under lease to it. City Delivery's carrier is American Casualty of Reading, (American), a CNA company. *fn8" American has consistently denied any obligation to insure Keller tractors under lease to City Delivery as a primary insurer. American refused Maryland's request that it defend the action filed by the Douaihys *fn9" and fund the settlement.

 When Maryland filed this action to recover as Keller's subrogee under the insurance provision clause of Keller's lease agreement, City Delivery joined American as a third party defendant. It alleges that American's failure to defend the action filed by the Douaihys and fund the settlement is a breach of its policy.

 This action is before the court on cross motions for summary judgment. All parties have moved for judgment in their favor. *fn10" Subsequent to the filing of its motion, Maryland filed a supplemental motion for partial summary judgment requesting that the court dispose of liability issues only on summary judgment, because of American's unwillingness to stipulate to the reasonableness of the settlement amount.

 We dispose of the outstanding motions as follows. Maryland's motion for summary judgment is deemed withdrawn. Maryland's supplemental motion for partial summary judgment against City Delivery on liability issues only will be granted. City Delivery's motion for summary judgment against American will be granted on liability issues only. American's motion for summary judgment will be denied.

 DISCUSSION

 Motion for summary judgment standard

 Summary judgment is appropriate if 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 any material fact and that the moving party is entitled to judgment as a matter of law. " Fed.R.Civ.P. 56(c) (Emphasis supplied).

 
. . . The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be 'no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is 'entitled to judgment as a matter of law' ...

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