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Ups Freight, F/K/A Overnite Transportation Company v. National Union Fire Insurance Company of Pittsburgh and C.C.

February 14, 2012

UPS FREIGHT, F/K/A OVERNITE TRANSPORTATION COMPANY,
PLAINTIFF
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH AND C.C. EASTERN, INC., DEFENDANTS.



The opinion of the court was delivered by: Susan Paradise Baxter United States Magistrate Judge

District Judge McLaughlin ) Magistrate Judge Baxter

MAGISTRATE JUDGE=S REPORT AND RECOMMENDATION

I. RECOMMENDATION

It is respectfully recommended that Plaintiff=s motion for entry of judgment [ECF No. 77] be granted in part and denied in part.

II. REPORT

A. Relevant Procedural History

On June 16, 2006, Plaintiff UPS Freight, formerly known as Overnite Transportation Company, filed the instant action for declaratory judgment against Defendant National Union Fire Insurance Company of Pittsburgh (ANational Union@). As relief against Defendant National Union, Plaintiff has sought: a) a declaration that National Union owes a duty to defend Plaintiff against claims asserted against it in a state court negligence action; b) a declaration that National Union is obligated to immediately reimburse Plaintiff for defense costs in the state court negligence action; and, c) a declaration that National Union must afford coverage to Plaintiff for any liability imposed on it in the state court action. [ECF No. 1, Complaint]. Plaintiff was subsequently permitted to file a second amended complaint on October 30, 2006, adding C.C. Eastern, Inc. as a Defendant in this action, at the insistence of Defendant National Union. [ECF

Case 1:06-cv-00137-SJM-SPB Document 89 Filed 02/14/12 Page 2 of 10

No. 14]. As relief against C.C. Eastern, Plaintiff primarily sought declaratory judgment in the form of: a) a declaration that C.C. Eastern owes a duty to defend Plaintiff against claims asserted against it in a state court negligence action; b) a declaration that C.C. Eastern is obligated to immediately reimburse Plaintiff for defense costs incurred by Plaintiff in connection with defending the state court negligence action; and c) a declaration that C.C. Eastern must afford coverage to Plaintiff for any liability imposed upon it in the state court negligence action. Id.

On January 18, 2008, Plaintiff filed a motion for summary judgment against Defendant National Union, seeking a Adetermination that [Plaintiff] is entitled to a defense and liability insurance coverage with respect to claims asserted against [Plaintiff] in the underlying action Thomas v. Overnite, et al.,@ as a matter of law. [ECF No. 38]. In response, Defendant National Union filed an opposition and cross-motion for summary judgment [ECF No. 42], as well as a memorandum of law in support thereof [ECF No. 44], seeking a judicial determination that it does not have a duty to defend or indemnify Plaintiff in the underlying state court action (hereinafter referred to as AUnderlying Action@).

Although Plaintiff did not seek the entry of summary judgment directly against Defendant C.C. Eastern, said Defendant filed an opposition to Plaintiff=s summary judgment motion and cross-motion for summary judgment [ECF No. 46], together with a memorandum of law in support thereof [ECF No. 47].*fn1 Defendant C.C. Eastern=s opposition to Plaintiff=s summary judgment motion was essentially identical to that of Defendant National Union, while its cross-motion sought a judicial determination that it Adid not breach any obligations it owed to [Plaintiff] under the lease between those parties.@

On August 25, 2008, this Court issued a Report and Recommendation (AR&R@) recommending that Defendant=s cross-motions for summary judgment [ECF Nos. 42 and 46] be denied, and that Plaintiff=s motion for summary judgment be granted as to Defendant National Union=s duty to defend Plaintiff in the Underlying Action, but denied, without prejudice, as to Defendant National Union=s duty of indemnification. [ECF No. 57]. Both Defendants filed objections to the R&R [ECF Nos. 58, 59], and oral argument on the objections was heard by District Judge Sean J. McLaughlin on September 22, 2008.

After hearing the parties= arguments, Judge McLaughlin issued an oral opinion declining to adopt the R&R. [See minute entry dated September 22, 2008]. Thereafter, Judge McLaughlin entered a written Order dated September 24, 2008, wherein he granted Plaintiff=s motion for summary judgment to the extent Plaintiff sought reimbursement from Defendant National Union for counsel fees incurred in the defense of the Underlying Action through November 18, 2005, but denied said motion in all other respects; granted Defendant C.C. Eastern=s summary judgment motion; and granted Defendant National Union=s summary judgment motion to the extent that it sought a declaration that it has no obligation to indemnify Plaintiff for any potential liability resulting from the Underlying Action or to reimburse Plaintiff for attorney fees incurred in defense of The Underlying Action after November 18, 2005. [ECF No. 63]. Plaintiff filed a timely appeal from Judge McLaughlin=s Order with the Third Circuit Court of Appeals on October 23, 2008 [ECF No. 65], and Defendants subsequently filed timely cross-appeals. [ECF Nos. 66, 67].

On May 3, 2011, the Third Circuit Court issued a Judgment affirming in part and reversing in part Judge McLaughlin=s Order of September 24, 2008. [ECF No. 75]. In particular, the Third Circuit Court found that Defendant National Union owes Plaintiff a duty to reimburse Plaintiff=s defense costs throughout the Underlying Action. (See ECF No. 76, USCA Mandate, at p. 12). Based on this finding, the Third Circuit Court vacated the partial grant of summary judgment and declaratory relief in favor of Defendant National Union, and directed that judgment be entered in favor of Plaintiff on the duty to defend issue. (Id. at pp. 4, 13). Furthermore, due to the grant of declaratory relief against Defendant National Union, the Third Circuit Court found no merit in Plaintiff=s alternative claim against Defendant C.C. Eastern, and the ...


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