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Stephen P. Koons v. Xl Insurance America

May 29, 2012

STEPHEN P. KOONS, PLAINTIFF,
v.
XL INSURANCE AMERICA, INC., AND GREENWICH INSURANCE COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Yohn, J.

MEMORANDUM

This is an insurance-coverage dispute regarding the duty of defendants, XL Insurance America, Inc. ("XL") and Greenwich Insurance Company ("Greenwich") to defend and indemnify plaintiff, Stephen P. Koons, in a personal-injury action brought against him in state court. After XL and Greenwich denied coverage to Koons, he brought this action seeking a declaratory judgment that XL and Greenwich have a duty to defend and indemnify him in the personal-injury action, and asserting claims for breach of contract and bad faith stemming from defendants' refusal to provide coverage. Now pending are cross-motions filed by Koons and defendants for summary judgment under Federal Rule of Civil Procedure 56. For the reasons that follow, I will deny Koons's motion for summary judgment and I will grant defendants' motion.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY*fn1

On April 18, 2008, Jeremy J. Andre, an employee of Ches-Mont Disposal, LLC ("Ches-Mont LLC") a waste-collection, recycling, and waste-disposal company, was killed while dumping recycling materials at a recycling facility in Philadelphia, Pennsylvania, in the course of his employment. (Defs.' Mot. for Summ. J. ("Defs.' Mot.") ¶¶ 7--8.) He was allegedly crushed by a trash-disposal truck that he had been operating on behalf of Ches-Mont LLC. (Id. ¶ 9.)

According to the Pennsylvania Department of Transportation's records, Koons, the plaintiff in this action, was the record owner of the truck at the time of the accident. (Id. ¶¶ 36, 52.) Koons, individually, and as a sole proprietor doing business under the fictitious name of Miller Concrete, was engaged in the business of selling and installing underground storage tanks, and had purchased the truck on October 22, 2001. (Id. ¶¶ 29, 31; Answer of Pl. to Defs.' Mot. for Summ. J. ("Pl.'s Answer to Defs.' Mot.") ¶ 29.) The purchase invoice identified the final user of the truck as "Chesmont Disposal" (Defs.' Mot. Ex. F), and on November 12, 2001, Koons entered into a 36-month lease on the truck with No Fun Allowed, Inc., a trash-hauling company solely owned by Koons at that time and a predecessor of what ultimately became Ches-Mont LLC.*fn2 (Defs.' Mot. ¶¶ 30, 32.)

In 2004 or 2005, No Fun Allowed, Inc., became Ches-Mont Disposal, Inc., an S-corporation wholly owned by Koons. (Id. ¶ 34.) Then in 2006, Koons acquired two partners in the business and Ches-Mont Disposal, Inc., was legally changed to a Pennsylvania limited liability company, Ches-Mont Disposal, LLC ("Ches-Mont LLC"). (Id. ¶ 39). Koons was the president of Ches-Mont LLC and a 35% owner and managing member of Ches-Mont Holdings, LLC ("Ches-Mont Holdings"), which was the sole member of Ches-Mont LLC, and Koons thus effectively owned 35% of Ches-Mont LLC. (Id. ¶¶ 40--41.)

According to its terms, the original lease on the trash-disposal truck expired on November 12, 2004. (Id. ¶ 35.) Although there is no evidence that the lease was extended, Ches-Mont LLC and its predecessors continued to use the truck after that date.*fn3 (Id. ¶¶ 37--38). Koons asserts that the lease "was never carried out by either party" because he transferred ownership of the truck to Ches-Mont LLC's predecessor after he purchased the truck, but he points to no evidence of such a transfer before the April 18, 2008 accident. (Pl.'s Answer to Defs.' Mot. ¶ 35.) And indeed, as of October 6, 2009, the Pennsylvania Department of Transportation continued to list Koons, doing business as Miller Concrete, as the owner of the truck and No Fun Allowed, doing business as Chesmont Disposal, as the lessee.*fn4 (Defs.' Mot. Ex. L.)

On February 25, 2010, Andre's widow commenced an action in state court against Koons, individually doing business as Miller Concrete, asserting claims for negligence, wrongful death, and survival (I will refer to this lawsuit as the "Andre action"). (Defs.' Mot. ¶ 10; id. Ex. B ("Andre Compl.").) The complaint alleged, inter alia, that Koons, as the owner-lessor of the truck, had failed to properly maintain the truck and had failed to discover and repair an alleged defect.*fn5 (Andre Compl. ¶¶ 126--155.) Ches-Mont LLC was not named as a defendant in the Andre action.*fn6

At the time of Andre's accident, Ches-Mont LLC was the named insured under both a commercial auto policy issued by XL and a commercial excess and umbrella policy issued by Greenwich. (Defs.' Mot. ¶¶ 54, 62.) Seeking defense and indemnification in the Andre action under these policies, Koons notified XL of the lawsuit by letter dated April 30, 2010. (See Mot. of Pl. for Partial Summ. J. ("Pl.'s Mot.") Ex. B.) Although XL initially agreed to provide a defense for Koons under a reservation of rights (see id. Ex. C), after further review (and after the exchange of a series of letters between Koons's counsel and XL), XL ultimately determined that it had no duty to defend or indemnify Koons in the Andre action (see id. Exs. D--F). Greenwich similarly determined that Koons was not entitled to coverage.*fn7 (See id. Ex. H.)

Koons filed this action on May 4, 2011, seeking a declaratory judgment that XL and Greenwich have a duty to defend and indemnify him in the Andre action, and asserting claims for breach of contract and bad faith stemming from defendants' refusal to provide coverage. I stayed Koons's bad-faith claim pending resolution of the insurance-coverage dispute.

In their answer to Koons's complaint, defendants each asserted a counterclaim seeking a declaration that Koons was not entitled to a defense or indemnification in the Andre action.

After discovery as to the insurance-coverage issue, XL and Greenwich filed a motion for summary judgment as to Koons's declaratory-judgment and breach-of-contract claims against them (counts I and II of Koons's complaint) and as to their counterclaims for declaratory judgments. Koons filed a cross-motion for partial summary judgment as to his declaratory-judgment claim against XL.

II. STANDARD OF REVIEW

A motion for summary judgment shall be granted "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). "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)). To defeat a motion for summary judgment, the nonmoving party must present "specific facts showing that there is a genuine issue for trial." Matsushita, 475 U.S. at 587 (internal quotation marks omitted). The nonmoving party must show more than "[t]he mere existence of a scintilla of evidence" for elements on which it bears the burden of production, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986), and may not "rely merely upon bare assertions, conclusory allegations or suspicions," Fireman's Ins. Co. v. DuFresne, 676 F.2d 965, 969 (3d Cir. 1982). By the same token, "it is inappropriate to grant summary judgment in favor of a moving party who bears the burden of proof at trial unless a reasonable juror would be compelled to find its way on the facts needed to rule in its favor on the law." El v. SEPTA, 479 F.3d 232, 238 (3d Cir. 2007) (footnote omitted). In addition, the mere fact that parties have filed cross-motions for summary judgment "does not mean that the case will necessarily be resolved at the summary judgment stage," because "[e]ach party must still establish that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law." Atl. Used ...


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