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Castlepoint National Insurance Co. v. Insurance Company of State

United States District Court, M.D. Pennsylvania

May 13, 2015



Sylvia H. Rambo United States District Judge

In this declaratory judgment action between two insurance companies brought pursuant to 28 U.S.C. § 2201, Plaintiff seeks a declaration as to Defendant’s duty to provide a defense to certain parties in an underlying personal injury action. Presently before the court are cross-motions for summary judgment as to Defendant’s responsibility of coverage. For the following reasons, the court concludes that the relevant insurance policy places Defendant under an obligation to defend four of the parties in the underlying action, but imposes no duty with respect to the defense and indemnification of the remaining two parties at issue. Plaintiff’s motion as it relates to Defendant’s duty to indemnify the four parties to which it has a duty to defend will be denied without prejudice pending a final judgment in the underlying action.

I. Background

A. Factual Background

For purposes of the matter sub judice, the following facts are undisputed. Castlepoint National Insurance Company f/k/a SUA Insurance Company (“Castlepoint”) and Insurance Company of the State of Pennsylvania (“ISOP”) are insurance companies that sell truckers’ liability insurance. Castlepoint issued an insurance policy to East-West Hauling, Inc. (“East-West”), and ISOP issued an insurance policy (“the ISOP policy”) to Single Source Transportation, Inc. (“Single Source”).

On November 6, 2009, Kasablanca, Inc. (“Kasablanca”) leased a 2000 Volvo tractor (“Volvo tractor”) to East-West pursuant to an indefinite lease agreement. The lease agreement provided that East-West, as the lessee, “agree[d] to assume possession of the vehicle . . . for its exclusive use and control, ” to “provide all identification required by the Federal Highway Administration, the U.S. Department of Transportation and any other government agencies to be affixed to the vehicle, ” and “to furnish and pay the cost of all public liability, property damage and cargo insurance on the vehicle, while the vehicle is operated in the service of the company.” (Doc. 15-1, p. 28 of 30.) The lease agreement further provided that Kasablanca, as the lessor, could not “maintain or enter into any contract or exclusive agreement with any other carrier or forwarder for the uses of the [tractor]” while the lease agreement was in force. (Id.)

On March 19, 2010, Single Source received a bill of lading directing it to haul a load on behalf of The Hub Group, Inc. (“HUB”) from Ontario, California to Pennsylvania, pursuant to a transportation services contract whereby Single Source, as a registered carrier, agreed to provide transportation services to HUB on an ongoing basis. Shortly after departure, however, Single Source’s tractor experienced some difficulty and the trailer affixed thereto was rerouted to a facility owned by both Single Source and East-West in Montebello, California. Thereafter, Onkar Singh, the owner of both Single Source and East-West, directed Javier Barbecho-Quinche (“Javier”), an employee of East-West, to take the trailer, owned by MidEast Transportation, Inc. (“Mid-East”), to Pennsylvania using the Volvo tractor leased to East-West.

On March 22, 2010, as the tractor-trailer operated by Javier and his brother, Lenin Barbecho (“Lenin”), approached its destination, a collision occurred on Interstate-80 in Centre County, Pennsylvania, between it and another tractor-trailer operated by Lawrence Rosenthal (“Rosenthal”). At the time of the collision, the tractor operated by Javier and Lenin displayed a U.S. Department of Transportation (“DOT”) number owned by E&K Trucking, Inc. (“E&K”).[1]

Rosenthal allegedly sustained injuries in the collision and commenced suit in the Centre County Court of Common Pleas on July 29, 2011 (the “underlying action”).[2] All of the parties referenced herein are involved in that suit, which is still pending, either as named defendants or as the defendants’ insurance carriers.

B. Procedural History

On April 24, 2014, Castlepoint filed a declaratory judgment complaint against ISOP seeking a declaration that ISOP has a duty to defend and indemnify Javier, Lenin, Kasablanca, East-West, Mid-East, and E&K in the underlying action presently defended by Castlepoint. (Doc. 1.) On June 27, 2014, Defendant ISOP filed an answer denying all of the allegations in the complaint. (Doc. 10.) On December 12, 2014, Castlepoint filed a motion for summary judgment with a statement of relevant facts incorporated therein.[3] (Doc. 15.) A supporting brief followed on December 15, 2014. (Doc. 16.) Castlepoint argues that ISOP has a duty to provide a defense to those underlying defendants because (1) the Volvo tractor is a covered “auto” as defined by ISOP’s insurance policy; (2) the Volvo tractor was being used by Javier and Lenin at the time of the accident; and (3) Javier, Lenin, Kasablanca, East-West, Mid-East, and E&K (“the underlying defendants”) each qualify as an “insured” under the terms of the ISOP insurance policy. (Doc. 15, p. 19 of 38.)

On January 23, 2015, after being granted an extension of time, ISOP timely filed a brief in opposition to Castlepoint’s motion for summary judgment (Doc. 23) and a counter statement of material facts (Doc. 25). In addition, ISOP filed a cross-motion for summary judgment (Doc. 22), a statement of material facts (Doc. 26), and a supporting brief incorporated within its brief in opposition (Doc. 23). ISOP avers that, based on the evidence obtained in the underlying action indicating that Single Source may have been hauling the load on behalf of HUB pursuant to the transportation services contract, ISOP has agreed to defend Javier, Lenin, East-West, and Mid-East under a reservation of rights because they may each qualify as an “insured” under its policy with Single Source. (Doc. 26, ¶ 12.) ISOP, however, denies any obligation to defend and indemnify E&K and Kasablanca. (Doc. 23, pp. 4-5 of 18.)

On February 5, 2015, Castlepoint filed a brief in opposition to ISOP’s motion for summary judgment with a counter statement of material facts incorporated therein. (Doc. 29.) ISOP filed a reply brief on February 19, 2015. (Doc. 30.) Therefore, the cross-motions have been fully briefed and are ready for consideration.

II. Legal Standard

A. Summary Judgment

Summary judgment may only be granted where the moving party shows that there is no genuine dispute as to any material fact and that judgment as a matter of law is warranted. Fed.R.Civ.P. 56(a). Pursuant to Federal Rule of Civil Procedure 56, the court must enter summary judgment against a party who fails to make a showing sufficient to establish an element essential to that party’s case and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In evaluating the evidence, the court must interpret the facts in the light most favorable to the nonmoving party, drawing all reasonable inferences in that party’s favor. Montville Twp. v. Woodmont Builders LLC, 436 F. App’x 87, 89 n.4 (3d Cir. 2011) (citing Kossler v. Crisanti, 564 F.3d 181, 186 (3d Cir. 2009)). There is no genuine issue for trial only when the record taken as a whole could not lead a rational trier of fact to find for the non-moving party. Id. (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).

The standard for addressing cross-motions for summary judgment remains the same as if only one motion was filed. See Lawrence v. City of Phila., 527 F.3d 299, 310 (3d Cir. 2008). When confronted with cross-motions for summary judgment, the “court must rule on each party’s motion on an individual and separate basis, determining for each side, whether a judgment may be entered in accordance with the Rule 56 standard.” Schlegel v. Life Ins. Co. of N. Am., 269 F.Supp.2d 612, 615 n.1 (E.D. Pa. 2003) (quoting 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2720 (1998)).

B. Choice of Law

In cases such as this one where the federal court’s jurisdiction lies in diversity, the court will procedurally apply the choice of law principals of the forum state. Hammersmith v. TIG Ins. Co., 480 F.3d 220, 226 (3d Cir. 2007). The parties rely on New Jersey law in their written submissions to the court, indicating their agreement ...

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