The Cincinnati Insurance Co. v. Richfield Corporation, Inc.

          Mag. Judge Mona K. Majzoub

         OPINION AND ORDER GRANTING GENERAL MOTORS LLC'S MOTION FOR SUMMARY JUDGMENT [55], GRANTING IN PART AND DENYING IN PART THE CINCINNATI INSURANCE COMPANY'S MOTION FOR SUMMARY JUDGMENT [32], AND DENYING THE RICHFIELD COMPANIES' MOTION FOR SUMMARY JUDGMENT [34]

          JUDITH E. LEVY United States District Judge

         Before the Court are three motions for summary judgment. In short, all three parties dispute the meaning of indemnification language in an insurance agreement and a purchase contract, as further described in detail below. Plaintiff The Cincinnati Insurance Company (“Cincinnati”) has filed a motion for summary judgment against defendants General Motors, LLC (“GM”) and Richfield Corporation, Inc., Corsair Engineering, Inc., and Transportation Technology Group, Inc. (the “Richfield Companies”). (Dkt. 32.) The Richfield Companies have filed a motion for summary judgment against Cincinnati and GM. (Dkt. 34.) Finally, GM has filed a motion for summary judgment against Cincinnati and the Richfield Companies. (Dkt. 55.) For the reasons set forth below, summary judgment is granted in favor of GM, granted in part and denied in part as to Cincinnati, and denied as to the Richfield Companies.

         I. Background

         On August 22, 2013, defendant Trask Simpson was injured by a gas cylinder explosion while working as an employee for Dort Steel Service, Inc. (“Dort Steel”). (Dkt. 1 at 3.) The cylinder was equipped on a container owned by GM and used to transport vehicle parts. (Dkt. 18 at 3.) At the time of the accident, Simpson was in the process of repairing the container consistent with a purchase contract between GM and the Richfield Companies. (the “GM-Richfield Purchase Contract”). (Dkt. 28 at 36.)

         On August 8, 2016, Simpson filed suit in Michigan state court, seeking damages relating FROM the injuries he suffered in the accident (the “Underlying Simpson Case”). (Dkt. 32-5). Simpson's complaint named the Richfield Companies as defendants, alleging they were responsible for the design and manufacture of the cylinder, and that their improper actions caused his injuries. (Id. at 3-8.) Simpson later filed an amended complaint on December 6, 2016, adding additional defendants including GM. (Dkt. 32-4 at 2.) Simpson alleged that GM was responsible for supplying the rack in an unsafe condition. (Dkt. 32-4 at 8-9.) GM subsequently filed a cross-claim against the Richfield Companies, asserting that under the GM-Richfield Purchase Contract, the Richfield Companies were obligated to indemnify and defend GM in the Underlying Simpson Case. (Dkt. 18 at 4.)

         Cincinnati brought this action in this Court on December 14, 2016, naming the Richfield Companies and Simpson as defendants.^[1] (Dkt. 1.) Cincinnati insured the Richfield Companies and sought a declaration that its commercial general liability insurance policy (the “Cincinnati Policy”) did not provide indemnification or defense coverage for the Richfield Companies in connection with the Underlying Simpson Case. (Id. at 2-3.) Because Cincinnati was defending the Richfield Companies under a reservation of rights that included the right to seek a determination that no coverage was available, Cincinnati also sought reimbursement from the Richfield Companies for the cost of the defense. (Id. at 10.)

         Cincinnati amended its complaint on March 27, 2017, adding GM as a defendant and seeking a further declaration that it does not owe a duty to defend or indemnify GM in the Underlying Simpson Case. (Dkt. 18.) In response, GM filed a counter-claim against Cincinnati, arguing that it qualifies as an “Automatic Additional Insured” under the terms of the Cincinnati Policy. (Dkt. 28 at 31-32.) Additionally, GM filed a cross-claim against the Richfield Companies, identical to the one it filed in the Underlying Simpson Case. GM's cross-claim asserts that the Richfield Companies are obligated to indemnify and defend GM under the express terms of the GM-Richfield Purchase Contract, or alternatively, under a theory of implied contractual indemnification. (Id. at 37-39.)

         Cincinnati moved for summary judgment, (Dkt. 32) and the Richfield Companies did the same. (Dkt. 34.) Then, after agreeing to dismiss its cross-claim in the underlying state-court action (Dkt. 62), GM also moved for summary judgment. (Dkt. 55.) After Simpson's claims against the Richfield Companies in the Underlying Simpson Case were dismissed, Cincinnati and the Richfield Companies withdrew those portions of their summary judgment motions against one another that sought a declaration regarding Cincinnati's alleged duty to defend and indemnify the Richfield Companies in the Underlying Simpson Case. (Dkt. 76.)

         The parties' claims, counter-claims, cross-claims, motions, and cross-motions for summary judgment are outlined in following chart and will be referred to as “Claim 1, ” “Claim 2”, etc. throughout this Opinion.

Parties	Claim Description
Cincinnati v. GM; and GM v. Cincinnati	Claim 1: Does GM qualify as an “Automatic Additional Insured” under the Cincinnati Policy for coverage related to indemnification and defense in the Underlying Simpson Case? If so, do any exclusions to coverage apply? (Dkts. 32, 55)
GM v. The Richfield Companies	Claim 2: Are the Richfield Companies obligated to defend and indemnify GM under the GM-Richfield Purchase Contract for the Underlying Simpson Case? (Dkt. 28 at 37-40.)
Cincinnati v. The Richfield Companies	Claim 3: Does the Cincinnati Policy provide coverage for defense and indemnification for GM's cross-claim against the Richfield Companies for breach of contract? (Dkt. 32.)
Cincinnati v. The Richfield Companies	Claim 4: Does the Cincinnati Policy provide coverage to the Richfield Companies for the Underlying Simpson Case? (Dkt. 18 at 4-12, 16-17.) This claim, and its resultant cross-motions for summary judgment, have been withdrawn by stipulation of the parties. (Dkt. 76.)

         For the reasons set forth below, as to Claim 1, GM's motion for summary judgment is granted, and Cincinnati's motion for summary judgment is denied. As to Claim 2, GM's motion for summary judgment is granted and the Richfield Companies' motion for summary judgment is denied. As to Claim 3, Cincinnati's motion for summary judgment is granted. As discussed, the parties withdrew Claim 4 BY stipulation (Dkt. 76).

         II. Legal Standard for Summary Judgment

         Summary judgment is proper when “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). The Court may not grant summary judgment if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court “views the evidence, all facts, and any inferences that may be drawn from the facts in the light most favorable to the nonmoving party.” Pure Tech Sys., Inc. v. Mt. Hawley Ins. Co., 95 Fed.Appx. 132, 135 (6th Cir. 2004) (citing Skousen v. Brighton High Sch., 305 F.3d 520, 526 (6th Cir. 2002)).

         The parties present the court with conflicting issues of contractual interpretation in their motions. If they had presented disputed issues of contractual intent, such issues could survive summary judgment on the basis that they are questions of fact, but “disputed issues of contractual interpretation can be resolved at summary judgment on the basis that they are questions of law.” B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d 587, 595 (6th Cir. 2001). Further, “genuine issues of material fact do not exist simply because opposing litigants argue for different interpretations of the same contractual provision.” Id. at 594-595 (citing Tenn. Consol. Coal Co. v. United Mine Workers of Am., 416 F.2d 1192, 1199 (6th Cir.1969)).

         The parties do not dispute that Michigan law applies. The purpose of contractual interpretation is to “determine and enforce the parties intent on the basis of the plain language of the contract itself.” Chungag v. Wells Fargo Bank, N.A., 489 Fed.Appx. 820, 823 (6th Cir. 2012) (citing Certified Restoration Dry Cleaning Network, LLC v. Tenke Corp., 511 F.3d 535, 543-44 (6th Cir. 2007) (internal citations, emphasis, and brackets omitted)). If the contract language is unambiguous, then the Court must enforce the contract “as written.” Id. Ambiguity of meaning can create a question of fact, and the Court cannot “impose an ambiguity on clear contract language.” Id. When analyzing the scope of insurance policy coverage, the traditional principles of contract and insurance law apply. Radenbaugh v. Farm Bureau Gen. Ins. Co., 240 Mich.App. 134, 138 (2000).

         III. Analysis

         A. Claim 1: Does the Cincinnati Policy provide coverage to GM for the Underlying Simpson Case?

         In Claim 1, GM argues that it is covered by the terms of the Cincinnati Policy as an “Automatic Additional Insured, ” meaning Cincinnati owes it a duty to indemnify and defend GM for the Underlying Simpson Case, and that no policy exemptions apply. (Dkt. 28 at 31-34.) Cincinnati argues the opposite: that GM is not an “Automatic Additional Insured” and that multiple exemptions to coverage apply. (Dkt. 18 at 9, 12-13.)

         A court tasked with determining whether an insurance policy provides coverage “must first consider whether coverage exists and then whether an exclusion precludes coverage.” Allstate Ins. Co. v. Freeman, 432 Mich. 656, 668 (1989). “It is the insured's burden to establish that his claim falls within the terms of the policy.” Heniser v. Frankenmuth Mut. Ins., 449 Mich. 155, 172 (Mich. 1995). However, it is the insurer's burden to establish that exemptions apply. See Arco Indus. Corp. v. Am. Motorists Ins. Co., 448 Mich. 395, 424-425 (1995) (Boyle, J., concurring). For the reasons set forth below, GM's motion for summary judgment on Claim 1 is granted and Cincinnati's motion for summary judgment on this claim is denied.

         1. Is GM Covered by the Cincinnati Policy as an Automatic Additional Insured?

         All parties agree that GM is not expressly named as an insured in the Cincinnati Policy. (See Dkt. 32 at 21.) Therefore, the only way that GM could qualify for coverage for the Underlying Simpson Case is if it is an Automatic Additional Insured. Automatic additional insured endorsements in insurance contracts generally eliminate the need to list each person or organization as an insured. See Craig F. Stanovich, Additional Insured Status- Automatic or Wet Blanket?, TSWW01 A.L.I.-C.L.E. 29 (2015). To qualify as an Automatic Additional Insured, GM must meet the following requirements:

         (1) Any person or organization described in Paragraph 8.a. (2) below (hereinafter referred to as additional insured) whom you are required to add as an additional insured under this Coverage Part by reason of:

(a) A written contract or agreement; . . . is an insured, provided:

(a) The written or oral contract or agreement is:

1) Currently in effect or becomes effective during the policy period; and

2) Executed prior to an “occurrence”^[2] or offense to which this insurance would apply; and

(b) They are not specifically named as an additional insured under any other provision of, or endorsement added to, this Coverage part.

         Paragraph 8.a. (2) states:

(2) Only the following persons or organizations are additional insureds under this endorsement, . . .: . . .

(c) Any person or organization (referred to below as a vendor) with whom you have agreed per Paragraph 8.a. (1) above to provide insurance, but only with respect to “bodily injury”^[3] or “property damage” arising out of “your products” which are ...