United States District Court, E.D. Michigan, Southern Division
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
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