BITCO General Insurance Corporation v. Kelluem et al, No. 1:2016cv00168 - Document 111 (S.D. Ga. 2017)
Court Description: ORDER granting 57 & 59 Motions for Partial Summary Judgment; denying 60 Motion for Summary Judgment; denying as moot 90 Motion for Leave to File an untimely response; denying 102 Motion for Hearing. Signed by Chief Judge J. Randal Hall on 12/21/2017. (thb)
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BITCO General Insurance Corporation v. Kelluem et al IN THE UNITED Doc. 111 STATES DISTRICT COURT SOUTHERN DISTRICT OF FOR THE GEORGIA AUGUSTA DIVISION BITCO GENERAL INSURANCE * COMPANY, * * Plaintiff, * * v. * CV 116-168 * EDWARD KELLUEM, FRANK POWELL, * GRANGE INDEMNITY INSURANCE * COMPANY, COMPANY, GRANGE MUTUAL CASUALTY CHARLES NICHOLAS BRANSON, DELOACH, and CALVIN "RICKY" * * * * * Defendants. * ORDER Before the Court are motions for partial from Plaintiff BITCO General Insurance Company 57, 59) summary judgment ("BITCO") (docs. and Defendants Grange Indemnity Insurance Company and Grange Mutual Casualty Company ("Grange") (doc. 60). The Clerk has given the opposing parties notice of the summary judgment motion and the summary judgment rules, of affidavits in opposition, 61.) Therefore, or other materials consequences of default.1 (Doc. the right to file and the the notice requirements of Griffith v. Wainwright, 772 F.2d 822, 825 (11th 1 After all three motions had been filed, the Clerk only issued notice with respect to Grange's motion on June 13, 2017. (Doc. 61.) However, all affected parties have responded to BITCO's motions. (Docs. 81, 82, 84, 91.) Therefore, since the matters have been fully briefed, Defendants have not suffered prejudice. Dockets.Justia.com Cir. 1985) (per curiam) , have been satisfied. The matters have been fully briefed and are ripe for consideration.2 I. On July 24, BACKGROUND 2013, Defendant Edward Kelluem was returning to G&H Timber and Harvesting ("G&H") timber. (Compl., % 52.) railroad, the tractor he was driving collided with a locomotive operated by Doc. 1, Defendants "Ricky" Deloach. (Id.) after unloading a shipment of As Kelluem began to cross a Charles Nicholas Branson and Calvin The tractor belonged to Defendant Frank Powell and was insured by Grange.3 (Holt Decl., Doc. 57, Attach. 4, t 10; Doc. 1, Attach. 3, at 2.) Powell had agreed to let G&H use and the tractor to haul lumber G&H would pay Powell according to the miles the tractor was driven and the amount of lumber hauled.4 (Holt Decl., H 10.) tractor to Kelluem. G&H, in turn, assigned the (Id.) G&H had business auto and commercial insurance policies with BITCO. (Olson Decl., Doc. 57, Ex. 7 K 3.) 2 Defendants Edward Kelluem and Frank Powell move for a hearing on BITCO's motion. Because the Court can resolve all pending motions without a hearing, Kelluem and Powell's motion (doc. 102) is DENIED. 3 Powell applied for and purchased the policy at William J. Heffernan & Co. (Doc. 1, Attach. 3, at 2.) 4 Although G&H used Powell's tractor, Powell was still in charge of the tractor's maintenance; its registration, taxes, and license; and where the tractor would be stored if it was not in use. (Powell Dep., Doc. 54, Attach. 1, at 18.) Additionally, there was no long-term lease so Powell was free to repurpose the tractor if he found a more lucrative opportunity. (Id^_ at 88.) Branson and Deloach each brought a separate lawsuit against Kelluem, Powell, and G&H in Bibb and Burke County, "State Action") . at 1.) (Doc. 57, Attach. 2, at 1; Doc. Georgia (the 57, Attach. 3, Branson and Deloach claimed Kelluem negligently failed to yield at a railroad crossing and that G&H was vicariously liable Doc. for both Kelluem and Powell. 57, Attach. (Doc. 57, Attach. 2, at 3, at 5.) Grange retained counsel to defend Kelluem and Powell, BITCO retained rights. 2015, counsel (Compl. M for G&H, subject 74-75; Olson Decl., to a % 9.) reservation and of On March 31, BITCO contacted Grange requesting that Grange defend G&H (Compl. % and assume the associated costs but Grange refused. 90.) 3; On April 22, 2016, Branson's counsel contacted BITCO and claimed that Kelluem and Powell policy. are insureds under BITCO's (Doc. 82, Attach. 4, at 1.) BITCO initiated this action seeking a declaratory judgment establishing that (a) Grange has a duty to defend and indemnify G&H in the State Action and therefore is obligated to reimburse BITCO for the costs it has incurred defending G&H thus far; and (b) BITCO has no duty to defend and indemnify Kelluem or Powell in the State Action. (Compl. H 185.) Presently, Grange and BITCO have filed cross-motions for partial summary judgment on the issue of whether Grange has a duty to defend G&H and reimburse BITCO. (Docs. 59, 60.) Additionally, BITCO has filed a separate motion for partial summary judgment on the issue of whether it has a duty to defend and indemnify Kelluem or Powell. (Doc. 57.) II. STANDARD A motion for summary judgment will be granted if there is no disputed material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The Court must view facts in the light most favorable to the non-moving party and draw all inferences in its favor. Ltd. v. Zenith Radio Corp., Matsushita Elec. 475 U.S. 574, 587 Indus. (1986). Co., The movant initially bears the burden of proof and must point to evidence on file which demonstrates the absence of a disputed material fact. (1986). The movant must also show no reasonable jury could find for non-moving party on any of the Celotex Corp. Fitzpatrick v. City of Atlanta, 1993) . v. Catrett, the 477 U.S. essential 2 F.3d 1112, 317, 323 elements. 1115 (11th Cir. If the movant carries its burden, the non-moving party must come forward with significant, probative evidence showing there is a material fact in dispute. moving party cannot IcL at 1116. simply rely on its pleadings The non- and must respond with affidavits or other forms provided by Federal Rule of Civil Procedure 56. Id. at 1116 n.3. Ill, DISCUSSION A. Grange's Duty to Defend G&H5 Through its motion, Grange exclusions precluding coverage. seeks to invoke two separate Grange argues that G&H is not covered by its policy since Kelluem was using Powell's tractor as a "for hire motor carrier" and was hauling cut trees. For its part, BITCO disputes whether the exclusions Grange cites are part of its policy. Additionally, BITCO claims that the policy's exclusions do not apply. 1. Grange's AutoAccel Eligibility Document Grange claims that the exclusions listed in the "AutoAccel Eligibility" document ("Eligibility Document") were included in Powell's application, which was expressly incorporated into the policy. The Eligibility Document excludes coverage for risks including "[v]ehicles hauling . . . cut trees [and] logging" and "[v]ehicles operated as a xfor hire motor carrier' that require Hired Auto Liability Coverage." responds that the (Doc. Eligibility Document 60-2, was at 66.) BITCO a guideline Grange's agents and not part of Powell's application. for A writing may be incorporated into an agreement by reference or physical 5 Since the dispositive question in both Grange (doc. 60) and one of BITCO's (doc. 59) motions is whether Grange has a duty to defend G&H, the two motions will be discussed and resolved together. attachment. West v. Although both parties Rudd, frame 249 this the Eligibility Document was S.E.2d as a 76, legal 79 (Ga. question, attached to the 1978.) whether application is a question of fact. To support its motion, of Richard H. Capps, Grange has submitted the affidavit who owns William J. Heffernan & Co., Inc., where Powell purchased his insurance policy. 60-2, at 60, 1 2.) (Capps Aff., Doc. Capps states that the Eligibility Document was attached to the application Powell signed. Grange has submitted evidence demonstrating (Id. at % 5.) the Eligibility Document was part of the application and therefore satisfied its initial burden for summary judgment. 1116. See Fitzpatrick, 2 F.3d at BITCO, on the other hand, has only put forward evidence showing that (Powell Dep., Powell did not at 60-62.) see the Eligibility Document. Because Powell does not challenge whether the Eligibility Document was part of the application, BITCO's evidence does not create a dispute over a material fact. Accordingly, Grange has demonstrated that the Eligibility Document was attached to Powell's application and is therefore incorporated into the policy. 2. The For Hire Motor Carrier Exclusion BITCO maintains that the "for hire motor carrier" exclusion does not apply to Powell's tractor. Grange's policy does not define "for hire motor carrier" but Grange claims it is defined according to the GMCA defines Georgia Motor Carriers Act motor carriers broadly to owning, controlling, used in the include "GMCA"). The "[e]very person operating, or managing any motor vehicle . business of transporting household goods, or property . . . ." Grange's (the interpretation makes other ban on hauling trees--superfluous.6 for hire persons, O.C.G.A. § 40-1-100(12). exclusions--including the A more logical reading is that the exclusion only applies to a subset of for hire motor carriers, namely Coverage." policy those "that require Hired Liability Neither party has addressed this clause but Grange's defines "Hired AAutos'" as those the "lease[s], hire[s], rent[s], or borrow[s]." at 15.) Auto named insured (Doc. 1, Attach. 3, Since Powell owned his tractor, it is not a hired auto. Accordingly, Powell's tractor is not a "*for hire motor carrier' that require[s] Hired Auto Liability Coverage." Thus, the "for hire motor carrier" exclusion does not preclude coverage. 3. The Vehicles Hauling Cut Trees Exclusion As previously "[v]ehicles argues that hauling because mentioned, Grange's . . . cut trees Kelluem unloaded accident, he was not hauling cut trees. 6 Thomas v. Kumar, 525 S.E.2d 735, [and] his policy excludes logging." cargo BITCO before the Grange responds that 736 (Ga. Ct. App. 1999) (-[Courts] bound to give meaning to every term . . . ." (internal quotations omitted). are Kelluem was G&H's still hauling cut business. In Generali, S.P.A. , making delivery, another a Hot 556 Shot S.E.2d Richard load when he trees because he was Express, 475 (Ga. Darr was involved Inc. Ct. on was v. Assicurazioni App. his engaged in 2001), way to in an accident. Id. after pick at up 476. The court found that although Darr was not hauling cargo, he was still engaged in Hot Shot Express, Inc.'s business and therefore was within the scope exclusion. Id. at of the insurance policy's 4 78-79. Like Darr, Kelluem was back to G&H to pick up another load of timber. at 50.) than the However, business use to the hauling in general. of exclusion in danger attendant unloaded his cargo. time use on his way (Kelluem Dep., Grange's cut trees exclusion is much narrower applies the business the This Hot to danger Shot. The hauling cut diminished exclusion trees, when not Kelluem Since Kelluem was not hauling cut trees at accident, the cut trees exclusion does not preclude coverage. 4. Grange's Duty to Defend G&H An insurer is required to defend an insured when the facts alleged in a complaint are within the policy's coverage. See City of Atlanta v. St. Paul Fire & Marine Ins. Co., 498 S.E.2d 782, 784 (Ga. Ct. App. 1998) . ultimately be held liable Thus, whether the insurer will is not 8 controlling. North Metro Directories Pub., 726, 729 (Ga. LLC v. Ct. liability coverage "insured" Cotton States Mut. App. to an 2006). Ins. Grange's "insured" and its Co., 631 S.E.2d policy provides definition of an includes the named insured and anyone "liable for the conduct of an insured." (Doc. 1, Attach. 3, at 16.) Branson and Deloach allege that G&H is vicariously liable for Powell. Powell is the named Grange's policy. liable for Therefore the insured and therefore an insured under Because Branson and Deloach claim that G&H is conduct of an Branson and insured, Deloach have G&H is also an insured. alleged facts that fall within Grange's policy and Grange has a duty to defend G&H in the State Action. BITCO also defending G&H. seeks to recover the costs it has incurred When an insurer pays for an insured's defense, the insurer may recover those costs from another insurer that was primarily responsible for the insured's defense. Cas. & Sur. Co. v. Empire Fire & Marine Ins. 778, 781 (Ga. Ct. App. 1994). is the primary coverage insured's vehicle. Co., See Aetna 442 S.E.2d Grange's policy provides that it for claims BITCO's policy, dealing with the named in contrast, states that when the named insured does not own the vehicle, its coverage is "excess over any other collectible insurance." 1, at 29.) (Doc. 1, Attach. Since Deloach and Branson's actions revolve around Powell's vehicle, Grange is the primary insurer. Accordingly, BITCO may seek reimbursement for the costs it has incurred defending G&H. Although the exclusions in the Eligibility Document were part of Powell's application and expressly incorporated into the policy, those exclusions Powell owned his tractor, that require[s] do not preclude coverage. Because it was not a "xfor hire motor carrier' Hired Auto Liability Coverage." Additionally, since Kelluem was not hauling trees at the time of the accident, Powell's tractor was logging." Upon not the a "[v]ehicle[] foregoing, hauling cut BITCO's motion trees for [or] summary judgment against Grange is GRANTED.7 B. BITCO's Liability for Kelluem and Powell In a separate motion for summary judgment, BITCO argues that Kelluem and Powell are not insureds under BITCO's policy, and therefore it is not required to defend them. BITCO's policy provides: We will pay all sums an "insured" legally must pay as damages because of "bodily injury" .... The following are "insureds": . . . a. You for any covered "auto". b. Anyone else while using with your permission a covered "auto" you own, hire or borrow .... 7 Grange complains that BITCO has not put forward any evidence showing the costs it incurred defending G&H were reasonable. However, summary judgment may be rendered with respect to liability alone, leaving the issue of damages for subsequent determination. Fed. R. Civ. P. 56(g). 10 (Doc. 1, Ex. 1, at 22.) Thus, Kelluem entitled to coverage if they (1) and Powell respond qualifies as a non-owned auto, coverage. are only that hired or borrowed. since Powell's tractor they are entitled to liability Non-owned autos are those the named insured does not "own, lease, with [the hire, named previously hauling Powell had G&H's permission and (2) Powell's tractor was one that G&H owned, Kelluem and rent or borrow that are used in connection insured's] discussed, lumber for business." Powell's (Id. tractor G&H and therefore was is a at 21.) As destroyed while non-owned auto. Kelluem and Powell essentially argue that any operator of any covered vehicle This is an insured entitled interpretation ignores the to limiting liability coverage. language in BITCO's policy. See Thomas v. Kumar, 525 S.E.2d 735, 736 (Ga. Ct. App. 1999) . "Anyone else" only qualifies as an insured when he is using a vehicle borrow[s] ." the Accordingly, policy holder "own[s], the use of a covered, hire[s] or non-owned auto does not convert Kelluem and Powell into insureds. The parties also dispute whether Powell's tractor is a hired auto under the policy. Kelluem and Powell argue that because G&H might be vicariously liable for Kelluem, tractor is a hired auto. hired auto depends Powell's However, whether Powell's tractor is a on G&H's relationship 11 with Powell, not Kelluem. 180-82 In Southern Gen. Ins. Co. v. Alford, 507 S.E.2d 179, (Ga. Ct. App. 1998), Don Harris lost control of a load of timber, which killed Lisa Alford. to Harris, Although the tractor belonged John McLucas owned the trailer and cargo. Alford's Estate made a claim against McLucas' auto-insurance arguing that Harris' tractor was a hired automobile. The court decided that because there was no separate hiring agreement between McLucas and Harris for Harris' contractor, Harris' this case, tractor and Harris was an independent tractor was not a hired automobile. neither party contends agreement regarding Powell's that tractor. there was Id. a separate Additionally, although Powell's tractor was being used to haul G&H's lumber, little control over the tractor. In Powell decided G&H had where the tractor would be housed when it was not in use; was in charge of the tractor's maintenance; and could repurpose the tractor if he found a more profitable use. Like McLucas in Alford, Powell contractor than an employee. not a (Powell Dep., at 33-34, 82-82). is more Accordingly, like an independent Powell's tractor is "hired auto." Finally, Carrier Act Kelluem and Powell argue that the Federal Motor (the "FMCA") creates a question whether Kelluem is a statutory employee of G&H.8 of fact as to However, BITCO 8 While BITCO correctly points out that Kelluem and Powell's response to BITCO's motion for summary judgment is untimely, BITCO has suffered no 12 is not disputing G&H's liability. not apply to 13506(a)(6); 884 tractors 111. (M.D. La. Cent. 2001) R. Even if it was, the FMCA does transporting Co. logs. v. Dupont, 49 190 F. ("[T]he transportation of U.S.C. Supp. § 2d 880, logs and pulpwood is not governed by the Motor Carrier Act."). Upon the under BITCO's foregoing, Kelluem and policy and therefore Powell BITCO's are not motion for insureds summary judgment is GRANTED. IV, CONCLUSION Therefore, upon the foregoing, BITCO's motions for summary judgment against Kelluem, Powell, and Grange (docs. 57, 59) are GRANTED and Grange's motion for summary judgment against BITCO (doc. 60) is DENIED. Additionally, Kelluem and Powell's motion for a hearing (doc. 102) is DENIED and their motion for leave to file an untimely response (doc. 90) is DENIED AS MOOT. ORDER December, ENTERED at Augusta, Georgia this £Z J * day of 2017. J, UNITgg" STATES DISTRICT COURT SOUTHERN DISTRICT OF GEORGIA prejudice and the delay will have no impact on these proceedings. Advanced Estimating Sys. , Inc. v. Riney, 77 F.3d 1322, 1325 (11th Cir. 1996) . the Court will consider Kelluem and Powell's arguments, leave to file an untimely response (doc. 90) is DENIED AS MOOT. 13 Since their motion for
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