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Great West Casualty Co. v. Robbins

United States Court of Appeals, Seventh Circuit

August 16, 2016

Great West Casualty Company, Plaintiff-Appellee,
v.
Pamela K. Robbins, as Administratrix of the Estate of Mike Douglas Robbins, Deceased, Defendant-Appellant, and Wren Equipment, LLC, Defendant-Appellee.

          Argued September 9, 2015

         Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. l:13-cv-00198 William T. Lawrence, Judge.

          Before Easterbrook, Kanne, and Williams, Circuit Judges.

          Kanne, Circuit Judge

         In January 2011, Defendant Linda K. Phillips, an employee of Hoker Trucking, LLC, was driving a semi-truck that struck a vehicle driven by Mike Douglas Rob-bins in Indiana. Robbins died as a result of the injuries he sustained in the accident. At the time of the accident, the semi-truck driven by Phillips was pulling a trailer Hoker borrowed from Lakeville Motor Express, Inc. Lakeville had purchased an insurance policy from Plaintiff Great West Casualty Company to cover the trailer.

         This case is not about the liability of Phillips or Hoker for the accident. That action was filed by Robbins's estate in an Indiana state court, and Phillips and Hoker were indemnified by Hoker's insurance policy. To preempt a possible claim against Lakeville's insurance policy, Great West filed this complaint for declaratory judgment against Hoker, Phillips, and Defendant Pamela Robbins, as administratrix of Mike Douglas Robbins's estate, amongst other defendants, seeking an order stating that it did not have to indemnify Hoker and Phillips for any liability in connection with the accident. After Robbins and Great West filed cross-motions for summary judgment, the district court granted summary judgment in favor of Great West and denied Robbins's motion. Finding no error with the district court's decision, we affirm.

         I. Background

         On January 4, 2011, a tractor-trailer driven by Linda K. Phillips struck a vehicle operated by Mike Robbins in Richmond, Indiana. Robbins died from the injuries sustained in the accident. At the time, Phillips was an employee of Hoker Trucking, LLC, ("Hoker") and was driving the tractor-trailer in the course and scope of her employment when she struck Robbins's vehicle. Hoker is incorporated and based in Iowa. Hoker owned the Peterbilt tractor driven by Phillips, but the trailer pulled by that tractor was on loan to Hoker from Lak-eville Motor Express, Inc. ("Lakeville"), a company incorporated and based in Minnesota.

         Lakeville, however, was not the actual owner of the trailer. Defendant Wren Equipment, LLC ("Wren") owned the trailer. Like Lakeville, Wren is incorporated and based in Minnesota. In July 2001, Wren leased Lakeville dozens of trailers, including the trailer involved in the accident, for five years. In exchange, Lakeville agreed to pay $22, 600 per month and provide insurance coverage for the trailers. Upon the expiration of the five-year term, the lease converted to a month-to-month lease.

         Karen Vanney, Lakeville's Vice President of Finance, averred that Lakeville continued leasing the trailer after the 2001 lease expired. In December 2009, Lakeville and Wren entered into another written lease agreement whereby Wren agreed to provide trailers to Lakeville, including the trailer involved in the accident, for a one-year term. Lakeville agreed to "provide insurance coverage, at its sole cost and expense, for public liability [and] property damage ... with a minimum aggregate coverage of $1, 000, 000.00 for bodily injury and property damage per occurrence." Like the earlier agreement, the lease converted to a month-to-month lease after the expiration of the one-year term. According to Vanney, Lakeville continued to lease that trailer until 2013.

         To satisfy its insurance-coverage obligations, Lakeville purchased a Commercial Lines Insurance Policy from Great West Casualty Company ("Great West") to provide automobile coverage. Great West is incorporated and based in Nebraska. Lakeville added Wren as an additional insured party under the policy, which was in effect at the time of the accident. Hoker and Phillips were not named as insured parties under the Great West policy. Hoker was insured at the time of the accident by Northland Insurance Company ("Northland"). Northland provided primary coverage in connection with the accident.[1]

         The Great West policy contains an endorsement providing that the policy's coverage will conform "with the provisions of the law or regulation to the extent of the coverage and limits of insurance required by that law or regulation" for the states in which Great West filed a "Motor Carrier Certificate of Bodily Injury or Property Damage Liability Insurance." Great West filed this certificate in Iowa, Illinois, Minnesota, North Dakota, and Wisconsin.

         In December 2012, Pamela Robbins, as administratrix of the Estate of Mike Douglas Robbins, ("Robbins"), filed a complaint in Indiana state court against Hoker, Phillips, and Lak-eville, alleging negligence. Lakeville has since been dismissed from that lawsuit.

         Great West filed this action in February 2013 seeking a declaratory judgment that Great West was not liable to defend or indemnify Hoker or Phillips in connection with the accident. After obtaining default judgments in connection with several other defendants to the first complaint, Great West subsequently amended the complaint twice. The only relevant remaining defendants to the current dispute are Robbins and Wren. Wren, however, joined in Great West's arguments both at the district court and before us.

         In June 2014, Robbins moved for summary judgment against Great West.[2] Great West responded by opposing summary judgment and cross-moving for summary judgment itself. The district court granted Great West's motion for summary judgment and denied Robbins's motion. In doing so, the district court determined that Great West's policy unambiguously excluded Hoker and Phillips as insured parties under the policy. This appeal followed.

         II. Analysis

         Robbins advances three arguments on appeal: (1) because Great West's policy is ambiguous as to whether Hoker and Phillips were excluded from coverage, we should construe the policy against Great West and find it covers Hoker and Phillips; (2) even if we find the exclusions under the Great West policy are not ambiguous, the policy exclusions nevertheless do not exclude Hoker and Phillips from coverage; and (3) regardless of whether the exclusions apply to Hoker and Phillips or not, such exclusions are invalid under Wisconsin law, the state where the trailer is registered.

         We review de novo a district court's decision on cross-motions for summary judgment. Hess v. Reg-Ellen Mach. Tool Corp., 423 F.3d 653, 658 (7th Cir. 2005). In conducting this review, we construe all facts as well as all reasonable inferences derived from those facts "in favor of the party against whom the motion under consideration was made." Clarendon Nat. Ins. Co. v. Medina, 645 F.3d 928, 933 (7th Cir. 2011). Summary judgment is appropriate where, after that review, we determine that the movant has demonstrated "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).

         Our jurisdiction over this dispute is based on diversity of citizenship, 28 U.S.C. § 1332, which means that a federal court must apply the substantive law of the forum state-here, Indiana. ErieR.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). A state's substantive law includes its conflict-of-law or choice-of-law rules. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). Although Indiana choice-of-law rules apply, the parties posit that Minnesota law governs interpretation of the insurance contract, which was issued and delivered to a Minnesota-based company. Because Indiana's choice-of-law rules give broad discretion to parties to choose the applicable substantive law, see, e.g., Barrow v. ATCO Mfg. Co., 524 N.E.2d 1313, 1314-15 (Ind.Ct.App. 1988), and we see no reason why Minnesota law should not govern this contract dispute, we apply Minnesota law in interpreting Great West's policy.

         A. Ambiguity of Great West's Policy Exclusions

         We start with Robbins's argument that Great West's policy is ambiguous as to whether Hoker and Phillips are excluded from its coverage. Minnesota courts analyze insurance policies under general contract law principles. Lobeck v. State Farm Mut. Auto. Ins. Co., 582 N.W.2d 246, 249 (Minn. 1998). Whether an insurance policy or particular provision is ambiguous is a question of law. Lott v. State Farm Fire & Cas. Co., 541 N.W.2d 304, 307 (Minn. 1995). "Language in a policy is ambiguous if it is susceptible to two or more reasonable interpretations." Carlson v. Allstate Ins. Co., 749 N.W.2d 41, 45 (Minn. 2008). In making that determination, Minnesota law directs us "not [to rely] upon words or phrases read in isolation, but rather upon the meaning assigned to the words or phrases in accordance with the apparent purpose of the contract as a whole." Art Goebel, Inc. v. N. Suburban Agencies, Inc., 567 N.W.2d 511, 515 (Minn. 1997). If language is susceptible to two reasonable interpretations, then "it must be interpreted in favor of coverage." Wanzek Constr., Inc. v. Emp'rs Ins. of Wausau, 679 N.W.2d 322, 325 (Minn. 2004). Language, however, that is unambiguous "must be given its plain and ordinary meaning, " Hubred v. Control Data Corp., 442 N.W.2d 308, 310-11 (Minn. 1989) (internal quotation marks omitted), as Minnesota law does not permit a court to "read an ambiguity into the plain language of a policy in order to provide coverage, " ]enoff, Inc. v. N.H. Ins. Co., 558 N.W.2d 260, 262 (Minn. 1997) (internal quotation marks omitted). If, however, an exclusion would omit coverage required by applicable law, it will not be enforced. Am. Family Mut. Ins. Co. v. Ryan, 330 N.W.2d 113, 115 (Minn. 1983).

         The dispute here centers on a disagreement over the effect of a September 2010 endorsement, which modified the policy's "Coverage" section of "WHO IS AN INSURED." Without the endorsement, the section read, in relevant part, as follows:

         1. WHO IS AN INSURED

         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 except:
(1) The owner or anyone else from whom you hire or borrow a covered "private passenger type" "auto."
(2)Your "employee" or agent if the covered "auto" is a "private passenger type" "auto" and is owned by that "employee" or agent or a member of his or her household.
(3)Someone using a covered "auto" while he or she is working in a business of selling, servicing, repairing, parking or storing "autos" unless that ...

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