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Property-Owners Insurance Co. v. Parke

United States District Court, N.D. Indiana, South Bend Division

September 14, 2016




         John Parke was seriously injured when a crane from Central Rent-A-Crane knocked over the roof trusses on which he was working. At the time of the accident, Mr. Parke was employed by D-T Construction. This is a declaratory judgment action wherein D-T's insurer, Property-Owners Insurance Company, seeks a declaration that it owes no duty to defend or provide coverage to Mr. Parke, D-T or Central Crane. D-T has not responded to the lawsuit and Parke is only a nominal defendant at this point because he has since settled his personal injury case in state court and thus has no real interest in the outcome of this case. Currently pending before me are Property-Owners' and Central Crane's cross-motions for summary judgment, as well as Central Crane's motion to strike. (DE's 60, 62, and 66.)

         Factual Background

         D-T Construction contracted with Central Crane to supply a crane and crane operator to a construction site to assist in setting trusses in the construction of a church. (DE 63-3 at ¶7.) The crane operator supplied by Central Crane was a man named Charles Patterson. (Id. at ¶10.) John Parke, one of D-T's employees, was atop one of the trusses when it was being set by the crane. (DE 63-4 at 3.) Somehow the truss collapsed with Mr. Parke on top of it, and he fell 20 feet to the ground as a result. (Id.) He was seriously injured in the fall. D-T had rented the crane from Central Crane for less than two days, and Mr. Patterson estimated he was on the job for no longer than a day and three-quarters. (DE 65-6 at 7, internal p.159:17-18.)

         After the accident, Parke sued Central Crane and other parties (who are not involved in this lawsuit) in state court in Wabash County, where the accident occurred. D-T was not a defendant in that action likely due to the fact that Parke's exclusive remedy against D-T, as his employer, would have been through the worker's compensation system. I am told by Property-Owners that D-T was a third-party defendant in the state court litigation having been sued by one of the defendants in that case, Martin Drafting and Design. That third party case was settled. (DE 86 at 4). But importantly, D-T was not sued by Central Crane in the state court litigation, or at any other time as a far as I can tell.

         As mentioned at the outset, Property-Owners insured D-T Construction. At some point after the state case was filed, Central Crane sought insurance coverage under D-T's policy issued by Property-Owners, requesting that Property-Owner's defend Central Crane in the Parke lawsuit. This request for indemnification was based upon an alleged indemnification agreement between Central Crane and D-T which is contained in the crane rental agreement (DE 63-6 at 2, ¶4.) Under the terms of the rental agreement, Central Crane leased the crane and crane operator to D-T, and D-T agreed to indemnify Central Crane from all claims for injury to persons arising out of the operation of the crane, but not for Central Crane's sole negligence. (Id.)

         It is clear from the record that Central Crane, through its lawyer, sought indemnification from D-T (DE 63-8 at 2-3), and then later sought coverage from Property-Owners. (DE 1 at ¶16). But as mentioned above, it is also clear from the record that Central Crane never sued D-T or otherwise brought a claim against D-T. Property-Owners tells me that “D-T informed Property-Owners of Central Crane's claim for defense and indemnification.” (DE 86 at 2.) But noticeably absent from this representation in Property-Owners' brief is a citation to any evidence supporting that proposition. (Id.) I'm puzzled why no lawsuit or claim has ever been brought by Central Crane against D-T. In any event, at this point, any liability of D-T to Central Crane is speculative at best which raises the question whether there exists an actual controversy between D-T and its insurer, Property-Owners.

         In response to Central Crane's request for coverage, Property-Owners agreed to defend Central Crane, but did so under a reservation of rights. (DE 60-12 at 5.) For reasons that are a little unclear, Central Crane then declined to use the attorney provided by Property-Owners, and it ultimately settled with Parke without informing Property-Owners. That settlement occurred in August 2015, but the terms of the settlement are unknown to the court. (DE 57 at ¶4.)

         During the state court litigation, but prior to the settlement, Property-Owners filed this action seeking a declaratory judgment to determine “the respective rights and responsibilities of the parties under the policy issued by Property-Owners to D-T Construction.” (DE 1 at 22.) Property-Owners specifically requested in its complaint a declaration of no duty to defend or indemnify Central Crane but curiously absent from the complaint is any similar request relating to D-T. (Id.) Property-Owners and Central Crane have filed cross-motions for summary judgment regarding Central Crane's and D-T's rights (or lack thereof) under the Policy. Property-Owners requests that I find that it owes no coverage to D-T for its potential indemnity obligations to Central Crane and that it owes no duty to defend Central Crane, while Central Crane argues that D-T is entitled to coverage for the losses suffered by Central Crane.

         After the motions were fully briefed, I requested additional briefing on two issues that the parties had not addressed: (1) whether Property-Owners has standing at this time to seek a declaration of its obligations to D-T, and (2) Central Crane's ability to recover directly from Property-Owners Insurance in light of precedent seemingly forbidding that course of action. The parties have submitted that briefing and now these motions are ready for my ruling.


         Summary judgment is proper “if 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). A genuine dispute about a material fact exists only “if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In making this determination, I must construe all facts and draw all reasonable inferences from the record in the light most favorable to the nonmoving party. Id. at 255.

         In essence, Property-Owners asks me to do two things: (1) declare that it has no obligation to D-T to provide coverage for any obligation D-T may have to indemnify Central Crane, and (2) declare that it has no obligation to provide coverage or defense directly to Central Crane. I'll address each of these in turn.

         The first request is problematic because Property-Owners does not have an actual controversy with its insured (D-T) at this time. Under the Declaratory Judgment Act, Property-Owners may seek a declaratory judgment only where it has a “case of actual controversy.” 28 U.S.C. § 2201. An “actual controversy” exists where the facts alleged “show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” ...

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