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Grange Mutual Casualty Co. v. Hallmark Specialty Insurance Co.

United States District Court, S.D. Indiana, Indianapolis Division

October 28, 2016

GRANGE MUTUAL CASUALTY COMPANY individually and as subrogee of AMERICAN SUNCRAFT CONSTRUCTION COMPANY, INC., Plaintiff,
v.
HALLMARK SPECIALTY INSURANCE COMPANY, Defendant.

          John Carl Trimble LEWIS WAGNER LLP

          Lewis S. Wooton LEWIS WAGNER LLP

          Michael Robert Giordano LEWIS WAGNER LLP

          ENTRY ON CROSS MOTIONS FOR SUMMARY JUDGMENT

          TANYA WALTON PRATT, JUDGE

         This matter is before the Court on the parties' cross motions for summary judgment filed pursuant to Federal Rule of Civil Procedure 56 by Plaintiff Grange Mutual Casualty Company (“Grange”) (Filing No. 63) and Defendant Hallmark Specialty Insurance Company (“Hallmark”) (Filing No. 71). This action arises out of the denial of tender by Hallmark to provide indemnification and a defense to Grange's insured, American Suncraft Construction Company (“Suncraft Construction”), following a wrongful death suit in which Grange paid $500, 000.00 on behalf of Suncraft Construction. Following the denial, Grange filed for relief in this Court, requesting that the Court order Hallmark to make a payment of $500, 000.00 to Grange for indemnification. Both parties moved for summary judgement on the Complaint. For the following reasons, the Court DENIES Grange's Motion for Summary Judgment and GRANTS Hallmark's Cross-Motion for Summary Judgment.

         I. BACKGROUND

         The following facts are undisputed. Both Grange and Hallmark are insurance companies. Grange is an Ohio corporation with its principal place of business in Ohio. Grange insures Suncraft Construction, which is also an Ohio corporation. Hallmark is a Texas corporation and holds its principal place of business in Texas. Hallmark insures F&F Coating, Inc. (“F&F”) which is also a Texas corporation.

         In 2010, Indiana-American Water Co., Inc., (“Indiana-American”) an Indiana corporation, contracted with Suncraft Construction to repair and refurbish a water tower located in Kokomo, Indiana. On August 23, 2010, Suncraft Construction subcontracted with F&F to complete a substantial amount of the repairs on the water tower (“the Subcontract”). The Subcontract included an indemnity agreement which states as follows:

To the fullest extent permitted by law, the Subcontractor [F&F] shall indemnify and hold harmless the Contractor [American Suncraft Construction], Contractor's representatives, agents and employees from all claims, losses, damages and expenses, including attorney's fees arising out of or resulting from the performance of the work, provided that such claim, loss, damage or expense is caused in whole or in part by any negligent act or omission of the Subcontractor, anyone directly employed by them or anyone whose acts they are liable for, and attributes to bodily injury, sickness, disease or death, mold growth, or to injury to or destruction of tangible property (other than the work itself) including any resulting loss of use, regardless of whether or not it is caused in part by a party indemnified above.

(Filing No. 1-1 at 3).

         On September 9, 2010, Rodolfo Torrez Vazquez (“Vazquez”), an employee at F&F, was repairing the water tower under the Subcontract agreement between F&F as subcontractor and Suncraft Construction as contractor. The ladder supporting Vazquez collapsed, resulting in his tragic death. On April 26, 2011, Vazquez's estate filed a wrongful death lawsuit in the United States District Court, Southern District of Indiana, Case No. 1:10-cv-01346. There is no dispute that Suncraft Construction and Indiana-American were negligent for failing to maintain the ladder used by Vazquez at the time of his death. On March 11, 2013, the wrongful death suit was dismissed following a settlement, where Grange paid $500, 000.00 to Vazquez's estate on behalf of Suncraft Construction and $12, 500.00 on the part of Indiana-American.

         During the underlying tort suit, Grange made several attempts to obtain reimbursement from Hallmark, through a tender of defense and a tender of indemnification. Hallmark denied the tender of defense and did not respond to the tender of indemnification. As a result, on May 25, 2016, Grange filed an Amended Complaint against Hallmark, asserting that it is entitled to indemnity because Suncraft Construction is named as an additional insured on F&F's Hallmark liability policy (the “Hallmark Policy”) and pursuant to the indemnification provision of the Subcontract. (Filing No. 58 at 4; Filing No. 58-5.) The Hallmark Policy states that:

[Hallmark] will pay those sums that [F&F] becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. [Hallmark] will have the right and duty to defend [F&F] against any “suit” seeking those damages. However, [Hallmark] will have no duty to defend [F&F] against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply.…

(Filing No. 26-1 at 7). Grange also asserts that F&F agreed to indemnify Suncraft Construction under the Subcontract and now Hallmark is required to repay Grange the $500, 000.00 that F&F had an obligation to pay. (Filing No. 58 at 3-4; Filing No. 58-1.)

         In response, Hallmark denies that it owed a defense or indemnification to Grange or Suncraft Construction. Hallmark argues that Texas law applies and the indemnity provision under the Subcontract is unenforceable under Texas law. Hallmark asserts that Suncraft Construction is not a named insured or an additional insured under the Hallmark Policy. Hallmark further contends that the wrongful death suit derived from Suncraft Construction's negligence and the Hallmark Policy with F&F does not insure against negligence, therefore it is not legally entitled to indemnification from F&F under the terms of the contract. Both parties move for summary judgment on the Complaint. (Filing No. 63; Filing No. 71.)

         II. SUMMARY JUDGMENT STANDARD

         The purpose of summary judgment is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.” Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587106 S.Ct. 1348 (1986). Under Federal Rule of Civil Procedure 56, summary judgment is appropriate only where there exists “no genuine issue as to any material facts and . . . the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56. In ruling on a motion for summary judgment, the court reviews “the record in the light most favorable to the non-moving party and draw[s] all reasonable inferences in that party's favor.” Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009) (citation omitted). “However, inferences that are supported by only speculation or conjecture will not defeat a summary judgment motion.” Dorsey v. Morgan Stanley, 507 F.3d 624, 627 (7th Cir. 2007) (citation and quotation marks omitted). Additionally, “[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial.” Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 489-90 (7th Cir. 2007) (citation omitted). “The opposing party cannot meet this burden with conclusory statements or speculation but only with appropriate citations to relevant admissible evidence.” Sink v. Knox County Hosp., 900 F.Supp. 1065, 1072 (S.D. Ind. 1995) (citations omitted). “[N]either the mere existence of some alleged factual dispute between the parties nor the existence of some metaphysical doubt as to the material facts is sufficient to defeat a motion for summary judgment.” Chiaramonte v. Fashion Bed Grp., Inc., 129 F.3d 391, 395 (7th Cir. 1997) (citations and quotation marks omitted).

         These same standards apply even when each side files a motion for summary judgment. The existence of cross-motions for summary judgment does not imply that there are no genuine issues of material fact. R.J. Corman Derailment Serv., LLC v. Int'l Union of Operating Eng'rs., 335 F.3d 643, 647 (7th Cir. 2003). The process of taking the facts in the light most favorable to the non-moving party, first for one side and then for the other, may reveal that neither side has enough to prevail without a trial. Id. at 648. “With cross-motions, [the Court's] review of the record requires that [the Court] construe all inferences in favor of the ...


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