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Kar v. Swift Transportation Co.

United States District Court, N.D. Indiana, Hammond Division

March 24, 2017

PATRICIA KAR, individually and as administrator of the ESTATE OF ARIES KARR, and as mother and guardian of J.K. and A.K. minor children, Plaintiff,


          Joseph S. Van Bokkelen United States District Judge

         This matter is before the Court on Defendants' motion for summary judgment (DE 33) and Plaintiff's motion for summary judgment (DE 36).[1] This Court has jurisdiction over the case pursuant to 28 U.S.C. § 1332 because the amount in controversy exceeds $75, 000 and there is complete diversity of citizenship between Plaintiff and all Defendants.

         A. Summary Judgment Standard

         A motion for summary judgment must be granted “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). In viewing the facts presented on a motion for summary judgment, a court must construe all facts in a light most favorable to the non-moving party and draw all legitimate inferences and resolve all doubts in favor of that party. NLFC, Inc. v. Devcom Mid-Am., Inc., 45 F.3d 231, 234 (7th Cir. 1995). This notion applies equally where, as here, opposing parties each move for summary judgment in their favor pursuant to Rule 56. I.A.E., Inc. v. Shaver, 74 F.3d 768, 774 (7th Cir.1996). Indeed, the existence of cross-motions for summary judgment does not necessarily mean that there are no genuine issues of material fact. R.J. Corman Derailment Serv., Inc. v. Int'l Union of Operating Eng'rs, 335 F.3d 643, 647 (7th Cir. 2003). Rather, the process of taking the facts in the light most favorable to the nonmovant, 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 party against whom the motion under consideration is made.” O'Regan v. Arbitration Forums, Inc., 246 F.3d 975, 983 (7th Cir. 2001) (quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)). Mindful of these standards, the court now turns to the factual basis for the parties' motions and then to their substance.

         B. Background

         Patricia Kar brings this suit on her own behalf, as administrator of the estate of Aries Kar, and as the mother and guardian of his two minor children. Aries Kar died in a traffic accident on January 3, 2015, in El Paso, Texas. At the time of the accident, he was driving a tractor-trailer owned by his employer, Swift Transportation Co. of Arizona LLC (“Swift Transportation”), one of four defendants in this case. The tractor-trailer was registered to Swift Transportation in the state of Indiana. Plaintiff has also sued Mohave Transportation Insurance Company (“Mohave”), Red Rock Risk Retention Group (“Red Rock”), and Swift Transportation Services LLC (“STS”). All of the defendants are wholly owned subsidiaries of Swift Transportation Company, which is not a defendant in this case. Mohave is a reinsurer and the claims administrator for the insurance provided to Swift Transportation Company through Red Rock, which is a captive insurer providing insurance to Swift Transportation Company and its subsidiaries. STS is a limited liability company that owns and operates vehicles, but it did not own the tractor-trailer Aries Kar was driving at the time of the accident. Moreover, STS has never employed him and he was not driving the tractor-trailer under STS's operating authority at the time of the accident.

         Plaintiff asserts that the accident that claimed Aries Kar's life was the fault of an underinsured motorist and that the insurance policy Defendants maintained on the tractor-trailer provides underinsured motorist coverage for the resulting damages, which greatly exceed the limits of the at-fault driver's insurance. Defendants insist that Swift Transportation Company validly rejected underinsured motorist coverage for all its subsidiaries in accordance with Indiana law, while Plaintiff argues that the purported rejection was not in compliance with Indiana law.

         C. Facts

         Swift Transportation Company is a nationwide trucking company, operating in forty-eight states. In 2010, it instituted a new liability insurance regime. To gain favorable income tax treatment, it created Red Rock as a wholly owned subsidiary to provide liability insurance for itself and all its subsidiary organizations. Red Rock has a board of directors but no employees. In 2010 Red Rock issued a commercial automobile liability policy bearing Policy No. 136818-10, with an effective date of February 1, 2010.

         On that same date, Virginia Henkels, Swift Transportation Company's CFO, signed a document entitled “Indiana Notice Uninsured/Underinsured Motorists Coverage ” (the “Indiana Rejection Document”). (DE 35-4.) The Indiana Rejection Document included the 2010 policy number and recited that Indiana law requires insurers to provide uninsured and underinsured motorists coverage, but that the named insured can reject the coverage. Under the heading “Coverage Selection, ” Henkels checked a box stating she agreed “that Underinsured and Underinsured Motorists Bodily Injury and Uninsured Motorists Property Damage coverage are hereby rejected in their entirety.” (Id. at 1.) Just above the signature line, the Indiana Rejection Document contained the following language:

I understand and agree that the choices indicated above will apply to this policy and all future renewals, reinstatements or replacements of this policy unless a written request for a change is received and approved by the Company.

(Id. at 2.) In addition to the date signed, an effective date of February 1, 2010, appears on the document.

         There was a commercial automobile liability policy in place with Red Rock as the insurer and Swift Transportation Company as the named insured each year from 2010 through 2015. Each policy bore the number RRG136818 with a hyphen after the final eight followed by the year of the policy, so that the policy for 2015 was assigned the number RRG136818-15. Each year the policy would be put together by Swift Transportation Company at a meeting with its broker, Aon. Aon would then compile all the forms and endorsements that make up the policy and keep the original of the policy.

         Included with the documents comprising the 2010 policy is a stack of uninsured and underinsured motorist coverage/rejection forms for some thirty-three states, including the Indiana Rejection Document. The first form in the stack, applicable to the state of Alaska, is stamped “RECEIVED Mar 4 2010 Aon Risk Services, SW.” (DE 37-4.) The Indiana Rejection Document is not mentioned in any table or schedule of the 2010 policy. After 2010, Red Rock did not again offer Swift Transportation Company underinsured motorist coverage and Swift Transportation Company did not sign a document similar to the ...

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