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Markel Insurance Co. v. United Emergency Medical Services, LLC

United States District Court, N.D. Indiana

June 28, 2019




         A chain of regrettable events has led to this litigation, which features five groups of litigants with various competing and overlapping interests. On one side is Plaintiff Markel Insurance Company (Markel). Markel seeks a declaration concerning insurance coverage for an ambulance owned by its insured, Defendant United Emergency Medical Services, LLC (United), who is part of the second category of litigant. This group also includes United's employee, Defendant Abraham A. Nadermohammadi. On January 2, 2016, Nadermohammadi was driving the ambulance when it was involved in a fatal accident with a vehicle occupied by Chester R. Stofko.

         The third litigant group is Defendant Lillian Marlene Rau, as Personal Representative of the Estate of Decedent, Chester R. Stofko (Rau). She filed a lawsuit in state court against Nadermohammadi and United (the Rau Suit) to recover damages related to the accident.

         The fourth group involved in this litigation is Third-Party Defendant Insurance Service Center (ISC), who was brought into the litigation when United filed a Third-Party Complaint alleging that, should a court determine that the Markel insurance policy does not provide coverage to United for the accident of January 2, 2016, the lack of coverage is due to ISC's acts or omissions. United asserts that, even though it requested that ISC add the ambulance to its coverage in place of another vehicle, ISC did not make the requested change and procure the proper insurance coverage.

         Finally, the intervener, Erie Insurance Company, insured Chester R. Stofko for underinsured/uninsured motorist coverage. Erie has an interest in the outcome of this declaratory action regarding Markel's coverage because this determination will impact whether Erie affords underinsured/uninsured coverage.


         Markel is seeking judgment that, as a matter of law, it has no duty to indemnify United or Nadermohammadi, and that it has no duty to defend with respect to the Rau Suit [ECF No. 94]. Rau objects to Markel's Motion and has filed a cross-motion for summary judgment [ECF No. 114]. Rau argues that, under the facts of this case, Indiana law permits the ambulance to be deemed covered under the policy, notwithstanding that it was not formally listed in the policy. Rau submits that effective notice of a requested policy change was given when United sent an email to ISC on March 30, 2015. The email notified ISC that the ambulance was being placed back in service after being temporarily removed from the policy to undergo repairs. United's email asked that an ambulance already listed in the policy be removed and that the repaired ambulance take its place. The ambulance, however, was never added to the schedule of covered vehicles. In fact, ISC disputes that it ever received the email. Rau maintains that, under Indiana's Uniform Electronic Transfer Act, an email is effective when received even if no one is aware of its receipt.

         Rau also submits that equity demands that the Markel policy be reformed to cover the ambulance because there was a mutual mistake. Finally, Rau contends that, even if this Court determines that United failed to disclose that it wanted the ambulance reinstated, such failure was unintentional and cannot result in a denial of coverage under the policy's “savings clause, ” which provides that “any unintentional failure to disclose” a material fact “will not result in a denial of coverage under this policy.” United also objects to Markel's motion for summary judgment and filed a cross-motion for summary judgment [ECF No. 116] against Markel. United submits that it directed Markel to change the policy, through the March 30 email to its agent ISC, but Markel failed to do so. Like Rau, United advances theories of policy reformation due to mutual mistake, and extension of coverage through equity.

         ISC objects to Markel's motion for summary judgment [ECF No. 117] and believes that the Court should find coverage (although it has not filed a cross-motion). ISC relies, not on notions of equity or reformation due to mutual mistake, but solely on the portion of the Markel policy related to unintentional failures to disclose, which contains the saving clause Rau referenced. Additionally, ISC opposes Rau's Cross-Motion [ECF No. 121], but only to the extent that Rau's designated evidence and argument bear on its defense of the third-party claims United brought against ISC for failing to procure insurance for the ambulance. ISC moves for summary judgment [ECF No. 122] against United related to United's Third-Party Complaint assertions that ISC committed professional negligence.

         United opposes ISC's Motion related to the third-party claims [ECF No. 130].[1] Rau also opposes ISC's motion [ECF No. 131] and submit that, if the Court determines that Markel is not obligated to provide coverage for the ambulance, then it should determine that ISC breached its duty to procure insurance coverage and deny ISC's motion for summary judgment on the third party claims United has brought against ISC.

         In summary, the following motions are pending: Plaintiff's Motion for Summary Judgment [ECF No. 94]; Rau's Cross-Motion for Summary Judgment [ECF No. 114]; United Emergency Medical Services, LLC's Cross-Motion for Summary Judgment [ECF No. 116], and; Third Party Defendant Insurance Service Center, Inc.'s Motion for Summary Judgment Against Third Party Plaintiff United Emergency Medical Services, LLC [ECF No. 122]. Also pending is Rau's Motion to Take Judicial Notice of Computer Science Facts [ECF No. 115], and ISC's Request for Oral Argument [ECF No. 129].


         Summary judgment is warranted when “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). The non-moving party must marshal and present the court with evidence on which a reasonable jury could rely to find in their favor. Goodman v. Nat'l Sec. Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010). A court must deny a motion for summary judgment when the nonmoving party presents admissible evidence that creates a genuine issue of material fact. Luster v. Ill. Dep't of Corrs., 652 F.3d 726, 731 (7th Cir. 2011) (citations omitted). A court's role in deciding a motion for summary judgment “is not to sift through the evidence, pondering the nuances and inconsistencies, and decide whom to believe. The court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial.” Waldridge v. Am. Heochst Corp., 24 F.3d 918, 920 (7th Cir. 1994).

         Facts that are outcome determinative under the applicable law are material for summary judgment purposes. Smith ex rel. Smith v. Severn, 129 F.3d 419, 427 (7th Cir. 1997). Although a bare contention that an issue of material fact exists is insufficient to create a factual dispute, a court must construe all facts in a light most favorable to the nonmoving party, view all reasonable inferences in that party's favor, Bellaver v. Quanex Corp., 200 F.3d 485, 491-92 (7th Cir. 2000), and avoid “the temptation to decide which party's version of the facts is more likely true, ” Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003).

         The fact that cross-motions for summary judgment are pending does not alter the standard. When evaluating each side's motion, the court simply “construe[s] all inferences in favor of the party against whom the motion under consideration is made.” Metro. Life Ins. Co. v. Johnson, 297 F.3d 558, 561-62 (7th Cir. 2002) (quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)).


         United is a limited liability company that runs a fleet of ambulances. Steven Pavek, who served as United's Administrative Director, was tasked with obtaining insurance for the ambulances. Since about 2007, Pavek worked with Jack Rosen of ISC to procure insurance. In insurance terminology, ISC is considered a producer for Markel. Although Pavek and Rosen worked together for many years prior to the January 2016 accident, they only communicated by telephone and email, and routinely exchanged documents and forms by email.

         United's annual insurance renewal deadline was March 5. For the 2014-2015 policy period, Rosen sent an email to Pavek on January 29, 2014, reminding United of the upcoming renewal. Rosen asked that the application be completed on or before February 12, 2014. Rosen directed Pavek to verify the vehicle schedule, stressing the importance of listing “every operable bus on the policy.” (ECF No. 123-3 at 1.) Pavek responded ten days later by email, asserting that he had left Rosen voice messages and emails with no response, asking Rosen to get in touch with Pavek at his earliest convenience. (Id.) According to Rosen, he did not receive any emails or calls from Pavek as claimed in the email.

         On March 3, 2014, two days before the renewal deadline, Rosen called United and spoke to Pavek, who told Rosen to work with United owner Jason Blankinship. During this call, Rosen learned that Pavek was ill and this illness was the likely reason for United's delayed communications about renewal. On the morning of March 4, 2014, Rosen emailed Pavek and Blankinship instructing them what paperwork was needed to effectuate United's renewal. Pavek responded by email with the required forms and requested that coverage be bound for renewal.

         The next day, Pavek emailed Rosen to inquire whether he had received Pavek's March 4 email, including the signed documentation. Rosen's response, thirty-eight minutes later, was that he had not received United's email with the signed forms. However, Rosen advised that he was able to renew coverage effective March 5, 2014, without the documents, and that they could be forwarded at his convenience. Pavek emailed a response to Rosen, explaining that he thought United's email server was “not pushing mail out sometimes.” (ECF No. 123-5 at 1.) Pavek acknowledged that he suspected Rosen had not received the email, as Rosen would have indicated that he got it. Rosen acknowledged Pavek's email, indicated that he received what was needed to renew United's coverage, and reminded Pavek that United still needed to make the premium payment.

         As the next renewal anniversary approached, Rosen again reached out to United to begin the renewal process. Rosen emailed Pavek on January 30, 2015, asking that he turn in United's renewal paperwork by February 9, 2015. Rosen did not receive a response from Pavek by February 9, 2015, so he called Pavek to determine if United was going to provide renewal information. On February 10, 2015, Pavek emailed that he would have United's paperwork to Rosen by the end of the day.

         When Rosen did not receive United's renewal paperwork on February 10, 2015, Rosen followed up with an email on February 13, 2015. On February 23, Pavek indicated that he was resending the materials, and thought United was “having email issues again” as he had “sent this twice.” (ECF No. 123-8 at 1.) Pavek wrote, “If I do not get a reply by the end of Business day I will call to confirm and fax instead. Please let me know you received it.” (Id.)

         On February 27, 2015, still during the renewal process, Pavek emailed Rosen about insurance changes. Specifically, he identified two trucks with motor issues. He thought that “Truck 1” identified as a 1999 Chevy C3500 with VIN # 1GBJC34J2XFO97228 was “permanently done” and should be removed. (ECF No. 114-2 at 69.) With respect to a second ambulance, “Truck 2” Pavek asserted that he did not know if it was salvageable. He asked that Truck 2, identified as a 2003 Ford E-350 with VIN# 1FDSS34F32HA74497 (Ford #4497) be removed. He advised, “This unit is the unit I am unsure of viability moving forward but it will [be] some time before I do, say at least 60 days repair time.” (Id.) Ford #4497 is the ambulance that was involved in the January 2016 accident. Pavek's email also identified a third ambulance that United wanted to add to the Policy.

         Rosen forwarded Pavek's email about removing Truck 1 and Truck 2 and adding the third vehicle to ISC's Gladys Jara. The accompanying message read: “United will be renewing their program. Please see below for changes that we will be making on their program Monday.” (ECF No. 114-2 at 69.) On March 3, 2015, Jara sent an email to Markel asking that it bind coverage effective March 5, 2015, with the changes identified in Pavek's February 27 email: the removal of two vehicles, including the Ford #4497, and the addition of another vehicle.

         Markel renewed United's coverage for the 2015-2016 policy year under policy number MTA70000847-02, effective from March 5, 2015, to March 5, 2016 (the Policy). When the Policy was issued, the following five autos were listed in the Business Auto Declarations section in Item Three of the Policy:

         (Table Omitted)

         As requested by United in Pavek's February 27, 2015, email, the schedule of vehicles did not contain the Ford #4497. However, when ISC sent auto ID cards for the renewal to Pavek's email, it included a card for the Ford #4497 in addition to the other five vehicles listed in the Policy.

         On March 30, 2015, Pavek emailed Rosen, and copied Blankinship, requesting that the Ford #4497 be put back on the Policy, and that the 1994 Ford that was listed on the Policy be removed. Pavek did not confirm Rosen's receipt of the email or otherwise follow-up regarding the request.

         On January 2, 2016, an ambulance owned by United and driven by Nadermohammadi struck a vehicle occupied by Stofko. According to the police report generated by the responding officer, the ambulance operated by Nadermohammadi at the time of the automobile collision was a 2002 Ford Econoline E350, VIN Number 1FDSS34F32HA74497, i.e., the Ford #4497.

         After the accident, Blankinship located the March 30, 2015, email. By this time, it had become apparent that the Ford #4497 had not been put back on the Policy and that Rosen was asserting that he had not received any instruction from Pavek regarding the Ford #4497 subsequent to the February 27 correspondence asking that it be removed from the Policy at renewal. On January 4, 2016, Blankinship forwarded the email to Pavek, who forwarded it to Rosen at ISC. Pavek explained to Rosen that he had worked with United's mail host, Google, to restore all the emails in their domain name, which allowed United to locate messages going back seven years. Pavek admitted that he had not been able to locate any reply from Rosen with respect to the March 30 email.

         The email that Pavek forwarded to Rosen was formatted as follows:

From: Steven Pavek []
Sent: Monday, March 30, 2015 5:49 PM To:
Jack Rosen
' CC: 'Jason Blankinship'
Subject: Re: Ambulance ...

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