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Waste Management, Inc. v. Great Divide Insurance Co.

United States District Court, E.D. Virginia, Richmond Division

March 12, 2019

WASTE MANAGEMENT, Inc., et al., Plaintiffs,
v.
GREAT DIVIDE INSURANCE COMPANY, et al., Defendants.

          MEMORANDUM OPINION

          M. HANNAH LAUCK UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on five motions:

         1. Plaintiffs Waste Management, Inc., Waste Management of Virginia, Inc., King George Landfill, Inc., and King George Landfill Properties, LLC's (collectively, the "Waste Management Plaintiffs" or the "WM Plaintiffs") Cross-Motion for Summary Judgment on the Duty to Defend of Defendants Great Divide Insurance Company and Nautilus Insurance Company (the "Waste Management Plaintiffs' Motion for Summary Judgment"), (ECF No. 69);

         2. Defendants Great Divide Insurance Company ("Great Divide") and Nautilus Insurance Company's ("Nautilus," and, collectively with Great Divide, the "Insurance Company Defendants") Motion for Summary Judgment (the "Insurance Company Defendants' Motion for Summary Judgment"), (ECF No. 71);

         3. The Insurance Company Defendants' "Motion for Entry of Order Permitting the Insurer Defendants to File Under Seal Exhibit H to Their Opposition to Plaintiffs' Summary Judgment Motion" (the "Motion to Seal"), (ECF No. 75);

         4. The Waste Management Plaintiffs' "Motion to Strike Reference to and Reliance Upon Extrinsic Evidence in Defendant's Summary Judgment Motion and Opposition Brief (the "Motion to Strike Extrinsic Evidence"), (ECF No. 78); and, 5. The Waste Management Plaintiffs' "Motion to Strike Defendants' Reply to Plaintiffs' Summary Judgment Opposition Brief (the "Motion to Strike Reply"), [1] (ECFNo.82).

         The Waste Management Plaintiffs and the Insurance Company Defendants filed Cross Motions for Summary Judgment pursuant to Federal Rule of Civil Procedure 56.[2] The Waste Management Plaintiffs and the Insurance Company Defendants have responded to the Cross Motions. (ECF Nos. 73, 74.) The Waste Management Plaintiffs did not respond to the Insurance Company Defendants' Motion to Seal and the time to do so has expired. The Insurance Company Defendants responded to the Motion to Strike Extrinsic Evidence and the Motion to Strike Reply, (ECF Nos. 84, 86), and the Waste Management Plaintiffs replied, (ECF Nos. 87, 88).

         The Court dispenses with oral argument because the materials before it adequately present the facts and legal contentions, and argument would not aid the decisional process. The Court exercises jurisdiction pursuant to 28 U.S.C. § 1332.[3] For the reasons stated below, the Court will grant the Insurance Company Defendants' Motion for Summary Judgment and deny the Waste Management Plaintiffs' Motion for Summary Judgment.

         I. Factual Background [4] and Federal Court Procedural History

         The Waste Management Plaintiffs filed their Amended Complaint seeking a declaration that the Insurance Company Defendants must provide them with a defense in an ongoing litigation filed in the Circuit Court of King George County (the "Underlying Litigation") and asserting breach of contract claims based on the Insurance Company Defendants' refusal to provide such a defense. Because the outcome of the Motions pending before the Court turn on the allegations in the Underlying Litigation, the Court will first introduce that litigation. After discussing the procedural history in this Court, the Court will evaluate the contract provisions upon which the Waste Management Plaintiffs base their claims of a duty to defend.

         A. The Underlying Litigation [5]

         On October 18, 2011, Arthur Robinson suffered injuries from an accident at the King George Landfill (the "Landfill") in Virginia. At the time, Robinson worked for (the now defunct) TAC Transport, LLC ("TAC Transport") as a commercial garbage truck driver.

         On the day of the accident, Robinson drove a TAC Transport trailer to the Landfill to dispose of garbage. The Landfill provided equipment to commercial drivers, including a 'tipper device" in order to raise, tip, and lower trailers to unload garbage. (Am. Compl. ¶ 13, ECF No. 6; Am. Compl. Ex. A "Underlying Litig. Compl." ¶ 11, ECF No. 6-1.)

         While Robinson waited in line to dump the contents from his trailer, the tipper malfunctioned when operating with the trailer ahead of Robinson, driven by Earl Kennedy. Robinson claims that nearby Landfill employees should have assisted Kennedy, but they did not. Instead, Kennedy-also a TAC Transport employee-asked for Robinson's help to manually close the rear door of Kennedy's trailer. Robinson obliged.

         To assist in trying to free the lodged rear door, Robinson climbed onto the Landfill's tipping platform. Once on the platform, Robinson assisted Kennedy and two other unidentified people in "us[ing] a wooden 2x4 to apply pressure to the door in an attempt to lift it." (Mem. Supp. Pis. Mot. Summ. J. ¶ 11, ECF No. 72.) Robinson testified during the Underlying Litigation that "Kennedy gave Robinson 'the okay that it was okay to go ahead and'" assist in trying to free the door. (Id. (quoting Mem. Supp. Pis. Mot. Summ. J. Ex. A "Robinson Depo." 150-54, ECF No. 72-1).) Robinson also testified that "[t]hen just when the door came free, I slipped and went off-went off the back." (Id. (quoting Robinson Depo. 165).) Robinson fell backward off the Landfill's tipper, landing on the ground fifteen to twenty feet below, and sustaining serious injuries. Although Robinson described his fall off the Landfill's tipper as due to a slip, he testified that he had "no idea" what he slipped on. (Robinson Dep. 167-68.) He noted that he "didn't see any problems with the tipper" on the day of his fall. (Id. 168.)

         On October 4, 2013, Robinson filed the complaint in the King George County Circuit Court, alleging one count of negligence each against Waste Management, Inc., Waste Management of Virginia, Inc., King George Landfill, Inc., and King George Landfill Properties, LLC, [6] as entities that "owned, operated, managed and/or w[ere] responsible for the Landfill." (Am. Compl. ¶ 17; Underlying Litig. Compl. ¶¶ 4-7, 23-46.) In the Underlying Litigation, Robinson contends that the Waste Management Plaintiffs' negligent actions caused him to fall from the Landfill's tipper, which resulted in his injuries. Robinson seeks $10, 000, 000 in damages jointly and severally from those four entities. Robinson did not include any claim against TAC Transport in the Underlying Litigation.

         In this case, the WM Plaintiffs seek representation from the Insurance Company Defendants for the Waste Management Plaintiffs' defense in the Underlying Litigation. They assert three contractual bases for the duty to defend, the first of which is a service agreement, while the other two are insurance contracts. First, the Waste Management Plaintiffs cite a transportation service agreement between TAC Transport and Waste Management of Maryland, Inc. (the "Transportation Agreement"). The Waste Management Plaintiffs claim the Transportation Agreement would obligate TAC Transport, as Robinson's employer, to defend them in the Underlying Litigation because TAC Transport's negligence caused Robinson's injuries.[7] Second, the WM Plaintiffs contend that the duty to defend arises under a Commercial General Liability Policy (the "CGL" Policy) between TAC Transport and Great Divide. Finally, the Waste Management Plaintiffs contend a duty to defend arises under a Business Auto Policy (the "BA Policy") between TAC Transport and Great Divide.[8] In Section III below, the Court will discuss seriatim the Waste Management Plaintiffs' arguments for seeking defense costs under the Transportation Agreement, the CGL Policy, and the BA Policy.

         B. Procedural History Before This Court

         The Waste Management Plaintiffs filed their Complaint in this Court asserting six claims against the Insurance Company Defendants and Arthur Robinson.[9] (See generally CompL, ECF No. 1.) While these six claims pertain to three insurance contracts, [10] only two of the insurance contracts are relevant to the Court's analysis of the current cross-motions.[11] On February 14, 2017, the Waste Management Plaintiffs filed their Amended Complaint asserting the same six claims against the Insurance Company Defendants and Robinson. (See generally Am. Compl., ECF No. 6.) On March 13, 2017, after an extension of time, the Insurance Company Defendants filed an answer and counterclaim. (ECF No. 15.) With the Court's permission, on April 13, 2017, the Insurance Company Defendants filed their Corrected Answer to the Amended Complaint and Counterclaim. (ECF No. 24.)

         On April 18, 2017, the Court referred several motions[12] to the Honorable David J. Novak, United States Magistrate Judge, for Report and Recommendation, including the Waste Management Plaintiffs' Motion to Dismiss Counterclaims, (ECF No. 20). (ECF No. 27.) On April 21, 2017, the Court also referred the Insurance Company Defendants' Motion to Dismiss Underlying Claimant Parties for Lack of Standing, (ECF No. 28), and Motion to Drop the Waste Management Subsidiaries as Parties Hereto or Declare Them to be Nominal or Otherwise Unnecessary Parties, (ECF No. 29), to the Magistrate Judge for Report and Recommendation. (ECF No. 34.) Additionally, on May 1, 2017, the Court referred the Insurance Company Defendants' Motion to Strike, (ECF No. 37), to the Magistrate Judge for consideration and incorporation into his Report and Recommendation. (ECF No. 41.)

         On June 30, 2017, the Magistrate Judge filed his Report and Recommendation (the "R&R"). (ECF No. 50.) In the R&R, Magistrate Judge Novak recommended that

Plaintiffs' Motion to Dismiss (ECF No. 20) be DENIED as to Counterclaim Counts I-A, II-A, III and V-A, and GRANTED as to Counterclaim Counts I-B, II-B, IV and V-B, that Defendants' Motion to Dismiss Underlying Claimant Parties (ECF No. 28) be DENIED as MOOT, that Defendants' Motion to Drop (ECF No. 29) be DENIED, and that Defendants' Motion to Strike (ECF No. 37) be GRANTED.

(R&R 17, ECF No. 50.) The Magistrate Judge notified the parties that they had 14 days to file an objection to the R&R.

         On July 14, 2017, the Insurance Company Defendants filed objections, citing numerous issues with the R&R. (See ECF No. 52.) On October 3, 2017, the Court overruled the Insurance Company Defendants' objections and adopted the findings and recommendations in the R&R. (See Oct. 3, 2017 Order, ECF No. 54.) In that same October 3, 2017 Order, the Court instructed the Insurance Company Defendants to file an Amended Answer and Counterclaim that complied with the R&R's findings.

         On October 9, 2017, the Insurance Company Defendants filed their Amended Answer. (ECF No. 55.) In their Amended Answer, the Insurance Company Defendants assert that the insurance contracts do not create a duty to defend or to indemnify. In their Counterclaim, the Insurance Company Defendants also seek a declaration that no duty to defend or indemnify exists under the CGL Policy, the BA Policy, or the Excess Policy. On October 16, 2017, the Waste Management Plaintiffs filed an Answer to the Insurance Company Defendants' Counterclaim. (ECF No. 56.)

         On December 1, 2017, the Court held an initial pretrial conference with all parties. In the Initial Pretrial Order, issued on December 5, 2017, the Court ordered that all dispositive motions be filed no later than May 3, 2018, and responses to those motions be filed no later than 20 days after the dispositive motion was filed. (Dec. 5, 2017 Order 5, ECF No. 61.)

         On May 1, 2018, the Court entered an Order clarifying the scope of briefing for summary judgment and granting the parties additional time, until May 7, 2018, to file their summary judgment motions. (ECF No. 68.) The Insurance Company Defendants and the Waste Management Plaintiffs filed their Motions for Summary Judgment. Each party filed its response to the opposing party's Motion for Summary Judgment.[13] This matter is now ripe for disposition.

         II. Applicable Legal Standards

         A. Standard of Review; Motions for Summary Judgment

         Summary judgment under Rule 56 is appropriate only when the Court, viewing the record as a whole and in the light most favorable to the nonmoving party, determines that there exists no genuine issue of material fact, and that the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986); Liberty Lobby, 477 U.S. at 248-50. "The interpretation of an insurance policy is a question of law that is particularly well suited for summary judgment." Minn. Lawyers Mut. Ins. Co. v. Protostorm LLC, 197 F.Supp.3d 876, 882 (E.D. Va. 2016) (citing St. Paul Fire & Marine Ins. Co. v. Jacobson, 826 F.Supp. 155, 157 (E.D. Va. 1993), aff'd, 48 F.3d 778 (4th Cir. 1995)).

         "A fact is material if the existence or non-existence thereof could lead a jury to different resolutions of the case." Thomas v. FTS USA, LLC, No. 3:13cv825, 2016 WL3653878, *4 (E.D. Va. June 30, 2016) (citing Liberty Lobby, 477 U.S. at 248). Once a party has properly filed evidence supporting its motion for summary judgment, the nonmoving party may not rest upon mere allegations in the pleadings, but instead must set forth specific facts illustrating genuine issues for trial. Celotex Corp., 411 U.S. at 322-24. The parties must present these in the form of exhibits and sworn affidavits. Fed.R.Civ.P. 56(c).

         A court views the evidence and reasonable inferences drawn therefrom in the light most favorable to the nonmoving party. Liberty Lobby, 411 U.S. at 255. Whether an inference is reasonable must be considered in conjunction with competing inferences to the contrary. Sylvia Dev. Corp. v. Calvert Cty., 48 F.3d 810, 818 (4th Cir. 1995). Nonetheless, the nonmoving "party is entitled 'to have the credibility of his [or her] evidence as forecast assumed.'" Miller v. Leathers, 913 F.2d 1085, 1087 (4th Cir. 1990) (en banc) (quoting Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir. 1979)).

         In the end, the non-moving party must do more than present a scintilla of evidence in its favor.

Rather, the non-moving party must present sufficient evidence such that reasonable jurors could find by a preponderance of the evidence for the non-movant, for an apparent dispute is not genuine within contemplation of the summary judgment rule unless the non-movant's version is supported by sufficient evidence to permit a reasonable jury to find the facts in his [or her] favor.

Sylvia Dev. Corp., 48 F.3d at 818 (internal quotations, citations, and alterations omitted). The ultimate inquiry in examining a motion for summary judgment is whether there is "sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the [nonmoving party's] evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Liberty Lobby, 477 U.S. at 249-50 (internal citations omitted). Where the court is faced with cross-motions for summary judgment, as in the instant case, the court must review each motion separately on its own merits. Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003).

         B. Contract Interpretation Under Maryland Law

         The parties properly agree that the Court must analyze the insurance policies pursuant to Maryland contract law. See Klein v. Verizon Commc 'ns, Inc., 61A Fed. App'x 304, 307-08 (4th Cir. 2017) (finding that a federal court sitting in diversity must apply the choice-of-law provisions of the state in which it sits, and that under Virginia law "lex loci contractus[14] [or the law of the place of the contract] serves as the default rule ... [h]owever, choice of law contractual provisions are an exception to that general rule"); Buchanan v. Doe, 246 Va. 67, 70-71 (1993) (finding that under Virginia state law, "the law of the place where an insurance contract is written and delivered controls issues as to its coverage").[15] (Mem. Supp. Defs. Mot. Summ. J. 15; Mem. Supp. Pis. Mot. Summ. J. 10.)

         "[U]nlike the majority of other states, Maryland does not follow the rule that insurance polices are to be most strongly construed against the insurer." Capital City Real Estate, LLC v. Certain Underwriters at Lloyd's London, 788 F.3d 375, 379 (4th Cir. 2015) (quoting Empire Fire & Marine Ins. Co. v. Liberty Mut. Ins. Co., 117 Md.App. 72 (1997)). Rather, under Maryland law, "[i]n interpreting the provisions of an insurance policy, [a court]... rel[ies] on the same principles that [it]... appli[es] to traditional contracts." White Pine Ins. Co. v. Taylor, 233 Md.App. 479, 498 (Md. Ct. Spec. App. 2017) (citing Bailer v. Erie Ins. Exck, 344 Md. 515, 521 (2000)); Capital City, 788 F.3d at 379 ("Maryland law applies ordinary contract principles to insurance contracts").

         Maryland follows the objective interpretation of contracts. Spacesaver Sys., Inc. v. Adam, 440 Md. 1, 8 (2014). Under this process, a court must

determine from the language of the agreement itself what a reasonable person in the position of the parties would have meant at the time it was effectuated. In addition, when the language of the contract is plain and unambiguous there is no room for construction, and a court must presume that the parties meant what they expressed. In these circumstances, the true test of what is meant is not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties would have thought it meant.

Id. (quoting Gen. Motors Acceptance Corp. v. Daniels, 303 Md. 254, 261 (1985)). "[I]f an insurance policy is ambiguous, it will be construed liberally in favor of the insured and against the insurer as drafter of the instrument" Capital City, 788 F.3d at 379 (quoting Empire Fire & Marine Ins. Co., Ill. Md.App. 72) (emphasis in original).

         The United States Court of Appeals for the Fourth Circuit has recognized that a court's "primary task in interpreting an insurance policy, as with any contract, is to apply the terms of the contract itself." Pa. Nat'l Mut. Cas. Ins. Co. v. Roberts, 668 F.3d 106, 112 (4th Cir. 2012) (quoting Cole v. State Farm Mut. Ins. Co., 359 Md. 298 (2000)). To this end, a court "must 'look first to the contract language employed by the parties to determine the scope and limitations of the insurance coverage.'" Id. (quoting Cole, 359 Md. 298). A court applying Maryland contract law "give[s] the words of the contract their ordinary and accepted meaning, looking to the intention of the parties from the instrument as a whole." White Pine Ins. Co., 233 Md.App. at 498 (quoting Phila. Indent. Ins. Co. v. Md. Yacht Club, Inc., 129 Md.App. 455, 467-68 (1999)). "A contract must be construed as a whole, and effect given to every clause and phrase, so as not to omit an important part of the agreement." Baltimore Gas & Elec. Co. v. Commercial Union Ins. Co., 113 Md.App. 540, 554 (Md. Ct. Spec. App. 1997).

         A court reviewing an insurance contract under Maryland law must consider the entire agreement, but because "'exclusions are designed to limit or avoid liability,' limitations on coverage must be construed strictly and narrowly and 'in favor of a finding of coverage.'" White Pine Ins. Co., 233 Md.App. at 500 (quoting Megonnell v. UnitedServs. Auto. Ass'n, 368 Md. 633, 656 (2002)). The insurer "must draft the language of an exclusion 'conspicuously, plainly and clearly' and 'clearly set forth' any limitation on coverage to the insured." Id. (quoting Megonnell, 368 Md. at 656.) "[I]n all cases, the insurer bears the burden of showing that an exclusion applies." Cornerstone Title & Escrow, Inc. v. Evanston Ins. Co., 555 Fed.Appx. 230, 235 (4th Cir. 2014).

         C. The Duty to Defend Under Maryland Contract Law

         Under Maryland law, an insurer's duty to defend an insured "is 'broader than the duty to indemnify.'" Cowan Sys., Inc. v. Harleysville Mut. Ins. Co., 457 F.3d 368, 372 (4th Cir. 2006) (quoting Litz v. State Farm Fire & Cas. Co., 346 Md. 217 (1997)). Maryland state courts clarify that "[a]n insurance company has a duty to defend its insured for all claims that are potentially covered under the policy." Walk v. Hartford Cas. Ins. Co., 382 Md. 1, 15 (2004) (citing Brohawn v. Transamerica Ins. Co., 276 Md. 396, 408 (1975)). As the Fourth Circuit has recognized "[e]ven a slim possibility can constitute a 'potentiality.'" Cornerstone, 555 Fed.Appx. at 234 (comparing Walk, 382 Md. 1, with Litz v. State Farm Fire & Cas. Co., 346 Md. 217 (1997)). Indeed, Maryland courts expand on this precept when observing that "by its contract, the insurer is obligated to provide a defense to a covered claim, even if the claim will ultimately fail." Baltimore Gas & Elec. Co., 113 Md.App. at 574. However, "[t]he insurer is not obligated to provide a defense to a suit that does not assert a covered claim." Id. If a court finds that a duty to defend exists over a part of the case, then the insurer must provide a defense to the entire case. Cornerstone, 555 Fed.Appx. at 235-36 (citing Perdue Farms, Inc. v. Travelers Cas. & Sur. Co. of Am., 448 F.3d 252, 258 (4th Cir. 2006)).

         To determine whether a duty to defend exists under Maryland law, a court undertakes a two-part inquiry. See Capital City, 788 F.3d at 379 (quoting St. Paul Fire & Marine Ins. Co.,292 Md. 187). First, the Court asks "what is the coverage and what are the defenses under the terms and requirements of the insurance policy?" Id. Second, the Court must inquire whether "the allegations in the tort action potentially bring the tort claim within the policy's coverage?" Id. "The first question focuses upon the language and requirements of the policy, and the second question focuses on the allegations of the tort suit. At times these two questions involve separate and distinct matters, and at other times they are intertwined, perhaps involving an identical issue." Id. If any doubt exists regarding the ...


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