Opinion
Civil Action No. 98-3326 Section "K"(5).
December 28, 2000.
Before the Court is Security Insurance Company of Hartford's ("Security") motion for summary judgment with respect to coverage against Plant Mechanical ("Plant"). The Court took the matter on the papers and has considered the pleadings, memoranda and relevant law and finds that Security's motion has merit for the reasons that follow.
I. Relevant Background
Hoist Crane, a wholly owned subsidiary of Plant Mechanical, purchased a Commercial Inland Marine Policy from Security for a policy period from April 1, 1998 through April 1, 1999. Plant Mechanical was a subcontractor present at the overload testing of the gantry ship unloader that toppled into the Mississippi River on June 11, 1998. Plant was named a defendant in certain suits arising out of the crash and Plant in turn filed a third party complaint against Security, seeking a declaration of coverage under the Lifting/Rigging Operations form of the policy. The Lifting/Rigging Operations form provides coverage for "property of others in your care, custody or control for the purposes of installation . . ."
II. Standard for Motion for Summary Judgment
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56 (c). The party moving for summary judgment bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact." Stults v. Conoco, 76 F.3d 651, 656, (5th Cir. 1996), (citing Skotak v. Tenneco Resins. Inc., 953 F.2d 909, 912-13 (5th Cir. 1992) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. The nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986); Tubacex Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995). Thus, where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial."Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986). The court notes that the substantive law determines materiality of facts and only "facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986). Where the opposing party bears the burden of proof at trial, the moving party need not submit evidentiary documents to properly support its motion, but need only point out the absence of evidence supporting the essential elements of the opposing party's case. See Saunders v. Michelin Tire Corp., 942 F.2d 299, 301 (5th Cir. 1991)
III. Analysis
Security's primary justification to deny coverage is based on the policy language limiting coverage to property in "the care, custody, or control" of Plant. As such, Security claims that the undisputed deposition testimony clearly proves that Plant's employees never had care, custody or control of the crane during the overload testing when the crane fell into the river. Plant does not dispute Security's fact or arguments and moreover, agrees that it never had care, custody or control of the crane. Security makes an alternate argument that, in the event this Court finds that the property was in Plant's care, custody or control, that a faulty workmanship exclusion bar coverage.
In Reynolds v. Select Properties, Ltd., 634 So.2d 1180 (La. 1994), the Louisiana Supreme Court set forth the two prong test to determine whether an insured was in the care, custody or control of property. The test was adopted by the United States Court of Appeals for the Fifth Circuit, which has stated that there are two circumstances where an insured is deemed to be in the care, custody or control of property. The first is "where the insured is either a contractor or subcontractor who has been sued by the owner of the property upon which work was being performed, or is a party with whom property has been placed for use or repair." St. Paul Mercury Insurance Company v. Fair Grounds Corp., 123 F.3d 336, 339-40 (5th Cir. 1997) (citing Reynolds v. Select Properties. Ltd., 634 So.2d 1180 (La. 1994)). The second occurs when "the insured has a proprietary interest in or derives monetary benefit from the property." Id. at 340. Although St. Paul interpreted an exclusion in a comprehensive general liability policy, the analysis employed is appropriate for the commercial inland marine policy at issue here because each policy imposes a limitation to otherwise broad coverage.
There is no allegation that Plant had a proprietary interest in the matter. The facts indicate that Plant was paid less than $4000 for one day of work. Therefore, the issue becomes whether Plant's activities on the day in question satisfy the first circumstance of the St. Paul and Reynolds test.
As stated above, the first circumstance where one is in the care, custody or control of property is when "the insured is either a contractor or subcontractor who has been sued by the owner of the property upon which work was being performed . . ."St. Paul Mercury Insurance Company v. Fair Grounds Corp., 123 F.3d 336, 339-40 (5th Cir. 1997) (citing Reynolds v. Select Properties, Ltd., 634 So.2d 1180 (La. 1994)). There is no dispute that Plant is either a contractor or subcontractor. Likewise, there is no dispute that Plant has been sued by ICRMT, the owner of the project. The real issue, then, becomes whether Plant was actually performing work on the owners property. In Reynolds, the supreme court reasoned that suits brought against contractors or subcontractors by owners often are brought for "alleged negligence in the performance of the work or in the use of the property which lead to the damage to the property." Reynolds v. Select Properties, Ltd., 634 So.2d 1180, 1184 (La. 1994). In the context of the exclusionary provision for property in the care, custody or control, of the insured, the court stated
the insured's actual, physical possession of or control over the property determined whether the exclusion applied. The purpose of the exclusion' under these circumstances is to prevent a general liability insurer from becoming a guarantor of the insured's workmanship in his ordinary operations.Id.
The insurance agreement before this Court is a mirror image to that in Reynolds because Security's policy includes, rather than excludes, property in the care, custody or control of the insured. In other words, the Security policy was, generally speaking, a guarantee against faulty workmanship and thus only provides coverage when there is care, custody or control. Despite this difference, the method of determining such care, custody or control remains the same.
Keeping in mind that Plant agrees that it never had care, custody or control of the crane, the deposition testimony presented by Security leaves no issue for the trier of fact. Plant's vice-president, David Cunningham, testified that Plant did not have care, custody or control of the gantry crane at the time of the accident. See Cuningham depo., p. 55. ICRMT's president and GBB's corporate representative testified similarly.See Bruce Conti and James LaRose depos.. Moreover, employees from ICRMT and General Electric present in the area of the load testing testified that the only care, custody or control exercised the day of the accident was by Marjan Mencinger, the Metalna project engineer on site. See Cary Smith and Adam Deleanides depos.
Taking into account the policy language, deposition testimony, relevant law and lack of a substantive opposition by Plant, the Court concludes that the crane was not in Plant's care, custody or control during the load testing and that any damages resulting from the toppling crane are not covered under Security's policy. Such a decision is limited to Plant's actual care, custody or control at the time the crane fell. This order does not address any extant contractual claims against Plant. Likewise, the mere fact that Plant was not in the care, custody or control at the time of the accident does not control any findings as to Plant's alleged negligence liability with respect to any actions that it may or should have taken on the dock pursuant to its agreements with other parties. Finally, this order does not decide Plant's rights vis a vis Reliance Insurance Company as that policy is not at issue before the Court at this time. Accordingly,
IT IS ORDERED that Security Insurance Company of Hartford's motion is GRANTED.