United Financial Casualty Company v. Pearson et al

Filing 72

OPINION AND ORDER granting UFCC's 65 motion for summary judgment; and denying as moot all other 64 and 70 pending motions. The Court denies without prejudice the request for costs and attorneys' fees. To the extent UFCC wishes to pur sue its request for costs and attorneys' fees, it may file supplemental briefing, including a discussion of authorities and an itemized request for such costs and fees, within 14 days of the entry of this Order. Signed by Judge Kristine G. Baker on 9/16/2016. (ljb)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION
UNITED FINANCIAL CASUALTY COMPANY
v.

PLAINTIFF

Case No. 4:15-cv-00192-KGB

DON ALLEN PEARSON, et al.

DEFENDANTS
OPINION AND ORDER

On April 3, 2015, plaintiff United Financial Casualty Company (“UFCC”) filed this
action for declaratory judgment against defendants pursuant to Federal Rule of Civil procedure
57 and 28 U.S.C. § 2201 et seq. (Dkt. No. 16, ¶ 30). UFCC is the underwriting company that
issued two insurance policies at issue in this matter. UFCC is affiliated with the more commonly
known Progressive Group of Insurance Companies (“Progressive”) (Id., at 2, FN 1). UFCC
seeks a declaration of the rights and other legal relations of the parties pursuant to policies of
insurance issued by UFCC to defendant Don Allen Pearson.
Before the Court are UFCC’s motion to voluntarily dismiss separate defendants (Dkt. No.
64), UFCC’s motion for summary judgment (Dkt. No. 65), and UFCC’s motion for default
judgment (Dkt. No. 70). No defendant has responded to any of the pending motions.
For the reasons set forth below, the Court grants UFCC’s motion for summary judgment
(Dkt. No. 65). All other pending motion are denied as moot (Dkt. Nos. 64, 70).
I.

Factual Background

Unless otherwise noted by citation, the following facts are taken from UFCC’s statement
of undisputed facts in support of its motion for summary judgment (Dkt. No. 67), to which none
of the defendants have responded. Local Rule 56.1(b) of the United States District Court for the
Eastern and Western Districts of Arkansas requires a non-moving party to supply the Court with

a statement of material facts “as to which it contends a genuine issue exists to be tried.” See
Jackson v. United Parcel Serv., Inc., 643 F.3d 1081, 1088 (8th Cir. 2011). Federal Rule of Civil
Procedure 56(e) states that “[i]f a party fails to properly support an assertion of fact or fails to
properly address another party’s assertion of fact as required by Rule 56(c), the court may:
(1) give an opportunity to properly support or address the fact;
(2) consider the fact undisputed for purposes of the motion;
(3) grant summary judgment if the motion and supporting materials — including the facts
considered undisputed — show that the movant is entitled to it; or
(4) issue any other appropriate order.”
Because no defendant has responded, the Court will consider the following facts undisputed for
the purposes of this motion pursuant to Rule 56(e)(2).
UFCC issued a commercial auto policy, Policy Number 02474899-0, to Mr. Pearson for
the policy period of November 4, 2013, through November 4, 2014 (Dkt. No. 67, Ex. A).
Because of Mr. Pearson’s failure to make his payments, UFCC/Progressive mailed to Mr.
Pearson a cancellation notice on March 13, 2014, regarding UFCC Policy Number 02474899-0
(Id., Ex. C). The cancellation notice read, in pertinent part: “Unfortunately, we didn’t receive
your payment and, as a result, your policy will be canceled at 12:01 a.m. on March 25, 2014.
Please know that this means you will no longer have insurance coverage.” (Id.).

The

cancellation notice stated, however, that Mr. Pearson could avoid a lapse in coverage by making
his payment prior to the March 25, 2014, cancellation deadline.
On March 26, 2014, UFCC/Progressive mailed to Mr. Pearson a final bill regarding
UFCC Policy Number 02474899-0, which explicitly stated that Mr. Pearson no longer had
insurance under the UFCC policy, effective March 25, 2014 (Id.,¶ 3; Ex. D). On April 15, 2014,
UFCC/Progressive mailed to Mr. Pearson a second final bill regarding UFCC Policy Number
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02474899-0, which similarly read, in pertinent part, as follows: “Please note that you no longer
have insurance with us, effective March 25, 2014.” (Id., ¶ 4; Ex. E). UFCC contends that
Progressive’s cancellation of Mr. Pearson’s policy was effective and that Progressive fully
complied with Arkansas law and the Cancellation and Nonrenewal Endorsement included in
UFCC Policy Number 02474899-0. Ark. Code Ann. § 23-66-206(9); (Id., ¶ 20).
At around 3:11 p.m. CST, on June 2, 2014, a 1993 Peterbilt tractor-trailer either owned or
leased by Mr. Pearson and being driven by Jerry Hickman was involved in an accident on U.S.
Highway 65 near its intersection with Arkansas Highway 16 East in Van Buren County,
Arkansas. Mr. Hickman was transporting logs, which spilled from the trailer after a tire blew out
on the tractor-trailer, causing injuries to several people and killing at least two others. At the
time the accident occurred, Mr. Hickman was not an employee of Mr. Pearson, did not have Mr.
Pearson’s permission to operate the tractor-trailer, and was not acting at the behest of Mr.
Pearson (See Dkt. No. 67, Ex. G).
At 6:08 p.m. EST, on June 2, 2014, Sherry Ragland, on behalf of Mr. Pearson, called
Progressive and attempted to reinstate UFCC Policy Number 02474899-0 (Dkt. No. 67, Ex. H).
The Progressive representative informed Ms. Ragland and Mr. Pearson, who could allegedly be
heard in the background, that the policy could not be reinstated. The Progressive representative
said that Mr. Pearson had to pay the balance owed on Policy Number 02474899-0, which had
been cancelled for nonpayment, and pay a down payment on a new policy before UFCC would
issue a new policy to Mr. Pearson. During their conversations with the Progressive/UFCC
representative on June 2, 2014, neither Ms. Ragland nor Mr. Pearson mentioned the
aforementioned accident, which had occurred just a few hours earlier.

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Mr. Pearson made the necessary payments, and UFCC issued to Mr. Pearson a new
commercial auto policy, UFCC Policy Number 03150888-0, with an effective date and time of
June 2, 2014, at 7:26 p.m. EST (Id.,¶ 8; Ex. J). The declarations page for UFCC Policy Number
03150888-0 provides as follows: “Your coverage began the later of June 2, 2014, at 12:01 a.m.
or at the time your application is executed on the first day of the policy period.” (Id., ¶ 11). The
application for insurance that UFCC sent to Mr. Pearson for his signature shows the effective
date and time for UFCC Policy Number 03150888-0 as June 2, 2014, at 7:26 p.m. EST. The
declarations page of UFCC Policy Number 03150888-0 lists only Mr. Pearson and Brandon
Wells as rated drivers (Dkt. No. 67, Ex. K).
UFCC Policy Number 03150888-0 provides the following pertinent definitions:
A. When used in Part I - Liability To Others, insured means:
1. You with respect to an insured auto.
2. Any person while using, with your permission, and within the
scope of that permission, an insured auto you own, hire, or borrow
except:
(a) A person while he or she is working in a business of
selling, leasing, repairing, parking, storing, servicing,
delivering or testing autos, unless that business is yours
and it was so represented in your application.
(b) A person, other than one of your employees, partners (if
you are a partnership), members (if you are a limited
liability company), officers or directors (if you are a
corporation), or a lessee or borrower or any of their
employees, while he or she is moving property to or from
an insured auto.
(c) The owner or anyone else from whom the insured auto is
leased, hired, or borrowed unless the insured auto is a trailer connected
to a power unit that is an insured auto. However, this exception does
not apply if the insured auto is specifically described on the
declarations page.
For purposes of this subsection A.2., an insured auto you own includes any
auto specifically described on the declarations page.
3. Any other person or organization, but only with respect to the legal liability
of that person or organization for acts or omissions of any person
otherwise covered under this Part I - Liability To Others.

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If we make a filing or submit a certificate of insurance on your behalf
with a regulatory or governmental agency, the term “insured” as used in
such filing or certificate, and in any related endorsement, refers only to the
person or organization named on such filing, certificate or endorsement.
B. When used in Part I - Liability To Others, insured auto also includes:
1. Trailers designed primarily for travel on public roads, while connected to
your insured auto that is a power unit;
2. Mobile equipment while being carried or towed by an insured auto; and
3. Any temporary substitute auto.
(Dkt. No. 67, Ex. J, at 6-7)(emphasis in original).
UFCC Policy Number 02474899-0 contains, in pertinent part, the following
Cancellation and Nonrenewal Endorsement:
CANCELLATION AND NONRENEWAL ENDORSEMENT
Except as specifically modified in this endorsement, all provisions of the
Commercial Auto Policy apply.
...
CANCELLATION
...
We may cancel this policy by mailing a notice of cancellation to the named
insured shown on the Declarations Page and any lienholder or loss payee named
in the policy at the last known address appearing in our records. If we cancel this
policy at any time due to nonpayment of premium, notice of cancellation will be
mailed at least 10 days before the effective date of cancellation. Notice of
cancellation due to any reason other than nonpayment of premium will be mailed
at least 20 days before the effective date of cancellation.
(Dkt. No. 67, Ex. A, at 45-46)(emphasis in original).
On August 29, 2014, separate defendants Clint Frye and Kenneth Hightower filed a
complaint in the Circuit Court of Van Buren County, Arkansas, Case No. 71-CV-14-115, against
Mr. Pearson and Mr. Hickman (Dkt. No. 67, Ex. M). In their complaint, Mr. Frye and Mr.
Hightower allege that Mr. Hickman was negligent in operating the tractor-trailer, that Mr.

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Hickman’s negligence caused Mr. Frye and Mr. Hightower’s injuries, and that Mr. Pearson, as
Mr. Hickman’s employer, is vicariously liable for Mr. Hickman’s negligence (Id., ¶ 14). UFCC
is providing Mr. Pearson and Mr. Hickman a defense in the Van Buren County, Arkansas,
lawsuit under a reservation of rights (Dkt. No. 67, Ex. N).
II.

Procedural Background

UFCC initially filed this lawsuit on April 3, 2015 (Dkt. No. 1) and then filed an amended
complaint on May 18, 2015 (Dkt No. 16). Since that time, some named defendants have
appeared in the action and some have not. In addition, UFCC has voluntarily dismissed multiple
defendants and moved for default judgment as to multiple defendants. The Court granted
motions to dismiss voluntarily defendants Bitco General Insurance Corporation (Dkt. No. 11),
Travelers Property and Casualty Company of America (Dkt. No. 45), and Johnathan Henson and
John Marple (Dkt. No. 53). With this Order, the Court also grants the motion to dismiss
voluntarily separate defendants Luis Garza, Mariano Hernandez, Mobley Construction Co.,
Alberto Iscamilla, Jose Pelcastre, and Abel Salazar (Dkt. No. 64).
UFCC has moved for default judgment against Timothy Champion (Dkt. No. 38); Daniel
Hankins (Dkt. No. 40); Cody Webster (Dkt. No. 42); Derek Brammer, Bradley Deaver, Perry
Fondrew, Kenneth Hightower, Austin Kosier, Ethan Tew, and Juan Torres (Dkt. No. 46); Evelyn
Bates as Co-Administrator of the Estate of Hubert Keith Moore, Clint Frye, Jerry Hickman,
Patricia Moore as Co-Administrator of the Estate of Hubert Keith Moore, and Fernando Rocha
(Dkt. No. 55); and Miguel Figueroo as Co-Administrator of the Estate of Recardo Trochez, Don
Allen Pearson, and Juan Buatista Trochez as Co-Administrator of the Estate of Recardo Trochez
(Dkt. No. 62). The Court denied without prejudice these motions (Dkt. Nos. 38, 40, 42, 46, 55,
and 62) because UFCC failed to comply with Federal Rule of Civil Procedure 55 when filing the

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motions for default (Dkt. No. 69). UFCC then re-filed its motions for default judgment as
against Evelyn Bates as Co-Administrator of the Estate of Hubert Keith Moore, Derek Brammer,
Timothy Champion, Bradley Deaver, Miguel Figueroo as Co-Administrator of the Estate of
Recardo Trochez, Perry Fondrew, Clint Frye, Daniel Hankins, Jerry Hickman, Kenneth
Hightower, Austin Kosier, Patricia Moore as Co-Administrator of the Estate of Hubert Keith
Moore, Don Allen Pearson, Fernando Rocha, Ethan Tew, Juan Torres, Juan Buatista Trochez as
Co-Administrator of the Estate of Recardo Trochez, and Cody Webster in compliance with Rule
55 (Dkt. No. 70). That motion is currently pending. On February 3, 2016, UFCC filed the
motion for summary judgment that is the subject of this Order (Dkt. No. 65).
III.

Legal Standard

Summary judgment is proper if the evidence, when viewed in the light most favorable to
the nonmoving party, shows that there is no genuine issue of material fact in dispute and that the
defendant is entitled to entry of judgment as a matter of law. Fed. R. Civ. P. 56; Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). A factual dispute is genuine if the evidence could cause a
reasonable jury to return a verdict for either party. Miner v. Local 373, 513 F.3d 854, 860 (8th
Cir. 2008). “The mere existence of a factual dispute is insufficient alone to bar summary
judgment; rather, the dispute must be outcome determinative under prevailing law.” Holloway v.
Pigman, 884 F.2d 365, 366 (8th Cir. 1989). However, parties opposing a summary judgment
motion may not rest merely upon the allegations in their pleadings. Buford v. Tremayne, 747
F.2d 445, 447 (8th Cir. 1984). The initial burden is on the moving party to demonstrate the
absence of a genuine issue of material fact. Celotex Corp., 477 U.S. at 323. The burden then
shifts to the nonmoving party to establish that there is a genuine issue to be determined at trial.
Prudential Ins. Co. v. Hinkel, 121 F.3d 364, 366 (8th Cir. 2008). “The evidence of the non-

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movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
IV.

Analysis
A.

Motion For Summary Judgment

The Court’s analysis of this action involving an insurance policy contract is governed by
Arkansas law, as this Court is required to look to the substantive law of the state in which it sits
in a case involving diversity of citizenship jurisdiction. See Erie R. Co. v. Tompkins, 304 U.S. 64
(1938). In its amended complaint, UFCC asks the Court to declare the rights and other legal
relations of the various parties with respect to two insurance policies issued by UFCC to Mr.
Pearson (Dkt. No. 16). UFCC contends that “[a]pplying the plain language of the relevant
insurance policies in light of the undisputed facts of this case, the Court should grant UFCC’s
motion for summary judgment.” (Dkt. No. 66, at 1). Specifically, UFCC requests that the Court
find that neither of the UFCC policies at issue affords any liability coverage for the June 2, 2014,
accident and that UFCC has no obligation to provide a defense for Mr. Pearson or Mr. Hickman
in the lawsuit filed against Mr. Pearson and Mr. Hickman by defendants Mr. Frye and Mr.
Hightower in Van Buren County, Arkansas, or in any other lawsuit that has been or may be filed
as a result of the June 2, 2014, accident (Dkt. No. 66, at 1).
UFCC asserts that “[t]he language in an insurance policy is to be construed in its plain,
ordinary, and popular sense.” Farmers Ins. Exchange v. Bradford, 60 S.W.3d 810, 813 (Ark.
App. 2015). “Different clauses of an insurance contract must be read together and the contract
construed so that all of its parts harmonize.” Id. “If a provision is unambiguous, and only one
reasonable interpretation is possible, this court will give effect to the plain language of the policy
without resorting to the rules of construction.” Id.

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1.

Policy Number 02474899-0

Initially, Mr. Pearson had a commercial auto policy, Policy Number 02474899-0, with
UFCC for the policy period of November 4, 2013, through November 4, 2014 (Dkt. No. 67, Ex.
B). Mr. Pearson failed to pay the premiums owed, and UFCC/Progressive sent to Mr. Pearson a
cancellation notice on March 13, 2014, which read, in pertinent part, as follows: “Unfortunately,
we didn’t receive your payment and, as a result, your policy will be canceled at 12:01 a.m. on
March 25, 2014. Please know that this means you will no longer have insurance coverage.” (Id.,
Ex. C).

The cancellation notice stated, however, that Mr. Pearson could avoid a lapse in

coverage by making his payment prior to the March 25, 2014, cancellation deadline (Id.). UFCC
further contends, and the undisputed facts show, that Mr. Pearson did not make the required
payment before the deadline. Subsequently, UFCC/Progressive sent to Mr. Pearson two final
bills, both of which UFCC says explicitly stated that Mr. Pearson no longer had insurance under
Policy Number 02474899-0, effective March 25, 2014 (Id., ¶¶ 3, 4; Exs. D, E).
UFCC argues that Progressive’s cancellation of Mr. Pearson’s policy was effective
because Progressive fully complied with Arkansas law and the Cancellation and Nonrenewal
Endorsement included in UFCC Policy Number 02474899-0. Ark. Code Ann. § 23-66-206(9);
(Dkt. No. 67, Ex. A, at 45-46). As a result, UFCC further asserts that “it is undisputed that
UFCC cancelled Policy Number 02474899-0 before the June 2, 2014, accident, and, as a result,
the only policy that could possibly provide coverage for the June 2, 2014, accident is UFCC
Policy Number 03150888-0.” (Dkt. No. 66, at 5).
Given the undisputed facts in the case, the pleadings, and the exhibits thereto, this Court
agrees. The language in the policy, specifically the Cancellation and Nonrenewal Endorsement
for Policy Number 02474899-0, is clear and unambiguous, and the Court sees only one

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reasonable interpretation of the date on which coverage under the policy ended (Dkt. No. 67, Ex.
A, at 45-46). Therefore, the Court will credit the plain meaning of the policy to find that the
policy was effectively cancelled, and coverage under the policy ended, before the June 2, 2014,
accident. See Farmers Ins. Exchange, 60 S.W.3d at 813.
2.

Policy Number 03150888-0

UFCC Policy Number 03150888-0 states that the policy “applies only to accidents and
losses occurring during the policy period shown on the declarations page.” (Dkt. No. 67, Ex. K).
The declarations page for UFCC Policy Number 03150888-0 provides as follows:

“Your

coverage began the later of June 2, 2014, at 12:01 a.m., or at the time your application is
executed on the first day of the policy period.” (Id.). It is undisputed that the application for
insurance, which UFCC sent to Mr. Pearson for his signature, shows the effective date and time
for UFCC Policy Number 03150888-0 as June 2, 2014, at 7:26 p.m. EST (Dkt. No. 67, Ex. L).
As a result, coverage under UFCC Policy Number 03150888-0 did not begin until June 2, 2014,
at 7:26 p.m. EST.
The underlying accident, for which Mr. Pearson and Mr. Hickman seek coverage,
occurred on June 2, 2014, at 3:11 p.m. CST. (Id., ¶ 5). UFCC contends that, because the
accident occurred several hours prior to the start of coverage under UFCC Policy Number
03150888-0, there is no coverage under UFCC Policy Number 03150888-0 for the June 2, 2014,
accident and any and all claims arising therefrom.
This Court interprets the unambiguous language from the application for insurance by
looking at its plain meaning. As a result, this Court finds that the effective date and time for
Policy Number 03150888-0, and coverage under that policy, was June 2, 2014, at 7:26 p.m. EST,

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which is after the accident at issue in this matter. No coverage for the accident existed under
Policy Number 03150888-0 based upon the language from the application.
UFCC bolsters its assertion that there was no coverage for the June 2, 2014, accident
under UFCC Policy Number 03150888-0 by arguing that UFCC Policy Number 03150888-0
provides liability coverage only for the named insured shown on the declarations page of the
policy with respect to an insured auto and for any other person while using, with the named
insured’s permission and within the scope of that permission, the named insured’s auto (Dkt. No.
67, Ex. K). Mr. Hickman, who at the time of the accident was driving the 1993 Peterbilt tractortrailer, which was owned by Mr. Pearson, was not listed as a rated driver on the declarations
page for UFCC Policy Number 03150888-0 (Id., Ex. K; ¶ 10). Further, the undisputed facts
show that, at the time the accident occurred, Mr. Hickman was not Mr. Pearson’s employee, did
not have Mr. Pearson’s permission to operate the tractor-trailer, and was not operating the
tractor-trailer at the behest of Mr. Pearson (Id., ¶ 6).
Policy Number 03150888-0 contains the following insuring agreement:
INSURING AGREEMENT - LIABILITY TO OTHERS
Subject to the Limits of Liability, if you pay the premium for liability coverage
for the insured auto involved, we will pay damages, other than punitive or
exemplary damages, for bodily injury, property damage, and covered pollution
cost or expense, for which an insured becomes legally responsible because of an
accident arising out of the ownership, maintenance or use of that insured auto.
However, we will only pay for the covered pollution cost or expense if the
same accident also caused bodily injury or property damage to which this
insurance applies.
We will settle or defend, at our option, any claim or lawsuit for damages covered
by this Part I. We have no duty to settle or defend any lawsuit, or make any
additional payments, after the Limit of Liability for this coverage has been
exhausted by payment of judgments or settlements.
(Dkt. No. 67, Ex. J, at 6)(emphasis in original).

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For these reasons, the Court finds that there is no coverage under UFCC Policy Number
03150888-0 for the June 2, 2014, accident involving the 1993 Peterbilt tractor-trailer and any and
all claims against Mr. Hickman and/or Mr. Pearson arising therefrom.
Thus, based on the record before it, the Court finds that no coverage provided by UFCC
existed for the June 2, 2014, accident. The evidence in this matter, when viewed in the light
most favorable to the nonmoving party, shows that there is no genuine issue of material fact in
dispute and that UFCC is entitled to entry of judgment as a matter of law. Fed. R. Civ. P. 56;
Celotex Corp., 477 U.S. at 322. Therefore, the Court grants UFCC’s motion for summary
judgment (Dkt. No. 65).
B.

Motion To Dismiss Voluntarily And Motion For Default Judgment

Because the Court has granted UFCC’s motion for summary judgment in this matter, the
Court denies the pending motion to dismiss voluntarily separate defendants and the motion for
default judgment as moot (Dkt. Nos. 64, 70).
V.

Conclusion

Based on the foregoing analysis, the Court grants UFCC’s motion for summary judgment
(Dkt. No. 65) and denies as moot all other pending motions (Dkt. Nos. 64, 70). It is the finding
of this Court that neither UFCC policy at issue affords liability coverage for the June 2, 2014,
accident and that UFCC has no obligation to provide a defense for Mr. Pearson or Mr. Hickman
in the Van Buren County, Arkansas, lawsuit filed against them or in any other lawsuit that has
been or may be filed as a result of the June 2, 2014, accident.
The Court declines at this time to award UFCC its costs and attorney’s fees in defending
Mr. Pearson and Mr. Hickman in the Van Buren County, Arkansas, lawsuit and its costs and
attorney’s fees incurred in prosecuting this action in accordance with 28 U.S.C. § 2202 and Ark.

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Code Ann. § 16-111-101 et seq. Accordingly, the Court denies without prejudice the request for
costs and attorneys’ fees. To the extent UFCC wishes to pursue its request for costs and
attorneys’ fees, it may file supplemental briefing, including a discussion of authorities and an
itemized request for such costs and fees, within 14 days of the entry of this Order.
So ordered this 16th day of September, 2016.

_______________________________
Kristine G. Baker
United States District Judge

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