St Paul Fire & Marine Insurance Company v. Schilli Transportation Services Inc et al
Filing
56
OPINION AND ORDER the Motion for Summary Judgment DE 41 filed by the plaintiff, St. Paul Fire & Marine Insurance Company, on December 15, 2010 is GRANTED; the Motion for Summary Judgment DE 44 filed by the defendants, Schilli Transportation Servi ces, Inc. and WVT of Texas, Inc., on December 15, 2010, is DENIED; the Motion for Summary Judgment DE 45 filed by the defendant, Schilli Transportation Service, Inc., on December 15, 2010, is GRANTED; the Motion to Strike Portions of the Affidavit of Michael P. Lynch DE 47 filed by the defendants on January 18, 2011, is DENIED; and the Motion for Leave to File Amended Affidavit DE 53 filed by the plaintiff on February 1, 2011, is GRANTED. St. Paul is entitled to judgment against the defend ants, Schilli, Atlantic, and WVT, in the amount of $347,133.31, plus accrued interest at an annual rate of 8% from the date of invoice. St. Paul shall submit its interest calculation within 14 days so that a final judgment may be entered consistent with Federal Rule of Civil Procedure 54(a). Signed by Magistrate Judge Andrew P Rodovich on 5/5/11. (kjp)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
ST. PAUL FIRE & MARINE
INSURANCE COMPANY,
)
)
)
Plaintiff
)
)
v.
)
)
SCHILLI TRANSPORTATION
)
SERVICES, INC.; ATLANTIC INLAND)
CARRIERS, INC.; WVT OF TEXAS, )
INC.,
)
)
Defendants
)
Case No. 2:08 cv 176
OPINION AND ORDER
This matter is before the court on the following motions:
the Motion for Summary Judgment [DE 41] filed by the plaintiff,
St. Paul Fire & Marine Insurance Company, on December 15, 2010;
the Motion for Summary Judgment [DE 44] filed by the defendants,
Schilli Transportation Services, Inc. and WVT of Texas, Inc., on
December 15, 2010; the Motion for Summary Judgment [DE 45] filed
by the defendant, Schilli Transportation Service, Inc., on
December 15, 2010; the Motion to Strike Portions of the Affidavit
of Michael P. Lynch [DE 47] filed by the defendants on January
18, 2011; and the Motion for Leave to File Amended Affidavit [DE
53] filed by the plaintiff on February 1, 2011.
For the follow-
ing reasons, the Motion for Summary Judgment [DE 41] filed by the
plaintiff is GRANTED, the Motion for Summary Judgment [DE 44]
filed by Schilli Transportation Services Inc. and WVT of Texas,
Inc. is DENIED, the Motion for Summary Judgment [DE 45] filed by
Schilli Transportation Service Inc. is GRANTED, the Motion to
Strike Portions of the Affidavit of Michael P. Lynch [DE 47] is
DENIED, and the Motion for Leave to File Amended Affidavit [DE
53] is GRANTED.
Background
St. Paul Fire & Marine Insurance Company issued an insurance
policy for the term of June 1, 2000 through June 1, 2002, listing
the defendants, Schilli Transportation Services, Inc., Atlantic
Inland Carriers, Inc., and WVT of Texas, Inc., as the named
insureds.
Schilli, Atlantic, and WVT are separate corporations,
each predominately owned by Tom Schilli, that engage in distinct
businesses.
WVT is an interstate motor carrier, Atlantic pre-
viously was an interstate motor carrier but closed in 2003, and
Schilli is a freight broker.
Schilli never has owned a tractor
trailer and never has employed truck drivers.
Schilli also pro-
vided risk management services for claims asserted against trucking companies, but all claims resolved on behalf of the trucking
companies were paid for by the trucking companies themselves.
St. Paul issued Policy CK002100627 and insured Schilli,
Atlantic, Wabash, and several other corporations.
The policy
defines "you, your, and yours" to mean "the insured named here
2
which is a CORPORATION", and goes on to list each corporation.
The policy provides in relevant part:
EACH ACCIDENT/EVENT DEDUCTIBLE
You agree to repay us up to this deductible
amount for all damages caused by any one
accident, as soon as we notify you of the
judgment or settlement . . .
REPAYMENT OF EXPENSES
We will pay all expenses to settle a claim or
suit. You’ll be responsible for the amount
of expenses within the deductible . . .
AUTO COVERAGE SUMMARY
This Coverage Summary shows the Limits of
Coverage that apply to your Commercial Auto
Protection . . .
$1,000,000.00 each accident.
OTHER:
$100,000 basket deductible per occurrence.
Under the General Rules section, the policy explained that
the first named insured, Schilli, was responsible for paying the
premium and would receive return premiums.
The first named in-
sured also could change or cancel the policy in whole or in part.
However, this section did not address who would be responsible
for the deductible in the event of a claim.
Throughout the duration of the insurance policy, several
accidents occurred involving the defendants.
On January 18,
2001, an automobile accident occurred between a car driven by
3
Heather Thompson and a semi tractor trailer driven by an Atlantic
employee in Ontario, Canada.
Thompson filed a complaint against
Schilli, and St. Paul negotiated the release of Thompson’s claim
in the amount of $102,567.20.
St. Paul sent Schilli an invoice
for the $100,000 deductible, and Schilli refused to pay.
On October 25, 2001, a collision occurred between an automobile driven by Andrea Johnson and a semi-tractor trailer driven
by an Atlantic employee.
St. Paul communicated with Schilli
regarding the status of the claim and eventually negotiated a
$16,000 settlement of Johnson’s claim.
Johnson executed a
release of all claims which named Schilli as one of the parties
released.
On June 22, 2000, an accident occurred between a WVT employee attempting to load a semi-tractor trailer and an Owens
Corning employee operating a forklift.
The WVT employee, Albert
Kozusko, filed a declaratory judgment action seeking a determination that St. Paul owed uninsured motorist coverage benefits
under the policy issued to Schilli.
St. Paul incurred defense
costs of $13,161.70 to defend the claim.
On January 6, 2002, Allison Bergner was injured in a three
vehicle collision involving a semi-tractor trailer driven by
Donald H. Indorf, an employee of Schilli.
Bergner asserted a
claim, and St. Paul communicated with Schilli multiple times to
4
work out the terms for a settlement.
St. Paul incurred
$24,971.61 in defending Schilli from claims arising from this
incident.
Another accident occurred on May 8, 2001, involving Lean
Wurslin and a semi-tractor trailer.
Wurslin filed suit against
Schilli, and St. Paul negotiated a $135,000 settlement.
On February 25, 2002, Maria Fuentes and Otilio Aguilar were
involved in a collision with a semi-tractor trailer.
Fuentes and
Aguilar filed a suit against Schilli, and St. Paul negotiated a
settlement for $62,500 to both Fuentes and Aguilar.
St. Paul contacted Schilli and remained in contact with it
throughout the negotiations for the above referenced accidents.
St. Paul sent Schilli an invoice, seeking reimbursement for the
$100,000 deductible for each accident.
each account.
Schilli refused to pay on
Schilli argues that it is not liable for the
deductible because the terms of the contract limit liability to
one corporation for each resulting incident and the Indiana
Statute of Frauds prohibits enforcing a contract to pay the debt
of another that is not made in writing.
Schilli believes that
WVT and Atlantic should be held responsible for their own deductibles.
Each of the parties has filed a motion for summary
judgment.
5
In support of its motion for summary judgment, St. Paul
submitted the affidavit of Michael P. Lynch.
Lynch’s affidavit
explains that his knowledge is based upon his review of the
business records that were kept in the ordinary course of business by an employee under a business duty to record the information.
Several documents were attached to his affidavit as exhi-
bits.
However, Exhibit 2, the full and final release executed by
Heather Thompson, Kale James William Thompson, and Kendra Loryn
Thompson, inadvertently was left out, and because of this error
Lynch’s statements did not coordinate with the exhibits.
St.
Paul requests leave to amend Lynch’s affidavit to attach Exhibit
2, but the defendants oppose St. Paul’s motion and argue that
Lynch’s affidavit should be stricken because the statements
contain inadmissible hearsay, Lynch lacks personal knowledge, and
the statements violate the best evidence rule because the documents his knowledge was derived from were not attached.
Discussion
As an initial matter, St. Paul moves to amend the affidavit
of Michael P. Lynch to include a document it inadvertently failed
to attach to Lynch’s affidavit.
The defendants oppose the motion
arguing that the attachment of the additional document, the full
and final release of all claims from the accident arising on
January 18, 2001, executed by Heather Thompson, Kale James
6
William Thompson, and Kendra Loryn Thompson, would cause them
prejudice because they have not had an opportunity to respond to
the document.
It is within the trial court’s discretion to allow parties
to amend evidence in support of a motion for summary judgment.
Maier v. Lucent Technologies, Inc., 120 F.3d 730, 735 (7th Cir.
1997)(explaining that the appellate court reviews the trial
court’s denial of a motion to supplement a response under an
abuse of discretion standard) (citing Jonasson v. Lutheran Child
& Family Servs., 115 F.3d 436, 440 (7th Cir. 1997); Buckner v.
Sam's Club, Inc., 75 F.3d 290, 292 (7th Cir. 1996)).
Generally,
the non-moving party must be afforded an opportunity to respond
to evidence submitted after its response has been filed.
How-
ever, reply affidavits may be submitted without giving the nonmoving party a chance to respond when the affidavit is limited to
matters that may be raised in the reply, provided that the affidavit does not raise new issues.
Buckner, 75 F.3d at 292; Baugh
v. City of Milwaukee, 823 F.Supp. 1452, 1457 (E.D. Wis. 1993)
("[S]upplemental affidavits can be employed to clarify ambiguous
or confusing deposition testimony.").
Although St. Paul did not submit Exhibit 2 as further evidence in support of its reply brief, St. Paul’s motion to amend
to include Exhibit 2 was filed after the defendants’ response was
7
submitted, so the defendants did not have an opportunity to view
and respond to the document.
However, Lynch’s affidavit made
note of the contents of Exhibit 2, as did St. Paul’s memorandum
in support of its motion for summary judgment.
Therefore, the
disclosure of the full and final release as Exhibit 2 of Lynch’s
affidavit as an amended attachment does not come as a surprise to
the defendants.
The prior references to the evidence gave the
defendants an opportunity to respond.
Therefore, the motion to
amend Lynch’s affidavit is GRANTED.
The defendants, however, oppose Lynch’s affidavit on the
merits and have moved to strike portions of his affidavit on the
ground that they contain hearsay and violate the best evidence
rule.
To support a claim that has been challenged on summary
judgment, an affidavit may not be based upon "self-serving
statements . . . without factual support in the record." Thanongsinh v. Board of Education, 462 F.3d 762, 781 (7th Cir. 2006)
(quoting Butts v. Aurora Health Care, Inc., 387 F.3d 921, 925
(7th Cir. 2004)).
Rather, Federal Rule of Civil Procedure 56(e)
requires that an affidavit must be "made on personal knowledge
[and] set forth facts as would be admissible in evidence."
Evi-
dence contained in the affidavit must be excluded if it does not
comply with the Federal Rules of Evidence. For example, hearsay
is not admissible, Wigod v. Chicago Mercantile Exchange, 981 F.2d
8
1510, 1519 (7th Cir. 1992), unless it comes within a recognized
exception to the hearsay rule. Oriental Health Spa v. City of
Fort Wayne, 864 F.2d 486, 490-91 (7th Cir. 1988) (applying Rule
803(8)).
In addition, a party resisting summary judgment may not
"patch-up potentially damaging deposition testimony with a contradictory affidavit."
Commercial Underwriters Insurance Company
v. Aires Environmental Services, Ltd., 259 F.3d 792, 799 (7th
Cir. 2001).
See also Buckner, 75 F.3d at 292 ("[T]he law of this
circuit does not permit a party to create an issue of fact by
submitting an affidavit whose conclusions contradict deposition
or sworn testimony.").
"Rule 56 demands something more specific
than the bald assertion of the general truth of a particular
matter, rather it requires affidavits that cite specific concrete
facts establishing the existence of the truth of the matter
asserted." Hadley v. County of DuPage, 715 F.2d 1238, 1243 (7th
Cir. 1983). See also, Drake v. Minnesota Mining and Manufacturing
Company, 134 F.3d 878, 886 (7th Cir. 1998).
The defendants’ motion is largely based on the plaintiff’s
inadvertent failure to attach Exhibit 2, so that the attached
exhibits failed to coordinate with the statements provided in
Lynch’s affidavit.
However, the referenced documents were
attached to Lynch’s affidavit, albeit not in the correct order.
St. Paul corrected the error by filing its amended affidavit and
9
attaching Exhibit 2, and the documents now properly coordinate
with the statements given in Lynch’s affidavit. However, the
defendants remain opposed to the affidavit, arguing that Lynch
does not have personal knowledge of the statements because he
garnered his knowledge from reviewing the attached documents.
An affiant must have personal knowledge of the facts he
attests to in his affidavit.
Rule 56(e).
Personal knowledge
refers to knowledge gained through first hand observation or
experience, as distinguished from a belief based on a statement
made by another.
3 Litigating Tort Cases §31:9; Visser v. Packer
Engineering Associates, Inc., 924 F.2d 655, 659 (7th Cir. 1991)
("'personal knowledge' includes inferences - all knowledge is
inferential - and therefore opinions . . . But the inferences and
opinions must be grounded in observation or other first-hand
personal experience. They must not be flights of fancy, speculations, hunches, intuitions, or rumors about matters remote from
that experience.").
A corporate officer may be deemed to have
personal knowledge of the acts of the corporation and need not
expressly state that the allegations contained in his complaint
are based on his personal knowledge.
See, e.g., Self-Realization
Fellowship Church v. Ananda Church of Self-Realization, 206 F.3d
1322, 1330 (9th Cir. 2000), cert. denied, 531 U.S. 1126, 121
S.Ct. 881, 148 L.Ed.2d 790 (2001) (stating that the court could
10
presume personal knowledge from the affiant’s position as a
corporate officer); Catawba Indian Tribe of South Carolina v.
State of South Carolina, 978 F.2d 1334 (4th Cir. 1992) (stating
that corporate officers ordinarily have personal knowledge of the
acts of their corporation); Barthelemy v. Air Lines Pilots Ass'n,
897 F.2d 999, 1018 (9th Cir. 1990) (inferring from affiant's
position as CEO personal knowledge of various corporate activities).
Rather, there is a general presumption that an employee
or corporate representative has personal knowledge, sufficient to
attest to matters relating to the business entity.
ABN Amro
Mortgage Group, Inc. v. Maximum Mortgage, Inc., 2006 WL 2598034,
*5 (N.D. Ind. Sept. 8, 2006).
In ABN, a corporate representative verified that her testimony was based on her personal knowledge and familiarity with the
corporation’s business records.
The court found that such deri-
vative knowledge was a sufficient basis for personal knowledge
and denied the motion to strike the affidavit.
2598034 at *5.
ABN, 2006 WL
See also Westchester Fire Ins. Co. v. American
Wood Fibers, Inc., 2006 U.S. Dist. LEXIS 24225 at *12 (N.D. Ind.
March 21, 2006) (presuming knowledge of events described in
affidavit based on employment and position with company).
The
court explained that the affiant’s conclusions were "based upon
11
her own observations and substantiated by specific facts and
records."
ABN, 2006 WL 2598034 at *5.
Lynch attested that he is a Senior Case Manager of Business
Insurance at Travelers Indemnity Company, that his knowledge was
based on reviewing the business records maintained by Travelers
and its affiliates, and that employees were under a business duty
to record the information accurately near the time of the recorded event.
As a corporate representative, Lynch is presumed
to have personal knowledge to attest to matters relating to
Travelers.
Whether his knowledge was garnered from reviewing
business documents that Travelers had a business duty to record
or from his personal observations is immaterial.
WL 2598034 at *5.
See ABN, 2006
Therefore, the defendants’ objection to
Lynch’s affidavit on the grounds of lack of personal knowledge is
not well grounded.
Lynch’s statements are made pursuant to his
own observations and substantiated by the records, and he therefore has personal knowledge to attest to the facts contained in
his affidavit.
The defendants also argue that the statements Lynch made in
his affidavit are inadmissible hearsay.
However, Lynch’s affida-
vit specifically states that his statements are based on his
review of "business records maintained by Travelers and its
affiliates by employees under a business duty to record informa-
12
tion accurately at or near the time of the event recorded."
Federal Rule of Evidence 803(6) exempts from the definition of
hearsay statements contained in business documents made at or
near the time of an event, recorded by someone with personal
knowledge, kept in the regular course of business, and made by
someone under a business duty to record.
In ABN, the affiant similarly stated that her knowledge was
derived from her review of business documents kept by the company
in the ordinary course of business created at or near the time of
the events documented therein.
ABN, 2006 WL 2598034 at *5. The
court found that this statement was conclusive proof that her
statements were not hearsay and were excluded by the business
records exception.
The court went on to explain that the defen-
dant did not provide a meaningful explanation of which statements
were hearsay and how he so concluded.
Although the defendant
argued that the business records exception was inapplicable, he
did not explain how the specific statements were hearsay.
ABN,
2006 WL 2598034, at *5.
Lynch made a similar statement, providing that his knowledge
was based on business records kept in the ordinary course of
business, by an individual with a business duty to record, at or
near the time of the events in question.
This statement is proof
that his subsequent statements, based on Traveler’s business
13
records, are admissible hearsay under the business records
exception.
Furthermore, the defendants provide nothing more than
boilerplate allegations that the statements are hearsay.
They
have failed to show how each statement they contest falls under
the hearsay rule.
The only specific allegation of hearsay the defendants
raised was in response to paragraph 17 which provides: "On
January 6, 2002, Allison Bergner, ('Bergner'), was driving her
car in New York when it was involved in a three vehicle collision
that included a semi tractor trailer driven by Donald H. Indorf,
('Indorf').
Indorf later gave a recorded statement to a claims
adjuster for St. Paul in which he stated he was an employee of
'Schilli.'
On January 31, 2003, St. Paul sent a letter to Robert
M. Miele, acknowledging that he was serving as an attorney for
Bergner to assert a claim for compensation against Schilli."
Beyond alleging that this specific statement is hearsay, the
defendant has provided no additional explanation to support its
argument.
Not only is this fatal to its claim, but Paragraph 17
also falls within an exception to hearsay.
Because Indorf was an
employee of Schilli, or one of the other defendants, his statement was a party admission through the doctrine of vicarious
admissions, and therefore not hearsay.
Federal Rule of Evidence
801(d)(2)(D) (stating that a statement by a party’s agent or
14
servant concerning a matter within the scope of the agency or
employment is not hearsay).
The statement then was recorded by a
claims adjuster who was under a business duty to record and again
exempted under Rule 803(6).
exceptions to hearsay.
Both statements are, therefore,
Absent further explanation, the defen-
dants have failed to meet their burden to show that the statement
was inadmissible hearsay.
The defendants also object to Lynch’s affidavit, arguing
that it does not comply with the best evidence rule.
The best
evidence rule states that an original writing must be produced to
prove its contents, except as otherwise provided by the Rules or
by Acts of Congress.
Federal Rule of Evidence 1002.
Duplicates
are admissible to the same extent as the original, provided the
authenticity is not challenged.
Federal Rule of Evidence 1003.
Lynch’s affidavit contains duplicates of the documents his knowledge is derived from, as permitted by the rules.
Although the
defendants made specific references to statements that were not
supported by the exhibits Lynch’s affidavit referenced, this
error was corrected when St. Paul submitted its amended affidavit
that correctly labeled the exhibits to coordinate with the statements in the affidavit.
Therefore, Lynch properly supplied the
requisite documentation to support the statements he made in his
affidavit and complied with the best evidence rule.
15
For all of
these reasons, the defendants' motion to strike Lynch’s affidavit
is DENIED in its entirety.
The court now will address the parties’ motions for summary
judgment.
Pursuant to Federal Rule of Civil Procedure 56(c),
summary judgment is proper only if it is demonstrated that "there
is no genuine issue as to any material fact and the moving party
is entitled to a judgment as a matter of law."
Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265
(1986); Stephens v. Erickson, 569 F.3d 779, 786 (7th Cir. 2009).
The burden is upon the moving party to establish that no material
facts are in genuine dispute, and any doubt as to the existence
of a genuine issue must be resolved against the moving party.
Adickes v. S.H. Kress & Company, 398 U.S. 144, 160, 90 S.Ct.
1598, 1610, 26 L.Ed.2d 142, 155 (1970); Stephens, 569 F.3d at
786.
A fact is material if it is outcome determinative under
applicable law.
There must be evidence on which the jury could
reasonably find for the nonmoving party.
Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d
202, 212 (1986); Stephens, 569 F.3d at 786; Wheeler v. Lawson,
539 F.3d 629, 634 (7th Cir. 2008).
Summary judgment is inappropriate for determination of
claims in which issues of intent, good faith, and other subjective feelings play dominant roles.
16
Ashman v. Barrows, 438 F.3d
781, 784 (7th Cir. 2006).
Upon review, the court does not evalu-
ate the weight of the evidence, judge the credibility of witnesses, or determine the ultimate truth of the matter; rather,
the court will determine whether there exists a genuine issue of
triable fact.
Wheeler, 539 F.3d at 634 (citing Anderson, 477
U.S. at 248, 106 S.Ct. at 2510).
In deciding a motion for summary judgment, the trial court
must determine whether the evidence presented by the party
opposed to the summary judgment is such that a reasonable jury
might find in favor of that party after a trial.
The inquiry performed is the threshold inquiry of determining whether there is the
need for a trial--whether, in other words,
there are any genuine factual issues that
properly can be resolved only by a finder of
fact because they may reasonably be resolved
in favor of either party.
[T]his standard mirrors the standard for a
directed verdict under Federal Rule of Civil
Procedure 50(a), which is that the trial
judge must direct a verdict if, under the
governing law, there can be but one reasonable conclusion as to the verdict.
Anderson, 477 U.S. at 250, 106 S.Ct. at 2511
See also Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133,
149-151, 120 S.Ct. 2097, 2109, 147 L.Ed.2d 105, 120-122 (2000)
(setting out the standard for a directed verdict); Celotex Corp.,
477 U.S. at 322-23, 106 S.Ct. at 2553; Stephens, 569 F.3d at 786;
Argyropoulos v. City of Alton, 539 F.3d 724, 732 (7th Cir. 2008)
17
(stating that a genuine issue is one on which a reasonable fact
finder could find for the nonmoving party); Springer v. Durflinger, 518 F.3d 479, 483 (7th Cir. 2008)(stating that a genuine
issue exists and summary judgment is inappropriate if there is
sufficient evidence for a jury to return a verdict for the
nonmoving party).
The parties dispute who is liable for the deductible under
the insurance policy St. Paul issued to Schilli, WVT, and Atlantic. "As a federal court sitting in diversity, we apply state
substantive law and federal procedural law."
Charter Oak Fire
Insurance v. Hedeen & Companies, 280 F.3d 730, 735 (7th Cir.
2002)(citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct.
817, 82 L.Ed. 1188 (1938).
Under Indiana law, insurance policies
are interpreted according to the same rules of construction as
other contracts.
Barga v. Indiana Farmers Mutual Trust Insurance
Group, Inc., 687 N.E.2d 575, 578 (Ind. App. 1997); Colonial Penn
Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind. 1997).
Words are
given their plain and ordinary meanings, and ambiguities are
resolved in favor of the insured.
Anderson v. State Farm Mutual
Auto Ins. Co., 471 N.E.2d 1170, 1172 (Ind. App. 1984).
Interpre-
tation of an insurance policy is a question of law to be decided
by the court.
National Fire and Casualty Company v. West, 107
F.3d 531, 534 (7th Cir. 1997).
18
In resolving a contract dispute, the court first must determine whether the policy contains clear terms or whether ambiguities exist.
See Travelers Indemnity Co. v. Summit Corp. Of
America, 715 N.E.2d 926, 937 (Ind. App. 1999)(stating that the
court first must determine whether the language in the contract
is ambiguous).
A term is ambiguous if it is susceptible to more
than one interpretation and a reasonable person may differ as to
the meaning of the policy language.
Eli Lilly and Co. v. Home
Insurance Co., 482 N.E.2d 467, 470 (Ind. 1985).
Ambiguity does
not exist simply because the parties favor a different meaning of
interpretation.
Anderson, 471 N.E.2d at 1172; Beam v. Wausau
Insurance Co., 765 N.E.2d 524, 528 (Ind. 2002).
The court will
not rewrite clear and unambiguous language regardless of the
equitable reasons for doing so.
Ely v. State Farm Mutual Auto.
Insurance Co., 268 N.E.2d 316, 320 (Ind. App. 1971).
The parties first dispute whether the insurance policy
provides for joint and several liability among the defendants.
To resolve this dispute, the court first must interpret the
policy and determine whether the policy contains clear terms
allocating liability between the insureds, or whether the terms
were ambiguous.
See Travelers, 715 N.E.2d at 937 (stating that
the court must first determine whether the language in the
contract is ambiguous).
The policy provides, in relevant part:
19
REPAYMENT OF EXPENSES
We will pay all expenses to settle a claim or
suit. You’ll be responsible for the amount
of expenses within the deductible. As soon
as we notify you of a payment, you agree to
reimburse us for any such expenses until the
total amount of reimbursed damages and expenses exceeds the deductible amount shown in
the coverage summary. . . .
AUTO COVERAGE SUMMARY
This Coverage Summary shows the Limits of
Coverage that apply to your Commercial Auto
Protection . . .
Limit of Coverage: $1,000,000.00 each accident.
OTHER: $100,000.00 basket deductible per
occurrence.
The policy defines "You, your, and yours" to mean "the insured
named here, which is a CORPORATION SCHILLI TRANSPORTATION SERVICES, INC. . . . SCHILLI LEASING, INC., ATLANTIC INLAND CARRIERS, INC., WABASH VALLEY TRANSPORTATION, INC. . . . WVT OF TEXAS,
INC. . . ."
Inserting this definition into the provision pertaining to
repayment of expenses, the policy would read that a corporation
Schilli, Atlantic, Wabash Valley Transportation, and the other
named insureds, will be responsible for the amount of expenses
within the deductible.
The defendants assert that definition of
"you" states "a corporation", meaning one corporation, in the
singular, is liable for each resulting incident.
20
This may be
true if the policy did not go on to specifically name all of the
businesses insured under the policy, thereby defining "you" as
all of the companies.
The designation "a corporation" signified
the type of insureds that the policy covered, a corporation
rather than a partnership or individuals, and did not limit the
liability for the corporations under the policy.
The policy
clearly and unambiguously defines "you" as all of the corporations by specifically listing each corporation, and therefore,
provisions containing the term "you" pertain to all of the listed
corporations.
For this reason, all of the listed corporations
are liable under the repayment of expenses provision, and for the
deductible at issue.
The defendants also argue that an ambiguity exists because
Policy CK00210627 laid out specific rules that applied to the
first named insured, and absent from the rules was a provision
holding the first named insured liable for the deductible of the
others.
However, the policy specifically provided that the first
name insured was liable for the premium and would receive repayment of expenses.
The defendants argue that this language dis-
tinguishes that the corporation obligated to pay the deductible
and repay expenses may be different than the first named insured.
What the defendants fail to recognize is that the "general rules"
section does not address the issue of liability for the deduct-
21
ible.
To the extent that this provision distinguishes between
the first named insured and the remaining insureds, this does not
defeat the plain language of the contract that specifically
defines "you" to mean each corporation and makes "you" available
for the resulting deductibles.
The general rules provision, dis-
tinguishing between the first named insured and the remaining
insureds, does not conflict with this reading or create ambiguity.
Rather, when the definition of "you" is applied to the
provision regarding the deductible, it renders each named corporation liable for the deductible, and nothing in the general
rules section contradicts this reading.
The defendants alternatively argue that the Indiana Statute
of Frauds prohibits holding each corporation liable for the
others’ debts absent a written agreement to do so.
The Indiana
Statute of Frauds requires certain types of contracts to be made
in writing.
Ind. Code §32-21-1-1.
Included under the statute of
frauds are contracts made to pay the debts of another.
§32-21-1-1(b)(2).
Ind. Code
A written memorandum satisfies the statute of
frauds if it is signed by the party charged or his agent, and
states with reasonable certainty the parties to the contract, the
subject matter of the contract, and the terms and conditions of
the promises.
McMahan Const. Co. v. Wegehoft Bros., Inc., 354
N.E.2d 278, 282 (Ind. App. 1976); Block v. Sherman, 34 N.E.2d
22
951, 955 (Ind. App. 1941).
The failure to form a written con-
tract is disregarded if the contract is partially performed, however, the degree of performance required is determined on a caseby-case basis.
McMahan, 354 N.E.2d at 282.
An unconditional promise to pay the debt of another must be
both in writing and based on valuable consideration.
Walker v.
Elkin, 758 N.E.2d 972, 975 (Ind. App. 2001); Southern Indiana
Loan & Savings Institute v. Roberts, 86 N.E. 490, 491 (Ind. App.
1908).
However, if the consideration exchanged is sufficient "to
give to the promise the character of an original undertaking",
the contract is taken outside of the scope of the statute of
frauds.
Walker, 758 N.E.2d at 975; Chandler v. Davidson, 1843 WL
2850, *1 (Ind. 1843).
This is true when "new consideration
passes, at the time of the promise, between the newly contracting
parties, of such a character that it would support a promise to
the plaintiff for the payment of the same sum of money, without
reference to any debt from another."
Chandler, 1843 WL 2850 at
*2. "Whenever the main purpose and object of the promisor is not
to answer for another, but to subserve some pecuniary or business
purpose of his own, his promise is not within the Statute".
Williston on Contracts §22.23.
This exception is known as the
main purpose rule and serves to exempt promises made where the
defendant derives his own benefit from the promise so that it was
23
an original promise.
Davis v. Patrick, 141 U.S. 479, 488, 12
S.Ct. 58, 59-60, 35 L.Ed.2d 826 (1981)("Whenever the main purpose
and object of the promisor is not to answer for another, but to
subserve some pecuniary or business purpose of his own, involving
either a benefit to himself or damage to the other contracting
party, his promise is not within the statute. . . ."); Williston
on Contracts §22.23.
The unambiguous terms of the contract render the defendants
jointly and severally liable for the resulting debts under the
contract.
Each defendant derived its own benefit from the con-
tract in the form of insurance benefits, and St. Paul’s issuance
of the policy presumably was due in part to the joint and several
liability of the named corporations under the contract.
By
signing the contract, the defendants became parties to the
original obligation.
They derived a benefit and in return were
liable for the resulting debts as the terms of the contract
provide.
This is not a case where one party is forced to pay the
debts of another, rather, the parties are being held jointly
liable for their debt according to the terms of the original
policy they negotiated with St. Paul.
Therefore, the defendants
were parties to the principal contract, rendering the statute of
limitations inapplicable.
24
Furthermore, even if the statute of limitations applied, the
defendants ignore that the policy they entered with St. Paul
serves as a written agreement indicating their intent to be held
jointly liable on the resulting debts under the terms of the
contract.
The contract unambiguously indicated that "you",
meaning all of the named insured, were liable for the per accident deductible.
_______________
For the foregoing reasons, the Motion for Summary Judgment
[DE 41] filed by the plaintiff, St. Paul Fire & Marine Insurance
Company, on December 15, 2010 is GRANTED; the Motion for Summary
Judgment [DE 44] filed by the defendants, Schilli Transportation
Services, Inc. and WVT of Texas, Inc., on December 15, 2010, is
DENIED; the Motion for Summary Judgment [DE 45] filed by the
defendant, Schilli Transportation Service, Inc., on December 15,
2010, is GRANTED; the Motion to Strike Portions of the Affidavit
of Michael P. Lynch [DE 47] filed by the defendants on January
18, 2011, is DENIED; and the Motion for Leave to File Amended
Affidavit [DE 53] filed by the plaintiff on February 1, 2011, is
GRANTED.
St. Paul is entitled to judgment against the defen-
dants, Schilli, Atlantic, and WVT, in the amount of $347,133.31,
plus accrued interest at an annual rate of 8% from the date of
invoice.
St. Paul shall submit its interest calculation within
25
14 days so that a final judgment may be entered consistent with
Federal Rule of Civil Procedure 54(a).
ENTERED this 5th day of May, 2011
s/ ANDREW P. RODOVICH
United States Magistrate Judge
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