Property-Owners Insurance Company v. Parke et al

Filing 87

OPINION AND ORDER: GRANTING IN PART AND DENYING IN PART 60 MOTION for Summary Judgment by Plaintiff Property-Owners Insurance Company; DENYING 62 MOTION for Summary Judgment by Defendant Central Rent-A-Crane Inc and DENYING AS MOOT 66 RULE 56 MOTION to Strike Portions of the Affidavit of Rashelle Bollinger by Defendant Central Rent-A-Crane Inc. Property-Owners is entitled to a DECLARATORY JUDGMENT AGAINST DEFENDANT CENTRAL RENT-A-CRANE, INC. stating that at this time Property-Owners o wes no duty to defend or indemnify Central Rent-A-Crane, Inc. Claims against D-T must be DISMISSED FOR LACK OF STANDING to sue D-T. Defendant John Parke will be DISMISSED as a party. Since there are no remaining claims pending in this matter, judgment may now be entered in accordance with this opinion and this matter will be CLOSED.Signed by Chief Judge Philip P Simon on 9/14/2016. (lhc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
PROPERTY-OWNERS INSURANCE
COMPANY,
Plaintiff,
vs.
JOHN PARKE, CENTRAL
RENT-A-CRANE, INC. and D-T
CONSTRUCTION SERVICES, INC.,
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)

Cause Number: 3:13CV399-PPS

OPINION AND ORDER
John Parke was seriously injured when a crane from Central Rent-A-Crane
knocked over the roof trusses on which he was working. At the time of the accident, Mr.
Parke was employed by D-T Construction. This is a declaratory judgment action
wherein D-T’s insurer, Property-Owners Insurance Company, seeks a declaration that it
owes no duty to defend or provide coverage to Mr. Parke, D-T or Central Crane. D-T has
not responded to the lawsuit and Parke is only a nominal defendant at this point because
he has since settled his personal injury case in state court and thus has no real interest in
the outcome of this case. Currently pending before me are Property-Owners’ and
Central Crane’s cross-motions for summary judgment, as well as Central Crane’s motion
to strike. (DE’s 60, 62, and 66.)
Factual Background
D-T Construction contracted with Central Crane to supply a crane and crane
operator to a construction site to assist in setting trusses in the construction of a church.

(DE 63-3 at ¶7.) The crane operator supplied by Central Crane was a man named Charles
Patterson. (Id. at ¶10.) John Parke, one of D-T’s employees, was atop one of the trusses
when it was being set by the crane. (DE 63-4 at 3.) Somehow the truss collapsed with
Mr. Parke on top of it, and he fell 20 feet to the ground as a result. (Id.) He was seriously
injured in the fall. D-T had rented the crane from Central Crane for less than two days,
and Mr. Patterson estimated he was on the job for no longer than a day and threequarters. (DE 65-6 at 7, internal p.159:17-18.)
After the accident, Parke sued Central Crane and other parties (who are not
involved in this lawsuit) in state court in Wabash County, where the accident occurred.
D-T was not a defendant in that action likely due to the fact that Parke’s exclusive
remedy against D-T, as his employer, would have been through the worker’s
compensation system. I am told by Property-Owners that D-T was a third-party
defendant in the state court litigation having been sued by one of the defendants in that
case, Martin Drafting and Design. That third party case was settled. (DE 86 at 4). But
importantly, D-T was not sued by Central Crane in the state court litigation, or at any
other time as a far as I can tell.
As mentioned at the outset, Property-Owners insured D-T Construction. At some
point after the state case was filed, Central Crane sought insurance coverage under D-T's
policy issued by Property-Owners, requesting that Property-Owner’s defend Central
Crane in the Parke lawsuit. This request for indemnification was based upon an alleged
indemnification agreement between Central Crane and D-T which is contained in the
crane rental agreement (DE 63-6 at 2, ¶4.) Under the terms of the rental agreement,

2

Central Crane leased the crane and crane operator to D-T, and D-T agreed to indemnify
Central Crane from all claims for injury to persons arising out of the operation of the
crane, but not for Central Crane’s sole negligence. (Id.)
It is clear from the record that Central Crane, through its lawyer, sought
indemnification from D-T (DE 63-8 at 2-3), and then later sought coverage from
Property-Owners. (DE 1 at ¶16). But as mentioned above, it is also clear from the record
that Central Crane never sued D-T or otherwise brought a claim against D-T. PropertyOwners tells me that “D-T informed Property-Owners of Central Crane’s claim for
defense and indemnification.” (DE 86 at 2.) But noticeably absent from this
representation in Property-Owners’ brief is a citation to any evidence supporting that
proposition. (Id.) I’m puzzled why no lawsuit or claim has ever been brought by Central
Crane against D-T. In any event, at this point, any liability of D-T to Central Crane is
speculative at best which raises the question whether there exists an actual controversy
between D-T and its insurer, Property-Owners.
In response to Central Crane’s request for coverage, Property-Owners agreed to
defend Central Crane, but did so under a reservation of rights. (DE 60-12 at 5.) For
reasons that are a little unclear, Central Crane then declined to use the attorney provided
by Property-Owners, and it ultimately settled with Parke without informing
Property-Owners. That settlement occurred in August 2015, but the terms of the
settlement are unknown to the court. (DE 57 at ¶4.)
During the state court litigation, but prior to the settlement, Property-Owners
filed this action seeking a declaratory judgment to determine “the respective rights and

3

responsibilities of the parties under the policy issued by Property-Owners to D-T
Construction.” (DE 1 at 22.) Property-Owners specifically requested in its complaint a
declaration of no duty to defend or indemnify Central Crane but curiously absent from
the complaint is any similar request relating to D-T. (Id.) Property-Owners and Central
Crane have filed cross-motions for summary judgment regarding Central Crane’s and DT’s rights (or lack thereof) under the Policy. Property-Owners requests that I find that it
owes no coverage to D-T for its potential indemnity obligations to Central Crane and
that it owes no duty to defend Central Crane, while Central Crane argues that D-T is
entitled to coverage for the losses suffered by Central Crane.
After the motions were fully briefed, I requested additional briefing on two issues
that the parties had not addressed: (1) whether Property-Owners has standing at this
time to seek a declaration of its obligations to D-T, and (2) Central Crane’s ability to
recover directly from Property-Owners Insurance in light of precedent seemingly
forbidding that course of action. The parties have submitted that briefing and now these
motions are ready for my ruling.
Discussion
Summary judgment is proper “if 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). A genuine dispute about a material fact exists only “if the
evidence is such that a reasonable jury could return a verdict for the non-moving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In making this determination, I

4

must construe all facts and draw all reasonable inferences from the record in the light
most favorable to the nonmoving party. Id. at 255.
In essence, Property-Owners asks me to do two things: (1) declare that it has no
obligation to D-T to provide coverage for any obligation D-T may have to indemnify
Central Crane, and (2) declare that it has no obligation to provide coverage or defense
directly to Central Crane. I’ll address each of these in turn.
The first request is problematic because Property-Owners does not have an actual
controversy with its insured (D-T) at this time. Under the Declaratory Judgment Act,
Property-Owners may seek a declaratory judgment only where it has a “case of actual
controversy.” 28 U.S.C. § 2201. An “actual controversy” exists where the facts alleged
“show that there is a substantial controversy, between parties having adverse legal
interests, of sufficient immediacy and reality to warrant the issuance of a declaratory
judgment.” Bell v. Taylor, __ F.3d ___, 2016 WL 3568139 at *9 (7th Cir. Jul. 1, 2016), quoting
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007).
Here, Property-Owners has no case or actual controversy with D-T because
Central Crane has not sued D-T for indemnification or for anything else relating to the
underlying claim, and it does not appear that D-T requested any coverage or filed any
claim with Property-Owners. In fact, D-T hasn't even appeared in this case. Under these
circumstances, Property-Owner’s action isn’t ripe with respect to D-T, and I must
dismiss it. Atlanta Int'l Insurance Company v. Atchison, Topeka & Santa Fe R.R. Co., 938
F.2d 81, 84 (7th Cir. 1991) (finding declaratory judgment action by insurer not ripe under
the Declaratory Judgment Act where insured had not yet filed a claim with insurer, even

5

though insured did send insurance company a notice that a judgment might be filed
against the insured and a judgment was ultimately filed against the insured). That’s
because “[t]he mere possibility that proceedings might be commenced against an
insured regarding an act of the insured’s as to which the insurer might contest coverage,
is not sufficient to create a controversy within the meaning of either the Declaratory
Judgment Act or Article III of the Constitution.” Solo Cup Co. v. Federal Ins. Co., 619 F.2d
1178, 1189 (7th Cir. 1980).
More specifically, in the Seventh Circuit, an insurance company ordinarily cannot
obtain a declaratory judgment regarding its duty to indemnify before its insured is
found liable. Lear Corp. v. Johnson Electric Holdings, Ltd., 353 F.3d 580, 583 (7th Cir. 2003)
(“We regularly say that decisions about indemnity should be postponed until the
underlying liability has been established.”) When a party seeks a declaratory judgment
on an unripe duty-to-indemnify claim, it is proper for the Court “to dismiss that aspect
of the case[.]” Medical Assur. Co. v. Hellman, 610 F.3d 371, 375 (7th Cir. 2010); Cincinnati
Ins. Co. v. Maintenance Dynamics, Inc., 2013 WL 350080 at *4 (N.D.Ind. 2013) (citing 7th
Cir. law). In other words, in order for Property-Owners to seek a declaratory judgment
regarding its potential obligation to provide coverage to its insured (D-T), Central Crane
would first need to seek indemnification from D-T, obtain a judgment saying D-T owes a
duty to indemnify Central Crane, and then D-T would need to seek coverage from
Property-Owners. Because these things have not occurred, it does not appear that there
is an actual case or controversy between Property-Owners and D-T. At the very least, it
is Property Owners’ obligation to establish standing and they have presented nothing to

6

me to suggest that there is a live controversy between it and D-T. Property-Owner’s
claims against D-T must therefore be dismissed because there is no actual controversy
between the parties.
There is, however, an actual case between Property-Owners and Central Crane.
And here, Property-Owners has the better argument. Property-Owners claims it owes
Central Crane no coverage under D-T’s policy, and thus no duty to defend Central
Crane, because Central Crane is not an additional insured under D-T's policy. The
policy requires that to be an additional insured as the lessor of leased equipment, the
parties must execute a written agreement naming Central Crane as an additional insured
prior to a covered loss: “ Section II - Who Is An Insured is amended to include as an
additional insured any person or organization with whom you have agreed (1) in a
written contract . . . to name as an additional insured[.]” (DE 60-5 at 129.)
Central Crane does not dispute that it is not actually named as an additional
insured under the policy, and a review of the policy confirms this. (DE 60-5 at 128-130,
133, and 189.) Instead, Central Crane claims its crane operator, Patterson, was a “leased
worker” to D-T under the policy and therefore an employee of D-T. In other words,
Central Crane appears to be arguing that the bad acts committed by Patterson were
actually the acts of D-T itself. According to Central Crane, if Patterson is an employee of
D-T, then he’d be covered under the Property-Owners policy and Central Crane
wouldn’t be on the hook for his actions. But there are a few problems with this
argument.

7

First, Central Crane is wrong about Patterson being D-T’s employee. The policy
requires that a leased employee be someone leased by a “labor leasing firm.” (DE 60-5 at
153.) Although the Policy does not define what constitutes a “labor leasing firm” — and
no Indiana state courts have interpreted the term — the Southern District of Indiana and
a few circuit courts from other jurisdictions have, and they all have come to the same
(and rather obvious) conclusion: a “labor leasing firm” is one which hires and places
individuals “with client companies for varying lengths of time” and retains “the rights
and obligations of an employer,” while leaving the client company “responsible for
training, supervision and assigning work tasks.” Telamon Corp. v. Charter Oak Fire Ins.
Co., 2015 WL 10738615 at *9 (S.D.Ind. Dec. 10, 2015), quoting Scottsdale Ins. Co. v. Torres,
561 F.3d 74, 75 (1st Cir. 2009). The company at issue in Telamon was exactly the type of
company one might think of as a labor leasing firm – it was a staffing company that
provided employees to various businesses on a temporary basis. Id.
Central Crane, as the moniker obviously implies, is a crane company; it’s not an
employment agency or staffing firm. (DE 60-8 at 4, internal p.8:11-14.) It’s not in the
business of leasing employees out to other companies like a labor staffing firm does. But
let’s suppose Patterson was leased to D-T. At most, Patterson was a temporary
employee and therefore still not an employee under the policy. Under the policy, a
“temporary worker” is someone furnished to D-T “to meet seasonal or short-term
workload conditions” and is excluded from coverage as an employee under the policy.
(DE 60-5 at 152, 155.) Recall that D-T rented the crane for two days and Patterson
worked on the job site for only one and three-quarters of a day. (DE 65-6 at 7, internal

8

p.159:17-18.) In short, Patterson wasn’t D-T’s employee. At most, he was filling a
temporary need – a couple of days of crane work to set some trusses.
There is yet another problem with Central Crane’s argument. Let’s suppose that
Patterson was D-T’s employee, there would still be a problem. Since Central Crane is not
an additional insured, it cannot go after Property-Owners for coverage directly because
the indemnification agreement between Central Crane and D-T creates no rights for
Central Crane under the Policy between D-T and Property-Owners. Sears, Roebuck & Co.
v. Royal Surplus Lines Ins., 61 Fed.Appx. 280, 284 (7th Cir. 2003) (relying on Alliance
Syndicate, Inc. v. Parsec, Inc., 318 Ill.App.3d 590 (1st Dist. 2000)). And as much as Central
Crane argues that D-T’s rights are the key to its claim, Central Crane can’t assert D-T’s
rights without D-T. Id. So Central Crane would still be on the hook for the money it
paid in its settlement with Parke.
At most, the Rental Agreement which secured the lease of the crane is an “insured
contract” whereby Property-Owners has agreed to provide coverage to D-T – its insured
– for agreements it executes with other companies. (DE 60-5 at 137, 152 (stating it will
cover D-T for D-T’s “liability for damages: (1) Assumed in a contract or agreement that is
an ‘insured contract’” and defining an insured contract as a contract or agreement where
D-T “assume(s) the tort liability of another party to pay for ‘bodily injury’ or ‘property
damage’ to a third person or organization.”) But, again, to get there Central Crane
would have to bring an action or claim against D-T for indemnity under the terms of
their contract. At that point, D-T could seek coverage from Property-Owners and argue
that the indemnity agreement is an insured contract entitling it to coverage from

9

Property-Owners in order to reimburse Central Crane for the money it paid to Parke.
There are several steps missing here. Thus, Property-Owners’ motion will be granted
regarding its claims against Central Crane, and Central Crane’s motion will be denied
because it cannot obtain coverage under the Policy directly from Property-Owners.
I will also dismiss Property-Owner’s claims against Parke. Property-Owners
stated in its complaint that “Defendants are made parties to this action to assert their
respective rights and interests, if any, as to liability coverage for Central Rent-A-Crane
under various insurance policies issued by Plaintiff to D-T Construction with regard to
liability coverage for damages alleged in a civil lawsuit filed by Defendant John Parke
against Defendants Rent-A-Crane, Builders of Wabash, Inc. and Stark Truss Company,
Inc.” (DE 1 at ¶9.) Presumably, Parke was named only because at the time, he was an
interested party and would have been interested in the outcome of the case insofar as his
state court claims had not yet been settled. But now, not only has he already settled with
and been paid by Central Crane (DE 57 at ¶4), but I have decided that Property-Owners
owes no duty to Central Crane directly. Since any right or claim in this matter Parke
could possibly have with Property-Owners would come from Central Crane’s liability,
both the settlement and my ruling have mooted out any claim Park could have had.
Indeed, although Parke did appear and answer in this matter, he has not otherwise
participated, nor has asked that I declare that he has any rights vis-a-vis PropertyOwners.
Finally, Central Crane’s Motion to Strike is denied as moot. Because I have
decided the case based on the issues presented in the supplemental briefing, I had no

10

need to evaluate or rely on the Bolinger affidavit, and it has not factored into my
decision.
Conclusion
Thus, for the reasons stated above, plaintiff Property-Owners Insurance
Company’s motion for summary judgment (DE 60) is DENIED IN PART and
GRANTED IN PART. Defendant Central Rent-A-Crane’s motion for summary
judgment (DE 62) is DENIED and its motion to strike (DE 66) is DENIED AS MOOT.
Property-Owners is entitled to a DECLARATORY JUDGMENT AGAINST
DEFENDANT CENTRAL RENT-A-CRANE, INC. stating that at this time PropertyOwners owes no duty to defend or indemnify Central Rent-A-Crane, Inc. But I cannot
grant Property-Owners’ request for a declaratory judgment with respect to defendant DT Constructions Services, Inc. because Property-Owners’ claims against D-T must be
DISMISSED FOR LACK OF STANDING to sue D-T. Defendant John Parke will be
DISMISSED as a party.
Since there are no remaining claims pending in this matter, judgment may now be
entered in accordance with this opinion and this matter will be CLOSED.
SO ORDERED.
ENTERED: September 14, 2016
/s/ Philip P. Simon
PHILIP P. SIMON, CHIEF JUDGE
UNITED STATES DISTRICT COURT

11