Progressive Gulf Insurance Company v. Kennedy et al

Filing 46

MEMORANDUM OPINION AND ORDER granting 34 Motion for Summary Judgment. A separate Final Judgment will be entered herein. Signed by District Judge Keith Starrett on 6/4/2014 (scp)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
EASTERN DIVISION
PROGRESSIVE GULF INSURANCE COMPANY
V.

PLAINTIFF

CIVIL ACTION NO. 2:13-CV-52-KS-MTP

CHAZ B. KENNEDY, et al.

DEFENDANTS

MEMORANDUM OPINION AND ORDER
For the reasons stated below, the Court grants Plaintiff’s Motion for Summary
Judgment [34]. The Court will enter a separate judgment in accordance with Rule 58.
I. BACKGROUND
Defendant Chaz Kennedy is the named insured under a commercial auto policy
issued by Plaintiff Progressive Gulf Insurance Company. The policy insures Kennedy’s
two International tractors, but it contains a “Non-Trucking” endorsement. Therefore,
the policy provides liability coverage for bodily injury and property damage arising
from Kennedy’s use of the insured trucks, but not when they are being used to
transport goods.
On January 15, 2013, Kennedy was driving one of the insured trucks in Jones
County, Mississippi, while transporting wood chips in a trailer owned by Defendant
Mike Ashley. Kennedy collided with a car driven by Defendant Kassie Ford. Ford later
made a claim on the policy issued by Progressive for bodily injuries arising from the
accident. Progressive denied Ford’s claim, stating that the policy excludes coverage for
damages arising from Kennedy’s use of the truck for transporting goods.
Progressive later filed this declaratory judgment action, naming Kennedy, Ford,

and Ashley as Defendants. Progressive seeks a declaratory judgment that the policy
does not provide defense or indemnity to any of the Defendants for claims for bodily
injury or property damage arising from the accident. Its Motion for Summary
Judgment [34] is ripe for review.
II. STANDARD OF REVIEW
Rule 56 provides that “[t]he court shall grant summary judgment 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); see also Sierra Club, Inc.
v. Sandy Creek Energy Assocs., L.P., 627 F.3d 134, 138 (5th Cir. 2010). “Where the
burden of production at trial ultimately rests on the nonmovant, the movant must
merely demonstrate an absence of evidentiary support in the record for the
nonmovant’s case.” Cuadra v. Houston Indep. Sch. Dist., 626 F.3d 808, 812 (5th Cir.
2010) (punctuation omitted). The nonmovant “must come forward with specific facts
showing that there is a genuine issue for trial.” Id. (punctuation omitted). “An issue is
material if its resolution could affect the outcome of the action.” Sierra Club, Inc., 627
F.3d at 138. “An issue is ‘genuine’ if the evidence is sufficient for a reasonable jury to
return a verdict for the nonmoving party.” Cuadra, 626 F.3d at 812.
The Court is not permitted to make credibility determinations or weigh the
evidence. Deville v. Marcantel, 567 F.3d 156, 164 (5th Cir. 2009). When deciding
whether a genuine fact issue exists, “the court must view the facts and the inference
to be drawn therefrom in the light most favorable to the nonmoving party.” Sierra
Club, Inc., 627 F.3d at 138. However, “[c]onclusional allegations and denials,
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speculation, improbable inferences, unsubstantiated assertions, and legalistic
argumentation do not adequately substitute for specific facts showing a genuine issue
for trial.” Oliver v. Scott, 276 F.3d 736, 744 (5th Cir. 2002).
III. PLAINTIFF’S DUTY TO INDEMNIFY AND/OR DEFEND KENNEDY
A.

Plaintiff’s Claim
The Court’s ultimate goal in applying an insurance policy is to “render a fair

reading and interpretation of the policy by examining its express language and
applying the ordinary and popular meaning to any undefined terms.” Corban v. United
Servs. Auto. Ass’n, 20 So. 3d 601, 609 (Miss. 2009). “In Mississippi, insurance policies
are contracts, and as such, they are to be enforced according to their provisions.” Id.
First, where an insurance policy is plain and unambiguous, a court must
construe that instrument, like other contracts, exactly as written. Second,
it reads the policy as a whole, thereby giving effect to all provisions.
Third, it must read an insurance policy more strongly against the party
drafting the policy and most favorably to the policy holder. Fourth, where
it deems the terms of an insurance policy ambiguous or doubtful, it must
interpret them most favorably to the insured and against the insurer.
Fifth, when an insurance policy is subject to two equally reasonable
interpretations, a court must adopt the one giving the greater indemnity
to the insured. Sixth, where it discerns no practical difficulty in making
the language of an insurance policy free from doubt, It must read any
doubtful provision against the insurer. Seventh, it must interpret terms
of insurance policies, particularly exclusion clauses, favorably to the
insured wherever reasonably possible. Finally, although ambiguities of
an insurance policy are construed against the insurer, a court must
refrain from altering or changing a policy where terms are unambiguous,
despite resulting hardship on the insured.
Nationwide Mut. Ins. Co. v. Lake Caroline, Inc., 515 F.3d 414, 419 (5th Cir. 2008); see
also Corban, 20 So. 3d at 609; Guidant Mut. Ins. Co. v. Indem. Ins. Co. of N. Am., 13
So. 3d 1270, 1281 (Miss. 2009); United States Fid. & Guar. Co. v. Martin, 998 So. 2d
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956, 963 (Miss. 2008).
The policy at issue [34-1, 1-1] – Progressive Commercial Auto Policy No.
01541752-0, effective from April 13, 2012, to April 13, 2013 – provides, in pertinent
part:
INSURING AGREEMENT – LIABILITY TO OTHERS
Subject to the Limits of Liability, if you pay the premium for liability
coverage, 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 an insured auto.
This section is modified by a “Non-Trucking” endorsement [34-1], which was noted on
the declarations page [1-1]. The endorsement provides, in pertinent part:
We agree with you that the insurance provided under your Commercial
Auto Policy is modified as follows:
PART 1 – LIABILITY TO OTHERS is modified as follows:
***
EXCLUSIONS
The following is added:
Coverage under this Part 1, including our duty to defend, does not apply
to:
1.

Bodily injury or property damage arising out of the use of any
insured auto while it is being operated, maintained, or used,
whether or not for compensation, in the business of any person or
organization other than the named insured shown on the
Declarations Page.

2.

Bodily injury or property damage arising out of the use of any
insured auto while it is being used to transport goods or
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merchandise, or while such goods or merchandise are being loaded
onto, or unloaded from, the insured auto.
The policy, therefore, unambiguously excludes coverage for bodily injury or
property damage arising out of the use of an insured truck while it is being used to
transport goods or merchandise. It is undisputed that the accident occurred while
Kennedy was using an insured truck to transport Ashley’s wood chips. Accordingly,
Progressive is not obligated to provide indemnification or defense for any bodily injury
or property damage arising from the accident.
B.

Kennedy’s Counterclaim
Kennedy asserted a counterclaim against Progressive for breach of contract [10],

claiming that he never purchased a “Non-Trucking” policy, and that Progressive
provided him with a Certificate of Insurance for a policy with “Trucking” liability
coverage. Although Kennedy did not respond to Progressive’s motion, he produced the
purported certificate [34-9] to Progressive during discovery. It is identical to those
presented by Progressive [34-2], except for one detail. Under the heading “Insurance
coverage(s),”

Progressive’s

Certificate

[34-2]

reads

“Non-Trucking

Bodily

Injury/Property Damage,” while Kennedy’s document contains a conspicuously empty
space immediately preceding the word “Trucking.” The difference is demonstrated in
the images below. First, an excerpt from Progressive’s Certificate [34-2], with the
pertinent section highlighted by the Court:

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See Exhibit B to Plaintiff’s Motion for Summary Judgment [34-2], p. 44 (emphasis
added). Next, an excerpt from Kennedy’s Certificate [34-9], which – but for the
highlighted section – is identical to Progressive’s:

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See Exhibit I to Plaintiff’s Motion for Summary Judgment [34-9], p. 5 (emphasis
added).
Progressive contends that the Certificate of Insurance produced by Kennedy has
been altered or modified since they sent it to him. The Court need not express an
opinion on that subject. Regardless of the explanation for the difference in the two
Certificates, the one produced by Kennedy is not sufficient to create a genuine dispute
of material fact as to the nature of the subject insurance policy.
“When opposing parties tell two different stories, one of which is blatantly
contradicted by the record, so that no reasonable jury could believe it, a court should
not adopt that version of the facts for purposes of ruling on a motion for summary
judgment.” Scott v. Harris, 550 U.S. 372, 380, 127 S. Ct. 1769, 167 L. Ed. 2d 686 (2007).
Indeed, a factual dispute is genuine only “if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
No reasonable jury could believe that the Certificate of Insurance produced by
Kennedy during discovery accurately reflects the insurance policy he purchased. First,
there is the matter of the rather conspicuous blank spot in the document [34-9].
Second, Progressive produced a Certificate [34-2] that matches the other policy
documents contained within its file, including the policy itself [34-1], which contained
a “Non-Trucking” endorsement. Third, Progressive produced undisputed transcripts
[34-5, 34-6, 34-7, 34-8] of telephone conversations of telephone conversations with
Kennedy in which he specifically requested “Non-Trucking” liability coverage. On June
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4, 2012 [34-8] – the last call preceding the accident – Kennedy confirmed that he
wanted “Non-Trucking” liability coverage.
For all of these reasons, the Court finds that there is no genuine dispute of
material fact on this issue. Kennedy purchased a “Non-Trucking” commercial auto
liability policy, and it provides no coverage for the accident of January 13, 2013,
because Kennedy was transporting goods when the accident occurred. Progressive has
not breached the policy, and the Court grants its Motion for Summary Judgment [34]
as to Kennedy’s counterclaim.
IV. PLAINTIFF’S DUTY TO INDEMNIFY AND/OR DEFEND ASHLEY
Ashley does not dispute that the accident occurred while Kennedy was
transporting goods, or that the policy’s “Non-Trucking” endorsement excludes coverage
for bodily injury and property damage arising from use of the truck while it is being
used to transport goods. Nevertheless, Ashley argues that Progressive is obligated to
provide a defense and indemnity for him under the principle of equitable estoppel.
First, Ashley contends that he relied upon Progressive’s silence – that is, its failure to
notify him of the “Non-Trucking” endorsement – when deciding to hire Kennedy.
Second, he contends that he relied upon the declarations page and “Additional Insured”
endorsement provided to him by Kennedy.
“Equitable estoppel arises when one party may be precluded by his act or
conduct, or silence when it is his duty to speak, from asserting a right which he
otherwise would have had.” Sentinel Indus. Contr. Corp. v. Kimmins Indus. Serv.
Corp., 743 So. 2d 954, 964 (Miss. 1999). There are two elements that must be satisfied
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for the doctrine to apply: 1) Ashley must have “changed his position in reliance upon
the conduct of [Progressive],” and 2) he must have “suffered detriment caused by his
change of position in reliance upon such conduct.” Brown v. Progressive Gulf Ins. Co.,
761 So. 2d 134, 136 (Miss. 2000).
Equitable estoppel is inapplicable here because it “may not operate to create
coverage or expand existing coverage to risks which, by the terms of the policy, are
expressly excluded.” Stewart v. Gulf Guar. Life Ins. Co., 846 So. 2d 192, 202 (Miss.
2002); see also Provident Life & Accident Ins. Co. v. Goel, 274 F.3d 984, 996 (5th Cir.
2001). As Professor Jackson observed: “[T]he doctrine that . . . estoppel cannot be used
to extend coverage is enforced in cases where the claimant seeks to change
fundamentally the nature of the risk that the insurer has undertaken.” Jeffrey
Jackson, Mississippi Insurance Law & Practice § 7:5 (2013). Ashley seeks coverage for
claims that are specifically excluded from coverage. Extending coverage in this case
would change the fundamental nature of the risk underwritten by Progressive – from
“Non-Trucking” liability to “Trucking” liability. As such, equitable estoppel is
inapplicable.1

1

The Court further notes that Ashley has not cited – and the Court was
unable to find – any legal authority imposing a duty on Progressive to provide
Ashley, an additional insured, with notice of the “Non-Trucking” endorsement. In
the absence of such duty, Ashley had no right to rely upon Progressive’s silence or
inaction. Sentinel, 743 So. 2d at 964 (“when it is his duty to speak”).
Additionally, the Declarations Page and “Additional Insured” endorsement
provided to Ashley by Kennedy [37-1] are not sufficient to meet the required
elements of equitable estoppel. These documents reflect the terms of the policy on
January 18, 2013 – after the accident had already occurred – and Ashley could not
have relied upon them when deciding to employ Kennedy prior to the accident.
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V. CONCLUSION
For all of the reasons stated above, the Court grants the Motion for Summary
Judgment [34] filed by Plaintiff, Progressive Gulf Insurance Company. The Progressive
Gulf Insurance Company policy numbered 01541752-0 does not obligate Plaintiff,
Progressive Gulf Insurance Company, to defend or indemnify Defendant Chaz Kennedy
or Defendant Mike Ashley d/b/a Ashley Farms against any claims for bodily injury or
property damage arising from the January 15, 2013, accident between Defendants
Chaz Kennedy and Kassie Ford. The Court dismisses Defendant Chaz Kennedy’s
counterclaims with prejudice. A separate Final Judgment will be entered in accordance
with Rule 58.
SO ORDERED AND ADJUDGED this 4th day of June, 2014.

s/ Keith Starrett
UNITED STATES DISTRICT JUDGE

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