Thunder Basin Coal Company, L.L.C. v. Zurich American Insurance Company et al

Filing 136

MEMORANDUM AND ORDER. (see order for details) IT IS HEREBY ORDERED that my August 27, 2013 ruling [# 118 ] as to Counts VI and VIII of the complaint is amended to grant partial summary judgment to plaintiff as follows: Partial summary judgment is granted on Counts VI and VIII to the extent that plaintiff Thunder Basin is entitled to a declaration that it is an additional insured under the policies and that Travelers Indemnity and Travelers Casualty owe a duty to defend it in the Wyoming act ions; Thunder Basin is also granted summary judgment on Counts IV and V as to liability only. IT IS FURTHER ORDERED that defendants' motions to clarify and to reconsider [# 123 , 124 ] are granted only to the extent set out herein and are othe rwise denied. IT IS FURTHER ORDERED that, as set out in the stipulation of dismissal [# 135 ] entered into between plaintiff and the settling defendants, Zurich American Insurance Company and National Union Insurance Company of Pittsburg, PA, all claims as to those settling defendants are dismissed with prejudice. Signed by District Judge Catherine D. Perry on 12/09/2013. (CBL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
THUNDER BASIN COAL
COMPANY, L.L.C.,
Plaintiff,
vs.
ZURICH AMERICAN
INSURANCE COMPANY, et al.,
Defendants.

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) Case No. 4:12CV231 CDP
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MEMORANDUM AND ORDER
On August 27, 2013, this court entered a Memorandum and Order granting
in part and denying in part the parties’ cross-motions for summary judgment on
Thunder Basin’s claims for insurance coverage under policies issued by Travelers
Indemnity and Travelers Casualty. On October 14, 2013, the Travelers defendants
filed joint motions to clarify and for reconsideration of that order. In one aspect I
agree that my order should be changed.
My earlier order granted more relief to Thunder Basin on its motion for
partial summary judgment than I intended. As to the declaratory judgment counts,
I should have only granted a declaration that Thunder Basin was an additional
insured under the policies and so Travelers has a duty to defend it. I will grant the
new motions to the extent of correcting that error, but will otherwise deny them.

Background
The factual background of this dispute is set out in detail in the August 27,
2013, Memorandum and Order, and I will not repeat it here. The essence of the
dispute is that plaintiff Thunder Basin Coal Company L.L.C. seeks coverage as an
additional insured under two policies issued to a contractor, Earth Works Solutions,
Inc., by defendants Travelers Indemnity Insurance Company of America and
Travelers Property and Casual Company of America.
Both sides filed motions for summary judgment, and on August 27, 2013, I
entered a Memorandum and Order denying Travelers’ motion for summary
judgment and granting Thunder Basin’s motion for summary judgment on its
counts for declaratory judgment as to Travelers’ duty to defend and indemnify in
the Wyoming suits. That order further granted Thunder Basin’s motion for
summary judgment as to liability only on its claims for breach of the contractual
duty to defend in the Wyoming actions. I made no ruling on the remedy to which
Thunder Basin might be entitled for its breach of contract claims.
Travelers has now filed a motion for reconsideration and a separate motion
for clarification of my August 27 order, alleging that several points in my summary
judgment ruling were made in error. In the motion for reconsideration Travelers
argues that the evidence and the law do not support my Order in several respects,
none of which are new, although it does cite to evidence from a September

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deposition in a related case as new evidence I should consider. In the motion to
clarify Travelers argues that even if Thunder Basin is an additional insured, there
remain numerous coverage questions that have not been resolved. It argues that it
cannot owe a duty to defend and indemnify Thunder Basin because the policies at
issue only cover vicarious liability and the Wyoming suits are outside of coverage.
Travelers also contends that no duty to defend could exist because its coverage
funds were depleted. Although I do not find these arguments in themselves
persuasive, I agree that my order went farther than it should have.
Discussion
The Federal Rules of Civil Procedure do not specify either motions to
reconsider or motions to clarify. But a district court “has the inherent power to
reconsider and modify an interlocutory order at any time prior to the entry of
judgment.” K.C. 1986 Ltd. P’ship v. Reade Mfg., 472 F.3d 1099, 1016-17 (8th Cir.
2007). Because my order did not enter final judgment, it is an interlocutory order
and, under Rule 54(b), F. R. Civ. P., it may be revised at any time before entry of
final judgment. Additionally Rule 60(a) affords the court an opportunity to correct
mistakes in orders and judgments arising from oversight or omission. In my
August 27 order, I found that Thunder Basin was entitled to summary judgment on
its claims for declaratory relief in Counts VI and VIII in their entirety. But that
included a declaration that defendants had a duty to indemnify as well as defend,

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which went beyond the issues raised in Thunder Basin’s motion. Thunder Basin
sought summary judgment declaring that it was an additional insured and that
Travelers had a duty to defend it in the Wyoming lawsuits. It was my intent to
issue declaratory judgment only as to the additional insured and duty to defend
issues. My ruling as to Counts VI and VIII will be amended so it is clear that I am
granting summary judgment only to that extent. My rulings as to the breach of
contract counts remain unchanged, because those alleged only a breach of the duty
to defend and it is undisputed that Travelers’ refused the request to defend. I will
not rule on the defendants’ duty to indemnify, but my other rulings stand, including
my conclusion that Thunder Basin qualifies as an additional insured under the
Travelers policies.
Travelers raises numerous arguments in its motions that were or should have
been raised at earlier opportunities. I do not believe my rulings on the additional
insured issue was incorrect, and I am not changing that. I have considered the
“new evidence” cited by Travelers and it does not change my conclusion.
Additionally, most of the other arguments are simply rehashing issues that I
already considered.
Travelers has raised additional arguments going to the “additional insured”
issue – arguments that could have been raised earlier. In any event, they do not
change the result. In particular, Travelers argues that the definition of “additional

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insured” should be construed so as only to afford coverage for vicarious liability of
the named insured. Policy coverage for an additional insured is restricted
to liability for ‘bodily injury’, ‘property damage’ or ‘personal injury’
. . . if, and only to the extent that, the injury or damage is caused by
acts or omissions of you or your subcontractor in the performance of
‘your work’ to which the ‘written contract requiring insurance’
applies. The person or organization does not qualify as an additional
insured with respect to the independent acts or omissions of such
person or organization.
The vicarious liability argument is a poorly disguised attempt at rearguing
the merits of this court’s summary judgment rulings. In any case, the policy
language is not so clear that it limits coverage solely to vicarious liability.
Ambiguous policies are construed liberally in favor of the insured and strictly
against the insurer. Mena v. Safeco Ins. Co., 412 F.3d 1159, 1163 (10th Cir. 2005)
(citing Aaron v. State Farm Mut. Auto Ins. Co., 34 P.3d 929, 933 (Wyo. 2001)).
The policy’s ambiguity is compounded by the ease with which a drafter could have
explicitly restricted coverage to vicarious liability. When reading the policy as a
whole, I conclude that the plain language unambiguously does not limit coverage
to situations involving vicarious liability.
Moreover, when interpreting insurance policies, Wyoming courts give
primary consideration to the parties’ intention. Id. Because an additional insured
would have an action for indemnity against the primary insured, “an endorsement
that provides coverage only for the additional insured’s vicarious liability may be

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illusory and provide no coverage at all.” Marathon Ashland Pipe Line LLC v.
Maryland Cas. Co., 243 F.3d 1232, 1240 & n.5 (10th Cir. 2001) (quotation marks
and citation omitted) (applying Wyoming law). In such a light, the insured clearly
would expect more than protection only from vicarious liability.
The Travelers defendants contend that their remaining arguments were
intended to place the court on notice as to issues remaining for trial. I will not
evaluate those arguments at this time. At trial Travelers may not contest the
decision that Thunder Basin is an additional insured under the policies, nor may it
contest the decision that it had a duty to defend and breached that duty by refusing
to defend. But other coverage disputes relating to indemnification were not
necessarily decided by the previous motion, and may be presented at trial, as may
disputes related to the amount of damages from the breach of the duty to defend. If
Travelers believes the damages it owes are limited in some way that has not
already been decided, it may present evidence or make appropriate legal arguments
at trial.
Accordingly,
IT IS HEREBY ORDERED that my August 27, 2013 ruling [# 118] as to
Counts VI and VIII of the complaint is amended to grant partial summary
judgment to plaintiff as follows:

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Partial summary judgment is granted on Counts VI and VIII to the extent
that plaintiff Thunder Basin is entitled to a declaration that it is an additional
insured under the policies and that Travelers Indemnity and Travelers Casualty
owe a duty to defend it in the Wyoming actions; Thunder Basin is also granted
summary judgment on Counts IV and V as to liability only.
IT IS FURTHER ORDERED that defendants’ motions to clarify and to
reconsider [# 123, 124] are granted only to the extent set out above and are
otherwise denied.
IT IS FURTHER ORDERED that, as set out in the stipulation of dismissal
[#135] entered into between plaintiff and the settling defendants, Zurich American
Insurance Company and National Union Insurance Company of Pittsburg, PA, all
claims as to those settling defendants are dismissed with prejudice.

CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 9th day of December, 2013.

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