Hackerman v. Demeza et al

Filing 156

MEMORANDUM (Order to follow as separate docket entry) re 150 MOTION for Partial Summary Judgment filed by Donald Demeza. Signed by Magistrate Judge Susan E. Schwab on 6/2/2019. (cw)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
RICHARD HACKERMAN,
Plaintiff,
v.
DONALD DEMEZA, et al.,
Defendants.

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CIVIL NO.: 1:13-CV-02883
(Chief Magistrate Judge Schwab)

MEMORANDUM ORDER
June 2, 2019
I. Introduction.
This case arises out of the deaths of two horses, Miss Savannah Rose and
Miss Savannah Rose’s unnamed foal (collectively referred to as “the horses”).
Miss Savannah Rose was pregnant with the foal while she was being boarded at a
stable owned by the defendants, Donald Demeza and Toledo Racing Stables, LLC
(collectively referred to as “Demeza” or “the defendants”). The foal was delivered
at the stable, but both horses died shortly after the foal’s birth. The plaintiff,
Richard Hackerman (“Hackerman”), was the owner of the horses. He brought suit
against the defendants alleging that the defendants were grossly negligent in
delivering the foal, which caused the deaths of both horses. The defendants denied
that they were grossly negligent and brought counterclaims against Hackerman for
breach of contract.

After six years of litigation, this case is scheduled to go to trial on June 4,
2019. On May 30, 2019, the court conducted a pretrial conference with the parties.
At that conference, the parties discussed a number of outstanding legal issues that
could potentially be resolved before trial. We informed the parties that the court
would accept motions on those issues if they were filed by the end of the day on
May 31, 2019. Demeza filed a motion for partial summary judgment and a
supporting brief on May 30, 2019, arguing that the defendants should be granted
judgment as a matter of law as to one of their breach of contract counterclaims
because Hackerman had not carried insurance on the horses as required by the
language of the parties’ contract. After we issued an order setting an expedited
briefing schedule on the motion, Hackerman filed a brief in opposition on May 31,
2019, and Demeza filed a reply brief later that day. We analyze Demeza’s motion
for partial summary judgment below. We ultimately conclude that Hackerman
breached the parties’ contract by failing to carry insurance and accordingly grant
the motion for partial summary judgment. We do not, however, decide what
damages Demeza is entitled to as a result of Hackerman’s breach, as that issue was
not raised by the parties.

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II. Summary Judgment Standard.
“A party may move for summary judgment, identifying each claim or
defense—or the part of each claim or defense—on which summary judgment is
sought.” Fed. R. Civ. P. 56(a). “The 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.” Id.
In a summary judgment motion, the moving party “bears the initial
responsibility of informing the district court of the basis for its motion, and
identifying those portions of the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any, which it believes
demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). With respect to an issue on which the
nonmoving party bears the burden of proof, the moving party may discharge that
burden by “‘showing’—that is, pointing out to the district court—that there is an
absence of evidence to support the nonmoving party’s case.” Id. at 325.
Once the moving party has met its burden, the nonmoving party may not rest
upon the mere allegations or denials of its pleading; rather, the nonmoving party
must show a genuine dispute by “citing to particular parts of materials in the
record, including depositions, documents, electronically stored information,
affidavits or declarations, stipulations (including those made for purposes of the
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motion only), admissions, interrogatory answers, or other materials” or “showing
that the materials cited do not establish the absence . . . of a genuine dispute.” Fed.
R. Civ. P. 56(c). If the nonmoving party “fails to make a showing sufficient to
establish the existence of an element essential to that party’s case, and on which
that party will bear the burden at trial,” summary judgment is appropriate. Celotex,
477 U.S. at 322. Summary judgment is also appropriate if the nonmoving party
provides merely colorable, conclusory, or speculative evidence. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). There must be more than a scintilla
of evidence supporting the nonmoving party’s claims and more than some
metaphysical doubt as to the material facts. Id. at 252. “Where the record taken as
a whole could not lead a rational trier of fact to find for the non-moving party,
there is no ‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986).
The substantive law identifies which facts are material, and “[o]nly disputes
over facts that might affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248. A
dispute about a material fact is genuine only if there is a sufficient evidentiary
basis that would allow a reasonable fact finder to return a verdict for the nonmoving party. Id. at 248-49. When “faced with a summary judgment motion, the
court must view the facts ‘in the light most favorable to the nonmoving party.’”
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N.A.A.C.P. v. N. Hudson Reg’l Fire & Rescue, 665 F.3d 464, 475 (3d Cir. 2011)
(quoting Scott v. Harris, 550 U.S. 372, 380 (2007)).
At the summary judgment stage, the judge’s function is not to weigh the
evidence or to determine the truth of the matter; rather it is to determine whether
there is a genuine issue for trial. Anderson, 477 U.S. at 249. The proper inquiry
for the court “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.” Id. at 250.

III. Discussion.
Demeza’s motion for partial summary judgment seeks judgment as a matter
of law as to Count III of the defendants’ counterclaims. Doc. 150 at 1. In Count
III, the defendants assert that the language of the Boarding Agreement and
Liability Release (“the contract”) required Hackerman to carry insurance and that
he breached the contract by failing to do so. Doc. 12 ¶¶ 28-29. The applicable
provision of the contract, titled “Direct Loss to Personal Property Warning” states:
Owner is hereby warned that while on Toledo Racing Stable premises,
direct loss or damage, theft, or injury to Owner’s horse, tack,
equipment, or trailer is not covered by Toledo Racing Stable’s
insurance. The actual Owner, having the financial interest in such
items, must carry his or her own personal property insurance under a
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homeowner’s or other insurance policy, or under a separate policy as in
the case of the loss of a horse.
Doc. 12-1 at 2.
Demeza argues that he is entitled to judgment as a matter of law as to Count
III because the contract clearly and unambiguously requires Hackerman to carry
insurance and Hackerman did not do so. Doc. 151 at 4-5. Hackerman responds
that “the language of the agreement does not contemplate the loss that occurred
with the demise of Miss Savannah Rose and her foal.” Doc. 154 at 1. Hackerman
argues that “[a] reasonable reading of the entire document reveals that the stable is
concerned with the costs of third-party actions as a result of any untoward activity
by the boarded horse.” Id. Hackerman argues that the contract did not require him
to insure the value of Miss Savannah Rose and that it does not release the
defendants from liability for the deaths of the horses. Id. Hackerman also argues
that the parties’ contract cannot indemnify Demeza from liability for gross
negligence. 1 Id. at 2. Demeza responds that Hackerman’s assertion that the

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In support, Hackerman cites to our March 31, 2016 opinion in which we held that
the exculpatory clause could not release Demeza from liability for gross
negligence. See doc. 96 at 35. Such citation is misplaced. Our opinion did not
hold, as Hackerman implies, that Demeza could not be indemnified for liability for
gross negligence, as the issue of the meaning of the indemnification clause was not
before the court. Furthermore, as Demeza correctly notes—and as we explain in
more detail below—the indemnification provision of the contract and the insurance
procurement provision are “two completely separate covenants with opposing
public policies related to their enforcement.” Doc. 155 at 2. Hackerman’s
argument that the indemnification clause does not relieve Demeza of liability for
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contract does not require him to insure the value of a lost horse is “opposite the
plain language of the Agreement.” Doc. 155 at 2. Demeza argues that under
Pennsylvania law, contractual terms requiring one party to the contract to obtain
insurance are both enforceable and not against public policy. Id.
“For a breach of contract claim, a party must show: ‘(1) the existence of a
contract; (2) a breach of the duty imposed by the contract; and (3) damages
resulting from the breach.’” Allegheny Intermediate Unit v. East Allegheny Sch.
Dist., 203 A.3d 371, 375-76 (Pa. Commw. Ct. 2019) (quoting Sewer Auth. of
Scranton v. Pa. Infrastructure Inv. Auth., 81 A.3d 1031, 1041-42 (Pa. Commw. Ct.
2013)).
“The fundamental rule in interpreting the meaning of a contract is to
ascertain and give effect to the intent of the contracting parties.” Maisano v.
Avery, 204 A.3d 515, 520 (Pa. Super. Ct. 2019) (quoting Ramalingam v. Keller
Williams Realty Grp., Inc., 121 A.3d 1034, 1046 (Pa. Super. Ct. 2015)). “When a
writing is clear and unequivocal, its meaning must be determined by its contents
alone.” Id. (quoting Ramalingam, 121 A.3d at 1046). “Only where a contract's
language is ambiguous may extrinsic or parol evidence be considered to determine
the intent of the parties.” Id. (quoting Ramalingam, 121 A.3d at 1046). “A

gross negligence is not relevant as to whether the insurance procurement provision
requires Hackerman to carry insurance, which is the issue before us.
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contract contains an ambiguity if it is reasonably susceptible of different
constructions and capable of being understood in more than one sense.” Id.
(quoting Ramalingam, 121 A.3d at 1046). “In the absence of an ambiguity, the
plain meaning of the agreement will be enforced.” Id. (quoting Ramalingam, 121
A.3d at 1046).
As Demeza correctly notes, contractual provisions requiring one party to the
contract to obtain insurance—commonly referred to as insurance procurement
agreements—are both enforceable and in line with public policy under
Pennsylvania law. See Jalapenos, LLC v. GRC Gen. Contractor, Inc., 939 A.2d
925, 933 (Pa. Super. Ct. 2007). “One who enters into an agreement to obtain
insurance and neglects to fulfill his obligation becomes himself insurer and liable
as such.” DiPietro v. City of Phila., 496 A.2d 407, 409-10 (Pa. Super. Ct. 1985)
(quoting Zortman v. Volk, 97 Pa. Super. 137, 140 (1929)).
Insurance procurement agreements are legally distinct from indemnification
provisions. See Jalapenos, 939 A.2d at 932. Unlike indemnification provisions,
insurance procurement agreements do not raise public policy concerns because the
purpose of the agreements is simply to allocate risk among the parties and not to
“transfer liability for negligence away from the tortfeasor.” Id. at 933 (quoting
Penn Avenue Place Assocs., L.P. v. Century Steel Erectors, Inc., 798 A.2d 256,
259 (Pa. Super. Ct. 2002)). Rather than “unilaterally reliev[ing] one party from the
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effects of its future negligence,” insurance procurement agreements “work to
ensure that injuries or damage [resulting from the contractual relationship] are
covered by the appropriate types and limits of insurance, and that the costs of that
coverage are appropriately allocated among the parties.” Id. (quoting Best Friends
Pet Care, Inc. v. Design Learned, Inc., 823 A.2d 329, 334 (Conn. App. Ct. 2003)).
“Because it is economically inefficient for both parties to insure against the
same risk, the parties’ inclusion of an insurance procurement clause indicates that
the parties intended to avoid both parties having to face potential liability for the
same risk.” St. Paul Fire & Marine Ins. Co. ex rel. Brandywine Cira, L.P. v.
Turner Constr. Co., 317 F. App’x 219, 221 (3d Cir. 2009) (applying Pennsylvania
law) (quoting Jalapenos, 939 A.2d at 930). A party breaches an insurance
procurement agreement when he fails to obtain the insurance specified by the
agreement. See, e.g., Burlington Coat Factory of Pa., LLC v. Grace Constr. Mgmt.
Co., LLC., 126 A.3d 1010, 1023-24 (Pa. Super. Ct. 2015).
The contract in the present case unambiguously requires Hackerman to carry
insurance covering “direct loss or damage, theft, or injury to [Hackerman’s] horse,
tack, equipment, or trailer.” Doc. 12-1 at 2. Although Hackerman asserts that
“[t]here is nothing in the agreement requiring the horse owner to insure the value
of the horse being boarded,” we do not see how the contract is susceptible of any
interpretation other than such a requirement. As the contract states, “[t]he actual
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Owner, having the financial interest in such items, must carry his or her own
personal property insurance under a homeowner’s or other insurance policy, or
under a separate policy as in the case of the loss of a horse.” Doc. 12-1 at 2
(emphasis added). It is also undisputed that Hackerman did not carry any such
insurance, thus breaching the parties’ insurance procurement agreement. See, e.g.,
Burlington Coat Factory, 126 A.3d at 1023-24. We therefore conclude that
Demeza is entitled to judgment as a matter of law as to his counterclaim that
Hackerman breached the parties’ contract by failing to carry insurance.
Although we conclude that Hackerman breached the parties’ contract by
failing to carry the insurance specified in the contract, we do not decide what
damages Demeza is entitled to as a result of Hackerman’s breach. The parties have
not raised the issue of what damages a non-breaching party is entitled to for the
breach of an insurance procurement agreement, nor have they adequately briefed
what the measure of those damages would be in this case. Accordingly, since the
issue of damages is not before us, our holding is limited to the conclusion that
Hackerman breached the parties’ contract by failing to carry insurance.

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IV. Order.
For the foregoing reasons, IT IS ORDERED that Demeza’s motion for
partial summary judgment (doc. 150) is GRANTED.

S/Susan E. Schwab
Susan E. Schwab
Chief United States Magistrate Judge

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