Those Certain Underwriters at Lloyd's, London Who Subscribe to Certificate Number NA125383 v. Western Express Inc.

Filing 13

INITIAL CASE MANAGEMENT ORDER: Motion to Amend Pleadings due by 10/2/2013. Discovery due by 12/4/2013. Dispositive Motions due by 1/31/2014. Signed by Magistrate Judge E. Clifton Knowles on 5/15/13. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(dt)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
THOSE CERTAIN UNDERWRITERS AT LLOYD’S,
LONDON WHO SUBSCRIBE TO CERTIFICATE
NUMBER NA125383,
Plaintiffs,

v.

CASE NO. 3:13-cv-00068
Judge Campbell
Magistrate Judge Knowles

WESTERN EXPRESS INC.,
JURY DEMAND

Defendant.

INITIAL CASE MANAGEMENT ORDER

Pursuant to Fed. R. Civ. P. 26(f) and Local Rule 16.01, the following initial case
management order is ADOPTED.
1.

Jurisdiction and Venue

The parties do not contest jurisdiction or venue.
This is an action for declaratory judgment, pursuant to the Federal Declaratory
Judgment Act, 28 U.S.C. § 2201, for the purpose of determining a question of actual
controversy between the parties, and pursuant to 28 U.S.C. § 1332(a) because there is
complete diversity between the plaintiffs and defendants and the amount in controversy
exceeds the sum of $75,000, exclusive of costs and interest.
Venue is proper because the insurance policy that is the subject of this controversy
was issued to defendant in Nashville, Tennessee, and the defendant is a business entity
incorporated, domiciled, and/or doing business in Nashville, Tennessee.
2.

Theories of the parties

Plaintiffs’ Theory:
This is an action to determine the rights and obligations between Plaintiffs Those
Certain Underwriters at Lloyd’s, London Who Subscribe to Certificate Number NA125383
(“Underwriters”) and Defendant Western Express, Inc. with regard to the thefts of two
shipments of copper sheets that were being transported by Defendant from Arizona to
Connecticut. Underwriters, pursuant to Certificate No. NA125383 (the “Policy”), provide

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Motor Truck Cargo coverage to the defendant for the period June 15, 2012 to June 15, 2013.
Coverage is provided in the amount of $150,000 any one truck and $300,000 any one loss.
Coverage is subject to a $10,000 deductible for each and every accident or event. Defendant
submitted two claims involving the theft of shipments of copper sheets that were being
transported from Freeport McMoran in Morenci, Arizona to Freeport McMoran in Norwich,
Connecticut. The thefts occurred on June 17, 2012 and July 8, 2012.
The June 17, 2012 theft loss occurred at the Flying J Truck Stop in Clearbrook,
Virginia. According to the bill of lading, Defendant’s driver, Bernell Blakes Jr., was
transporting 44,140 pounds of Cathode-Morenci Central PDMI, or copper sheets, on a flatbed trailer. Defendant’s driver parked his tractor trailer at the Flying J Truck Stop and then
left it unattended with a key in the ignition while he went inside to shower and purchase
food. The tractor trailer was not garaged in a building, was not parked in a fully enclosed
yard which was securely closed and locked, was not under constant surveillance, and was
not on a guarded lot. When Defendant’s driver returned to the location where he parked
the tractor trailer, he discovered it had been stolen. The tractor involved was recovered, but
the trailer and the cargo of copper sheets remain missing. This tractor did not reflect any
evidence of forcible or violent entry, and Defendant did not make any repairs to the tractor
following this incident.
The July 8, 2012 theft loss occurred at a truck stop in Raphine, Virginia. According to
the bill of lading, Defendant’s driver, Jared Rizzo, was transporting 44,480 pounds of
Cathode-Morenci Southside PDSS, or copper sheets, on a flat-bed trailer. Defendant’s driver
parked his tractor trailer at the truck stop and then left it unattended while he went inside
to eat. The tractor trailer was not garaged in a building, was not parked in a fully enclosed
yard which was securely closed and locked, was not under constant surveillance, and was
not on a guarded lot. When Defendant’s driver returned to the location where he parked
the tractor trailer, he discovered it had been stolen. The tractor involved was recovered, but
the trailer and the cargo of copper sheets remain missing. The tractor involved did not
reflect any evidence of forcible or violent entry, and Defendant did not make any repairs to
the tractor following this incident.
The Unattended Truck Endorsement in the Policy does not extend coverage for these
losses because there was no forcible and/or violent entry to the unattended trucks and/or
the trucks did not have all keys removed. Thus, coverage for these losses is excluded
pursuant to exclusion k) contained in the Policy. Underwriters thus request a declaration
from this Court that coverage does not exist for the losses that occurred on June 17, 2012
and July 8, 2012.
Further, question 18 of the application for coverage submitted to Underwriters for
the Policy requests that Defendant give details of its cargo loss experience, whether insured
or not, for the past 5 years. Defendant responded to that question as follows: “Per files with
Tysers.” Based upon the information contained in the application submitted, Underwriters
issued Certificate number NA125383. Underwriters, after submission of the involved two
claims, requested that Defendant provide additional information regarding its prior loss

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history; however, Defendant refused to provide the requested information. Upon
information and belief, the representation made by Defendant with regard to its prior loss
history was false as it did not contain all of Defendant’s cargo losses during the previous
five years. Upon information and belief, the misrepresentation was made by Defendant
with the intent to deceive Underwriters and increased the risk of loss. Underwriters relied
upon the above misrepresentation to its detriment when it issued the Policy and would not
have issued the Policy as written had the true facts been known. Underwriters are ready,
willing, and hereby offer to return the premium for the policy. Because of the
misrepresentations on the application, Underwriters request that the Court rescind the
Policy ab initio.
Defendant’s Theory:
Defendant takes issue with the recitation of facts by Plaintiff. Defendant takes issue
with the recitation of facts with regard to the circumstances of theft losses. Among other
dispute issues, Defendant asserts that the units were securely locked. Defendant further takes
issue with the allegations that the units were not under constant surveillance on a guarded,
lighted lot within the meaning of the policy. Secondly, Defendant takes issue with the recitation
that the Defendant refused to provide requested information. The application was prepared by
Defendant’s agent broker. Upon review, Defendant even advised the broker that there was a
previous loss within the deductible omitted from the application. Furthermore, Plaintiff had
coverage for Defendant for over five years and had all of the records and loss runs for all of
those years. Defendant did not misrepresent anything to the Plaintiff.
Defendant asserts that Plaintiff is liable for the involved losses in that the units were
under constant surveillance or on a guarded lot within the meaning of the policy and the units
were securely locked. Any other interpretation of the policy would render the policy a nullity.
Defendant purchased coverage for cargo theft in the ordinary course of business. Plaintiff’s
interpretation of the policy exclusions would enable Plaintiff to collect premiums while
excluding all coverage for cargo. Plaintiff and its agent broker were well aware that Defendant
provides trucking services in 48 states in an over-the-road service. The driver cannot be
expected to refrain from using a restroom, short stops to eat and other short breaks. Parking a
unit at a major truck stop which is under constant surveillance by the truck stop, other drivers,
and the driver is within the required definitions of the policy. Any other interpretation would
render the policy a nullity.
Defendant did not misrepresent any material fact to Plaintiff in making its application
for coverage to Plaintiff. In fact, the application was prepared by Plaintiff’s agent broker. Upon
review, Defendant even advised broker that there was a previous loss omitted within the
deductible. Furthermore, Plaintiff had coverage for Defendant’s cargo insurance for over five
years prior to the application in question. Therefore, Plaintiff had all of Defendant’s loss runs
and information already in its possession at the time of the application. Defendant did not
make any misrepresentations to Plaintiff. Therefore, there is no grounds to rescind or return the
premium.

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3.

Initial Disclosures
The parties shall make their Rule 26(a)(1) disclosures on or before June 7, 2013.

4.

Discovery

The parties shall complete all written discovery, including requests for production of
documents, and depose all witnesses on or before December 4, 2013. Discovery is not stayed
during dispositive motions, unless ordered by the Court. Interrogatories, Requests for
Production, and Requests for Admissions must be submitted to the opposing party in sufficient
time for the opposing party to respond by the time permitted by the Rules prior to the deadline
for completion of discovery.
No deposition shall be scheduled to occur after the discovery cutoff date. Each side shall
be limited to no more than five depositions, no more than 25 interrogatories, and no more than
50 requests for admission.
Discovery-related motions, including those related to requests for production, are to be
filed no later than December 18, 2013. No motions concerning discovery are to be filed until
after the parties have conferred in good faith and are unable to resolve their differences.
At this time, and considering the nature of the litigation, the parties do not anticipate
that extensive electronic discovery will be necessary. Should the parties encounter problems
regarding the discovery of electronically-stored information, the parties may file appropriate
motions.
5.

Joinder of Parties and Motions to Amend

All motions to amend the pleadings, including motions to add additional parties, to add
additional claims, counterclaims, or cross-claims shall be filed by October 2, 2013.
6.

Disclosure of Experts

Plaintiffs shall disclose expert witnesses, if any, no later than September 13, 2013.
Defendant shall disclose expert witnesses, if any, no later than October 11, 2013. The parties
shall disclose rebuttal expert witnesses, if any, no later than November 1, 2013. All expert
witness disclosures shall be made to the opposing party and contain the information specified
in Rule 26(a)(2).
7.

Dispositive Motions

All dispositive motions shall be filed no later than January 31, 2014. Responses to
dispositive motions shall be filed no later than February 21, 2014. Optional replies may be filed
no later than March 7, 2014. If a dispositive motion is filed earlier, the response and reply
deadlines shall be moved up accordingly.

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8.

Trial

The jury trial is expected to last 1-2 days. The pretrial order date, pretrial conference
date, and trial date will be set by the presiding judge. The parties have not consented to trial
before the magistrate judge. The target trial date is June 3, 2014 (jury).
It is so ORDERED.
_____________________________________________
U.S. MAGISTRATE JUDGE CLIFTON KNOWLES

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