Opinion
No. 98 Civ. 8168 (MBM).
May 16, 2001
CHRISTOPHER T. BRADLEY, ESQ. KENNETH P. HORENSTEIN, ESQ. (Attorneys for Plaintiff) Marshall, Conway Wright, P.C.
LOUIS J. SCHEPP, ESQ. (Attorney for Defendant) Robin, Schepp, Yuhas, Doman, Harris.
OPINION AND ORDER
Manuel Payamps was run over and killed by a cement mixing truck while working as a mechanic. His estate sued the truck's driver, the driver's employer, and the truck's owner, for wrongful death in New York state court. The parties to that suit settled for $1.2 million.
Plaintiff U.S. Underwriters insures the truck's owner. U.S. Underwriters contributed $550,000 to the settlement. Defendant Liberty Mutual Insurance Company insures the driver's employer. Liberty Mutual refused to contribute to the settlement. In this diversity action, U.S. Underwriters sues Liberty Mutual for a declaratory judgment that Liberty Mutual's policy covers the accident, and that it must exhaust its policy limit before U.S. Underwriters is required to contribute. U.S Underwriters now moves pursuant to Fed.R.Civ.P. 56 for summary judgment. Liberty Mutual cross-moves for summary judgment in its favor.
For the reasons stated below, Liberty Mutual's policy covers the accident and its limits must be exhausted before U.S. Underwriters contributes. Therefore, U.S. Underwriters' motion for summary judgment is granted. Liberty Mutual's cross-motion for summary judgment is denied.
I.
Payamps was a mechanic employed by O T Maintenance Corp. (Bradley Aff., Ex. J). He died in an accident at O T Maintenance's Liberty Avenue yard on September 9, 1987. (Id.) As set forth below, U.S. Underwriters produces evidence that Payamps was run over by a cement-mixing truck driven by Sean Pekusic, an employee of the F M Trans-Mix Corp. (Id.) U.S. Underwriters also produces evidence that Pekusic was driving the truck as an employee of F M. (Id. at Ex. K) However, the truck was owned by O T Trans-Mix, a company related to O T Maintenance, not by Pekusic's employer, F M. (Id. at Ex. B)
Payamps's estate sued Pekusic, F M, and O T Trans-Mix for wrongful death in New York state court. (Id. at Ex. A) In addition, Pekusic and O T Trans-Mix sued O T Maintenance as a third-party defendant. (Id.) Before closing arguments, the case settled. The defendants agreed to pay the plaintiff $1.2 million in "full settlement of all claims arising out of this action." (Id. at Ex. I).
The State Insurance Fund contributed $400,000 to the settlement as workers' compensation on behalf of O T Maintenance. (Id. O T Trans-Mix's primary automobile liability insurer, the Allstate Insurance Company, contributed $250,000. (Id.) O T Trans-Mix's excess insurer, U.S. Underwriters, contributed $550,000. (Id.)
F M's primary insurer, Liberty Mutual, refused to contribute. (Id.) Consequently, the defendants in that state court action agreed as part of the settlement that the payments made by Allstate and U.S. Underwriters on behalf of Pekusic and 0 T Trans-Mix were "made under an express reservation of rights" that Pekusic, O T Trans-Mix, Allstate, and U.S. Underwriters may sue F M and Liberty Mutual in "another forum to litigate all issues pertaining to liability." (Id.)
U.S. Underwriters now sues Liberty Mutual for a declaration that Liberty Mutual's policy covers the accident and that Liberty Mutual must exhaust its policy limit first. (Id. at Ex. E) U.S. Underwriters explains in its memorandum that this suit is intended only to resolve the priority of coverage among Allstate, U.S. Underwriters, and Liberty Mutual. The suit is not intended to determine the relative liability of each of the insureds. (4/7/2000, P1. Mem. at 2).
II.
Liberty Mutual argues that there is a genuine issue of material fact with respect to whether its policy covers the accident. Liberty Mutual's policy covers vehicles F M owns and vehicles it uses in connection with its business. (Bradley Aff., Ex. D) Liberty Mutual contends that there are genuine issues regarding whether it was Pekusic's truck which ran over Payamps as well as whether he was driving in connection with F M's business, and thus a genuine issue as to coverage. (Def. 56.1 Stat. in Opp., ¶¶ 6-7).
A.
To establish the circumstances of Payamps's death, U.S. Underwriters produces the state court trial testimony of Pekusic, the driver, who testified that on the day of the accident, he was having a problem with his truck. (Bradley Aff., Ex. K) He returned to the Liberty Avenue yard where he backed up to a wash-out pit. (Id.) With the truck running, he rotated the truck's barrel in order to "empty out what little water was left" in it. (Id.) Pekusic left the truck running and walked to the garage to tell the foreman, Raphael Pinaqua, about the problem he was having. (Id.) Pekusic and Pinaqua returned to the truck where they spoke for five minutes, standing on the driver's side of the truck. (Id.) Pinaqua asked Pekusic to park the truck in a spot approximately 20 feet from the wash-out pit, and Pinaqua returned to the garage. (Id.) Pekusic testified that before he moved the truck he did not walk to the rear or front of the truck, or look under it. (Id.) He testified that in order to park the truck he drove 20 to 30 feet forward, then 20 to 30 feet in reverse, and then he pulled the truck forward to the left, to park it against a wall. (Id.)
Liberty Mutual argues that the trial testimony in the underlying state court action is not admissible because Liberty Mutual was not a party to the trial and neither witness has reviewed or signed the testimony. (7/19/2000, Def. Mem. at p. 3) Sworn testimony from another trial is admissible on a motion for summary judgment. See Kraft Gen'l Foods Inc. v. Cattell, 18 F. Supp.2d 280, 284 (S.D.N.Y. 1998) (citingLangston v. Johnson, 478 F.2d 915, 918 n. 17 (D.C. Cir. 1973)). Moreover, certified transcripts of that testimony "ha[ve] the same evidentiary value and safeguards as affidavits provided for in Rule 56(e)." Shulins v. New England Insur. Co., 360 F.2d 781, 785 (2d Cir. 1966)
After he parked the truck, Pekusic stopped by the yard's main office, and went home. (Id.) He returned to the yard later that evening upon learning of the accident. (Id.) He testified that Payamps's body was lying between the wash-out pit and the place where Pekusic ultimately parked the truck. (Id.)
U.S. Underwriters also produces the trial testimony of Tommaso Fini, the Liberty Avenue yard's supervisor. (Id. at Ex. J) He testified that on the day of the accident he had gone home and was called to return because of the accident. (Id.) Fini was asked where he saw Payamps's body, and he testified that Payamps' body was right where Pekusic's truck — truck 50 — had been earlier: "It was right where truck 50, because I remember when I left, it was truck 50 parked there. Wash the truck. It was washing, then I left. And because they couldn't even, that point in time, nobody knows which truck was, but I left the truck. It was the same tires and I did figure out it was 50." (Id.)
U.S. Underwriters produces the deposition of Joseph Letta, a claims manager for Liberty Mutual at the time of the wrongful death suit. (Bradley Aff., Ex. G) His statements that Pekusic's truck ran over Payamps are not admissible because they are not based on personal knowledge.
Liberty Mutual has not produced any evidence to the contrary, but contends that the identification of the truck is "purely conjecture and surmise as there are not witnesses to (the] accident." (Def. 56.1 Stat. in Opp., ¶ 7) Liberty Mutual is correct that Fini reached his conclusion on the basis of circumstantial evidence. However, Pekusic's and Fini's testimony is sufficient to support a reasonable jury's finding that it is more likely than not that Pekusic's truck, rather than some other truck, ran over Payamps, and Liberty Mutual has failed to create a genuine issue with respect to this fact.
In addition, although Liberty Mutual has failed to create a genuine issue, it is theoretically possible that a jury could find that U.S. Underwriters has failed to satisfy its burden of production on this issue, based on a finding that it was at least as likely — or even more likely than not — that some other truck ran over Payamps. However, neither of those findings would be reasonable in light of U.S. Underwriters' evidence. Accordingly, a reasonable jury could not find for Liberty Mutual on this issue.
B.
U.S. Underwriters' evidence shows also that Pekusic was driving the truck in connection with F M's business. Pekusic testified in the wrongful death action that his F M supervisors told him that whenever he had problems with his vehicle, he should inform Ralphael Pinagua, the foreman at the Liberty Avenue yard. (Bradley Aff., Ex. K) Fini also testified that "any driver, if there is anything wrong, small or big on the truck, they're supposed to come in the garage and tell the foreman." (Id. at Ex. J) Pekusic testified that on the day of the accident, he had a problem with the truck. (Id. at Ex. K) He told Pinagua about it; Pinagua told him to move his vehicle from one location to another nearby. He moved the truck, and went home. (Id.)
U.S. Underwriters again produces Joseph Letta's deposition, this time for his statements that Pekusic's truck was a covered vehicle. (Bradley Aff., Ex. G) That conclusion assumes that Pekusic's truck ran over Payamps and that Pekusic was driving in connection with F M's business. Letta lacks personal knowledge of both facts. Therefore, his statements regarding coverage is not admissible.
Liberty Mutual produces only one piece of evidence in support of its argument that there is a genuine issue regarding whether Pekusic was driving his truck in connection with F M's business. Liberty Mutual cites Fini's deposition testimony that "driver's for F M or O T would be lent to the other company." (Schepp Aff., Ex. C) Liberty Mutual suggests that it is possible that Pekusic was driving in connection with O T's business on the day of the accident, not F M's. However, Liberty fails to produce any specific evidence of that possibility. Moreover, it is clear from Pekusic's testimony that he was working for F M that day. He testified that he was employed by F M as a truck driver, that F M gave him directions about how to deal with problems with the truck, and that F M paid him. Then he was asked whether there was a problem with the truck on the date of the accident. He said yes. The lawyer then asked him "[a]nd what were you told as an employee of F M to do if there was a problem with the truck." Pekusic testified that he was told to make Raphael aware of it. The lawyer next asked "And on that date, were you having a problem with the truck," and "did you advise Raphael of that problem," and Pekusic answered yes to both questions. In asking Pekusic how he was told to deal with problems with the truck as an employee of F M and whether he dealt with the problem in that way on the date of the accident, the lawyer assumed that Pekusic worked for F M on the date of the accident, and Pekusic never said anything to contradict him. (Bradley Aff., Ex. K).
U.S. Underwriters has produced enough evidence to support a reasonable jury's finding that it is more likely than not that Pekusic was driving the truck for F M, and Liberty Mutual has failed to create a genuine issue with respect to this fact. Moreover, a reasonable jury could not find that U.S. Underwriters failed to satisfy its burden of production on this issue. Accordingly, a reasonable jury could not find for Liberty Mutual on this issue.
Because U.S. Underwriters has produced enough evidence to support a reasonable jury's finding that it was Pekusic's truck that ran over Payamps and that Pekusic was driving for F M, and Liberty Mutual has failed to create a genuine issue with respect to either fact; and because a reasonable jury could not find that U.S. Underwriters has failed to satisfy its burden of production on either issue, a reasonable jury could find only that Liberty Mutual's policy's covers the accident. Accordingly, U.S. Underwriters' motion for a declaration of such coverage is granted.
III.
U.S. Underwriters also sues for a declaratory judgment that Liberty Mutual must exhaust its policy limit first. (Bradley Aff., Ex. E) Liberty Mutual argues that U.S. Underwriters must exhaust first, or in the alternative, that both insurers must contribute pro rata. (7/19/2000, Def. Mem. at 4-7) U.S. Underwriters is O T Trans-Mix's excess liability insurer. (Id. at Ex. B) The U.S. Underwriters policy states that the insurer will "indemnify . . . [O T] for [a] loss . . . in excess of [the primary insurers's limit]." (Id.) The policy defines loss as "the sums paid in settlement of claim or satisfaction of judgment as damages for which the insured is liable . . . ," and then further defines loss to exclude any part of the insured's liability which is covered by other insurance. (Id.) ("[T]he sums paid . . . after making deductions for other insurances (other than the amounts payable under the Primary Insurance). . .") Thus, U.S. Underwriters' policy establishes that the company will pay for a loss only after subtracting the limits of the insured's primary insurance as well as any other insurance that would cover the loss. In other words, U.S. Underwriters purports to be excess over any other insurance.
U.S. Underwriters' complaint actually seeks a declaration that both Liberty Mutual and Allstate must exhaust first. (Bradley Aff., Ex. E) However, Allstate has already paid its policy limit, (id. at Ex. I), and has not sued either U.S. Underwriters or Liberty Mutual for contribution. Thus, I will consider only whether Liberty Mutual must exhaust before U.S. Underwriters.
Liberty Mutual asks the court to disregard the definition of loss because the policy submitted during discovery was missing two pages, which included the definition. (7/19/2000, Def. Mem. at p. 5) U.S. Underwriters does not dispute that it forgot those two pages, and the company corrected its mistake with the policy that it submitted along with its summary judgment motion (Bradley Aff., Ex. B). Nevertheless, Liberty Mutual argues that the two pages must be excluded. It produces the deposition of a U.S. Underwriters' claims examiner who, when shown the deficient policy, testified that as far as he could tell, the policy was complete. (Def. 56.1 Stat. in Opp., Ex. C) Liberty Mutual also presses that U.S. Underwriters has not produced "any affidavit by a person with knowledge," in support of its assertion that the policy submitted on summary judgment is the correct one. (Def. Mem. at p. 5)
In fact, however, U.S. Underwriters produces an affidavit by the underwriter who prepared the attachments to 0 T's policy. (Seltner Aff., ¶ 3) He avers that the policy included the two pages. (Id. at ¶ 5) Moreover, U.S. Underwriters' attorney avers that he told Liberty Mutual's attorney that he could conduct additional discovery to confirm that the two pages omitted in discovery were part of the original policy. (7/21/200, Horenstein Aff., ¶ 8) Liberty Mutual did not avail itself of that offer and has not produced evidence which would suggest that the two additional pages were not part of the original policy.
Liberty Mutual is F M's primary insurer for vehicles F M owns. (Bradley Aff., Ex. D) For non-owned vehicles, Liberty Mutual's insurance is "excess over any other collectible insurance." (Id.) The policy then states that "[w]hen two or more policies cover on the same basis, either excess or primary, [Liberty Mutual] will pay only [its pro rata] share." (Id.) Thus, Liberty Mutual's policy purports to be excess over primary insurance but, with respect to other excess insurance, it is of equal status.
"[A]n insurance policy which purports to be excess coverage but contemplates contribution with other excess policies . . . must contribute ratably with a similar policy, but must be exhausted before a policy which expressly negates contribution with other carriers, or otherwise manifests that it is intended to be excess over other excess policies." State Farm Fire and Casualty Co. v. LiMauro, 65 N.Y.2d 369, 375-76, 492 N.Y.S.2d 534 (1985). Liberty Mutual's policy "contemplates contribution with other excess policies," and Liberty Mutual so concedes. U.S. Underwriters' policy does not similarly contemplate contribution. Rather, U.S. Underwriters' policy's definition of loss "manifests that it is intended to be excess over other excess policies." As described above, U.S. Underwriters says that it will pay for a loss in excess of the primary insurer's limit, and then defines loss so that it excludes the limits of any other insurance. That method of asserting that a policy will be excess to other policies is equivalent to a more conventional clause in which the policy expressly states that it shall be excess to other insurance.
In Jefferson Insur. Co. v. Glens Falls Insur. Co., 88 A.D.2d 925, 926, 450 N.Y.S.2d 888, 889-90 (2d Dep't 1982), the Court considered two policies. The first defined "ultimate net loss" as "the sums paid in settlement of losses . . . after making deductions for other insurance (other than recoveries under the policy/ies of the Primary Insurers). . ." (Id. at 889) The second provided that its insurance "shall be excess insurance over any other valid and collectible insurance . . (Id.) The Court held that both policies provide for excess insurance and that each policy purports to be excess to the other excess policy. ( See id. at 889-90) The U.S. Underwriters' policy's definition of loss is equivalent to the definition in Jefferson, and also should be construed as equivalent to a conventional "other insurance" clause in which the insurer states that its policy is excess over other insurance.
U.S. Underwriters' definition of loss to exclude any liability covered by "other insurance" does not expressly purport to require deduction of "excess" insurance. The definition merely refers to "other insurance." However, the omission of the word excess does not change the result. The broad phrase "other insurance" includes "excess" insurance. The New York Court of Appeals has explained that the "phrase "whether primary excess or contingent' does not add anything to the all inclusive "other valid' phrase. . . . The super-escape phraseology may be more specific, but its listing of other coverage still falls within the ambit of the very broad phrase "other valid' insurance." LiMauro, 65 N.Y.2d 369, 378, 492 N.Y.S.2d 534 (1985).
Because Liberty Mutual's policy contemplates contribution with other excess insurance, whereas, in contrast, U.S. Underwriters' policy purports to be excess over any other insurance, Liberty Mutual must exhaust its policy limit first. Accordingly, U.S. Underwriters' motion for summary judgment seeking a declaration that Liberty Mutual must exhaust first is granted.
Liberty Mutual contends that despite U.S. Underwriters' label, its policy is not a "true" excess policy because it charged premiums comparable to what Liberty Mutual charged for its primary policy. (7/19/2000, Def. Mem. at pp. 5-7) U.S. Underwriters charged O T $1800 for Pekusic's truck. (Bradley Aff., Ex. B) Liberty Mutual's memorandum suggests that Liberty Mutual charged only $1571 for "similar vehicles." (7/19/2000, Def. Mem. at p. 6)
In fact, U.S. Underwriters charged $1800 for nine trucks ranging in model year from 1968 to 1973. (Bradley Aff., Ex. B) In contrast, Liberty Mutual charged $2,354 for four trucks ranging from model years 1970 to 1973, and $1571 for only two — 1971 and 1974 models. (Id. at Ex. D) Further, in an affidavit submitted along with its cross motion, Liberty Mutual's attorney acknowledges that it charged more for similar vehicles. (Schepp Aff. at ¶ 19) In that affidavit, Liberty Mutual's attorney avers that "the premium for the cement mixer in question was $1,800 under the U.S. Underwriters' policy and a similar vehicle under the Liberty Policy had a premium of $2,354 for the same $750,000 of liability coverage." (Id.) Thus, Liberty Mutual charges substantially more per vehicle on average that U.S. Underwriters charges. In addition, U.S. Underwriters' policy covers a period of one year; whereas, Liberty Mutual's policy covers only seven months. (Id. at Ex. B, D).
U.S. Underwriters also sues for a third declaratory judgment that Liberty Mutual must reimburse them the $550,000 U.S. Underwriters contributed to the $1.2 million settlement of the underlying wrongful death suit. As U.S. Underwriters explains in its memorandum, however, "[t]here has not yet been a finding of liability in the underlying wrongful death action." (4/7/2000, P1. Mem. at p. 2) Thus, U.S. Underwriters is not yet entitled to reimbursement. Its summary judgment motion on this issue must be denied.
IV.
Liberty Mutual cross-moves for summary judgment seeking a declaration that its policy is excess to U.S. Underwriters'. For the reasons stated in Section III, the motion is denied.
* * *
For the reasons stated above, U.S. Underwriters' motion for summary judgment is granted. Liberty Mutual's cross-motion is denied.
SO ORDERED: