LM Insurance Corporation v. Dubuque Barge and Fleeting Svc ( 2020 )

United States Court of Appeals
For the Eighth Circuit
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No. 19-1647
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LM Insurance Corporation
lllllllllllllllllllllPlaintiff - Appellant
v.
Dubuque Barge and Fleeting Service Company, doing business as Newt Marine Service
lllllllllllllllllllllDefendant - Appellee
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Appeal from United States District Court
for the Northern District of Iowa - Dubuque
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Submitted: June 18, 2020
Filed: July 20, 2020
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Before LOKEN and GRASZ, Circuit Judges, and CLARK,1 District Judge.
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GRASZ, Circuit Judge.
LM Insurance Corporation sued Dubuque Barge and Fleeting Service Company,
d/b/a Newt Marine Service (“Newt Marine”), for breach of contract alleging Newt
1
The Honorable Stephen R. Clark, Sr., United States District Judge for the
Eastern District of Missouri, sitting by designation.
Marine wrongfully refused to pay premiums owed under three separate workers’
compensation insurance policies. Both parties moved for summary judgment. The
district court2 granted Newt Marine’s motion and denied LM Insurance’s motion,
concluding the premiums LM Insurance sought from Newt Marine were not merited
by the terms of the polices. LM Insurance appeals the denial of its motion for
summary judgment and the grant of summary judgment in Newt Marine’s favor. We
affirm.
I. Background
Newt Marine is an Iowa marine construction company that conducts most of its
work on a floating dredge barge and plant on the Mississippi River. Through Iowa’s
assigned risk plan, LM Insurance issued Newt Marine three successive one-year
workers’ compensation insurance policies starting in May 2013. See generally Iowa
Code § 515A.15. Each policy included the same premium terms. Newt Marine pays
an up-front, estimated premium. Then, following an audit, LM Insurance calculates
the final premium. If the final premium exceeds the initial estimated premium, Newt
Marine must pay the difference.
Each policy also included the same coverage exclusion. Coverage did not
extend to bodily injuries to “a master or member of the crew of any vessel,” otherwise
known as “seamen” under the Jones Act, 46 U.S.C. § 30104. Johnson v. Cont’l Grain
Co., 58 F.3d 1232, 1235 (8th Cir. 1995) (“The terms ‘master or member of a crew’ are
refinements of the term ‘seaman’ in the Jones Act.”). This exclusion exists because
“seamen” have a private right of action against their employers for personal injuries.
See 46 U.S.C. § 30104. And, according to the Iowa Supreme Court, that private right
2
The Honorable Mark A. Roberts, United States Magistrate Judge for the
Northern District of Iowa, to whom the case was referred for final disposition by
consent of the parties pursuant to 28 U.S.C. § 636(c).
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of action deprives Iowa’s workers’ compensation commission of subject matter
jurisdiction to award benefits to seamen employees. See Harvey’s Casino v. Isenhour,
724 N.W.2d 705, 709 (Iowa 2006). So to cover bodily injuries to its seamen
employees, Newt Marine had to obtain a separate protection and indemnity policy from
AIG.
Even though the workers’ compensation policies issued by LM Insurance
excluded Newt Marine’s seamen employees from coverage, LM Insurance charged
Newt Marine a premium for their coverage by including all seamen employees in its
final premium calculations. To calculate the final premium owed, the policies require
multiplying a certain rate by “payroll and all other remuneration paid or payable during
the policy period for the services of: 1. all officers and employees engaged in work
covered by [the] policy; and 2. all other persons engaged in work that could make [LM
Insurance] liable under . . . [the] policy.” (hereinafter section C.1. & C.2.). Since they
are excluded by the terms of the policy, seamen are not engaged in “work covered by
[the] policy.” So, to include payroll and other remuneration to seamen in its
calculations, LM Insurance relied on section C.2. LM Insurance reasoned that because
Newt Marine may alter an employee’s work from that of a seaman to that of an
employee engaged in work covered by the policy, all seamen employees qualify as
“other persons engaged in work that could make [LM Insurance] liable under . . . [the]
policy.” (emphasis added). Newt Marine rejected this rationale and refused LM
Insurance’s demands for additional premiums calculated on this basis. LM Insurance
then sued for breach of contract, seeking over $1 million in premiums.
Both parties moved for summary judgment. The district court granted Newt
Marine’s motion, concluding section C.2. does not allow LM Insurance to charge a
premium for all of Newt Marine’s seamen employees. The language of section C.2.,
the district court stated, plainly applied to independent contractors engaged in work
covered by the policy. Section C.2. did not, as LM Insurance claimed, encompass
seamen employees who may at some point perform other work covered by the policy.
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LM Insurance appealed, arguing its summary judgment motion was erroneously denied
and that Newt Marine’s summary judgment motion was erroneously granted.
II. Analysis
We have jurisdiction to review both the grant of summary judgment in Newt
Marine’s favor as well as the denial of LM Insurance’s motion for summary judgment.
See RSA 1 Ltd. P’ship v. Paramount Software Assocs., Inc., 793 F.3d 903, 906 (8th
Cir. 2015). But because we affirm summary judgment in favor of Newt Marine, our
review begins and ends there.
Summary judgment is appropriate when “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). “We review both the district court’s grant of summary judgment and its
interpretation of the insurance policy de novo.” Mich. Millers Mut. Ins. Co. v. Asoyia,
Inc., 793 F.3d 872, 880 (8th Cir. 2015) (quoting United Fire & Cas. Co. v. Titan
Contractors Serv., Inc., 751 F.3d 880, 883 (8th Cir. 2014)). The parties raised no
issue with the district court’s application of Iowa law, so Iowa law governs our
interpretation and construction of the policies. See Progressive N. Ins. Co. v.
McDonough, 608 F.3d 388, 390 (8th Cir. 2010).
LM Insurance sued Newt Marine claiming it was in breach of contract for
refusing to pay premiums allegedly owed under section C.2. of the workers’
compensation insurance policies. Whether the district court appropriately granted
Newt Marine’s motion for summary judgment on this claim depends on whether we
agree that the charged premiums were not merited and thus not owed under section
C.2. See Asoyia, 793 F.3d at 879–80 (quoting Ill. Nat’l Ins. Co. v. Farm Bureau Mut.
Ins. Co., 578 N.W.2d 670, 671 (Iowa 1998) (“The construction of an insurance
contract and the interpretation of its language are matters of law for the court.”). We
agree the charged premiums were not merited.
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“Under Iowa law, the intent of the parties, as determined by the language of the
policy, controls the court’s interpretation of an insurance policy.” Liberty Mut. Ins.
Co. v. Pella Corp., 650 F.3d 1161, 1169–70 (8th Cir. 2011) (citing Nationwide Agri-
Bus. Ins. Co. v. Goodwin, 782 N.W.2d 465, 470 (Iowa 2010)). In full, the policies’
premium calculation provisions state:
C. Remuneration
Premium for each work classification is determined by multiplying
a rate times a premium basis. Remuneration is the most common
premium basis. This premium basis includes payroll and all other
remuneration paid or payable during the policy period for the
services of:
1. all your officers and employees engaged in work
covered by this policy; and
2. all other persons engaged in work that could make us
liable under Part One (Workers Compensation
Insurance) of this policy. If you do not have payroll
records for these persons, the contract price for their
services and materials may be used as the premium
basis. This paragraph 2 will not apply if you give us
proof that the employers of these persons lawfully
secured their workers compensation obligations.
The premiums LM Insurance seeks in this lawsuit are based entirely on
remuneration paid or payable to Newt Marine’s seamen employees during the three
consecutive policy terms. However, remuneration for those employees is not
encompassed by section C.1. or section C.2. When read together, it is clear that section
C.1.’s language encompasses remuneration for employees engaged in covered work
while section C.2. encompasses remuneration for nonemployees, like independent
contractors, engaged in covered work. Remuneration for Newt Marine’s seamen
employees is not encompassed by section C.1. because Newt Marine’s seamen,
although employees, do not engage in covered work. And, despite LM Insurance’s
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arguments to the contrary, it is not encompassed by section C.2. because Newt
Marine’s employee seamen are, of course, employees. The charged premiums are
therefore not merited by the language of the policies.
Like the district court, we reject LM Insurance’s argument that remuneration for
Newt Marine’s seamen employees may be included in the premium calculation under
section C.2. because they are “other persons engaged in work that could make [LM
Insurance] liable under” the policies. (emphasis added). As explained above, they are
not “other persons,” i.e., persons other than employees like independent contractors.
And the possibility that Newt Marine may, during the policy period, reclassify a
seaman employee as an employee engaged in covered work does not suddenly
implicate section C.2. In that event, the reclassified employee’s remuneration would,
at least in theory, be encompassed by section C.1., and LM Insurance’s audit at the
conclusion of each policy period could appropriately account for any such
reclassifications. However, the possibility of reclassification does not, as LM
Insurance contends, allow LM Insurance to include remuneration for all of Newt
Marine’s seamen employees in the final premium calculation under section C.2.
regardless of whether reclassification actually occurs.
Because the premiums LM Insurance charged to Newt Marine were not merited,
Newt Marine did not breach its obligations under the workers’ compensation insurance
policies by refusing to pay. Summary judgment was therefore appropriately granted
to Newt Marine because LM Insurance’s breach claims fail as a matter of law.
III. Conclusion
We affirm the district court’s judgment.
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