Joseph Leibovich v. The Kroger Co. ( 1997 )


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  •                   IN THE COURT OF APPEALS OF TENNESSEE
    WESTERN SECTION AT JACKSON
    JOSEPH LEIBOVICH, EXECUTOR OF )
    THE ESTATE OF EVELYN G. JORDAN)
    AND JOHN JORDAN,                 )
    )
    Plaintiffs/Appellees,  ) Shelby Circuit No. 38197 T.D.
    )
    VS.                              ) Appeal No. 02A01-9608-CV-00192
    )
    THE KROGER COMPANY,
    TOPVALCO, INC., MID-SOUTH
    )
    )
    )
    FILED
    AUTOMATIC DOOR AND BESAM,        )
    August 19, 1997
    INC.,                            )
    )
    Cecil Crowson, Jr.
    Defendants/Appellants. )     Appellate C ourt Clerk
    APPEAL FROM THE CIRCUIT COURT OF SHELBY COUNTY
    AT MEMPHIS, TENNESSEE
    THE HONORABLE D’ARMY BAILEY, JUDGE
    JOHN R. CANNON, JR.
    THE HARDISON LAW FIRM
    Memphis, Tennessee
    Attorney for Appellant
    SAM L. CRAIN, JR.
    STEPHEN D. CRAWLEY
    SCOTT J. CROSBY
    Memphis, Tennessee
    Attorneys for Appellee
    REVERSED AND REMANDED
    ALAN E. HIGHERS, J.
    CONCUR:
    W. FRANK CRAWFORD, P.J., W.S.
    DAVID R. FARMER, J.
    In this personal injury action, Joseph Leibovich (“Plaintiff”) filed suit as the executor
    of the estate of Evelyn Jordan (“Jordan”) and her husband, John Jordan, for injuries Jordan
    sustained as a result of being struck by automatic doors that closed upon her. Plaintiff
    alleged that the negligence of the Defendants, The Kroger Company, Topvalco, Inc., Mid-
    South Automatic Door (“Mid-South”), and Besam, Inc. (“Besam”), combined to cause
    Jordan’s injury. Besam cross-claimed against Mid-South for breach of contract based
    upon Mid-South’s failure to have Besam named as a co-insured on Mid-South’s policy of
    liability insurance for the 1989-1990 year. Besam filed a motion for summary judgment on
    its cross-claim against Mid-South. The trial court granted Besam’s motion for summary
    judgment on its cross-claim against Mid-South and held that Mid-South breached its
    distributorship agreement with Besam by failing to name Besam as a co-insured or
    additional insured on Mid-South’s liability insurance policy which was in effect on the date
    of Jordan’s accident. In granting Besam’s motion for summary judgment on its cross-claim
    against Mid-South, the trial court ordered Mid-South to defend Besam in the underlying
    action, ordered Mid-South to reimburse Besam for all attorneys’ fees and litigation costs
    incurred by Besam in its defense of this case up to the date of the order, ordered Mid-
    South to pay any judgment entered against Besam in favor of the Plaintiff to the same
    extent that Besam would have been covered for the judgment under the liability insurance
    policy in effect at the time of Plaintiff’s accident had Besam been named as a co-insured
    or additional insured under the policy, unless Besam is adjudged solely liable for Plaintiff’s
    alleged damages and injuries, and designated its order as a final judgment pursuant to
    Tenn. R. Civ. P. 54.02. Mid-South appeals the judgment of the trial court arguing that the
    trial court erred in granting Besam’s motion for summary judgment on its cross-claim
    against Mid-South. For the reasons stated hereafter, we reverse the judgment of the trial
    court and remand for a determination of whether Besam is directly and solely liable for the
    claims asserted by the Plaintiff.
    FACTS
    Mid-South, a distributor of automatic doors, entered into a distributorship agreement
    with Besam, a manufacturer of automatic doors, whereby Mid-South agreed to provide
    Besam with liability insurance for all claims for which Besam was not directly and solely
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    liable. Mid-South’s distributorship agreement with Besam provides in pertinent part as
    follows:
    6.     [Mid-South’s] Sales, Service and Reporting Obligations
    [Mid-South] shall, to the reasonable satisfaction
    of [Besam]:
    G.   Obtain and maintain liability insurance naming
    [Besam] as co-insured in such reasonable
    amounts as may be agreed upon by the parties
    and protecting [Besam] from any workman’s
    compensation or other claim for which [Besam]
    is not directly and solely liable hereunder.
    *          *          *
    11.    General
    G.      The construction and performance of this
    Agreement and the rights and remedies of the
    parties hereto shall be governed by the law of
    the State of New Jersey.
    Mid-South failed to have Besam named as a co-insured on Mid-South’s policy of
    liability insurance for the 1989-1990 year.
    On July 26, 1990, Jordan sustained injuries at a Kroger store when an automatic
    door closed on her.
    LAW
    The sole issue presented for review is as follows:
    Whether the trial court erred in granting Besam’s motion for summary judgment on
    its cross-claim against Mid-South.
    The standards governing our review of a trial court’s action on a motion for summary
    judgment are well settled.     Since our inquiry involves purely a question of law, no
    presumption of correctness attaches to the trial court’s judgment, and our task is confined
    to reviewing the record to determine whether the requirements of Rule 56 of the
    Tennessee Rules of Civil Procedure have been met. Carvell v. Bottoms, 
    900 S.W.2d 23
    ,
    26 (Tenn. 1995); Cowden v. Sovran Bank/Central South, 
    816 S.W.2d 741
    , 744 (Tenn.
    1991); Foley v. St. Thomas Hosp., 
    906 S.W.2d 448
    , 452 (Tenn. Ct. App. 1995); Brenner
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    v. Textron Aerostructures, A Division of Textron, Inc., 
    874 S.W.2d 579
    , 582 (Tenn. Ct. App.
    1993). Tennessee Rule of Civil Procedure 56.03 provides that summary judgment is
    appropriate only where: (1) there is no genuine issue of material fact relevant to the claim
    or defense contained in the motion, and (2) the moving party is entitled to a judgment as
    a matter of law on the undisputed facts. Carvell, 900 S.W.2d at 26; Byrd v. Hall, 
    847 S.W.2d 208
    , 210 (Tenn. 1993); Anderson v. Standard Register Co., 
    857 S.W.2d 555
    , 559
    (Tenn. 1993). The moving party has the burden of proving that the motion satisfies these
    requirements. Downen v. Allstate Ins. Co., 
    811 S.W.2d 523
    , 524 (Tenn. 1991).
    While the summary judgment procedure is not a substitute for trial, it goes to the
    merits of the complaint and should not be taken lightly. Byrd, 847 S.W.2d at 210; Jones
    v. Home Indem. Ins. Co., 
    651 S.W.2d 213
    , 214 (Tenn. 1983); Fowler v. Happy Goodman
    Family, 
    575 S.W.2d 496
    , 498 (Tenn. 1978); Foley, 906 S.W.2d at 452. It has been
    repeatedly stated by the appellate courts of this state that the purpose of a summary
    judgment proceeding is not the finding of facts, the resolution of disputed factual issues or
    the determination of conflicting inferences reasonably to be drawn from the facts. Bellamy
    v. Federal Express Corp., 
    749 S.W.2d 31
    , 33 (Tenn. 1988).           Rather, the purpose of
    summary judgment is to resolve controlling issues of law. Id.
    In evaluating the propriety of a motion for summary judgment, we view the evidence
    in the light most favorable to the nonmoving party and draw all reasonable inferences in
    the nonmoving party’s favor. Byrd, 847 S.W.2d at 210-11. A motion for summary
    judgment should be granted only when both the facts and the conclusions drawn from the
    facts permit a reasonable person to reach but one conclusion. Id.
    Because the parties agreed in the distributorship agreement that New Jersey law
    would apply in the construction and performance of the agreement and in assessing the
    parties’ rights and remedies, we will apply New Jersey law to the facts of this case.
    One who enters into an agreement to obtain insurance and neglects to fulfill his
    4
    obligation becomes himself an insurer and is liable as such.              DiPietro v. City of
    Philadelphia, 
    496 A.2d 407
    , 409 (Pa. Super. Ct. 1985). As a general rule, the insurer is
    obligated to defend an action whenever a complaint alleges a basis of liability within the
    insured’s liability coverage. Burd v. Sussex Mut. Ins. Co., 
    267 A.2d 7
    , 9 (N.J. 1970). One
    purpose of a liability insurance policy is to have the insurer defend suits involving claims
    which the insurer would have to pay if the claimant prevailed in the action. Id. at 10. The
    covenant to defend is thus identified with the covenant to pay. Id.
    The obligation to defend “groundless, false or fraudulent” claims does not mean that
    the insurer is obligated to defend claims which are beyond the insured’s liability coverage.
    Id. The obligation to defend means merely that an insurer cannot refuse to defend a suit
    on the ground that the claim asserted against the insured cannot possibly succeed
    because either in law or fact there is no basis for a plaintiff’s judgment. Id. In sum, an
    insurer’s promise to pay claims within the scope of an insured’s liability insurance policy
    encompasses the obligation to defend those claims. Id.
    If the circumstances are such that the scope of coverage and the correlative duty
    to defend may not be resolved until factual matters surrounding the claim have been
    determined at trial, the obligation to furnish a defense is transformed to one of
    reimbursement to the insured. Cooper Lab. v. Int’l Surplus Lines, 
    802 F.2d 667
    , 675 (3rd
    Cir. 1986); See also Burd, 267 A.2d at 9-10.
    In the present case, the trial court may find Besam to be directly and solely liable
    for Plaintiff’s injuries. Thus, as Mid-South has argued, the possibility exists that Plaintiff’s
    claim might not be covered by the insurance required by the parties’ distributorship
    agreement. Therefore, because Mid-South’s obligation to defend claims which would have
    been covered by the insurance required by the parties’ distributorship agreement does not
    include an obligation to defend claims beyond the reach of insurance coverage required
    by the parties’ agreement, the trial court’s grant of summary judgment in favor of Besam
    on Besam’s cross-claim against Mid-South is premature. Mid-South’s corresponding
    5
    obligation to defend and duty to pay the claims assessed against Besam does not arise
    until after the trial court determines whether Besam is directly and solely liable for the
    claims asserted by the Plaintiff. We, therefore, reverse the trial court’s order granting
    summary judgment in favor of Besam on its cross-claim against Mid-South and remand for
    a determination of whether Besam is directly and solely liable for the claims asserted by
    the Plaintiff.
    The judgment of the trial court is hereby reversed and remanded for a determination
    of whether Besam is directly and solely liable for the claims asserted by the Plaintiff. Costs
    on appeal are taxed to Besam for which execution may issue if necessary.
    HIGHERS, J.
    CONCUR:
    CRAWFORD, P.J., W.S.
    FARMER, J.
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