Elk Run Coal v. Canopius US Insurance , 235 W. Va. 513 ( 2015 )

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2015 Term
FILED
June 9, 2015
released at 3:00 p.m.
No. 14-0723 RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
ELK RUN COAL COMPANY, INC.
D/B/A REPUBLIC ENERGY,
Defendant and Third-Party Plaintiff, Petitioner
V.
CANOPIUS US INSURANCE, INC.
(F/K/A OMEGA US INSURANCE, INC.);
RSUI INDEMNITY COMPANY;
NATIONAL CASUALTY COMPANY; AND
SCOTTSDALE INSURANCE COMPANY,
Third-Party Defendants, Respondents
Appeal from the Circuit Court of Kanawha County
Honorable Charles E. King, Judge
Civil Action No. 11-C-1740
REVERSED, IN PART; AFFIRMED, IN PART; AND REMANDED
Submitted: April 22, 2015
Filed: June 9, 2015
Jonathan L. Anderson Brent K. Kesner
Jackson Kelly PLLC Kesner & Kesner, PLLC
Charleston, West Virginia Charleston, West Virginia
Attorney for the Petitioner Attorney for Respondents
Canopius US Insurance, Inc. and
RSUI Indemnity Company
Charles K. Gould
Jenkins Fenstermaker, PLLC
Huntington, West Virginia
Attorney for Respondents
National Casualty Company and
Scottsdale Insurance Company
JUSTICE DAVIS delivered the Opinion of the Court.
JUSTICE BENJAMIN, deeming himself disqualified, did not participate in the decision
of this case.
SENIOR STATUS JUSTICE MCHUGH sitting by temporary assignment.
SYLLABUS BY THE COURT
1. “Language in an insurance policy should be given its plain, ordinary
meaning.” Syllabus point 8, Cherrington v. Erie Insurance Property & Casualty Co., 231
W. Va. 470, 745 S.E.2d 508 (2013) (internal quotations and citations omitted).
2. “In a policy for commercial general liability insurance . . . when a party
has an ‘insured contract,’ that party stands in the same shoes as the insured for coverage
purposes.” Syllabus point 7, in part, Consolidation Coal Co. v. Boston Old Colony Insurance
Co., 203 W. Va. 385, 508 S.E.2d 102 (1998).
3. “Contracts of indemnity against one’s own negligence do not contravene
public policy and are valid.” Syllabus Point 1, Sellers v. Owens–Illinois Glass Co., 156
W. Va. 87, 191 S.E.2d 166 (1972).
4. “Generally, contracts will not be construed to indemnify one against his
own negligence, unless such intention is expressed in clear and definite language.” Syllabus
point 3, Sellers v. Owens–Illinois Glass Co., 156 W. Va. 87, 191 S.E.2d 166 (1972).
4. “It is well settled law in West Virginia that ambiguous terms in
i
insurance contracts are to be strictly construed against the insurance company and in favor
of the insured.” Syllabus point 4, National Mutual Insurance Co. v. McMahon & Sons, 177
W. Va. 734, 356 S.E.2d 488 (1987), overruled on other grounds by Potesta v. United States
Fidelity & Guarantee Co., 202 W. Va. 308, 504 S.E.2d 135 (1998).
ii
Davis, Justice:
Petitioner, Elk Run Coal Co., Inc., d/b/a Republic Energy (“Elk Run”),
defendant and third-party plaintiff below, appeals four separate orders entered by the Circuit
Court of Kanawha County on May 28, 2014. The orders grant summary judgment in favor
of four different insurance companies and deny Elk Run’s motion for partial summary
judgment against one insurer. Third-party complaints filed by Elk Run against the four
insurers were dismissed with prejudice. Elk Run contends that the circuit court erred in
concluding that none of the insurance policies provided coverage to Elk Run where a contract
between Elk Run and the named insured under the policies, Medford Trucking, LLC
(“Medford”),1 was an insured contract. The four insurance companies filed timely responses
arguing that the circuit court did not err in relying on certain policy provisions to determine
there was no coverage. After a careful review of the briefs submitted by the parties, the
record submitted for appeal, the oral arguments presented to this Court, and the applicable
case law, we determine that the circuit court erred in granting summary judgment to two of
the insurers. We therefore reverse, in part; affirm, in part; and remand this case for
additional proceedings consistent with this opinion.
1
Medford is not a party to this action.
1
I.
FACTUAL AND PROCEDURAL HISTORY
The facts leading to the instant dispute begin with a “Hauling and Delivery
Agreement” (“H & D Agreement”) between Elk Run and Medford whereby Medford would
haul Elk Run’s coal to various destinations designated by Elk Run.
On May 31, 2011, Medford truck driver Timothy Walker (“Mr. Walker”) was
sitting seat-belted in his parked coal truck while the truck was being loaded with coal by Elk
Run employee Eric Scott Redden (“Mr. Redden”). Mr. Redden had directed Mr. Walker
where to park the truck and had begun loading it with coal using a piece of equipment
referred to as an “end-loader” or “front-end loader.” During the course of loading the truck,
Mr. Redden allegedly lost consciousness and struck the truck with the front-end loader
thereby flipping the truck and causing injury to Mr. Walker. Elk Run and Mr. Redden have
stipulated that they “will not argue or assert a comparative negligence defense against
Plaintiff Timothy Walker at the trial of this matter.” Similarly, there has been no allegation
that Medford caused or contributed to the accident in any way.
Following the accident, Mr. Walker commenced a civil action against Elk Run
and others on October 3, 2011.
2
The instant dispute involves the availability of insurance coverage to Elk Run
in relation to the above-described accident. In this regard, the H & D Agreement between
Elk Run and Medford contains a broadly worded “Indemnity; Insurance” clause, which
states:
9.1 Except as otherwise expressly provided herein,
Contractor [Medford] shall indemnify, defend and save harmless
Owner [Elk Run], its members, parent companies, sister
companies, predecessors, successors, affiliates, insurers,
reinsurers, other contractors, successors and assigns, and the
officers, directors, shareholders, employees and agents of each
of the foregoing (collectively “Owner’s Indemnified Persons”)
from and against any and all demands, actions, suits, claims,
rights, losses (including, but not limited to, diminution in value),
controversies, damages, costs, expenses (including, but not
limited to, interest, fines, penalties, costs of preparation and
investigation, and the reasonable fees and expenses of attorneys,
accountants and other professional advisers), and any other
liability of whatsoever kind or nature against Owner’s
Indemnified Persons (collectively, “Losses”), whether on
account of damage or injury (including death) to persons or
property, violation of law or regulation, or otherwise, relating
to, resulting from, arising out of, caused by or sustained in
connection with, directly or indirectly, Contractor’s performance
of the Work[2] or other activities performed pursuant to this
Agreement (including work and activities performed by
subcontractors) or Contractor’s nonperformance or breach of the
terms of this Agreement. . . .
2
The H & D Agreement provided the following description of the term “work”:
“Contractor [Medford] shall, during the term of this Agreement, haul coal from Owner’s [Elk
Run’s] premises to various locations set forth on Exhibit A. All of such services are
sometimes hereinafter collectively referred to as the ‘work.’”
3
(Emphasis and footnote added).3
In addition, pursuant to the “Indemnity; Insurance” clause of the H & D
Agreement, Medford was required to purchase insurance:
9.3 Before commencing Work hereunder, Contractor
[Medford] . . . shall obtain, and throughout the term of this
Agreement maintain, at its sole expense, the following insurance
coverages:
....
(b) Commercial General Liability
Insurance with minimum limits of $2,000,000 for
each occurrence and $2,000,000 general
aggregate, for death, bodily injury and property
damage, including coverage for independent
contractors, products and completed operations,
Blanket Broad Form Contractual, cross-liability,
personal injury liability, Broad Form Property
Damage, and where an exposure exists, coverage
with the explosion, collapse and underground
(XCU) hazard exclusions deleted from the policy.
....
(d) Automobile Liability Insurance,
including owned, non-owned and hired vehicle
coverage with limits of liability of not less than
$2,000,000 combined single limits for death,
bodily injury and property damage claims.
3
The language quoted above from paragraph 9.1 of the “Indemnity; Insurance”
clause appears in the fourth amendment to the H & D Agreement, which amendment was
applicable at the time relevant to this action.
4
....
B. Except as to workers’ compensation
insurance, Owner [Elk Run] shall be named as an
additional insured.
(Emphasis added).
In apparent accordance with the foregoing provisions, Medford purchased a
commercial general liability (“CGL”) policy from Canopius US Insurance, Inc., f/k/a Omega
US Insurance, Inc. (“Canopius”), and a related commercial excess liability policy (“excess
policy”) from RSUI Indemnity Company (“RSUI”). Additionally, Medford purchased a
commercial automobile liability policy, issued by National Casualty Company (“National”),
and a related commercial automobile excess liability policy, issued by Scottsdale Insurance
Company (“Scottsdale”). Each of these policies provided coverage in the amount of
$1,000,000 per occurrence.
On November 1, 2011, Elk Run tendered a written demand for indemnification
to Medford pursuant to the H & D Agreement, and asked Medford to place its insurance
carriers on notice of Elk Run’s demand. Medford’s auto carrier, National, denied coverage
based upon its conclusion that the claim did not result from “the ownership, maintenance or
use of a covered auto as required under the insuring agreement.” Medford’s CGL carrier,
Canopius, agreed to provide a defense to Elk Run subject to a reservation of rights to deny
5
coverage upon further investigation of the relevant facts. Ultimately, Canopius denied
indemnity and any further defense to Elk Run based upon the conclusion that the injury and
damages allegedly suffered by Mr. Walker were “not caused in whole or in part by
Medford’s acts or omissions or those of someone on its behalf, as is required for coverage
under the . . . Blanket Additional Insured Endorsement.”
On October 9, 2012, Mr. Walker filed an amended complaint naming Elk Run
and Mr. Redden as defendants. Thereafter, Elk Run asserted a third-party complaint against
Dr. Yasar J. Aksoy.4 On May 16, 2013, Elk Run filed an amended third-party complaint
adding as defendants Canopius, RSUI, National, and Scottsdale. Elk Run’s complaint
sought, in relevant part, a declaration that there was insurance coverage for Mr. Walker’s
claim against Elk Run under either the CGL policy issued to Medford by Canopius (with
excess coverage by RSUI) or the automobile liability policy issued to Medford by National
(with excess coverage by Scottsdale).
4
Dr. Yasar J. Aksoy (“Dr. Aksoy”) had been Mr. Redden’s physician. Elk Run
alleged that Dr. Aksoy had prescribed Mr. Redden opiate and benziodiazepine medications,
and that Dr. Aksoy negligently provided Elk Run with written certification declaring Mr.
Redden was medically stable to operate a front-end loader and perform other work-related
duties while taking the prescribed opiate and benziodiazepine medications. Elk Run asserted
that the certification provided by Dr. Aksoy deviated from the acceptable standard of care
and caused an unjustifiable risk of harm to third parties. Dr. Aksoy is not a party to this
appeal.
6
Meanwhile, Mr. Walker made a settlement demand on Elk Run. Elk Run
forwarded the demand to Canopius, and Canopius responded that it would not make any offer
in response. Elk Run eventually reached a settlement agreement with Mr. Walker, and his
claims against Elk Run and Mr. Redden were dismissed. None of the insurers contributed
to the settlement; therefore, Elk Run’s third-party declaratory action against the insurers
remained.
In January 2014, Elk Run moved for partial summary judgment against
Canopius. On February 3, 2014, and February 11, 2014, respectively, Canopius and RSUI
each filed a motion for summary judgment against Elk Run. On March 7, 2014, National and
Scottsdale each filed a motion for summary judgment. On April 8, 2014, Elk Run filed a
cross-motion for summary judgment against National.
On May 28, 2014, the circuit court entered four separate orders granting
summary judgment in favor of Canopius, RSUI, National, and Scottsdale, and denying Elk
Run’s motion for partial summary judgment against Canopius.5 Elk Run’s third-party
complaints against Canopius, RSUI, National, and Scottsdale were dismissed with prejudice.
This appeal followed.
5
The circuit court did not expressly deny Elk Run’s motion for summary
judgment against National. However, the circuit court’s grant of summary judgment to
National necessarily amounts to a denial of Elk Run’s summary judgment motion.
7
II.
STANDARD OF REVIEW
We review de novo Elk Run’s appeal of the circuit court’s summary judgment
orders. “A circuit court’s entry of summary judgment is reviewed de novo.” Syl. pt. 1,
Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994). To the extent that the circuit court
also denied summary judgment to Elk Run, we note that “[t]his Court reviews de novo the
denial of a motion for summary judgment, where such a ruling is properly reviewable by this
Court.” Syl. pt. 1, Findley v. State Farm Mut. Auto. Ins. Co., 213 W. Va. 80, 576 S.E.2d 807
(2002). Our de novo review is guided by the principle that “[a] motion for summary
judgment should be granted only when it is clear that there is no genuine issue of fact to be
tried and inquiry concerning the facts is not desirable to clarify the application of the law.”
Syl. pt. 3, Aetna Cas. & Sur. Co. v. Federal Ins. Co. of New York, 148 W. Va. 160, 133
S.E.2d 770 (1963).
We additionally observe that “[t]he interpretation of an insurance contract,
including the question of whether the contract is ambiguous, is a legal determination that,
like a lower court’s grant of summary judgment, shall be reviewed de novo on appeal.” Syl.
pt. 2, Riffe v. Home Finders Assocs., Inc., 205 W. Va. 216, 517 S.E.2d 313 (1999). It is also
pertinent for us to note that the “[d]etermination of the proper coverage of an insurance
contract when the facts are not in dispute is a question of law.” Syl. pt. 1, Tennant v.
8
Smallwood, 211 W. Va. 703, 568 S.E.2d 10 (2002). With due regard for the forgoing
standards, we consider the issues raised by Elk Run.
III.
DISCUSSION
Elk Run seeks coverage under four policies of insurance; however, two of the
policies are for excess coverage. Coverage under the excess policies is, in part, dependent
upon coverage under the primary policies. Therefore, it is necessary to first determine
whether there is coverage under the primary policies. We begin with the CGL policy.
Elk Run asserts four errors by the circuit court in finding that Elk Run was not
entitled to coverage under the Canopius CGL policy. We address them in turn. First, Elk
Run contends that the H & D Agreement between Medford and Elk Run qualifies as an
“insured contract.” Accordingly, Elk Run stands in the shoes of Medford for coverage
purposes.6
6
This Court rejects Canopius’ assertion that Elk Run has waived the issue of
whether it qualifies as an “additional insured” under the Canopius CGL policy. This
assertion is predicated upon the circuit court’s determination in its order granting summary
judgment to Canopius that Elk Run “concedes that it is not an insured under the Blanket
Additional Insured Endorsement.” While Elk Run has not expressly challenged this finding
by the circuit court, its argument that it “stands in the same shoes” as Medford pursuant to
Syllabus point 7 of Consolidation Coal Co. v. Boston Old Colony Insurance Co., 203 W. Va.
385, 508 S.E.2d 102 (1998), is tantamount to asserting that it is an additional insured under
(continued...)
9
The Canopius CGL policy defines an “insured contract” in relevant part as:
9.f. That part of any other contract or agreement pertaining to
your business . . . under which you assume the tort
liability of another party to pay for “bodily injury” or
“property damage” to a third person or organization.
Tort liability means a liability that would be imposed by
law in the absence of any contract or agreement.
“Language in an insurance policy should be given its plain, ordinary meaning.” Syl. pt. 8,
Cherrington v. Erie Ins. Prop. & Cas. Co., 231 W. Va. 470, 745 S.E.2d 508 (2013) (internal
quotations and citations omitted). Applying the plain language above, it is clear that, insofar
as the indemnity agreement between Elk Run and Medford was part of their H & D
Agreement and required Medford to “assume the tort liability of another party to pay for
‘bodily injury’ or ‘property damage’ to a third person or organization,” it is an “insured
contract” under the policy.7 Because the contract between Elk Run and Medford is an
6
(...continued)
the policy. Furthermore, significant evidence in the record demonstrates that Elk Run is an
additional insured. First, Section 9.3 of the H & D Agreement expressly required that
“Owner [Elk Run] shall be named as an additional insured.” Second, a “Certificate of
Liability Insurance” in the record contains a statement that “Certificate Holder is an
Additional Insured on the referenced policies.” The certificate references both the Canopius
CGL policy and the RSUI excess policy, and identifies Elk Run as the certificate holder.
Finally, a claim adjustor/third party administrator for Canopius states, in relevant part, in a
letter dated February 8, 2012, that Canopius “confirms that Elk Run . . . qualifies as an
Additional Insured on the Policy.” Therefore, we interpret Elk Run’s argument to be that it
is an additional insured under the Canopius CGL policy and will develop our analysis
accordingly.
7
With regard to this type of language in an insurance policy, this Court has
clarified that
[t]he phrase “liability assumed by the insured under any
(continued...)
10
insured contract,8 we observe this Court’s prior holding that, “[i]n a policy for commercial
general liability insurance . . . when a party has an ‘insured contract,’ that party stands in the
same shoes as the insured for coverage purposes.” Syl. pt. 7, in part, Consolidation Coal Co.
v. Boston Old Colony Ins. Co., 203 W. Va. 385, 508 S.E.2d 102 (1998). Based upon this
holding, we conclude that Elk Run “stands in the same shoes as [Medford] for coverage
purposes” and is, therefore, an additional insured.
Canopius argues that there is no coverage for Elk Run’s sole negligence
pursuant to the “Blanket Additional Insured Endorsement,” which provides, in relevant part,
that
[t]he insurance provided to these additional insureds is limited
as follows:
1. That person or organization is an additional insured only
with respect to liability for “bodily injury”, “property
damage” or “personal and advertising injury” caused, in
whole or in part, by:
a. Your acts or omissions; or
7
(...continued)
contract” in an insurance policy, or words to that effect, refers
to liability incurred when an insured promises to indemnify or
hold harmless another party, and thereby agrees to assume that
other party’s tort liability.
Syl. pt. 5, Marlin v. Wetzel Cnty. Bd. of Educ., 212 W. Va. 215, 569 S.E.2d 462 (2002).
8
The CGL policy contains an exclusion of contractual liability, but expressly
states that the exclusion does not apply to an “insured contract.”
11
b. The acts or omissions of those
acting on your behalf.
(Emphasis added). To the extent that “your” refers to Medford as the named insured,
subsection (a) does not apply insofar as the underlying liability does not result from any act
or omission by Medford. However, the circuit court also concluded that subsection (b) does
not apply based upon its conclusion that Elk Run was not “acting on [Medford’s] behalf” in
loading coal onto Medford’s truck. We disagree.
A case similar to the instant matter is Norfolk Southern Railway Co. v. National
Union Fire Insurance of Pittsburgh, PA, 999 F. Supp. 2d 906 (S.D.W. Va. 2014). The facts
of Norfolk Southern are that employees of Norfolk Southern Railway Company (“Norfolk
Southern”) and Cobra Natural Resources, LLC (“Cobra”) were “positioning a train under a
coal loading facility.” Id. at 909. During this process, a rail broke causing several cars to
derail. One car struck the coal loading facility causing it to collapse. Several lawsuits were
subsequently filed against Norfolk Southern. Cobra did not cause the derailment. An
agreement between Norfolk Southern and Cobra required Cobra to maintain insurance under
which Norfolk Southern was an additional insured. The policy obtained by Cobra provided
coverage for additional insureds “only with respect to liability arising out of ‘Your Work’,
‘Your Product’ and to property owned or used by you.” Id. at 912 (internal quotations
12
omitted).9 The district court observed that “[t]he policy defines ‘Your Work,’ in relevant
part, as ‘(1) work or operations performed by you or on your behalf; and (2) materials, parts
or equipment furnished in connection with such work or operations.’” Id. (emphasis added).
The court concluded that the policy provided coverage for Norfolk Southern, the additional
insured, because the derailment “arose out of” Cobra’s “work” as defined in the policy. Id.
at 914. See also Twin City Fire Ins. Co. v. Ohio Cas. Ins. Co., 480 F.3d 1254, 1264 (11th
Cir. 2007) (finding coverage for indemnity obligation triggered by accident arising out of
indemnitor’s work because the work placed indemnitor’s employees in the path of accident
caused by indemnitee’s negligence); Perkins v. Rubicon, Inc., 563 So. 2d 258, 259 (La. 1990)
(finding indemnity provision requiring injury “arising out of” indemnitor’s performance of
work required “connexity similar to that required for determining cause-in-fact,” and
concluding that injury triggered indemnification because injured employee would not have
been present to be injured “but for performance of the work under the contract”).
Similarly, we find coverage for Elk Run under the Canopius policy provision
qualifying Elk Run as “an additional insured only with respect to liability . . . caused, in
whole or in part, by: . . . [the] acts or omissions of those acting on your [Medford’s] behalf.”
The underlying injury in this case occurred while an Elk Run employee was loading coal onto
9
The Norfolk Southern court observed that “Cobra is the named insured on the
Westchester policy, so ‘you’ refers to Cobra.” Norfolk S. Ry. Co. v. National Union Fire Ins.
of Pittsburgh, PA, 999 F. Supp. 2d 906, 912 (S.D.W. Va. 2014).
13
a Medford truck. In loading the coal onto the Medford truck, Elk Run was acting on
Medford’s behalf. First, the H & D Agreement originally acknowledged that Elk Run “shall
supply a loader with operator to assist Contractor [Medford] in the performance of the
Work.” The circuit court rejected this clause as evidence that Elk Run’s activities were on
behalf of Medford because this provision was omitted by an amendment to the H & D
Agreement that became effective prior to the incident underlying this claim. To the contrary,
however, we find the fact that Elk Run was no longer contractually obligated to supply a
loader with operator to assist Medford does not diminish the fact that Elk Run, nevertheless,
continued to provide this assistance and, in doing so, was acting on Medford’s behalf.
Elk Run next contends that the circuit court erred by finding that the public
policy of the State of West Virginia does not permit one to obtain indemnification for one’s
own conduct. The circuit court relied on W. Va. Code § 55-8-14 (1975) (Repl Vol. 2008)
as a general source for this asserted public policy. The circuit court’s reliance on W. Va.
Code § 55-8-14 is misplaced. That statute expressly applies only to certain types of contracts
not at issue in this case; therefore it does not provide a basis for a public policy against all
contracts indemnifying one for his or her own conduct. Assuming, arguendo, that W. Va.
Code § 55-8-14 did apply, it does not prohibit indemnity contracts for the sole negligence of
the indemnitee where the contract includes an agreement to purchase insurance:
W. Va. Code § 55–8–14 requires courts to void a broad
indemnity agreement only: (1) if the indemnitee is found by the
14
trier-of-fact to be solely (100 percent) negligent in causing the
accident; and (2) it cannot be inferred from the contract that
there was a proper agreement to purchase insurance for the
benefit of all concerned.
Syl. pt. 2, Dalton v. Childress Serv. Corp., 189 W. Va. 428, 432 S.E.2d 98 (1993) (emphasis
added); see also Id., at 431, 432 S.E.2d at 101 (“[A] just public policy demands that
indemnity agreements be permitted unless they go beyond a mere allocation of potential joint
and several liability and indemnify against the sole negligence of the indemnitee without an
appropriate insurance fund, bought pursuant to the contract, for the express purpose of
protecting all concerned. A contract that provides in substance that A shall purchase
insurance to protect B against actions arising from B’s sole negligence does not violate the
statute as public policy encourages both the allocation of risks and the purchase of
insurance.” (emphasis added)). The H & D Agreement between Elk Run and Medford
clearly included an agreement to purchase insurance for the benefit of all concerned;
therefore, even under Dalton, the agreement is not void and unenforceable. Finally, the
circuit court’s conclusion is contrary to this Court’s precedent. Indeed, this Court has
expressly declared that “[c]ontracts of indemnity against one’s own negligence do not
contravene public policy and are valid.” Syl. pt. 1, Sellers v. Owens–Illinois Glass Co., 156
W. Va. 87, 191 S.E.2d 166 (1972). Accord Syl. pt. 3, Riggle v. Allied Chem. Corp., 180 W.
Va. 561, 378 S.E.2d 282 (1989); Syl. pt. 4, State ex rel. Vapor Corp. v. Narick, 173 W. Va.
770, 320 S.E.2d 345 (1984). Consequently, we find the circuit court erred in concluding that
the H & D Agreement violated the public policy of this State.
15
Elk Run next asserts that the circuit court erred in finding the language of the
H & D Agreement was not sufficiently clear to express that Medford had agreed to indemnify
Elk Run for accidents arising from Elk Run’s sole negligence. This Court, in Sellers v.
Owens–Illinois Glass Co., 156 W. Va. 87, 191 S.E.2d 166, held that, “[g]enerally, contracts
will not be construed to indemnify one against his own negligence, unless such intention is
expressed in clear and definite language.” Syl. pt. 3, id. The indemnifying clause at issue
in Sellers provided that “‘Subcontractor shall indemnify Contractor against all claims for
damages arising from accidents to persons or property occasioned by the Subcontractor, his
agents or employees.’” Id. 94, 191 S.E.2d at 170. The Court found “[t]he language of the
indemnity agreement is not sufficiently clear and definite to require [subcontractor] to
indemnify the [contractor], for its sole negligence.” Id. Unlike the agreement in Sellers, the
instant agreement was not limited to damages “occasioned by” the indemnitor. Rather, the
H & D Agreement required Medford to obtain insurance to broadly indemnify Elk Run for
losses “relating to, resulting from, arising out of, caused by or sustained in connection with,
directly or indirectly, [Medford’s] performance of the Work.”10 The indemnity clause in the
Elk Run/Medford agreement is more broad than a clause found to be sufficiently clear in the
10
Terms such as “relating to” and “in connection with” have been afforded
exceptionally broad meaning by this Court. See, e.g., Caperton v. A.T. Massey Coal Co., 225
W. Va. 128, 147, 690 S.E.2d 322, 341 (2009) (concluding that the phrase “in connection
with” means that one thing must “bear a logical relationship” to another); Contractors Ass’n
of W. Virginia v. West Virginia Dep’t of Pub. Safety, Div. of Pub. Safety, 189 W. Va. 685,
697, 434 S.E.2d 357, 369 (1993) (“The ordinary meaning of ‘relating to’ is that there is a
connection between two subjects, not that the subjects have to be the same.”).
16
case of Eastern Gas & Fuel Associates v. Midwest-Raleigh, Inc., 374 F.2d 451 (4th Cir.
1967), which is discussed in Sellers. The Eastern Gas court considered an indemnity
agreement requiring the indemnitor to “‘protect and indemnify Eastern against loss or
damage to property and injury and death to persons resulting from, arising out of or incident
to the performance of this contract.’” Id., 374 F.2d at 452. Also pursuant to the agreement,
“Midwest would maintain bodily injury and property damage liability insurance to cover any
liability arising from the performance of the contract.” Id. Following an explosion that
killed two workers, a judgment was obtained against Eastern for the damages. Eastern then
sought indemnification in accordance with its agreement with Midwest. The court held that
the “the contract is ‘clear and definite’ in its indemnity of Eastern against all liability arising
from performance of the contract, despite its own negligence.” Id., 374 F.2d at 454.
Likewise, we find the broad language used in the H & D Agreement, which includes losses
relating to or in connection with Medford’s work, either directly or indirectly, is sufficiently
clear and definite to express that Medford agreed to indemnify Elk Run for Elk Run’s sole
negligence so long as that negligence bore some relation, either directly or indirectly, to
Medford’s work. The circuit court erred in finding otherwise.
Elk Run’s final argument related to the CGL policy is that the circuit court
erred in finding the auto exclusion in the Canopius policy applicable. The Canopius policy
contains an exclusion for “‘[b]odily injury’ or ‘property damage’ arising out of the
17
ownership, maintenance, use or entrustment to others of any . . . ‘auto’ . . . owned or operated
by . . . any insured.” The Medford truck in which Mr. Walker was sitting at the time of his
injury qualifies as an “auto” under the Canopius policy.11 The question, then, is whether the
loss was caused by the “use” of the auto. Pursuant to the policy, “[u]se includes operation
and ‘loading or unloading.’”12 Significantly, however, the definition of the term “loading or
11
The policy defines “Auto” as
a. A land motor vehicle, trailer or semitrailer designed for
travel on public roads, including any attached machinery
or equipment; or
b. Any other land vehicle that is subject to a compulsory or
financial responsibility law or other motor vehicle
insurance law in the state where it is licensed or
principally garaged.
However, “auto” does not include “mobile equipment.”
12
The policy provides the following definition of “loading and unloading”:
11. “Loading or unloading” means the handling of property:
a. After it is moved from the place where it is
accepted for movement into or onto an . . . “auto”;
b. While it is in or on an . . . “auto”; or
c. While it is being moved from an . . . “auto” to the
place where it is finally delivered;
but “loading or unloading” does not include the
movement of property by means of a mechanical device,
other than a hand truck, that is not attached to the
. . . “auto”.
18
unloading” contained in the policy clarifies that the term “does not include the movement of
property by means of a mechanical device, other than a hand truck, that is not attached to
the . . . ‘auto.’” (Emphasis added). Given this definition of “loading or unloading,” we must
determine whether the front-end loader used to load coal onto the Medford truck is a
“mechanical device.”
The Canopius policy fails to define the term “mechanical device.” As Elk Run
notes, courts have concluded that a “front-end loader” is a “mechanical device.” See Palp,
Inc. v. Williamsburg Nat’l Ins. Co., 200 Cal. App. 4th 282, 292, 132 Cal. Rptr. 3d 592, 600
(2011) (referring to a front-end loader as a mechanical device); Cobb Cnty. v. Hunt, 166 Ga.
App. 409, 410, 304 S.E.2d 403, 405 (1983) (referring to a front-end loader as a mechanical
device); Lafata v. Village of Lisle, 185 Ill. App. 3d 203, 207, 541 N.E.2d 210, 213 (1989)
(finding that front-end loader was a mechanical contrivance or device), aff’d, 137 Ill. 2d 347,
561 N.E.2d 38 (1990). “It is well settled law in West Virginia that ambiguous terms in
insurance contracts are to be strictly construed against the insurance company and in favor
of the insured.” Syl. pt. 4, National Mut. Ins. Co. v. McMahon & Sons, 177 W. Va. 734, 356
S.E.2d 488 (1987), overruled on other grounds by Potesta v. United States Fid. & Guar. Co.,
202 W. Va. 308, 504 S.E.2d 135 (1998). Thus, given the authorities for concluding that a
“front-end loader” is a “mechanical device,” we will treat it as such for purposes of the
Canopius policy.
19
Because “‘loading or unloading’ does not include the movement of property
by means of a mechanical device other than a hand truck,” and because the coal was being
loaded onto Medford’s truck using a mechanical device, the loading of the coal was not a
“use” of an automobile as excluded by the policy. Accordingly, the circuit court erred in
applying the auto exclusion of the Canopius policy as a grounds for finding coverage was not
available to Elk Run.13
Based upon our reasoning above, we conclude that the circuit court erred in
granting summary judgment to Canopius based upon the circuit court’s erroneous finding that
Elk Run was not entitled to coverage under the Canopius policy. We therefore reverse the
circuit court’s grant of summary judgment to Canopius. Because we additionally have found
coverage for Elk Run under the terms of the Canopius policy, we likewise reverse the circuit
court’s denial of Elk Run’s motion for partial summary judgment. We remand this case for
proceedings consistent with this opinion, including the entry of an order granting partial
13
Elk run additionally argues, in the alternative, that if this Court finds the CGL
policy does not provide coverage due to the auto exclusion, then the commercial automobile
policy issued by National Casualty must provide coverage insofar as the CGL and
commercial automobile policies are designed to provide seamless, non-overlapping coverage.
Because we find the circuit court erred by finding no coverage under the Canopius CGL
policy, we affirm, without discussion, the circuit court’s grant of summary judgment to the
commercial automobile insurer, National. In addition, because the excess policy issued by
Scottsdale follows the terms, conditions, exclusions, definitions, and endorsements of the
commercial automobile policy issued by National, we likewise affirm the circuit court’s grant
of summary judgment to Scottsdale.
20
summary judgment to Elk Run on the issue of coverage under the Canopius policy.
We next consider the excess policy issued by RSUI that is related to the
Canopius policy. The circuit court gave two grounds for granting summary judgment to
RSUI. First, the circuit court found that the RSUI excess policy does not apply to any
occurrence for which the underlying insurance does not apply. Because we find coverage
under the Canopius policy, this portion of the circuit court’s ruling is erroneous. In addition,
the circuit court found that the RSUI policy contains an exclusion that precludes coverage
for Mr. Walker’s claim against Elk Run independent of the Canopius policy. This
“Employers Liability Exclusion Endorsement” provides, in relevant part, that the RSUI
policy “does not apply to bodily injury . . . to: . . . [a]n employee of the insured arising out
of and in the course of employment by the insured.” The provision goes on to provide that
“[t]his exclusion applies: . . . [w]hether the insured may be liable as an employer or in any
other capacity; and [t]o any obligation to share damages with or repay someone else who
must pay damages because of the injury.” We conclude that this exclusion does not preclude
coverage for Elk Run in the instant matter.
RSUI concedes that its policy is a following form policy. RSUI explains that
such a policy incorporates the same terms as the Canopius Policy, unless the RSUI policy
21
specifies otherwise.14 Notably, the RSUI policy contains no provisions addressing insured
contracts. Therefore, the insured contract provisions of the Canopius policy apply. We
determined above, in relation to the Canopius policy, that because this action involves an
insured contract, Elk Run steps into the shoes of Medford for coverage purposes. See Syl.
pt. 7, Consolidation Coal Co. v. Boston Old Colony Ins. Co., 203 W. Va. 385, 508 S.E.2d
102 (“In a policy for commercial general liability insurance . . . when a party has an ‘insured
contract,’ that party stands in the same shoes as the insured for coverage purposes.”). Thus,
Elk Run is an additional insured under the RSUI policy, just as it is under the Canopius
policy. Looking at the plain language of the RSUI exception from the perspective of Elk Run
as an insured thereunder, it becomes apparent that the exclusion does not apply. Elk Run is
neither seeking coverage for an injury to its own employee, nor seeking to repay someone
else who must pay damages because of the injury. Accordingly, the circuit court erred in
granting summary judgment to RSUI and we reverse the same.
14
In this regard, the policy, itself, expressly provides that “[t]his insurance is
subject to the same terms, conditions, agreements, exclusions and definitions as the
‘Underlying Insurance.’” The policy then sets out two exceptions to this statement; one for
claims settled without RSUI’s consent, and the other for provisions that are contrary to
provisions contained in the RSUI policy.
22
IV.
CONCLUSION
For the reasons stated in the body of this memorandum decision, we reverse
the May 28, 2014, order of the circuit court of Kanawha County granting summary judgment
to Canopius and denying Elk Run’s motion for partial summary judgment. Likewise, the
circuit court’s order of May 28, 2014, granting summary judgement to RSUI is reversed. We
remand this case with instructions to the circuit court to enter an order granting partial
summary judgment to Elk Run on the issue of coverage under the Canopius policy, and for
further proceedings consistent with this memorandum decision. The two orders granting
summary judgment to National and Scottsdale, also entered on May 28, 2014, are affirmed.15
Reversed, in part; Affirmed, in part; and Remanded.
15
See supra note 13.
23