Colony Ins. Co. v. Progressive Cas. Ins. Co.

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COLONY INSURANCE COMPANY, Plaintiff, v. PROGRESSIVE CASUALTY INSURANCE COMPANY, Defendant.

Civil Action No. 8:21-cv-00987-PX

United States District Court, D. Maryland

March 29, 2023

MEMORANDUM OPINION

Paula Xinis, United States District Judge.

Plaintiff Colony Insurance Company (“Colony”) filed suit against Defendant Progressive Casualty Insurance Company (“Progressive”), seeking reimbursement from Progressive for a settlement payment it made for a personal injury claim. ECF No. 1. Presently pending before the Court are the parties' cross motions for summary judgment. The motions are fully briefed and no hearing is necessary. D. Md Local R. 105.6. For the reasons set forth below, Colony's motion is GRANTED in pertinent part and Progressive's motion is DENIED.

I. Background

On May 23, 2019, a Lawson Concrete truck was involved in an accident in Bethesda, Maryland. ECF No. 1. at ¶ 7; ECF No. 23-3 at 4. The truck had been pumping concrete through its permanently attached “auger/chute mechanism” into a sub-pump operated by A&D Construction. ECF No. 1. at ¶ 8; ECF No. 23-3 at 5-6. After the truck finished pumping, Terrance White, a Lawson Concrete employee, used the truck's control board to lift the auger into a locked position for transport. ECF No. 23-5 at 2. As the auger rose to its upright position, it suddenly disengaged and fell striking A&D employee Jose Rodriguez in the head, shoulder, and right hand. ECF No. 1 at ¶ 8; ECF No. 23-9 at 2.

Mr. Rodriguez filed a claim for compensation for his injuries against Lawson Concrete. ECF No. 23-8; ECF No. 23-9. Lawson Concrete insured the truck with Progressive under a Commercial Auto Policy (the “Progressive Policy”) and with Colony under its Commercial General Liability Policy (the “Colony Policy”). ECF No. 1 at ¶ 1. Progressive denied coverage for the claim under the policy's Operations Exclusion which excludes from coverage bodily injury “arising out of the operation of . . . machinery or equipment that is on, attached to, or part of, a land vehicle that would qualify under the definition of mobile equipment if it were not subject to a compulsory or financial responsibility law where it is licensed or principally garaged.” ECF No. 23-7 at 2 (emphasis in original); ECF No. 1 at ¶¶ 9-10. Because Mr. Rodriguez had been injured by the auger attached to the concrete truck, Progressive took the position that the vehicle itself fit the definition of “mobile equipment” that triggered the enumerated exclusion. ECF No. 23-7 at 2.

Since Progressive denied coverage, Lawson Concrete next tendered Mr. Rodriguez's claim to Colony and made a settlement demand. ECF No. 1 at ¶¶ 11, 14; ECF No. 23-9. In turn, Colony and Lawson Concrete tendered the demand to Progressive, ECF No. 1. at ¶ 15; ECF No. 23-10, and again Progressive denied coverage, citing to the policy's Operations Exclusion. ECF No. 1 at ¶ 15; ECF No. 23-11. Colony and Mr. Rodriguez settled the claim for $195,000 in exchange for Mr. Rodriguez's release of any remaining claims to Colony. ECF No. 1 at ¶ 17. Lawson Concrete also assigned Colony its rights related to Mr. Rodriguez's claim and settlement under the Progressive Policy. Id. at ¶ 18; ECF No. 23-15.

On April 21, 2021, Colony filed this subrogation and contribution action. In Count I, Colony alleges that under the plain language of the Progressive Policy, the claim is covered, and more to the point, the claim does not fall under the Operations Exclusion. Thus, the insured-now Colony as the subrogee-is entitled to full coverage of the claim. ECF No. 1 at ¶¶ 34-46. Count II avers that if coverage is proper, and if the claim is covered under both the Colony and Progressive policies as primary and co-primary insurers, then at a minimum, Colony is entitled to contribution from Progressive toward the claim. Id. at ¶¶ 47-48.

The parties now cross move for summary judgment. Colony maintains that summary judgment should be granted in favor of coverage because the asserted Operations Exclusion does not apply. ECF No. 23-1 at 17-21. Progressive, on the other hand, contends that summary judgment in its favor must lie because the incident falls under the Operations Exclusion. ECF No. 24-1 at 4-11. Because the resolution of both motions turns on the interpretation of the Operations Exclusion as applied to undisputed facts, the Court considers both motions in tandem.

II. Standard of Review

Summary judgment is appropriate when the Court, viewing the evidence in the light most favorable to the non-moving party, finds no genuine disputed issue of material fact, entitling the movant to judgment as a matter of law. See Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008). “A party opposing a properly supported motion for summary judgment ‘may not rest upon the mere allegations or denials of [his] pleadings,' but rather must ‘set forth specific facts showing that there is a genuine issue for trial.'” Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003) (quoting former Fed.R.Civ.P. 56(e)). “A mere scintilla of proof . . . will not suffice to prevent summary judgment.” Peters v. Jenney, 327 F.3d 307, 314 (4th Cir. 2003). Importantly, “a court should not grant summary judgment ‘unless the entire record shows a right to judgment with such clarity as to leave no room for controversy and establishes affirmatively that the adverse party cannot prevail under any circumstances.'” Campbell v. Hewitt, Coleman & Assocs., Inc., 21 F.3d 52, 55 (4th Cir. 1994) (quoting Phoenix Sav. & Loan, Inc. v. Aetna Casualty & Sur. Co., 381 F.2d 245, 249 (4th Cir. 1967)). Where the party bearing the burden of proving a claim or defense “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial,” summary judgment against that party is likewise warranted. Celotex, 477 U.S. at 322.

“Where, as here, cross motions for summary judgment are filed, a court must ‘evaluate each party's motion on its own merits, taking care [in each instance] to draw all reasonable inferences against the party whose motion is under consideration.'” Snyder ex rel. Snyder v. Montgomery Cty. Pub. Sch., No. DKC-08-1757, 2009 WL 3246579, at *5 (D. Md. Sept. 29, 2009) (quoting Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987)). The Court must deny both motions if it finds a genuine issue of material fact precludes resolution, “[b]ut if there is no genuine dispute and one or the other party is entitled to prevail as a matter of law, the court will render judgment.” 10A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 2720 (4th ed. 2020).

III. Analysis

To resolve the cross motions on the question of coverage, the Court must first interpret the Progressive Policy terms and exclusions. Under Maryland law, “the interpretation of an insurance policy is governed by the same principles generally applicable to the construction of other contracts.” Mitchell v. AARP, 140 Md.App. 101, 116 (2001); Megonnell v. United Servs. Automobile Assn, 368 Md. 633, 655 (2002) (explaining that “ordinary principles of contract interpretation apply.”). Accordingly, the Court must “apply the terms of the contract itself' to ascertain “the scope and limitations of the insurance coverage.” Cole v. State Farm Mut. Ins. Co., 359 Md. 298, 305 (2000). Unless otherwise stated in the policy, the Court gives policy terms the plain, ordinary, and accepted meanings “as defined by what a reasonably prudent lay person would understand them to mean.” Universal Underwriters Ins. Co. v. Lowe, 135 Md.App. 122, 137 (2000) (quoting Kendall v. Nationwide Ins. Co., 348 Md. 157, 166 (1997)).

The Court must also read each policy as a whole, interpreting terms in such a way as to avoid rendering any provisions superfluous. Nautilus Ins. Co. v. 200 W. Cherry St., LLC, 383 F.Supp.3d 494, 510 (D. Md. 2019). When construing provisions that exclude coverage, the Court must “take special care to interpret [such] provisions narrowly,” Cornerstone Title & Escrow, Inc. v. Evanston Ins. Co., 555 Fed.Appx. 230, 235 (4th Cir. 2014), and “in favor of a finding of coverage.” Megonnell, 368 Md. at 656 (quoting Eric Mills Holmes & Mark S. Rhodes, Holmes's Appleman on Insurance, 2d276-81 (Eric Mills Holmes ed., vol. 2 § 7.2 1996)). The insurer has the burden of establishing that an exclusion applies. Cornerstone Title & Escrow, Inc., 555 Fed.Appx. at 235.

A. Whether the Claim is Excluded Under the Progressive Policy

Both Colony and Progressive agree that liability coverage for Mr. Rodriguez's accident is triggered under Progressive's policy. ECF No. 24-1 at 4; ECF No. 23-1 at 21-23. The policy states Progressive will pay damages “for bodily injury, property damage, and covered pollution cost or expense, for which an insured becomes legally responsible because of an accident arising out of the ownership, maintenance or use of that insured auto.” ECF No. 23-16 at 13 (emphasis in original). An “[i]nsured auto” is “[a]ny auto specifically described on the declarations page,” id. at 9 (emphasis in original), and here, the Lawson Concrete truck is listed on the policy's declarations page as “2007 Strg LT9” with VIN number 2FZHAZCV87AW82476, id. at 3; ECF No. 1 at ¶ 22.

Progressive argues, however, the claim is excluded from coverage under the policy's Operations Exclusion. The exclusion states that coverage does not apply to “[b]odily injury arising out of the operation of . . . machinery or equipment that is on, attached to, or part of, a land vehicle that would qualify under the definition of mobile equipment ....” ECF No. 23-16 at 18 (...