Erie Ins. Exch. v. Columbia Nat'l Ins. Co.

ERIE INSURANCE EXCHANGE v. COLUMBIA NATIONAL INSURANCE COMPANY ET AL.

No. M2012-00331-COA-R3-CV

COURT OF APPEALS OF TENNESSEE AT NASHVILLE

October 24, 2012 Session

Filed: January 30, 2013

Appeal from the Chancery Court for Wilson County

No. 08323 Charles K. Smith, Chancellor

This is a declaratory judgment action wherein one insurance company, which provided general liability insurance coverage to the insured, asserts that another insurance company, which provided the same insured with automobile insurance coverage, had the primary duty to pay the cost of defending and to indemnify the insured in a third-party tort action filed pursuant to Tennessee Code Annotated § 50-6-112. The plaintiff insurer asserts that the defendant insurer had the primary duty to provide and pay the cost of the defense in that action and to indemnify the insured pursuant to its automobile insurance policy because an additional insured was operating a "boom truck" owned by the insured that was listed under the defendant's auto policy when the injury to the third-party plaintiff occurred. Both insurers filed motions for summary judgment. The trial court denied the plaintiff's motion and granted summary judgment to the defendant insurer holding that the plaintiff, not the defendant, is liable for providing and paying the cost of the defense and for indemnifying the insured in the third-party tort action. We affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

FRANK G. CLEMENT, JR., J., delivered the opinion of the Court, in which PATRICIA J. COTTRELL, P.J., M.S., and RICHARD H. DINKINS, J., joined.

Gordon C. Aulgur, Nashville, Tennessee, for the appellant, Erie Insurance Exchange.

Joseph M. Huffaker, Nashville, Tennessee, for the appellee, Columbia National Insurance Company.

OPINION

This appeal arises from an on-the-job injury to the employee of a subcontractor at a construction site on October 31, 2005. On that date, Timothy Brewington, while working in the course and scope of his employment for a subcontractor, was severely injured when the metal crane on a boom truck that was hoisting sheet metal came into contact with overhead electrical wires electrocuting Mr. Brewington.

Nashville Building Systems, Inc. ("NBS") was the general contractor on the project, which was the construction of a pre-fabricated building in Hendersonville, Tennessee. NBS engaged Mike Miles as the subcontractor responsible for installing the sheet metal portion of the building. Miles in turn employed Richard White to supervise Miles's work. Miles also employed Brewington.

The "boom truck," a 1995 Ford flat-bed truck outfitted with a permanently attached Manitex crane, was owned by NBS, and NBS gave Miles permission to use the boom truck as needed on the project. Immediately prior to the accident, Miles instructed White to use the crane on the boom truck to lift bundles of sheet metal and Brewington was directed to assist White. While White was operating the crane, the crane came into contact with electrical wires causing Brewington to be electrocuted because he was on or in contact with the truck at the time.

Brewington was acting in the course and scope of his employment for Miles when he was injured and Brewington recovered workers' compensation benefits from Miles's workers' compensation carrier, Liberty Mutual Insurance. Thereafter, Brewington filed a third-party personal injury action against White ("Brewington v. White") pursuant to Tennessee Code Annotated § 50-6-112(a) of the Workers' Compensation Act alleging that White's negligence caused Brewington's injuries.

Erie Insurance Exchange ("Erie") provided the defense for White pursuant to a Five Star Contractors Policy, which was a general liability policy.

On July 25, 2008, Erie filed a Complaint for Declaratory Judgment against Columbia National Insurance Company ("Columbia").¹ In the Complaint, Erie sought a declaration that Columbia provided commercial automobile insurance for NBS, that the boom truck wasidentified in the policy as an insured vehicle, and, therefore, that Columbia had the primary duty to defend and indemnify White under the auto policy because White was an additional insured. Columbia answered denying that it had the primary duty to defend and to indemnify White, asserting instead that Erie had the primary duty.

Erie and Columbia filed cross-motions for summary judgment. Erie asserted that there were no genuine issues of material fact and it was entitled to summary judgment because Columbia's policy was illusory and Columbia should be estopped from denying coverage to White because it listed the boom truck as a vehicle covered by the auto policy. In its motion, Columbia agreed that no material facts are in dispute and asserted that it was entitled to summary judgment as a matter of law because the workers' compensation exclusion in its policy barred coverage for liability arising under any workers' compensation law, the Employee Indemnification and Employer's Liability Exclusion barred coverage for bodily injury sustained by employees of the insured, and its policy excluded coverage for automobiles while they were being used as mobile equipment.

Following a hearing on November 8, 2011, the trial court announced its ruling from the bench. The court denied Erie's motion for summary judgment² and granted Columbia summary judgment on one ground. The court concluded that Brewington's claim against White was barred by the Workers' Compensation Act because Brewington's claim was that of a statutory employee against the statutory employer, NBS, which was insured by Columbia. The court found that there was a genuine issue of material fact as to whether the boom truck was covered as automobile or mobile equipment under the policy. The court further found that White was an additional insured under the Columbia policy. Thus, it denied Columbia's motion for summary judgment on its additional two grounds. The order was entered on February 3, 2011, denying Erie's motion for summary judgment and grantingColumbia's motion. The court did not set forth any findings of fact or conclusions of law in the order, but attached its November 8, 2011 ruling from the bench and incorporated that ruling into its order. Both Erie and Columbia raise issues on appeal.

ANALYSIS

On appeal, Erie contends that the trial court erred as a matter of law when it held that the Workers' Compensation Statute provided an exclusive remedy at law and that since NBS was the statutory employer, Erie was prevented from seeking coverage under Columbia's policy. Columbia contends that the trial court erred in denying its motion for summary judgment on the applicability of the mobile equipment exclusion and the applicability of the Employee Indemnification and Employer's Liability exclusion.

I. WORKERS' COMPENSATION STATUTE AND EXCLUSION

Mr. Brewington was injured on the job while employed by subcontractor Miles; thus, his rights of recourse are limited to those afforded under the Workers' Compensation Act of Tennessee. The comprehensive Workers' Compensation Act of Tennessee extinguished claims for on-the-job injuries that Tennessee employees had under the common law and replaced those claims with exclusive statutory remedies. Tenn. Code Ann. § 50-6-108(a); King v. Ross Coal Co., 684 S.W.2d 617, 619-20 (Tenn. Ct. App. 1984). However, Tennessee Code Annotated § 50-6-112 affords Mr. Brewington, inter alia, the right to sue third-party tortfeasors under limited circumstances. Without this expressed statutory remedy, an action against a third-party tortfeasor, like Mr. White, would not be permissible. Thus, Mr. Brewington's entitlement, if any, to maintain a tort action against Mr. White, and Mr. White's liability, if any, are exclusive products of the workers' compensation statutory scheme. See Tenn. Code Ann. § 50-6-112; see also Queen Ins. Co. Am. v. Insurance Co. of North America, 455 S.W.2d 149, 152 (Tenn. 1970) (explaining the applicability of a similar workers' compensation exclusion where the Tennessee workers' compensation law was the only source of liability).

The same statutory scheme that affords an injured employee the right to pursue an action against a third-party tortfeasor affords the employer a right of subrogation against the employee's recovery from the third-party tortfeasor. and the employer, or its workers' compensation insurer, may recoup the workers' compensation benefits paid to the employee. Tenn. Code Ann. § 50-6-112(c)(1) (2010).

Erie contends that the trial court erred as a matter of law when it held the workers' compensation statute provided an exclusive remedy at law and that since NBS was the statutory employer of Brewington, Erie was prevented from seeking coverage underColumbia's policy. Conversely, Columbia insists its insured, NBS, is the statutory employer of Brewington, thus, Brewington is a statutory employee of NBS, which is fatal to Erie's claim.

Realizing the number of layers of contractors and subcontractors separating the general contractor, NBS, from Mr. White and Mr. Brewington, it is difficult to see the employment chain without a listing.³ Thus, we provide such listing below.⁴

Nashville Building Systems

• NBS is the General Contractor hired by Owner to Construct Building

• NBS is insured by Columbia under three policies, including the Auto Policy

• NBS owned the boom-truck loaned/leased to Miles

Mike Miles

• Miles is a Subcontractor to NBS

• M iles is the direct employer of Mr. Brewington

• M iles leased or borrowed the boom truck from NBS

• Miles is an additional insured under the NBS/Columbia Auto Policy

• M iles employed White to do part of Miles's work on NBS project

Richard White d/b/a Outright Construction Co.

• White was employed by Miles to work on the NBS project

• White operated the boom truck at Miles's direction• White is an additional insured under NBS/Columbia Auto Policy

• White was operating boom truck when Brewington was injured

• Brewington sues White as

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