Farm Bureau Prop. & Cas. Ins. Co. v. Szantho

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FARM BUREAU PROPERTY & CASUALTY INSURANCE COMPANY, Plaintiff, v. ANDRAS SZANTHO, as Personal Representative of the Wrongful Death Estate of Johnny Newnum, Defendant.

Civ. No. 22-501 KK/JFR

United States District Court, D. New Mexico

December 12, 2024

MEMORANDUM OPINION AND ORDER

KIRTAN KHALSA, UNITED STATES MAGISTRATE JUDGE

Before the Court is Plaintiff's Motion for Summary Judgment on its Complaint for Declaratory Judgment Relief (Doc. 52) (“Motion”), filed April 5, 2024. The Court having reviewed the parties' submissions, the record, and the relevant law, and being otherwise sufficiently advised FINDS that the Motion is well-taken and should be GRANTED.

I. Background

This case arises out of a tragic accident in August 2020 that fatally injured Johnny Newnum. In May 2021, Defendant Andras Szantho filed a wrongful death action in state court on behalf of Mr. Newnum's wrongful death estate. (Doc. 1-2.) In that action, Defendant asserted state tort claims against Osvaldo Esparza, Mr. Esparza's sole proprietorship OE Trucking d/b/a OE & Company (“OE”), and others. (Id.) Plaintiff Farm Bureau Property & Casualty Insurance Company issued an insurance policy to Mr. Esparza and OE that was in effect at the time of the accident that killed Mr. Newnum. (Doc. 1-1.) Plaintiff defended Mr. Esparza and OE in Defendant's wrongful death action under a reservation of rights. (Doc. 52 at 3; Doc. 54 at 3.)

On July 7, 2022, Plaintiff filed this action against Mr. Esparza, OE, and Defendant, asking the Court to declare that Plaintiff has no duty to defend Mr. Esparza or OE in the wrongful death action, and no duty to indemnify Mr. Esparza, OE, or Defendant for the claims asserted therein. (Doc. 1 at 10.) The parties subsequently settled the wrongful death action and agreed to dismiss Mr. Esparza and OE from both that action and the case at bar, rendering the issue of Plaintiff's duty to defend moot. (Docs. 29, 33; Doc. 52 at 3 & n.1.) As such, the sole remaining issue in this case is whether Plaintiff has a duty to indemnify Mr. Esparza, OE, or Defendant for any claims asserted in Defendant's wrongful death action. (Doc. 52 at 3.) On April 5, 2024, Plaintiff filed the Motion presently before the Court, arguing that it is entitled to a summary judgment declaring that it owes no such duty. (Id. at 1, 22.)

II. Analysis

A. Legal Standards Governing Summary Judgment

“Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Jones v. Kodak Med. Assistance Plan, 169 F.3d 1287, 1291 (10th Cir. 1999) (quotation marks omitted); Fed.R.Civ.P. 56(a). “A dispute is genuine when the evidence is such that a reasonable [factfinder] could return a verdict for the nonmoving party, and a fact is material when it might affect the outcome of the suit under the governing substantive law.” Bird v. W.Valley City, 832 F.3d 1188, 1199 (10th Cir. 2016) (quotation marks and brackets omitted). Only material factual disputes preclude the entry of summary judgment. Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000). If the nonmovant demonstrates a genuine dispute as to material facts, the Court views the facts in the light most favorable to the nonmovant. Ricci v. DeStefano, 557 U.S. 557, 586 (2009). However, the Court will not draw “unreasonable inferences that are unsupported by the record.” Est. of Redd ex rel. Redd v. Love, 848 F.3d 899, 906 (10th Cir. 2017); Wellington v. Daza, 2022 WL 3041100, at *2 (10th Cir. Aug. 2, 2022), cert. denied, 143 S.Ct. 788 (2023).

A summary judgment movant bears the initial burden of showing the absence of a genuine issue of material fact and its entitlement to a judgment as a matter of law. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670-71 (10th Cir. 1998). When the nonmovant would bear the burden of proof at trial, the movant may meet its initial summary judgment burden by submitting “affirmative evidence that negates an essential element of the nonmoving party's claim” or by demonstrating “that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim.” Tesone v. Empire Mktg. Strategies, 942 F.3d 979, 994 (10th Cir. 2019). But when the movant would bear the burden of proof at trial, its initial summary judgment burden is “intensified,” and it must establish all of the essential elements of its claim or defense as a matter of law. Donner v. Nicklaus, 778 F.3d 857, 876 (10th Cir. 2015). If the movant meets its initial summary judgment burden, “the burden then shifts to the nonmovant,” Tesone, 942 F.3d at 994, who must “go beyond the pleadings and set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant ... by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein.” Adler, 144 F.3d at 671 (quotation marks omitted).

B. Material Facts

The following facts are undisputed for purposes of the present Motion, except as specifically noted. Plaintiff issued a commercial package insurance policy (“Policy”) to Mr. Esparza doing business as “OE & Co.,” that was in effect between June 2020 and June 2021. (Doc. 1-1 at 1-2; Doc. 52 at 5; Doc. 54 at 3.) The Policy has a commercial auto component (“Auto Component”) and a commercial general liability component (“CGL Component”). (Doc. 1-1.)

The Policy's Auto Component provides coverage for an insured's liability for bodily injury or property damage “caused by an accident and resulting from the ownership, maintenance or use of a covered auto.” (Id. at 7 (quotation marks omitted).) It also provides coverage for medical and funeral expenses for anyone accidentally injured while occupying a covered auto.^[1] (Id. at 8.) The Auto Component lists three scheduled vehicles: a 1995 Red River Belly Dump trailer, a 2004 Peterbilt 387 tractor, and a 1988 Kenworth T600A tractor. (Id. at 4; Doc. 52-1^[2] at 2.) With limited exceptions, the Auto Component provides that only the listed scheduled vehicles are “covered auto[s].” (Doc. 1-1 at 3-4, 6-7.) In his response to Plaintiff's Motion, Defendant does not argue or present any evidence to show that any exceptions apply in this case.^[3] (See generally Doc. 54.)

The Policy's CGL Component provides “Bodily Injury and Property Damage Liability” coverage for “those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies.” (Id. at 9 (quotation marks omitted).) This portion of the CGL Component excludes coverage for, among other things, “[b]odily injury or property damage arising out of the ownership, maintenance, use or entrustment to others of any . auto . owned . by . any insured.”^[4] (Id. at 10-11 (quotation marks omitted).) This exclusion specifies that “[u]se includes operation and loading or unloading,” and states that

[t]his exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the occurrence which caused the bodily injury or property damage involved the ownership, maintenance, use or entrustment to others of any .. auto ... that is owned ... by ... any insured.

(Id. at 11 (quotation marks omitted).)

The CGL Component also includes “Medical Payments” coverage for medical and funeral expenses incurred as a result of “bodily injury caused by an accident . [b]ecause of [an insured's] operations.” (Id. at 12 (quotation marks omitted).) This portion of the Policy excludes expenses incurred as a result of bodily injury to a “[h]ired [p]erson,” i.e., “a person hired to do work for or on behalf of any insured or a tenant of any insured.” (Id.) It also incorporates the exclusions listed in the liability portion of the CGL Component. (Id.)

An endorsement applicable to both the Auto Component and the CGL Component states that “[t]his insurance does not apply to liability for punitive or exemplary damages.” (Id. at 13.)

On May 18, 2021, Defendant filed a lawsuit in state court against Mr. Esparza, OE, and others, seeking to recover damages on behalf of Mr. Newnum's wrongful death estate. (Doc. 1-2; Doc. 52 at 9; Doc. 54 at 3.) In relevant part, Defendant's original wrongful death complaint included the following allegations.^[5] The New Mexico Department of Transportation (“NMDOT”) contracted with Mountain State Constructors, Inc. (“MSCI”) to work on a project to improve U.S. Route 64 between Farmington and Bloomfield, New Mexico. (Doc. 1-2 at 3.) MSCI recruited OE to deliver paving material to the project.^[6] (Id.) Mr. Esparza, OE's owner and sole proprietor, delegated the paving material delivery to Spades Trucking, a sole proprietorship owned by Mario Mares.^[7] (Id. at 2-3.) At the time, Mr. Mares and the belly dump truck and trailer he was using were in violation of several federal regulations. (Id. at 3-5.) Mr. Newnum was an independent contractor whom Mr. Mares hired as a laborer and paid in cash.^[8] (Id. at 5.)

On August 12, 2020, Mr. Mares was delivering paving material to the Route 64 project when an NMDOT project manager saw that his belly dump trailer was losing material on the roadway. (Id. at 1, 5-6.) The project manager directed a MSCI foreman to address the issue, and the MSCI foreman directed Mr. Mares to clean out the trailer. (Id. at 6.) Mr Esparza and Mr. Mares, in turn, directed Mr. Newnum to clean the belly dump gates using diesel and a blow torch, even though the NMDOT prohibits...