Graham Constr., Inc. v. Markel Am. Ins., Co.

180 F.Supp.3d 626

Graham Construction, Inc., and Arch Insurance Company, Plaintiffs,

v.Markel American Insurance, Co., Defendant.

8: 15CV276

United States District Court, D. Nebraska.

Signed April 13, 2016

Filed April 14, 2016

Randall L. Goyette, Stephen J. Schutz, Baylor, Evnen Law Firm, Lincoln, NE, for Plaintiffs.

Jeremy T. Fitzpatrick, Tory M. Bishop, Kutak, Rock Law Firm, Omaha, NE, for Defendant.

MEMORANDUM AND ORDER

Laurie Smith Camp, Chief United States District Judge

This matter is before the Court on the Motion for Summary Judgment (Filing No. 22) filed by Plaintiffs Graham Construction, Inc. (“Graham”) and Arch Insurance Co. (“Arch”) (collectively “Plaintiffs”) and the Motion for Summary Judgment (Filing No. 26) (collectively “Motions”) filed by Defendant Markel American Insurance Co. (“Markel”). For the reasons discussed below, Plaintiffs' Motion will be denied, Markel's Motion will be granted, and this case will be dismissed with prejudice.

BACKGROUND

The following facts are those stated in the parties' briefs, supported by pinpoint citations to evidence in the record, and admitted or not properly resisted by the opposing party as required by NECivR 56.1¹ and Federal Rule of Civil Procedure 56.

On or about June 20, 2007, Graham Contracting, Inc. (“Graham Contracting”) and Wal-Mart Stores, Inc. (“Wal-Mart”) entered into a contract (“Wal-Mart Contract”) for the construction of a Wal-Mart Supercenter in Omaha, Nebraska (“Wal-Mart Project”), for which Graham Contracting would be the general contractor. (Filing No. 25-7 at ECF 5.) On or about September 24, 2007, Graham Contracting assigned the Wal-Mart Contract and all related subcontracts to Graham (the “Assignment”). (Filing No. 27 ¶ 12; 25-6 at ECF 2.)

On or about January 18, 2008, Graham Contracting and D & BR Building Systems, Inc. (“D & BR”) entered into a subcontract (“Subcontract”) for the purpose of providing certain steelwork for the Wal-Mart Project. (Filing No. 23 ¶ 3.) The Subcontract was assigned to Graham pursuant to the terms of the Assignment. (Id. ¶ 4.) At all relevant times, Graham was insured by Arch, and D & BR was insured by Markel. (Filing No. 23 ¶¶ 1–2.)

§ 18 of the Subcontract stated:

[D & BR] will obtain and keep in force during the term of this contract public liability and property damage insurance with coverage equal to, or greater than, the minimum specified in the Main Contract and Contractor requirements. [D & BR] shall furnish to [Graham] evidence of this insurance as in the same form as described in Paragraph 17 above and naming [Graham], [Wal-Mart] and those identified in the Main Contract as additional insureds for ongoing and completed operations with respect to work performed by or on the behalf of [D & BR]. In addition, a waiver of subrogation shall be provided on behalf of the additional insureds. Such insurance shall be primary and non-contributory to that of the additional insureds. The insurance shall include: contractual liability coverage applicable to the indemnity provisions of this subcontract, defense costs outside of policy limits, and coverage for punitive damage .... Evidence of this insurance shall also be accompanied by a completed and signed “Insurance Coverage Checklist and Certification” ... and the following policy endorsements: additional insured, primary and non-contributory, waiver of subrogation and per project aggregate ....

(Filing No. 25-4 at ECF 10 § 18.) § 29 of the Subcontract stated:

INDEMNIFICATION. [D & BR] agrees to defend, indemnify and hold [Graham] harmless from any and all claims, demands, losses and liabilities to or by third parties arising from, resulting from, or connected with services performed or to be performed under this Subcontract by [D & BR] or [D & BR's] agents or employees to the fullest extent permitted by law and subject to the limitations provided below.

[D & BR's] duty to indemnify [Graham] shall not apply to liability for damages arising out of bodily injury to persons or damage to property caused by or resulting from the sole negligence of [Graham] or [Graham]'s agent or employees.

[D & BR's] duty to indemnify [Graham] for liability for damages arising out of bodily injury to persons or damage to property caused by or resulting from the concurrent negligence of (a) [Graham] or [Graham]'s agents or employees, and (b) [D & BR] or [D & BR's] agents or employees, shall apply only to the extent of negligence of [D & BR] or [D & BR's] agents or employees.

[D & BR] specifically and expressly waives any immunity that may be granted it under the Washington State Industrial Insurance Act, Title 51 RCW. Further, the indemnification obligation under this Subcontract shall not be limited in any way by any limitation on the amount of type of damage, compensation or benefits payable to or for any third party under workers' compensation acts, disability benefits acts, or other employee benefits acts; provided [D & BR's] waiver of immunity by the provisions of this paragraph extends only to claims against [D & BR] by [Graham], and does not include, or extend to, any claims by [D & BR's] employees directly against [D & BR].

[D & BR's] duty to defend, indemnify and hold [Graham] harmless shall include, as to all claims, demand, losses and liability to which it applies, [Graham's] personnel-related costs, reasonable attorneys' fees, court costs and all other claim-related expenses.

(Id. at ECF 12 § 29.)

Markel issued an insurance policy to D & BR for the period of August 27, 2007, to August 27, 2008 (“Markel Policy”). (Filing No. 27 ¶ 29.) The Markel Policy provided coverage for bodily injury subject to a $1,000,000 each-occurrence limit. The Markel Policy's Bodily Injury and Property Damage Liability Coverage Insuring Agreement stated in part that:

[Markel] will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. [Markel] will have the right and duty to defend the insured against any “suit” seeking those damages. However, [Markel] will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply.

(Filing Nos. 27 ¶ 31; 25-1 at ECF 68.)

The Markel Policy contained a Products-Completed Operations Endorsement (“Completed Operations Endorsement”), which stated that the policy included Graham “as an additional insured ... but only with respect to liability for ‘bodily injury’ or ‘property damage’ caused, in whole or in part, by ‘your work'² ... performed for that additional insured and included in the ‘products completed operations hazard’.”³ (Filing No. 25-1 at ECF 183.) The Markel Policy also contained a Commercial General Liability Plus Extension Endorsement (“Additional Insured Endorsement”) which stated in part:

“Any person or organization for whom [D & BR] [is] required by written contract ... to provide insurance is an Insured subject to the following additional provisions: ... [t]he ... organization is an Insured only to the extent [D & BR] [is] held liable due to ... [D & BR's] ongoing operations for the insured, whether the work is performed [by or for D & BR].

....

No coverage will be provided if, in the absence of this endorsement, no liability will be imposed by law on [D & BR]. Coverage will be limited to the extent of [D & BR's] negligence or fault according to the applicable principles of comparative fault.

(Filing Nos. 23 ¶ 9; 25-1 at ECF 119 § XIII.)

On or about January 9, 2008, D & BR provided Graham with a Certificate of Liability Insurance (“Certificate”). (Filing Nos. 23 ¶ 7; 27 ¶ 33.) The Certificate stated that “[Graham] and others required by contract are included as additional insured on general liability (coverage is primary and non-contributory and includes completed operations).” (Filing No. 25-5 at ECF 2.) The Certificate also stated it was “issued as a matter of information only and confer[red] no rights upon the certificate holder.” (Id. )

On January 27, 2008, Jose Sanchez Dominguez (“Sanchez”) was working on the Wal-Mart Project for D & BR when he fell off the roof of the structure and suffered fatal injuries. (Filing No. 23 ¶ 10.) On or about December 8, 2008, Guadalupe Gaytan (“Gaytan”), as Special Administrator of the estate of Sanchez, filed a lawsuit against Graham and D & BR in the District Court of Douglas County, Nebraska (“First Gaytan Action”). (Id. ) Gaytan named D & BR for subrogation purposes of Nebraska Workers' Compensation Act.⁴ (Id. ) On June 9, 2009, Graham filed an amended answer and cross-claim against D & BR pursuant to the indemnity provisions in the Subcontract. (Id. ¶ 11.) On January 19, 2010, Gaytan voluntarily dismissed the First Gaytan Action. (Id. ¶ 12.)

On or about January 26, 2010, Gaytan filed a second action, which is currently pending in the District Court of Douglas County, Nebraska, against Wal-Mart, Graham, and D & BR (“Second Gaytan Action”).⁵ (Id. ¶ 13.) D & BR was named for subrogation purposes of Nebraska's workers' compensation statutes. (Id. ) In the action, Gaytan alleged that Graham was in overall control of the Wal-Mart Project, that Graham “failed to exercise reasonable care in the exercise of the control placed [sic] which it had in its contract with Wal-Mart,” that Graham “violated duties owed to [Sanchez] and all workers on the premises” and that Graham, “[i]n addition to it's [sic] direct negligence, ... had a nondelegable duty to protect [Sanchez] from harm.” (Filing No. 25-9 at ECF 5 ¶¶ 14–16.) Gaytan alleged that “[a]s a direct and a proximate result of the negligence of Graham, whether direct of imputed, [Sanchez] sustained blunt trauma to his head and chest. These injuries caused his death.” (Id. at ECF 5 ¶ 17.)

As to D & BR, Gaytan alleged that at the time of the accident, “[Sanchez] was an employee of Stellar Staffing who contracted with [D & BR] to provide laborers .... [D & BR] was a sub-contractor for [Graham] .... [D & BR]...