Swank Enters. v. United Fire & Cas. Co.

SWANK ENTERPRISES, INC., Plaintiff, v. UNITED FIRE AND CASUALTY COMPANY(d/b/a UNITED FIRE GROUP) and John Does 1-10, Defendants.

CV 19-179-M-DWM

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MONTANA MISSOULA DIVISION

April 7, 2020

OPINION and ORDER

This is a coverage dispute arising out of injuries sustained by employees of a subcontractor during the 2015 construction of the Butte-Silverbow Metro Wastewater Treatment Plant in Butte, Montana ("the Project"). (See Doc. 1.) Plaintiff Swank Enterprises, Inc. was the general contractor, (id. at ¶ 6), and hired T&L Painting, Inc. as a subcontractor, (id. at ¶ 7). In June 2018, two T&L employees filed suit in state court against Swank and Tnemec Company, Inc., an epoxy manufacturer, alleging injury through exposure to chemicals contained in the coatings they applied at the Project (collectively, "the Underlying Cases"). (Id. at ¶ 11.) At the time, T&L was insured by Defendant United Fire and Casualty Company. (Id. at ¶ 8.) Swank tendered the Underlying Cases to United Fire for defense and indemnity, insisting Swank was an additional insured under T&L's Policy. (Id. at ¶ 13.) United Fire rejected the tender, (id. at ¶ 14), resulting in the present lawsuit. United Fire seeks a judgment on the pleadings that it does not owe a duty to defend or indemnify Swank as an additional insured under T&L's Policy. (Doc. 8.) That motion is granted because even assuming Swank is an additional insured, which is a close question, the policy's pollution exclusion bars coverage.

LEGAL STANDARD

I. Rule 12(c)

"After the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). "A judgment on the pleadings is properly granted when, assuming the truth of the allegations in the non-moving party's pleadings, the moving party is entitled to judgment as a matter of law." Rubin v. United States, 904 F.3d 1081, 1083 (9th Cir. 2018). As with a motion under Rule 12(b)(6), a successful Rule 12(c) motion must show either that the complaint lacks a cognizable legal theory or fails to allege facts sufficient to support its theory. Dworkin v. Hustler Magazine Inc., 867 F.2d 1188, 1192 (9th Cir. 1989); Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988).

II. Materials under Consideration

The determination of a Rule 12(c) motion is limited to the pleadings. See Fed. R. Civ. P. 12(d); see also Fed. R. Civ. P. 10(c). "A court may, however,consider certain materials—documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice—without converting the motion to dismiss into a motion for summary judgment." United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). Relevant here, there are 14 documents submitted for consideration. They are discussed in turn.

A. Attached to the Pleadings

Attached to Swank's Complaint are the complaints in the Underlying Cases, (Doc. 1-1), and Swank's answer in the Underlying Cases, (Doc. 1-2). These documents are incorporated by reference, Ritchie, 342 F.3d at 908, and judicially noticed, see Fed. R. Evid. 201. United Fire attached T&L's Policy to its Answer, (Doc. 5-1), which is incorporated by reference. See Ritchie, 342 F.3d at 908 (clarifying that "[t]he defendant may offer such a document").

B. Attached to United Fire's Brief in Support

There are three documents attached to United Fire's brief in support of its Rule 12(c) motion: the subcontractor agreement between Swank and T&L, (Doc. 9-1); the "Certificate of Liability Insurance" issued by T&L's local insurance broker, (Doc. 9-2); and an order entered by the Montana Thirteenth Judicial District Court, Yellowstone County in Farmers Insurance Exchange et al., v. Green et al., Cause No. DV 17-1456 (Jan. 29, 2019), (Doc. 9-3). According to Swank, the Subcontractor Agreement provided at Doc. 9-1 is incomplete. (SeeDoc. 12 at 5 n.1.) A full copy of the document is included as Doc. 12-1. Additionally, the Certificate attached at Doc. 9-2 is not for the correct project. (Compare Doc. 9-2 (describing "Basin Creek WTP") with Doc. 12-1 at 35 (describing "Butte WWTP Phase 2"); see Doc. 12 at 16.) Therefore, the Court does not rely on either Docs. 9-1 or 9-2; however, the Farmers decision at Doc. 9-3 is judicially noticed. See Fed. R. Evid. 201.

C. Attached to Swank's Response

There are eight documents attached to Swank's response. The first is a compilation of the subcontractor documents, which includes what Swank alleges is a more complete version of the Subcontractor Agreement than Doc. 9-1. (See Doc. 12-1.) It is incorporated by reference. Ritchie, 342 F.3d at 908. The second document is an affidavit from Swank's Safety Director and an additional copy of the Subcontractor Agreement. (Doc. 12-2.) The affidavit may not be considered on a Rule 12(c) motion and the attached Agreement is duplicative. Doc. 12-2 is not considered. The third through seventh documents relate to the procedural posture and discovery in the Underlying Cases. (Docs. 12-3, 12-4, 12-5, 12-6, 12-7.) Though the existence of these documents is subject to judicial notice, see Fed. R. Evid. 201, their content is not. But Swank appears to rely on them solely to establish the procedural posture of the Underlying Cases, not for their content. (See Doc. 12 at 7.) They are noticed for that limited purpose.

The eighth document is a compilation of documents including various letters between the parties related to Swank's tender of the claim to United Fire in 2019. (Doc. 12-8.) The proffer of these documents pushes the boundaries of a Rule 12(c) motion. And, many of them are duplicative of documents already in the record. The letters and extrinsic materials relating to the tender of the defense to United Fire (excluding those that have already been incorporated or noticed as discussed above) do not qualify under Rule 12(c). The Court therefore did not consider Doc. 12-8 in resolving the present motion.

D. Documents Considered

Ultimately, the following documents were considered:

- Underlying Complaints (Docs. 1-1, 1-2);

- T&L's Policy (Doc. 5-1);

- Farmers Order (Doc. 9-3);

- Subcontractor Agreement and Attachments (Doc. 12-1); and

- Service and Discovery Documents for Underlying Cases (Docs. 12-3, 12-4, 12-5, 12-6, 12-7), but only for existence, not content.

ANALYSIS

As the party seeking coverage, Swank "bears the initial burden to establish that the claim falls within the basic scope of coverage," Fire Ins. Exch. v. Weitzel, 371 P.3d 457, 461 (Mont. 2016), including showing its status as an additional insured, WBI Energy Transmission, Inc. v. Colony Ins. Co., 56 F. Supp. 3d 1194, 1197 (D. Mont. 2014) (citing Travelers Cas. & Sur. Co. v. Ribi Immunochem Research, Inc., 108 P.3d 469, 476 (Mont. 2005)). Whether a defense is owed "isdetermined by the language of the insurance policy." Lloyd A. Twite Family P'ship v. Unitrin Multi Line Ins., 192 P.3d 1156, 1158 (Mont. 2008). "Unless there exists an unequivocal demonstration that the claim against an insured does not fall within the insurance policy's coverage, an insurer has a duty to defend." Farmers Union Mut. Ins. Co. v. Staples, 90 P.3d 381, 385 (Mont. 2004). But if there is "no duty to defend, it follows that there can be no duty to indemnify." Skinner v. Allstate Ins. Co., 127 P.3d 359, 364 (Mont. 2005) (internal quotation marked omitted). United Fire argues it has no duty to defend—and thus indemnify—because Swank is not an additional insured under T&L's Policy and, alternatively, that the Policy's Total Pollution Exclusion precludes coverage.

I. Additional Insured

Pursuant to the Subcontractor's Agreement, T&L agreed to indemnify Swank for all claims for bodily injury and property damage related to the Project, (§ 9.1, Doc. 12-1 at 21), and name Swank as an additional insured on T&L's Policy "with respect to liability for bodily injury, property damage or personal and advertising injury to the extent caused by the negligent acts or omissions of [T&L], or those acting on [T&L]'s behalf, in the performance of Subcontract Work for Contractor at the Project site," (§ 9.2.11.1, id. at 23). T&L, as required by the Agreement, (see id.), provided Swank with a "Certificate of Liability Insurance" produced by Cogswell Insurance Agency LLC on August 18, 2014, (id. at 35).The Certificate identifies Swank as the "Certificate Holder" but advises in bold language across the top:

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.

(Id.) The Certificate also includes an attachment of "[a]dditional insured endorsements" specific to the relationship between T&L and Swank. (Id. at 36.) However, Swank was not added to the Schedule of Additional Insureds included in T&L's Policy. (See Doc. 5-1 at 4.)

A. Applicable Endorsements

T&L's Policy includes four additional insured endorsements:

CG 71 31 02 15: Additional Insured - Owners, Lessees or Contractors - Completed Operations Endorsement, (id. at 36);

CG 20 11 04 13: Additional Insured - Managers of Lessors of Premises Endorsement, (id. at 101);

CG 71 50 02 15: Contractors Blanket Additional Insured - Limited Products - Completed Operations Coverage Endorsement, (id. at 37); and

CG 71 51 02 15: Broadened Liability Plus Endorsement, (id. at 38-48).

Because the first two endorsements require that the additional insured be "shown in the Schedule [of Additional Insureds]," (id. at 36, 101), and Swank is not listed on that Schedule, (id. at 4), United Fire argues only the second two endorsements apply. Swank, on the other hand, insists a genuine issue of material fact exists as to whether United Fire should have listed Swank in the...