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CMH Homes, Inc. v. United States Fidelity & Guaranty Co.

February 21, 2007


The opinion of the court was delivered by: Thomas W. Phillips United States District Judge



The matter presently before the Court involves an insurance coverage dispute. The plaintiff insured has filed a motion for partial summary judgment [Doc. 11], and the defendant insurer has filed a cross motion for summary judgment [Doc. 19]. Replies and responses to these motions have been received. For the reasons that follow, plaintiff's motion for partial summary judgment [Doc. 11] and defendant's motion for summary judgment [Doc. 19] are DENIED with leave to re-file.

I. Summary of the facts

The Court merely provides an abridged summary of facts for the purposes of this opinion. On February 5, 2003, Jennifer L. Claxton was driving her automobile when struck from behind by an automobile being driven by Thomas Hodges. The impact caused her vehicle to collide head-on with an oncoming manufactured home being transported by a vehicle owned and operated by Mobile Homes Broker Transport, Inc. ("MHBT"). Unfortunately, Ms. Claxton did not survive the collision.

The Estate of Jennifer L. Claxton filed suit on behalf of the deceased, Jennifer L. Claxton, and her minor daughter in the Sevier County Circuit Court against CMH Homes, Inc. ("CMH"), the manufacturer of the mobile home,*fn1 as well as others, in a case styled Claxton, et al. v. Hodges, et al., Case Number 2003-595-IV. The allegations against CMH in the lawsuit were as follows: (1) CMH negligently failed to obtain the proper permit to move an oversized home; (2) CMH negligently allowed the movement of a manufactured home during prohibited hours in violation of TDOT rules; and (3) CMH negligently hired MHBT without first determining whether the towed vehicle was capable of safe operation, and without determining whether the driver of the towing vehicle had a valid commercial driver's license. The Estate alleged that CMH's "acts of negligence ... were the proximate cause of the automobile collision which took the life of the deceased Jennifer L. Claxton."

At the time of the accident, CMH was the named insured on two relevant policies of insurance issued by United States Fidelity and Guaranty ("USF&G"). These policies were the Commercial General Liability ("CGL") policy and Business Auto Coverage ("BAC") policy. Under CMH's CGL policy, CMH was required to pay a one million dollar ($1,000,000.00) deductible in connection with underlying litigation prior to USF&G's incurring any liability. As such, under CMH's CGL policy, USF&G would only incur liability for underlying litigation after the $1,000,000.00 deductible was exhausted. In addition, under the CGL policy, the liability coverage limit per "occurrence" was $1,000,000.00.*fn2 Under the BAC policy, CMH was required to pay a five-hundred thousand dollar ($500,000.00) deductible prior to USF&G incurring any financial liability. As such, USF&G would incur liability after the $500,000.00 deductible was exhausted. Morever, under the BAC policy, USF&G's liability exposure was $500,000.00, that is, the $1,000,000.00 liability coverage limit, less the $500,000.00 deductible.

During the course of the underlying litigation, USF&G asserted that only the CGL policy, and not the BAC policy, was applicable and that any losses arising out of the underlying litigation would be covered under the CGL policy. Following mediation in the tort action, CMH settled the claims asserted against it for one million one-hundred thousand dollars ($1,100,000.00). To date, USF&G has not paid any amount of the settlement. Accordingly, CMH filed the instant suit requesting declaratory judgment that the BAC policy provides coverage with respect to the underlying tort litigation. CMH also asserts claims based upon breach of contract, violation of the Tennessee Consumer Protection Act ("TCPA"), and bad faith refusal to pay insurance claim. The instant motions for summary judgment address and argue the declaratory judgment count of plaintiff's amended complaint.

II. Law applicable to Rule 56 of the Federal Rules of Civil Procedure

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment will be granted by a court only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. The burden is on the moving party to conclusively show that no genuine issue of material fact exists. A court must view the facts and all inferences to be drawn therefrom in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co., v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Morris v. Crete Carrier Corp., 105 F.3d 279, 280-81 (6th Cir.1997); 60 Ivy Street Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir.1987).

Once the moving party presents evidence sufficient to support a motion under Rule 56 of the Federal Rules of Civil Procedure, the nonmoving party is not entitled to a trial simply on the basis of allegations. The non-moving party is required to come forward with some significant probative evidence, which makes it necessary to resolve the factual dispute at trial. Celotex Corp. v. Catrett, 477 U.S. 317 (1986). The moving party is entitled to summary judgment if the non-moving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof. Celotex, 477 U.S. at 323; Collyer v. Darling, 98 F.3d 220 (6th Cir. 1996).

III. Motions for summary judgment and applicable law

The insuring agreement of the business auto policy provides in relevant part that "[USF&G] will pay all sums 'insured' legally must pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies, caused by an 'accident' and resulting from the ownership, maintenance or use of a covered 'auto.'" USF&G provides descriptions of covered autos with designated symbols in the Business Auto Coverage Form. Symbol "1" indicates "Any 'Auto'" without further commentary, and Symbol "9" corresponds to "Non-owned 'Auto Only,'" stating "[o]nly those 'autos' you do not own, lease, hire, rent or borrow that are used in connection with your business ...." The Declaration for CMH's BAC policy designates symbol "1," "Any Auto," for liability coverage.

The issue before the Court, raised by both parties, is whether the business auto policy provides coverage with respect to the February 5, 2003 car accident involving Jennifer L. Claxton. The plaintiff argues that the "Any Auto" language is a broad, all-inclusive term that, as the ordinary plain meaning of the word "any" suggests, encompasses any and every auto. In the alternative, the plaintiff argues that the non-owned auto section, corresponding to Symbol "9," would encompass the MHBT vehicle in that the MHBT vehicle was "used in connection with [CMH's] business." The defendant responds that the allegations in the underlying litigation against CMH only trigger the umbrella policy because the claims against CMH did not relate to the ownership, maintenance, or use of an auto. The defendant also contends that the auto at issue, i.e. the MHBT vehicle, was not a covered auto under the BAC insurance policy because the "Any Auto" designation ...

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