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Sentry Select Insurance Company v. James "Stan" Hosmer

February 4, 2011


The opinion of the court was delivered by: Nanette K. Laughrey United States District Judge


Before the Court are the Motion for Summary Judgment [Doc. # 127] and the Motion for Summary Judgment Based on the Insuring Clause [Doc. # 167] filed by Plaintiff Sentry Select Insurance Company ("Sentry") and the Motion for Partial Summary Judgment [Doc. # 172] and Motion for Summary Judgment [Doc. # 177] filed by Defendants James "Stan" Hosmer, James Duckworth, and Nancy Duckworth. For the following reasons, the Court denies Sentry's motions and grants partial summary judgment for Defendants only with respect to the insuring and exclusion provisions of the insurance policy as well as the Graves Amendment issue.

I. Background

A. The Uncontroverted Facts

The Court has considered the parties' statements of facts and finds that the following facts are undisputed and supported by evidence. On November 16, 2004, a vehicle collision occurred involving Mark Burleson, who is not a party in this action, and Defendant James Duckworth. At the time of the collision, the vehicle driven by Burleson was a tractor owned by Defendant James "Stan" Hosmer. Hosmer had supplied the vehicle and its driver, Burleson, to CANDS, Inc., which is also not a party in this action. CANDS is the named insured and is alternately referred to as "you" under policy number CT750612-3603-041 issued by Sentry for the period of May 19, 2004 to May 19, 2005 ("the policy").

The policy provided, in relevant part:


A. Coverage

We will pay all sums an "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."

We have the right and duty to defend any "insured" against a "suit" asking for such damages . . . . We may investigate and settle any claim or "suit" as we consider appropriate. Our duty to defend or settle ends when the Liability Coverage Limit of Insurance has been exhausted by payment of judgments or settlements. . . . .

C. Limit Of Insurance

Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", the most we will pay for the total of all damages . . . combined, resulting from any one "accident" is the Limit of Insurance for Liability Coverage shown in the Declarations.

[Doc. # 104, Ex. A at 29.] The policy's declarations state that the most that Sentry will pay for any one accident or loss is $1,000,000. Id. Hosmer is an insured under the policy.

The policy also contains a contractual liability exclusion which provides, in relevant part:

B. Exclusions

This insurance does not apply to any of the following: . . .

2. Contractual

Liability assumed under any contract or agreement. But this exclusion does not apply to liability for damages;

a. Assumed in a contract or agreement that is an "insured contract" provided the "bodily injury" or "property damage" occurs subsequent to the execution of the contract or agreement; or b. That the "insured" would have in the absence of the contract or agreement. Id. at 31. Furthermore, the policy provides: "Insured Contract" means:

5. That part of any other contract or agreement pertaining to your business . . . under which you assume the tort liability of another to pay for "bodily injury" or "property damage" to a third party or organization. . . . .

6. That part of any contract or agreement, entered into, as part of your business, pertaining to the rental or lease, by you or any of your "employees", of any "auto". However, such contract or agreement shall not be considered an "insured contract" to the extent that it obligates you or any of your "employees" to pay for "property damage" to any "auto" rented or leased by you or any of your "employees". An "insured contract" does not include that part of any contract or agreement:

b. That pertains to the loan, lease or rental of an "auto" to you or any of your "employees", if the "auto" is loaned, leased or rented with a driver; or

c. That holds a person or organization engaged in the business of transporting property by "auto" for hire harmless for your use of a covered "auto" over a route or territory that person or organization is authorized to serve by public authority.

Id. at 39.

The agreement by which Hosmer leased the tractor to CANDS contains the following hold harmless and indemnity provision:

"Hold harmless." INDEPENDENT CONTRACTOR agrees to defend, indemnify and hold harmless CARRIER from any direct, indirect and consequential loss, damage, fine, expense, including reasonable attorney's fees, action, claim for injury to persons, including death, and damage to property which the CARRIER may occur [sic] rising out of or in connection with INDEPENDENT CONTRACTOR's obligations and or services under this agreement.

It is expressly understood and agreed that INDEPENDENT CONTRACTOR is an independent contractor for the equipment and driver services provided pursuant to this agreement, and that INDEPENDENT CONTRACTOR agrees to defend, indemnify and hold CARRIER harmless for any claims, suits, or actions, including reasonable attorney fees in protecting CARRIERS interest, brought by INDEPENDENT CONTRACTOR, employees, any union, the public, or state or federal agencies, ...

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