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Atlantic Casualty Insurance Co. v. CM Sellers, LLC

United States District Court, W.D. Arkansas, El Dorado Division

September 28, 2017

ATLANTIC CASUALTY INSURANCE COMPANY PLAINTIFF
v.
CM SELLERS, LLC; KYLER JOHNSON; and POTLATCH LAND & LUMBER, LLC DEFENDANTS

          MEMORANDUM OPINION

          Susan O. Hickey United States District Judge

         Before the Court are cross-motions for summary judgment filed by Plaintiff Atlantic Casualty Insurance Company (“ACIC”) (ECF No. 32) and Defendant Potlatch Land & Lumber, LLC (“Potlatch”) (ECF No. 35). Responses have been filed. ECF Nos. 39, 42. The parties have filed replies. ECF Nos. 42, 45. The Court finds that these motions are ripe for the Court's consideration.

         BACKGROUND

         Pursuant to a purchase order, Potlatch retained CM Sellers as a general contractor to replace the roof on one of its buildings at its facility in Warren, Arkansas. As part of this purchase order, Potlatch and CM Sellers entered into a contract titled “Terms and Conditions for Contractor Services.” Under this contract, CM Sellers was obligated to obtain, pay for, and keep in force primary liability insurance coverage on which Potlatch and its subsidiaries were named as additional insureds. CM Sellers satisfied this contract provision with a policy of insurance, No. LI99000557 (the “Policy”), previously purchased from ACIC. CM Sellers was the named insured under the Policy, and an endorsement named “Potlatch Forest Holdings, Inc., its parent companies, subsidiaries & affiliates” as additional insureds.[1]

         To perform the roofing work under its contract with Potlatch, it appears that CM Sellers retained Richard West d/b/a West Construction as a subcontractor. West supplied Kyler Johnson, his grandson, as a laborer to CM Sellers on the Potlatch roof project. Johnson was paid by Richard West.

         While working on the crew that was replacing Potlatch's roof, Johnson fell through the roof and onto the ground, sustaining injuries from the fall. Johnson subsequently filed a complaint against Potlatch Corporation and CM Sellers in the Circuit Court of Ashley County, Arkansas (referred to in this opinion as “the underlying action”).[2] Johnson's suit against Potlatch seeks compensatory damages for its alleged negligence. In the underlying action, Potlatch filed a cross-claim against CM Sellers, alleging that it was given an express, contractual right of indemnity against Sellers. In the present declaratory judgment action, ACIC seeks to avoid its obligation under the Policy to defend and indemnify Potlatch against Johnson's claims in the underlying action. The parties have filed cross-motions for summary judgment.

         LEGAL STANDARDS

         A. Summary Judgment Standard

         Summary judgment is only appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Krenik v. Cnty. of LeSueur, 47 F.3d 953 (8th Cir. 1995). The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Enter. Bank v. Magna Bank, 92 F.3d 743, 747 (8th Cir. 1996). The nonmoving party must then demonstrate the existence of specific facts in the record that create a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Krenik, 47 F.3d at 957.

         On a motion for summary judgment, the Court must view the facts “in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts.” Ricci v. DeStefano, 557 U.S. 557, 586 (2009) (quoting Scott v. Harris, 550 U.S. 372, 380 (2007)). A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see Agristor Leasing v. Farrow, 826 F.2d 732 (8th Cir. 1987). Summary judgment is particularly appropriate where the unresolved issues are primarily legal rather than factual. Koehn v. Indian Hills Cmty Coll., 371 F.3d 394, 396 (8th Cir. 2004); see John Deere Ins. Co. v. Shamrock Indus., Inc., 929 F.2d 413, 417 (8th Cir. 1991) (noting that “the interpretation and construction of insurance policies is a matter of law, and therefore, such cases are particularly amenable to summary judgment”).

         B. Interpretation and Construction of an Insurance Contract

         Under Arkansas law, which the parties agree applies in this diversity action, the Court must give effect to the plain meaning of unambiguous language in an insurance policy without resort to rules of construction. Ohio Cas. Ins. Co. v. Union Pacific R.R., 469 F.3d 1158, 1162-63 (8th Cir. 2006) (applying Arkansas law). “If language is ambiguous, however, [the Court] will construe the language ‘liberally in favor of the insured and strictly against the insurer.'” Id. (quoting Elam v. First Unum Life Ins. Co., 57 S.W.3d 165, 169 (Ark. 2001)). “Language is ambiguous if there is doubt or uncertainty as to its meaning and it is fairly susceptible to more than one reasonable interpretation.” Elam, 57 S.W.3d at 167.

         “Contracts of insurance should receive a practical, reasonable, and fair interpretation consonant with the apparent object and intent of the parties in light of their general object and purpose.” Parker v. S. Farm Bureau Cas. Ins. Co., 292 S.W.3d 311, 315 (Ark. Ct. App. 2009). “Different clauses of an insurance contract are read together to harmonize all parts because it is error to give effect to one clause over another when the two clauses are reconcilable.” Ohio Cas., 469 F.3d at 1163. The Court will not adopt a construction that “neutralizes any provision of a contract” if the Court can construe the contract to give effect to all provisions. Id. (quoting Smith v. S. Farm Bureau Cas. Ins. Co., 114 S.W.3d 205, 209 (Ark. 2003)). “The insurer bears the burden of proving as a matter of law that the insured's claim was excluded under the policy.” State Auto. Ins. Co. v. Lawrence, 358 F.3d 982, 986 (8th Cir. 2004) (applying Arkansas law).

         C. ...


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