United States District Court, E.D. Arkansas, Northern Division
COMMERCIAL CREDIT GROUP INC. PLAINTIFF
ALLIANZ GLOBAL CORPORATE & SPECIALTY NORTH AMERICA a/k/a AGCS MARINE INSURANCE COMPANY; BATESVILLE INSURANCE AGENCY, INC. d/b/a COMMUNITY INSURANCE PROFESSIONALS, INC.; and SWETT & CRAWFORD DEFENDANTS
OPINION AND ORDER
Kristine G. Baker United States District Court Judge.
the Court is defendant Swett & Crawford's
(“Swett”) motion for summary judgment (Dkt. No.
61). Plaintiff Commercial Credit Group, Inc.
(“CCG”), has responded to the motion (Dkt. No.
65), and Swett has replied (Dkt. No. 76). For the following
reasons, the Court grants Swett's motion for summary
judgment and enters judgment in favor of Swett on CCG's
otherwise noted, the following facts are taken from
Swett's statement of material facts as to which there is
no genuine dispute to be tried and CCG's
counter-statement of disputed material facts (Dkt. Nos. 63;
LLC, (“Uniserve”), a scrap metal dealer located
in Newport, Arkansas, maintained various pieces of large
construction equipment as part of its job activities (Dkt.
No. 63, ¶ 1). The sole partner and managing member of
Uniserve was Kevin Statler (Id., ¶ 2). Uniserve
maintained a property interest in a 2004 Caterpillar Material
Handler, Serial Number CDY00316 (“CDY316”)
(Id., ¶ 3). CCG maintained a perfected security
interest in CDY316 (Dkt. Nos. 63, ¶ 4; 67, ¶ 1). On
October 27, 2009, Mr. Statler, on behalf of Uniserve, signed
a security agreement related to the financing of CDY316 and
other pieces of equipment, including a 2004 Caterpillar
Material Handler with serial number CDY00308
(“CDY308”) (Dkt. Nos. 63, ¶ 5; 67, ¶
3). The security agreements between CCG and Uniserve required
Uniserve to obtain insurance on CCG's collateral and
additionally required that the insurance policy contain a
standard or union mortgage clause designating CCG as an
additional insured or lender loss payee (Dkt. No. 67, ¶
2). The security agreements further required Uniserve to
provide CCG with a copy of the insurance policy naming CCG as
an additional insured (Dkt. No. 63, ¶ 6). Swett contends
that Uniserve never provided CCG with a copy of an all risks
insurance policy naming CCG as an additional insured
(Id., ¶ 7).
order to obtain the insurance policy, defendant Batesville
Insurance Agency, Inc. d/b/a Community Insurance
Professionals, Inc. (“Community”) used the
wholesale insurance brokering services of Swett
(Id., ¶ 8). Community is a retail insurance
broker/agent and Swett is a wholesale insurance broker
(Id., ¶¶ 9, 10). As a wholesale insurance
broker, Swett worked as a middleman between the retail agent
and potential insurers to provide Uniserve with an insurance
policy fitting its needs (Id., ¶ 11). In its
capacity as a wholesale insurance broker, Swett arranged for
the issuance by AGCS Marine Insurance Company
(“AGCS”) of AGCS Policy #MXI93017792 (“the
Policy”), naming Uniserve and its various entities as
the insured (Dkt. Nos. 63, ¶ 14; 67, ¶ 4). The
Policy term was April 28, 2010, through April 28, 2011 (Dkt.
No. 63, ¶ 18). The Policy covered both CDY316 and CDY308
(Dkt. No. 67, ¶ 7). CDY316 was covered by $474, 409.00
in insurance, and CDY308 was covered by $441, 946.00 in
insurance (Id., ¶¶ 12, 13). The
application for the insurance Policy included an additional
interest schedule which identified CCG as loss payee on the
policy (Id., ¶ 5).
Policy contains a loss payee provision that states AGCS will
pay both the insured and a loss payee, “[i]f a loss
payee is named in the Declarations.” (Id.,
¶ 17). The Policy did not list CCG as a loss payee
(Id., ¶ 19). On April 29, 2010, Swett issued a
confirmation of coverage bound, noting the blanket loss payee
endorsement on the Policy (Dkt. No. 67, ¶ 8). Swett
contends that, at no time during the process of obtaining a
policy of insurance for Uniserve, did any representative of
Swett communicate with Kevin Statler, any other
representative of Uniserve, or any representative of CCG
(Dkt. No. 63, ¶¶ 12, 13). Swett submits that
neither Community nor Uniserve ever provided any information
to AGCS or Swett which indicated that CCG was to be a loss
payee on the Policy (Id., ¶¶ 15, 16).
provided Uniserve with an Evidence of Property Insurance form
which states that the “policies of insurance listed
below have been issued to the insured name above [Uniserve]
for the policy period indicated
[04/20/2010-04/28/2011].” (Dkt. No. 67, ¶ 9). The
Evidence of Property Insurance form lists CCG as an
additional interest and the box for loss payee is marked
(Dkt. No. 1, Ex. 2). CCG submits that the Evidence of
Property Insurance form provided confirmation that Uniserve
obtained insurance covering both CDY316 and CDY308 and naming
CCG as loss payee (Dkt. No. 67, ¶¶ 10, 11). CCG
further submits that Endorsement 001 included in the Policy
notes that loss payees were added under the Policy
(Id., ¶ 14). CCG submits that it was the sole
loss payee under the Policy during the initial term
(Id., ¶ 15).
August 29, 2010, during the Policy term, CDY316 was
completely destroyed by fire (Dkt. No. 63, ¶ 20).
Community prepared a property loss notice and provided notice
of the loss to Swett on August 30, 2010 (Dkt. Nos. 63, ¶
21; 67, ¶ 26). Swett then forwarded the notice of loss
to AGCS (Dkt. No. 63, ¶ 22). Swett contends that after
forwarding the notice of loss to AGCS, it played no further
role in the handling of the claim (Id.).
November 5, 2010, Claire Fox, claims professional for AGCS,
emailed Christian Michaels, attorney for Mr. Statler of
Uniserve, inquiring about the name of Uniserve's loss
payee for CDY316 (Dkt. No. 63, ¶ 23). On December 9,
2010, Mr. Michaels responded to Ms. Fox and stated that
CDY316 did not have a loss payee (Id., ¶ 24).
Also on December 9, 2010, Mr. Michaels forwarded to Ms. Fox a
sworn statement in proof of loss which was signed by Mr.
Statler (Id., ¶ 25). One of the representations
contained within the sworn statement was: “No other
person or persons had any interest therein [as to material
handler 316] or encumbrance thereon, except:”
(Id.). The response given to this question was
“n/a.” (Id.). On December 13, 2010, AGCS
issued check #000010:651 in the amount of $212, 365.45 to Mr.
Statler and to “Uniserve, LLC, UIMG, et al.”
(Id., ¶ 26). The proceeds were not made jointly
payable to CCG (Dkt. No. 67, ¶ 23). CCG submits that
Cari Ellenberger, a Legal Specialist for AGCS, later
questioned the payment to the insured rather than the loss
payee, asking: “Did we have the Acord? It seems to me
we should have known?” (Id., ¶ 24).
February 16, 2011, CDY308 was destroyed in a fire
(Id., ¶ 25). Community prepared a property loss
notice and provided notice of the loss to Swett
(Id., ¶ 26). AGCS issued payment in the amount
of $431, 946.00 on July 18, 2011 (Id., ¶ 29).
The payment was made to both Uniserve and CCG (Id.).
CCG received insurance proceeds for the loss of CDY308 but
did not receive insurance proceeds for the loss of CDY316
even though both machines were covered by the initial Policy
(Id., ¶ 30). CCG contends that it knew
generally that Mr. Statler had experienced a fire on another
piece of equipment and received insurance proceeds, but CCG
submits that it did not know that the loss was related to its
collateral (Dkt. No. 67, ¶ 31). CCG contends that it did
not know that its loans to Uniserve were no longer secured by
the CDY316 and continued to extend financing to Uniserve
based on the value of the collateral (Id., ¶
Standard Of Review
judgment is proper if the evidence, when viewed in the light
most favorable to the nonmoving party, shows that there is no
genuine issue of material fact in dispute and that the
defendant is entitled to entry of judgment as a matter of
law. Fed.R.Civ.P. 56; Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). A factual dispute is genuine if the
evidence could cause a reasonable jury to return a verdict
for either party. Miner v. Local 373, 513 F.3d 854,
860 (8th Cir. 2008). “The mere existence of a factual
dispute is insufficient alone to bar summary judgment;
rather, the dispute must be outcome determinative under
prevailing law.” Holloway v. Pigman, 884 F.2d
365, 366 (8th Cir. 1989). However, parties opposing a summary
judgment motion may not rest merely upon the allegations in
their pleadings. Buford v. Tremayne, 747 F.2d 445,
447 (8th Cir. 1984). The initial burden is on the moving
party to demonstrate the absence of a genuine issue of
material fact. Celotex Corp., 477 U.S. at 323. The
burden then shifts to the nonmoving party to establish that
there is a genuine issue to be determined at trial.
Prudential Ins. Co. v. Hinkel, 121 F.3d 364, 366
(8th Cir. 2008). “The evidence of the non-movant is to
be believed, and all justifiable inferences are to be drawn
in his favor.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986).
alleges five causes of action: (1) breach of contract; (2)
specific performance; (3) promissory estoppel; (4)
conversion; and (5) negligence (Dkt. No. 1, at 7-10). Swett
argues that CCG lacks the capacity to bring claims against
Swett as the wholesale broker of the insurance policy (Dkt.
No. 62, at 4). Swett further argues that, should the Court
find that CCG has standing to bring its claims against Swett,
those claims are barred by the statute of limitations. Swett
filed its motion for summary judgment and, pursuant to
Federal Rule of Civil Procedure 10, incorporated into its
brief in support of its motion for summary judgment the
motion for summary judgment and brief in support submitted by
AGCS. For the following reasons, the Court grants the motion.
preliminary matter, the Court finds that CCG, as an alleged
loss payee on the Policy, generally has the capacity to bring
claims. A loss payee is an “insured” in the sense
that it can sue to enforce a policy under which it would
ultimately be paid. See Newcourt Financial Insurance v.
Canal Insurance Co.,15 S.W.3d 328, 333 (Ark. 2000)
(citing Huddleston v. Home Life Ins. Co. of New
York,34 S.W.2d 221, 222 (Ark. 1931)). When a policy
contains a standard or union mortgage clause, such as is the
case here, it is considered that the insurer has entered into
a separate contract with the mortgagee just as if the latter
had applied for insurance entirely independent of the
mortgagor. Fireman's Fund Insurance Co. v.
Rogers, 712 S.W.2d 311, 314 (Ark. 1986); Dalrymple
v. Royal-Globe Insurance Co., 659 S.W.2d 938, 940 (Ark.
1983); Lucas County Bank of Toledo v. Am. Cas. Co.,256 S.W.2d 557 (Ark. 1953) (discussing the difference between
open and standard loss payee clause language and emphasizing
that standard clauses could not be invalidated by any act of
the mortgagor/insured). In general, while a loss payee is not
afforded all the rights afforded an insured under a policy of
insurance, a loss payee is ...