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Commercial Credit Group Inc. v. Allianz Global Corporate & Specialty North America

United States District Court, E.D. Arkansas, Northern Division

March 30, 2018



          Kristine G. Baker United States District Court Judge.

         Before the Court is the motion for summary judgment filed by defendant Batesville Insurance Agency, Inc. d/b/a Community Insurance Professionals, Inc. (“Community”) (Dkt. No. 45). Plaintiff Commercial Credit Group, Inc. (“CCG”), has responded to the motion, and Community has replied (Dkt. Nos. 52, 55, 57). For the following reasons, the Court grants Community's motion for summary judgment and enters judgment in favor of Community on CCG's claims.

         I. Factual Background

         Unless otherwise noted, the following facts are taken from Community's statement of material facts not in dispute and CCG's counter-statement of undisputed material facts (Dkt. Nos. 47, 54). The Court notes that Local Rule 56.1 of the Local Rules of the United States District Court for the Eastern and Western Districts of Arkansas provides that all material facts set forth in the statement filed by the moving party shall be deemed admitted unless controverted by the statement filed by the non-moving party. Local Rule 56.1(c). As such, the Court deems admitted Community's statements of material facts where not controverted by CCG.

         CCG is a secured and perfected creditor of several related entities-Uniserve, LLC, Universal Industrial Management, LLC, and Uniserve Construction, Inc. (collectively, “Uniserve”)-with a security interest in Uniserve's equipment and any insurance proceeds arising out of the equipment (Dkt. No. 54, ¶ 1). The security agreements between CCG and Uniserve required Uniserve to obtain insurance on CCG's collateral, and additionally, the security agreements required that the insurance policy contain a standard or union mortgage clause designating CCG as an additional insured or lender loss payee (Id., ¶ 2). On October 27, 2009, CCG entered into a security agreement with Uniserve (Dkt. No. 47, ¶ 9). The security agreement included a schedule of equipment to be covered under the required insurance policy which listed a 2004 Caterpillar Material Handler with serial number CDY00316 (“CDY316”) and a 2004 Caterpillar Material Handler with serial number CDY00308 (“CDY308”) (Dkt. Nos. 54, ¶ 3; 45-7, at 4). The security agreement states that “each policy shall be delivered to the secured party and shall expressly state that insurance as to secured party shall not be invalidated by any act, omission, or neglect of debtor in that the insured shall give 30 days written notice to secured party of any alteration or cancellation of the policy” (Dkt. No. 47, ¶ 9).

         The Uniform Commercial Code (“UCC”) financing statement filed on October 28, 2009, includes the CDY316 material handler (Id., ¶ 10; Dkt. No. 45-8). The UCC financing statement also states that the collateral is “all accounts, accounts receivable, chattel paper, contract rights, documents, equipment . . . including . . . insurance proceeds” (Dkt. No. 47, ¶ 10).

         CCG contends that, on December 31, 2009, Uniserve applied for and obtained a policy of property insurance through Community, that the application included an additional interest schedule which identified CCG as loss payee on the policy, and that the policy covered CCG's collateral, including both CDY316 and CDY308 (Dkt. No. 54, ¶¶ 4-7). The parties agree that, on April 28, 2010, property coverage was bound for Uniserve with AGCS Marine Insurance Company (“AGCS”) by policy number MXI93017792 (“Policy”) (Dkt. No. 47, ¶ 1). The confirmation of coverage was issued by Swett & Crawford (“Swett”) and listed the broker as Batesville Insurance Agency, Inc. d/b/a Community Insurance Professionals, Inc. (Id.). The Policy's equipment list included CDY316 (Id., ¶ 2). CCG contends that the Policy also covered CDY308 (Dkt. No. 54, ¶ 7). The parties agree that the Policy contained a blanket loss payee endorsement (Dkt. Nos. 47, ¶ 11; 54, ¶8). Community maintains that it was not a party to the insurance Policy (Dkt. No. 47, ¶ 12).

         On May 20, 2010, Community provided a signed Evidence of Property Insurance form for the Policy that included CDY316 (Id., ¶ 3). The additional interest holder on the form was listed as CCG, and the box for loss payee was marked (Id.). Community contends that the Evidence of Property Insurance form states in part that the Evidence of Property Insurance is “issued as a matter of information only and confers no rights upon the additional interest named below” (Id.). Community further maintains that the Evidence of Property Insurance form does not amend, extend, or alter the coverage afforded by the Policy (Id.).

         CCG contends that the Evidence of Property Insurance form provided confirmation that Uniserve obtained insurance naming CCG as loss payee and that the form provided confirmation that both the CDY316 and CDY308 were covered by the Policy (Dkt. No. 54, ¶¶ 10, 11). CCG asserts that CDY316 was covered by $474, 409.00 in insurance, and CDY308 was covered by $441, 946.00 in insurance (Id., ¶¶ 12, 13). CCG further submits that Policy Endorsement 001 notes the existence of a blanket loss payee and asserts that CCG was the sole loss payee under the Policy during the initial term (Id., ¶¶ 14, 15). CCG alleges that, when Uniserve acquired additional equipment, it would notify Community through a Policy Change Request and that CCG was listed as the loss payee on the Policy Change Requests (Id., ¶ 16).

         On August 29, 2010, CDY316 caught fire (Dkt. No. 47, ¶ 4). On December 9, 2010, Uniserve delivered a sworn proof of loss making claim in the amount of $212, 365.45 for CDY316 for Uniserve only (Id., ¶ 5). On December 13, 2010, AGCS issued payment in the amount of $212, 365.45 (Id., ¶ 6).

         CCG contends that, when CDY316 was destroyed by fire, Community prepared a Property Loss Notice and provided notice of the loss to Swett (Dkt. No. 54, ¶ 17). CCG alleges that Community did not acknowledge CCG's status as loss payee on the Property Loss Notice (Id., ¶18). CCG further contends that, after the initial notice of claim, Community kept apprised of the status of the claim (Id., ¶ 19). CCG submits that Big Rig Claims Service inspected CDY316 and advised that AGCS make recommendation for payment as outlined to the insured and lienholder, if applicable (Id., ¶ 20). CCG claims that Claire Fox, claims adjustor for AGCS, emailed Christian Michaels, attorney for Uniserve, noting the blanket loss payee endorsement on the Policy and requesting the additional loss payee's name for the material handler (Id., ¶ 21). CCG claims that Mr. Michaels denied that there was an additional loss payee on the Policy and that AGCS issued payment to Uniserve two business days later (Id., ¶¶ 22, 23). CCG claims that Cari Ellenberger, a legal specialist for AGCS, later questioned payment to the insured rather than to the loss payee, asking, “Did we have the Acord? It seems to me we should have known?” (Dkt. No. 54, ¶ 24).

         On February 16, 2011, material handler CDY308 was destroyed in a fire (Id., ¶ 25). CCG contends that Community prepared a Property Loss Notice that did not acknowledge CCG's status as loss payee and provided notice of the loss to Swett (Id., ¶¶ 26, 27). CCG contends that Community then sent a list of equipment covered by the initial Policy, which included both CDY316 and CDY308, to AGCS (Id., ¶28). CCG contends that AGCS issued payment in the amount of $431, 946.00 on July 18, 2011, made out to both Uniserve and CCG (Id., ¶ 29). CCG contends that it received insurance proceeds for the loss of CDY308 but did not receive insurance proceeds for the loss of CDY316, even though both were covered by the initial insurance Policy (Id., ¶ 30).

         Community contends that, on February 17, 2011, Bruce Woodson, then an employee of CCG, sent an e-mail to two other employees of CCG regarding Universal Industrial Management Group, LLC, stating, “Kevin [Statler, sole member and manager of Uniserve] had a similar machine burn about 7 months ago, took 4 months to settle his claim, but insurance paid $212, 000.00. Our exposure is down with Kevin. He has one note paying off in 6 months and the not[e] mentioned above has only 14 payments remaining.” (Dkt. No. 47, ¶ 7). Before filing the present suit, CCG filed suit against Uniserve in the United States District Court for the Eastern District of Arkansas, Docket No. 1:14-cv-139-JLH (Id., ¶ 8). David Shoop, then Regional Vice President with CCG, executed an affidavit filed in that case which indicated that the notes and lease upon which CCG were suing were all notes and leases originating after the date of payment by AGCS (Id., ¶ 13).

         CCG admits that it knew generally that Mr. Statler had previously experienced a fire on another piece of equipment and received insurance proceeds, but CCG denies knowing that the loss was related to its collateral (Dkt. No. 54, ¶ 31). CCG contends that the promissory note and security agreements were extended or modified, that the collateral was cross-pledged, and that the outstanding indebtedness related to the original promissory note (Id., ¶ 32). CCG alleges that it did not know that its loans to Uniserve were no longer secured by CDY316 and continued to extend financing based on the value of that collateral (Id., ¶ 33). CCG filed this suit on August 27, 2015 (Id., ¶ 13).

         II. Standard Of Review

         Summary 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).

         III. Discussion

         CCG alleges five causes of action against Community: (1) breach of contract; (2) specific performance; (3) promissory estoppel; (4) conversion; and (5) negligence (Dkt. No. 1, at 7-10). Community contends that it is ...

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