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

          OPINION AND ORDER

          Kristine G. Baker United States District Judge.

         Before the Court is defendant Allianz Global Corporate & Specialty North America a/k/a AGCS Marine Insurance Company's (“AGCS”) motion for summary judgment (Dkt. No. 58). Plaintiff Commercial Credit Group, Inc. (“CCG”), has responded to the motion (Dkt. No. 68), and AGCS has replied (Dkt. No. 75). For the following reasons, the Court grants AGCS's motion for summary judgment and enters judgment in favor of AGCS on CCG's claims.

         I. Factual Background

         Unless otherwise noted, the following facts are taken from AGCS's material facts as to which there is no genuine dispute to be tried and CCG's statement of material facts as to which a genuine dispute exists to be tried (Dkt. Nos. 60, 70).

         Uniserve, 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. 60, ¶ 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. 60, ¶ 4; 70, ¶ 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. 60, ¶ 5; 70, ¶ 3).

         The security agreement 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. 70, ¶ 2). The security agreement further required Uniserve to provide CCG with a copy of the insurance policy naming CCG as an additional insured (Dkt. No. 60, ¶ 6). AGCS contends that Uniserve never provided CCG with a copy of an all risks insurance policy naming CCG as an additional insured (Id., ¶ 7).

         In 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 & Crawford (“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 of AGCS Policy #MXI93017792 (“Policy”), naming Uniserve and its various entities as the insured (Id., ¶ 14). The Policy term was April 28, 2010, through April 28, 2011 (Dkt. No. 60, ¶ 18). The Policy covered both CDY316 and CDY308 (Dkt. No. 70, ¶ 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).

         The 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. 70, ¶ 8). AGCS 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. 60, ¶¶ 12, 13). AGCS 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).

         Community 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. 70, ¶ 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. 70, ¶¶ 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).

         On August 29, 2010, during the Policy term, CDY316 was completely destroyed by fire (Dkt. No. 60, ¶ 20). Community prepared a property loss notice and provided notice of the loss to Swett on August 30, 2010 (Dkt. No. 60, ¶ 21; Dkt. No. 70, ¶¶ 16, 26). Swett then forwarded the notice of loss to AGCS (Dkt. No. 60, ¶ 22). AGCS contends that Swett played no role in the handling of the claim (Id.).

         On 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 (Id., ¶ 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:” 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.” (Dkt. No. 60, ¶ 26). The proceeds were not made jointly payable to CCG (Dkt. No. 70, ¶ 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).

         On 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 (Dkt. No. 70, ¶ 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 (Id., ¶ 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., ¶ 33).

         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's complaint alleges the following causes of action: (1) breach of contract; (2) specific performance; (3) promissory estoppel; (4) conversion; and (5) negligence. AGCS argues that the Court should grant summary judgment in its favor because: (1) the gist of CCG's claims lie in tort and thus the applicable statute of limitations bars CCG's claims, and (2) CCG did not provide notice to AGCS of its claim to policy proceeds in accordance with Arkansas law and precedent. Specifically, AGCS contends that under Arkansas's “gist test, ” CCG's claims sound entirely in tort. AGCS contends that CCG's complaint is actually a tort action against AGCS for not conducting a sufficiently diligent investigation into the identity of the loss payee for CDY316. AGCS argues, therefore, that the applicable three year statute of limitations bars all of CCG's claims. In response, CCG maintains that, because its claims arise under a policy of insurance, Arkansas Code Annotated § 23-79-202 with its corresponding five-year limitations period governs all of its claims.

         The Court examines first the “jist” of CCG's claims against AGCS. The Court concludes the jist is a breach of contract claim but that CCG cannot prevail on that claim against AGCS. Next, the Court examines whether Arkansas Code Annotated § 23-79-202 applies to all claims alleged by CCG against AGCS. The Court concludes that provision does not cover CCG's claims. Therefore, in determining whether AGCS is entitled to summary judgment on CCG's remaining claims, the Court looks to each cause of action alleged by CCG in turn. Finally, the Court considers whether CCG was required to provide notice to AGCS under Arkansas law.

         A. CCG's Claims

         1. Breach Of ...