United States District Court, E.D. Arkansas, Northern Division
COMMERCIAL CREDIT GROUP INC. PLAINTIFF
v.
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 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 ...