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Ryder Truck Rental Inc. v. National Fire Insurance Co. of Hartford

United States District Court, E.D. Wisconsin

March 31, 2017

RYDER TRUCK RENTAL, INC., Plaintiff,
v.
NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, Defendant.

          DECISION AND ORDER

          LYNN ADELMAN UNITED STATES DISTRICT JUDGE

         Plaintiff Ryder Truck Rental, Inc. (“Ryder”), commenced this action against the National Fire Insurance Company of Hartford (“National”), alleging that National is required to provide liability coverage to Ryder in connection with a personal-injury suit brought by a third party. National denies that its policy provides coverage to Ryder. Before me now are the parties' cross-motions for summary judgment. See Fed. R. Civ. P. 56.

         I. BACKGROUND

         In 2005, Ryder entered into a contract with Rockline Industries, LLC, in which Ryder agreed to lease trucks to Rockline. The contract required Rockline to maintain a policy of automobile-liability insurance covering both Rockline and Ryder “as insureds for the ownership, maintenance, use, and operation of each” vehicle that Ryder leased to Rockline. Truck Lease & Serv. Agreement § 9.A & Schd. A § 14, ECF No. 20-1.

         Rockline purchased a commercial automobile policy from National. The policy includes a “Designated Insured” endorsement stating that “any person or organization which the named insured is obligated to provide insurance where required by a written contract or agreement” is an “insured” under the policy, “but only to the extent that person or organization qualifies as an ‘insured' under the Who Is An Insured Provision” of the main coverage form. Policy p. 41, ECF No. 21-1. The policy also includes an endorsement entitled “Lessor - Additional Insured and Loss Payee.” This policy extends liability coverage under the policy to a lessor of an auto hired or borrowed by Rockline, but only for “‘bodily injury' or ‘property damage' resulting from the acts or omissions by” Rockline, its employees, or any person operating a leased auto with Rockline's permission. Policy p. 40.

         On December 11, 2014, Suvad Hadzic and Selva Hadzic filed a complaint in Wisconsin state court against Ryder.[1] The complaint alleges that Suvad Hadzic “was severely injured when he stepped onto a step attached to the truck known as Spotter 505034 which was negligently repaired by” Ryder. Hadzic Compl. ¶ 8, ECF No. 20-2. The complaint further alleges that Hadzic's injuries occurred while he “was climbing out of his truck and fell due to a defective step, ” and that Ryder “was negligent with respect to the repairs made to Spotter 50534 and said negligence was the cause of the plaintiff's injuries and property damage resulting from him losing his footing and falling.” Id. ¶ 9. The complaint also alleges a claim for loss of society and companionship on behalf of Selva Hadzic.

         Ryder and National agree that the Spotter truck identified in the complaint was one of the trucks that Ryder leased to Rockline under the 2005 lease agreement. Ryder and National also agree that Hadzic was an employee of Rockline at the time of the accident.

         Ryder tendered the Hadzics' suit to Rockline, and Rockline tendered the claim to National. National denied coverage for Ryder and, to date, has not provided Ryder with a defense to the Hadzics' claims.

         II. DISCUSSION

         The parties agree that Wisconsin substantive law applies to this case. As the Wisconsin Supreme Court has recognized, “[l]iability insurance policies often contractually obligate an insurer both to defend and to indemnify its insured.” Marks v. Houston Cas. Co., 369 Wis.2d 547, 570 (2016). Generally speaking, when courts refer to an insurer's “duty to defend, ” they mean the insurer's responsibility to defend the insured from all actions brought against the insured based on alleged facts or circumstances falling within the purview of coverage under the policy, regardless of the suit's validity or invalidity. Id. An insurer's duty to indemnify its insured, in contrast, is the insurer's duty to pay all covered claims and judgments against its insured. Id.

         The principal issue in this case is whether the Hadzics' complaint triggered National's duty to defend Ryder against their suit. Ryder contends that it did and that National breached its duty to defend by failing to accept Ryder's tender of the defense. National, of course, contends that it has no duty to defend Ryder against the Hadzics' suit.

         Under Wisconsin law, to determine whether a third party's suit triggers an insurer's duty to defend, a court compares the language of the insurance policy to the third party's complaint. Marks, 369 Wis.2d at 571. If the complaint, liberally construed, alleges a claim that, if successful, would be covered by the policy, then the insurer has a duty to defend. Id. at 571-75. An insurance policy is interpreted based on what a reasonable person in the position of the insured would have understood the policy terms to mean. Mau v. N. Dakota Ins. Reserve Fund, 248 Wis.2d 1031, 1043 (2001). Any ambiguity in the insurance policy is construed against the insurer. Marks, 369 Wis.2d at 574. Policy language is ambiguous where it is susceptible to more than one reasonable interpretation. Mau, 248 Wis.2d at 1042.

         The policy provisions relevant to this case appear in the policy's “Business Auto Coverage Form” under “Section II - Liability Coverage” and in two endorsements related to this form. The Liability Coverage section provides in relevant part that National “will pay all sums an ‘insured' legally must pay as damages because of ‘bodily injury' or ‘property damage' to which this insurance applies, caused by an ‘accident' and resulting from the ownership, maintenance or use of a covered ‘auto.'” Policy p. 20. It also requires National to defend any insured against a suit for covered damages. Id. (“We have the right and duty to defend any ‘insured' against a ‘suit' asking for such damages . . . .”). There is no dispute that the Hadzics' complaint alleges that Mr. Hadzic suffered “bodily injury” caused by an “accident” and “resulting from the ownership, maintenance or use of a covered ‘auto.'” The language “to which this insurance applies” means that the general insuring clause is subject to the policy's exclusions, see Reliance Nat. Ins. Co. v. Hatfield, 228 F.3d 909, 911 (8th Cir. 2000); see also Policy p. 21 (stating that “[t]his policy does not apply to any of the following, ” and then listing exclusions), and National does not contend that the Hadzics' suit falls within any exclusion. The only dispute is over whether Ryder qualifies as an “insured.” Section II.A.1 of the policy is entitled “Who Is An Insured.” It provides as follows:

         The following are “insureds”:

a. You for any covered “auto.”
b. Anyone else while using with your permission a covered “auto” you own, ...

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