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Category: Volume 14, Edition 10 Cases
Canal Ins. Co. v. Owens
Posted on October 27, 2011 Categories Volume 14, Edition 10 Cases
United States District Court,
S.D. Mississippi,
Eastern Division.
CANAL INSURANCE COMPANY, Plaintiff
Russell Dale OWENS d/b/a/ Owens Trucking; James H. Peninger, Jr.; and Amanda Pugh, Individually and on Behalf of All Wrongful Death Beneficiaries of Judy Blanks Bearden, Defendants.
No. 4:10–CV–00009–CWR–LRA.
Claude Patrick Roberts, John B. MacNeill, MacNeill & Buffington, P.A., Flowood, MS, for Plaintiff.
Orlando R. Richmond, Sr., Butler, Snow, O'Mara, Stevens & Cannada, PLLC, Ridgeland, MS, for Defendants.
CARLTON W. REEVES, District Judge.
The above-styled matter is before the Court on the motions for summary judgment of the plaintiff, Canal Insurance Company, and defendant Amanda Pugh. The Court has considered the arguments and authorities offered in support of both motions and, after due deliberation, has concluded that the plaintiff's motion should be denied and that Amanda Pugh's motion should be granted.
On November 15, 2006, Miller Cattle Company, Inc. (hereinafter "Miller"), of Marion, Mississippi, purchased 117 calves from sources in the following cities: Livingston, Linden and Roanoke, Alabama; Athens and Washington, Georgia; Carthage and Kosciusko, Mississippi; and Orangeburg, South Carolina. The next day, Miller sold the same 117 calves to Roger Walker of Okemah, Oklahoma. Walker purchased the cattle with the ultimate intent to have them transported to certain properties in either Oklahoma or Kansas, but first, the cattle needed to spend 30–45 days at a preconditioning lot to strengthen them for the long journey to the Midwest. For that purpose, Walker had Miller ship his newly purchased calves to a preconditioning lot in Courtland, Mississippi.
Defendant Amanda Pugh's Memorandum of Law in Support of Motion for Summary Judgment [Docket No. 35] (hereinafter "Pugh memo") at 2.
Pugh memo at 2.
According to Pugh's memo, "[p]reconditioning involves giving the young calves their vaccination shots, worm treatments, dehorning, and any other health treatments that were medically necessary. Preconditioning helps ensure that the young calves are healthy before they are shipped to their final destination, otherwise the young calves' health could be compromised and they could get sick and die." Pugh memo at 3.
Miller hired Russell Dale Owens d/b/a Owens Trucking (hereinafter "R.D. Owens") to transport the calves. James Peninger (hereinafter "Peninger"), an employee of R.D. Owens, was tasked with the responsibility of transporting the cattle. Judy Blanks Bearden (hereinafter "Bearden") rode as a passenger, although R.D. Owens contends that Bearden's presence was "unauthorized." But while en route, the vehicle crashed in Neshoba County, Mississippi, and Bearden was killed.0
Memorandum Brief in Support of Canal Insurance Company's Motion for Summary Judgment [Docket No. 37] (hereinafter "Canal memo") at 1. However, Canal does not appear to argue that Bearden's lack of authority to ride in the truck entitles Canal to the relief it seeks.
0. Pugh memo at 4.
In time, a negligence suit was brought against Peninger and R.D. Owens in Neshoba County Circuit Court by Amanda Pugh, individually and on behalf of Bearden's wrongful death beneficiaries (hereinafter collectively "Pugh"). 1
Shortly after the institution of the negligence suit, Canal Insurance Company (hereinafter "Canal"), which insured R.D. Owens on the date of the crash, 2 filed a declaratory-judgment action in federal court 3 in the hopes of establishing that its policy with R.D. Owens creates no duty to defend R.D. Owens and Peninger in the Neshoba County case.4
2. Exhibit A Part 1 to Complaint [Docket No. 1–2] (hereinafter "Policy").
3. Canal has invoked the diversity jurisdiction of this court, see Title 28, Section 1332, and brings this action under the Declaratory Judgment Act, Title 28, Section 2201, which provides in part that "[i]n a case of actual controversy within its jurisdiction … any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought."
4. See generally Complaint.
On June 1, 2011, Pugh moved for summary judgment.5 Essentially, Pugh argues that even if the terms of the Canal policy itself create no duty to indemnify, the terms of an attached endorsement do so.6 That same day, Canal filed its own motion for summary judgment 7 in which it argues, among other things, that the scope of the attached endorsement does not extend so far from the policy's core terms as to include a set of facts such as that surrounding the case at hand.8
5. Defendant Amanda Pugh's Motion for Summary Judgment (hereinafter "Pugh Motion") [Docket No. 34].
6. Pugh memo at 6–12.
7. Canal Insurance Company's Motion for Summary Judgment [Docket No. 36].
8. Canal memo at 12–13.
STANDARD OF REVIEW
Although motions for summary judgment are filed frequently, not every case is suitable for such disposition. Summary judgment is appropriate only "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." 9 When confronted with these motions, this Court focuses on "genuine" disputes of "material" facts. An issue is genuine "if the evidence supporting its resolution in favor of the party opposing summary judgement, together with an inference in such party's favor that the evidence allows would be sufficient to support a verdict in favor of the party." 0 A fact is material if it is one which might affect the outcome of the suit under the governing law. Factual disputes that are irrelevant or unnecessary will not be considered.1 Likewise, unsubstantiated assertions are not competent summary judgment evidence. 2
9. Fed.R.Civ.P. 56(a).
0. Zisman v. Mason, 2008 WL 879726,(S.D.Miss.2008) (citing Amant v. Benoit, 806 F.2d 1294, 1297 (5th Cir.1987).
1. Id.
2. Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir.1994).
The jury has the responsibility to assess the probative value of the evidence. As a consequence, a court must step back and refrain from making credibility determinations, and it must not weigh evidence or draw from the facts legitimate inferences for the movant .3 This Court is ever mindful that although a useful device, summary judgment "must be employed cautiously because it is a final adjudication on the merits." 4
3. Strong v. Dept. of Army, 414 F.Supp.2d 625, 628 (S.D.Miss.2005).
4. Jackson v. Cain, 865 F.2d 1235, 1241 (5th Cir.1989); Hulsey v. State of Texas, 929 F.2d 168, 170 (5th Cir.1991).
But in cases like the one at hand, where the relevant facts are not in dispute and the critical questions turn purely on legal rights and relationships, summary judgment is appropriately considered.5
5. See Nabers v. Morgan, 2011 WL 359069,(S.D.Miss.2011).
Whether the Original Provisions of the Insurance Policy Create in Canal a Duty to Indemnify. Canal argues against virtually no rebuttal that the original terms of its insurance policy with R.D. Owens—that is, those terms not included within the MCS– 90 Endorsement 6—do not call for coverage of any injury suffered by Pugh.
6. See infra at 6–7.
Specifically, the Occupant Hazard Exclusion of Canal Policy No. 343488 provides as follows: "It is agreed that such insurance as is afforded by the policy for Bodily Injury Liability does not apply to Bodily Injury including death at any time resulting therefrom, sustained by any person while in or upon, entering or alighting from the automobile." 7 In Canal's view, this provision explicitly "does not provide coverage for the claims made against Russell Dale Owens or James Peninger in the underlying litigation," 8 and Canal cites in support a 2009 district court opinion vindicating that view of the Occupant Hazard Exclusion.9
7. Policy at 14.
8. Canal memo at 11.
9. Canal Ins. Co. v. Bumble Bee Express, No. 5:08–cv–01063–IPJ (N.D. Ala. June 2, 2009).
The language of the Occupant Hazard Exclusion is straightforward, and even Pugh spills no ink to refute Canal's interpretation thereof. The Occupant Hazard Exclusion, in and of itself, demonstrates no duty relevant to the Neshoba County proceedings.
Whether the MCS– 90 Endorsement Applies. Federal law requires that a motor carrier engaged in interstate commerce carry a minimal amount of liability coverage.0 In order to comply with that requirement, a motor carrier may attach to an otherwise deficient insurance policy an MCS– 90 Endorsement, the terms of which are established by federal regulation. In relevant part, federal regulations set forth the following provisions for an MCS– 90 Endorsement:
0. 49 U.S.C. § 13906(a)(1); 49 C.F.R. § 387.
The insurance policy to which this endorsement is attached provides automobile liability insurance and is amended to assure compliance by the insured, within the limits stated herein, as a motor carrier of property, with Sections 29 and 30 of the Motor Carrier Act of 1980 and the rules and regulations of the Federal Motor Carrier Safety Administration (FMCSA).
In consideration of the premium stated in the policy to which this endorsement is attached, the insurer (the company) agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980 regardless of whether or not each motor vehicle is specifically described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere. Such insurance as is afforded, for public liability, does not apply to injury to or death of the insured's employees while engaged in the course of their employment, or property transported by the insured, designated as cargo. It is understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, this endorsement, or any other endorsement thereon, or violation thereof, shall relieve the company from liability or from the payment of any final judgment, within the limits of liability herein described, irrespective of the financial condition, insolvency or bankruptcy of the insured. However, all terms, conditions, and limitations in the policy to which the endorsement is attached shall remain in full force and effect as binding between the insured and the company. The insured agrees to reimburse the company for any payment made by the company on account of any accident, claim, or suit involving a breach of the terms of the policy, and for any payment that the company would not have been obligated to make under the provisions of the policy except for the agreement contained in this endorsement.
It is further understood and agreed that, upon failure of the company to pay any final judgment recovered against the Insured as provided herein, the judgment creditor may maintain an action in any court of competent jurisdiction against the company to compel such payment.1
1. 49 C.F.R. § 387.15. See also Exhibit E to Pugh Motion [Docket No. 34–5] (hereinafter "Canal's MCS– 90 Endorsement") at 1.
The MCS– 90 Endorsement has been a frequent topic of discussion in federal courts. The endorsement is consistent with the purpose of the Motor Carriers Act of 1980 (hereinafter "MCA") and the regulations promulgated pursuant thereto, "which were designed to stem the unregulated use of non-owned vehicles that threatened both public safety and the vitality of the trucking industry." 2 "The purpose of the MCS– 90 endorsement is to assure compliance with federal minimum levels of financial responsibility for motor carriers. The endorsement … obligates an insurer to pay certain judgments against the insured arising from interstate commerce activities, even though the insurance contract would have otherwise excluded coverage" 3 As noted in the preamble to the MCA's regulations:
2. Integral Ins. Co. v. Lawrence Fulbright Trucking, Inc., 930 F.2d 258, 261 (2nd Cir.1991) (citing Empire Fire & Marine Ins. Co. v. Guar. Nat'l Ins. Co., 868 F.2d 357, 363 (10th Cir.1989)).
3. Canal Ins. Co. v. Coleman, 625 F.3d 244, 247 (5th Cir.2010).
[t]he purpose of these regulations is to create additional incentives to motor carriers to maintain and operate their vehicles in a safe manner and to assure that motor carriers maintain an appropriate level of financial responsibility for motor vehicles operated on the public highways.4
4. 49 C.F.R. § 387.1.
"Basically, the MCS– 90 makes the insurer liable to third parties for any liability resulting from the negligent use of any motor vehicle by the insured, even if the vehicle is not covered under the insurance policy." 5 "In short, the endorsement requires [an insurer] to pay any final judgment against [the insured] for public liability resulting from the negligent use of motor vehicles subject to the financial responsibility requirements of Section 29 and 30 of the Motor Carrier Act of 1980." 6
5. T.H.E. Ins. Co. v. Laresen Intermodal Servs., Inc., 242 F.3d 667, 671 (5th Cir.2001). See also Pierre v. Providence Wash. Ins. Co., 99 N.Y.2d 222, 226784 N.E.2d 52, 53–54 (N.Y.2002) (describing the endorsement as one that "shifts the risk of loss for accidents occurring in the course of interstate commerce away from the public by guaranteeing that an injured party will be compensated even if the insurance carrier has a valid defense based on a condition in the policy").
6. Coleman, 625 F.3d at 248.
The question of whether the MCS– 90 Endorsement applies in any given case is an issue of federal law.7 However, "the endorsement covers vehicles only when they are presently engaged in the transportation of property in interstate commerce." 8
8. Id. at 249. See also id. at 251 (surveying differences of opinion among federal courts).
In the case at bar, Pugh contends that she has suffered injuries due to Peninger's negligence and R.D. Owens' vicarious liability during a transportation of property in interstate commerce.9 In Pugh's view, she is precisely the sort of "third party" 0 to whom the MCS– 90 Endorsement is directed.
9. Pugh memo at 10.
0. T.H.E., 242 F.3d at 671. See also Herkes v. Doe, 2002 WL 465192,(E.D.La.2002) (where underlying insurance policy provides no coverage for the vehicle, the MCS– 90 Endorsement is triggered for benefit of the plaintiff).
Canal offers four specific arguments in opposition to Pugh's interpretation. First, Canal argues that the MCS– 90 Endorsement merely establishes a surety and "does not create insurance coverage nor alter existing insurance coverage." 1 Second, Canal contends that federal regulations specifically exempt from the MCS– 90 Endorsement's scope any transportation of ordinary livestock.2 Third, Canal claims that Peninger was not engaged in interstate commerce because both his place of origin and intended destination were within Mississippi.3 And fourth, Canal argues that the MCS– 90 Endorsement only insured R.D. Owens, the named insured, and does not apply to any negligent acts on the part of Peninger.
Canal's contention that the MCS– 90 Endorsement "does not create insurance coverage nor alter existing insurance coverage" 4 is incorrect. It is true that courts have described the MCS– 90 Endorsement's obligation "as one of suretyship." 5 But courts have not viewed the MCS– 90 Endorsement's function as one limited by that technical definition; its primary function is "to assure that injured members of the public would be able to obtain judgments collectible against negligent authorized carriers." 6 It "accomplishes its purpose by reading out … those clauses in the policy that would limit the ability of a third party victim to recover for his loss." 7
5. T.H.E., 242 F.3d at 672 (citing with approval Canal Ins. Co. v. Carolina Cas. Ins. Co., 59 F.3d 281, 281 (1st Cir.1995)).
6. Canal Ins. Co. v. First Gen. Ins. Co., 889 F.2d 604, 611 (5th Cir.1989).
7. T.H.E., 242 F.3d at 673. See also Adams v. Royal Indem. Co., 99 F.3d 964, 968 (10th Cir.1996) (the endorsement "is designed to required ICC-certified carriers to insure against public liability for all their motor vehicles that are subject to the financial responsibility requirements of the Motor Carrier Act ….") (emphasis added); Real Legacy Assurance Co. v. Santori Trucking, Inc., 560 F.Supp.2d 143, 146 ("MCS– 90 endorsement ensures that a motor carrier has independent financial responsibility to pay for losses sustained by the general public arising out of its operations.") (emphasis added).
The strongest rebuttal to Canal's argument comes from the plain language of the MCS– 90 Endorsement itself, which reads, in relevant part:
It is understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, this endorsement, or any other endorsement thereon, or violation thereof, shall relieve the [insurer] from liability or from the payment of any final judgment, within the limits of liability herein described, irrespective of the financial condition, insolvency or bankruptcy of the insured.8
8. See Integral, 930 F.2d at 262 ("[W]hen a judgment is entered against the owner of a motor vehicle insured under an MCS– 90 endorsement, the insurer is obligated to indemnify, even when the judgment is based on a theory of vicarious liability."). See also Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868, 881 (10th Cir .2009) (en banc ) ("The MCS– 90 endorsement comes into play … where (1) the underlying insurance policy to which the endorsement is attached does not otherwise provide liability coverage, and (2) the carrier's other insurance coverage is either insufficient to satisfy the federally[ ] prescribed minimum levels of financial responsibility or is non-existent."); 7A Couch on Ins. § 109:83 (3d. ed. 2011) ("The manifest purpose of laws making liability insurance mandatory for motor carriers is the protection of passengers and members of the public who may be injured by the negligence of the operators of such conveyances, rather than employees of the insured injured in the course of employment.").
In short, no policy to which an MCS– 90 Endorsement applies can be read to deny coverage of injuries suffered by a third party through the negligent acts of the insured, even when other provisions within the same policy would accomplish precisely that result.9 Canal's argument to the contrary is not compelling.
9. T.H.E. Ins. Co. v. Laresen Intermodal Servs., Inc., 242 F.3d 667, 671 (5th Cir.2001).
Canal's second argument, wherein it contends that the MCS– 90 Endorsement does not apply to transportations of ordinary livestock, is similarly unpersuasive. The suggestion takes root in Title 49, Section 13506(a)(6)(A) of the United States Code, which provides that "[n]either the Secretary [of Transportation] nor the [Surface Transportation] Board has jurisdiction under this part over … transportation by motor vehicle of … ordinary livestock [.]" According to Canal, the provision denounces the Secretary of Transportation's authority to regulate transportation of "ordinary livestock" and, therefore, leaves Canal's MCS– 90 Endorsement inapplicable to Peninger's crash in Neshoba County.
This argument is not persuasive because this limitation does not apply to the authority under which the MCS– 90 Endorsement regulation was created. Section 13506 falls under Subtitle IV, Part B of Title 49, whereas the MCS– 90 Endorsement regulated was promulgated pursuant to Title 49, Section 31139 0—which falls not under Subtitle IV, Part B, but rather under Subtitle VI, Part B.
0. See Century Indem. Co. v. Carlson, 133 F.3d 591, 599 (8th Cir.1998) (identifying 49 U.S.C. § 31139 as statutory source of 49 C .F.R. § 387.7).
Moreover, the jurisdictional limitation enunciated by Section 13506 was designed not to encumber the Department of Transportation but, rather, the Interstate Commerce Commission. Today, it continues to limit the authority of the Surface Transportation Board,1 but the Department of Transportation's authority is broader than that formerly enjoyed by the ICC. 2 The plain text of Section 13506(a)(6)(A) makes clear that it concerns itself only with "transportation by motor vehicle of … ordinary livestock," but as the Eighth Circuit has observed, "[t]he exempt nature of the commodity has no bearing on the application of the MCS– 90 endorsement…. Once the endorsement is provided, it covers the truck in its interstate operations regardless of the commodity being transported" 3
1. Id. at 599–600.
2. Id. at 599.
Section 13506 does not imply a hole in the MCS– 90 Endorsement's coverage when the offending motor vehicle contains livestock, and Canal's argument to the contrary is rejected. To read in this "exclusion" would thwart the regulation's primary purpose: to provide for "an appropriate level of financial responsibility for motor vehicles operated on public highways." 4 Neither the statute nor the regulation makes an exception for vehicles carrying livestock; neither will this Court.
Next, Canal argues that the transportation at the center of the case at hand was intrastate rather than interstate and, therefore, did not fall within the authority of the MCS– 90 Endorsement.
The Fifth Circuit has held that the MCS– 90 Endorsement "covers vehicles only when they are presently engaged in the transportation of property in interstate commerce." 5 Canal argues that because Peninger attempted merely to transport the livestock from one Mississippi location to another, the transportation enjoyed no interstate character. According to Canal, the character of commerce is determined by the shipper's fixed and persisting intent at the time of the shipment, and in this case, Peninger intended only to transport the livestock within Mississippi.6
But Canal's argument rests on a fundamental flaw: Peninger was not the shipper. Peninger was merely the ill-fated truck's driver. Roger Walker of Okemah, Oklahoma, who purchased the calves with the ultimate goal of receiving them at property in either Oklahoma or Kansas, was the calves' true shipper; he was their owner, and only he had the legal authority to order their shipment. Peninger was no more the shipper than a Postal Service truck driver is a mailer.
Canal's contention crumbles for more thorough reasons as well because the question of whether transportation was interstate or intrastate is not so simple as to rest on determining the points where a driver's foot engaged and alighted from the accelerator. The Fifth Circuit has held that "characterization of transportation between two points in a State as interstate or intrastate in nature depends on the essential character of the shipment. Crucial to a determination of the essential character of a shipment is the shipper's fixed and persisting intent at the time of shipment." 7 In determining whether a transportation was interstate or intrastate, the shipper's intent can trump even logistics. "If the shipment comes to rest within the state of origin and the goods are thereafter disposed of locally, the interstate character of the shipment is lost, but temporary storage within the state, made necessary in furtherance of interstate carriage, does not change its character." 8
7. State of Texas v. United States, 866 F.2d 1546, 1556 (5th Cir.1989).
8. Id. at 1559.
In the case at bar, the evidence from which no genuine issue arises shows clearly that the shipment in question was interstate in character. Roger Walker purchased livestock that, only days before, had been scattered across four states, and he registered the purchase with a company many states away from his own. From Mississippi, he fully intended to have the cattle brought to him in either Kansas or Oklahoma.9 The only reason he ordered them held at the preconditioning lot in Courtland, Miss., was to prepare the calves physically for the long trip ahead—a step "necessary in furtherance of interstate carriage." 0 No evidence exists to suggest that Walker intended to have the livestock "disposed of locally" 1 in Mississippi. Walker intended only that the calves' stopover in Courtland be a "temporary storage." 2 The shipment's essential character, therefore, unquestionably was interstate in nature. And when the question arises of whether travel was interstate, the broader character of the full travel controls the answer.
9. Defendant Amanda Pugh's Memorandum of Law in Support of Response in Opposition to Canal Insurance Company's Motion for Summary Judgment [Docket No. 39] (hereinafter "Pugh response memo") at 13 (citing Deposition of Roger Walker, Exhibit I to Pugh Motion for Summary Judgment [Docket No. 34–9] at 7, 21).
0. Texas v. United States, 866 F.2d at 1559.
For that reason, the MCS– 90 Endorsement was in effect at the time of the crash.
Finally, Canal argues that the MCS– 90 Endorsement only insured R.D. Owens and does not apply to any negligent acts on the part of Peninger. Because R.D. Owens was the Canal policy's name insured, Canal contends that the policy did not extend to cover the negligent acts of Peninger.3
Canal is correct that an MCS– 90 Endorsement extends only to indemnify the negligent acts of the named insured.4 But Canal ignores the fact that, under the respondeat superior theory advanced by Pugh in her Neshoba County complaint,5 an employer can be bound by his employee's negligent acts. 6 To be sure, a driver not named on the policy will not be indemnified thereby,7 but that conclusion is irrelevant to the question of whether the policy's coverage extends to acts by which the insured can be held liable.
4. Ooida Risk Retention Group, Inc. v. Williams, 579 F.3d 469, 477–78 (5th Cir.2009). But see Integral, 930 F.2d at 260–61 (noting that the plain meaning of the endorsement only requires a final judgment against the insured arising out of the negligent operation, maintenance or use of the motor vehicle; if the Secretary of Transportation "intended judgment to be founded upon the insured's own active negligence, the endorsement would read 'any final judgment recovered against the insured for public liability resulting from the insured's negligence in the operation, maintenance or use of motor vehicles.' ") (emphasis in original).
5. Exhibit C to Pugh Motion for Summary Judgment [Docket No. 34–3] at 4.
6. Richardson v. APAC–Mississippi, Inc., 631 So.2d 143, 151 (Miss.1994). See also Welch v. Loftus, 776 F.Supp.2d 222, 225 (S.D.Miss.2011); Gaddis v. Hegler, 2011 WL 2111801,(S.D.Miss. May 26, 2011).
7. Ooida, 579 F.3d at 477.
In sum, Pugh's argument that the MCS– 90 Endorsement extends Canal's obligations to the event described in the Neshoba County complaint is compelling, and none of the reasons offered by Canal to the contrary is persuasive.
The MCS– 90 Endorsement attached to Canal's policy extends the policy's coverage to include Bearden's injuries suffered in the November 2006 crash. Therefore, Pugh's motion for summary judgment is granted, and Canal's motion for summary judgment is denied.
Because this determination resolves the merits of the case, a Final Judgment will be entered accordingly.
SO ORDERED.
Category 5 Management Group, LLC v. National Cas. Ins. Co.
S.D. Alabama,
Southern Division.
CATEGORY 5 MANAGEMENT GROUP, LLC, Plaintiff,
NATIONAL CASUALTY INSURANCE COMPANY, et al., Defendants.
Civil Action No. 09–633–CG–B.
Oct. 5, 2011.
Charles J. Potts, Sarah Bond Dorger, Briskman & Binion, P.C., Kevin F. Masterson, Masterson & Newell, L.L.C., Matthew B. Hall, Mobile, AL, Emily H. Nelson, Morris Haynes & Hornsby, Birmingham, AL, for Plaintiff.
Edgar M. Elliott, IV, John W. Johnson, II, Christian & Small LLP, Michael Thomas Scivley, Scott M. Salter, Starnes & Atchison, LLP, Birmingham, AL, M. Warren Butler, Starnes Davis Florie LLP, L. Bratton Rainey, III, Brigg Hails Austin, Luther, Crowe & Rainey, P.C ., Mobile, AL, for Defendants.
CALLIE V.S. GRANADE, District Judge.
This matter is before the court on the motions for summary judgment filed by defendants, National Casualty Insurance Company ("NCIC") (Doc. 72), Colonel McCrary Trucking, Inc. ("CMT") (Doc. 148), ACE American Insurance Company ("ACE") (Doc. 161), and plaintiff, Category 5 Management Group, LLC ("CAT 5") (Docs. 154 and 155). For the reasons set forth herein, CAT 5's motions are due to be DENIED and the defendants' motions are due to be GRANTED .
On June 29, 2007, the defendant, Colonel McCrary Trucking, LLC ("CMT"), entered into a subcontract ("the subcontract") with the plaintiff, Category 5 Management Group, LLC ("CAT 5"), to provide debris removal services in Jefferson Parish, Louisiana, following Hurricane Katrina. (Doc. 159, p. 1). On July 11, 2007, a CMT driver named Joe Edward Johnson ("Johnson") borrowed a CMT-owned truck in order to attend a pre-trial court hearing in a criminal matter in Baldwin County, Alabama. (Doc. 159, p. 2). While returning to Louisiana, Johnson was involved in a serious traffic accident in which he allegedly drove through a red light on Highway 59 in Baldwin County without stopping, striking a Mini Cooper containing Tracy Lee Stewart, Celena Sprinkle, and a three year-old child. Id. All three passengers in the Mini Cooper were seriously injured, two severely so—Celena Sprinkle suffered a brain injury, and the three year-old child suffered a severe spinal injury which caused permanent, high-level quadriplegia. (Doc. 1, p. 1).
On August 7, 2007, the three injured parties filed suit against Johnson, R.D. Construction, Inc. ("RDC"), CMT, and four fictitious parties in the Circuit Court of Mobile County (the "underlying litigation"), seeking compensatory and punitive damages for their injuries. (Doc. 1, p. 2). The complaint alleged, inter alia, that Johnson was driving the truck with the permission of his employer, within the line and scope of his employment, or alternatively, that the trip benefitted the defendants. (Doc. 153–3, p. 5).
At the time of the accident, CMT was insured under a policy of general liability insurance issued by NCIC with a per accident limit of $1,000,000. (Doc. 1, p. 2). CMT was also insured under an excess liability policy issued by ACE with a policy limit of $4,000,000. (Doc. 159, p. 3). The NCIC and ACE policies were issued for delivery and accepted in Georgia. (Doc. 153, p. 6).
On December 31, 2007, the plaintiffs in the underlying litigation filed an amended complaint (the "amended complaint"), naming additional defendants, including CAT 5, and alleging that CMT was a subcontractor of CAT 5. (Doc. 153–1, p. 5). The amended complaint alleged causes of action against CAT 5 for negligence and/or wantonness, negligent and/or wanton hiring, negligent and/or wanton training, negligent and/or wanton supervision, and negligent and/or wanton entrustment. Id. at pp. 6–15. On October 2, 2008, NCIC and ACE each paid their policy limits, a total of $5,000,000.00, to settle the claims of the underlying plaintiffs against Johnson, CMT and RDC, but not CAT 5. (Doc. 159, p. 10).
In January 2009, CAT 5 filed an amended cross claim against CMT and filed third party claims against NCIC and ACE, alleging causes of action for negligence against CMT, bad faith against NCIC and ACE, and breach of contract against all three. See Doc. 1–3. In addition, CAT 5 alleges that it is a third party beneficiary of the insurance policies NCIC and ACE issued to CMT. The Mobile County Circuit Court severed CAT 5's claims from the remainder of the personal injury action on September 18, 2009. (Doc. 1, p. 3). Those severed claims were subsequently removed to this court by CMT, NCIC and ACE. (Doc. 1). In January 2010, CAT 5 and the underlying plaintiffs agreed to a consent judgment in the amount of $6,000,000.00. (Doc. 159, p. 12).
In the case before this court, CAT 5 alleges 1) that CMT has breached the Subcontract by refusing to defend and indemnify CAT 5 from the claims of the plaintiffs in the underlying litigation; 2) that NCIC and/or ACE breached contractual obligations owed to CAT 5 as a third party beneficiary of the NCIC and ACE insurance policies; 3) that NCIC and ACE are guilty of bad faith towards CAT 5 in the handling of the underlying litigation and settlement; and 4) that CMT negligently failed to procure insurance on behalf of CAT 5.
CAT 5 seeks summary judgment as to its breach of contract claim against CMT, (Doc. 154), and seeks partial summary judgment against NCIC and ACE as to its breach of contract claim arising out of NCIC's and ACE's alleged failure to defend and indemnify CAT 5. (Doc. 155). NCIC and ACE seek summary judgment as to all of CAT 5's claims. (Docs. 72 and 161). CMT seeks summary judgment as to all of CAT 5's claims. (Doc. 148).
A. MOTIONS TO STRIKE THE AFFIDAVIT OF C. WILLIAM DANIELS
As a preliminary matter, the court first turns to the defendants' motions to strike the affidavit of C. William Daniels (Docs.171, 172), which CAT 5 submitted in support of its motions for partial summary judgment against NCIC and ACE. (See Doc. 158). Daniels was the attorney for Ceres Environmental Services, Inc. ("Ceres"), which was the plaintiff in a companion case to this one, Ceres Environmental Services, Inc. v. Colonel McCrary Trucking, LLC, 2010 WL 3522385 (S.D.Ala. September 2, 2010), which arises out of the same set of facts.
The defendants argue, inter alia, that (1) CAT 5 did not identify Daniels as an individual likely to have discoverable evidence; (2) CAT 5 never supplemented its Rule 26(a) initial disclosures to identify Daniels; (3) CAT 5 never identified Daniels at all prior to including his affidavit with its motion for partial summary judgment against NCIC and ACE. (Doc. 155); (4) CAT 5 never disclosed Daniels as an expert witness; (5) the defendants are unable to depose or cross-examine Daniels because the March 31, 2011, discovery deadline in this case has passed; (6) Daniels' affidavit consists of opinion testimony, and therefore may not be used to support a motion for summary judgment, pursuant to Fed.R.Civ.P. 56(c)(4); (7) Daniels' affidavit expresses an opinion concerning the Ceres litigation, but does not address the instant case and is therefore irrelevant pursuant to Fed.R.Evid. 402; and (8) Daniels' testimony impermissibly invades the province of the court by seeking to testify as to the absence of a genuine issue of material fact that claims for vicarious liability were asserted in the underlying litigation in state court. (See Docs. 171, 172).
In response, CAT 5 asserts that it does not offer Daniels' affidavit testimony as expert testimony, but rather, as factual witness testimony to support CAT 5's position that the allegations of the underlying litigation were claims of vicarious liability. (Doc. 182, p. 3). CAT 5 also argues that the Daniels affidavit is relevant and probative because CAT 5, like Ceres, filed a motion for summary judgment in the underlying litigation which "implicitly held" that the plaintiffs in the underlying litigation had based their claims on vicarious liability. Id. Finally, CAT 5 argues that the Daniels affidavit violates no order entered by the court.
Federal Rule of Procedure 26(a)(1)(A)(i) requires parties to disclose the names of individuals likely to have discoverable information that the party may use to support its claims or defenses. Federal Rule of Procedure 26(e)(1) requires parties to supplement incomplete Rule 26(a) disclosures. A party who fails to comply with Rules 26(a) or (e) is precluded from using the undisclosed witness "to supply evidence on a motion … unless the failure was substantially justified or harmless." Fed.R.Civ.P. 37(c)(1). The Eleventh Circuit has held that, when a party fails to comply with Rule 26, the district court does not abuse its discretion by striking an affidavit submitted at the summary judgment stage. See Faulk v. Volunteers of America, 2011 WL 3687861 (11th Cir.2011); Lawver v. Hillcrest Hospice, Inc., 300 Fed. Appx. 768, 770 (11th Cir.2008).
Here, CAT 5 did not list Daniels as a potential witness in its initial disclosure, nor did it supplement its disclosures, nor does it claim to have done so. (See Doc. 182). CAT 5 has failed to explain its omission, and accordingly, the court does not find its failure to be substantially justified or harmless. Furthermore, the record reveals that the defendants would not have known that CAT 5 was relying on Daniels' testimony until his affidavit materialized as an exhibit in support of CAT 5's motions for partial summary judgment.
Accordingly, the defendants' motions to strike the Daniels affidavit (Docs.171, 172) are GRANTED.
B. SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56(a) provides that summary judgment shall be granted "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." The trial court's function is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "The mere existence of some evidence to support the non-moving party is not sufficient for denial of summary judgment; there must be 'sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.' " Bailey v. Allgas, Inc., 284 F.3d 1237, 1243 (11th Cir.2002) (quoting Anderson, 477 U.S. at 249). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249–250. (internal citations omitted).
The basic issue before the court on a motion for summary judgment is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." See Anderson, 477 U.S. at 251–252. The moving party bears the burden of proving that no genuine issue of material fact exists. O'Ferrell v. United States, 253 F.3d 1257, 1265 (11th Cir.2001). In evaluating the argument of the moving party, the court must view all evidence in the light most favorable to the non-moving party, and resolve all reasonable doubts about the facts in its favor. Burton v. City of Belle Glade, 178 F.3d 1175, 1187 (11th Cir.1999). "If reasonable minds could differ on the inferences arising from undisputed facts, then a court should deny summary judgment." Miranda v. B & B Cash Grocery Store, Inc., 975 F.2d 1518, 1534 (11th Cir.1992) (citing Mercantile Bank & Trust v. Fidelity & Deposit Co., 750 F .2d 838, 841 (11th Cir.1985)).
Once the movant satisfies his initial burden under Rule 56(c), the non-moving party "must make a sufficient showing to establish the existence of each essential element to that party's case, and on which that party will bear the burden of proof at trial." Howard v. BP Oil Company, 32 F.3d 520, 524 (11th Cir.1994)(citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). Otherwise stated, the nonmovant must "demonstrate that there is indeed a material issue of fact that precludes summary judgment." See Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991). The non-moving party "may not rely merely on allegations or denials in [the non-moving party's] pleading; rather, its response …. must—by affidavits or as otherwise provided in this rule—set out specific facts showing a genuine issue for trial." FED.R.CIV.P. 56(e). "A mere 'scintilla' of evidence supporting the [non-moving] party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party." Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.1990) (citation omitted). "[T]he nonmoving party may avail itself of all facts and justifiable inferences in the record taken as a whole." Tipton v. Bergrohr GMBH–Siegen, 965 F.2d 994, 998 (11th Cir.1992). "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (internal quotation and citation omitted).
C. CAT 5's MOTIONS FOR SUMMARY JUDGMENT
CAT 5 filed a motion for summary judgment against CMT on its breach of contract claim for failure to indemnify and defend CAT 5. CAT 5 also filed a motion for partial summary judgment against NCIC and ACE on its breach of contract claim for failure to indemnify and defend CAT 5.
(1) CAT 5's Motion For Summary Judgment Against CMT
(a) Indemnity for Underlying Claims of CAT 5's Negligence
The parties agree that, per section 6.18 of the Subcontract, Louisiana law controls. (Doc. 150–1, p. 65, ¶ 6.18). CMT argues that summary judgment for CAT 5 is inappropriate because the allegations against CAT 5 in the underlying litigation (the allegations for which it seeks a defense and indemnification) allege negligence on the part of CAT 5, i.e., negligent hiring, negligent training, negligent supervision, and negligent entrustment. (Doc. 173, p. 5). CMT asserts that under Louisiana law, "… a contract will not be construed to indemnify an indemnitee against losses resulting to him through his own negligent acts unless such an intention is expressed in unequivocal terms." Perkins v. Rubicon, Inc., 563 So.2d. 258, 259 (La.1990) (citing Sovereign Ins. Co. v. Texan Pipe Line Co., 488 So.2d 982 (La.1986) ("When a contract of indemnity makes no express provisions for indemnification against the consequences of the indemnitee's negligence … the court will presume that the parties did not intend to hold the indemnitee harmless from such liability."); Chevron U.S.A., Inc. v. Energen Resources Corp., 2009 WL 2390311,(M.D.La.2009) ("… generalized language indemnifying against 'any and all liability, damage, costs, fees and other losses of whatever nature …' has been held to not unequivocally express the intent to indemnify against the indemnitee's own negligence.")
In response, CAT 5 argues that it is "beyond the point and not at issue" whether the Subcontract does or does not require CMT to indemnify CAT 5 for CAT 5's own negligence. (Doc. 180, p. 1). CAT 5 argues, instead, that the Subcontract requires CMT to indemnify CAT 5 for any liability arising from the performance of the contract. (Doc. 180, p. 2). But this argument does not address CMT's point, and cites no authority to contradict the argument that explicit, unequivocal language is required in the indemnification provision when the liability to be defended against and indemnified arises from CAT 5's own negligence. CAT 5 prefers to focus on this court's ruling in Ceres, which arises out of the same underlying litigation. While the court did find that the liability at issue in Ceres related to the contract between CAT 5 and Ceres, neither the court nor the parties in that case cited or addressed the Louisiana rule that indemnification of the indemnitee's negligence must be unequivocal. See Id.
CAT 5 cites the plaintiff's motion for summary judgment in Ceres as being granted. However, Ceres' motion was denied (Case 1:09–cv–00642, Doc. 41). The court infers that CAT 5 intended to cite to the court's order, which the parties requested after submitting briefs in lieu of a bench trial. (See Case 1:09–cv–00642, Doc. 63). However, CAT 5 did not cite to even one page of the order. The court need consider only the cited materials, and will not undertake to review the Ceres order on behalf of CAT 5. See Fed.R.Civ.P. 56(c)(3).
The court finds the case of Daigle v. Lang, 377 So.2d 1384, 1390 (La.App. 4th Cir.1979), to be instructive. The contract at issue was between a contractor and building owner, and contained an indemnification provision with language similar to that in Section 8 .1 of the CAT 5/CMT Subcontract: the Daigle contractor indemnified the owner from claims for personal injury or property damage "arising out of his performance of the work …" Daigle, 377 So.2d at 1390. After a worker was seriously injured, the owner was accused of negligence, and a dispute about the indemnification provision arose. The trial court ruled that the language of the indemnification provision limited indemnity to the consequences of the contractor's negligent acts alone. Id. Since the contract did not state that the indemnitee was indemnified against his own negligence, the indemnification provision in the contract was not triggered. Id.
Compare the indemnification provision at issue in Daigle:
"The Contractor binds and obligates itself to hold the Owner harmless from any claims of any nature whatsoever for personal injury or damage to property arising out of his performance of the work herein undertaken …:
with the indemnification provision in Section 8.1 of the Subcontract:
"The Subcontractor shall save and hold Contractor and the Corps of Engineers harmless against all suits, claims, damages and losses for injuries to persons or property arising from or caused by errors, omissions or negligent acts of the Subcontractor, its officers, agents, servants, or employees …"
Even a cursory reading of the indemnification provision contained in Section 8.1 of the CAT 5/CMT Subcontract shows that the proposed indemnification is for injuries caused by "negligent acts of the Subcontractor," and does not reveal any unequivocal language requiring the CMT to indemnify CAT 5 for its own negligence. (Doc. 150–1, p. 66). CAT 5 has not cited any language elsewhere in the Subcontract which requires CMT to indemnify CAT 5 for CAT 5's own negligent acts, nor has it offered any contrary authority suggesting that such unequivocal language is somehow not required, after all. Instead, CAT 5 focuses its argument exclusively on the fact that it faces potential liability, without distinguishing whether that potential liability is allegedly due to its own negligence or that of another party. Given the clear Louisiana case law on this point, the court finds that CAT 5's motion for summary judgment as to its breach of contract claims against CMT (Doc. 154) is due to be denied.
(2) CAT 5's Motion For Partial Summary Judgment Against NCIC and ACE As To Its Breach of Contract Claims
CAT 5 claims that it was a "definitional insured" under the NCIC and ACE policies, i.e., that it was covered by NCIC's liability policy and ACE's follow form policy. (Doc. 159, p. 26). Therefore, according to CAT 5, NCIC and ACE owed it a duty to defend and a duty to indemnify against the claims in the underlying litigation. (See Doc. 159, pp. 16–27). When NCIC and ACE failed to do so, they breached their policies, giving rise to CAT 5's claim for breach of contract. Id.
"Federal courts sitting in diversity apply the forum state's choice-of-law rules" Boardman Petroleum, Inc. v. Federated Mut. Ins. Co., 135 F.3d 750, 752 (11th Cir.1998). In contract actions, Alabama's choice of law rule provides that the law of the state wherein the contract was executed governs the interpretation of contracts. Pines v. Warnaco, Inc., 706 F.2d 1173, 1176 n. 3 (11th Cir.1983). Where the last act is "receipt and acceptance" of an insurance policy, the court must apply the law of the state where this last act occurred. Industrial Chem. & Fiberglass v. North River Ins. Co., 908 F.2d 825, 829 n. 3 (11th Cir.1990). The last acts necessary to the execution of the policies, the receipt and acceptance of the policies by the named insured, took place in Georgia. Therefore Georgia law governs CAT 5's breach of contract claims against NCIC and ACE.
Under Georgia law, an insurer's duty to defend and duty to indemnify are separate and distinct obligations. Elan Pharm. Research Corp. v. Employers Inc. of Wasau, 144 F.3d 1372, 1375 (11th Cir.1998). The existence of a duty to defend does not necessarily mean that a duty to indemnify exists. City of Atlanta v. St. Paul Fire & Marine Ins. Co., 231 Ga.App. 206, 208 (Ga.App.1997). "Whether an insurer is obligated to defend an action against its insured 'is determined by the contract; and since the contract obligates the insurer to defend claims asserting liability under the policy; even if groundless, the allegations of the complaint are looked to to determine whether a liability covered by the policy is asserted. Thus, the issue is not whether [the insured] is actually liable to the plaintiffs [in the underlying action]; the issue is whether a claim has been asserted which falls within the policy coverage and which the insurer has a duty to defend.' " Atlanta Postal Credit Union v. International Indemnity Co., 228 Ga.App. 887, 888 (Ga.App.1998) (quoting Penn–America Ins. Co. v. Disabled American Veterans, Inc., 224 Ga.App. 557, 558, 481 S.E.2d 850 (1997)) (citations omitted).
CAT 5 claims that (a) the policy language, (b) the factual allegations asserted by the plaintiffs in the underlying litigation, and (c) the denial of CAT 5's motion for summary judgment in the underlying litigation all demonstrate that CAT 5 was insured under the NCIC and ACE policies and therefore was owed both a defense and indemnity by NCIC and ACE. (Doc. 170, p. 5). Not surprisingly, NCIC and ACE argue the opposite.
(a) The Policy Language
The NCIC policy provides that the following are "insureds:"
a. You for any covered "auto."
b. Anyone else while using with your permission a covered "auto" you own, hire or borrow….
c. The owner or anyone else from whom you hire or borrow a covered "auto" that is a "trailer" while the "trailer" is connected to another covered "auto" that is a power unit, or, if not connected:
(1) Is being used exclusively in your business as a "trucker"; and
(2) Is being used pursuant to operating rights granted to you by a public authority.
d. The owner or anyone else from whom you hire or borrow a covered "auto" that is not a "trailer" while the covered "auto":
e. Anyone liable for the conduct of an "insured" described above but only to the extent of that liability.
(Doc. 156–2, p. 20). Furthermore, the ACE policy, as a "follow form" policy provides that:
The Definitions, Terms, Conditions, Limitations, and Exclusions of the UNDERLYING INSURANCE [i.e., the NCIC policy], in effect at the inception date of this policy, apply to this coverage unless they are inconsistent with provisions of this policy …
(Doc. 161–6, p. 15). CAT 5 claims that it meets the criteria of subcategory (e) in the NCIC policy ("Subcategory (e)"), because Johnson was found to be insured under NCIC's and ACE's policies. (Doc. 159, p. 18). Since CAT 5 faces potential liability for Johnson's conduct, it argues, it therefore falls within the policy and is entitled to both a defense and indemnification from claims in the underlying litigation. Id.
NCIC and ACE, on the other hand, argue that, under Georgia law, the phrase "liable for the conduct of an 'insured'…" in a liability insurance policy is synonymous with vicarious liability, and that they are only obligated to defend and indemnify CAT 5 for claims of vicarious liability. (Doc. 176, p. 15) (citing Atlanta Postal Credit Union v. International Indemnity Co., 228 Ga.App. 887, 891 (Ga.App.Ct.1998) ("[w]e examined the same policy provision and ruled that because the complaint alleged liability under the doctrine of respondeat superior, the defendant was an insured under the policy."); Aetna Casualty & Surety Co. v. Empire Fire & Marine Ins. Co., 212 Ga.App. 642, 643–44 (Ga.App.Ct .1994) ("Since the complaints allege that Carolina Mills is liable for Pelfry's negligence on the basis of respondeat superior, Carolina Mills fits within the policy's definition of an 'insured.' "); Zurich Insurance Co. v. New Amsterdam Cas. Co., 117 Ga.App. 426, 429 (Ga.App.1968) ( "..the latter phrase is sufficiently broad to include an employer who is responsible for the negligent use by the employee in a respondeat superior situation."). NCIC and ACE argue further that the claims against CAT 5 in the Amended Complaint are not for vicarious liability, but are actually claims of direct liability, i.e., negligence, negligent hiring, negligent training, negligent supervision, and negligent entrustment. (Doc. 176, p. 16). Therefore, since CAT 5 it being sued for its own alleged negligence, rather than the negligence of Johnson, then CAT 5 is not covered under their policy, and NCIC and ACE owe no duties of defense or indemnification. (Doc. 176, p. 16).
Although CAT 5 flatly asserts that the phrase "anyone liable for the conduct of an 'insured'…" means more than vicarious liability, it cites no authority to support that argument. (Doc. 170, p. 4). CAT 5 also suggests that there is no extrinsic evidence of an intention by CMT, NCIC, or ACE to limit the policy only to allegations of vicarious liability, (Doc. 159, p. 22), and argues further that any ambiguity existing in the policy language is due to be resolved in CAT 5's favor. Id. (citing McIntosh v. Scottsdale Ins. Co., 992 F.2d 251 (10th Cir.1993)). However, the sole case that CAT 5 cites for support on this point is from the Tenth Circuit and applies Kansas law, telling the court nothing about Georgia law.
Under Georgia law, "[t] he construction of a contract, including the existence or nonexistence of any ambiguities in the contract, presents a question of law for the court." McKinley v. Coliseum Health Group, LLC, 308 Ga. App, 768, 770 (Ga.App.2011) (citations omitted). After review of the policy language, the court does not find any ambiguity that is due to be resolved in CAT 5's favor. In light of NCIC and ACE's citation of Georgia law explaining the applicability of Subsection (e) to vicarious claims only, and CAT 5's conclusory counterargument citing no binding authority, the court finds that the policy language on its face does not support CAT 5's summary judgment motion, and therefore turns its attention to the claims against CAT 5 in the underlying litigation to determine whether they constitute claims of vicarious liability against CAT 5.
(b) The Factual Allegations in the Underlying Litigation
Alternatively, CAT 5 maintains that the plaintiffs in the underlying litigation have asserted claims against CAT 5 which are grounded in vicarious liability, (Doc. 159, p. 23), because the accident that Johnson caused was the impetus for the underlying litigation, and therefore the claims against all defendants in the underlying litigation necessarily "arose from" Johnson's conduct. (Doc. 159, p. 18). CAT 5 suggests that NCIC has admitted to this point in the deposition testimony of its Rule 30(b)(6) representative. (Doc. 156–6, pp. 121–122). Furthermore, as evidence of claims of vicarious liability, CAT 5 also points out that the First Amended Complaint alleges that Johnson was acting within the scope of his employment, was conferring an economic benefit on all defendants in the underlying litigation, and that CAT 5 negligently hired and trained Johnson. (Doc. 159, p. 23). Because Alabama is a notice pleading state, CAT 5 argues that the underlying plaintiffs have stated claims for vicarious liability. Id.
Questions regarding the underlying litigation are governed by Alabama law. Lifestar Response of Alabama, Inc. v. Admiral Ins. Co ., 17 So.3d 200, 213 (Ala.2009). CAT 5 is correct in pointing out that Alabama is a notice pleading state. Surrency v. Harbison, 489 So.2d 1097, 1104 (Ala.1986) (quoting Simpson v. Jones, 460 So.2d 1282 (Ala.1984)). However, alleging, as the underlying plaintiffs did, that Johnson was acting within the scope of his employment is sufficient to put CMT, not CAT 5, on notice that it was facing or may have faced claims of vicarious liability. There is no allegation in the underlying complaint that Johnson was CAT 5's employee.
The court is also not convinced by NCIC's deposition testimony purportedly admitting that the allegations made against CAT 5 implicate vicarious liability. Terry Showers, NCIC's 30(b)(6) representative, agreed with plaintiff's counsel's characterization that "the allegations made against CAT 5 arose out of the acts or omissions of Mr. Johnson[.]" (Doc. 156–6, p. 121). Any claim for negligent hiring, training, supervision, or entrustment will necessarily "arise out of the act or omission" of an independent agent or employee, even when vicarious liability is not implicated. See Humana Medical Corp. of Alabama v. Traffanstedt, 597 So.2d 667, 668–69 (Ala.1992).
CAT 5 cannot sustain a grant of summary judgment upon this argument alone. Accordingly, the court looks to the Mobile County Circuit Court's denial of summary judgment in the underlying litigation.
(c) CAT 5's Motion for Summary Judgment in State Court
Finally, CAT 5 asserts that, because its motion for summary judgment in the underlying litigation was denied, the Mobile County Circuit Court must therefore have tacitly held that the plaintiffs in the underlying litigation asserted claims for vicarious liability against CAT 5. (Doc. 159, pp. 23–24). If that court implicitly found that vicarious liability was alleged, then under CAT 5's argument, it would fall within the NCIC policy's definition of an insured, and therefore CAT 5 would be owed a defense and indemnity in the underlying litigation.
NCIC and ACE argue that CAT 5 moved for summary judgment on grounds relating to direct liability claims and not vicarious liability claims, i.e., CAT 5 claimed in its motion that its actions were not the proximate cause of the plaintiffs' injuries; it had no relationship to Johnson; and it owed no duty to the plaintiffs. (Doc. 176, pp. 17–18) (citing Doc. 157–5). Furthermore, NCIC and ACE point out that Judge Johnston's order on CAT 5's motion for summary judgment simply said, "denied," with no elaboration. (Doc. 157–7, p. 1). Therefore, they argue, the Judge's order does not make any finding or implication that CAT 5 was vicariously liable for Johnson. (Doc. 176, p. 18).
Of the summary judgment briefs presented to the state court in the underlying litigation, the court notes that only CAT 5's memorandum in support of summary judgment makes any mention of vicarious liability, and even then, it devotes only one paragraph to the subject. (Doc. 157–5, pp. 5–6). This short paragraph consists of an extended string-citation to Alabama law on vicarious and respondeat superior liability, without citing to any facts or record evidence. The rest of CAT 5's state court memorandum in support—the majority of its argument-is devoted to addressing the claims of direct liability made against it. (See Doc. 157–5). Additionally, the underlying plaintiffs' opposition to CAT 5's motion for summary judgment, (Doc. 157–6), mentions only claims of direct liability against CAT 5, including CAT 5's alleged breach of its duty to supervise and direct work; CAT 5's alleged breach of its duty to use qualified labor; and CAT 5's alleged breach of contractual duties with respect to Johnson's hiring and supervision. Id. at pp. 8–11. The underlying plaintiffs do not make mention of vicarious liability in their brief at all. Id. at p. 1. It is therefore not at all apparent to this court, based on the state court summary judgment briefs and Judge Johnston's concise order, that "the only conclusion" from the state court's denial of summary judgment in the underlying litigation is that CAT 5 was facing vicarious liability claims.
Upon review of CAT 5's argument that it was insured under the NCIC and ACE policies, and based upon the record evidence and legal authority cited by CAT 5 in support of its argument, the court finds that CAT 5 has not met its summary judgment burden of establishing the absence of a genuine dispute of material fact. It logically follows that, if CAT 5 has not carried its summary judgment burden with regard to its status as an insured party, then it has not carried its summary judgment burden regarding its claim that NCIC and ACE owed it a duty of defense and indemnity, and its claim that NCIC and ACE engaged in bad faith when they settled for the policy limits. Therefore, CAT 5's motion for summary judgment on its breach of contract claim is due to be denied.
C. NCIC's AND ACE'S MOTIONS FOR SUMMARY JUDGMENT
NCIC and ACE seek summary judgment on all of CAT 5's claims : (1) breach of contract on the alleged duties to defend and indemnify; (2) bad faith on the alleged duties to defend and indemnify; (3) third party beneficiary; and (4) negligence for failure to procure insurance for CAT 5.
ACE submitted its own substituted motion for summary judgment (Doc. 161) and adopted and incorporated NCIC's substituted motion for summary judgment and memorandum in support (Docs. 153 and 154).
(1) CAT 5's Breach of Contract Claims
The parties' arguments regarding NCIC's and ACE's motions for summary judgment on CAT 5's breach of contract claim hew closely to the arguments advanced for and against CAT 5's motion for partial summary judgment, supra, with respect to the breach of contract claims. However, the burden is now on NCIC and ACE, as the moving parties, to establish the absence of a genuine dispute of material fact. In the interests of judicial economy, the court only briefly summarizes the parties' positions where they are duplicative of the arguments made above.
NCIC and ACE argue that CAT 5 is not covered by their respective policies because the phrase in Subsection 1(e), "liable for the conduct of an 'insured'…", refers exclusively to vicarious liability under Georgia law. (Doc. 153, pp. 14–15). Under this argument, NCIC and ACE are only obligated to defend and indemnify CAT 5 for claims of vicarious liability. (Doc. 176, p. 15) (citing Atlanta Postal Credit Union, 228 Ga.App. at 891, supra ). NCIC and ACE argue that, since claims against CAT 5 in the underlying litigation are actually claims of direct liability (i.e., negligence, negligent hiring, negligent training, negligent supervision, and negligent entrustment), then CAT 5 is not covered under their policy and is owed no duty of defense or indemnity. (Doc. 176, p. 16).
CAT 5 flatly disputes this argument, and asserts that the phrase in Subsection 1(e) is broader than NCIC and ACE contend. (Doc. 170, p. 4). However, CAT 5 offers no contrary Georgia authority to rebut the assertion that "anyone liable for the conduct of an insured …" refers exclusively to vicarious liability. CAT 5 focuses instead on the absence of extrinsic evidence that CMT, NCIC, or ACE intended to limit Subsection 1(e) to allegations of vicarious liability only. Id. at pp. 3–4. Yet extrinsic evidence is required only when there is an ambiguity to be resolved, McKinley v. Coliseum Health Group, LLC, 308 Ga.App. 768, 770 (Ga.App.2011) (citing Record Town, Inc. v. Sugarloaf Mills Ltd. Partnership of Ga., 301 Ga.App. 367, 368(3) (2009)), and CAT 5 does not assert that the language is ambiguous. (Doc. 170, p. 4). Furthermore, the construction of a contract, including the existence or nonexistence of any ambiguities in the contract, presents a question of law for the court, which finds no ambiguity here. Id.
CAT 5 also argues that "a fair reading" of the original and First Amended Complaints makes clear that the liability of all defendants arose out of the conduct of Johnson, i.e., that they allege vicarious liability. (Doc. 170, p. 4). Again, CAT 5 cites no authority or evidence to explain how the five counts alleged against CAT 5 are anything other than torts implicating CAT 5's own negligence (i.e., negligence, negligent hiring, negligent supervision, negligent training, and negligent entrustment). Instead, CAT 5 simply insists that the claims against it in the underlying litigation "arose out of" Johnson's conduct. Id. As the court discussed in greater detail, supra, there was no allegation in the underlying litigation that Johnson was CAT 5's employee. Furthermore, negligence-based claims will necessarily "arise out" of an employee's or independent agent's act, even when vicarious liability is not implicated. See Humana Medical Corp. of Alabama v. Traffanstedt, 597 So.2d 667, 668–69 (Ala.1992). Thus, for the same reasons discussed, supra, the court does not attach great weight to NCIC's deposition testimony admitting that the allegations against CAT 5 "arose out of" Johnson's conduct. (Doc. 170, p. 4).
Finally, CAT 5 points to its pleadings in the underlying litigation as evidence that it was defending itself against claims of vicarious liability. This argument fails for the same reasons as discussed above: only CAT 5's state court memorandum in support of summary judgment makes any mention of vicarious liability, and even then devotes only one short paragraph to the subject without citing to any facts or record evidence. (Doc. 157–5, pp. 5–6). Instead, the majority of CAT 5's argument is devoted to addressing the claims of direct liability made against it. (See Doc. 157–5). Moreover, the underlying plaintiffs' opposition mentions only claims of direct liability against CAT 5, with no mention or allegations of vicarious liability at all. See Doc. 157–6. As stated above, it is not at all apparent to the court, based on the state court summary judgment briefs and Judge Johnston's concise order, that "the only conclusion," or that any reasonable conclusion to be drawn from the state court's denial of summary judgment in the underlying litigation is that CAT 5 was facing vicarious liability claims.
The court finds that NCIC and ACE have met their burden of showing that there is no genuine dispute that the language of the Subsection 1(e) of the NCIC policy, interpreted according to Georgia law, is clear and unambiguous that only claims of vicarious liability are covered. Furthermore, the court finds that NCIC and ACE have established that no genuine dispute exists as to the nature of the factual allegations contained in the First Amended Complaint. The claims against CAT 5 are clearly direct liability claims for CAT 5's own alleged negligence, and do not consist of claims for vicarious liability. Therefore, NCIC and ACE's motions for summary judgment are due to be granted with respect to CAT 5's claims of breach of contract for failure to defend and indemnify.
(2) CAT 5's Third Party Beneficiary Claim
CAT 5's Amended Cross Claim ("Cross Claim") includes a claim for third-party beneficiary status under the NCIC and ACE policies, (Doc. 1–3, pp. 8–9), and alleges that CAT 5 was entitled to a defense and indemnity under the NCIC policy, because of the indemnification provision contained in the subcontract between CMT and CAT 5. (Doc. 1–3, p. 4). While NCIC and ACE argue in their summary judgment briefs (Docs. 153 and 161) that CAT 5's third-party beneficiary arguments are not supported by Georgia law, and the CMT/CAT 5 subcontract is not an "insured" contract due to the indemnity provision, CAT 5's opposition brief is silent on these matters. (See Doc. 170).
Accordingly, the court deems CAT 5's silence an abandonment of its third-party beneficiary claim and of its allegation regarding defense and indemnity arising out of common law indemnity principles, as to NCIC and ACE. See Crayton v. Valued Services of Alabama, LLC, 737 F.Supp.2d 1320, 1330–1331 (M.D.Ala.2010) (citing Wilkerson v. Grinnell Corp., 270 F.3d 1314, 1322 (11th Cir.2001); Coalition for the Abolition of Marijuana Prohibition v. City of Atlanta, 219 F.3d 1301, 1325 (11th Cir.2000); Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 182 F.3d 888, 892 (Fed.Cir.1999) (affirming "the unremarkable position that assertions made in the pleadings (e.g., complaint or answer), but not made in opposition to a motion for summary judgment, need not be considered by the district court or the appellate court in ruling on the motion for summary judgment.")).
(3) CAT 5's Bad Faith Claim
The parties agree that CAT 5's bad-faith claim is governed by Alabama law. (Doc. 153, p. 21), (Doc. 170, p. 6). "The plaintiff asserting a bad-faith claim bears a heavy burden." Shelter Mut. Ins. Co. v. Barton, 822 So.2d 1149, 1154 (Ala.2001) (citing LeFevre v. Westberry, 590 So.2d 154, 159 (Ala.1991). To establish a prima facie case of bad-faith refusal to pay an insurance claim, the plaintiff must demonstrate that the insurer had no legal or factual defense to the claim. LeFevre, 590 So.2d, supra. The Alabama Supreme Court has distinguished between "normal" bad-faith claims and "abnormal" bad-faith claims. Shelter Mut. Ins. Co., 822 So.2d at 1154. (citing Safeco Ins. Co. of America v. Sims, 435 So.2d 1219, 1225 (Ala.1983). For a "normal" bad-faith claim to be submitted to a jury, the underlying contract claim must be so strong that the plaintiff would be entitled to a pre-verdict judgment as a matter of law. Id. (citing National Savings Life Ins. Co. v. Dutton, 419 So.2d 1357, 1362 (Ala.1982).
In the instant case, the court has found that summary judgment in favor of NCIC and ACE is appropriate on the breach of contract claim, because they have established the absence of a genuine dispute regarding the lack of their contractual liability to CAT 5 for defense and indemnification. (See supra). Thus, CAT 5 clearly does not meet the requirement that its underlying contractual claim be strong enough to obtain a pre-verdict judgment as a matter of law. Even if NCIC and ACE had not prevailed on their motion for summary judgment, they still put forward a legal and factual defense that their insurance policies, interpreted according to Georgia law, did not cover the claims brought against CAT 5 in the underlying litigation. (See supra). Thus, CAT 5 cannot meet the requirement that it demonstrate that "the insurer had no legal or factual defense to the claim." Lefevre, 590 So.2d at 159. Accordingly, NCIC's and ACE's motions for summary judgment are due to be granted with regard to CAT 5's bad-faith claim.
(4) CAT 5's Negligence Claim
NCIC's and ACE's motions for summary judgment are due to be granted with regard to CAT 5's negligence claim. (Doc. 1–3, p. 10). CAT 5's complaint does not allege that either NCIC or ACE owed it a duty to procure insurance, nor does it allege that either NCIC or ACE breached any such duty. Id. CAT 5's failure to state a claim upon which relief can be granted is sufficient for the court to grant NCIC's and ACE's motions for summary judgment on this point.
Furthermore, while both NCIC and ACE argue this point in their motions for summary judgment, (Doc. 153, p. 29), (Doc. 161, p. 7), CAT 5's opposition brief is silent. (See Doc. 170). Accordingly, the court deems CAT 5's assertions of negligence against NCIC and ACE to be abandoned. See Crayton v. Valued Services of Alabama, LLC, 737 F.Supp.2d 1320, 1330–1331 (M.D.Ala.2010) (citing Wilkerson v. Grinnell Corp., 270 F.3d 1314, 1322 (11th Cir.2001); Coalition for the Abolition of Marijuana Prohibition v. City of Atlanta, 219 F.3d 1301, 1325 (11th Cir.2000); Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 182 F.3d 888, 892 (Fed.Cir.1999) (affirming "the unremarkable position that assertions made in the pleadings (e.g., complaint or answer), but not made in opposition to a motion for summary judgment, need not be considered by the district court or the appellate court in ruling on the motion for summary judgment.")).
D. CMT's MOTION FOR SUMMARY JUDGMENT
CMT has moved for summary judgment as to all of CAT 5's claims against CMT, consisting of breach of contract for failure to defend and indemnify CAT 5 in the underlying litigation and negligent failure to procure insurance on behalf of CAT 5. (Doc. 148).
(1) Breach of Contract for Failure to Defend and Indemnify
The Subcontract is governed by Louisiana law. (See Doc. 150–1, p. 65, ¶ 6.18). CMT correctly notes that the duty to defend and the duty to indemnify are two separate duties. (Doc. 149, p. 11) (citing Federal Insurance Co., et. al. v. St. Paul Fire and Marine Insurance Co., et.al., 638 So.2d 1132, 1137 (La.App. 1 Cir.1994).
With regard to the alleged duty to defend, CMT argues that there is no agreement between the parties for CMT to defend CAT 5 "in any way," and points out that the indemnity provision contained in the Subcontract does not contain the words "defend" or "attorney fees ." Id. at p. 12.
With regard to the alleged duty to indemnify, CMT argues that Louisiana law requires unequivocal language in order for an indemnitee to be indemnified against his own negligence. Id. (citing Perkins v. Rubicon, Inc., 563 So.2d 258, 259 (La.1990)) ("[a] contract of indemnity whereby the indemnitee is indemnified against the consequences of his own negligence is strictly construed, and such a contract will not be construed to indemnify an indemnitee against losses resulting to him through his own negligent acts unless such an intention is expressed in unequivocal terms."); ( Jackson v. America's Favorite Chicken Co., 778 So.2d 1257, 1261 (La.App. 4th Cir.2001) (holding that unless a mutual intent to provide indemnification against the indemnitee's own negligence is expressed in unequivocal terms, the presumption is that the parties did not intend for the indemnitee to be protected from his own negligence.). CMT argues further that the terms of the indemnification provision do not "unequivocally" impose upon CMT the duty to indemnify CAT 5 for CAT 5's own negligence. (Doc. 149, p. 23). Therefore, since the claims against CAT 5 in the underlying litigation are claims of direct negligence, CMT argues that it cannot be forced to indemnify CAT 5 for these claims.
CAT 5 argues in opposition that, with regard to the alleged duty to defend, the Subcontract's indemnification clause is broad enough under Louisiana law to include indemnity for CAT 5's defense costs and expenses. (Doc. 169, p. 4). CAT 5 quotes Naquin v. Louisiana Power & Light Co., 951 So.2d 228 (La.App. 1st Cir.2006) for the proposition that "[i]ndemnity in its most basic sense means reimbursement, and may lie when one party discharges a liability which another rightfully should have assumed." Id. at 231.
With regard to the alleged duty to indemnify, CAT 5 insists that the issue turns on CAT 5's potential liability to the plaintiffs in the underlying litigation. (Doc. 169, p. 2). CAT 5 also argues that the Ceres litigation is instructive in the instant case because Ceres ultimately prevailed on its claims for defense and indemnity based upon its subcontract with CMT. Id.
As was the case with CAT 5's motion for summary judgment against CMT, and as the court stated, supra, even a cursory reading of Section 8.1 of the Subcontract in this case shows that the indemnification provision covers injuries caused by "negligent acts of the Subcontractor." (Doc. 150–1, p. 66). CAT 5 has cited no "unequivocal" language in the Subcontract which requires CMT to indemnify CAT 5 for CAT 5's own negligent acts, nor has it offered any contrary Louisiana authority suggesting that such unequivocal language is somehow not required, after all. Instead, CAT 5 prefers to draw comparisons between the instant case and the Ceres litigation, despite the fact that the indemnification provisions at issue in Ceres contained far broader language. (See Doc. 153–2, p. 7). There is no discussion in Ceres, from either party, of the Louisiana rule requiring a clearly expressed intent to indemnify a principal against his own negligence. See Id. CAT 5 is silent on this point in its opposition to summary judgment. (See. Doc. 169).
Given the weight of Louisiana case law requiring "unequivocal" language expressing an intent to indemnify an indemnitee for its own negligence, and further given the absence of such language in the CAT 5/CMT Subcontract, the court finds that CMT's motion for summary judgment with regard to CAT 5's breach of contract claim is due to be granted.
(2) Negligent Failure to Procure Insurance
CMT argues that it was under no obligation to procure insurance for CAT 5 as a named insured, and asserts that it properly obtained liability insurance at levels required by the Subcontract. (Doc. 149, pp. 12–13).
CAT 5's opposition brief is silent on this issue. (See Doc. 169). Accordingly, the court deems CAT 5's assertions of negligence against CMT to be abandoned. See Crayton v. Valued Services of Alabama, LLC, 737 F.Supp.2d 1320, 1330–1331 (M.D.Ala.2010) (citing Wilkerson v. Grinnell Corp., 270 F.3d 1314, 1322 (11th Cir.2001); Coalition for the Abolition of Marijuana Prohibition v. City of Atlanta, 219 F.3d 1301, 1325 (11th Cir.2000); Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 182 F.3d 888, 892 (Fed.Cir.1999) (affirming "the unremarkable position that assertions made in the pleadings (e.g., complaint or answer), but not made in opposition to a motion for summary judgment, need not be considered by the district court or the appellate court in ruling on the motion for summary judgment.")).
After due consideration of all matters presented and for the reasons set forth herein, it is ORDERED that CAT 5's motion for summary judgment as to its breach of contract claims against CMT (Doc. 154) is DENIED. CAT 5's motion for summary judgment as to its breach of contract claims against NCIC and ACE are DENIED. NCIC and ACE's motions for summary judgment as to all of CAT 5's claims are GRANTED. CMT's motion for summary judgment as to all of CAT 5's claims is GRANTED. The NCIC's and ACE's motions to strike certain expert testimony, (Docs. 168 and 174), and ACE's motion to strike plaintiff's reply brief, (Doc. 185), are denied as MOOT.
DONE and ORDERED.
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text:
EditorialFeaturedStanley Pranin
Aikido: A Legacy from the Past, a Vision for the Future by Stanley Pranin
"What is special about aikido is that its spiritual core is manifest
in its physical movements and integral to its techniques"
From Aikido Journal #100, 1994
The publication of Aikido Journal 100 is a landmark for this magazine. It is the first issue bearing our new name, one that is much more appropriate, given the present content and direction of the publication. Our new name and format also happen to coincide with our 20th anniversary. I, perhaps more than anyone, am amazed that this publication has survived for so long. In fact, it has become my life's work. I would like to take this occasion to thank you loyal readers for your interest and support and to reaffirm our commitment to producing as fine a publication as we are able… and then some!
As you know, our concern in Aikido Journal is with aikido as a body of techniques and a tool for achieving the peaceful resolution of conflict. This means that our starting point is the art formulated by Morihei Ueshiba, with its inseparable humanistic premises. This is the standard by which we measure the content of technique and the morality of behavior. The aims of aikido also constitute our vision for a future world in which peaceful interaction in society is achieved through the presence of a skilled sword that remains sheathed. Strength, skill, and foresight are required to forestall violence, not merely a "desire for peace."
I have often been a critic of the present technical content and almost casual practice of aikido seen in many schools today. The reason for my dismay is the fact that aikido practiced in this way is a debased form of the martial art bequeathed by the founder. Certainly, all are free to practice as they wish, but I question the validity of calling much of what is seen today "aikido" when it represents little more than a hollow shell of the real art.
Having said this, I wish to point out a remarkable phenomenon. Aikido, even in this diluted form, has proven a phenomenal success both in Japan and abroad. It is one of the major martial arts practiced worldwide and has become a household word in most developed countries. Unlike judo, karate, or kendo, aikido has achieved this distinction despite the fact it has not been transformed into a sport and therefore lacks competition as a means of generating interest. But if the techniques of aikido as practiced today are weak and ineffectual in self-defense situations, if it cannot count on competition (except for Tomiki Aikido) as a lure to attract the young, then where on earth does its broad appeal lie?
I have given this enigma a great deal of thought in recent months and have come up with two compelling reasons. The first is simply the exceptional beauty of aikido techniques. The circularity of movement of two partners who hold no violent intent is a wonder to behold. There is a flow and gracefulness about aikido techniques that is not seen in its precursor art, Daito-ryu aikijujutsu. The other characteristic of aikido that has contributed to its wide acceptance is the innovative concept of a martial art as a tool for achieving peace. This is not to say that the classical martial ways, or modern ones for that matter, do not stress the development of the individual. They surely do. But what is special about aikido is that its spiritual core is manifest in its physical movements and integral to its techniques.
The situation as I see it is thus as follows: Aikido itself and the concepts it embodies are so appealing that it has survived and thrived even in a degraded form. If this is the case, what then might be the impact of the art on society if the techniques and concepts of the founder were to be re-infused into the art? Such an aikido would surely be revolutionary and have far-reaching consequences!
Yet we cannot reassert our link with the founder simply by declaring that aikido is a "spiritual martial art." Instead, leaders and teachers of the art must exemplify this spirituality in all aspects of their lives, not solely on the training mat. Nor can we succeed in convincing people that aikido is an effective martial art simply by demonstrating light, dainty movements where the attacker is in obvious collusion with his partner. We must show convincing techniques where all openings are covered, where our movements are powerful, but controlled and applied with compassion Only then can we do justice to the intended form and meaning of aikido.
Our challenge as a magazine devoted to the study and propagation of aikido is then to dearly and repeatedly articulate this message of hope. I think the challenge to you as individuals and aikidoka everywhere is to reassess your involvement in the art. I would suggest that you start by reading up on the founder. There are a number of books in English today that cover the subject. Aikido Journal has, in its earlier incarnation as Aiki News, published literally hundreds of articles dealing with every aspect of his life and art. Moreover, serious aikidoka should take a good look at the founder's technique, which has been preserved on film. Last year we released a six-volume set of videotapes documenting the founder's art from 1935 up until his death in 1969.
Finally, I would ask that you make a special effort to rejuvenate your own practice. If you are going to invest your valuable time to learn a self-defense art and engage in a form of exercise to improve your health, do you not owe it to yourself to constantly test your limits? Aikido has such potential as a discipline for personal growth and the improvement of society that it seems a shame not to practice it in line with the founder's original intent. You, have in your hands the power to do so. Please do your best… and then some!
Here's wishing both you and Aikido Journal another successful twenty years!
Stanley Pranin is editor-in-chief and publisher of Aikido Journal, which he established as Aiki News in 1974 in an attempt to provide accurate in formation for English- speaking aikido practitioners. He began his aikido training in 1962 in Lomita, California, and is now 5th dan. Since 1977 Pranin has lived, trained, and worked in Japan and publishes the Japanese magazine Aiki News, as well as a variety of aikido-related books. He is the author of The Aiki News Encyclopedia of Aikido, editor of Aikido Masters, and co-author of The Aiki News Dojo-Finder and Takemusu Aikido: Background and Basics.
Stanley Pranin
Transmission, Inheritance, Emulation 1, by Peter Goldsbury
Hello Stan,
This article is just as applicable now as eighteen years ago. I am working forward.
We are trying and doing things that I don't think are being done anywhere else in the world.
I developed a counter kata for the 13 no jo and since the end of that and thrust 13 in the 31 no jo are
the same we tack on the back end of the 31 no jo and now we have two 31 no jo katas.
If i find a hole or weak spot in a technique my students and I find a way to fix the hole or
strengthen the weakness.
A lot of the advanced classes I teach become labs where we break down and analyze exactly what
makes the technique work and discover if there are ways to improve execution. I think this was what
Nishio Sensei was doing and I believe this is what he as well as O'Sensei expected of their students.
My students got me the Takemusu Aikido volume 5 for Christmas. I thought this had come out in the
mid 1990's while I was out at sea so much. I was very surprised to see the year 2000 as the copyright.
That makes sense why I didn't notice it coming out. I was swamped in classes at University of Florida and
look at anything beyond what got me through. It's a lot harder to get a finance degree at 49 than at 24.
This 2000 date on the copyright makes me wonder about the Budo book coming out like volume six before #5.
Was this book delayed to let some of the old guard pass away so there would not be any "questions" about
disseminating the weapons information? I understand that Saito Sensei's first set was supposed to have been
longer but he stopped because of some concerns from the Hombu Dojo.
Tom Huffman
As to the order of publication of the "Takemusu Aikido" series, we didn't know how many books would be published because of Saito Sensei's declining health. I felt that the "Budo" book was especially important from the historical standpoint and we had already shot a video of the material. That's why it appeared before volume 5. Later, we decided to dub it volume 6.
omercado says:
Stan as always you hit the nail on the head with both eloquence , and in a respectful way. I might add another reason for the popularity of Aikido as it is practiced today. The huge status quo is directly related to the points you make regarding the degraded form of training today. In many places you will find significantly older out of shape senior students. You will find no spirit attacks, and people falling down when they really shouldn't.
Having trained in other arts other than Aikido I have found this is often not the case in other arts. The collusion you speak of in training is a big draw for many Aikidoists. The people who have sent everybody flying through the air with minimal effort are not going to want to go back to the drawing board. There are, of course, exceptions to the rule. Yet, they are a small percentage of the Aikido whole. I applaud your efforts to have people strive towards training like the founder designed. Yet, the thing about change on a larger scale is that people have to want to change. You obviously have many fans (me being one of them), but truly how many have the shared vision of training the way you speak of. The old guard will keep many of the younger people from trying Aikido. They will demonstrate their techniques in a way that will have people continuing to say " That's not real" or " That would never work in real life." I am inspired by your perseverance, please keep on pushing forward.
Thank you very much for your comment. I totally agree with what you're saying.


text:
Jim McCormick + Spencer Bohren + Alex McMurray + Paul Sanchez
CUP FLOWETH OVER
Write Bros "First Flight" Reviewed
by Brad Bohannan | Nola Defender
When I first heard of this project, I wondered if it would ever happen! Getting some of the best songwriters and musicians in New Orleans to record an album together, putting their talents on tracks and their egos on the side, would be no easy feat. But Spencer Bohren, Jim McCormick, Alex McMurray and Paul Sanchez a.k.a. the Write Brothers managed to put together "First Flight" this winter. I've listened to every track, note and word and offer this as my humble opinion.
The album begins with "Cup Full of Soul." This is quirky telling stories about Smoke House Turnip and Pete Fountain enjoying the Spirits of New Orleans. For the cost of a couple dollars, a savory lady gave them a first taste of a 'cup full of soul'. I believe this to be the best song on the record and reflective of their style.
Another winner is track 5, "New Orleans." This is a song about being home, missing home, and ultimately making a home by finding a place where you belong. This song could be about anyone's home but as these artists are from the Crescent CIty and their love for New Orleans comes out in the lyrics and the emotional tone in which it is performed. For obviosu sreasons, this tune is sure to be a local favorite!
Track 8, "Losing You" is the closest thing to a cute catchy love song on the album. You will catch on quick to the lyrics and find yourself singing along! Ultimately, the song is about a guy suffering from a stream of bad luck but of all the bad, the one thing that he can't get over is losing his lady.
"Wedding Day" is the deepest song on the album and the most touching. It's about a man dealing with the loss of his wife. He repeats his best day of his life over and over to pretend the worst day never happened. This is song that takes guts to record but I find it to be something special.
Musicians are notorious for letting egos get in the way of great music. Surprisingly, this eclectic group of New Orleans' music royalty put egos aside and their talent in the forefront, making this album something special. The songs are songs that you can tell they picked for themselves and it shows in the recording. This might be the Write Bros first flight, but I'm looking forward to the return trip! This is New Orleans music that we crave and let's hope the second flight gets off the ground.
The Write Brothers will be playing at the Ogden After hours Thursday August 27 at Ogden Museum of Southern Art 925 Camp Steet.


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Here is a special acrostic which does a very nice job of highlighting the meaning of Christmas and the Christmas season.
Feel free to use this kind of Christmas word game to add a something extra special to your Christmas morning traditions.
'S' is for the star that shone so bright.
And that's why there is a Christmas Day.
And a Happy New Year too.


Firespring and Cornerstone Print & Marketing teamed with NEDCO to utilize the SBA 504 Loan Program, which enabled them to remodel the 65,000-square-foot "Gotcha Covered" building at 1201 Infinity Court in Lincoln. Growth and facility demands required more space to accommodate the overall business plan. Cornerstone offers printing and marketing services and Firespring offers innovative online tools to nonprofits.
Since the move, the group has experienced a nearly 20% growth in employees. Firespring also contributes 2% of revenue to nonprofit organizations in our community and allows employees one day a month to volunteer at a nonprofit of their choice.
The new facility has allowed Firespring to expand its service offering into informational technology services with the acquisition of tech firm, Floor99. In addition, since moving into the new building, Firespring has launched a payment processing platform called PaymentSpring. This service allows current and new customers an integrated solution to taking online payments and donations.
Jay Wilkinson of Firespring praised NEDCO for their expertise and responsive loan process. "The staff of NEDCO was there at every step of the process," Wilkinson commented.
For more information about Firespring or Cornerstone Print & Marketing, please visit www.firespring.com or www.cornerstoneprintmarketing.com.


In December 1971, the musical version of Two Gentlemen of Verona took Broadway by storm after a summer tryout at the Delacorte in Central Park. In researching the show's history, I dug up a lot of very cool facts.
2. It beat Grease for the 1972 Tony Award for Best Musical. Oh, AND it also beat Follies. Sometimes, that Best Musical category is darkhorsed like a bawse (just ask Avenue Q)! That Tony probably felt especially good in the hands of Galt MacDermot (see below), whose legendary musical Hair lost just three years prior.
5. Hair composer Galt MacDermot wrote the music. And, no wonder: The show sounds like a cross between Hair and Pippin, which came out a year later. This period seems like it was a real turning point for musical theater, with Broadway being forced to reckon with the fact that rock music can and should be a part of its legacy.
Check out the Two Gentlemen of Verona Original Broadway Cast recording on Spotify by clicking below. If you're not sure where to start, "Night Letter" (see the video above for the 2005 revival version) is a straight-up banger and "Summer, Summer", the opening number is groovy AF.
Fair warning, this album is gonna be your new jam!


Leaning Tower of Pisa Mold Sand Building Toy makes a unique educational summer party favor for kids.
You don't have to go to Italy to see the famous leaning tower! You can build your own on the beach or in your backyard sandbox. Leaning Tower of Pisa Mold Sand Building Toy by Hape is bright yellow sand mold that will inspire your sand builder to learn about world geography and architecture. The Pisa tower sand shape makes a great party favor for your kids pool party or summer birthday. If you like to add interesting architectural twist to your kids' sand play, combine Leaning Tower of Pisa Mold Sand Building Toy with other unique sand molds from Educational Toys Planet.
Dimensions of package 4.92" x 4.92" x 6.89"
Write your own review of Leaning Tower of Pisa Mold Sand Building Toy.


Simple polo shirt from Junk de Luxe. Plain-coloured and with a logo appliqué on the left side of the chest. Button placket with a single button. The polo is slim fit, so it is a bit tighter than a regular fit t-shirt.
Appliqué on the left side of the chest.