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Evanston Insurance Co. v. Yeager Painting LLC

United States District Court, N.D. Alabama, Southern Division

August 3, 2018

EVANSTON INSURANCE CO., Plaintiff,
v.
YEAGER PAINTING, LLC, CHRIS YEAGER, and WILFREDO HERNANDEZ, a/k/a WILFREDO ROMAN HERNANDEZ-ZAVALA, Defendants.

          MEMORANDUM OPINION [1]

          John E. Ott Chief United States Magistrate Judge.

         The court has before it the January 10, 2018 motion for summary judgment filed by Plaintiff Evanston Insurance Company against Defendants Chris Yeager and Yeager Painting LLC.[2] (Doc. 38). Pursuant to the court's initial order (Doc. 28) and the February 7, 2018 extension (Doc. 41), the motion was under submission as of March 1, 2018. After consideration of the briefs, evidence and applicable case law, the court finds that the motion is due to be granted for the following reasons.

         I. BACKGROUND

         Chris Yeager formed Yeager Painting, LLC (“Yeager Painting”) in 2000. (Doc. 38-2 (“Yeager Dep.”) at 7-8).[3] Yeager Painting is in the business of sandblasting and painting. (Id. at 7). In September 2012, Yeager formed Yeager Industrial Painting, LLC (“Yeager Industrial”). (Id. at 9-11; Doc. 38-2 at 13-19). Although Yeager Industrial did not exist until September 2012, Yeager Painting sometimes used the name Yeager Industrial Painting. (Yeager Dep. at 21-23, 27-28).

         Essex Insurance Company issued a commercial general liability policy to Yeager Painting for the policy period March 2, 2012 to March 2, 2013. (Doc. 38-1 (“Roach Aff.”) ¶ 4; Doc. 38-1 at 5-63). Essex merged into Evanston effective June 30, 2016, and as a result of the merger, Essex ceased to exist and Evanston became the insurer under the policy. (Roach Aff. ¶¶ 2, 5).

         A. The Accident

         In March 2012, the City of Pelham, Alabama, hired Walker Brothers Ltd. to sandblast water tanks. (Yeager Dep. at 17; Doc. 38-3 at 1-4). Walker Brothers subcontracted the work to Yeager Painting.[4] (Yeager Dep. at 17). Yeager Painting[5] then subcontracted the work to Delgado Painting. (Id. at 22-23; Doc. 38-2 at 24-33). There is no evidence Yeager Painting required, secured, or maintained any certificate of insurance confirming Delgado Painting carried commercial general liability insurance coverage with limits at least equal to the limits of the Evanston policy and naming Yeager Painting as an additional insured.[6]

         Wilfredo Hernandez, an employee of Delgado Painting, was injured on May 19, 2012, while working on the Pelham water tanks. (Doc. 38-7 at 4). Hernandez was using “a man-lift basket . . . that uses a winch and cable system to travel up and down the water tank/structure” to sandblast the tank in preparation for paint. (Id.). The basket was anchored to the top of the water tank, and when Hernandez was approximately 25-30 feet high and in the stop position, the breaking system of the winch allegedly failed and Hernandez fell to the ground. (Id. at 4-5). As a result of the fall, Hernandez alleges he suffered severe injuries including, but not limited to, the loss of teeth, traumatic damage to the right mandible, multiple fractures to his jaw, and damage to his left arm resulting in the loss of mobility. (Id. at 5).

         B. Accident Reported to Evanston and Evanston's Denial of Coverage

         At some point after the accident, Evanston “received notice of a claim presented by Wilfredo Hernandez for injuries allegedly sustained while working on a bucket truck allegedly owned by Yeager Painting LLC.” (Doc. 38-9 at 1; see also 38-1 at 52). It is unclear who notified Evanston of the accident. (Id.). On January 30, 2013, Markel Service Inc., Evanston's claims service manager, sent Yeager and Yeager Painting a reservation of rights letter and hired an adjusting firm to investigate the claim. (Doc. 38-1 at 52). After an investigation, on April 10, 2013, in a letter addressed to Chris Yeager of Yeager Painting, Markel, on behalf of Evanston, denied coverage “due to the fact that the claim arises out of an injury sustained to a sub-contractor which is excluded by the policy.” (Id.). The letter concluded by instructing Yeager to contact his attorney regarding the matter, but to immediately contact Evanston if anything changed or of he had additional information regarding the claim. (Id.).

         C. The Underlying Lawsuit

         On March 12, 2014, Hernandez filed a complaint in the Circuit Court of Shelby County, Alabama, against Yeager Industrial, Walker Brothers, and Delgado Painting. (Doc. 38-8). The complaint asserted the following claims against all three defendants: (1) claim for worker's compensation benefits under the Alabama Worker's Compensation Act; (2) claim under the Alabama Employer's Liability Act; (3) claim entitled “unsafe work environment” alleging a duty under Alabama Code § 25-5-1 to furnish reasonably safe employment; (4) negligence and wantonness; (5) negligent and/or wanton hiring, training, retention and/or supervision; and (6) spoliation of evidence/wanton destruction of evidence. (Id.).

         Almost two years later, on February 16, 2016, Hernandez amended his complaint and added Yeager Painting and Chris Yeager as defendants. (Doc. 38-7). The amended complaint contained the same claims as the original complaint and asserted the claims against all defendants. (Id.). Yeager Painting and Yeager were served with the amended complaint on February 27, 2016 and February 22, 2016, respectively. (Doc. 38-10 at 5-6).

         On September 16, 2016, seven months after being served with the amended complaint, an attorney for Yeager Painting and Yeager sent a letter to Evanston enclosing the amended complaint and demanding “defense and indemnity” under the policy. (Doc. 38-1 at 49). After receipt of this letter, Evanston made repeated attempts to contact Yeager to obtain information regarding Hernandez's lawsuit, but Yeager did not respond or cooperate in the investigation. (Id. at 54). Based on the allegations in the amended complaint, Evanston agreed to defend Yeager and Yeager Painting against all claims in the amended complaint other than the worker's compensation claim under a full reservation of rights. (Id. at 52).

         II. STANDARD OF REVIEW

         Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is proper “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.” Fed.R.Civ.P. 56(a). “Rule 56[ ] mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the initial burden of proving the absence of a genuine issue of material fact. Id. at 323. The burden then shifts to the nonmoving party, who is required to “go beyond the pleadings” to establish there is a “genuine issue for trial.” Id. at 324 (citation and internal quotation marks omitted). A dispute about a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         The court construes the evidence and all reasonable inferences arising from it in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, (1970); see also Anderson, 477 U.S. at 255 (all justifiable inferences must be drawn in the non-moving party's favor). Any factual disputes will be resolved in favor of the non-moving party when sufficient competent evidence supports the non-moving party's version of the disputed facts. See Pace v. Capobianco, 283 F.3d 1275, 1276-78 (11th Cir. 2002). “[M]ere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005) (citing Bald Mtn. Park, Ltd. V. Oliver, 836 F.2d 1560, 1563 (11th Cir. 1989)). Moreover, “[a] mere ‘scintilla' of evidence supporting the opposing 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) (citing Anderson, 477 U.S. at 252).

         III. ...


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