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Titan Indemnity Co. v. Gaitan Enterprises, Inc.

United States District Court, D. Maryland, Southern Division

November 14, 2016

TITAN INDEMNITY CO., Plaintiff,
v.
GAITAN ENTERPRISES, INC., et al., Defendants.

          MEMORANDUM OPINION

          PAUL W. GRIMM, UNITED STATES DISTRICT JUDGE

         This insurance-contract dispute arises out of the tragic June 2012 death of Fort Meyer Construction Corp. (“Fort Meyer”) employee Leroy Cook in a vehicular accident at one of the company's asphalt plants. Cook died when a dump truck driven by Santos Sifredo Romero Garcia struck him. Garcia owns and operates trucking companies called A and S Trucking and Romero Santos Trucking. Marvin Gaitan owns and operates Gaitan Enterprises, Inc. and shares a truck parking lot with Garcia and other dump-truck contractors in Landover, Maryland.[1]Gaitan referred the Fort Meyer job to Garcia when he lacked a sufficient number of trucks to perform the work himself. Following the accident, Cook's estate and family members filed a tort suit in the Circuit Court for Prince George's County against Garcia, Gaitan, and their companies. Cir. Ct. Prince George's Cnty, Md. Second Am. Compl., J.A. 1-11, ECF No. 62.[2] Titan Indemnity Co. (“Titan”), which insures Gaitan, filed suit in this Court seeking a declaratory judgment that it is not liable for any of the allegations in the state-court lawsuit and owes no duty to defend Gaitan in that case. Compl., ECF No. 1.

         Pending now before the Court is Titan's Motion for Summary Judgment. ECF No. 60. The Motion has been fully briefed, see Pl.'s Mem., ECF No. 61; Defs.' Opp'n, ECF No. 63; Pl.'s Reply, ECF No. 66, and no hearing is necessary, see Loc. R. 105.6 (D. Md.). Because I find that Garcia is not covered by the Titan Policy's temporary-substitution clause, I will grant Titan's Motion as to its liability and duty to defend under the Policy. I also conditionally find that Titan has no duties or obligations under the MCS-90 endorsement attached to the policy because it only applies to entities insured by the underlying policy. But because Titan did not raise this issue in its briefing, I will give the Defendants an opportunity to show cause within twenty-one days why summary judgment should not be granted in Titan's favor regarding the MCS-90 endorsement before rendering a final decision.

         Background

         In reviewing a motion for summary judgment, the Court considers the facts in the light most favorable to the non-movant, drawing all justifiable inferences in that party's favor. Ricci v. DeStefano, 557 U.S. 557, 585-86 (2009); George & Co., LLC v. Imagination Entm't Ltd., 575 F.3d 383, 391-92 (4th Cir. 2009); Dean v. Martinez, 336 F.Supp.2d 477, 480 (D. Md. 2004). Unless otherwise stated, this background is composed of undisputed facts. See Ricci, 557 U.S. at 585-86; George & Co., 575 F.3d at 391-92; Dean, 336 F.Supp.2d at 480.

         For several years, Gaitan worked as a truck driver on site at Fort Meyer. Gaitan Statement 13:2-10, J.A. 151. In 2005, he opened his own business, id., and Fort Meyer began using him as a point person for its hauling needs. See Coppula Dep. 11:16-22, J.A. 63; Gaitan Statement 14:16-22, J.A. 152. Whether Fort Meyer and Gaitan formalized this relationship in a written contract is a subject of dispute.[3] Coppula Dep. 26:1-10, J.A. 78; Gaitan Statement 13:15-21, J.A. 151; Gaitan Dep. Vol. I 14:11-14, J.A. 183. Under this arrangement, Fort Meyer would tell Gaitan how many trucks it needed for each job, and Gaitan would either fill the request using his own fleet or refer work he could not perform to other contractors with whom he shared his parking lot. Coppula Dep. 11:16-22, 29:18-30:8, J.A. 81-82; Garcia Dep. 18:12- 19:8, J.A. 117; Gaitan Statement 14:16-22, 16:2-6, J.A. 152, 154. When Gaitan made referrals, drivers would submit to Fort Meyer a Gaitan work-order ticket, and Fort Meyer would pay Gaitan at an hourly rate for each submitted ticket; Gaitan, in turn, would pay the other contractors in full for their drivers' work, reserving only two to five dollars per job for processing costs. Gaitan Statement 18:3-8, 21:3-13, J.A. 156, 159; Garcia Dep. 53:1-6, J.A. 125; Gaitan Dep. Vol. I 25:15-26:5, J.A. 185-86. Gaitan shared neither the proceeds nor the expenses from referred trucking jobs with the other contractors, but benefitted by getting referrals from other contractors when they had excess work. Gaitan Statement 21:14-22:6. J.A. 159-60; Gaitan Dep. Vol. II 20:2-6, J.A. 208. Whatever the contractual relationship between Gaitan and Fort Meyer, it is undisputed that he exercised a degree of supervisory authority over the contractors to whom he referred work: verifying that they complied with Department of Transportation regulations; confirming that they met Fort Meyer's insurance requirements; examining drivers' driving records; and issuing IRS Forms 1099 to contractors. Garcia Dep. 6:19-7:10, J.A. 114; Gaitan Dep. Vol I. 16:19-18:9, J.A. 183-84. On any given day, Gaitan might refer multiple Fort Meyer jobs to other contractors. See Gaitan Tickets, J.A. 248-72.[4]

         On June 19, 2012, Fort Meyer called Gaitan with a job, but the parties dispute the number of trucks that Fort Meyer requested that day. In his initial answers to interrogatories Gaitan indicated that Fort Meyer requested one truck, Gaitan Answers to Interrogs. No. 6, J.A. 133, but he later supplemented his answer and indicated the number was five, Gaitan Supp. Anwers to Interrogs. No. 6., J.A. 274-75, and he recalled the number as two in his deposition, Gaitan Depo. Vol. I 22:4, J.A. 185. Whatever the number, Gaitan could not fill the request because one of his five trucks was in disrepair and-if Fort Meyer requested fewer than five trucks-because the others were on assignment elsewhere.[5] Gaitan Depo. Vol. I. 22:4-11, J.A. 185; Gaitan Supp. Answers to Interrogs. No. 6, J.A. 274. Instead, Gaitan referred the job to Garcia, one of the other contractors with whom he shared a parking lot in Landover, Maryland. Garcia Dep. 20:15-21, 22:11-19, J.A. 117-18; Gaitan Dep. Vol. I 22:12-14. Garcia took the job and used his own dump truck, Garcia Dep. 11:2-6, J.A. 115; Gaitan Statement 21:5-6; Gaitan Dep. Vol. II 13:12- 17, which was minimally insured by a policy that he purchased from Progressive Casualty Insurance Company, Progressive Policy, J.A. 137. While Garcia prepared the truck for loading at Fort Meyer, the truck in front of him pulled forward. Garcia Dep. 29:13-30:1, 33:8-12, J.A. 119-20. Without seeing Cook walking in front of the vehicle, Garcia also pulled forward, struck Cook, and killed him. Id. 38:1-39:21.

         Following the accident, Cook's estate and family members filed suit in the Circuit Court for Prince George's County against Garcia, Gaitan, and their companies, bringing wrongful-death and survival claims (Counts I and II) as well as negligence claims for Garcia's failure to obtain adequate insurance coverage and Gaitan's failure to ensure that he did so (Counts III and IV). Cir. Ct. Prince George's Cnty, Md. Second Am. Compl.

         Standard of Review

         Summary judgment is proper when the moving party demonstrates, through “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials, ” 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), (c)(1)(A); see also Baldwin v. City of Greensboro, 714 F.3d 828, 833 (4th Cir. 2013). If the party seeking summary judgment demonstrates that there is no evidence to support the nonmoving party's case, the burden shifts to the nonmoving party to identify evidence that shows that a genuine dispute exists as to material facts. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 & n.10 (1986). The existence of only a “scintilla of evidence” is not enough to defeat a summary judgment motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). Instead, the evidentiary materials submitted must show facts from which the finder of fact reasonably could find for the party opposing summary judgment. Id. A “genuine” dispute of material fact is one where the conflicting evidence creates “fair doubt”; wholly speculative assertions do not create “fair doubt.” Cox v. Cnty. of Prince William, 249 F.3d 295, 299 (4th Cir. 2001); see also Miskin v. Baxter Healthcare Corp., 107 F.Supp.2d 669, 671 (D. Md. 1999). The substantive law governing the case determines what is material. See Hooven-Lewis v. Caldera, 249 F.3d 259, 265 (4th Cir. 2001). A fact that is not of consequence to the case, or is not relevant in light of the governing law, is not material. Id.; see also Fed. R. Evid. 401 (defining relevance).

         Discussion

         Under Maryland law, an insurance company has a duty to defend “if there is a potentiality that the claim could be covered by the policy.” Md. Cas. Co. v. Blackstone Int'l Ltd., 114 A.3d 676, 682 (Md. 2015).[6] Determining whether a potentiality of coverage exists requires courts to examine two questions: “(1) what is the coverage and what are the defenses under the terms and requirements of the insurance policy? (2) do the allegations in the [underlying] tort action . . . potentially bring the tort claim within the policy's coverage?” Id. (quoting Walk v. Hartford Cas. Ins. Co., 852 A.2d 98, 106 (Md. 2004)).

         The Titan Policy does not list Garcia as an insured individual or his truck as a covered vehicle. See Business Auto Coverage Form Declarations 3-4, J.A. 18-19. Defendants maintain, however, that Garcia's truck falls within the Policy's “temporary substitute” clause. Defs.' Mem. 13-14. If Garcia's truck is not covered as a temporary substitute, then Defendants argue that the Policy's MCS-90 endorsement requires Titan to pay for any judgement against Garcia, subject to indemnification. Id. at 15, 20.

         Temporary-Substitute ...


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