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Kaplan Trucking Co. v. Grizzly Falls Inc.

Court of Appeals of Ohio, Eighth District, Cuyahoga

March 16, 2017

KAPLAN TRUCKING COMPANY PLAINTIFF-APPELLANT
v.
GRIZZLY FALLS INC., ET AL. DEFENDANTS-APPELLEES

         Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-14-826537

          ATTORNEY FOR APPELLANT Marcia E. Hurt

          ATTORNEYS FOR APPELLEES FOR WESTCHESTER FIRE INSURANCE COMPANY Geoffrey A. Belzer Wilson, Elser, Moskowitz, Edelman & Dicker L.L.P.

          FOR GRIZZLY FALLS INC. Steve Barrett

          BEFORE: Laster Mays, J., Jones, P.J., and Blackmon, J.

          JOURNAL ENTRY AND OPINION

          ANITA LASTER MAYS, JUDGE

         {¶1} Plaintiff-appellant Kaplan Trucking Company ("Kaplan") appeals the trial court's grant of summary judgment in favor of defendant-appellee Westchester Fire Insurance Company ("Westchester"). After a thorough review of the record, we find that genuine issues of material fact exist, and the trial court erred in granting summary judgment. The matter is reversed and remanded.

         I. BACKGROUND AND FACTS

         {¶2} Kaplan is an Ohio based national freight hauling and brokerage company. On April 5, 2010, Kaplan entered into a brokerage agreement with Grizzly Falls, Inc., an Alabama trucking company ("Grizzly), to haul cargo owned by independent third parties ("Contract"). The Contract included a clause indemnifying Kaplan against any and all losses, damages, and expenses relating to the loading, handling, transportation, unloading, or delivery of shipments, including the full value of the cargo involved, fees, and costs. Section 14 of the Contract required that Grizzly carry liability insurance for loss or damage to cargo for an amount not less than $100, 000, and for Kaplan to be named an additional insured under the policy.

         {¶3} Grizzly secured a cargo policy ("Policy") through insurance broker Kunkel & Associates, Inc. ("Kunkel"). Kunkel secured the Policy, issued by Westchester as the insurer, through Westrope & Associates ("Westrope"), a producer and broker for Westchester. Insurance documents delivered to Grizzly by Westrope included:

(1) the insurance binder, a contract for temporary insurance pending issuance of the Policy;
(2) the insurance covernote ("Covernote"), issued on Westrope letterhead, listing Westchester as the insurer and Kunkel as the producer, and setting forth general terms encompassing the business relationship between Westrope and Kunkel;
(3) an insurance premium invoice, on a Westrope form, listing the premium amount and the percentage deduction for Kunkel's commission; and
(4) a contact list for Policy services, listing Westrope personnel. No Westchester personnel were listed as contacts.

         {¶4} The Policy term was for the period of June 9, 2012 to June 8, 2013. The Policy covered cargo damage or theft under the cited conditions; however, coverage did not extend to cargo transported by vehicles that were not listed on the Policy schedule ("Schedule"). The failure to notify Westchester of a change of vehicle within 30 days of the triggering event resulted in a denial of coverage.

         {¶5} Grizzly supplied Kaplan with a Certificate of Insurance ("Certificate") identifying Kaplan as the certificate holder, Kunkel as the producer, Westchester as the cargo insurer, and Progressive Insurance Company ("Progressive") as the automobile liability insurer. The Certificate also provided that, for the holder of the Certificate to qualify as an additional named insured, the underlying policy must include an additional insured endorsement.

         {¶6} On March 26, 2013, Grizzly was involved in an accident while transporting three excavators pursuant to the Contract. The cargo was deemed to be a total loss. Kaplan asserts that Westchester agreed with the cargo owner that $105, 824.40 was a reasonable value for the loss, and Kaplan remitted the sum to the cargo owner.

          {¶7} Kaplan demanded reimbursement from Grizzly. Grizzly filed a claim with Westchester, who denied coverage on June 6, 2013. Several months prior to the accident, Grizzly had purchased the truck involved in the accident to replace the truck listed on the Schedule. Grizzly advised Kunkel, who contacted Progressive, but failed to notify Westchester. As a result, the truck was excluded from coverage.

         {¶8} Kaplan filed suit against Grizzly and Westchester on May 8, 2014, alleging breach of contract by Grizzly, and equitable subrogation as to Westchester. Based on Westchester's status as insurer, its direct involvement with the cargo owner in determining the loss value, and subsequent refusal to pay the claim, Kaplan declared entitlement as a successor, or subrogor, to Grizzly under the Policy.

         {¶9} On December 4, 2014, default judgment was granted against Grizzly for $105, 824.40, plus attorney fees of $8, 060.25, statutory interest from the date of judgment and costs. On February 19, 2015, Kaplan filed a "supplemental complaint" against Westchester pursuant to R.C. 3929.06(A)(2), which provides that a judgment creditor of an insured, who has not received payment within 30 days of the judgment, may file a supplemental complaint against the insurer to obtain payment of the judgment amount.

         {¶10} On July 31, 2015, Kaplan filed an amended supplemental complaint adding Kunkel as a party, and a negligence claim against Westchester and Kunkel regarding Kunkel's failure to advise Westchester of the change of vehicles under the policy. Kaplan subsequently dismissed Kunkel pursuant to Civ.R. 41(A).

          {¶11} Westchester filed for summary judgment on September 14, 2015. In addition to reliance on the Policy and related documents, Westchester argued that, based on the terms of a producer agreement between Westchester and Westrope, and case law interpreting R.C. 3929.27, [1] Westrope did not act as Westchester's agent.

         {¶12} Kaplan filed a cross-motion for summary judgment on November 25, 2015. The trial court granted summary judgment for Westchester stating:

There is no factual dispute that both Grizzly and its insurance broker, Kunkel, failed to timely notify Westchester or its alleged agent, Westrope, of Grizzly's newly acquired vehicle within the applicable period stated in the policy. Even assuming that Westrope had authority as an agent of Westchester to bind Westchester to the terms of the Westrope letter, no reasonable mind could conclude that the Westrope letter altered the terms of the policy between Westchester and Grizzly, such that Grizzly could update its policy with Westchester simply by informing Kunkel of a change in vehicles.
Because the 2000 Mack Truck was not covered under the policy for the 03/26/2013 accident, Westchester did not breach an obligation to pay Grizzly under the policy. Therefore, judgment is rendered in favor of defendant Westchester Fire Insurance Company and against plaintiff Kaplan Trucking Company.

         {¶13} This appeal ensued.

         II. ASSIGNMENT OF ERRORS

         {¶14} Kaplan offers the following five assignments of error in support of its argument that the trial court erred in granting summary judgment for Westchester:

I. The trial court erred as a matter of law in failing to construe the facts presented by plaintiff in opposition to Westchester's motion for summary judgment in favor of plaintiff.
II. The trial court erred as a matter of law in failing to find that reasonable minds could find that Westrope was the agent of Westchester when Westrope communicated with Grizzly about the Policy.
III. The trial court erred as a matter of law when it concluded that Westrope's communications with Grizzly altered the terms of the Policy.
IV. The trial court erred as a matter of law in failing to apply principles of estoppel to facts showing that Westchester caused Grizzly to direct notice of a change in vehicle to Kunkel.
V. The trial court erred as a matter of law when it found that Grizzly's notice to Kunkel was insufficient to bind Westchester.

         III. ...


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