United States District Court, N.D. Ohio, Eastern Division
MEMORANDUM OPINION AND ORDER
J. LIMBERT UNITED STATES MAGISTRATE JUDGE.
matter is before the Court on a motion for judgment on the
pleadings filed by Defendant RLI Insurance Company
(“RLI”) on July 8, 2019. ECF Dkt. #13. Plaintiffs
PI&I Motor Express, Inc., Elite Leasing, Inc., Joseph
Kerola, Sr., Pamela Kerola, and JWK Bros., Inc. (collectively
“Plaintiffs”) filed an opposition brief on August
6, 2019. ECF Dkt. #18. Both parties filed subsequent reply
briefs. ECF Dkt. #s 19, 21, 27. For the following reasons,
the Court DENIES Defendant RLI's motion for judgment on
the pleadings (ECF Dkt. #13), GRANTS Plaintiffs' motion
to amend to add a reformation claim, and DENIES
Plaintiffs' alternative request to convert the instant
motion into one for summary judgment (ECF Dkt. #18).
FACTUAL AND PROCEDURAL HISTORY
case concerns insurance coverage for an underlying personal
injury lawsuit (“Underlying Lawsuit”) in
Allegheny County, Pennsylvania, in which Plaintiffs were
named as defendants. In the Underlying Lawsuit, plaintiff
Ryan Marshall, Sr. (“Marshall”) sought to recover
damages for personal injuries he sustained when a pipe that
was being loaded onto a truck fell and crushed his legs. The
injuries were so severe that Marshall's legs required
amputation. See ECF Dkt. #13 at 2, #18 at 9.
in the instant case, seek defense and indemnity for the
Underlying Lawsuit under a policy of commercial general
liability insurance that RLI issued to Plaintiff PI&I
Motor Express, Inc. (“Motor Express”). RLI
defended Plaintiffs in the Underlying Lawsuit under a
reservation of rights, and the Underlying Lawsuit has since
been settled. ECF Dkt. #13 at 2; #18 at 15; #23.
Parties and Factual Background
Motor Express is a registered Ohio for-profit corporation
that operates a full-service truck and motor carrier business
throughout the United States. ECF Dkt. #1-1 at ¶¶3,
16; #13 at 2; #18 at 10. Plaintiffs Elite Leasing, Inc.
(“Elite”) and JWK Bros., Inc. (“JWK”)
are Ohio corporations, and are affiliates of Motor Express.
ECF Dkt. #1-1 at ¶¶ 4-5; #13 at 2. Plaintiff Joseph
Kerola, Sr. is president of Motor Express, general manager of
Elite, and president of JWK, and Plaintiff Pamela Kerola is
Joseph Kerola's wife. ECF Dkt. #1-1 at ¶¶6-7;
#13 at 2.
Industries (“Dura-Bond”) manufactures and stores
large industrial pipes at its facility in Duquesne,
Pennsylvania, and it outsources its on-site hauling needs,
which fluctuates daily. ECF Dkt. #18 at 10 (citing ECF Dkt.
#4-2 at 13, 23). Plaintiffs clarified that Dura-Bond
typically used Robert Wallace for its on-site hauling needs.
ECF Dkt. #18 at 10 (citing ECF Dkt. #4-2 at 12-14);
see ECF Dkt. #4-2 at 8. Around 2007, Wallace entered
into an independent contract agreement with Motor Express and
began to run his trucks under Motor Express' operating
authority. ECF Dkt. #18 at 10 (citing ECF Dkt. #4-3 at 22).
Trucks operating under Motor Express' operating authority
are driven by independent contractor drivers, drivers of the
trucking companies, or drivers provided by
professional-employer organizations. ECF Dkt. #18 at 10
(citing ECF Dkt. #1-1 at 6 ¶18). Pursuant to its federal
and state regulatory requirements, Motor Express must screen
and approve drivers and provide certain safety information
and instruction for trucks to be driven under its operating
authority. Drivers must also sign an independent contractor
agreement which requires drivers to provide their own
insurance. ECF Dkt. #18 at 10 (citing ECF Dkt. #1-1 at 6
¶19; #4-2 at 8-9).
hired Motor Express to move freight around its facility using
trucks bearing the Motor Express placard and operating under
Motor Express' Federal Motor Carrier operating authority.
ECF Dkt. #1-1 at ¶ 21; #13 at 3; #18 at 10. Dura-Bond
worked directly with Wallace on its daily hauling needs. ECF
Dkt. # 18 at 10 (citing ECF Dkt. #4-2 at 12; #4-3 at 23). At
times, Wallace did not have sufficient drivers to handle
Dura-Bond's workload. In such a case, Wallace would bring
in a third party for drivers, including Sam Russell Trucking
(“Russell Trucking”). Id. (citing ECF
Dkt. #4-2 at 11; #4-3 at 25). Russell Trucking also had an
independent contracting agreement with Motor Express to
operate its trucks under Motor Express' operating
authority. Id. at 11 (citing ECF Dkt. #1-1 at 6
¶22). Under this arrangement, among other things, Motor
Express leased trucks from Russell Trucking to perform the
work required by Dura-Bond at its facility. ECF Dkt. #13 at 3
(citing ECF Dkt. #1-1 at 6 ¶22). Motor Express received
weekly logs, invoiced Dura-Bond, and then paid Wallace (or
third parties such as Russell Trucking) a percentage of the
sum received from Dura-Bond. Id. (citing ECF Dkt.
#4-2 at 13).
Marshall (the underlying plaintiff) was a former Dura-Bond
employee, and applied with Russell Trucking to drive its
trucks as an independent contractor. ECF Dkt. 13 at 3; #18 at
11; #1-1 at 7 ¶23. Motor Express screened Marshall and
approved him as a driver with Russell Trucking for purposes
of the work at Dura-Bond, subject to training by Russell
Trucking. ECF Dkt. 13 at 3 (citing ECF Dkt. #1-1 at 7
¶23); #18 at 11. Marshall signed a Driver Lease
Agreement with Russell Trucking wherein Marshall noted that
he was an independent contractor who was leasing one of
Russell trucking's trucks and that he was responsible for
securing his own workers compensation coverage. ECF Dkt. #18
at 11 (citing ECF Dkt. #1-1 at 7 ¶24). On or about May
27, 2014, Marshall began driving Russell Trucking's
trucks under Motor Express' operating authority. ECF Dkt.
#18 at 11 (citing ECF Dkt. #1-1 at 7 ¶¶23-26; #4-2
at 4, 6).
his training was completed, Marshall's assigned job at
the Dura-Bond facility was to drive truckloads of Dura-Bond
pipe across the facility grounds. ECF Dkt. #13 at 3; 18 at 11
(both citing ECF Dkt. #1-1 at ¶ 26). Marshall received
his assignments and pay from Russell Trucking, and on-site
Dura-Bond personnel instructed Marshall where to transport the
loads. Motor Express was not involved in these daily
operations and did not pay Marshall. ECF Dkt. #18 at 11
(citing ECF Dkt. #1-1 at ¶ 26; #4-3 at 16).
27, 2014, while working at the Dura-Bond facility, Marshall
sustained injuries that permanently disabled him. ECF Dkt.
#13 at 3; #18 at 11. Marshall was standing outside his truck
while Dura-Bond personnel loaded pipe onto the truck with a
forklift. When a Dura-Bond employee was backing up in the
forklift, he bumped into a pipe and the load fell, hitting
Marshall and crushing his legs, which had to be amputated.
ECF Dkt. #13 at 3; #18 at 11 (both citing ECF Dkt. #1-1 at 7
filed several workers' compensation claim administrative
petitions against Motor Express, Russell Trucking, and the
Pennsylvania Uninsured Employers Guaranty Fund
(“UEGF”). ECF Dkt. #13 at 3; #18 at 11-12; #1-1
at 8 ¶29. The UEGF filed a petition to join Dura-Bond to
the proceedings, which were consolidated into a single
proceeding. ECF Dkt. #13 at 3; #18 at 12; #1-1 at 8 ¶29.
Marshall also filed a lawsuit in state court asserting tort
liability against Motor Express, Dura-Bond, Wallace, and
Russell Trucking and others. ECF Dkt. #18 at 12 (citing ECF
Dkt. #1-1 at 9 ¶¶34-36).
Pennsylvania Workers Compensation
Administrative Law Judge (“ALJ”) in the
workers' compensation proceeding found Russell Trucking
to be Marshall's immediate employer. However, unbeknownst
to Motor Express, Russell Trucking did not have workers
compensation insurance. ECF Dkt. #13 at 3; #18 at 12 (citing
ECF Dkt. #1-1 at 8 ¶30; #4-2 at 18). The ALJ further
found both Motor Express and Dura-Bond to be Marshall's
“statutory employers, ” which finding the
Pennsylvania Workers' Compensation Appeal Board affirmed.
ECF Dkt. #13 at 3; #18 at 12-13; #1-1 at 8 ¶31; #4-3 at
instant Complaint states that neither Russell Trucking nor
Motor Express carried workers compensation insurance in
Pennsylvania, but Dura-Bond did. Thus, Dura-Bond, as required
by law, has been paying for Marshall's workers
compensation claim. ECF Dkt. #1-1 at 8 ¶32. Dura-Bond
subsequently asserted a right of indemnity against Motor
Express in a civil action in Pennsylvania for the workers
compensation costs and expenses it paid to Marshall related
to the accident. Id. at 9 ¶33. The status of
this suit is unknown.
Underlying Lawsuit: Pennsylvania Civil
also filed a civil action in Pennsylvania state court against
Motor Express and certain related individuals and affiliates,
Russell Trucking, Wallace, and Dura-Bond. Marshall sought
compensatory and punitive damages for his injuries. The civil
action was stayed pending the Workers Compensation
Proceeding. ECF Dkt. #18 at 14 (citing ECF Dkt. #1-1 at 9
¶¶34-36). According to a joint status report filed
on September 6, 2019, the parties settled the Underlying
Lawsuit during a mediation. ECF Dkt. #23.
an Illinois for-profit insurance company that issues various
insurance policies to entities around the United States and
in Ohio. ECF Dkt. #1 at 1; #1-1 at 3 ¶8. RLI issued a
policy (“RLI Policy”) of commercial general
liability insurance to Motor Express for the period from June
1, 2014 to June 1, 2015, under which Plaintiffs seek defense
and indemnity for the Underlying Lawsuit. ECF Dkt. #13 at 5;
#18 at 15. A copy of the RLI Policy was attached to RLI's
Answer and Counterclaim, and therefore, constitute part of
the pleadings. ECF Dkt. #13 at 5 (citing Fed. R. Civ. P
10(c)); ECF Dkt. #4-1; see also ECF Dkt. #1-1 (RLI
Policy was also attached to the notice of removal). The
parties dispute which individuals and entities are insured
under the RLI Policy and the Court will address these
arguments and specific facts more in depth later in this
April 4, 2019, Plaintiffs filed a Complaint in the Court of
Common Pleas in Trumbull County, Ohio, which contained seven
counts against Defendants RLI and TrueNorth Companies, L.C.
(“TrueNorth”). ECF Dkt. #1-1. The Complaint
alleges the following counts: (1) declaratory judgment
against RLI; (2) anticipatory breach of contract against RLI;
(3) negligent misrepresentation against TrueNorth; (4)
professional negligence/negligent procurement against
TrueNorth; (5) breach of fiduciary duty against TrueNorth;
(6) breach of contract against TrueNorth; and (7) unjust
enrichment against TrueNorth. Id. By stipulation of
the parties, Plaintiffs dismissed with prejudice their
instant claims against Defendant TrueNorth after having
settled, leaving RLI as the remaining defendant and Counts
One and Two pending. ECF Dkt. #s 23, 28, 29.
6, 2019, RLI removed the case from the Court of Common Pleas
to the United States District Court for the Northern District
of Ohio. ECF Dkt. #1. On that same day, RLI filed an Answer
and Counterclaim against all Plaintiffs. ECF Dkt. #4. On June
6, 2019, the parties consented to the exercise of
jurisdiction by a United States Magistrate Judge. ECF Dkt.
filed the instant motion for judgment on the pleadings on
July 8, 2019. ECF Dkt. #13. Plaintiffs filed a response brief
in opposition to the motion on August 6, 2019. ECF Dkt. #18.
On August 20, 2019, RLI filed a reply brief. ECF Dkt. #19.
With permission from the Court, Plaintiffs filed a sur-reply
on August 27, 2019, and RLI filed a response to
Plaintiffs' sur-reply on September 10, 2019. ECF Dkt. #s
STANDARD OF REVIEW
Civil Rule 12(c) provides that “[a]fter the pleadings
are closed - but early enough not to delay the trial - a
party may move for judgment on the pleadings.”
Fed.R.Civ.P. 12(c). A court reviews a Rule 12(c) motion for
judgment on the pleadings under the same standard as a motion
to dismiss under Rule 12(b)(6). Fritz v. Charter Twp. of
Comstock, 592 F.3d 718, 722 (6th Cir. 2010); Jackson
v. Prof'l Radiology Inc., 864 F.3d 463, 465-66 (6th
Cir. 2017); Boulger v. Woods, 917 F.3d 471, 478 (6th
“[f]or purposes of a motion for judgment on the
pleadings, all well-pleaded material allegations of the
pleadings of the opposing party must be taken as true, and
the motion may be granted only if the moving party is
nevertheless clearly entitled to judgment.” McGlone
v. Bell, 681 F.3d 718, 728 (6th Cir. 2012) (quoting
JPMorgan Chase Bank, N.A., v. Winget, 510 F.3d 577,
581 (6th Cir. 2007)). Although a complaint need not contain
“detailed factual allegations, ” it does require
more than “labels and conclusions” or “a
formulaic recitation of the elements of a cause of
action.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007). Thus, a complaint survives a motion to
dismiss if it “contain[s] sufficient factual matter,
accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662 (2009) (internal quotations omitted). “[A]
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Hensley Mfg. v. ProPride, Inc., 579
F.3d 603, 609 (6th Cir. 2009) (quoting Iqbal, 556
U.S. at 678). A motion for judgment on the pleadings
“is granted when no material issue of fact exists and
the party making the motion is entitled to judgment as a
matter of law.” JPMorgan Chase Bank, N.A. v.
Winget, 510 F.3d 577, 582 (6th Cir. 2007) (quoting
Paskvan v. City of Cleveland Civil Serv. Comm'n,
946 F.2d 1233, 1235 (6th Cir.1991)).
LAW AND ANALYSIS
RLI attacks both Counts One and Two that remain pending
against RLI, which is the only remaining Defendant in the
instant case. RLI's defenses are also reiterated in its
Counterclaim against Plaintiffs. Essentially, RLI argues
that, based on the Workers Compensation adjudication,
Plaintiffs are collaterally estopped from arguing that the
underlying plaintiff, Marshall, was not an employee of Motor
Express, and, consequently, due to his “employee”
status, RLI argues that the Employee Exclusion of the RLI
Policy precludes coverage. ECF Dkt. #4 at 9; #13 at 9, 11.
RLI further contends that it has no duty to defend or
indemnify Plaintiffs in the Underlying Lawsuit. ECF Dkt. #4
at 10; #13 at 15-16.
Employee Exclusion under RLI Policy
parties agree that Ohio law governs the interpretation of the
RLI Policy in the instant insurance claim, whereas
Pennsylvania law governed the Workers Compensation
adjudication and the Underlying Lawsuit. See ECF
Dkt. #13 at 15 n.3; #18 at 18. However, RLI asserts that
Pennsylvania law governs the “workers compensation
issues, ” specifically Marshall's employment
status. ECF Dkt. #13 at 15 n.3; #19. RLI relies heavily on
Pennsylvania case law to conclude that, because the ALJ in
the workers compensation proceeding determined that Motor
Express was one of Marshall's “statutory employers,
” Marshall is therefore an “employee” of
Motor Express under the RLI Policy, which excludes coverage
for “bodily injur[ies]” to an insured's
“employee.” ECF Dkt. #13 at 9; see ...