Leflore v. Norfolk Southern Corp.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

MALCOLM LEFLORE, ET AL. CIVIL ACTION

VERSUS No.: 19-1449

NORFOLK SOUTHERN SECTION: “J” (3)

CORP., ET AL.

ORDER & REASONS

Before the Court are cross-motions for summary judgment filed by

Defendant/Third-Party Plaintiff Archer-Daniels Midland Company (“ADM”) (Rec.

Doc. 72) and Third-Party Defendant Federal Insurance Company (“Federal”) (Rec.

Doc. 74). Having considered the motions and memoranda, the record, and the

applicable law, the Court finds that ADM’s motion should be GRANTED and

Federal’s motion should be DENIED.

FACTS AND PROCEDURAL BACKGROUND

This litigation arises from injuries allegedly sustained by Plaintiff Malcolm

LeFlore while acting in the course and scope of his employment with Domino Sugar

Company (“Domino”) at its railyard in Arabi, Louisiana. Plaintiff alleges that his

right foot was crushed by a defective or unsafe railcar on or about July 16, 2018, and

requires numerous surgeries and future prosthetics. ADM owns the railcar in

question and had leased it to Defendant Total Sweeteners, Inc., d/b/a Batory Foods

(“Total Sweeteners”) prior to the alleged incident.

The Railcar Lease Agreement (“Lease”) between ADM and Total Sweeteners

required Total Sweeteners to preserve the railcar in good condition and to defend,

indemnify, and hold ADM harmless from and against any claim arising out of Total

Sweeteners’ “default” under the Lease.1 The Lease also required Total Sweeteners to

maintain certain insurance coverage, including comprehensive general liability

insurance, and to name ADM as an additional insured “in respect of risks arising out

of the condition, maintenance, use or ownership of the [railcar].”2 Total Sweeteners

obtained a comprehensive general liability insurance policy (the “Policy”) from

Federal that was in effect at the time of Mr. LeFlore’s injuries.3

In their Fourth Amended Complaint, Plaintiffs Malcolm LeFlore and his wife,

Peola LeFlore, asserted claims against ADM as the owner of the railcar, Total

Sweeteners as the lessee of the railcar, and Norfolk Southern Corporation (“Norfolk”),

who allegedly serviced and delivered the railcar to Domino prior to the incident.

Plaintiffs allege that ADM, Total Sweeteners, and Norfolk were negligent in failing

to warn Mr. LeFlore of the defective railcar, failing to properly train and supervise

Mr. LeFlore, failing to adhere to the Safety Appliance Act and other applicable federal

regulations, and failing to properly inspect the railcar. ADM filed a crossclaim against

Total Sweeteners and a third party claim against Federal, who filed a counterclaim

against ADM. ADM and Federal then filed the instant cross-motions for partial

summary judgment.

1 (Lease, Rec. Doc. 72-5, at 5-6).

2 Id. at 4.

3 (Policy, Rec. Doc. 73-2, at 1).

LEGAL STANDARD

Summary judgment is appropriate when “the pleadings, the discovery and

disclosure materials on file, and any affidavits show that there is no genuine issue as

to any material fact and that the movant is entitled to judgment as a matter of law.”

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing FED. R. CIV. P. 56); accord

Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether

a dispute as to any material fact exists, a court considers “all of the evidence in the

record but refrains from making credibility determinations or weighing the evidence.”

Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th

Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but

a party cannot defeat summary judgment with conclusory allegations or

unsubstantiated assertions. Little, 37 F.3d at 1075. A court ultimately must be

satisfied that “a reasonable jury could not return a verdict for the nonmoving party.”

Delta, 530 F.3d at 399.

If the dispositive issue is one on which the moving party will bear the burden

of proof at trial, the moving party “must come forward with evidence which would

‘entitle it to a directed verdict if the evidence went uncontroverted at trial.’” Int’l

Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991). The nonmoving

party can then defeat the motion by either countering with sufficient evidence of its

own, or “showing that the moving party’s evidence is so sheer that it may not

persuade the reasonable fact-finder to return a verdict in favor of the moving party.”

Id. at 1265.

If the dispositive issue is one for which the nonmoving party will bear the

burden of proof at trial, the moving party may satisfy its burden by merely pointing

out that the evidence in the record is insufficient with respect to an essential element

of the nonmoving party’s claim. See Celotex, 477 U.S. at 325. The burden then shifts

to the nonmoving party, who must, by submitting or referring to evidence, set out

specific facts showing that a genuine issue exists. See id. at 324. The nonmovant may

not rest upon the pleadings but must identify specific facts that establish a genuine

issue at trial. See id. at 325; Little, 37 F.3d at 1075.

DISCUSSION

This is an issue of contract interpretation. The Court must first determine

whether ADM qualifies as an “insured” under the Policy issued by Federal to Total

Sweeteners; if the Court determines that it does, the next question is whether the

allegations in Plaintiffs’ complaint are sufficient to trigger Federal’s duty to defend

ADM. See, e.g., Gilbane Bldg. Co. v. Admiral Ins. Co., 664 F.3d 589, 594 (5th Cir.

2011). As the Lease provides that it is “governed by the laws of the state of Illinois,”4

the Court will apply Illinois law.

Under Illinois law, ADM must prove by competent summary judgment

evidence that it qualifies as an insured under the Policy for Federal to have a

potential duty to defend ADM. See Pekin Ins. Co. v. Centex Homes, 72 N.E.3d 831,

837 (Ill. App. Ct. 2017). If it does, then the Court “must compare the allegations in

the underlying complaint to the policy language” to determine whether Federal has

4 (Lease, Rec. Doc. 72-5, at 8).

a duty to defend ADM. Id. at 839 (citation omitted). As explained by the Appellate

Court of Illinois:

An insurer may not justifiably refuse to defend an action against its

insured unless it is clear from the face of the underlying complaint that

the allegations set forth in that complaint fail to state facts that bring

the case within or potentially within the insured’s policy coverage. If the

underlying complaint alleges facts within or potentially within policy

coverage, an insurer is obligated to defend its insured even if the

allegations are groundless, false or fraudulent. In making this

determination, the allegations in the underlying complaint must be

liberally construed in favor of the insured. Where the facts alleged

support multiple theories of recovery, there is a duty to defend if any one

of those theories potentially falls within policy coverage. It is the alleged

conduct, rather than the labeling of the claim in the complaint, that

determines whether the insurer has a duty to defend.

In certain circumstances, the court may look beyond the underlying

complaint in order to determine whether an insurer has a duty to

defend. Thus, [Illinois courts] have recognized that it may be

appropriate to consider the written agreements between the named

insured and the additional insured in determining whether the insurer

has a duty to defend an additional insured.

Id. at 839-40 (internal quotation marks, brackets, and citations omitted).

I. ADM QUALIFIES AS AN INSURED UNDER THE POLICY

ADM contends that it qualifies as an insured under the provision of the Policy

titled “Lessors Of Equipment,” which provides:

Persons or organizations from whom you lease equipment are insureds;

but they are insureds only with respect to the maintenance or use by

you of such equipment and only if you are contractually obligated to

provide them with such insurance as is afforded by this contract.

However, no such person or organizations is an insured with respect to

any:

• damages arising out of their sole negligence; or

• occurrence that occurs, or offense that is committed, after the

equipment lease ends.5

Federal contends that ADM is not an insured because ADM cannot demonstrate the

requisite “maintenance or use” of the railcar by Total Sweeteners at the time of the

incident because (1) ADM, not Total Sweeteners, was obligated to maintain and

repair the defective safety appliances that caused Mr. LeFlore’s injuries, and (2) his

injuries occurred in connection with switching operations, which do not constitute a

“use” of the railcar, citing Trinidad v. Southern Pacific Transportation Co., 949 F.2d

187, 188 (5th Cir. 1991).

Federal’s argument about who had maintenance obligations for certain

portions of the railcar misconstrues the question before the Court, which is whether

Total Sweeteners was engaged in the maintenance or use of the railcar at the time

Mr. LeFlore sustained his injuries. It is undisputed that Total Sweeteners was

leasing the railcar from ADM at the time of the incident;6 no party contends that the

Lease had terminated. Prior to the incident, Total Sweeteners and Domino entered

into an agreement for the purchase of Domino’s product.7 The railcar left Total

Sweetener’s facility on June 12, 2018, and arrived at Domino’s facility on July 10,

2018.8 There is no indication that the railcar left Domino’s facility between the time

it arrived and the time of the incident. The incident occurred at Domino’s facility on

July 16, 2018.9

5 (Policy, Rec. Doc. 73-2, at 22).

6 (Lease, Rec. Doc. 72-5, at 3).

7 (Total Sweeteners’ Resp. to Pls.’ Interrogs., Rec. Doc. 82-1, at 5).

8 Id. at 9.

9 (Rec. Doc. 72-4, at 6).

Based on these facts, the Court finds that Total Sweeteners was engaged in

the use of the railcar at the time of the incident because Total Sweeteners had

employed the railcar to facilitate the purchase and delivery of product from Domino.

While the railcar was not directly in Total Sweeteners’ custody or control at the time

of the incident, the Court finds that such a narrow construction of the word “use” does

not comport with the plain and ordinary meaning of the word.10 See, e.g., Virginia

Sur. Co. v. N. Ins. Co. of N.Y., 866 N.E.2d 149, 153 (Ill. 2007) (“If the contract

language is unambiguous, it should be given its plain and ordinary meaning.”).

Further, Federal’s argument based on Trinidad is unavailing. In Trinidad, the

Fifth Circuit held that certain provisions of the Safety Appliance Act did not apply to

a train during predeparture inspection because the train was not “in use.” 949 F.2d

at 188-89. However, “courts in the Fifth Circuit since Trinidad have specified that its

holding was limited to ‘trains’ rather than all rail vehicles.” Barbay v. Union Pac.

R.R. Co., No. 17-568, 2019 WL 639011, at *2 (M.D. La. Feb. 14, 2019) (denying

summary judgment on defendant’s claim that the railcar was not “in use” at the time

of the accident because it was involved in switching operations); see also Solice v. CSX

Transp. Inc., No. 11-1288, 2012 WL 1196668, at *2 (E.D. La. Apr. 10, 2012) (finding

that Trinidad did not preclude a plaintiff from bringing suit for a handbrake’s failure

on a railcar during switching operations because Trinidad’s holding was limited to

“trains”). Moreover, Trinidad is inapplicable because it involved interpretation of the

10 Black’s Law Dictionary defines “use” as “[t]he application or employment of something; esp., a long-

continued possession and employment of a thing for the purpose for which it is adapted, as

distinguished from a possession and employment that is merely temporary or occasional.” Use, BLACK’S

LAW DICTIONARY (11th ed. 2019).

Safety Appliance Act, see 949 F.2d at 188, whereas here the Court is tasked with

interpreting an insurance contract.

Next, Total Sweeteners was “contractually obligated to provide [ADM] with

such insurance as is afforded by” the Policy.11 The Lease provides that Total

Sweeteners “shall keep or cause to be kept with insurance companies acceptable to

[ADM]: (1) comprehensive general liability insurance, including products liability and

contractual coverage for the liabilities assume herein, including bodily injury, death,

and property damage.”12 The Policy afforded such coverage.13

To the extent Federal argues that ADM is not an insured because Mr. LeFlore’s

injuries arose out of ADM’s sole negligence, Federal has failed to present any evidence

that ADM acted negligently. While Federal argues that ADM had the sole

maintenance obligations for the safety appliances that allegedly caused Mr. LeFlore’s

injuries, the Lease clearly provides that Total Sweeteners shall “preserve the [railcar]

in good condition” and “shall promptly notify [ADM] upon receipt by [Total

Sweeteners] of knowledge of any damage to” the railcar.14 The Lease further provides

“that [Total Sweetener’s] Maintenance Items shall include (a) damage while in [Total

Sweetener’s] or [Total Sweetener’s] shipper or consignee’s possession, custody or

control, and (b) damage occurring from use other than permitted under this

Agreement.”15 Although ADM bears the burden of proving it was an insured under

11 (Policy, Rec. Doc. 73-2, at 22).

12 (Lease, Rec. Doc. 72-5, at 4).

13 (Policy, Rec. Doc. 73-2, at 17).

14 (Lease, Rec. Doc. 72-5, at 3, 5).

15 Id. at 3.

the Policy, Federal’s lack of evidence of ADM’s negligence fails to create a genuine

dispute of material fact and therefore cannot defeat summary judgment. See Int’l

Shortstop, 939 F.2d at 1265.

Accordingly, the Court holds that ADM was an insured under the Policy

because Total Sweeteners was using the railcar leased from ADM at the time of Mr.

LeFlore’s injuries.

II. FEDERAL HAS A DUTY TO DEFEND ADM

Having determined that ADM was an insured under the Policy, the Court

“must compare the allegations in the underlying complaint to the policy language” to

determine whether Federal has a duty to defend ADM. Pekin, 72 N.E.3d at 839

(citation omitted).

The Policy provides that Federal “will pay damages that the insured becomes

legally obligated to pay by reason of liability imposed by law or assumed in an insured

contract for bodily injury or property damage caused by an occurrence to which this

coverage applies.”16 The Policy defines “occurrence” as “an accident.”17 The Policy

further provides that Federal has “the right and duty to defend the insured against a

suit, even if such suit is false, fraudulent or groundless.”18

Plaintiffs’ complaint alleges that Mr. LeFlore was injured by the negligence,

negligence per se, and wrongful conduct of Defendants, including ADM, in providing

Mr. LeFlore with a hazardous and defective railcar.19 Specifically, Plaintiffs allege

16 (Policy, Rec. Doc. 73-2, at 17) (cleaned up).

17 Id. at 43.

18 Id. at 18.

19 (Fourth Am. Compl., Rec. Doc. 39, at 3).

that ADM was negligent by owning a hazardous railcar with defective safety

appliances, failing to properly inspect the railcar, failing to warn Domino that the

railcar was defective, and failing to properly train and supervise Domino employees.20

Because the “complaint alleges facts within or potentially within policy coverage,” the

Court holds that Federal has the duty to defend ADM. Pekin, 72 N.E.3d at 139

(internal quotation marks and citation omitted).

III. FEDERAL’S POLICY IS PRIMARY TO ANY OTHER INSURANCE

Federal contends that, even if ADM is entitled to a defense, Federal is not

required to defend ADM because Federal’s Policy is not primary to the exclusion of

any other policy held by ADM. Federal argues this is so because the Lease does not

use the term “primary” to describe the priority of the Policy over other insurance held

by ADM. However, the Lease provides that “[a]ll insurance maintained . . . shall

provide that . . . any other insurance maintained by [ADM] . . . shall not be

contributory or have the effect of suspending, impairing, invalidating or reducing the

coverages to be provided and maintained by [Total Sweeteners].”21 This clearly

evidences the parties’ intent for the Policy to be primary to any other insurance held

by ADM.

Federal further contends that the Policy is at most concurrent with any other

insurance held by ADM, based on language in the Policy that Federal would “share

with all that other insurance” that is applicable to liability.22 However, this provision

20 Id. at 4-6.

21 (Lease, Rec. Doc. 72-5, at 4).

22 (Policy, Rec. Doc. 73-2, at 36).

is not triggered “unless any of [ADM’s] other insurance is also primary.”23 As Federal

has not presented any evidence of ADM having another insurance policy that was

also primary, it is not entitled to summary judgment on this basis.

IV. WHETHER FEDERAL MUST DEFEND ADM AS AN INDEMNITEE OF TOTAL

SWEETENERS

Finally, Federal seeks a summary judgment ruling that it is not required to

defend ADM as an indemnitee of Total Sweeteners. Federal first argues that ADM

did not properly raise this issue in its third-party complaint against Federal because

ADM did not specifically allege that the Lease constitutes an “insured contract” under

the Policy. However, ADM’s third-party complaint clearly alleges that the Lease

required Total Sweeteners to indemnify ADM, that ADM tendered its defense and

indemnity to Total Sweeteners, and that Federal refused coverage on behalf of itself

and Total Sweeteners.24 The case cited by Federal, McGinley v. Luv N Care, Ltd., No.

17-821, 2019 WL 320583, at *3 (W.D. La. Jan. 24, 2019), is inapposite, as the court

there was confronted with causes of action, rather than allegations, that had not been

pleaded.

Moreover, ADM in its motion does not seek to have Federal defend it as an

indemnitee of Total Sweeteners but only as an additional insured. Even if the Court

were to conclude that Federal was not required to defend ADM as an indemnitee of

Total Sweeteners, Federal is required to defend ADM as an additional insured, as

explained above. To the extent Federal argues that the insurance provisions of the

23 Id.

24 (Rec. Doc. 51, at 21, 25).

Lease are somehow restricted by the indemnity clause, the Court disagrees, as the

Lease contains no such limiting language. The Court will deny summary judgment

as to this claim.

CONCLUSION

Accordingly,

IT IS HEREBY ORDERED that ADM’s Motion for Partial Summary

Judgment (Rec. Doc. 72) is GRANTED and Federal’s Motion for Partial Summary

Judgment (Rec. Doc. 74) is DENIED.

New Orleans, Louisiana, this 15th day of January, 2020.

¢

CARL J.B ER

UNITED S ES DISTRICT JUDGE

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