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Soo Line Railroad Co. v. Brown's Crew Car of Wyoming3/11/2003
In cross-appeals from summary judgments in this declaratory-judgment action, appellant Progressive Casualty Insurance Company challenges the district court's ruling that insurance-policy exclusions do not apply to preclude coverage for respondent Soo Line Railroad Company. Appellant Brown's Crew Car of Wyoming, Inc. challenges the district court's application of collateral estoppel to bar litigation of an insurance-coverage issue. Because we hold that a policy exclusion precludes coverage for the Soo Line and that collateral estoppel does not apply, we reverse and remand.
FACTS
This is a declaratory-judgment action brought by a railroad against an insurance company and a motor-transportation company. The railroad incurred costs in defending two third-party lawsuits arising out of personal-injury actions brought by railroad employees. The railroad contends that both a liability-insurance policy and a separate contract with the transportation company entitle it to reimbursement for costs of defense.
Respondent Soo Line Railroad Company hired Crew Transport Services, Inc. (CTS) to transport train-crew employees as they traveled between railroad yards. CTS designated Brown's Crew Car of Wyoming, Inc. to provide motor vehicles and drivers.
Brown's agreed to obtain automobile-liability insurance covering its transportation services and to include CTS and the Soo Line as additional insureds. Brown's also agreed to indemnify and hold harmless CTS and [the Soo Line] from all claims, demands, costs and expenses including attorney and court costs for any accidents injury * * * [to Soo Line] or their employees.
Brown's purchased a policy of business automobile-liability insurance from appellant Progressive Casualty Insurance Company. Through this policy, Progressive agreed to pay all sums an insured legally must pay because of bodily injury caused by an accident resulting from the use of a Brown's automobile. Progressive also agreed to defend claims for damages against an insured, but provided that it would "have no duty to defend any 'insured'" on a claim "to which this insurance does not apply."
Progressive's policy contained exclusions that became issues in this action. Excluded from coverage and defense obligation were (1) liability that an insured assumed under another agreement, unless the agreement was an "insured contract"; (2) injuries to railroad employees arising out of their employment, unless the employees were domestic employees not entitled to workers' compensation or benefits under an "insured contract"; and (3) any obligation for which the insured may be held liable under workers' compensation or "any similar law."
On August 13, 1997, Soo Line employees Erin Geng and Kaythrine Cooper were passengers in a Brown's automobile when it was struck by a vehicle driven by Joseph Thielke. Thielke and his passenger were killed, and Geng and Cooper were injured.
In separate personal-injury lawsuits, Geng and Cooper sued Brown's, Thielke's personal representative, and two restaurants at which Thielke had consumed alcohol prior to the accident. One of the restaurants, Applebee's, impleaded the Soo Line and Brown's, seeking contribution or indemnification.
The Soo Line tendered the defense of the third-party actions to Progressive under the liability policy and to Brown's under the indemnity agreement. Ultimately, both refused the tender. The Soo Line defended and incurred legal expenses. After the personal-injury actions were settled, the Soo Line brought this declaratory-judgment action.
Progressive contended that the policy did not provide coverage for the Soo Line and hence
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