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Industrial Indemnity Co. of the Northwest v. Central National Insurance Co. of Omaha12/22/2000
Judge Alan J. Green of the Twenty-Fourth Judicial District Court serving Pro Tempore by special appointment of the Louisiana Supreme Court.
This appeal challenges the grant of a summary judgment on the issue of insurance coverage. We reverse.
BACKGROUND
This litigation involves a dispute between two insurance companies over the cost of indemnity and defense of a personal injury claim filed by Douglas Day in 1985. Plaintiff, Industrial Indemnity Company of the Northwest (Industrial) paid over one million dollars on behalf of its insured, Trans American Transport (TAT) in the underlying litigation, and filed this suit seeking reimbursement from Central National Insurance Company (CNIC). CNIC, which had originally filed an answer in the Day lawsuit, soon withdrew and refused to provide TAT a defense on the basis that TAT was not a named insured on the policy.
Industrial filed a motion for summary judgment, asking the court to reform the CNIC policy to make TAT a named insured thereon. Industrial's motion also sought determinations that: (1) CNIC waived all coverage defenses; (2) the CNIC policy provided coverage for the accident; (3) CNIC waived its right to challenge the finding of the Day courts; (4) CNIC must pay a pro-rata share of damages and defense costs, which it urged was 66% and (5) CNIC is liable for all costs of the reimbursement suit.
CNIC filed a cross motion for summary judgment on the coverage issue, arguing that the policy did not provide coverage. CNIC also filed a reconventional demand insisting that in the event Industrial did succeed on its reimbursement claim, Industrial abused TAT's rights in the underlying litigation by allowing the loss to fall on TAT, rather than another entity, Trans America Brokerage (TAB). Industrial asserted the defenses of res judicata, wavier and no right of action to the reconventional demand.
The evidence offered by both parties in support of and in opposition to the motions for summary judgment can be summarized as follows: George and Betty Thompson operated a trucking business called Freight Expenditures, which was headquartered in Tacoma, Washington. They owned no equipment, and acted as the broker for companies desiring transportation services. At some point, they were advised by the Interstate Commerce Commission that they could not operate a brokerage business without having a transportation entity. Around 1983, they phased out Freight Expenditures and formed two corporations to conform with the ICC regulations. They called the first Trans American Transport (TAT), which owned equipment and operated as a broker. TAT was incorporated in the state of Washington. The second company, Trans American Brokerage (TAB), dealt exclusively with the brokerage of freight and owned no equipment.
While operating as Freight Expenditures, the Thompsons procured liability insurance from the Dudley Stair Agency. They purchased a commercial liability package from Industrial, which contained a comprehensive commercial liability insurance policy (CGL), a commercial auto liability policy and an excess/umbrella policy. TAT and TAB were added as named insureds to the policy at different times.
In their depositions, the Thompsons revealed that when they set up TAT, they purchased equipment from Richard Kasshun, who had also been operating a trucking business called R&R;Trucking. The Thompsons leased Mr. Kasshun's ICC number to operate their business. Mr. Kassuhn had obtained a one million dollar auto liability insurance policy from CNIC for R&R;trucking, purchased through the Bell-Anderson Insurance Agency. Mr. Kassuhn put the Thompsons in touch with the Bell-Anderson agen
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