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Soo Line Railroad Co. v. Brown's Crew Car of Wyoming4/5/2005
This case arises out of injuries suffered by two of respondent Soo Line Railroad Company's employees while riding as passengers in a van operated by an employee of respondent Brown's Crew Car. On appeal from a summary judgment, appellant Progressive Casualty Insurance Company argues that (a) the indemnity agreement under which Brown's Crew Car must reimburse Soo Line Railroad Company for legal expenses incurred as a result of tort liability does not constitute an "insured contract" within the meaning of Progressive Casualty Insurance Company's policy so as to fall within the exception to the contractual liability exclusion in the policy; and (b) the district court abused its discretion by awarding Brown's Crew Car's costs and attorney fees. We affirm.
FACTS
This is a declaratory-judgment action brought by a railroad against an insurance company and a motor-transportation company. The material facts are undisputed. Two employees of Soo Line Railroad Company (Soo Line) were injured while riding in a car operated by respondent Brown's Crew Car of Wyoming, Inc. (Brown's). Brown's was transporting train crews for Soo Line pursuant to an agreement between Crew Transportation Services (CTS) and Brown's under which Brown's agreed to indemnify and hold harmless CTS and [Soo Line] from all claims, demands, costs and expenses including attorney and court costs for any accident, injury , property damage or any other loss incurred by CTS and [Soo Line] or their employees, agents, representatives, or other using said Transportation Services regardless of the nature of the claim or the theory of recovery against CTS and [Soo Line], including claims that CTS and/or [Soo Line] was at fault, negligent, or strictly liable.
Brown's also agreed to obtain automobile-liability insurance covering its transportation services and to include CTS and Soo Line as additional insureds.
At the time of the accident giving rise to the underlying actions, appellant Progressive Casualty Insurance Company (Progressive) insured Brown's under a commercial automobile liability policy. Through this policy, Progressive agreed to pay all sums an "'insured' legally must pay as damages because of 'bodily injury ' or 'property damage' to which this insurance applies." The policy further stated that Progressive had "the right and duty to defend any 'insured' against a 'suit' asking for such damages," but Progressive had no duty to defend against a suit seeking damages to which the policy did not apply.
The policy contained an exclusion--and therefore did not provide coverage--for " iability assumed under any contract or agreement." But, the policy exempted from this exclusion--and therefore provided coverage--for liability " ssumed in a contract or agreement that is an 'insured contract' provided the 'bodily injury ' or 'property damage' occurs subsequent to the execution of the contract or agreement." Hence, the policy extended coverage for liability assumed in an "insured contract" defined as follows:
That part of any other contract or agreement pertaining to your business . . . under which you assume the tort liability of another to pay for "bodily injury " or "property damage" to a third party or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.
The policy defined "bodily injury " to mean "bodily injury, sickness or disease sustained by a person including death resulting from any of these."
In August 1997 two Soo Line employees were passengers in a Brown's automobile when it was struck by another vehicle. The driver of the other vehicle and his passenger were killed, and the two
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