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Scottsdale Insurance Co. v. Thornton

United States District Court, E.D. Washington

January 11, 2018

SCOTTSDALE INSURANCE COMPANY, an Ohio Corporation, Plaintiff,
v.
LEE THORNTON dba Malo Store, individually, JULIE THORNTON, GLENN THORNTON, individually and as Co-Administrator for the Estate of E.T., and SEASON HAMILTON, individually and as Co-Administrator for the Estate of E.T., and DOES 1 through 5, Defendants/Third Party Plaintiffs,
v.
METROPOLITAN GROUP PROPERTY AND CASUALTY INSURANCE COMPANY dba Met Life Auto & Home, a Rhode Island Corporation doing business as an insurer in the state of Washington, Third Party Defendant.

          MEMORANDUM OPINION AND ORDER RE: MOTIONS FOR SUMMARY JUDGMENT

          JUSTIN L. QUACKENBUSH SENIOR UNITED STATES DISTRICT JUDGE

         I. Introduction

         BEFORE THE COURT is: (1) Third-Party Defendant Metropolitan Group Property and Casualty Insurance Company's Motion for Summary Judgment (ECF No. 44); (2) Plaintiff Scottsdale's Motion for Summary Judgment (ECF No. 48); (3) Defendants Season Hamilton, Glenn Thornton, and Estate of E.T.'s Motion for Summary Judgment (ECF No. 49); and (4) Defendant Lee and Julie Thornton's Amended Motion for Summary Judgment (ECF No. 53). Plaintiff and all Defendants filed Response briefs to Plaintiff and Defendants' Motions. (ECF No. 59); (ECF No. 63); (ECF No. 67). Plaintiff and all Defendants filed Reply briefs. (ECF No. 68); (ECF No. 69); (ECF No. 70). Plaintiff took no position on Met Life's Motion (ECF No. 58), and Defendants stated they had no objection to that Motion (ECF No. 73), (ECF No. 74). All Motions were submitted for decision without oral argument. This Order memorializes the court's ruling on the Motions.

         The MetLife Policy provided coverage only for the Toyota Highlander. Metlife asserts its Policy provides no coverage for the U-Haul truck or the U-Haul operation. (ECF No. 44 at 5). The parties do not oppose MetLife's Motion. The court finds there is no genuine issue of fact that the MetLife Policy does not provide coverage for the U-Haul accident and summary judgment is appropriate.

         II. Factual Background

         At all material times, Defendant Lee Thornton owned and operated the Malo Store, located at 17510 N. Highway 21, Malo, Washington 99150. (ECF No. 64 at ¶2). He had run the Malo Store since September 2003. (ECF No. 64 at ¶3). As part of the Malo Store operation, Lee Thornton was, since January, 2003, a registered agent of U-Haul to rent, receive, and display U-Haul trucks. (ECF No. 64 at ¶4).

         Plaintiff Scottsdale Insurance Company (“Plaintiff” or “Scottsdale”) issued Commercial General Liability policy No. CPS2343072 (“Scottsdale Policy”) to the Malo Store which had a policy period of October 14, 2015, to October 14, 2016. (ECF No. 51-1 at 4). The Malo Store application listed “grocery” and “gas pump” in the schedule of hazards (ECF No. 51-2 at 2). The application did not disclose or seek insurance coverage for a truck rental business. See (ECF No. 51-2). The application answered “N[o]” when asked “DO YOU RENT OR LOAN EQUIPMENT TO OTHERS” and “ANY PARKING FACILITIES OWNED/RENTED.” (ECF No. 51-2 at 4). The application was signed by Lee Thornton. (ECF No. 51-2 at 5).

         The Scottsdale Policy excludes claims for “‘Bodily injury' or ‘property damage' arising out of the ownership, maintenance, use or entrustment to others of any aircraft, ‘auto' or watercraft owned or operated by or rented or loaned to any insured.” (ECF No. 51-1 at 15, § I(A)(2)(g)). This exclusion does not apply to “[p]arking an ‘auto' on, or on the ways next to, premises you own or rent, provided the ‘auto' is not owned by or rented or loaned to you or the insured.” (ECF No. 51-1 at 15, § I(A)(2)(g)(3)). The Scottsdale Policy defines “auto” as:

a. A land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment; or
b. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. However, “auto” does not include “mobile equipment”.

(ECF No. 51-1 at 24, § V(2)).

         On December 7, 2015, the Malo Store entered into its then current Agreement with U-Haul Company of Inland Northwest. (ECF No. 66 at 1). Pursuant to the Agreement, the U-Haul equipment is “consigned to [Malo Store] and title to the Equipment shall remain in U-Haul and/or one of its affiliates at all times.” (ECF No. 66 at 1). The Store's obligations to U-Haul included “prominently displaying the Equipment, distributing the Equipment... [and] dispatching and receiving the equipment.” (ECF No. 66 at 5). The Store was also obligated to complete “all relevant inspections, inquiries and paperwork, checking and correcting the tire pressure, fluid levels, non-functioning lights, cleanliness and visible damage... [and] perform repair work designated as minor maintenance on the Equipment.” (ECF No. 66 at 5). U-Haul required the Malo Store to “account for all odometer mileage accumulated on the Equipment” and the Malo Store paid “for any mileage not properly accounted for on a valid rental contract.” (ECF No. 66 at 6).

         Third Party Defendant Metropolitan Group Property and Casualty Insurance Company (“MetLife”) issued Auto Policy No. 161072257-0 (“MetLife Policy”) to Defendant Julie Thornton with effective dates June 1, 2016 to December 1, 2016. (ECF No. 46-1 at 3). Julie Thornton is the wife of Lee Thornton (collectively “Thornton Defendants”). (ECF No. 1 at ¶3); (ECF No. 18 at ¶3). The MetLife Policy lists Julie and Lee Thornton as household drivers. (ECF No. 46-1 at 4). The only insured vehicle on the MetLife Policy is a 2009 Toyota Highlander. (ECF No. 46-1 at 3).

         On December 5, 2016, Glenn Thornton and Season Hamilton, individually and as co-administrators of the estate of E.T. (collectively “Hamilton Defendants” in this matter) filed a First Amended Complaint for Wrongful Death, Pre-Death Pain and Suffering, Loss of Parent/Child Consortium in case number 16-2-00083-9 in the Ferry County Superior Court against, inter alia, Lee and Julie Thornton and the Malo Store. (ECF No. 51-4). On May 23, 2017, the Hamilton Defendants filed a Second Amended Complaint in the Ferry County court. (ECF No. 51-5); see Thornton, et al. v. Thornton, et al., No. 16-2-00083-9, Dkt. #30 (Ferry County Superior Court) (“Ferry County lawsuit”). The underlying facts as alleged in the Ferry County lawsuit, are as follows.

         On June 9, 2016, customer Mike Seifried returned a rented U-Haul truck to the Malo Store. (ECF No. 64 at ¶¶9, 12); (ECF No. 51-5 at ¶2.9). Seifried parked the truck in front of the Malo Store, entered the Store, returned the keys, and asked for his deposit. (ECF No. 64 at ¶¶9-11). Lee Thornton returned the deposit, took Seifried's paperwork, and set it on the counter because Lee Thornton was assisting other customers. (ECF No. 64 at ¶¶11-12). Seifried left the Store. (ECF No. 64 at ¶13). Thereafter, Lee Thornton left the store to park the returned U-Haul truck in the designated display area. (ECF No. 64 at ¶15). When Lee Thornton went outside, his two year old grandson, E.T., followed him. (ECF No. 51-5 at ¶2.17). E.T. was accidently knocked to the ground and run over by the U-Haul truck driven by Lee Thornton, causing E.T.'s death. (ECF No. 51-5 at ¶¶2.21, 2.22).

         The Ferry County lawsuit alleges Lee Thornton was negligent in operating the U-Haul truck and failed to take precautions to prevent two-year old E.T. from following him outside. (ECF No. 51-5 at § III). The Thornton Defendants tendered the Ferry County lawsuit to Scottsdale. (ECF No. 1 at ¶26); (ECF No. 18 at ¶26). Scottsdale agreed to defend the Thornton ...


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