Insurer Averts Suit on Trash Hauler's Death
(CN) - A garbage collector who called his company No Fun Allowed cannot rely on his insurer for a legal defense after an employee died on the job, a federal judge ruled.
Jeremy Andre, an employee of Ches-Mont Disposal LLC fka No Fun Allowed Inc., had been dumping recyclables at a facility in Philadelphia when the Mack truck he was operating crushed him, according to the ruling.
A local news outlet, the Reading Eagle, quoted the coroner as saying that 28-year-old Andre had been trying to remove a blockage of trash, but that the truck had inadvertently been left in gear, causing it to back up and pin him. It said the accident happened in Skippack, Pa., at about 11 a.m. on April 18, 2008.
Andre's widow sued Ches-Mont's owner, Stephen Koons, in his individual capacity two years later for negligence, wrongful death, and survival.
She claimed that, as lessee of the truck, Koons breached his duty of care to third persons like Andre by failing to maintain the truck in a safe and operable condition.
Koons had bought the company and changed its name to No Fun Allowed Inc. shortly after buying Miller Concrete, a company that sold septic tanks in Downington, Pa., in 1999.
Though No Fun officially changed its name to Ches-Mont Disposal Inc. around 2004, it soon restructured into a limited liability company.
Koons sought defense and indemnification in the Andre case from Ches-Mont's insurer XL Insurance America and its subsidiary, Greenwich Insurance Co., under an "umbrella occurrence-based liability coverage over self-insured retention."
But when both companies refused to lend a hand, Koons sued them for beach of contract and bad faith.
Senior U.S. District Judge William Yohn Jr. awarded the insurers summary judgment in May 2012, holding that Koons was "acting within the scope of [his] duties" as the head of Ches-Mont when he bought the truck 12 years ago.
A three-judge panel of the 3rd Circuit reversed and remanded, however, after finding that a jury could reasonably infer that he purchased the truck in his capacity as the owner of No Fun Allowed.
The parties filed cross-motions for summary judgment, and Judge Yohn sided with Greenwich on Sept. 19.
"Evidence in the record shows that Koons both purchased and leased the truck in his individual capacity dba Miller Concrete," Yohn wrote. "Additionally, although the lease with [No Fun Allowed] NFA dba Ches-Mont Disposal expired in 2004, as of 2009 the truck was still registered to Koons dba Miller Concrete. Moreover, in 2010 Koons sold the truck to Ches-Mont Disposal LLC for $5,000 - a payment he accepted in his individual capacity dba Miller Concrete."
Even if Koons is found to have been acting as the limited company's owner, the policy's worker's compensation exclusion provision would bar the Andres' claims against him, the ruling states.
"If, on the other hand, Koons does not qualify as an insured because he was acting individually, then Greenwich has no duty to defend or indemnify him in the Andre estate action," Yohn wrote. "In either scenario, Greenwich owes no duty to defend, and therefore no duty to indemnify, Koons. Thus, summary judgment in favor of Greenwich is appropriate."
XL Insurance reported $7.23 million in revenue in 2012.