Elk Run Coal Co. v. Canopius U.S. Insurance
235 W. Va. 513
W. Va.2015Background
- Elk Run (owner) entered a Hauling & Delivery Agreement with Medford (hauler) requiring Medford to indemnify Elk Run and name Elk Run as an additional insured on Medford’s insurance policies.
- A Medford driver was injured while seated in a parked Medford truck being loaded by an Elk Run employee; Elk Run did not assert comparative negligence against the plaintiff and Medford did not cause the accident.
- Medford’s insurers: Canopius (CGL primary) with RSUI excess; National (auto primary) with Scottsdale excess — each underlying policy had $1,000,000 limits and Medford purchased the coverages specified in the contract.
- Elk Run tendered indemnity; Canopius initially defended under reservation then denied indemnity/coverage; National denied coverage under its auto policy. Elk Run sued insurers for declaratory relief.
- The circuit court granted summary judgment to all four insurers and denied Elk Run partial summary judgment; the Supreme Court of Appeals (this Court) reversed summary judgment as to Canopius and RSUI (remanding and directing partial summary judgment for Elk Run on Canopius coverage) and affirmed summary judgment for National and Scottsdale.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the H&D Agreement is an "insured contract" making Elk Run an additional insured under Medford’s CGL | The indemnity language is broad and requires Medford to assume tort liability and purchase insurance for Elk Run, so Elk Run "stands in Medford’s shoes" as an additional insured | Insurers contended Elk Run is not covered under the Blanket Additional Insured Endorsement and alternative defenses | Court: Agreement is an insured contract; Elk Run stands in insured’s shoes and is an additional insured under the CGL. |
| Whether the Blanket Additional Insured Endorsement covers Elk Run for liability caused by Elk Run’s conduct while loading Medford’s truck (i.e., "acts of those acting on your behalf") | Elk Run: its employee was loading the truck and thus was "acting on Medford’s behalf," so the endorsement covers liability caused in whole or in part by those acting on Medford’s behalf | Canopius: argued Elk Run was not "acting on [Medford]’s behalf" and thus endorsement language did not apply | Court: Elk Run was acting on Medford’s behalf (contractual performance and continued practice), so the endorsement applies and provides coverage. |
| Whether public policy or statute voids indemnity for an indemnitee’s sole negligence | Elk Run: contract valid; it required insurance to be purchased for benefit of all concerned, so public policy does not void it | Insurers: relied on W. Va. Code §55‑8‑14 and public policy against indemnifying sole negligence | Court: statute did not apply here; precedent permits indemnity for one’s own negligence where contract is clear and/or requires insurance (Dalton, Sellers); contract is valid. |
| Whether the CGL auto exclusion bars coverage because injury "arose out of" use/loading of an auto | Elk Run: loading was by a front‑end loader (mechanical device) so policy’s definition excludes such mechanical-device loading from the auto exclusion; thus CGL applies | Canopius: the loss arose from loading/unloading of the auto and so auto exclusion applies | Court: "loading or unloading" definition excludes movement by mechanical device not attached to the auto; a front‑end loader is a mechanical device; auto exclusion did not bar coverage. |
Key Cases Cited
- Cherrington v. Erie Ins. Prop. & Cas. Co., 231 W. Va. 470 (2013) (policy language given plain, ordinary meaning)
- Consolidation Coal Co. v. Boston Old Colony Ins. Co., 203 W. Va. 385 (1998) (party with an "insured contract" stands in the insured’s shoes for coverage purposes)
- Sellers v. Owens–Illinois Glass Co., 156 W. Va. 87 (1972) (indemnity against one’s own negligence is valid but requires clear, definite language)
- Dalton v. Childress Serv. Corp., 189 W. Va. 428 (1993) (broad indemnity void under statute only if indemnitee sole negligent and no agreement to purchase insurance for benefit of all)
- National Mut. Ins. Co. v. McMahon & Sons, 177 W. Va. 734 (1987) (ambiguities in insurance contracts construed against insurer)
- Eastern Gas & Fuel Assocs. v. Midwest‑Raleigh, Inc., 374 F.2d 451 (4th Cir. 1967) (broad indemnity language held sufficiently clear to indemnify indemnitee despite its own negligence)