Hanover Insurance Company v. Professional Moving & Storage, Inc., 2:12-cv-02196

Background

Professional Moving & Storage, Inc. (PMS) purchased a Commercial General Liability (CGL) policy from Hanover and a Business Auto policy from Massachusetts Bay, both effective Feb 28, 2011–Feb 28, 2012.
Frederick Simmons, a PMS employee, died on July 21, 2011 when a PMS truck rolled; his daughter L.S. received workers’ compensation benefits; Ortiz (conservator) and Simmons’ mother sued PMS supervisors Robert Jones and Doug Havlik for wrongful death in state court alleging negligent maintenance/supervision.
Plaintiffs (Hanover and Massachusetts Bay) filed this federal declaratory-judgment action seeking a ruling that the CGL and Auto policies do not provide liability or medical-payments coverage for Simmons’ death and that insurers have no duty to defend or indemnify Jones and Havlik.
Insurers defended Jones and Havlik in the underlying suit under reservation of rights and moved for summary judgment in this declaratory action.
Insurers relied primarily on three policy exclusions: Workers’ Compensation Exclusion, Auto (vehicle-use) Exclusion, and Employer’s/Employee Indemnification Exclusions; insurers also argued medical-payments coverage is barred if liability coverage is excluded.
The district court applied Kansas law (place of contracting) to interpret the policies and granted summary judgment for the insurers, holding the Workers’ Compensation and Auto exclusions (and related medical-payments exclusions) bar coverage.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether CGL/Auto policies cover liability for Simmons’ death given workers’ compensation recovery	Exclusions bar coverage because L.S. recovered workers’ compensation; CGL/Auto are not meant to insure employee claims	Exclusions should not apply because Missouri’s “something more” doctrine may allow co-employee liability and potential indemnity exposure; more discovery needed	Workers’ Compensation Exclusions apply; because L.S. received workers’ comp, liability coverage is precluded under both policies
Whether the Auto (vehicle-use) exclusion precludes Coverage A for injuries arising from truck use	Auto Exclusion excludes bodily injury arising out of ownership/maintenance/use/loading/unloading of autos; underlying claims stem from truck maintenance/use	Defendants concede courts enforce such exclusions; argue factual development may affect application	Auto Exclusion precludes Coverage A for Simmons’ death
Whether medical-payments coverage is available under CGL/Auto despite Coverage A exclusions	Medical-payments are excluded where Coverage A exclusions apply; thus no medical payments	Defendants argue Coverage A exclusions might not apply (invoking “something more”) but give no substantive defense	Medical payments excluded because Coverage A liability coverage is excluded
Whether insurers must defend/indemnify Jones and Havlik (including Havlik’s insured status under CGL)	Insurers owe no duty to defend or indemnify because exclusions eliminate coverage; Havlik’s insured status need not be reached if coverage is lacking	Defendants argue Havlik may be an insured and that factual issues remain about applicability of exclusions under Missouri law	No duty to defend or indemnify; court did not decide Havlik’s insured status because exclusions resolve coverage issue

Key Cases Cited

Oppenheim v. Reliance Ins. Co., 804 F. Supp. 305 (M.D. Fla.) (persuasive district-court analysis upholding workers’ compensation exclusion where employee already recovered workers’ comp)
Burns v. Smith, 214 S.W.3d 335 (Mo. 2007) (discusses co-employee liability and Missouri’s treatment of employee immunity/exceptions)
Hansen v. Ritter, 375 S.W.3d 201 (Mo. Ct. App.) (discusses Missouri Workers’ Compensation Act exclusivity)
Celotex Corp. v. Catrett, 477 U.S. 317 (summary-judgment standard and burden-shifting)
Marshall v. Kansas Med. Mut. Ins. Co., 73 P.3d 120 (Kan.) (Kansas rules for interpreting insurance policy language)