P.I. & I. Motor Express, Inc. v. RLI Insurance Company
499 F.Supp.3d 486
N.D. Ohio2020Background:
- Motor Express (Ohio) sought defense and indemnity from RLI under a CGL policy for a Pennsylvania tort suit by Ryan Marshall, a driver whose legs were amputated when pipe fell while he worked at Dura‑Bond.
- Marshall drove Russell Trucking’s truck under Motor Express’s operating authority; WC judge found Russell the immediate employer and Motor Express a "statutory employer." Dura‑Bond paid workers’ compensation benefits and pursued indemnity against Motor Express.
- Marshall’s Pennsylvania civil tort case settled for $2.4 million; Motor Express filed this federal suit (declaratory relief and anticipatory breach) against RLI after RLI defended under reservation of rights.
- RLI moved for summary judgment invoking two policy exclusions: (1) the Workers’ Compensation and Similar Laws exclusion, and (2) the Employer’s Liability exclusion (which excludes injury to an "employee" but defines and excludes "temporary worker").
- The court addressed subject‑matter jurisdiction under the Declaratory Judgment Act, exercised its discretion to retain the case, and denied RLI’s motion: the WC exclusion could not be read to swallow the separate Failure‑to‑Comply clause, and genuine factual disputes remain whether Marshall was a temporary worker.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction to hear declaratory claim paired with damages claim | Federal court should retain jurisdiction given settled underlying facts, judicial economy, and ongoing related claims | Diversity + pleaded damages > $75,000 mandate federal jurisdiction over entire case | Court exercised discretion to retain jurisdiction after applying Bituminous factors and comity analysis |
| Whether "Workers’ Compensation and Similar Laws" exclusion bars coverage for damages related to insured's failure to obtain statutorily required workers' comp | Exclusion does not bar tort damages (pain and suffering) that are not workers' compensation benefits | Exclusion should preclude coverage for liabilities that arise from failure to secure required WC coverage | Court: reading exclusion to bar such liabilities would render a separate "Failure To Comply with ‘Workers’ Compensation Law’" clause surplusage; exclusion does not defeat coverage on that basis |
| Whether Employer’s Liability exclusion applies — was Marshall an "employee" (or instead a "temporary worker") | Marshall was not Motor Express’s employee for coverage purposes; at minimum he was a temporary worker excluded from the "employee" definition | Marshall is a statutory/actual employee of Motor Express so the employer’s liability exclusion applies | Court: factual disputes remain (who "furnished" Marshall and whether work was to meet "short‑term workload conditions"); summary judgment denied to RLI |
Key Cases Cited
- Wilton v. Seven Falls Co., 515 U.S. 277 (U.S. 1995) (Declaratory Judgment Act confers district courts discretion whether to hear declaratory suits)
- Bituminous Cas. Corp. v. J & L Lumber Co., 373 F.3d 807 (6th Cir. 2004) (factors to decide whether to exercise jurisdiction over insurance declaratory actions)
- Adrian Energy Assocs. v. Michigan Pub. Serv. Comm’n, 481 F.3d 414 (6th Cir. 2007) (discussion of when federal court must address claims paired with declaratory relief)
- Neal‑Pettit v. Lahman, 928 N.E.2d 421 (Ohio 2010) (insurer bears burden to show an exclusion specifically applies; exclusions construed narrowly)
- Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm, 652 N.E.2d 684 (Ohio 1995) (plain‑meaning/control test for determining who is an "employee" under insurance contracts)
- Six L’s Packing Co. v. W.C.A.B. (Williamson), 44 A.3d 1148 (Pa. 2012) (elements defining a Pennsylvania statutory employer)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment burden‑shifting framework)
- Scott v. Harris, 550 U.S. 372 (U.S. 2007) (not every factual dispute defeats summary judgment)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (view evidence in the light most favorable to nonmoving party)
- Affiliated FM Ins. Co. v. Owens‑Corning Fiberglas Corp., 16 F.3d 684 (6th Cir. 1994) (contract interpretation requires giving effect to every clause)