Western World Insurance Co. v. Mary Armbruster
773 F.3d 755
| 6th Cir. | 2014Background
- Hoey operated a farmers’ market and hired Armbruster to run a hay wagon for eight weekends; Armbruster was paralyzed in a wagon accident and sued Hoey (and his daughter) for negligence in Michigan state court.
- Western World, Hoey’s commercial general-liability insurer, agreed to defend Hoey under a reservation of rights and sought a federal declaratory judgment that it owed no duty to defend or indemnify; the insureds and Armbruster sought a state declaratory judgment that coverage existed (Western World removed that action); the matters were consolidated in federal court.
- Western World’s coverage defense turned on whether Armbruster fell within the policy’s exclusion for an “employee” (the policy excluded injuries to an “employee” and to a “temporary worker” as defined).
- Armbruster argued the policy’s language was ambiguous and that she should fall outside the “employee” exclusion (claiming a narrower definition of “temporary worker” should not defeat her coverage); Western World argued the policy made “employee” the default and excluded Armbruster.
- The district court exercised discretionary jurisdiction over the declaratory action and held, after applying Michigan law and the economic‑reality test, that Armbruster was an employee and her injury was excluded from coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the federal court properly exercised jurisdiction over the declaratory-judgment action | Armbruster/insureds: federal resolution acceptable but preferred state forum; all parties sought declaration (no procedural games) | Western World: federal declaratory action appropriate to determine insurer obligations promptly | Court: District court did not abuse discretion in taking jurisdiction (Grand Trunk factors satisfied) |
| Whether the policy’s term “employee” is ambiguous such that Armbruster should be covered | Armbruster: policy uses “temporary worker” inconsistently; ambiguity should be construed against insurer | Western World: policy makes “employee” the default category; exclusions limit coverage for workers | Court: Policy not ambiguous as applied; ambiguities construed against insurer but here only one reasonable interpretation — Armbruster is an employee |
| Whether Armbruster fits the policy’s excluded category of “employee” | Armbruster: she was temporary/short-term and not a “temporary worker” as defined, so exclusion shouldn’t apply | Western World: she was hired, controlled, paid, and could be fired by Hoey—functionally an employee | Court: Applying Michigan’s economic‑reality factors, Armbruster was an employee; exclusion applies |
| Whether commercial general liability policy should cover workers’ on-the-job injuries | Armbruster: sought coverage under CGL policy | Western World: CGL policies normally exclude employer’s workers; worker’s compensation is the proper remedy | Court: Agrees CGL typically does not cover employee workplace injuries; policy exclusion aligns with purpose |
Key Cases Cited
- Pub. Serv. Comm’n of Utah v. Wycoff Co., Inc., 344 U.S. 237 (discretionary nature of Declaratory Judgment Act)
- Wilton v. Seven Falls Co., 515 U.S. 277 (federal courts’ broad discretion to hear declaratory-judgment actions)
- Scottsdale Ins. Co. v. Flowers, 513 F.3d 546 (6th Cir.) (application of Grand Trunk factors in insurance declaratory actions)
- Grand Trunk W. R.R. Co. v. Consol. Rail Corp., 746 F.2d 323 (6th Cir.) (articulation of factors guiding exercise of declaratory jurisdiction)
- Meridian Mut. Ins. Co. v. Wypij, 573 N.W.2d 320 (Mich. Ct. App. 1997) (Michigan economic‑reality test for employee status)
- McDonald v. Farm Bureau Ins. Co., 747 N.W.2d 811 (Mich.) (limits on finding ambiguity in insurance contracts)