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State Farm Fire & Casualty Co. v. ARC Manufacturing, Inc.

United States District Court, D. Minnesota

March 31, 2014

STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff,
v.
ARC MANUFACTURING, INC.; RONALD W. LAMMERT; VALERIOUS A. YOUNG, as Co-Trustee for the Heirs and Next of Kin of James J. De Vaan; MARY DE VAAN, as Co-Trustee for the Heirs and Next of Kin of James J. De Vaan; GREAT WEST MECHANICAL, INC., Defendants

Page 899

Matthew R. Smith, TOMSCHE, SONNESYN & TOMSCHE, P.A., Minneapolis, MN, for plaintiff.

Tonya T. Hinkemeyer, RINKE NOONAN, St. Cloud, MN, for defendants ARC Manufacturing, Inc. and Ronald W. Lammert.

Thomas G. Johnson, JOHNSON MOODY SCHMIDT & KLEINHUIZEN, PA, Willmar, MN, for defendant Valerious A. Young.

Christopher A. Johnston, JOHNSTON MARTINEAU PLLP, Roseville, MN, for defendant Mary De Vaan.

Matthew W. Moehrle, RAJKOWSKI HANSMEIER LTD., St. Cloud, MN, for defendant Great West Mechanical, Inc.

Page 900

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

JOHN R. TUNHEIM, United States District Judge.

Plaintiff State Farm Fire and Casualty Company (" State Farm" ) brings this declaratory judgment action against its insureds, ARC Manufacturing, Inc. (" ARC" ), Ronald Lammert, and Great West Mechanical, Inc. (" Great West" ). The underlying facts giving rise to this action involve a fatal truck accident. James J. De Vaan was killed after a truck and trailer driven by Lammert collided with his vehicle. Lammert is the vice president of ARC, and at the time of the accident was returning home from a job site where ARC had been retained as a subcontractor by Great West to perform certain construction work. Valerious A. Young and Mary De Vaan as co-trustees for the heirs and next of kin of James J. De Vaan (collectively, " Co-Trustees" ) brought a wrongful death action in Minnesota state court against Lammert, ARC, and Great West.

State Farm then brought the present declaratory judgment action seeking a declaration that its contractor insurance policy issued to ARC does not provide coverage for damages arising out of the accident. Specifically, State Farm argues that coverage for the accident is barred by an exclusion in the policy for liability arising out of the use of a non-owned auto in ARC's business. State Farm moves for summary judgment with respect to all Defendants. Because the Court concludes that no issue of material fact remains such that a reasonable jury could find that the accident is covered under the policy, the Court will grant State Farm's motion for summary judgment.

BACKGROUND

I. THE ABERDEEN JOB SITE

Lammert is the vice president of ARC, a company that performs plumbing, heating, ventilation, and air conditioning work. (Aff. of Matthew R. Smith, Ex. 7 (Dep. of Ronald Walter Lammert (" Lammert Dep." ) 8:9-20), July 19, 2013, Docket Nos.

Page 901

29-31.)[1] In October 2010, ARC was performing work for Great West as a subcontractor on a construction site in Aberdeen, South Dakota. (Lammert Dep. 9:2-23; Smith Aff., Ex. 8 (Dep. of Scott Snare (" Snare Dep." ) 17:23-18:2).)

On October 4, 2010, Lammert traveled to Great West's office facility in Big Lake, Minnesota, to pick up vent hoods to bring to the Aberdeen job site. (Lammert Dep. 17:11-13, 36:21-25, 43:3-44:14.) Lammert loaded the hoods onto a trailer (" the Trailer" ) attached to a 2007 Ford truck (" the Truck" ) and hauled the hoods to Aberdeen. (Lammert Dep. 11:9-10.)

No written agreement governed the relationship between ARC and Great West regarding ARC's work at the Aberdeen job site. (Snare Dep. 36:9-14; Lammert Dep. 10:10-21.) Great West paid an hourly rate for time Lammert spent driving the Truck and Trailer to and from the site. (Snare Dep. 22:8-24.) Great West also paid an hourly wage for Lammert's work on the site. ( Id. 23:6-15.) Additionally, Great West paid approximately $800 per month for the use of the Truck. (Lammert Dep. 49:13-51:23.) Snare testified that he was not sure, but assumed that Lammert did not receive compensation directly from Great West, but rather that Great West would have paid ARC, who in turn would have paid Lammert. (Snare Dep. 7:9-11, 35:2-36:8, 48:13-19.) Lammert testified that he did not receive individual payments for any of the work performed at the Aberdeen jobsite and that Great West paid ARC. (Lammert Dep. 18:6-20, 56:10-18.) Great West did, however, pay Lammert individually $100 for using the Trailer to transport the hoods to the Aberdeen job site. (Snare Dep. 41:15-23; Lammert Dep. 19:20-20:19.)

II. THE TRUCK AND TRAILER

Lammert was the registered owner of both the Truck and Trailer involved in the accident. (Lammert Dep. 11:5-16, 17:19-18:5.) ARC, however, purchased the Truck, making an $8,000 down payment and making all payments on the loans financing the Truck. ( Id. 23:11-14, Smith Aff., Ex. 6 at 35.) ARC also paid for the Truck's license and registration fees, maintenance, fuel, and insurance.[2] (Lammert Dep. 23:20-24:10.) Additionally, ARC depreciates the Truck and Trailer on its corporate tax returns. (Smith Aff., Ex. 6 at 36.) ARC also pays for the license and registration fees, maintenance, and insurance for the Trailer. (Lammert Dep. 24:16-25:8.) ARC makes these payments directly, rather than reimbursing Lammert for incurring such expenses. ( Id. 25:24-26:7.) ARC made these payments because the company had determined that the Truck and Trailer are an integral part of its business. ( Id. 25:12-18; Smith Aff., Ex. 9.)

III. THE ACCIDENT

On October 7, 2010, Lammert was driving home from the Aberdeen job site in the Truck, pulling the Trailer behind him. (Lammert Dep. 9:2-12.) During this trip, ...


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