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Starr Indemnity & Liability Co. v. North Central Aviation, Inc.

United States District Court, D. Minnesota

April 2, 2019

Starr Indemnity & Liability Company, Plaintiff,
v.
North Central Aviation, Inc., Defendant.

          Robert William Vaccaro, Esq., and Timothy R. Schupp, Esq., Meagher & Geer, P.L.L.P., counsel for Plaintiff.

          Sharon L. Van Dyck, Esq., Van Dyck Law Firm, PLLC, and Tyler P. J. Brimmer, Esq., Fafinski Mark & Johnson P.A., counsel for Defendant.

          MEMORANDUM OPINION AND ORDER

          DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE.

         INTRODUCTION

         This is an insurance coverage dispute over whether Plaintiff Starr Indemnity & Liability Company (“Starr”) has an obligation to defend or indemnify Defendant North Central Aviation, Inc. (“NCA”) in connection with a lawsuit arising from an airplane collision in 2016. The parties agree on the underlying facts of the case, however dispute whether an exclusion bars coverage. Each party filed a motion for summary judgment. (Doc. Nos. 20, 25.) For the reasons set forth below, the Court grants Starr's motion and denies NCA's motion.

         BACKGROUND

         The parties do not dispute the following facts. Starr is a property and casualty insurance company incorporated in Texas with its principal place of business located in New York. (Doc. No. 1, Complaint (“Compl.”) ¶ 6.) NCA is a Minnesota corporation which provides personal aircraft charter and management services. (Compl. 7.)

         NCA leased a Cessna Citation CJ-2 jet with tail number N457MD (“Aircraft 1”) from BreezeAir, LLC (“BreezeAir”) through an agreement dated February 15, 2016. (Compl. 14; Doc. No. 23, (“Vaccaro Decl.” ¶ 2), Ex. A (“Aircraft 1 Lease Agreement”).) NCA also leased a Cessna Citation V jet with tail number N753MB (“Aircraft 2”) from Investment Leasing, LLC (“Investment Leasing”) through an agreement dated June 1, 2016. (Compl. ¶ 15; Vaccaro Decl., Ex. B (“Aircraft 2 Lease Agreement”).)

         On the evening of December 5, 2016 both planes were at the Flying Cloud Airport in Eden Prairie, Minnesota. (Compl. ¶ 16; Vaccaro Decl. ¶ 4, Ex. C NCA Incident Report N753MB dated Dec. 5, 2016 (“Incident Report”).) Aircraft 2 was piloted by an NCA crew (Id.); Aircraft 1 was last piloted, then parked at approximately 6:00 p.m., by a separate NCA crew. (Incident Report; Doc. No. 27, (“NCA Memo”), Ex. D (“Lurie Depo.”) at 14-19.) At approximately 7:00 p.m. local time, while taxiing from its parking spot, Aircraft 2 collided with parked and stationary Aircraft 1. (Incident Report.) NCA concedes that it is “likely to be held legally liable for the collision” resulting from the actions of its crew who were operating Aircraft 2 at the time of the incident. (NCA Memo at 8.)

         Aircraft 1 Lease Agreement

          The Aircraft 1 Lease Agreement contains several provisions critical to the issues in controversy. Section 1, entitled “Lease Term, ” specifies that the agreement will continue “in full force” for a term of one year, and renew automatically for one-year terms. (Aircraft 1 Lease Agreement § 1.) The same section instructs that the aircraft “shall be delivered by Lessor [BreezeAir] to Operator [NCA] for each usage at the Anoka County-Blaine Airport . . . (the ‘Operating Base'), unless otherwise agreed by the parties.” (Id.)

         Section 2, “Use of Aircraft, ” includes the designation of the agreement as a “dry lease.” In relevant part, this means that in its role as Operator, NCA “shall have and maintain operational control” over the plane during initiation, conduct, and termination of a flight and that NCA shall be “solely responsible for supplying a flight crew” for its operations. (Id. at § 2(a)(i)-(iii).)

         Section 3 of the agreement, “Rent, Taxes and Expenses, ” requires “rent for the lease of the Aircraft” to be paid by monthly invoice at a specified hourly rate according to “Aircraft hours used.” (Id. at § 3(a).) This section also states that as Operator, NCA shall be responsible for expenses related to the use of Aircraft 1 including “all necessary ground and flight operations support such as hangar while away from the Operating Base.” (Id. at § 3(c).) Clause 3(c) goes on to state that the Lessor, BreezeAir, “shall be solely responsible for the cost and expense of hangaring the Aircraft at the Operating Base . . . .” (Id.)

         Section 8, “Insurance, ” requires the Operator to “provide insurance coverage from a reputable insurance carrier related to Operator's possession, use, maintenance and operations of the Aircraft, ” and specifies that “[t]he policies will include aircraft liability insurance to insure against liability for personal injuries, death or property damages . . . .” (Id. at § 8(a); (a)(i).)

         Aircraft 2 Insurance Policy

          Aircraft 2, which inflicted the damage on Aircraft 1, was insured at the time of the collision by Starr through a policy stating a coverage period of June 8, 2016 to June 8, 2017. (Compl. ¶ 20; Vaccaro Decl. ¶ 6, Ex. E, (the “Policy”) at 1.) The Policy named the aircraft owner, Investment Leasing, as the insured, and included an ...


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