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LM Insurance Corp. v. Dubuque Barge and Fleeting Service Co.

United States District Court, N.D. Iowa, Eastern Division

March 8, 2019





         This matter is before the Court on (1) Plaintiff LM's motion for summary judgment (Doc. 21) and (2) Defendant Newt Marine's motion for summary judgment (Doc. 20). Each party has filed a resistance to the other's motion. (Docs. 22, 23.) Each party has filed a reply brief in support of its own motion. (Docs. 24, 25.) The Court held oral arguments February 25, 2019. The matter is fully submitted.

         Plaintiff Liberty Mutual Insurance Corporation (“LM”) commenced this action by filing a complaint on December 20, 2017. (Doc. 1.) LM's Complaint asserts that Defendant Dubuque Barge and Fleeting Service Company d/b/a Newt Marine Services (“Newt Marine”) breached the parties' contract to provide workers' compensation insurance because Newt Marine failed to pay workers' compensation insurance premiums. The dispute concerns whether Newt Marine is required to pay premiums for employees who are classified as seamen under the Jones Act.

         Pursuant to the scheduling order and discovery plan of March 30, 2018 (Doc. 12), the parties unanimously consented to disposition by a United States Magistrate Judge, and the case was subsequently reassigned to me. See 28 U.S.C. Section 636(c)(3).


         Any party may move for summary judgment regarding all or any part of the claims asserted in a case. Fed.R.Civ.P. 56(a). Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         A material fact is one “that might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Thus, “the substantive law will identify which facts are material.” Id. Facts that are “critical” under the substantive law are material, while facts that are “irrelevant or unnecessary” are not. Id. “An issue of material fact is genuine if it has a real basis in the record, ” Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)), or “when ‘a reasonable jury could return a verdict for the nonmoving party' on the question, ” Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005) (quoting Anderson, 477 U.S. at 248)). Evidence that only provides “some metaphysical doubt as to the material facts, ” Matsushita, 475 U.S. at 586, or evidence that is “merely colorable or is not significantly probative, ” Anderson, 477 U.S. at 249-50 (internal citation omitted), does not make an issue of material fact genuine. Put another way, “‘[e]vidence, not contentions, avoids summary judgment.'” Reasonover v. St. Louis Cty., 447 F.3d 569, 578 (8th Cir. 2006) (quoting Mayer v. Nextel W. Corp., 318 F.3d 803, 809 (8th Cir. 2003)). The parties “may not merely point to unsupported self-serving allegations.” Anda v. Wickes Furniture Co., 517 F.3d 526, 531 (8th Cir. 2008) (citation omitted).

         As such, a genuine issue of material fact requires “sufficient evidence supporting the claimed factual dispute” so as to “require a jury or judge to resolve the parties' differing versions of the truth at trial.” Anderson, 477 U.S. at 249 (quotations omitted). The party moving for entry of summary judgment bears “the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record which show a lack of a genuine issue.” Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at 323). Once the moving party has met this burden, the nonmoving party must go beyond the pleadings and by depositions, affidavits, or otherwise, designate specific facts showing that there is a genuine issue for trial. Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th Cir. 2005). The nonmovant must show an alleged issue of fact is genuine and material as it relates to the substantive law. Id. at 910-11. If a party fails to make a sufficient showing of an essential element of a claim or defense with respect to which that party has the burden of proof, then the opposing party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 322.

         In determining if a genuine issue of material fact is present, the court must view the evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 587-88. Further, the court must give the nonmoving party the benefit of all reasonable inferences that can be drawn from the facts. Id. However, because the court views “the facts in the light most favorable to the nonmoving party, [the court does] not weigh the evidence or attempt to determine the credibility of the witnesses.” Kammueller v. Loomis, Fargo & Co., 383 F.3d 779, 784 (8th Cir. 2004) (citation omitted). Instead, “the court's function is to determine whether a dispute about a material fact is genuine.” Quick v. Donaldson Co., 90 F.3d 1372, 1377 (8th Cir. 1996).

         On cross motions for summary judgment, the “court must rule on each party's motion on an individual and separate basis, determining, for each side, whether a judgment may be entered in accordance with the Rule 56 standard.” 10A Charles Alan Wright et al., Federal Practice and Procedure § 2720 (3d ed. 1998). When the parties seek summary judgment on some of the same issues, the court may consider all the parties' arguments as to each issue, keeping in mind the separate inferences that are to be drawn from each motion. See Wright v. Keokuk Cty. Health Ctr., 399 F.Supp.2d 938, 946 (S.D. Iowa 2005). In the instant case, virtually all of the relevant facts are not in dispute. Where an objection is raised to any statement of a material fact, the dispute, for the most part, concerns the legal effect of a certain fact or facts - not about the facts themselves.


         Newt Marine, an Iowa Corporation, is engaged in marine construction work, mostly conducted on a floating plant and dredge barge with a tug boat. LM is a corporation that sells, among other things, workers' compensation insurance of the type that Iowa employers are required to maintain. This case involves workers' compensation insurance policies issued by LM to Newt Marine.

         At the time the policies were issued, LM was a servicing carrier who issued workers' compensation insurance through Iowa's state-administered assigned risk plan. See Iowa Code § 515A.15. As LM describes it, employers who cannot obtain workers' compensation insurance on the voluntary market apply for insurance through Iowa's assigned risk plan. A participating insurer is then randomly assigned and issues the policy to the employer. (Doc. 21-1 at 2.) There is no opportunity to investigate or engage in underwriting prior to issuing the policy. The insurer issues the policy based solely on information supplied by the employer and an estimated premium deposit. However, the employer is subject to audit by the insurer to determine the actual premium owed based on the risk actually undertaken:

The final premium will be determined after this policy ends by using the actual, not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and the work covered by this policy. If the final premium is more than the premium you paid to us, you must pay us the balance.

(Doc. 21-3 at 28 (Policy, Pt. Five ¶ E).) The policy further permits LM to charge a premium “for all other persons engaged in work that could make us liable.” (Id. at 27 ¶ C2.)

         LM issued Newt Marine three workers' compensation policies between May 4, 2013 and February 1, 2016 as part of Iowa's assigned risk plan. The policies gave LM the right to examine and audit Newt Marine's records relating to the policies and determine the final premium after the policy period. The final premium is determined

after [each] policy ends by using the actual, not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and work covered by [each] policy. If the final premium is more than the premium [the insured] paid to [LM], [the insured] must pay [LM] the balance.

(Doc. 23-1 ¶ 5.) Each policy further provided that “[i]nformation developed by audit will be used to determine final premium, ” and that LM can charge a premium. (Doc. 21-3 at 28 (Policy, Pt. Five ¶ G).)

         Each policy expressly excluded from coverage: “[b]odily injury to a master or member of the crew of any vessel.” (Doc. 20-4 at 35 (Policy, Pt. Two ¶ C10).) Masters or members of any crew of any vessel, otherwise known as “seamen, ” are covered under a separate protection and indemnity policy maintained by Newt Marine with AIG.

         Newt Marine contends that all of its deckhands, operators, pilots, and boat engineers were excluded from the LM policies because they were classified by Newt Marine as seamen. (Doc. 22-1 ¶ 7.) In response, LM asserts that those individuals “were supposed to be excluded from the policy however [Newt Marine] still submitted claims on these individuals to LM Insurance, claims which LM Insurance paid on.” (Id.) Three injuries to Newt Marine employees were reported to LM. These employees were classified as seamen and employed as “operators, ” but asserted workers' compensation claims and received benefits under the Iowa Workers' Compensation Statute.[1] LM conducted audits in 2013, 2014, and 2015 to calculate final premiums. The audits specifically excluded the three seamen who were compensated under the Iowa workers' compensation statute and all of whom were identified as “operators.” At all material times, deckhands, operators, pilots, and boat engineers employed by Newt Marine were masters or members of a vessel excluded from coverage under each of the LM policies at issue and were subject to the Jones Act based on their duties and responsibilities. LM performed an audit following the end of the policies and decided to assess a total additional premium of $1, 290, 927.58, plus interest. (Doc. 21-2 ¶ 14.) This amount was determined by charging a premium for the seamen who were excluded under the policies. In fact, the only relief LM requests is damages for unpaid premiums for “all other persons engaged in work that could make us liable.” (Doc. 1 ¶¶ 22, 36, 37, 51, 52.) Plaintiff LM's Complaint does not state any claim to recover amounts it paid in claims for employees that should have been excluded under the policies.

         IV. ...

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