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Hendrick Automotive Group v. Hartford Fire Insurance Co.

United States District Court, W.D. North Carolina, Charlotte Division

April 9, 2018

HENDRICK AUTOMOTIVE GROUP, Plaintiff,
v.
HARTFORD FIRE INSURANCE COMPANY TRUMBULL INSURANCE COMPANY, Defendant.

          ORDER

          Max O. Cogburn Jr. United States District Judge

         THIS MATTER is before the Court on cross-motions for summary judgment, including plaintiff Hendrick Automotive Group's (“HAG's”) Motion for Summary Judgment (#19) and defendants' Trumbull Insurance Company's and Hartford Fire Insurance Company's (collectively “Hartford's”) Motion for Summary Judgment (#20).

         FINDINGS AND CONCLUSIONS

         I. Background

         A. Nature of this Action

         In this action, the Court is asked to resolve a dispute between an insured, HAG, and its insurer, Hartford, concerning whether payment by the insured of two deductibles for the same occurrence was a breach of the comprehensive insurance agreement entered into by the parties. The issue is framed in terms of a breach of contract, and HAG contends that Hartford breached its duty to defend under the Employer Liability Policy (“EL Policy”) when Hartford denied a defense under the EL Policy and instead defended the claim under the Commercial General Liability Policy (“CGL Policy”). Inasmuch as HAG had already paid the claimant under the Worker Compensation Policy (“WC Policy”) based on the same Loss Event or Occurrence, HAG ended up paying two $350, 000.00 deductibles. For the reasons that follow, the Court determines that it was a breach of the EL Policy not to defend under that agreement and that HAG is entitled to a refund of the second $350, 000.00 deductible.

         B. The Underlying Claim

         Clarence Adams (“Mr. Adams”) was an employee of HAG, working for Hendrick Chevrolet and HC Parts in Georgia, both of which are owned by HAG. In the course of his duties, Mr. Adams was severely injured at the HC Parts warehouse in Georgia.

         While Mr. Adams was unfortunate in that he was injured on the job, he was fortunate in securing excellent legal representation. Through such capable representation, Mr. Adams first received a substantial settlement of his worker's compensation claim under the HAG's WC Policy, which was issued by Hartford. He then successfully brought a civil claim from which he received another substantial settlement, which was funded by HAG's CGL Policy, which was also issued by Hartford. In accordance with the policies of insurance which funded the settlements, HAG paid a $350, 000.00 deductible under the WC Policy when the worker's compensation settlement was paid to Mr. Adams and then paid a second deductible of $350, 000.00 under the CGL Policy when the civil action was settled.

         HAG contends that the second deductible should be refunded as the settlement should have been paid under the EL Policy, under which it requested a defense, not under the CGL Policy.

         II. Undisputed Facts

         A. The Policy

         As part of the comprehensive insurance package sold to HAG, Hartford issued a Workers Compensation and Employers Liability Policy (“WC/EL Policy” and, at times, “WC Policy” and “EL Policy”) and a Commercial General Liability Policy (“CGL Policy”). The WC/EL Policy has a limit of liability of $1, 000, 000.00 per accident and imposes a $350, 000.00 loss reimbursement deductible of $350, 000.00 per “Loss Event.” A Loss Event is defined as “all bodily injury to one or more employees in any one accident.” The CGL Policy has a limit of liability of $2, 000, 000.00 and imposes a $350, 000 deductible for any one “Occurrence.” An Occurrence is defined as an “accident.”

         B. The Loss Event or Occurence

         Mr. Adams was employed as a delivery driver who delivered parts and accessories for Hendrick Chevrolet and HC Parts, both of which are owned by HAG. He received his paycheck from Hendrick Chevrolet, but for accounting purposes, HC Parts paid 25% of his wages and benefits. Mr. Adams work included working in the HC Parts warehouse, where on April 23, 2013, he was injured in a forklift accident. The forklift was being operated by another HC employee and both employees were working within the course and scope of their employment with HAG and its subsidiaries. Mr. Adams brought claims for his injuries against Hendrick Chevrolet under the Georgia Workers Compensation Act and Hartford paid the resulting workers compensation claim under the WC/EL Policy and HAG paid the $350, 000.00 deductible.

         C. The ...


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