Amina Benahmed v. Houston Casualty Company , 486 F. App'x 508 ( 2012 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 12a0510n.06
Nos. 11-3027/3041
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
AMINA BENAHMED, Individually, and as
personal representative and/or next of friend of
May 16, 2012
the estate of Agdulgader Zbedah, Aya Zbedah, LEONARD GREEN, Clerk
Alimusa Zbedah, and Jannat Zbedah,
ON APPEAL FROM THE
Plaintiff-Appellee/Cross-Appellant, UNITED STATES DISTRICT
COURT FOR THE NORTHERN
v. DISTRICT OF OHIO
HOUSTON CASUALTY COMPANY,
Defendant-Appellant/Cross-Appellee.
/
BEFORE: NORRIS, CLAY, and GRIFFIN, Circuit Judges.
CLAY, Circuit Judge. This action arises between Plaintiff Amina Benahmed, as executor
of her deceased husband’s estate, and Defendant Houston Casualty Company. Defendant appeals
the district court’s order granting summary judgment in part to Plaintiff on her action to recover
insurance damages from Defendant following her successful state action for wrongful death against
her deceased husband’s employers, Defendant’s insureds. Plaintiff cross-appeals the order granting
summary judgment in part to Defendant on Plaintiff’s request for post-judgment interest. For the
reasons that follow, we AFFIRM both orders.
No. 11-3027
BACKGROUND
Abdulgader Zbedah was employed with TriCoastal Air, Inc. (“TriCoastal”) and Grand Aire
Express, Inc. (“Express”) as a pilot. On February 8, 2006, he was piloting a Fairchild Swearingen
SA226TC cargo plane from Ohio to Texas and was the plane’s only occupant. The plane developed
a mechanical problem and crashed in Tennessee, ultimately killing Zbedah. Following Zbedah’s
death, Plaintiff was appointed executor of his estate. Plaintiff filed a wrongful death action against
TriCoastal and Express in the Lucas County Court of Common Pleas of Ohio.
TriCoastal and Express alleged that they were insureds of Defendant Houston Casualty
Company under Policy Number 013047-014. Defendant initially represented TriCoastal and Express
in the Lucas County lawsuit, but it eventually determined that Plaintiff’s claim was not covered by
its policy, issued a coverage denial letter, and subsequently terminated its representation of
TriCoastal and Express. TriCoastal and Express hired independent counsel and jointly agreed to
settle with Plaintiff. The settlement stipulated that TriCoastal, Express, and two other Grand Aire
affiliates negligently maintained the cargo plane flown by Zbedah and that their negligence caused
Zbedah’s death. The companies also agreed to confess judgment of $5,278,753.00 in Plaintiff’s
favor, in exchange for Plaintiff’s agreement to enforce judgment only against Defendant. On
October 20, 2008, the Lucas County court entered judgment in Plaintiff’s favor against TriCoastal
and Express for the agreed-upon amount.
Plaintiff, acting as a judgment creditor, brought the present action against Defendant in
federal district court on the basis of diversity jurisdiction. Plaintiff sought to enforce the stipulated
damages amount against Defendant under Policy Number 013047-014.
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No. 11-3027
The policy period of May 17, 2005 to May 17, 2006 encompasses the date of Zbedah’s
accident, February 8, 2006. The “named insureds” listed on the policy are TriCoastal, Grand Aire,
Inc., Grand Aire Operations, Inc., Grand Aire Avionics, Inc., the estate of Tahir Cheema (owners of
the Grand Aire companies), the officers, directors, and employees of the companies, and any
subsidiary companies.1
The policy provides Coverages A through E and twelve “endorsements” (additional coverage
policies). The provision of the policy at issue is Endorsement Four, for “Premises, Products-
Completed Operations and Hangarkeepers Liability Coverage.” Section Two of that endorsement
provides:
Aviation Products-Completed Operations Liability
This Policy will pay on behalf of the Insured all sums which the Insured shall become
legally obligated to pay as damages because of bodily injury and property damage
caused by an occurrence and arising out of the Insured’s aviation operations and/or
the possession, use, consumption or handling of any goods or products manufactured,
constructed, altered, repaired, serviced, treated, sold, supplied or distributed by the
Named Insured or its employees, and then only after such goods or products have
ceased to be in the possession or under the control of the Insured.
The limit of liability under Endorsement Four, Section Two is one million dollars, and the
endorsement is subject to certain exclusions. The endorsement states:
Exclusions
The coverage provided by this Section [Endorsement Four, Section Two] is subject
to the same exclusions as are applicable to Coverages B, C, D, and E of this Policy
....
1
Express is not listed as a named insured, and Defendant strongly asserts that it cannot be
required to pay for a non-insured’s negligence. Regardless of the merits of Defendant’s allegation,
Defendant admits that TriCoastal is a named insured, and Defendant’s liability under the policy is
the same regardless of whether Express is also a named insured.
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Thus, Endorsement Four, Section Two refers the reader to the policy’s coverage exclusions.2 The
policy’s general “Exclusions” section lists four exclusions that apply to all coverages A through E,
which are not pertinent here. The section also offers four coverage-specific exclusions. Relevant
to this appeal are two coverage-specific exclusions. Those provide:
EXCLUSIONS
This policy does not apply to:
....
5. Under Coverage B, C, D and E
(a) to liability assumed by the Insured under any contract or agreement, but
this exclusion 5.(a) does not apply to the assumption by the Named Insured of the
liability of others for bodily injury or property damage in any written hold harmless
agreement required by a governmental or military authority as a prerequisite to the
use of an airport or an airport facility;
(b) (i) To claims directly or indirectly occasioned by, happening through or
in: [sic] consequence of: (1) noise . . ., (2) pollution . . ., (3) electrical and
electromagnetic interference, (4) interference with the use of property; unless caused
by or resulting from a crash, fire, explosion or collision of an aircraft or a recorded
in-flight emergency causing abnormal aircraft operation.
(ii) With respect to any provision in the policy concerning any duty of the
Company to investigate or defend claims, such provision shall not apply and the
Company shall not be required to defend: (1) claims excluded by paragraph (b) (i)
above or (2) a claim or claims covered by the policy when combined with any claims
excluded by paragraph (b)(i) above (referred to below as “Combined Claims”).
(iii) In respect of any Combined Claims, the Company shall (subject to
proof of loss and the limits of the policy) reimburse the Insured for that portion of the
following items which may be allocated to a claim or claims covered by the policy:
(1) damages awarded against the Insured and (2) defense fees and expenses incurred
by the Insured.
(c) To claims in respect of bodily injury or property damage caused by or
resulting from the use by the Insured or his agent of all forms of fertilizers,
fungicides, defoliants, herbicides, hormone selective weed killers, pesticides,
2
Additionally, there are several exclusions that apply only to Endorsement Four, Section
Two, but are not relevant on appeal.
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insecticides, and arsenical preparations or compounds or any other forms of
chemicals.
6. Under Coverages B, C and D
(a) to any obligation for which the Insured or any carrier as his insurer may
be held liable under any worker’s compensation, unemployment compensation or
disability benefits law, or under any similar law;
(b) to bodily injury to any employee of the Named Insured arising out of and
in the course of his employment by such Named Insured; but this exclusion 6.(b)
does not apply to liability assumed by the Named Insured under any governmental
or military agreement referred to in Exclusions 5. (a) above;
(c) to bodily injury to any person who is a Named Insured . . . .
On the basis that her claim was covered under Endorsement Four, Section Two of the policy,
Plaintiff filed a motion for summary judgment, requesting that Defendant pay the confessed Lucas
County judgment and post-judgment interest. Defendant filed a cross-motion for summary
judgment, arguing that no liability existed under its policy for the negligence of TriCoastal or
Express or for their stipulated judgment. The district court granted partial summary judgment to
Plaintiff, determining that Defendant was liable to Plaintiff, but only in the amount of one million
dollars per the cap in the insurance agreement. The court also granted partial summary judgment to
Defendant in denying Plaintiff’s request for post-judgment interest. Defendant responded with a
single motion under both Federal Rules of Civil Procedure Rule 59(e) to alter or amend judgment
and Rule 60(b)(6) for relief from the district court’s order, which the district court denied. Both
parties timely cross-appealed the district court’s summary judgment order.
DISCUSSION
I. Federal Jurisdiction and Standing to Sue
On appeal, Defendant argues, for the first time, that federal jurisdiction does not exist and
that Plaintiff lacks standing to sue. Our jurisdiction and the justiciability of Plaintiff’s claim are
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No. 11-3027
threshold issues that we must always consider. However, we find that Defendant’s contentions are
meritless with respect to both matters.
A. Subject Matter Jurisdiction
Although Defendant admits that diversity jurisdiction exists under 28 U.S.C. § 1332,
Defendant argues that under Ohio Revised Code § 3929.06, Plaintiff was required to file her action
against Defendant in the Lucas County Court of Common Pleas, which is the court that entered
judgment in the underlying action.
Section 3929.06 governs rights of a judgment creditor and provides, in relevant part:
If, within thirty days after the entry of the final judgment . . . the insurer that issued
the policy of liability insurance has not paid the judgment creditor an amount equal
to the remaining limit of liability coverage provided in that policy, the judgment
creditor may file in the court that entered the final judgment a supplemental
complaint against the insurer seeking the entry of a judgment ordering the insurer to
pay the judgment creditor the requisite amount.
Ohio Rev. Code Ann. § 3929.06(A)(2) (emphasis added). Despite Defendant’s assertions, the word
“may” within the statute indicates that a judgment creditor is merely permitted—not mandated—to
file its action in the same court pronouncing judgment. Moreover, this Court has previously found
federal jurisdiction to be proper under § 3929.06 in cases where a plaintiff obtained a judgment in
state court and filed a diversity action in federal district court to recover damages against the insurer.
See Ridge v. Nat’l Am. Ins. Co., No. 93-4026, 1995 U.S. App. LEXIS 635, at *3–4 (6th Cir. Jan. 11,
1995) (per curiam) (“Complete diversity of citizenship exists between the parties, and this Court has
previously recognized the propriety of bringing a diversity action based on section 3929.06.”); see
also Ayers v. Kidney, 333 F.2d 812, 814 (6th Cir. 1964); Doepker v. Everest Indem. Ins. Co., No.
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No. 11-3027
5:07CV2456, 2008 U.S. Dist. LEXIS 6015, at *13 (N.D. Ohio Jan. 16, 2008). We therefore find that
our jurisdiction is not precluded by § 3929.06(A)(2).
B. Standing to Sue
Defendant next argues that Plaintiff lacks standing to sue because Defendant is immune from
liability. The doctrine of standing to sue is well ingrained in our jurisprudence; it requires that the
plaintiff suffered actual injury that is traceable to the defendant’s conduct and can be remedied by
a judgment in the plaintiff’s favor. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992);
see Valley Forge Christian College v. Ams. United for Separation of Church & State, 454 U.S. 464,
474–75 (1982) (outlining additional prudential requirements). Without standing, there is no
justiciable case or controversy and this Court may not adjudicate the matter. Lujan, 504 U.S. at 561.
Defendant’s arguments with respect to standing are frivolous. Defendant cites no authority
for the proposition that a defendant’s immunity precludes plaintiff’s standing. Indeed, Defendant
fails to realize that a defendant’s alleged immunity from suit does not prevent a plaintiff from
establishing standing, but instead affects the plaintiff’s ability to recover. Courts frequently grant
immunity to defendants without holding that the plaintiff lacks the threshold requirement of
standing. Here, Plaintiff has been injured by the Defendant’s refusal to pay damages to which
Plaintiff believes she is entitled, and an order of this Court requiring Defendant to pay on its policy
would indeed remedy Plaintiff’s grievance. Plaintiff has standing to sue.
II. Damages
We review de novo a district court’s decision to grant summary judgment. Holloway v.
Brush, 220 F.3d 767, 772 (6th Cir. 2000) (en banc). Summary judgment is appropriate where “there
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is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. Pro. 56(a). We view the facts and reasonable inferences in the light most
favorable to the nonmoving party. Holloway, 220 F.3d at 772.
The district court found that Plaintiff was entitled to damages under TriCoastal’s insurance
policy with Defendant. Defendant argues first that it is immune from Plaintiff’s claim; in the
alternative, Defendant argues that Plaintiff’s claim is not covered by the plain language of
Endorsement Four, Section Two or is excluded from coverage under Exclusion 6 or the language
of Coverage C. We address each of these matters in turn, below.
A. Defendant’s Immunity
As an initial matter, we address Defendant’s contention that it is immune from liability under
Article II, Section 35 of the Ohio Constitution, Ohio Revised Code §§ 4123.74, 4123.82(A),
3929.06, and state and federal case law. Defendant contends that under the Ohio Constitution’s
Article II, Section 35, employers are immune from employees’ negligence claims for workplace
accidents; because the employers are immune, the employers’ insurers are immune by extension.
Furthermore, Defendant argues that under Ohio Revised Code § 4123.82, insurers are allegedly not
permitted to issue policies that cover employee’s negligence claims against employers. Therefore,
according to Defendant, judgment against it is in contravention of Ohio constitutional and statutory
law.
We may not reach the merits of Defendant’s immunity argument, because Defendant failed
to preserve that argument in the district court proceedings below. Although it raised the argument
in its Answer, Defendant waived the immunity argument when it failed to raise the argument in its
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motion for summary judgment. While Defendant did mention Article 35 and one related Ohio case
in its motion, Defendant did so only in the context of informing the district court of its interpretation
of the meaning of its own policy. Indeed, Defendant never even used the word “immunity” at that
stage in the proceedings. After summary judgment was granted to Plaintiff on the damages issue,
Defendant did raise the immunity argument in its motion under Rule 59(e) to alter or amend
judgment and Rule 60(b)(6) for relief from judgment. Nonetheless, Defendant’s attempt to revive
its abandoned defense was futile, because “issues [are] waived when they are raised for the first time
in motions requesting reconsideration or in replies to responses.” Scottsdale Ins. Co. v. Flowers, 513
F.3d 546, 553 (6th Cir. 2008). Moreover, because Defendant has also abandoned its appeal of the
Rule 59 and Rule 60 motion by failing to argue that the denial of that motion was in error, we have
no opportunity to consider the immunity argument in the context of the court’s denial of that motion
either.
Defendant asserts that it cannot be deemed to have abandoned the immunity defense, because
1) insurers may not waive immunity without express, written consent; 2) it has a right to per Ohio
Revised Code § 3929.06(C)(1) to raise any defense that its insureds could have raised at trial; and
3) judgment against it would offend Ohio constitutional law. Each of these arguments fail. First,
although it may be the case that we cannot give effect to a pre-trial waiver of an insurer’s immunity
without its written consent, see Lubrizol Corp. v. Nat’l Union Fire Ins. Co., 200 F. App’x 555,
560–61 (6th Cir. 2006), waiver of immunity in that context is entirely distinct from waiver or failure
to preserve an immunity argument in this Court for procedural purposes. See Scottsdale Ins. Co.,
513 F.3d at 552 (outlining the policy reasons for waiver and failure to preserve doctrines in the court
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system). Second, although Defendant argues that it has a right per Ohio Revised Code §
3929.06(C)(1) to raise any defense that it could raise against its insureds—such as the immunity
argument—that statute does not save defenses that the Defendant itself failed to properly preserve
for appeal. Finally, our decision cannot be offensive to Ohio law when Ohio itself permits
employers to waive their immunity by express writing. See Lubrizol, 200 F. App’x at 560.
B. Liability Under the Policy
Under Ohio law, which the parties agree governs this case, the interpretation of insurance
contract language is a question of law. United Nat’l Ins. Co. v. SST Fitness Corp., 182 F.3d 447, 449
(6th Cir. 1999); Lager v. Miller-Gonzalez, 896 N.E.2d 666, 669 (Ohio 2008. “A policy of insurance
is a contract and like any other contract is to be given a reasonable construction in conformity with
the intention of the parties as gathered from the ordinary and commonly understood meaning of the
language employed.” Dealers Dairy Prods. Co. v. Royal Ins. Co., 164 N.E.2d 745, 747 (Ohio 1960);
Andersen v. Highland House Co., 757 N.E.2d 329, 332 (Ohio 2001). “Where provisions of a
contract of insurance are reasonably susceptible of more than one interpretation, they will be
construed strictly against the insurer and liberally in favor of the insured.” Lane v. Grange Mut.
Cos., 543 N.E.2d 488, 490 (Ohio 1989). “Ambiguity exists only where a term cannot be determined
from the four corners of the agreement or where contract language is susceptible to two or more
reasonable interpretations.” Potti v. Duramed Pharm., Inc., 938 F.2d 641, 647 (6th Cir. 1991); see
Sunoco, Inc. v. Toledo Edison Co., 953 N.E.2d 285, 292 (Ohio 2011). Policy exclusions must be
clear to combat the general presumption that a claim is included in a policy. Andersen, 757 N.E.2d
at 332 (citing Home Indemn. Co. of N.Y. v. Plymouth, 64 N.E.2d 248 (Ohio 1945)). “[I]n order to
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defeat coverage, the insurer must establish not merely that the policy is capable of the construction
it favors, but rather that such an interpretation is the only one that can fairly be placed on the
language in question.” Andersen, 757 N.E.2d at 332 (internal quotation marks and citation omitted).
1. Policy Coverage
Plaintiff brought her claim under Endorsement Four, Section Two of the insurance policy,
which covers claims for:
bodily injury and property damage caused by an occurrence and arising out of the
Insured’s aviation operations and/or the possession, use, consumption or handling of
any goods or products manufactured, constructed, altered, repaired, serviced, treated,
sold, supplied or distributed by the Named Insured or its employees, and then only
after such goods or products have ceased to be in the possession or under the control
of the Insured.
This provision thus offers protection for injuries “arising out of” two possible things: 1) “aviation
operations” or 2) the “possession, use, consumption or handling or any goods or products” of the
named insured.
Plaintiff contends that Zbedah’s death arose out of the former circumstance—an occurrence
related to “aviation operations.” It is undisputed that Zbedah was piloting TriCoastal’s plane and
that, due to TriCoastal’s negligent maintenance of the plane, the plane crashed and killed Zbedah
while in Zbedah’s control. The policy outlines the definition of “aviation operations” as inclusive
of the following:
[A]ll operations arising from the ownership, maintenance or use of locations for
aviation activities including that portion of roads or other accesses that adjoin these
locations. Aviation Operations include all operations necessary or incidental to
aviation activities.
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Under the second sentence of the definition, “all operations necessary or incidental to aviation
activities” are said to be aviation operations. Surely, operations necessary to aviation activities
includes piloting and maintaining the plane. Thus, the definition of “aviation operations” captures
the activities at issue.
Defendant next asserts that even if “aviation operations” encompasses Plaintiff’s claim, the
final clause of the endorsement, that liability attaches “only after such goods or products have ceased
to be in the possession or under the control of the Insured,” excludes the claim because TriCoastal’s
plane remained in Zbedah’s control at the time of the accident. Defendant misreads the plain
language of the endorsement. We agree with the district court’s conclusion that the language “after
such goods or products have ceased to be in the possession or under the control of the Insured”
explicitly applies only to the “goods or products” portion of the endorsement, not the “aviation
operations portion.” We therefore find that Plaintiff’s claim is covered under Endorsement Four,
Section Two.
2. Policy Exclusions
We next consider whether any exclusions bar Plaintiff’s claim. Endorsement Four, Section
Two states that it “is subject to the same exclusions as are applicable to Coverages B, C, D, and E
of this Policy.” The general exclusions section to the policy provides two potentially relevant
exclusions: Exclusion Five for exclusions “Under Coverages B, C, D, and E” and Exclusion Six for
exclusions “Under Coverages B, C, and D.” The parties agree that Exclusion Five would not affect
Plaintiff’s claim, but the bar on reimbursing named insureds under Exclusion Six would exclude
Plaintiff’s claim. Also relevant is the language of Coverage C, which Defendant alleges contains
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an applicable exclusion. Plaintiff does not concede that the Coverage C language would preclude
recovery.
The parties dispute the meaning of the Endorsement Four, Section Two language—that the
endorsement “is subject to the same exclusions as are applicable to Coverages B, C, D, and E of this
Policy”—in terms of which exclusions are referenced. Defendant argues that the language means
that any exclusion that applies jointly or separately to Coverages B, or C, or D, or E will also apply
to the endorsement. Plaintiff, however, reads the endorsement clause as actually referring to the
heading of Exclusion Five. Alternatively, Plaintiff reads the endorsement language to mean that it
has the same exclusions as are applicable to all Coverages B, and C, and D, and E; under this
interpretation, the general Exclusion Five would still be the only applicable exclusion.
We agree that there are several ways of interpreting the phrase, “the same exclusions as are
applicable to Coverages B, C, D, and E.” That phrase could mean that only exclusions that apply
to all coverages B, C, D, and E apply to the endorsement; that any exclusion that applies to those
coverages separately could apply to the endorsement; or that the phrase is referencing the headings
of the general policy exclusions and thus only Exclusion Five applies. None of these interpretations
is blatantly incorrect and all are plausible. Under Ohio law, ambiguity in an insurance policy is
construed against the drafter. See Andersen, 757 N.E.2d at 332; Lane, 543 N.E.2d at 490. Because
the endorsement language referencing the policy’s exclusions is ambiguous, we construe the
language in Plaintiff’s favor and find that only the exclusions listed in general Exclusion 5 apply.
And because Exclusion 5 does not preclude Plaintiff’s recovery under the policy, Defendant remains
liable for the judgment.
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III. Post-Judgment Interest
Finally, Plaintiff contends that a provision in the insurance policy also entitles her to post-
judgment interest on the entirety of the Lucas County judgment. The applicable policy language
provides that, “[w]ith respect to Coverages B, C, and D,” Defendant shall have a duty to defend suits
seeking damages for bodily injury and shall pay “all interest on the entire amount of any judgment
therein which accrues after entry of the judgment.” The provision thus expressly states that it only
applies to Coverages B, C, and D. Plaintiff, however, brought her claim under Endorsement Four
of the policy, not one of the three applicable coverages. Endorsement Four does not cross-reference
that provision or provide a similar provision of its own. We therefore find that Plaintiff is not
entitled to post-judgment interest.
Plaintiff next argues that although she did not bring her claim under one of the applicable
coverages, she could have brought her claim under Coverage B and thus is entitled to the interest by
implication. This argument is obviously flawed because Plaintiff is not entitled to the benefits of
a particular coverage if she did not in fact bring her claim under that coverage.
Because we affirm the district court’s denial of Plaintiff’s request for post-judgment interest,
it is unnecessary for us to decide whether Plaintiff’s request for post-judgment interest was untimely.
CONCLUSION
For the reasons discussed above, we AFFIRM the district court’s order granting partial
summary judgment to Plaintiff on the issue of damages and AFFIRM the district court’s order
granting partial summary judgment to Defendant on the issue of post-judgment interest.
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