FAILURE TO SUBMIT SOLE NEGLIGENCE ISSUE TO JURY CREATES QUESTION OF FACT ABOUT EXCLUDING COVERAGE FOR VOLUNTARY PAYMENTS.

In Hulcher Services, Inc. v. Great American Insurance Company, 2015 WL 3921903 (E.D. Tex.-Sherman Division June 25, 2015), Hulcher Services provided derailment and rerailment services to Union Pacific Railroad.  Hulcher was primarily insured by CNA.  Great American provided umbrella coverage with limits of $25 million.

In September of 2003, James Collins, a Hulcher employee, was injured while moving equipment to the site of a Union Pacific collision that caused a derailment of twenty cars.  Union Pacific and Hulcher notified CNA and Great American of the lawsuit filed by Collins against Union Pacific and co-worker Dinda Barnett.  The jury ultimately determined Collins and Barnett were generally employees of Bulcher, they were also employed by Union Pacific at the time of the accident, Union Pacific was negligent, and Collins was not negligent.  The trial court entered a judgment in favor of Collins for $2,558,826.  CNA paid its policy limits but Great American refused to contribute above CNA’s $1 million.  Union Pacific demanded that Hulcher indemnify it and it did so.  Hulcher then sued Great American.

Hulcher filed a motion for partial summary judgment and Great American filed a motion for summary judgment on the indemnity payment made by Hulcher under its contract with Union Pacific.  Great American argued it was a voluntary payment thus it precluded all of Hulcher’s claims as a matter of law under equitable subrogation principles.

It was undisputed Hulcher was not required to indemnify Union Pacific against any loss caused by Union Pacific’s sole negligence.  The issue then became whether or not this sole negligence question was determined by the jury in the underlying lawsuit.  Great American focused on the finding that Union Pacific had the right to control the work of Collins and Barnett, the employee whose negligence that caused the accident.

The Court determined Union Pacific’s sole negligence was not submitted to the jury in the underlying case and thus a question of fact precluded summary judgment.  It held:

The Court agrees that the issue of whether Union Pacific was solely negligent for Collins injuries was not determined or argued to the jury in the underlying Collins litigation.  The jury was never asked to determine whether Hulcher was also negligent … the issue was never argued nor submitted to the jury to consider….In the FELA context, the jury merely answered the question of whether Union Pacific’s negligence, if any, ‘played any part, no matter how small, in bringing about the harm, even if other factors also contributed to the harm.’ This instruction on causation and the resulting answer by the jury is not sufficient to preclude a finding by the jury that Hulcher was also negligent, in addition to Union Pacific.