Starr Indemnity & Liability Company v. North Central Aviation, Inc.
- Donovan Frank
- 0:18-cv-00098
- U.S. District Court · District of Minnesota
- 15
In Starr Indemnity v. North Central Aviation, Judge Frank granted Starr summary judgment, ruling a policy exclusion barred coverage for an aircraft-collision lawsuit.
Starr Indemnity & Liability Company and North Central Aviation, Inc.; the ruling determined Starr’s duties to defend and indemnify NCA for the underlying aircraft-collision lawsuit.
What happened
Starr Indemnity & Liability Company sued North Central Aviation, Inc. over whether Starr had to defend or pay for claims arising from a 2016 collision between two airplanes. Both parties agreed on the underlying facts but disagreed about an insurance-policy exclusion.
North Central’s crew was operating one leased airplane when it struck another airplane leased by North Central and parked at the airport. The insurance policy covered property damage but excluded damage to property in the insured’s care, custody, or control. North Central argued that the parked airplane was no longer under its control when the collision occurred.
The court ruled that the exclusion applied because both airplanes were under North Central’s care, custody, and control. In Starr Indemnity & Liability Company v. North Central Aviation, Inc., Judge Donovan W. Frank granted Starr’s motion for summary judgment and denied North Central’s motion, finding that Starr had no duty to defend or indemnify North Central.
The detailed version
- Starr Indemnity & Liability Company v. North Central Aviation, Inc. · No. 0:18-cv-00098
- Donovan Frank
- Apr. 2, 2019
Background
This was an insurance-coverage dispute concerning Starr’s duties to defend and indemnify North Central Aviation, Inc. (NCA) in an underlying lawsuit arising from a December 5, 2016 airplane collision. NCA leased two aircraft. Aircraft 2, insured by Starr, was being operated by an NCA crew when it collided with Aircraft 1, which was parked at Flying Cloud Airport. NCA conceded that it was likely to be held legally liable for the collision.
The owner of Aircraft 1 sued Investment Leasing, the owner of Aircraft 2, and NCA. The claims against NCA included breach of contract for allegedly failing to provide adequate insurance and negligence based on the collision. NCA sought coverage from Starr for the negligence claim. Starr declined to defend NCA and sought a declaration that the policy provided no coverage. NCA counterclaimed, asserting that Starr wrongfully refused to defend or indemnify it.
Insurance Policy and Lease
The Starr policy covered property-damage liability and stated that Starr had a duty to defend suits seeking damages for covered property damage. The policy defined an occurrence as an accident causing property damage that was neither expected nor intended from the insured’s standpoint.
Exclusion 7 stated that the policy did not apply to property damage to property owned, occupied, rented, or used by the insured, or property in the insured’s care, custody, or control, or over which the insured was exercising physical control.
The lease for Aircraft 1 identified Anoka County-Blaine Airport as its operating base. It gave NCA operational control over the aircraft during flights, required NCA to supply flight crews, charged rent based on aircraft hours used, and required NCA to provide aircraft liability insurance. NCA argued that it had effectively returned Aircraft 1 to its owner after parking it at Flying Cloud Airport. NCA also argued that Flying Cloud had become the aircraft’s operating base, although the court noted that no superseding lease agreement established that change.
Court’s Analysis
The court applied Minnesota law because the case was in federal court based on diversity jurisdiction and the parties agreed Minnesota law governed. Under that law, interpreting an insurance policy is a legal question. Policy terms are given their plain and ordinary meaning, and exclusions are read narrowly, but courts may not create an ambiguity where the policy language is clear.
The court found that Exclusion 7 applied. When Aircraft 2 struck Aircraft 1, both aircraft were under NCA’s care, custody, and control. The Aircraft 1 lease gave NCA priority access to the aircraft and imposed operating expenses and rental fees on NCA. The court also relied on NCA’s concession that it had the right of possession and control when Aircraft 1 was on the ground away from its operating base.
The court concluded that the lease unambiguously identified Anoka County-Blaine Airport—not Flying Cloud Airport—as Aircraft 1’s operating base. The other documents NCA submitted did not change the court’s interpretation of the Aircraft 1 lease. The court therefore found that Aircraft 1 remained under NCA’s care, custody, and control when the collision occurred.
Because Exclusion 7 barred coverage, the court ruled that Starr had no duty to defend NCA in the underlying lawsuit. The court’s conclusion also stated that Starr had no duty to indemnify NCA.
Disposition
The court granted Starr’s motion for summary judgment and denied NCA’s motion for summary judgment. Judgment was ordered to be entered accordingly.
Read the full 15-page opinion on CourtListener, the free public archive maintained by the Free Law Project.