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National Union Fire Co. of Pittsburgh, PA v. Pontiac Flying Service

November 27, 2006

NATIONAL UNION FIRE CO. OF PITTSBURGH, PA, PLAINTIFF,
v.
PONTIAC FLYING SERVICE, INC., JUSTYN WEBSTER AND VIRGINIA WEBSTER-SMITH AS CO-PERSONAL REPRESENTATIVES OF THE ESTATE OF NEIL WEBSTER, DECEASED, AND CAREN LUCENTE, AS INDEPENDENT EXECUTOR OF THE ESTATE OF RICHARD P. LUCENTE, DECEASED, DEFENDANTS. AND PONTIAC FLYING SERVICE, INC., THIRD PARTY PLAINTIFF,
v.
HARDY AVIATION INSURANCE, INC., THIRD PARTY DEFENDANT.



The opinion of the court was delivered by: Joe Billy McDade United States District Judge

ORDER

Before the Court is a Motion for Summary Judgment (Doc. 108) filed by Third Party Defendant, Hardy Aviation Insurance, Inc. ("Hardy Insurance"). Third Party Plaintiff, Pontiac Flying Service, Inc., ("Pontiac Flying") has filed a Response to the Motion for Summary Judgment (Doc. 111) and Hardy Insurance has filed a Reply to that Response (Doc. 113). For the reasons set forth below Hardy Insurance's Motion for Summary Judgment is GRANTED.

BACKGROUND

The present litigation deals simply with insurance coverage but the issues arises out of a tragic aviation accident. On May 5, 2003 a small plane crashed killing two men in the plane, Rick Lucent and Neil Webster. The plane which they were flying was an Air Tractor 503 (the "AT-503") that was owned by Pontiac Flying. Lucente, a flight instructer, was using the AT-503 to provide turbine transition flight training for his student, Webster.

At the time of the accident, Pontiac Flying had a commercial liability policy (Doc. 109 Ex. 2) with National Union Fire Company of Pittsburgh (National Union). The National Union Policy was an aerial applicator or "crop dusting" policy. It only insured the AT-503 for "application by aircraft of seeds, fertilizers or chemicals.." (Doc. 109 Ex 2.) The National Union Policy also covered flights required "in direct support" of crop dusting. (Id.) When the AT-503 crashed it was being used for training purposes not for crop dusting. As a result, National Union commenced the present litigation by filing a declaratory action seeking to deny coverage.

Pontiac Flying asserted that they were entitled to coverage. However, Pontiac Flying also filed a third party complaint against Hardy Insurance. Pontiac Flying alleged that in the event that they were not entitled to coverage under the National Union Policy, then Hardy Insurance had been negligent as an insurance broker. According to Pontiac Flying, Hardy Insurance was professionally negligent because Hardy Insurance failed to procure training insurance for the AT-503.

On August 19, 2005, this Court agreed with National Union that the AT-503 was not being used for aerial application but rather for training purposes. Furthermore, this Court held that the flight was not made "in direct support" of crop dusting. As a result, this Court held that Pontiac Flying was not covered under the National Union Policy and granted National Union summary judgment (Doc. 86). Pontiac Flying then pursued their third party claim against Hardy Insurance for broker negligence. Hardy Insurance now seeks summary judgment against that third party claim.

With this procedural history in mind, it is necessary to turn back to the facts surrounding the procurement of insurance for the AT-503. Pontiac Flying is owned by Sarah and Scott Petersen. The Petersens purchased the AT-503 for Pontiac Flying from Harold Miller who owned and operated Harold Miller's Flying Service. Before the sale, Harold Miller's Flying Service used the AT-503 for training. In addition, Lucente was a turbine transition training instructor for Harold Miller.

While the AT-503 was owned by Harold Miller, the plane was insured by Hardy Insurance. In addition, the president of Hardy Insurance, James "Randy" Hardy ("Hardy"), knew that Harold Miller used the AT-503 for turbine transition training. (Hardy Depo. at 59-60.)

The Petersens created Pontiac Flying in February of 2002 to purchase the business and assets of Harold Miller's Flying Service. In the course of purchasing Miller's assets, the Petersens sought a quote for insurance coverage for the AT-503. While the Peterson's allege that they intended to use the plane for the same purposes that Miller had been using the plane, Scott Petersen acknowledges that their initial inquiries were only into procuring crop dusting insurance. (Petersens' Statement at 25.)

On February 28, 2002 the Petersens purchased the plane and on the same day Scott Petersen had a conversation with Hardy regarding insurance coverage for the plane. According to Scott Petersen, Hardy told Mr. Petersen to get additional turbine transition training in the AT-503. Mr. Petersen agreed to get additional training and asked Hardy to add Rick Lucente as an instructor in the Policy. (Scott Petersen Dep. at 37.) According to Scott Petersen, Hardy assured Mr. Petersen that Lucente was covered as a turbine transition training instructor. (Scott Petersen affidavit at 3.)

While Hardy himself does not recall whether such a conversation took place (Hardy Dep. at 68), Hardy Insurance argues that Hardy would not have made such a statement. Specifically, Hardy would not have asked Scott Petersen to obtain additional training because internal memorandum between AIG (the insurance provider at the time) and Hardy's office makes no mention of any further training being required. (Banz Dep. at 35.) However, Pontiac Flying points out that Scott Petersen did receive training in the AT-503 and listed in the flight log that a flight made with Rick Lucente before the accident was for "insurance requirements." (Scott Petersen Dep. Exs. 5-6.)

Hardy Insurance emphasizes that the Petersen's other company, Pontiac Flying Service (not "Pontiac Flying Service, Inc."), owned planes that were used for flight instruction and Sarah Petersen specifically obtained training insurance on their other planes. Despite being aware of the need for training insurance, Hardy Insurance emphasizes that neither Scott nor Sarah Petersen ever requested insurance for training members of the public in the AT-503.

To further support their position that Scott Petersen was aware that he needed additional insurance for turbine transition training, Hardy Insurance brings forward the testimony of Frank Kimmel. Kimmel is an insurance agent and fellow pilot who previously worked with Scott Petersen. Kimmel testified that he had a conversation with Scott Petersen in the spring of 2002. In that alleged conversation, Scott Petersen discussed training in the AT-503 and told Kimmel that his insurance did not cover training in the AT-503 for training purposes. (Kimmel Affidavit.) Scott Petersen, for his part, denies that such a conversation ever took place. (Scott Petersen Affidavit.)

Pontiac Flying emphasizes other facts. Namely, they point to an advertisement that was placed by Pontiac Flying in "Ag Air Update." Ag Air Update is a national publication that focuses on crop dusting and similar services. Pontiac Flying advertised their training course in Ag Air Update from December 2002 through May of 2003. Pontiac Flying argues that Hardy himself must have seen the advertisement and been aware of the training course. Not only did Hardy subscribe and regularly read parts of Ag Air Update, but Hardy Insurance advertised in the same ...


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