Submitted September 10, 2015
Appeal from United States District Court for the District of North Dakota - Bismarck.
For Great West Casualty Company, Plaintiff - Appellee: Tamara Lynn Novotny, Cousineau & Mcguire, Minneapolis, MN.
For National Casualty Company, Defendant - Appellant: Joel A. Flom, Flom Law Office, Fargo, ND; Jon M. Hughes, Scott W. McMickle, Mcmickle & Kurey, Alpharetta, GA.
Before LOKEN, MELLOY, and GRUENDER, Circuit Judges.
LOKEN, Circuit Judge.
This is a liability insurance coverage dispute. In April 2011, independent owner-operator Steven Heinis leased his Volvo semi-tractor and Trailmobile tanker-trailer to Avery Enterprises (" Avery" ), a trucking firm providing services to the oil and gas industry in the Bakken oilfields in North Dakota. On June 18, Heinis drove the tractor-trailer rig to Avery's shop in Powers Lake, North Dakota, to repair a crack in the loading valve or pipe on Heinis's trailer. When Jesse Miller, a shop employee, contacted the pipe with his welding torch,
an explosion occurred, injuring Miller, who received workers' compensation benefits from the North Dakota Workforce Safety & Insurance Organization and filed a state court negligence action against Heinis. See N.D. Cent. Code Ch. 65-02, § 65-01-09.
At the time in question, Great West Casualty Company (" Great West" ) was Heinis's commercial lines liability insurer, and National Casualty Company (" National" ) was Avery's commercial motor carrier liability insurer. Great West filed this declaratory judgment action seeking a declaration that National is contractually obligated to defend and indemnify Heinis in Miller's pending state court lawsuit and Great West is not. National's Amended Answer asserted contrary positions. The district court granted summary judgment in favor of Great West, concluding that Miller's negligence claim against Heinis was covered under National's policy and excluded under Great West's policy. Great W. Cas. Co. v. Nat'l Cas. Co., 53 F.Supp.3d 1154, 1190 (D.N.D. 2014). National appeals. Though the parties have argued other issues, to resolve the appeal we need only determine (i) that Heinis was an " insured" under the National policy, (ii) that neither of two exclusions in the National policy applied, and (iii) that the exclusion in Great West's policy applied. Reviewing these issues de novo, we affirm.
The April 2011 Lease Agreement provided that Avery would dispatch Heinis to haul fresh water to drilling sites and contaminated " flowback" water from drilling sites to disposal facilities. Avery dispatched and paid Heinis on a per-job basis. The lease required Heinis to remain in " constant contact" with Avery and to respond to dispatches within a reasonable amount of time. Heinis hauled only for Avery from the commencement of the lease until the June 2011 accident. Heinis agreed to maintain the tractor and trailer in good and safe operational condition, to comply with federal motor carrier safety regulations, and to be responsible for the cost of repairs, maintenance, and fuel. The lease required Avery to maintain " fleet cargo and liability insurance" for the equipment, and required Heinis to maintain " property and casualty insurance (bobtail) for the leased equipment."  At the time of the accident, Avery's name and DOT motor carrier numbers were affixed to the tractor.
Some days prior to the accident, Heinis noticed a leak from the trailer's valve or pipe during loading and unloading. After using a bucket to prevent spills while loading and unloading at least one load of contaminated water, Heinis called Kevin Avery the day before the accident and arranged to have the leak repaired at Avery's repair shop. It is undisputed that the repair was Heinis's responsibility under the Lease Agreement and that Heinis was not required to have the repair done at Avery's shop. The next day, Heinis testified, he backed the ...