Actuant Corporation v. Axis Surplus Insurance Company

United States District Court, N.D. Texas, Dallas Division.

ACTUANT CORPORATION, Plaintiff,

v.

AXIS SURPLUS INSURANCE COMPANY and The Travelers Indemnity Company, Defendants.

3:10-CV-1741-P

|

Signed 06/22/2012

Attorneys & Firms

Keith A. Bruett, Quarles & Brady LLP, Milwaukee, WI, E. Thomas Bishop, Bishop & Hummert, Dallas, TX, for Defendants.

ORDER

JORGE A. SOLIS, UNITED STATES DISTRICT JUDGE

*1 Now before the Court is Defendant’s¹ Motion for Summary Judgment, filed on April 9, 2012. (Doc. 66.) Plaintiff filed a Response on April 30, 2012. (Doc. 69.) Defendant filed a Reply on May 14, 2012. (Doc. 78.) After reviewing the parties’ briefing, the evidence, and the applicable law, the Court GRANTS in part and DENIES in part Defendant’s Motion for Summary Judgment.

I. Background

Plaintiff Actuant Corporation (“Actuant”) operated a manufacturing plant in Grand Prairie, Texas using a workforce consisting of full time employees and other workers contracted from placement agency HRT Staffing Services (“HRT”). On August 9, 2008, Samuel Pulido (“Pulido”) was hired by HRT and leased by Actuant to work in the Grand Prairie facility. On August 19, 2008, Pulido’s hand was caught on the saw blade of the machine he was using (the “Accident”). On October 7, 2008, Pulido notified Actuant that he was making a claim against Actuant for his injuries. Actuant was covered by myriad insurance policies (the “Underlying Insurance Policies”). Travelers covered Actuant under the Travelers Workers Compensation Insurance Policy and the Travelers Employers Liability Insurance Policy (collectively the “Travelers Insurance Policies”). Lexington covered Actuant under the Lexington Commercial General Liability Insurance Policy. Additionally, Actuant had excess insurance with Defendant Axis Surplus Insurance Company (“Axis”) under the Axis Excess Insurance Policy. On October 8, 2008, Actuant notified Travelers of Pulido’s claim and requested coverage under the Travelers Workers Compensation Insurance Policy. On October 21, 2008, Travelers denied Actuant’s workers compensation claim regarding Pulido’s injury. Pulido filed a liability suit in state court against Actuant (the “Pulido Suit”) on December 16, 2008 and served Actuant with the Original Petition on January 20, 2009.

On April 29, 2010, more than fifteen months after being served with the Original Petition, Actuant notified Axis of the Pulido Suit. Actuant transmitted the case information to Axis on June 22, 2010 Axis and on June 30, 2010, Actuant and Axis held a conference call to discuss the facts of the Pulido Suit. After conducting an investigation, Axis denied excess coverage on August 18, 2010.

On August 20, 2010, Actuant and Pulido, with representatives of the insurers present, attempted to mediate. Unsuccessful, Lexington filed the instant coverage suit on September 2, 2010. On September 17, 2010, Actuant settled the Pulido Suit for $3.625 million. Actuant is now seeking to recover that payment from its insurers. Both Lexington and Travelers have settled with Actuant, leaving Axis as the sole remaining defendant.

II. Legal Standard

A. Summary Judgment Standard

Summary judgment shall be rendered when the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the burden of informing the district court of the basis for its belief that there is an absence of a genuine issue for trial and of identifying those portions of the record that demonstrate such absence. See Celotex, 477 U.S. at 323. However, all evidence and reasonable inferences to be drawn there from must be viewed in the light most favorable to the party opposing the motion. See United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).

*2 Once the moving party has made an initial showing, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Fed. R. Civ. P. 56(e); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). The party defending against the motion for summary judgment cannot defeat the motion, unless he provides specific facts demonstrating a genuine issue of material fact, such that a reasonable jury might return a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). Mere assertions of a factual dispute unsupported by probative evidence will not prevent summary judgment. See id. at 249-50. In other words, conclusory statements, speculation, and unsubstantiated assertions will not suffice to defeat a motion for summary judgment. See Douglass v. United Servs. Auto. Ass’n 79 F.3d 1415, 1429 (5th Cir. 1996) (en banc); see also Abbott v. Equity Grp., Inc., 2 F.3d 613, 619 (5th Cir. 1993) (“[U]nsubstantiated assertions are not competent summary judgment evidence.” (citing Celotex, 477 U.S. at 324)). Further, a court has no duty to search the record for evidence of genuine issues. Fed. R. Civ. P. 56(c)(1) & (3); see Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). It is the role of the fact finder, however, to weigh conflicting evidence and make credibility determinations. Liberty Lobby, 477 U.S. at 255.

B. Choice of Law

Sitting in diversity, a district court applies the choice of law rules of the state in which it sits. Klaxon v. Stentor Elec. Mfg., Inc., 313 U.S. 487, 496 (1941). Under Texas choice of law rules, a court must determine which state has the most significant relationship to the controversy and the parties by applying the ‘most significant relationship’ test as set out in Restatement (Second) of Conflicts of Law §§ 6 and 145 (1971). Hughes Wood Prods., Inc. v. Wagner, 18 S.W.3d 202, 205 (Tex. 2000); Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex. 1984). For both contract and tort causes of action, the Restatement instructs courts to consider the following contacts: (a) the place where the injury occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and place of business of the parties; and (d) the place where the relationship, if any, between the parties is centered. Restatement (Second) of Conflict of Laws § 145; see Advanced Envtl. Recycling Techs. Inc. v. Am. Int’l Specialty Lines Ins., Co., 399 Fed.Appx. 869, 872 n.1 (5th Cir. 2010) (citing Exploration Co. v. Cudd Pressure Control, Inc., 271 S.W.3d 228, 233 (Tex. 2008); Restatement (Second) of Conflict of Laws § 188(2)).

The parties agree that Wisconsin law applies to the interpretation of the Insurance Policies and the breach of fiduciary duty cause of action at issue. Additionally, the parties agree that Texas law governs the tort claims brought by Pulido against Actuant and the application of workers compensation. The Court applies the law based on the parties’ agreement.

III. Breach of Contract and Liability Under the Insurance Policies

“Judicial interpretation of a contract, including an insurance policy, seeks to determine and give effect to the intent of the contracting parties.” Am. Family Mut. Ins. Co. v. Am. Girl, Inc., 673 N.W.2d 65, 73 (Wis. 2004) (internal citations omitted). “The language in an insurance contract should be given its ordinary meaning—the meaning a reasonable person in the position of the insured would give the terms.” Acuity v. Society Ins., 810 N.W.2d 812, 817 (Wis. Ct. App. 2012) (internal citations omitted). “Where the language of a policy is plain and unambiguous, we enforce it as written, without resort to rules of construction or principles in case law.” Gulmire v. St. Paul Fire & Marine Ins. Co., 674 N.W.2d 629, 636 (Wis. Ct. App. 2003) (citing Daqnbeck v. Am. Family Mut. Ins. Co., 629 N.W.2d 150, 154 (Wis. 2001)). “[I]f the policy language is susceptible to more than one reasonable construction, it is ambiguous.” Stubbe v. Guidant Mut. Ins. Co., 651 N.W.2d 318, 322 (Wis. Ct. App. 2002) (citing Smith v. Atl. Mut. Ins. Co., 456 N.W.2d 597, 598-99 (Wis. 1990)). “Ambiguities are resolved in favor of the insured.” Id. “However, we do not interpret insurance policies to provide coverage for risks that the insurer did not contemplate or underwrite and for which it has not received a premium.” Am. Family, 673 N.W.2d at 73 (citing Wis. Label Corp. v. Northbrook Prop. & Cas. Ins. Co., 607 N.W.2d 276 (Wis. 2000)).

A. The Axis Excess Insurance Policy

*3 Actuant entered into the Excess Insurance Policy with Axis to provide liability insurance above the coverage limits of the Underlying Insurance Policies. Under the Policy:

[t]he coverage provided by this policy is excess insurance and, except as otherwise stated in this policy, follows the terms, conditions, exclusions, and endorsements of the [Underlying Insurance Policies] as shown in Item 8 of the Declarations. We will pay those sums in excess of the [Underlying Insurance Policies] that you become legally obligated to pay as damages because of injury or damage to which this insurance applies, provided that the [Underlying Insurance Policies] also appl[y], or would have applied.

(Doc. 68-3 at 26.) Under Item 8 of the Excess Liability Policy, and applicable to the instant case, Actuant contracted for coverage under the Lexington Commercial General Liability Insurance Policy, the Travelers Workers Compensation Insurance Policy, and the Travelers Employers Liability Insurance Policy. (Id. at 3-4.) The Court must determine which Underlying Insurance Policy covers the claims in the Pulido Suit. Each policy is discussed in turn.

B. The Lexington Commercial General Liability Insurance Policy

The Lexington Commercial General Liability Insurance Policy provides coverage for non-employee related risks. The Policy states “[w]e will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” (Doc. 68-2 at 5.) The Policy excludes workers compensation coverage, stating “[t]his insurance does not apply to ... [a]ny obligation of the insured under a workers compensation, disability benefits or unemployment compensation law or any similar law.” (Id. at 6.) Similarly, the Policy excludes all other employee injuries, stating “[t]his insurance does not apply to ... ‘[b]odily injury’ to an ‘employee’ of the insured arising out of and in the course of: (a) [e]mployment by the insured; or (b) [p]erforming duties related to the conduct of the insured’s business.” (Id.) Therefore, the Lexington Insurance Policy only provides coverage for non-employee related injury.

C. The Travelers Insurance Policies

Travelers provides coverage for employee injuries under a single combined insurance policy. Part I, the Travelers Workers Compensation Insurance Policy, provides workers compensation coverage and Part II, the Travelers Employer Liability Insurance Policy, provides employer liability coverage. The Travelers Workers Compensation Insurance Policy states “[t]his workers compensation insurance applies to bodily injury by accident or bodily injury by disease.... We will pay promptly when due the benefits required of you by the workers compensation law.” (Doc. 68-4 at 18.) The Policy defines ‘workers compensation law’ as “the workers or workmen’s compensation law and occupational disease law of each state or territory named in Item 3A.” (Id.) Item 3A includes Texas and, as the Accident occurred in Texas, Texas workers compensation law applies. (Id. at 4.)

The Travelers Employers Liability Insurance Policy states “[t]his employers liability insurance applies to bodily injury by accident or bodily injury by disease.... We will pay all sums you legally must pay as damages because of bodily injury to your employees, provided the bodily injury is covered by this Employers Liability Insurance.” (Id. at 19.) However, this Policy excludes “any obligation imposed by a workers compensation, occupational disease, unemployment compensation, or disability benefits law, or any similar law.” (Id.) Taken together, the Travelers Insurance Policies provide workers compensation and employers liability coverage—both of which only apply to employee injury.

D. Application of the Insurance Policy Exclusions

*4 Axis argues that the exclusions of coverage included in a specific Underlying Insurance Policy should cross-apply to the other Policies. An insurance policy should be read as a whole and construed such that none of the language is discarded as superfluous or meaningless. Stubbe, 651 N.W.2d at 323 (citing D’Angelo v. Cornell Paperboard Prods. Co., 207 N.W.2d 846, 848-49 (Wis. 1973)). “In construing an insurance contract, a construction that gives reasonable meaning to every provision is preferable to one leaving part of the language useless or meaningless.” Danielson v. Larsen Co., 541 N.W.2d 507, 510 (Wis. Ct. App. 1995) (citing Stanhope v. Brown Cnty., 280 N.W.2d 711, 722 (Wis. 1979)). Insurance policy “[e]xclusions are narrowly or strictly construed against the insurer if their effect is uncertain.” Am. Family, 673 N.W.2d at 73. “We analyze each exclusion separately; the inapplicability of one exclusion will not reinstate coverage where another exclusion has precluded it.” Id.

The Lexington and Travelers Insurance Policies cover non-employee and employee injury, respectively. The exclusion of coverage under one insurance policy does not preclude coverage under another policy; therefore, the exclusions found in one of the Underlying Insurance Policies cannot be applied to another absent an express showing of such an intent by the parties. See id.; Danielson, 541 N.W.2d at 510. In effect, the exclusions from the Lexington Insurance Policy limiting coverage to non-employee injury would preclude all employee injury coverage under both Parts of the Travelers Insurance Policies. Similarly, the exclusion of workers compensation coverage under Part II of the Travelers Employer Liability Insurance Policy does not apply to Part I of the Travelers Workers Compensation Insurance Policy because it is contained in a different section and would preclude workers compensation coverage. Therefore, the exclusions contained in one Underlying Insurance Policy do not cross-apply to another. Based on the Court’s interpretation of the Underlying Insurance Policies and their exclusions, the Axis Excess Insurance Policy provides excess coverage on Pulido’s injury: (a) as a non-employee under the Lexington Commercial General Liability Insurance Policy; or (b) as an employee under the Travelers Insurance Policies.

E. Pulido’s Employment Status Under the TWCA at the Time of the Accident

Whether the Lexington Commercial General Liability Insurance Policy or the Travelers Insurance Policies covers Pulido’s injury is dependent upon whether Pulido was an employee at the time of the Accident as defined by the Texas Workers Compensation Act (“TWCA”).² The TWCA defines the term ‘employee’ as “each person in the service of another under a contract of hire, whether express or implied, or oral or written.” Tex. Lab. Code Ann. § 401,012(a). The term ‘employee’ under this section does not include “a person whose employment is not in the usual course and scope of the employer’s business.” Id. § 401,012(c)(2).

As a general rule, “an employer may not split its workforce by electing [employers liability] coverage for some employees but not for all.” Port Elevator-Brownsville v. Casados, 358 S.W.3d 238, 241 (Tex. 2012). In some limited circumstances, however, an employer may split its workforce if it borrows workers from another general employer. See Flores v. N. Am. Techs. Grp., Inc., 176 S.W.3d 442, 448 (Tex. App.—Houston [1st Dist.] 2004, pet. denied). A client-employer may lease staff from another company under the Staff Leasing Services Act (“SLSA”). Tex. Lab. Code Ann. § 91.042. However, the SLSA does not apply if the “assignment is intended to be of a long-term or continuing nature, rather than temporary or seasonal in nature.” Id. § 91.001(14). These staff are not considered employees of a client company where they are assigned “to support or supplement the client’s workforce in a special situation, including: (A) an employee’s absence; (B) a temporary skill shortage; (C) a seasonal workload; or (D) a special assignment or project.” Id. § 91.001(16). “[T]he general employer is, and should be, an ‘employer’ of a temporary worker even if a client company directs the details of that employee’s work when the employee is injured.” Wingfoot Enters, v. Alvarado, 111 S.W.3d 134, 143 (Tex. 2003).

*5 Actuant argues that Pulido was a temporary worker and not an employee because he was placed at Actuant on a temporary basis to meet short-term work conditions. It provides evidence of a marked increase in product orders and leased workers in the months of July and August of 2008. (Docs. 68-6 at 62-65; 70 at 17; 71-1 at 1-4.) Axis argues that Pulido was an employee and not a temporary worker because Actuant had the right to control the manner of Pulido’s work. (Docs. 67 at 13; 68-5 at 6; 68-6 at 43-49.) Based on the parties’ briefing, the evidence, and the applicable law, the Court finds that Pulido’s employment status at the time of the Accident is a question of fact. Therefore, the Court cannot determine as a matter of law which Underlying Insurance Policy applies to cover the Pulido Suit.

F. Violation of the Notice Conditions

Axis next argues that Actuant’s untimely notice voided all coverage under the Axis Excess Insurance Policy. Wisconsin law requires an insured “to give timely notice to his or her insurer.” Neff v. Pierzina, 629 N.W.2d 177, 183 (Wis. 2001). Notice is timely if it: “is furnished as soon as reasonably possible and within one year after the time it was required by the policy[.] [F]ailure to furnish such notice or proof within the time required by the policy does not invalidate or reduce a claim unless the insurer is prejudiced thereby.” Wis. Stat. § 631.81. Similarly, the Axis Excess Insurance Policy requires Actuant to “see to it that [Axis is] notified as soon as practicable of an occurrence, offense, wrongful act, error or omission ... which may result in a claim or a suit.... If a claim is made or suit is brought against [Actuant], you must ... notify [Axis] as soon as possible [and] see to it that [Axis] receive[s] written notice of the claims or suit as soon as practicable.” (Doc. 68-3 at 32.)

It is undisputed that Actuant provided untimely notice to Axis over one year after the time required by the policy. Thus, the Court must determine whether Axis was prejudiced by the late notice. See Neff, 629 N.W.2d at 185. Wisconsin statute § 632.26 states: “[f]ailure to give notice as required by the policy ... does not bar liability under the policy if the insurer was not prejudiced by the failure, but the risk of nonpersuasion is upon the person claiming there was no prejudice.” Wis. Stat. § 632.26(2); see Neff, 629 N.W.2d at 185 (“[W]hen the insured fails to give notice within one year after the time required by the policy, “there is a rebuttable presumption of prejudice and the burden of proof shifts to the claimant to prove that the insurer was not prejudiced by the untimely notice.” (internal citations omitted)). “Prejudice to the insurer in this context is a serious impairment of the insurer’s ability to investigate, evaluate, or settle a claim, determine coverage, or present an effective defense.” Neff, 629 N.W.2d at 185. “The ability to conduct an investigation can be impaired when witnesses are no longer available or when witnesses become entrenched in a position because they have calculated the legal effect of their answers.... [R]elationships among parties and witnesses change, memories fade, and records are lost.” Id. at 187. “An insurer is prejudiced by late notice when, for example, it cannot investigate the facts necessary to determine whether coverage should be provided and when it has been denied the opportunity to have input into the manner in which the underlying claim is being defended.” Fireman’s Fund Ins. Co. of Wis. v. Bradley Corp., 660 N.W.2d 666, 683 (Wis. 2003). “Generally, whether a liability insurer has been prejudiced by late notice is a question of fact, but may be determined as a matter of law where facts are not in dispute.” Id.

Because the notice to Axis was untimely, a rebuttable presumption of prejudice exists. Actuant argues that Axis was not prejudiced by the late notice because Axis would have disclaimed any coverage obligations just as it did in 2010. (Doc. 70 at 21.) Pulido served his Original Petition on Actuant on January 20, 2009. (Doc. 68-1 at 2.) After providing notice of Pulido’s claim to Axis on April 29, 2010, Actuant provided the case file, the discovery, Pulido’s settlement negotiation documents, and all other documents to Axis. Axis denied coverage on August 18, 2010, stating it had conducted an investigation and determined that its coverage had not been implicated. (Doc. 71-5 at 1-11.) In denying coverage, Axis relied upon the exclusions to the Underlying Insurance Policies. (Id.) Additionally, David Hart, Axis’ Senior Vice President, testified that:

*6 Axis conducted a timely and detailed investigation of the facts and circumstances surrounding the Pulido claim and determined that the circumstances were appropriate to issue a denial of coverage to Actuant.... Axis has an obligation under the terms of its policy to investigate claims that are presented. An investigation was conducted. A denial of coverage letter was issued. It was well considered.... Nothing has happened to change Axis’ position that there is no coverage under its policy.

(Doc. 71-3 at 32-33.) Based on the evidence, the Court cannot find that Axis was prejudiced as a matter of law by Actuant’s late notice of the Pulido suit because Axis consistently maintained that no coverage existed. See Fireman’s Fund, 660 N.W.2d at 684 (holding as a matter of law that the insurer was not prejudiced by late notice based on the insurer’s consistent denial of coverage under the insurance policy). As Axis concedes, it had no immediate duty to defend Actuant at the time the Pulido Suit was initially filed and it was able to gauge that its layer of coverage was implicated June 22, 2010 when it received documentation from Actuant—less than two months after receiving notice of the suit from Actuant. (Doc. 67 at 26-27.) The applicability of the Lexington and Travelers Insurance Policies, and Axis’ determination of coverage, was not affected by Actuant’s late notice. Axis had sufficient time to investigate the Pulido Suit, determine coverage did not exist, and attend settlement negotiations. Additionally, Axis had the opportunity to attend multiple depositions, including those of Actuant employees [May 18-19, 2010], HRT agent Cindy Myers [June 21, 2010], and Pulido [July 8, 2010], which were all held after Axis received notice from Actuant regarding the Pulido Suit on April 29, 2010.³

Axis claims that it was prejudiced because it could not assert the exclusive remedy defense under Texas workers compensation law.⁴ As discussed above, Axis had no duty to defend Actuant in the Pulido Suit. Actuant conceded that the Accident was not covered by Texas workers compensation insurance in the Pulido Suit [doc. 68-12 at 59], but the determination of coverage under the Axis Excess Insurance Policy is an issue for the Court in this declaratory judgment coverage suit—not the underlying Pulido Suit. Further, it is unclear whether the exclusive remedy defense would apply based on the legal and factual posture of the case. Lexington, and to a lesser extent Travelers, had an incentive to argue that Pulido was an employee covered by workers compensation law in order to minimize the costs of his claim, and Lexington originally filed the instant suit based on this exact theory. (Doc. 1 at 4-8.) Because the facts surrounding Axis’ alleged prejudice are not in dispute, whether Axis was prejudiced by late notice is a matter to be determined by the Court. The Court cannot find as a matter of law that Axis was prejudiced by the late notice. Based on the parties’ briefing, the evidence, and the applicable law, the Court DENIES Axis’ Motion for Summary Judgment as to Actuant’s breach of contract claims.

IV. Breach of Fiduciary Duty

*7 Under Wisconsin law, “an insurer assumes a fiduciary duty on behalf of the insured ... [b]y entering into an insurance contract and taking control of settlement or litigation.” Prosser v. Leuck, 592 N.W.2d 178, 182 (Wis. 1999); see Sta-Rite Indus., Inc. v. Zurich Re (U.K.) Ltd., 178 F.3d 883, 886 (7th Cir. 1999) (finding an insurer’s duty of good faith grounded in the insurer’s exclusive duty to settle and defend a case). “[I]n Wisconsin, the duty of good faith ‘arises from the provisions in an insurance contract which give the insurer absolute control over the defense and settlement of all claims against the insured.’ ” Sta-Rite, 178 F.3d at 886 (quoting Moutsopoulos v. Am. Mut. Ins. Co. of Boston, 607 F.2d 1185, 1188-89 (7th Cir. 1979)).⁵ “Because the insured has given up something of value to the insurer—namely, the right to defend and settle a claim—the insurer has been said to be in the position of a fiduciary with respect to an insured’s interest in settlement of a claim.” Prosser, 592 N.W.2d at 182 (internal quotations omitted). “The fiduciary duty ‘carries with it the duty to act on behalf of the insured and to exercise the same standard of care that the insurance company would exercise were it exercising ordinary diligence in respect to its own business.” Id. (quoting Alt, 237 N.W.2d at 712). An insurer’s right to associate in the defense and settlement of a claim against the insured does not create a fiduciary duty to act in good faith under Wisconsin law. Sta-Rite, 178 F.3d at 886.

The Axis Excess Insurance Policy states “[Actuant] shall have the obligation to provide, at its own expense, an adequate defense and a prompt and diligent investigation of any claim or suit.”⁶ (Doc. 68-3 at 18.) “[Axis] shall not be called upon to assume charge of the settlement or defense of any claim made, suit brought, or proceeding instituted against you. However, [Axis] will have the right and opportunity to associate with [Actuant] in the defense and control of any claim, suit, or proceeding.” (Id. at 27 (emphasis added).) Additionally, the Policy states:

[i]f all ‘underlying insurance’ has been exhausted by payment of damages, then [Axis] will pay the necessary expenses for other such claims, suits or proceedings to which this insurance applies, (a) Our obligation to pay defense expenses is subject to the following limitations and conditions: (1) At our election, we will have the right and opportunity, but not the obligation, to assume charge of the defense and control of any claim, suit, or proceeding.

(Id.) Based on the Axis Excess Insurance Policy’s language, Axis had the right to control settlement or litigation if and only if: (a) the Underlying Insurance Policies had been exhausted by payment of damages and (b) Axis elected to take control. There is no evidence before the Court that either of these conditions was met. When Actuant settled the Pulido suit on September 22, 2010, neither of the Underlying Insurance Policies had been exhausted because Travelers had denied coverage and there is insufficient evidence that a claim was ever filed with Lexington. (Docs. 46; 68-13 at 3.) Further, Axis merely had a right to associate in the defense and there is insufficient evidence that Axis elected to take control of Actuant’s defense. An insurer’s right to associate in the defense and settlement of a claim against the insured does not create a fiduciary duty to act in good faith under Wisconsin law. Sta-Rite, 178 F.3d at 886. To the contrary, the evidence shows that Axis refused to take a part in Actuant’s defense. (Doc. 71-5 at 1-11.) While the Axis Excess Insurance Policy states “[s]ettlement of any claim or suit for an amount in excess of any ‘underlying insurance’ shall not be binding on us unless we consent in writing” [doc. 68-3 at 26], this provision does not give Axis the right to control settlement or litigation. Because Axis did not have an absolute right or duty to control the litigation, Axis did not owe a fiduciary duty to Actuant as its excess insurer. See Sta-Rite, 178 F.3d at 886. Based on the parties’ briefing, the evidence, and the applicable law, the Court GRANTS Axis’ Motion for Summary Judgment as to Actuant’s Breach of Fiduciary Duty claim.

V. Conclusion

*8 For the foregoing reasons, the Court GRANTS in part and DENIES in part Defendant’s Motion for Summary Judgment. The sole remaining factual issue left in this case is whether Pulido was an employee of Actuant at the time of the Accident.

IT IS SO ORDERED.