Opinion
Case No. 6:01-cv-1509-Orl-31DAB
April 1, 2003
ORDER
This cause comes before the Court for consideration of Plaintiff Canal Insurance Company's ("Canal") Motion for Summary Judgment (Doc. 78) and Memorandum in Support (Doc. 79) as well as the opposing memoranda of Defendants David Paul Mullino (Doc. 87) and National Insurance Company ("National") (Doc. 88).
The Court heard oral argument on March 27, 2003.
I. Background
Canal, an insurance corporation, issued to Defendant Midwest Freightways, Inc. ("Midwest"), an owner-operator of truck tractors, an insurance policy to cover the period January 29, 2001 to January 29, 2002. The policy provided coverage for "bodily injury or property damage . . . arising out of ownership, maintenance or use, including loading and unloading, for purposes stated as applicable hereto in the declarations of an owned automobile. . . ." The policy also contained the following exclusion as to liability coverage under a Non-Trucking Use Policy endorsement:
A verified copy of this policy was filed at Document 94. The policy was formed and executed in the state of Illinois.
The precise definition of the term "owned automobile" is not relevant, but the term is indeed defined in the policy.
This insurance does not apply to: (a) A covered automobile while used to carry property in any business. (b) A covered automobile while in the business to whom the automobile is rented. (c) A covered automobile while being operated with permission of any lessee.
Pursuant to a Contractor Operating Agreement, Midwest leased tractors and drivers exclusively to Defendant CDN Logistics, Inc. ("CDN"), a common carrier that transports interstate freight via leased tractors and trailers. CDN had a trucking insurance policy from National.
This Agreement was filed as Exhibit B to Canal's Amended Complaint (Doc. 61).
The Interstate Commerce Commission ("ICC"), which regulates interstate truck transportation, required the Midwest-CDN lease to provide in writing that CDN "shall have exclusive possession, control, and use of the equipment for the duration of the lease." 49 C.F.R. § 376.12 (c)(1).
Associate Rental Systems ("Associate") leased to CDN the trailer at issue.
Midwest employed several tractor drivers, including Ramon Fernandez, who transported freight for CDN pursuant to the lease ageement. Midwest issued paychecks to these drivers, but CDN handled all of the dispatching functions. CDN paid Midwest for the tractor and driver services based on a "shortest miles" (as opposed to actual miles driven) computer-generated calculation performed by CDN. CDN paid to Midwest a certain amount per mile, an amount that varied depending on the region of the country in which the trip was made. Midwest in turn paid its drivers a certain amount per mile, also determined by the "shortest miles" computer-generated calculation.
Although CDN and Midwest determined payment based on a "shortest miles" calculation, neither CDN nor Midwest actually required the drivers to take the shortest mileage route. Drivers could determine their routes, as long as they arrived on time to pick up or drop off the loads and complied with federal regulations for sleep and hours of driving.
On August 13, 2001, CDN dispatched Fernandez to pick up freight in Elk Grove, Illinois, for drop off in Apopka, Florida. That day, Fernandez picked up the tractor from the CDN home parking lot\terminal in Northlake, Illinois. The CDN trailer (leased from Associate) was attached to the tractor from the time he pulled out of the CDN lot and at all relevant times thereafter. In addition, the CDN company logo decal was affixed to the tractor-trailer at all relevant times.
Pursuant to his dispatched from CDN, Fernandez drove from Elk Grove to Apopka and dropped off the load on August 15. Around 8:30 a.m. on August 15, Fernandez phoned the CDN dispatcher from Apopka to ask when and where to pick up his next load. The CDN dispatcher did not, at the time, have a load for Fernandez and instructed Fernandez to phone back in an hour. Fernandez did so, but still no load was available. Fernandez told the CDN dispatcher he was hungry and wanted to go to a truck stop. The CDN dispatcher said "okay." (Doc. 81 at 31).
Document 81 is the deposition of Ramon Fernandez.
Fernandez did not inform CDN that the truck stop was located in Mango, Florida.
At around 9:15 a.m., Fernandez drove southwest 50 miles on Interstate 4 to Mango, a small town located near Tampa. Fernandez understood Mango to have the closest, most convenient truck stop for tractor-trailers. According to both Midwest and CDN, the practice of leaving the site of the last load is acceptable and/or common. (Doc. 83 at 32; Doc. 82 at 174, 178).
Fernandez also testified that he chose Mango because he expected his next load to be in Tampa, a common location for load pick-ups. (Doc. 81 at 76-77). In addition, Fernandez said that travel to a truck stop southbound on the Florida Turnpike did not make sense at the time because of the $20 cost for access and exit. ( Id. at 77-78).
Document 83 is the deposition of Ernest Lilliebridge, the owner and president of Midwest at the relevant time.
82 is the deposition of Bruce Lenau, safety manager for CDN.
At around 3:30 or 4:00 p.m., the CDN dispatcher contacted Fernandez to inform him that his next load would be in Ft. Pierce, on Florida's southeast coast. The CDN dispatcher told him to be in Ft. Pierce by 9:00 a.m. the next day (August 16) to pick up the load.
With plenty of time to spare until picking up the load in Ft. Pierce, at around 4:30 p.m. on August 15, Fernandez's brother, who lived in Tampa, picked up Fernandez at the Mango truck stop and drove Fernandez by car back to Tampa so Fernandez could shower, eat, and catch up with relatives. Fernandez left the tractor-trailer parked at the truck stop in Mango. At around 8:30 or 9:00 p.m., the brother returned Fernandez to his tractor-trailer in Mango, and around 10:00 p.m., Fernandez began driving toward Ft. Pierce.
While on Route 60, west of Yeehaw Junction, at around 12:16 a.m. on August 16, Fernandez collided with Francisco Rodriguez, the driver of another tractor-trailer. At the time of the crash and during the entire run from Elk Grove, Nikko Mojica, the minor child of Fernandez's girlfriend, was in the truck with Fernandez as an unauthorized passenger. Mojica and Rodriguez died in the crash, and Fernandez survived.
Defendant David Paul Mullino owned Rodriguez's tractor.
Because Fernandez was operating the tractor with an empty trailer at the time of the accident, he was, in trucking parlance, "deadheading." Deadheading can be contrasted to "bobtailing," which is when the driver operates just the tractor with no trailer hooked to it.
II. Procedural History
In wrongful death lawsuits filed by personal representative Rosanne Rodriguez and trustee Jeanette Mojica in Florida Circuit Courts, Canal provided a defense on behalf of Midwest and Fernandez. Meanwhile, National signed settlement agreements with the following: 1) Rosanne Rodriguez as personal representative of the estate of Francisco Rodriguez, CDN, and Midwest; and 2) Jeanette Mojica as trustee for the estate of Nikko Mojica, CDN, Midwest, and Ramon Fernandez. National claims that as a result of these settlement agreements, it has exhausted its $1 million liability coverage. (Doc. 89 at ¶ 5).
In these underlying actions, both estates assert that National's and Canal's policies provide coverage for the crash.
On December 26, 2001, Canal brought this declaratory action against National, CDN, Midwest, Associate, Fernandez, Mullino, Rosanne Rodriguez as personal representative of the estate of Francisco Rodriguez, and Jeanette Mojica as trustee for the estate of Nikko Mojica. Thereafter, National filed a counterclaim (Doc. 68) seeking declaratory judgment that the insurance policy issued to CDN is secondary to Canal's policy or that they are co-primary and thus to be applied pro-rata. On May 2, 2002, default was entered against Midwest, CDN, and Associate. (Doc. 47). On November 19, 2002, Deutsch Financial Services Corporation was dismissed by stipulation of the parties. (Doc. 72).
Canal attempts in its briefs to put into dispute issues alleged in National's counterclaim regarding primary and secondary liability. However, no motions have been filed with regard to this counterclaim, and hence any issues related to it are not properly before the Court nor germane to the decision herein.
On January 31, 2002, Canal moved for summary judgment, asking the Court inter alia to enter judgment declaring that its policy excluded coverage for claims arising out of the Fernandez-Rodriguez crash. Only Defendants National and David Paul Mullino replied to the Motion.
Rosanne Rodriguez originally filed a Notice of Consent (Doc. 91) to Canal's Motion for Summary Judgment but subsequently filed a Withdrawal of Consent. (Doc. 96). Nevertheless, Rodriguez did not file a written opposition to Canal's Summary Judgment Motion. Jeanette Mojica filed a Notice of Consent to Canal's Motion for Summary Judgment. (Doc. 98).
III. Standard of Review
A party is entitled to judgment as a matter of law when the party can show that there is no genuine issue as to any material fact. Fed.R.Civ.P. 56(c). The substantive law applicable to the case determines which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the burden of proving that no genuine issue of material fact exists. Id. at 323. In determining whether the moving party has satisfied its burden, the court considers all inferences drawn from the underlying facts in a light most favorable to the party opposing the motion, and resolves all reasonable doubts against the moving party. Anderson, 477 U.S. at 255. If the record presents factual issues, the court must not decide them, but rather, must deny the motion and proceed to trial. Environmental Def. Fund v. Marsh, 651 F.2d 983, 991 (5th Cir. 1981).
All decisions of the Fifth Circuit prior to October 1, 1981 are binding precedent on this Court. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).
IV. Analysis
Canal urges summary judgment in its favor, claiming that once a leased tractor leaves the lessee's terminal, the leased tractor is "in the business of' the lessee until the leased tractor returns to the lessee's home terminal or operates with another company.
Under Illinois law, if policy terms are clear and unambiguous, a court must give them their plain and ordinary meaning. National Union Fire Ins. Co. of Pittsburgh v. Glenview Park Dist., 632 N.E.2d 1039, 1042 (Ill. 1994); Gould Ratner v. Vigilant Ins. Co., 782 N.E.2d 749, 754 (Ill.App. 1st 2002) (citing American States Ins. Co. v. Koloms, 687 N.E.2d 72 (Ill. 1997)). If, however, the terms are subject to more than one meaning, they will be construed against the insurer. Gould Ratner, 782 N.E.2d at 754 (citing Koloms). Exclusionary provisions also are construed against the insurer. Glenview Park Dist., 632 N.E.2d at 1042; Pope ex. rel. Pope v. Econ. Fire Cas. Co., 779 N.E.2d 461, 467 (Ill.App. 1st 2002) (citations removed) (when insurer relies upon exclusionary clause to deny coverage, the clause's applicability must be clear and without doubt, and any doubts as to coverage must be resolved in favor of the insured). However, a court will not search for nonexistent ambiguities. Pope, 779 N.E.2d at 467 ("courts should not torture the language of a policy to find coverage where it is clear that none exists."); Pekin Ins. Co. v. L.J. Shaw Co., 684 N.E.2d 853, 856 (Ill.App. 1st 1997).
Because the Court is sitting in diversity, the law of the forum state-including choice of law rules-controls the Court's decision herein. Admiral Ins. Co. v. Feit Mgmt. Co., No. 01-10331 slip op. at 1449 (11th Cir. Feb. 19, 2003). Florida choice of law rules dictate that Illinois law governs the adjudication of this case, given that the parties formed and executed the Canal insurance contract in Illinois. Allstate Ins. Co. v. Clohessy, 199 F.3d 1293, 1294 n. 1 (11th Cir. 2000); Sturiano v. Brooks, 523 So.2d 1126 (Fla. 1988) (law of the jurisdiction in which the contract was formed governs coverage terms in the insurance policy at issue).
The instant case bears striking similarities to St. Paul Fire Marine Co. v. Frankart, 370 N.E.2d 1058 (Ill. 1997). In that case, Robert Frankart, an owner-operator (like Midwest/Fernandez) leased his driving services and tractor to a common carrier (like CDN) known as Wilson Freight Company ("Wilson"). As in the case herein, ICC regulations required Wilson to have exclusive possession, use, and control of the equipment for the lease's duration.
On Wilson's dispatch orders, Frankart transported a load of freight from Pennsylvania to Oklahoma. After delivering the load, Frankart phoned Wilson, who informed him that no loads were available for transport in the direction of Frankart's home terminal in Ohio. Thus, Frankart drove to a Wilson terminal in Granite City, Illinois. Once at the terminal, Frankart removed his name from the availability list and departed for his Ohio home with an empty Wilson trailer attached to his tractor, i.e., "deadheading." While "deadheading," Frankart opted to travel through East Peoria — even though the diversion created a less direct route from Granite City to Ohio — so he could fill up on cheaper fuel and potentially sublease with another carrier. As he exited the highway in East Peoria, Frankart collided with a bus.
In Frankart, the Illinois Supreme Court focused on whether the appellate court erred in concluding that Fernandez's tractor, while traveling home with the empty Wilson trailer attached, was being used in the business of Wilson at the time of the accident. Id. at 1060. The court held that given the nature of the trucking business, Frankart was indeed in the business of Wilson because he had not yet arrived at Wilson's home with the tractor-trailer and thus was still furthering the business of Wilson. Id. at 1062.
In discussing the exclusionary provision contained in Frankart's insurance policy — a provision almost identical to the provision at issue herein — the court acknowledged that the insurance policy was ambiguous to the extent it failed to define "in the business of' as the equivalent or non-equivalent of Wilson's common carrier liability pursuant to the ICC regulations' "exclusive possession, use and control" language. Id. at 1060-61. The ambiguity would have required the Court to strictly construe the term at issue against the insurer. Id. at 1061. Nonetheless, the court held that an insurance contract should not be interpreted with reference to the federal regulatory scheme unless the contract so provided. Thus, according to the plain, ordinary, popular meaning of "in the business of," the court concluded that the policy would exclude coverage when Frankart's trailer was used in the common carrier's business, even if the tractor was pulling an empty trailer at the time of the accident. Id.
The same ambiguity may exist in the instant case regarding the interplay of the insurance term "in the business of" and the ICC regulations' term "exclusive possession, control and use," but as in Frankart, the Court must construe the term "in the business of' according to its recognized common usage and independent of the federal regulatory scheme, absent reference to that scheme in the policy. Central Nat'l Ins. Co. of Omaha v. Lib. Mut. Ins. Co., 685 F. Supp. 123, 126 (D.S.C. 1988); Frankart, 370 N.E.2d at 1061.
The ICC regulations make National primarily liable to underlying claims as a "certified carrier." It is irrelevant to this dispute regarding Canal's insurance policy that National served the purpose of the ICC regulations by paying policy proceeds in the underlying claims pursuant to settlement agreements. See, e.g., American Interins. Exch. v. Occidental Fire Cas. Co. of N.C., 847 F.2d 1300, 1303 (7th Cir. 1988) (holding that coverage or lack thereof stems from the insurance policy, not from offenses against the federal regulatory network)
If the Frankart court found the driver was still in the business of the lessee even though the driver had removed his name from the carrier's availability list and was headed home, it is unquestionable that the instant case merits a finding that Fernandez was in the business of CDN at the time of the accident. Simpkins v. Protective Ins. Co., 419 N.E.2d 557, 561 (Ill.App. 1st 1981) (finding that the lessee issued dispatch orders to the tractor driver and pursuant to those orders, the driver was in the lessee's business while en route to pick up the lessee's freight and trailer at the time of the accident). Indeed, as in Frankart, the CDN trailer remained attached to Fernandez's tractor at all times during Fernandez's run and the CDN company logos remained affixed to the tractor-trailer. Unlike in Frankart, however, Fernandez was not merely driving home with an empty trailer (which still was considered the business of the lessee) but rather was operating pursuant to CDN's explicit dispatch instructions at the time of the accident. Thus, even more strongly than the circumstances in Frankfart, the facts at bar compel a finding that Fernandez and the tractor were in the business of CDN, the lessee, at the time of the accident.
At least one other district court found that the fact that the trailer was empty had no bearing on the determination that the driver was in the business of the lessee at the time of the accident. See, e.g., Central Nat'l Ins. Co. of Omaha, 685 F. Supp. at 126 (finding driver of tractor-trailer, who was en route to pick up a load, was furthering the business of the lessee at the time of an accident even though the trailer was empty and the driver thus was deadheading).
National's assertions that the record contains evidence that Fernandez deviated from his CDN business to visit relatives in Tampa have no merit. First, the trip to Tampa occurred during Fernandez's off-duty time and in no way hindered or affected his efforts to pick up the Ft. Pierce load. Second, Fernandez did not bring his tractor-trailer to Tampa but rather left it parked at the Mango truck stop. Third, the accident did not occur while Fernandez was in Tampa but rather while he was en route from Mango to Ft. Pierce to pick up the next load assigned by the CDN dispatcher. Even though Fernandez in hindsight may have taken a less direct route from Apopka to Ft. Pierce, he did so for valid and acceptable reasons, at his discretion, and in violation of no Midwest or CDN policy.
Defendants do not explicitly contest these facts, but they do offer the testimony of Bruce Lenau, who said that Fernandez would have "no business" to take the truck to Tampa. Lenau admitted, however, that if Fernandez had some reason for taking Route 60 to get to Ft. Pierce to pick up the load, then "he would be under [CDN] business." (Doc. 82 at 114-115). Lenau also testified that going to a relative's house before a pick-up was "absolutely not" out of the question. (Doc. 82 at 189).
Indeed, Fernandez and all of the drivers leased to CDN were paid based on a computer-determined "shortest miles" calculation.
National also contends that a factual issue exists as to whether the vehicle was "being operated with permission of any lessee" and that if this exclusion applied, it would completely eviscerate Canal's policy and render its coverage illusory. National's contention is not true, for the coverage could apply, for example, to circumstances in which the driver was "bobtailing."
Finally, Mullino contends that the exclusionary language on which Canal relies is ambiguous because it applies to the undefined term "covered automobile," whereas the Canal policy refers only to the defined term "owned automobile(s)." Mullino correctly concedes, however, that Canal is not required to define every term in its policy. Admiral Ins. Co. v. Feit Mgmt. Co., No. 01-10331 slip op. at 6 (11th Cir. Feb. 19, 2003) ("mere failure to provide a definition for a term involving coverage does not necessarily render the term ambiguous.") (internal citations and quotations removed). Even though "covered automobile" is not expressly defined, the Court finds no ambiguity exists when read in context of the entire policy, especially where the term "owned automobile" is defined. Frankart, 370 N.E.2d at 1061 (all parts of a contract must be given meaning and effect where possible).
Based on all of the above, the Court concludes that Canal is not responsible for the defense or indemnification of underlying claims arising out of the accident, which occurred while the Midwest tractor and driver were leased to and in the business of CDN.
V. Conclusion
It is therefore
ADJUDGED AND ORDERED that Canal's Motion for Summary Judgment is GRANTED in part. The Court decrees that Canal's policy does not afford coverage for any claims arising out of the August 16 accident between Fernandez's tractor-trailer and Rodriguez's tractor-trailer.