Summary
applying Texas law and citing Topps v. Gulf Coast Marine, 72 F.3d at 487-88; Sprow v. Hartford Ins. Co., 594 F.2d 418; and Griffin v. Travelers Indem. Co. of Rhode Island, 4 S.W.3d 915, 918 (Tex. App. 1999)
Summary of this case from Luizzi v. Pro Transp., Inc.Opinion
CIVIL ACTION NO. 99-1350, (REF: ALL CASES), SECTION "L" (3).
January 22, 2002
ORDER AND REASONS
Pending before the Court is the motion of Plaintiff, Harold David Andrews, for judgment against Defendant National Union Fire Insurance Company of Pittsburgh, Pennsylvania ("NUFIC"). After review of the briefs, deposition testimony, and applicable law, the Court finds that Plaintiffs are not insured under the NUFIC policy at issue and Plaintiff's motion for judgment is DENIED.
I. Background
This case arises from a motor vehicle accident that occurred on May 7, 1998, on Highway 1 in Lafourche Parish, Louisiana. The Plaintiffs in this consolidated case were employed on the M/V C-Searcher by PGS Exploration (US), Inc. ("PGS"). PGS arranged for a van to transport its employees from Port Fourchon, Louisiana to the New Orleans airport for transport back to their homes. On the date of this accident, Eric Leibold, an employee of Edison Chouest Offshore, was riding in the van along with several PGS employees. The van was traveling northbound on Louisiana Highway 1 when, near milepost 28.7, a Mack truck heading southbound collided with the van. As a result of the collision, the vehicle rolled over several times, coming to rest overturned on the highway. One of the passengers, Wallace Loper, was killed in the accident and others were seriously injured.
Plaintiffs originally filed suit against several defendants, eventually proceeding to trial in March of 2001, against Mack Trucks, Inc. and Acadiana Mack Sales and Service, Inc. on claims arising under the Louisiana Products Liability Act. On April 2, 2001, the jury returned a verdict in favor of the defendants on all products liability claims. Prior to trial, the parties agreed to a separate judicial determination of the insurance coverage obligations of the Defendant in this action, NUFIC.
At issue in the pending motion is underinsured/uninsured coverage under an automobile insurance policy issued by the Defendant, NUFIC, to Petroleum Geo-Services, Inc. This policy lists PGS as a named insured and includes an uninsured/underinsured endorsement form that defines an "insured" as "any other person occupying a covered auto." See Plaintiff's Memorandum of Law in Support of Motion for Judgment Against National Union Fire Insurance Company, at 7-8. The policy further defines a "covered auto" as an auto "owned or leased by you." See id. In addition, the policy contains a Business Auto Coverage Form that defines an insured as "anyone else while using with your permission a covered auto you own, hire or borrow." See id. at 8.
The Plaintiffs assert that this policy provides uninsured/underinsured motorist coverage for the injuries arising out of this accident. According to the Plaintiffs, the 1997 Ford Club Wagon in which Plaintiffs were riding at the time of the accident is a "covered auto" because PGS "contracted with Central Dispatch, Inc. ("CDI") to lease or hire" the vehicle. See Plaintiff's Memorandum of Law in Support of Motion for Judgment Against National Union Fire Insurance Company, at 4. In the alternative, Plaintiffs claim that the van was "hired, leased, or borrowed by PGS" and they are insured as "anyone else while using with your permission a covered auto you own, hire, borrow." See id. at 9.
NUFIC disputes coverage, and asserts that the policy does not provide uninsured/underinsured motorist coverage to the Plaintiffs in this case. As a threshold matter, the Defendant argues that Plaintiffs have not "obtained a judicial determination of an uninsured/underinsured motorist's fault, as required by Texas law." See NUFIC's Response to Plaintiff's Motion for Judgment and Memorandum in Support at 1. NUFIC further argues that Plaintiffs are not insured under the policy because they did not occupy a "covered auto." See id. at 2. According to the Defendant, the vehicle was not "owned or leased by PGS," and there was "no contract for PGS to lease from CDI the van." See id. at 3. On the contrary, NUFIC maintains that CDI simply provided transportation "as a common carrier pursuant to a published tariff on file with the Interstate Commerce Commission." See id.
This Court has previously addressed these coverage issues, in denying NUFIC's motion for summary judgment. At that time, this Court found that "factual questions remain[ed] as to whether PGS had leased the CDI van for the purposes of the uninsured/underinsured motorists insurance endorsement of the NUFIC policy." See Order and Reasons, February 21, 2001, at 7.
Specifically, the Court noted that the Plaintiffs' evidence created a genuine dispute as to two issues: whether an agreement existed between PGS and the van's owner, CDI, and whether the van was under the exclusive use and control of PGS. See id. at 6. After consideration of the parties' briefs, deposition testimony, and applicable law, the Court now answers both questions in the negative and, accordingly, Plaintiff's motion for judgment is DENIED.
II. Analysis
This Court has previously determined that Texas law governs this dispute. See Order and Reasons, February 21, 2001, at 4. Few Texas courts have been called upon to interpret the term "lease" in the context of an automobile insurance contract. See Griffin v. Travelers Indem. Co. of Rhode Island, 4 S.W.3d 915, 918 (Tex.App. 1999) (noting that "[o]ur research reveals no Texas state cases interpreting the term `lease' in an automobile insurance contract."). One Texas court has found, however, that the terms "lease" and "hire" are interchangeable for the purposes of analyzing insurance coverage. See Griffin, 4 S.W.3d at 918. The Grfffin court analyzed an insurance provision covering "leased" vehicles by applying the federal case law interpreting the term "hired" for coverage purposes, ultimately concluding that instructing an employee as to "where to go and what to do" and reimbursing the employee's mileage did not constitute an automobile "lease" under Texas law. See Griffin, 4 S.W.3d at 917-18.
Under Texas and federal case law, a vehicle is "hired" when: (1) a separate contract for hiring or leasing exists between the named insured and the owner of the vehicle, and (2) the vehicle is subject to the exclusive use and control of the named insured. See Toops v. Gulf Coast Marine, Inc., 72 F.3d 483, 487-88 (5th Cir. 1996) (construing Texas law); Sprow v. Hartford Ins. Co., 594 F.2d 418 (5th Cir. 1979) (construing Mississippi law and citing numerous federal cases construing a variety of state laws); Griffin, 4 S.W.2d at 918. Accordingly, for a vehicle to be classified as "leased," a separate contract of lease must exist and the insured "must have had exclusive use or control of the vehicle during the lease." See id.
In Toops, the Fifth Circuit further distinguished a hired auto and an independent contractor. See 72 F.3d 483 at 488. The Court found that "hiring an independent contractor will not create insurance coverage under a `hired auto' clause." Id. The Court further noted that it is the Plaintiff's burden to show that there was a separate agreement to hire the vehicle and that the driver was operating the vehicle with the insured's permission. Id. Citing Johnson v. Royal Indemnity Co., 206 F.2d 561, 563-64 (5th Cir. 1953), the Toops court listed several factors to distinguish between a hired auto and an independent contractor, including whether the hiring party furnished gas or oil or otherwise maintained the auto, whether the autos were required to be a particular size, whether the drivers were individually selected, whether the hiring party could fire the driver, whether the hiring party was "only interested in the results of getting from Point A to Point B," and whether the hiring party assumed control of the hired auto. See Toops, 72 F.3d at 487-88.
In this case, the Plaintiffs have failed to establish that the vehicle was "leased" under the NUFIC policy. Plaintiffs have not proved that there was a separate contract between PGS and CDI to lease the vehicle or that the accident vehicle was under the exclusive use and control of PGS. First, the deposition testimony of CDI President Joni Gravolet reveals that there was no contract between CDI and PGS providing for the lease of the vehicle. According to Ms. Gravolet, "CDI do[es] not lease a van to a customer." See Deposition of Joni Gravolet, May 7, 2001, at 7. When asked specifically to describe the relationship between CDI and PGS, Ms. Gravolet further explained that "there were no contracts" to lease the van, and that CDI performed a variety of services for PGS, including warehousing parts, transporting parts, and, as on the day of the accident, transporting employees. See id. at 8.
Second, Plaintiffs have not established that the vehicle was "under the exclusive use and control" of PGS. On the contrary, the testimony reveals that the relationship between CDI and PGS was that of hiring party and common carrier, rather than lessor and lessee of a particular vehicle. Ms. Gravolet's testimony is again instructive on this point, as she explained that CDI drivers did not need PGS permission to operate a van, that it was CDI, not PGS, that furnished gasoline and otherwise maintained the vehicles, and that PGS did not require that CDI furnish any particular van. See id. at 8-9. Ms. Gravolet further explained that PGS had virtually no control over the driver of the vehicle, as PGS did not select individual drivers and could not fire a driver. See id. at 9. When asked whether CDI's transportation services "involved a temporary use of the CDI van," Ms. Gravolet maintained that "the job that was given to us was being done by Central Dispatch . . . [t]there was no temporary or permanent use of my van . . . [t]he job was just to be completed, period . . . [t]hey hired our company, not our van." See id. at 52.
Plaintiffs argue strenuously that, under Texas law, they do not have the burden of disproving that CDI was an independent contractor. Because, however, Plaintiffs have failed to prove either prong of the "hired vehicle" test, i.e. the existence of a separate contract and exclusive use and control of the vehicle, CDI's independent contractor status is not essential to the Court's decision. Moreover, even if Plaintiffs were able to establish the existence of a contract between CDI and PGS, Plaintiffs examples of alleged PGS "control" of the CDI vehicle, including directing the CDI driver, William Dean to wait at the helipad for PGS crewmembers, requesting stops and/or detours along the route, and allowing non-PGS employees to ride in the CDI van, fall far short of the requisite "exclusive use and control" to constitute a "lease" under Texas law. Indeed, many of the purported examples were specifically addressed and refuted by CDI President Joni Gravolet. See, e.g., Deposition of Joni C. Gravolet, May 7, 2001, at 11-12 (explaining that CDI could have sent the driver on another route rather than wait at the helipad for the PGS crew); id. at 26-27 (explaining that "company policy" dictates that a driver should "check with the [CDI] office" before acting on instructions from a PGS crew chief or passenger). In light of the complete absence of both a separate contract to lease the vehicle and evidence of PGS's exclusive use and control of the vehicle, Plaintiffs have failed to establish that the CDI vehicle was a "covered auto"under the NUFIC policy. Accordingly, Plaintiffs motion for judgment is DENIED.
III. Conclusion
For the foregoing reasons, the Court finds that the vehicle involved in the automobile accident at issue was not a "covered auto" under the NUFIC policy. Accordingly, Plaintiffs' motion for judgment is DENIED.