Opinion
CIVIL ACTION No. 98-3247
October 24, 2000
ORDER AND REASONS
The following motions have been filed shortly before trial and considered on an expedited basis:
1) Motion of defendant National Union Fire Insurance Company of Pittsburgh, PA ("National Union"), for reconsideration, which is opposed by plaintiffs and State Farm Mutual Automobile Association ("State Farm");
2) Motion of defendant Landstar Inway, Inc. ("Landstar"), for summary judgment on insurance coverage issues, which is opposed by plaintiffs and State Farm; and
3) Motion of plaintiffs Richard J. Madere, Sr., and Gloria Madere ("the Maderes"), for summary judgment on coverage issues, which is opposed by defendants Landstar and National Union.
Facts
On the night of November 30, 1997, Dolphins Chapman, the owner and operator of a truck which had been leased to Landstar, had parked the truck and the attached trailer on the River Road in St. James Parish, Louisiana. James Pierce, the owner and operator of Kelly's Nursery, which is located in Tyler, Texas, had hired Chapman to travel to St. James Parish to load and transport railroad ties. James Pierce traveled to St. James Parish and one of his employees was using a forklift to ferry the railroad ties from one side of the road to the other side of the road, where the truck which Chapman had leased to Landstar was parked in the lane of travel on one side of River Road. Once the forklift crossed the other lane of travel on River Road, it loaded the railroad ties on the trailer of the Landstar-leased truck parked on the other side of River Road.Plaintiff Richard Madere was traveling southbound on River Road and collided with the forklift, which was in his lane of travel, and sustained injuries. Richard Madere and his wife Gloria sued National Union, Landstar's insurer, Dolphins Chapman, the driver of the truck, Landstar, the lessor of the truck, James Pierce, doing business as Kelly's Nursery, Kelly's Nursery's insurer, Burlington, and their own uninsured/underinsured motorist carrier, State Farm. Burlington's motion for summary judgment, to which no opposition was filed, was granted on the basis that Pierce had failed to pay the premiums for the insurance and it was canceled prior to the accident.
The three motions sub judice concern whether or not the negligence of James Pierce, individually and doing business as Kelly's Nursery, is covered by Landstar and/or the National Union policy, for the injuries caused to the plaintiff, Richard Madere. These motions do not concern whether or not Pierce or Kelly's Nursery have a claim for indemnification or contribution against Landstar, or whether Landstar can seek indemnity or contribution from Pierce or Kelly's Nursery in the event that Landstar must pay damages to the plaintiff for injuries which resulted in whole or in part from the negligence of Pierce/Kelly's Nursery. This distinction is important.
In its statement of uncontested material facts, Landstar admits that: "1. Landstar Inway, Inc. was self-insured for the first $1,000,000 of liability exposure to plaintiffs on November 30, 1997. 2. National Union Insurance Company of Pittsburgh, PA had $4,000,000 liability coverage above the $1,000,000 retention of Landstar Inway." Landstar had procured an insurance policy from National Union with liability limits of $5,000,000. Landstar filed for and was certified as a self insurer under the Interstate Commerce Commission regulations, and attached to the National Union policy the Form MCS-90 which was issued to Landstar.
The liability coverage section of the National Union policy issued to Landstar lists as insureds "a. You for an covered `auto." b. Anyone else while using with your permission a covered `auto' you own, hire or borrow except . . . (4) Anyone other than your employees, partners, a lessee or borrower or any of their employees, while moving property to or from a covered auto." National Union policy, p. 2 of 13, Section II (emphasis added). Under Coverage, the policy states that:
We will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance or use of a covered "auto."
Id. (emphasis added). The policy also contains an exclusion for
the "Movement of Property by Mechanical Device" which provides that the insurance does not apply to "Bodily injury" or "property damage" resulting from the movement of property by a mechanical device (other than a hand truck) unless the device is attached to the covered "auto."" National Union policy, p. 4 of 13, B(8)
The National Union policy carried a MCS-90 endorsement specifying that Landstar had a $1,000,000 retention for each accident and that National Union was liable for the additional $4,000,000. The endorsement provided that:
The insurance policy to which this endorsement is attached provides automobile liability insurance and is amended to assure compliance by the insured, within the limits stated herein, as a motor carrier of property, with Sections 29 and 30 of the Motor Vehicle Carrier Act of 1980 and the rules and regulations of the Federal Highway Administration's Bureau of Motor Carrier Safety (Bureau) and the Interstate Commerce Commission (ICC).
It further states that:
In consideration of the premium stated in the policy to which this endorsement is attached, the insurer (the company) agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from the negligence in the operation, maintenance, or use of motor vehicles subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980 regardless of whether or not each motor vehicle is specifically described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere. . . . It is understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, this endorsement, or any endorsement thereon, or violation thereof, shall relieve the company from liability or from the payment of any final judgment, within the limits of liability herein described, irrespective of the financial condition, insolvency or bankruptcy of the insured. However, all terms, conditions, and limitations in the policy to which the endorsement is attached shall remain in full force and effect as binding between the insured and the company.
Kelly's Nursery issued a Bill of Lading to Landstar to transport the railroad ties, which was printed on a Landstar form. Landstar admits that the small print on the Bill of Lading was illegible, and includes a legible copy of the Bill of Lading's provisions, including Tariff 102-B, in effect between Landstar and Kelly's Nursery. Tariff 102-B governs "Loading by Consignor — Unloading by Consignee" and states that "Carrier will not be responsible for any damage to a shipment or for personal injuries at origin, destination or enroute, which is directly caused by improper, careless or inefficient preparation for shipment, or loading or unloading performed by consignor or consignee." Landstar Exhibit F.
THE MOTIONS Defendant National Union's Motion for Reconsideration
Defendant National Union filed a motion for reconsideration of the Court's prior decision regarding the effect of the "movement of property" exclusion in the Landstar policy. Previously, National Union filed a motion for summary judgment seeking a ruling that its policy did not cover the negligent conduct in question, because plaintiff was injured when his truck struck a forklift which was located in the middle of a lane of travel on the River Road, and the other lane of travel was obstructed by the parked Landstar-leased truck. The exclusion states that Landstar will not be liable for "`Bodily injury' or `property damage' resulting from the movement of property by a mechanical device (other than a hand truck) unless the device is attached to the covered `auto'." Landstar's position was that the injury resulting from the forklift moving the railroad ties to the truck, and that no coverage was afforded for this accident.
The Court held that the exclusion did not apply because the liability, if any, of the defendants "does not arise out of the movement of the forklift, but its presence in the lane of travel and the fact that it was not illuminated, nor were other actions taken to warn drivers." (Ruling on Motions, Jan. 14, 1999, Rec. Doc. No. 14). Summary judgment was thus denied.
Defendant Landstar seeks reconsideration of this decision on the grounds that "[b]y use of the word `defendants.' the Court's ruling did not address the separate alleged acts of negligence of the Landstar leased vehicle, operated by Dolphins Chapman, for parking in a moving lane of traffic and failure to have it properly lit and the separate acts of negligence of Kelly's Nursery, which owned the forklift and was operating same with its own employee, of operating same in a moving lane of traffic and failing to have it properly lit." The insurer suggests that in its prior motion, it did not seek to be relieved of coverage for the alleged negligent acts of the Chapman vehicle, but did ask to be relieved of coverage for the alleged negligent acts of Kelly's Nursery.
Landstar is simply wrong when it states that it asked the Court to differentiate between defendants in ruling upon the movement of property exclusion. The first sentence in the motion for summary judgment filed by Landstar on December 1, 1999 (Rec. Doc. No. 9) states that "Defendant National Union . . . moves for a summary judgment dismissing all claims against it based on alleged negligence attributable to the loading and unloading of the Landstar Inway, Inc. motor vehicle made the subject of plaintiffs' suit against it. . . . [The National Union] policy does not cover any act(s) of negligent conduct when bodily injury results from the movement of property by a mechanical device from its insured's truck." Nowhere in National Union's motion of December 1, 1999, does it seek specifically to be relieved of coverage for the alleged negligent acts of Kelly's Nursery, as contrasted with Dolphins Chapman's truck, but only that it be relieved of coverage because the accident resulted from the movement of property by mechanical means.
The basis of National Union's motion for reconsideration of that decision is not that the Court was incorrect in its interpretation of the clause, but that it misconstrued what National Union was seeking. After reviewing the National Union motion and the ruling on the motion, it is patent that National Union is incorrect and the wording of the prior motion does not support its present position.
Additional light has been shed on the efficacy of the National Union exclusion due to Landstar's recent admission that it is self-insured for the first $1,000,000, pursuant to an MCS-90 endorsement. The endorsement provides that no limitation, exclusion, or policy provision relieves Landstar for its liability to the public [i.e., "public liability"] for negligence, but that any such policy provision is enforceable as between the insured and the insurance company. In its previous motion for summary judgment, defendant National Union asked for summary judgment relieving it of all liability to the plaintiff, and did not intimate that it thought its position vis-a-vis this clause was different from that of Landstar. For these reasons, the motion for reconsideration of the Court's previous ruling relating to the "movement of property exclusion" must be denied.
Motion of Plaintiffs and Defendant Landstar for Summary Judgment on Insurance Coverage Issues
In its motion, defendant Landstar seeks summary judgment declaring that it had no legal responsibility for any negligent acts of James Pierce d/b/a/ Kelly's Nursery on November 30, 1997. In their motion, plaintiffs Richard and Gloria Madere seek summary judgment declaring that (1) National Union issued a policy of liability insurance to defendant Landstar which provided coverage for damages arising out of the ownership, maintenance and use of defendant Chapman's vehicle on November 30, 1997, and that under the facts of this case, plaintiffs can collect money to satisfy the full amount of any final judgment from National Union, up to the policy limits of $5,000,000; and (2) Landstar is primarily responsible to the plaintiffs, who are members of the public, for damages arising from the actions of Dolphins Chapman, James Pierce, and Pierce's employees, on November 30, 1997, while loading the truck leased to Landstar on the River Road. All parties agree that this is a question of insurance coverage which may be determined on the basis of the documents submitted and that the material facts relative to this issue are not in dispute. The gravamen of both motions is whether the insurance policy, including the endorsements, and the bill of lading, should properly be construed as to afford James Pierce, doing business as Kelly's Nursery, as well as Pierce's employees, coverage under the National Union policy provided by Landstar.
There is undisputed that James Pierce contacted Landstar seeking to hire a truck and a driver to travel to St. James Parish, Louisiana, to help him pick up railroad ties for his business, Kelly's Nursery, located in Tyler, Texas. Chapman received approval from Landstar to undertake the trip. A bill of lading printed on a Landstar form was completed as was a delivery receipt on a printed Landstar form indicating that 12 bundles of crossties weighing 30,000 lbs. were being shipped by Kelly's Nursery in Donaldsonville, Louisiana, to Kelly's Nursery in Tyler, Texas. James Pierce for Kelly's Nursery wrote a check for $450.00 to Landstar Inway, Inc. to pay for the transportation and gave it to Chapman. Landstar paid Chapman, the truck driver and an independent contractor of Landstar, for performing the job.
The National Union policy issued to Landstar defines an "insured" as "You for a covered auto", which is Landstar, and "Anyone else while using with your permission a covered `auto' you own, hire or borrow, except . . . (4) Anyone other than your employees, partners, a lessee or borrower or any of their employees, while moving property to or from a covered auto." National Union policy, p. 2 of 13, Section II (emphasis added) Pierce and Kelly's Nursery had contracted with Landstar to hire the Chapman truck, which was leased to Landstar, for purposes of delivering a load of railroad timbers from St. James Parish, Louisiana to Tyler, Texas. It is plain that Pierce and Kelly's Nursery were "using" the vehicle to perform those transportation services and it paid Landstar for its use of the vehicle. Pierce and his employees were lessees or borrowers of the vehicle, with permission, who were actually moving property to the truck at the time of the accident. There can be no other common sense, reasonable interpretation but that Chapman, Pierce, and Pierce's employees are "insureds" under the policy.
The National Union policy requires it to "pay all sums an `insured' legally must pay as damages because of `bodily injury' or `property damage' to which this insurance applies, caused by an `accident' and resulting from the ownership, maintenance or use of a covered `auto.' National Union policy, p. 2 of 13. The Landstar MCS-90 endorsement to the policy requires that the insurer pay "any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980. . . ."
The linchpin of coverage of Pierce and Kelly's Nursery herein is whether the activities of Pierce and Kelly's Nursery constituted a "use" of the vehicle). The term "use" in an automobile liability insurance policy has been the subject of previous litigation and thus there is jurisprudential guidance on this important question. The court inTolleson v. State Farm Fire and Casualty Co., 449 So.2d 105 (La.App. 1st Cir. 1984) considered whether the shooting of one teenage boy seated in a vehicle by another standing several feet from the car "demonstrating" the use of a gun in a robbery, while both boys were waiting to go hunting, constituted a "use" of the vehicle under the applicable policy. The court noted:
Landstar and National Union concede that Dolphins chapman was "using" the vehicle when he parked it in the lane of travel on the River Road at night.
The meaning of the term "use" has been the subject of much litigation. It is well established that one need not be actually operating or driving a vehicle to be using it. [citation omitted]. Likewise, under the terms of the policy, the word "use" includes loading and unloading of the car.449 So.2d at 108. The Tolleson court concluded that vehicle in that case was not being used because the gun that caused the injury was not being loaded into the car, nor was it being unloaded, as the teenage boy had merely picked it up to engaged in "horseplay" with the other boy. Using a common sense approach, the court held that the shooting of a person seated in a vehicle which originated outside of the vehicle was not a "use" within the contemplation of the parties to the insurance contract. 449 So.2d at 109.
Other courts have construed the word "use" as including loading and unloading of the vehicle. The court in Barrios v Service Drayage Co., Inc., 250 So.2d 135 (La.App. 4th Cir. 1971) recognized that:
There have been several cases in Louisiana interpreting the loading and unloading provisions of insurance policies such as this. Our courts have declared that such provisions expand the coverage afforded beyond the actual driving or parking of the vehicle insured so as to cover some acts in which the vehicle does not itself play any part; that is, the vehicle is not moving but at rest, and some objects are being moved onto or off of the vehicle. Spurlock v. Boyce-Harvey Machinery, Inc., 90 So.2d 417 (La.App. 1st Cir. 1956).250 So.2d at 142.
The court in Spurlock was apparently the first Louisiana decision to consider whether loading and unloading was a use of the vehicle, and that court found that "[w]hether the actions preparatory to loading the goods are so directly related to use of the truck in question as to be within the coverage of the loading and unloading clause is a matter which must vary greatly with the facts of each case — but here, with the truck present at the premises and some of the goods already loaded and the midst of loading the remainder, and when the injury was sustained as a direct result of an activity directly related to such loading, we think coverage must unquestionably be sustained." 90 So.2d at 426.
The court in Cantrelle v. State Farm General Ins. Co., 618 So.2d 997 (La.App. 1st Cir. 1993) studied the term "use" to determine whether the injuries to a woman who was assisting her daughter-in-law unload a roll of carpet from a flatbed trailer which was connected to her son's pick-up truck resulted from a "use" of the borrowed trailer under the trailer's insurance policy. In studying this question and concluding that the negligent parking of a vehicle constitutes use, the Cantrelle court found that:
The term "use" [in vehicle liability insurance policies] is a broad catch-all designed to include all proper uses of the vehicle not falling with the terms of "maintenance" and ownership" under automobile liability policies. The term "use" involves simply employment for the purpose of the user.
In Carter v. City Parish Government of East Baton Rouge, 423 So.2d 1080 (La. 1982), the court established the analysis to be used in determining whether an accident arose out of the "use" of an automobile. The court noted that the "use" provision is designed to limit coverage to liability resulting from conduct of the insured which constitutes both a use of the vehicle and a legal cause of the injury. Thus, the courts are required to answer two separate questions:
(1) Was the conduct of the insured of which the plaintiff complains a legal cause of the injury?
(2) Was it a use of the automobile?
In order for the conduct to arise out of the use of the vehicle, the automobile must be essential to the theory of liability. The specific duty breached by the insured must flow from use of the automobile. If the specific duty breached by the insured existed independently of the automobile, then liability does not arise out of use even though the duty could have been performed by use of the automobile.618 So.2d at 1000. Also, courts have recognized that "[o]ne needs not actually be operating or driving a vehicle in order to be using it", and that "use" of a vehicle includes instances when no one is occupying it and in situations where it has been negligently parked. Id.
The rules governing the interpretation of insurance contracts are well settled. As summarized in Hartford Accident Indemnity Co. v. Joe Dean Contractors, Inc., 584 So.2d 1226 (La.App. 2d Cir. 1991)
When interpreting an insurance policy, the contract between the insured and his carrier constitutes the law between the parties. Thus, the agreement will be enforced as written if policy terminology at issue is clear and expresses the intent of the parties.
No single portion of an insurance contract should be construed independently of the whole, i.e., the policy is to be considered in its entirety. If ambiguity exists, it should be construed in favor of the insured and against the insurer. Courts, however, lack authority to alter policy terms under the guise of contractual interpretation when provisions are couched in unambiguous language.
Indeed, an insurance contract should be given no meaning which will enlarge or restrict its provisions beyond what its terms reasonably contemplated, or which will lead to an absurd conclusion. Absent a conflict with law or public policy, insurers are entitled to limit their liability and impose reasonable conditions upon the obligations assumed in a given policy.
Moreover, an insurance policy being a contract, those rules established for the construction of written instruments apply. LSA-C.C. Art. 2045 defines interpretation of a contract as "the determination of the common intent of the parties." Such intent is to be determined in accordance with the plain, ordinary and popular sense of the language used, and by construing the entirety of the document in a practical, reasonable, and fair basis.584 So.2d at 1229 (citations omitted)
In Hartford, the court held that a person attempting to position a cement chute to a cement truck was injured while "unloading" the vehicle. Under these circumstances, "unloading" was determined to be a use of the vehicle. As the Hartford court explained, "More to the point: the injury, occurring as the driver prepared to pour cement at the job site, arose out of an inherent part of the exact use expected of the vehicle." 584 So.2d at 1229.
Pierce d/b/a Kelly's Nursery hired the truck in question for the purpose of loading railroad ties onto it and transporting them from Louisiana to Texas. He paid a fee for permission to use the truck. The process of parking the truck and loading it with the ties, which included lifting the ties and placing them onto the truck with a forklift, were necessary adjuncts to the entire operation. The users of the truck, which include both Chapman, the truck driver, and Pierce, chose to park the truck in a lane of travel on the River Road at night, and to cross the other lane of travel with a forklift carrying the railroad timbers. Adopting a commonsense approach, as recognized by the court, these acts contributed to plaintiff Richard Madere's injury when he struck the forklift which was present in his lane of travel. The injury to plaintiff occurred while Pierce d/b/a Kelly's Nursery was using the truck for the exact purpose as he and Chapman, Landstar's agent for the hiring of the truck, contemplated and agreed. The truck was being loaded in preparation for the transportation of the railroad ties to Texas.
Therefore, because Pierce, individually and d/b/a Kelly's Nursery, was an insured under the policy, as he was using the truck with permission, and the incident which gave rise to the accident in question was a "use" of the vehicle, the Landstar endorsement to the National Union policy afforded coverage to Pierce and Kelly's Nursery for liability to plaintiffs as a result of negligence on the part of Chapman, Pierce, and Kelly's Nursery.
Landstar contends that under Tariff 102-B, which is printed in letters so small that they are illegible on the Bill of Lading, operates to relieve it and National Union of liability for the acts of negligence of Pierce and Kelly's Nursery. However, the Bilf of Lading is a contract between Pierce and Kelly's Nursery, and cannot operate to alter the provisions of the insurance policy relative to the plaintiff, a non-party to the Bill of Lading.
The court reviewed the specific sections of the deposition of Dennis P. Owen, Vice President of Rich Management for Rich Management claim Services, Inc., a wholly owned subsidiary of Landstar, concerning the MCS-90 endorsement, the self-insured retention of Landstar, and the Tariff 102-B in the Bill of Lading. Mr. Owen admitted that he would have to defer to third party counsel as to the legal import of the MCS-90, regarding coverage and the liability of Landstar under the endorsement. Owen deposition, p. 33, 1. 22-25, p. 34, 1. 1-2.
Apart from the fact that the Bill of Lading does not alter the terms of the National Union insurance policy, an MCS-90 endorsement, required by sections 29 and 30 of the Motor Carrier Act of 1980, was attached to the policy. As explained in Adams v. Royal Indemnity Co., 99 F.3d 964 (10th Cir. 1996), the "ICC endorsement is designed to require ICC-certified carriers to insure against public liability for all their motor vehicles that are subject to the financial responsibility requirements of the Motor Carrier Act" and intended to prevent "the possibility that, through inadvertence or otherwise, some vehicles may be left off of a policy to the detriment of the public." 99 F.3d at 968. Insurers and insureds may contractually apportion ultimate liability among themselves at will, but the ICC endorsement is intended to assure that members of the general public would be able to obtain judgments for losses arising out of trucking operations. 99 F.3d at 968-69. Thus, while Landstar may attempt to obtain indemnity from Pierce and Kelly's Nursery for any damages it must ultimately pay to the Maderes, the policy and the MCS-90 endorsement ensures that Landstar and National Union must pay any judgment recovered against the insured for public liability resulting from the operation, maintenance or use of the motor vehicle in question. As previously discussed at length, Pierce and Kelly's Nursery are insureds under the policy and the activities in which they were engaged, i.e., loading the railroad ties onto the truck Landstar leased from Chapman for transportation to Texas, was a use of the vehicle under the policy.
The Court therefore finds that James Pierce, individually and doing business as Kelly's Nursery, and his employees engaged in the loading operation, Dolphins Chapman, and Landstar, are all insureds under the National Union policy and the Landstar retention, and that their activities in loading the railroad ties onto the truck constituted a use of vehicle, such as to trigger coverage under the Landstar retention and the National Union policy, with the MCS-90 endorsement.
Accordingly, for the above and foregoing reasons,
IT IS ORDERED that the motion of National Union Fire Insurance Company of Pittsburgh, PA for reconsideration be and is hereby DENIED; IT IS FURTHER ORDERED that the motion of defendant Landstar Inway, Inc., for summary judgment on insurance coverage issues be and is hereby DENIED;
IT IS FURTHER ORDERED that the motion of plaintiffs Richard J. Madere and Gloria Madere for summary judgment on insurance coverage issues be and is hereby GRANTED.