WALKER v. TRAILER TRANSIT, INC.

Filing 70

ENTRY on Motion for Summary Judgment - Trailer Transit's Motion for Summary Judgment (Dkt. 12 ) is GRANTED in part and DENIED in part on Mr. Walker's breach of contract claim, and is GRANTED on Mr. Walker's unjust enrichment claim. Signed by Judge Tanya Walton Pratt on 2/14/2014. (TRG)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
HUBERT E. WALKER on behalf of himself
and all others similarly situated,
Plaintiff,
v.
TRAILER TRANSIT, INC.,
Defendant.

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Case No. 1:13-cv-00124-TWP-DKL

ENTRY ON MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on Defendant Trailer Transit, Inc.’s (“Trailer Transit”)
Motion for Summary Judgment (Dkt. 12). Plaintiff Hubert Walker (“Mr. Walker”) filed this
breach of contract and unjust enrichment action on behalf of himself and others similarly
situated, alleging that Trailer Transit breached the terms of a lease contract by failing to pay the
entire amount due in accordance with the compensation provision of the agreement. For the
reasons set forth below, Trailer Transit’s motion is GRANTED in part and DENIED in part.
I. BACKGROUND
The following material facts are not in dispute and are viewed in the light most favorable
to Mr. Walker as the non-moving party. Trailer Transit is an Indiana corporation located in
Porter, Indiana, and is engaged in the business of providing tow-away, power-only transportation
solutions for its customers.

To carry out these services, Trailer Transit uses independent

contractor owner-operators (“Drivers”) with whom it has entered into written lease contracts to
handle the pick-up and delivery of trailers (“Lease Agreements”). Mr. Walker was formerly one
of these Drivers. He contracted with Trailer Transit from approximately December 7, 2004 until
February 24, 2011, and handled approximately 600 shipments of trailers during his successive

one year contract terms. Over 1,000 other Drivers leased their semi-tractors to Trailer Transit
between September 13, 2001 and May 9, 2012 under a form Lease Agreement that was the same
or substantially similar to Mr. Walker’s form Lease Agreement.
Appendix B to Mr. Walker’s Lease Agreement contained the following provision:
The parties mutually agree that [Trailer Transit] shall pay to [Driver], as rental for
the equipment leased herein, for trips under [Trailer Transit]’s operating
authorities or in [Trailer Transit]’s service, a sum equal to seventy-one percent
(71%) of the gross revenues derived from the use of the equipment leased herein
(less any insurance related surcharge and all items intended to reimburse [Trailer
Transit] for special services, such as permits, escort services and other special
administrative costs including, but not limited to, Item 889).
(the “Compensation Provision”). Dkt. 50-4 at 17. Mr. Walker alleges that Trailer Transit
routinely invoices its customers in excess of the amounts that Trailer Transit paid for services
performed by third parties, such as escorts, permits, and for fees paid to third parties (the “AddOn Fees”). He argues that the amount exceeding Trailer Transit’s out-of-pocket costs is not
“intended to reimburse” Trailer Transit, and thus should be considered revenue to which the
Drivers are entitled a percentage under the terms of the Compensation Provision. Mr. Walker
argues that he and the other Drivers should receive 71% of the amount that exceeded Trailer
Transit’s out-of-pocket costs or, in the case of customer charges for which there is no underlying
cost to Trailer Transit, 71% of the entire charge.
II.

LEGAL STANDARD

Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate if “the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” Hemsworth v. Quotesmith.Com, Inc., 476
F.3d 487, 489-90 (7th Cir. 2007). In ruling on a motion for summary judgment, the court

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reviews “the record in the light most favorable to the nonmoving party and draw[s] all
reasonable inferences in that party’s favor.” Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir.
2009) (citation omitted). However, “[a] party who bears the burden of proof on a particular issue
may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations,
that there is a genuine issue of material fact that requires trial.” Hemsworth, 476 F.3d at 490
(citation omitted). “In much the same way that a court is not required to scour the record in
search of evidence to defeat the motion for summary judgment, nor is it permitted to conduct a
paper trial on the merits of a claim.” Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001)
(citation and internal quotations omitted). “[N]either the mere existence of some alleged factual
dispute between the parties . . . nor the existence of some metaphysical doubt as to the material
facts . . . is sufficient to defeat a motion for summary judgment.” Chiaramonte v. Fashion Bed
Grp., Inc., 129 F.3d 391, 395 (7th Cir. 1997) (citations and internal quotations omitted).
III. DISCUSSION
A.

Breach of Contract Claim
Mr. Walker argues that there is a question of material fact as to whether the Add-On Fees

charged by Trailer Transit were “items intended to reimburse” Trailer Transit. “Generally,
construction of a written contract is a question of law for which summary judgment is
particularly appropriate.” Manzon v. Stant Corp., 202 F. Supp. 2d 851, 856 (S.D. Ind. 2002)
(quoting N. Ind. Pub. Svc. Co. v. Dabagia, 721 N.E.2d 294, 299 (Ind. Ct. App. 1999)).

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when a contract is ambiguous or uncertain in its terms will extrinsic facts be useful in construing
the contract and ascertaining the intent of the parties; otherwise, interpretation of the contract “is
purely a question of law to be determined by the trial court.” Id. (quoting Fresh Cut, Inc. v.
Fazli, 650 N.E.2d 1126, 1133 (Ind. 1995).

“[I]f reasonable men would find the contract

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susceptible of more than one construction, ambiguity exists making summary judgment
inappropriate. However, if the ambiguity arises not because of extrinsic facts but by reason of
the language used, construction of the ambiguous contract is a question of law for the court.”
McCae Mgmt. Corp. v. Merchants Nat. Bank & Trust Co. of Indianapolis, 553 N.E.2d 884, 887
(Ind. Ct. App. 1990). A contract term is not ambiguous merely because the parties disagree
about the term’s meaning. Roy A. Miller & Sons, Inc. v. Indust. Hardwoods Corp., 775 N.E.2d
1168, 1173 (Ind. Ct. App. 2002).
Ambiguity in a contract may be one of two types: patent or latent. Patent ambiguity is
“apparent on the face of the instrument and arises from an inconsistency or inherent uncertainty
of language used so that it either conveys no definite meaning or a confused meaning.” Oxford
Fin. Grp., Ltd. v. Evans, 795 N.E.2d 1135, 1143 (Ind. Ct. App. 2003). A latent ambiguity, on the
other hand, “rises only upon attempting to implement the contract.” Id. at 1144.

Patent

ambiguities present pure questions of law, while latent ambiguities are resolved as questions of
fact. Felker v. Sw. Emergency Med. Serv., Inc., 521 F. Supp. 2d 857, 867 (S.D. Ind. 2007).
Extrinsic evidence is admissible to explain the meaning of a latent ambiguity, but is not
admissible to explain a patent ambiguity. Id.
The first issue that the Court must decide is whether there is an ambiguity in the contract
with regard to whether Mr. Walker and the Drivers are entitled to any portion of the Add-On
Fees, as asserted by Mr. Walker. In determining whether the terms of a contract are ambiguous,
the Court gives words their usual and common meaning, unless it is clear from the entire contract
and its subject matter that another meaning was intended. Boswell Grain & Elevator, Inc. v.
Kentland Elevator & Supply, Inc., 593 N.E.2d 1224, 1227 (Ind. Ct. App. 1992). The Court finds
that the parties merely disagree on the interpretation of the Compensation Provision with regard

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to which revenue sources are part of the Drivers’ compensation, and it is not ambiguous based
upon the plain meaning of the language used in the contract. As such, resolution of this issue
presents a question of law and the Court will enforce the contract according to its terms. Rice v.
Meridian Ins. Co., 751 N.E.2d 685, 688 (Ind. Ct. App. 2001).

The Court must ascertain the

intent of the parties at the time the contract was executed, and will accept an interpretation of the
contract that “harmonizes its provisions as opposed to one which causes the terms to be
conflicting.” Felker, 521 F. Supp. 2d at 867.
Mr. Walker focuses his argument on the phrase “items intended to reimburse,” arguing
that the amounts charged to customers for Add-On Fees in excess of the amount it cost Trailer
Transit to provide the service is not “intended to reimburse” Trailer Transit, and therefore should
not be excluded from the Drivers’ compensation calculation. However, the Court finds that an
important phrase in the Compensation Provision that Mr. Walker ignores is the term “gross
revenues.” Gross revenues are the total amounts received from customers for services or goods,
while net revenues are the amounts received from customers minus the expenses related to the
sale. Mr. Walker is essentially asking the contract to be interpreted such that he and the other
Drivers would be entitled to receive 71% of the net revenues from these other services – the
amount paid by the customer minus the amount it actually cost Trailer Transit to provide the
service.1 The Compensation Provision does not state that the Drivers are entitled to a percentage
of net revenues or profits. The Compensation Provision expressly excludes the revenue from
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Mr. Walker also takes an overly simplified view of the amount that it actually costs Trailer Transit to provide a
customer these various services. For example, the cost of procuring a permit for a customer is not just the cost of
the permit itself, but the overhead costs involved in obtaining the permit, such as personnel, facilities, utilities, etc.
The expense of providing a service involves much more than just the direct costs. If customers were charged for
services which they did not receive, that is a contract issue between the customer and Trailer Transit. The correct
remedy for this situation would not be for Mr. Walker and the other Drivers to be able to profit from alleged
fraudulent charges by receiving 71% of the gross revenues from services that allegedly were not performed or for
which there was no underlying cost. However, as stated above, to say that Trailer Transit incurred no expense in
providing services to customers is an oversimplification that does not take into account reimbursement for Trailer
Transit’s indirect costs.

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“any insurance related surcharges” and “all items intended to reimburse [Trailer Transit] for
special services” from the gross revenues that form the basis for the Drivers’ compensation.
Dkt. 50-4 at 17. In order to be consistent with the other language in the Lease Agreement, this
language must be interpreted to mean the gross revenue received from insurance related
surcharges and the gross revenue for items intended to reimburse Trailer Transit for special
services are excluded from the Drivers’ compensation, not net revenues.
To accept Mr. Walker’s interpretation of the Compensation Provision would be to read
into the Lease Agreement a provision that not only does not exist in the contract—that Drivers
are entitled to 71% of net revenues for certain items—but that also conflicts with the plain
meaning of the term “gross revenues.” “The court must accept an interpretation of the contract
which harmonizes its provisions as opposed to one which causes them to be conflicting.” McCae
Mgmt. Corp., 553 N.E.2d at 887. The Court’s interpretation is also consistent with the phrase
“items intended to reimburse” Trailer Transit; the gross revenue from these charges do reimburse
Trailer Transit for special services, but there is nothing in the contract or the law that limits
Trailer Transit to charging only the direct cost of these services, or from charging customers a
premium or surcharge for providing these services. These “special services” are provided by
Trailer Transit, not the Drivers, and the Compensation Provision states that the Drivers are
entitled to 71% of the gross revenues “derived from use of the equipment leased herein.” Dkt.
50-4 at 17. Based upon the plain and ordinary meaning of the contract language, the Court finds
that the Add-On Fees are excluded in their entirety from gross revenue that forms the basis of the
Drivers’ compensation, and Mr. Walker and the Drivers are not entitled to any portion of the
gross revenues, or net revenues, that fall into these categories.

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Having determined that the Lease Agreement does not provide for Mr. Walker and the
other Drivers to receive a percentage of the net revenues for insurance related surcharges and
Add-On Fees, the Court finds that the Compensation Provision also contains a latent ambiguity
with regard to what charges actually fall into these categories and are thus excluded from the
Drivers’ compensation.

A latent ambiguity “rises only upon attempting to implement the

contract.” Oxford Fin. Grp., Ltd., 795 N.E.2d at 1144. While “insurance related surcharges” is a
fairly specific category, it is unclear from the face of the contract what charges are included in
the category of “special services” and “special administrative costs.”

The Compensation

Provision excludes from gross revenues “special services, such as permits, escort services and
other special administrative costs[,]” indicating that these are only examples of charges for
“special services.” Dkt. 50-4 at 17 (emphasis added). The Compensation Provision goes on to
state that “special administrative costs” include, but are not limited to, “Item 889.” Id.

From

this language, it appears that there are other charges excluded from the Drivers’ compensation
calculation; however, there is nothing in the contract to clearly indicate what other charges
besides permits and escort services are included in “special services” or the other items that
would be included in “special administrative costs” besides Item 889.
For example, Trailer Transit argues that drayage charges should be included in this
category of special services and costs because they are similar to escort services. However, this
is a question of fact requiring extrinsic evidence; the Court cannot determine from the face of the
contract, as a matter of law, that drayage charges fall within the excluded Add-On Fees. Where
the meaning of the contract needs to be determined by extrinsic evidence due to a latent
ambiguity, its construction is a matter for the fact finder and the resolution of the issue is
inappropriate for summary judgment. Fresh Cut, Inc., 650 N.E.2d at 1133. Where, such as here,

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technical terms or terms of art are used in a contract, this general rule also applies. See Ecorp,
Inc. v. Rooksby, 746 N.E.2d 128, 131 (Ind. Ct. App. 2001) (“[I]f language of the contract is
ambiguous, or if technical words, local phrases or terms of art are used and evidence is properly
admitted showing meaning, the question becomes one of fact.” (quoting Timberline Equip. Co. v.
St. Paul Fire & Marine Ins. Co., 576 P.2d 1244, 1246 (Or. 1978)). Extrinsic evidence will be
necessary to determine what charges fall into the categories of “special services” and “special
administrative costs” in the trucking industry or which charges have customarily been included
in these categories in the course of dealings of the parties. Therefore, the Court concludes that,
with the exception of permits, escort services, and Item 889 charges, which are specifically
mentioned in the Lease Agreement, there is a question of material fact as to what constitutes
other “special services” and “other special administrative costs” for purposes of the
Compensation Provision of the Lease Agreement.
The Court concludes that Mr. Walker and the Drivers are not entitled to 71% of the
portion of Trailer Transit’s Add-On Fees that exceed its actual out-of-pocket costs under the
terms of the Compensation Provision of the Lease Agreement, and specifically are not entitled to
71% of charges for insurance related costs, permits, escort services, and charges billed under
Item 889. However, the Court finds that there is a question of material fact requiring extrinsic
evidence as to what other charges are included in “special services” and “other special
administrative costs” such that they should also be excluded from the gross revenue amount that
forms the basis of Mr. Walker’s and the Drivers’ compensation. Summary judgment on the
breach of contract claim is therefore GRANTED in part and DENIED in part.

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B.

Unjust Enrichment
Mr. Walker has also asserted, in the alternative, an equitable claim for unjust enrichment,

alleging that Trailer Transit has received and retained funds under such circumstances that in
equity and good conscience, Trailer Transit ought not be permitted to retain.

Under the

circumstances of this case, Mr. Walker’s equitable claim is precluded by the existence of the
Lease Agreement. “When the rights of parties are controlled by an express contract, recovery
cannot be based on a theory implied in law.” Coppolillo v. Cort, 947 N.E.2d 994, 998 (Ind. Ct.
App. 2011). The only exception to this rule is where an express contract does not fully address a
subject; however, that is not the case here. Id. The Compensation Provision of the Lease
Agreement fully addresses how the Drivers’ compensation is to be calculated and thus provides
an adequate remedy at law. “A plaintiff may not pursue an equitable remedy when there is a
remedy at law.” Id. Therefore, Trailer Transit is entitled to summary judgment on Mr. Walker’s
equitable claim, and its Motion is GRANTED.
IV. CONCLUSION
For the reasons set forth above, Trailer Transit’s Motion for Summary Judgment (Dkt.
12) is GRANTED in part and DENIED in part on Mr. Walker’s breach of contract claim, and
is GRANTED on Mr. Walker’s unjust enrichment claim.

SO ORDERED.
02/14/2014
Date: _____________

________________________
Hon. Tanya Walton Pratt, Judge
United States District Court
Southern District of Indiana

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DISTRIBUTION:
Irwin B. Levin
COHEN & MALAD LLP
[e-mail]
Richard E. Shevitz
COHEN & MALAD LLP
[e-mail]
Vess Allen Miller
COHEN & MALAD LLP
[e-mail]
Christopher J. Eckhart
SCOPELITIS GARVIN LIGHT HANSON & FEARY PC
[e-mail]
James H. Hanson
SCOPELITIS GARVIN LIGHT HANSON & FEARY PC
[e-mail]
Robert L. Browning
SCOPELITIS GARVIN LIGHT HANSON & FEARY PC
[e-mail]

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