NATIONAL INTERSTATE INSURANCE COMPANY v. CHAMPION TRUCK LINES, INC. et al
Filing
37
OPINION. Signed by Chief Judge Jerome B. Simandle on 3/21/2013. (dmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
NATIONAL INTERSTATE INSURANCE
CO.,
Plaintiff,
Civil Action
No. 11-5097 (JBS-KMW)
v.
OPINION
CHAMPION TRUCK LINES, INC., et
al.
Defendants.
APPEARANCES:
Dennis M. Marconi, Esq.
Barnaba & Marconi, LLP
315 Lowell Ave.
Trenton, NJ 08619
Attorney for Plaintiff and Counter Defendant National
Interstate Insurance Company
Jon Michael Dumont, Esq.
Rawle & Henderson LLP
Ten Lake Center Executive Park
401 Route 73 North
Suite 200
Marlton, NJ 08053
Attorney for Defendant and Third Party Plaintiff and Cross
Claimant and Counter Claimant Carolina Casualty Co.
Julia Morrow, Esq.
Friedman Schuman PC
101 Greenwood Avenue
Fifth Floor
Jenkintown, PA 19046
Attorney for Defendant John Davis
SIMANDLE, Chief Judge:
I.
INTRODUCTION
Plaintiff National Interstate Insurance Co. (“National
Interstate”) seeks a declaratory judgment against Defendants
Carolina Casualty Insurance Company (“Carolina Casualty”) and
Champion Services, Inc. (“Champion”) declaring that National
Interstate is not primarily liable for the damages resulting
from a truck accident that occurred on June 15, 2010, in which
Defendant John Davis 1 was injured. Defendants Davis and Carolina
Casualty filed motions for summary judgment [Docket Items 29 &
30, respectively], seeking to establish, inter alia, that
National Interstate is the primary insurer because the truck
that injured Davis was a “hired auto” pursuant to the terms of
the National Interstate insurance contract. Both motions for
summary judgment will be denied because Northstar did not “hire”
the Champion tractor and, therefore, Northstar’s policy is not
primary.
II.
FACTUAL BACKGROUND
The essential facts in this case are undisputed. 2 On June
15, 2010, Defendant John Davis was injured at Packer Marine
Terminal in Philadelphia, PA. (Davis Mem. Law. Supp. Mot. Summ.
J. (“Davis Mem.”) at 1.) He was struck by a chassis attached to
a tractor trailer being driven by Defendant Paul Dillard, a
1
The pleadings refer to both John and Johnny Davis. His birth
name is Johnny Davis. [Docket Item 29 at 4.]
2
None of the parties submitted statements of undisputed material
facts, as required by Local Civil Rule 56.1(a). The Court has
referenced the factual background sections in the parties’
briefing.
2
Champion employee. (Davis Mem. at 1-2.) Dillard was a longstanding Champion employee, working as a commercial driver.
(Davis Mem. at 2.) Champion is an interstate motor
carrier/trucker authorized by the United States Department of
Transportation (“USDOT”) to transport goods throughout 48
states. (Davis Mem. at 2.) At the time of the accident, Champion
was insured by Defendant Carolina Casualty under a Commercial
Transportation Policy bearing policy number CBP 354244
(“Carolina Casualty Policy”). (Davis Mem. at 2.)
Third Party Defendant Northstar Services, Ltd.
(“Northstar”) is also a USDOT-registered interstate trucking
company. At the time of the accident, Northstar was insured by
National Interstate under a Commercial Auto Liability Policy
bearing policy number HAT 0010221 (“National Interstate
Policy”). (Davis Mem. at 3.)
In early June of 2010, Northstar employee Anthony
Cancelliere called Champion’s owner, Ralph DiFabio, and asked
Champion to haul containers from Dependable Distribution
Services (“Dependable”) in New Jersey to Northstar’s terminal in
New Jersey. (Davis Mem. at 2, 4.) Each of the containers at
Dependable’s terminal sat upon a chassis, which Northstar had
previously borrowed from of pool of chassis at the Packer
Terminal. (Davis Mem. at 4-5.) Cancelliere and DiFabio verbally
agreed that each chassis would be returned to the Packer
3
terminal after each Dependable haul and that Northstar would pay
Champion $400 per haul. (Davis Mem. at 5.) DiFabio and
Concelliere did not explicitly discuss insurance coverage for
the Dependable haul. (DiFabio Dep. 38:23-39:2.)
On June 15, 2010, a Champion employee and driver, Richard
Kearns, operating a Champion tractor typically assigned to his
use, retrieved a container of cocoa beans from Dependable’s
terminal in New Jersey. (Davis Mem. at 5.) Northstar was the
designated carrier on the bill of lading for the cocoa beans.
(Davis Mem. at 5.) Kearns delivered the container of cocoa beans
to Northstar’s terminal in New Jersey and returned to Champion’s
terminal in New Jersey with the empty chassis. (Davis Mem. at
6.) Defendant Dillard then hitched the chassis to his tractor
and drove it from the Champion terminal to the Packer Terminal
in Pennsylvania. (Davis Mem. at 6.) While driving through the
Packer Terminal lot, Dillard struck Davis with the tractor and
chassis. 3 (Davis Mem. at 6.) Davis finished returning the chassis
and received an equipment receipt reflecting that Northstar had
returned the chassis. (Davis Mem. at 6.)
In November of 2011, Davis filed a Pennsylvania state court
action seeking damages from, inter alia, Northstar and Champion
for the injuries he sustained in the accident. (Davis Mem. at
3
The record is inconsistent as to whether the tractor, the
chassis, or both struck Davis. That fact is immaterial to the
Court’s analysis.
4
6.) National Interstate then filed the present action to
establish which whether Northstar’s insurer, National
Interstate, or Champion’s insurer, Carolina Casualty, is the
primary insurer. [Docket Item 1 (Compl.).]
Champion’s Carolina Casualty insurance policy has a clause,
which states:
This Coverage Form’s Liability Coverage is primary for any
covered “auto” while hired or borrowed by you and used
exclusively in your business as a “trucker” and pursuant to
operating rights granted to you by a public authority. This
Coverage Form’s Liability Coverage is excess over any other
collective insurance for any covered “auto” while hired or
borrowed from you by another “trucker”.
[Docket Item 29-4 at 85.] Under the terms of this clause,
Champion’s Carolina Casualty policy is excess for autos that are
hired by another trucker. Northstar’s National Interstate policy
has an identical clause. [Docket Item 29-9 at 24.] Under this
clause, Northstar’s National Interstate policy is primary if
Northstar has hired an auto to be used exclusively in its
business as a trucker.
III. ANALYSIS
A. Standard of Review
Summary judgment is appropriate “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A dispute is “genuine” if “the evidence is such that a
5
reasonable jury could return a verdict for the non-moving
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A fact is “material” only if it might affect the outcome
of the suit under the applicable rule of law. Id. Disputes over
irrelevant or unnecessary facts will not preclude a grant of
summary judgment. Id. The district court must “view the facts
and draw reasonable inferences in the light most favorable to
the party opposing the summary judgment motion.” Scott v.
Harris, 550 U.S. 372, 378 (2007).
A court should grant summary judgment “in a declaratory
judgment action seeking a declaration of coverage, when the
insurer's duty, if any, rests solely on the applicability of the
insurance policy, the construction and effect of which is a
matter of law.” Harco Nat. Ins. Co. v. Zurich Am. Ins. Co.,
8:10-CV-27-T-17 (TGW), 2011 WL 4460261, *1 (M.D. Fla. Sept. 26,
2011) aff'd, 479 F. App'x 920 (11th Cir. 2012).
B. Status of Plaintiff’s “Cross-Motions for Summary
Judgment”
The Court notes that Plaintiff’s opposition briefs in both
motions were entitled, “Memorandum of Points and Authorities in
Opposition to Defendant John Davis’ Motion [or Defendant
Carolina Casualty Insurance Company’s Motion] for Summary
Judgment and in Support of Plaintiff National Interstate
Insurance Company’s Cross-Motion for Summary Judgment.” [See
6
Docket Items 32 & 34.] Thus, one might receive the impression
that National Interstate was cross-moving for summary judgment
against the Defendants. National Interstate filed no such notice
of cross-motions, nor did it propose an order for granting any
cross-motions, nor did it set forth, or otherwise adopt, a
statement of material facts not in dispute, all as required by
L. Civ. R. 7.1(d),(e), & (h) (with respect to cross-motion
procedure) and L. Civ. R. 56.1(a) (with respect to filing
statement of material facts not in dispute). Nothing in
Plaintiff’s opposition brief otherwise advocates for granting of
its own cross-motions. Most importantly, it appears that the
Defendants, as the original movants, did not perceive in their
Reply Briefs [Docket Items 33 & 36] that Plaintiff National
Interstate had asserted cross-motions against them.
Accordingly, the Court does not perceive that the crossmotions have been adequately noticed or briefed. The Court
notes, however, that the case was ripe for such cross-motions as
they would be “related to the subject matter of the original
motion” as required by L. Civ. R. 7.1(h). Such cross-motions are
not decided at this time, but the Court will follow the
procedure, outlined in Part III.D, below.
C. “Hired” Auto Analysis
“When there is a dispute between two carriers, . . . the
insurance policies themselves are determinative.” U.S. Fid. &
7
Guar. Co. v. Am. Auto. Ins. Co., A-0520-06T2, 2007 WL 2238532.
*4 (N.J. Super. Ct. App. Div. Aug. 6, 2007) (citing Carolina
Cas. Ins. Co. v. Ins. Co. of N. Am., 595 F.2d 128, 138 (3rd Cir.
1979)). 4 In interpreting insurance contracts, “the words of an
insurance policy should be given their ordinary meaning, and in
the absence of an ambiguity, a court should not engage in a
strained construction to support the imposition of liability.”
Longobardi v. Chubb Ins. Co., 121 N.J. 530, 537 (1990); see also
Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 175 (1992)
(“Generally, an insurance policy should be interpreted according
to its plain and ordinary meaning.”).
The parties agree that the dispositive issue is whether
Northstar “hired” from Champion the tractor that injured Davis.
(See, e.g., Davis Mem. at 8, Carolina Casualty Br. Supp. Mot. at
2, Northstar Opp’n to Carolina Casualty Mot. at 4.) If Northstar
“hired” the Champion truck, then pursuant to both insurance
4
Northstar and Champion are both New Jersey corporations.
(Compl. ¶ 16.) John Davis was injured in Pennsylvania and is a
Pennsylvania resident. (Compl. ¶ 4, 10.) The insurance policies
from which the instant coverage dispute arises were issued in
New Jersey. (Compl. ¶ 17.) None of the parties explicitly
discussed which law governs, and they cited both New Jersey and
Pennsylvania state court cases. The Court has not conducted a
choice of law analysis because the outcome of this lawsuit would
be same under both New Jersey and Pennsylvania law. See
Selective Way Ins. v. Travelers Prop. Cas. Co. of Am., 724 F.
Supp. 2d 520, 526 (E.D. Pa. 2010), discussed infra. Under New
Jersey law, when the same result is required under the laws of
all relevant jurisdictions, the court need not decide which law
would apply to the action. Port Auth. of New York & New Jersey
v. Arcadian Corp., 189 F.3d 305, 311 (3d Cir. 1999).
8
policies, the National Insurance Policy is primary. If Northstar
did not “hire” the Champion truck, then the Carolina Casualty
Policy is primary. 5
Neither insurance contract defines the term “hire”, but
there are “hired auto” cases that examine the meaning of the
term: “The key inquiry regarding whether an automobile will fall
within the hired automobiles provision of the policy is whether
the insured exercised dominion, control or the right to direct
the use of the vehicle.” Selective Way Ins. v. Travelers Prop.
Cas. Co. of Am., 724 F. Supp. 2d 520, 526 (E.D. Pa. 2010)
(citing Lee R. Russ & Thomas F. Segalla, COUCH ON INSURANCE §
118.46, at 118-74 (3d ed. 1997)). The Selective Way court found
5
Davis also argues that the National Interstate Policy is
primary because the Motor Carrier Act of 1980 requires that all
commercial liability policies must contain an endorsement, the
MCS-90 endorsement, to protect members of the public when there
is no other insurance coverage available. The MCS-90 endorsement
is not applicable here because “where the case is concerned with
responsibility as between insurance carriers, and not with the
federal policy of protecting the public, . . . a court should
consider the express terms of the parties’ contracts.” Carolina
Cas. Ins. Co. v. Ins. Co. of N. Am., 595 F.2d 128, 138 (3d Cir.
1979); see also Griffin v. Pub. Serv. Mut. Ins. Co., 327 N.J.
Super. 501, 508 (N.J. App. Div. 2000) (federal regulations
concerning protecting the public “do not control in situations
where the dispute is solely between the insurance companies,
including controversies between carriers as to which of them
affords primary rather than excess coverage”). Defendant
Carolina Casualty also acknowledged that the MCS-90 endorsement
is not triggered because both “policies are valid and
collectible” and the MCS-90 “is a guarantee forged of public
policy considerations that the insurer shall pay any judgment in
cases where the insurance is not applicable.” (Carolina Casualty
Mem. at 6.)
9
that “[t]he majority of courts that apply the plain meaning of
‘hire’ when interpreting policies like the one at issue have
found the term to contain an element of control.” Selective Way,
724 F. Supp. 2d at 526 (internal string cite omitted).
The Selective Way court noted several factors that courts
consider when evaluating “hired auto” clauses in the hauling
context, including, “the degree of control exerted over the
vehicle, driver, and route . . . .” Selective Way, 724 F. Supp.
2d at 527. 6
An examination of these factors clearly reveals that
Northstar did not “hire” the tractor that Dillard was driving.
The Champion operations manager decided which drivers and which
trucks would perform the Dependable job. (DiFabio Dep. 35:1-9.)
6
This analysis of control is similar to the analysis that New
Jersey courts conduct to distinguish between an employee and an
independent contractor: In determining whether a contractee
maintains the right of control, several factors are to be
considered . . . including: (a) the extent of control which, by
the agreement, the master may exercise over the details of the
work;(b) whether or not the one employed is engaged in a
distinct occupation or business; (d) the skill required in the
particular occupation; (e) whether the employer or the workman
supplies the instrumentalities, tools, and the place of work for
the person doing the work; (f) the length of time for which the
person is employed; (g) the method of payment, whether by the
time or by the job; (h) whether or not the work is a part of the
regular business of the employer; and (i) whether or not the
parties believe they are creating the relation of master and
servant.” Mavrikidis v. Petullo, 153 N.J. 117, 132, 707 A.2d
977, 984 (1998) (citing Restatement (Second) of Agency § 220(2)
(1958)).
10
Northstar did not directly pay Dillard or Kearns; it paid
Champion who then paid Dillard and Kearns. (DiFabio Dep. 57:29.) Champion’s dispatcher directed Dillard to take the chassis
back to Packer Terminal. (DiFabio Dep. 136:21-23.) Dillard used
a Champion truck, obtained the chassis from the Champion yard,
and operated pursuant to Champion’s dispatcher’s instructions.
(Dillard Dep. 42:8-18.)
Dillard worked for Champion for 12 years and drove a truck
specifically assigned to him by Champion. (Dillard Dep. 9:16-17,
11:1-3.) Champion serviced Dillard’s truck with its own
mechanics. (Dillard Dep. 11:22-12:1.) Champion paid Dillard’s
salary. (Dillard Dep. 12:9-13.) Dillard was never hired as an
employee by Northstar or paid by Northstar. (Dillard Dep. 13:1923.) The day of the accident, Dillard reported to Champion and
Champion’s dispatcher gave him instructions regarding “what to
do, . . .
where to go.” (Dillard Dep. 13:24-14:17.)
In addition, Dillard did not work exclusively for
Northstar; returning the chassis used in the Dependable haul was
the first job he performed on Northstar’s behalf. 7 In addition,
there is no indication in the record that Northstar instructed
7
One month prior to the Dependable job, Northstar’s Cancelliere
and Champion’s DiFabio agreed that Champion would haul goods to
Maryland for Northstar at a rate of $500-$525 per haul. (Davis
Mem. at 4.) Dillard was not one of the drivers who worked the
Maryland job. (DiFabio Dep. 35:19-36:1.)
11
Dillard as to the specific route he was supposed to take or how
to operate his vehicle.
In sum, no reasonable jury could find that Northstar
controlled Dillard and his tractor because Northstar did not
provide or maintain his equipment, did not choose him to perform
the job, did not pay him, and did not instruct him on the
particulars of performing his job. Because a reasonable jury
could not find that Northstar controlled Dillard and his
tractor, Northstar did not hire Dillard. See Selective Way, 724
F. Supp. 2d at 528-529. 8
Davis and Carolina Casualty argue that Northstar had hired
Dillard and his tractor because Dillard’s truck had a Northstar
placard on the day of the accident. Defendants cite Cox v. Bond
Transp., Inc., 53 N.J. 186 (1969), which holds that when a
trucker engages an owner-operator of a tractor to transport
goods in interstate commerce, and indicates that intention with
the required identification and decals, Interstate Commerce
8
The day after the accident, Champion instructed Dillard to fill
out a Northstar driver application so that Northstar could have
him in its files as an employee; he was instructed to backdate
the application. (DiFabio Dep. 77:10-87-20.) After the accident,
Dillard also signed an affidavit saying “I was not working for
Champion at the time of the June 15 accident.” (Dillard Dep.
44:13-16.) These actions do not change the degree of control
that Northstar was exerting over Dillard and do not change the
“hired auto” analysis.
12
Commision (“ICC”) regulations must be deemed included in their
contract. Id. at 201.
The Cox court explained that its rationale was to protect
the public: “In our judgment the I.C.C. regulations designed to
control the use of leased equipment must be construed most
liberally in the interest of members of the public using the
highways.” Id. at 203. Federal regulations are intended “to
protect the public from the tortious conduct of judgment-proof
operators of interstate motor carrier vehicles,” by requiring “a
motor carrier to assume full direction and control of leased
vehicles.” Price v. Westmoreland, 727 F.2d 494, 496 (5th Cir.
1984). To accomplish this goal, the ICC 9 promulgated regulations
requiring, inter alia, that leases be in writing and provide for
exclusive possession, control, and use of the equipment and
requiring lessors to provide lessees with a placard identifying
the motor carrier for whom the equipment is being operated.
Harco Nat. Ins. Co. v. Zurich Am. Ins. Co., 8:10-CV-27-T-17
(TGW), 2011 WL 4460261, *11 (M.D. Fla. Sept. 26, 2011), aff'd,
479 F. App'x 920 (11th Cir. 2012) (explaining history of ICC
placard regulations).
9
In 1995, Congress abolished the Interstate Commerce Commission
and transferred most of its responsibilities to the Secretary of
Transportation. Dep't of Transp. v. Pub. Citizen, 541 U.S. 752,
759 n.1 (2004).
13
But ICC regulations have been amended since the Cox case
was published: “In 1986, however, the ICC amended the leasing
regulations to clarify that it never intended ‘to assign
liability based on the existence of placards or to interfere
with otherwise applicable State law.’” Id. at *11 (citing Lease
& Interchange of Vehicles (Identification Devices), 3 I.C.C.2d
92, 9394 (1986)). The ICC specifically noted that it expected
courts to decide insurance disputes based on principles of state
law:
certain courts have relied on Commission regulations
in holding carriers liable for the acts of equipment
owners
who
continue
to
display
the
carrier's
identification on equipment after termination of the
lease contract. We prefer that courts decide suits of
this nature by applying the ordinary principles of
State tort, contract, and agency law.
Lease & Interchange of Vehicles (Identification Devices) (49
C.F.R. Part 1057), 3 I.C.C.2d 92, 93 (Oct. 10, 1986). The
presence of Northstar’s placard on Dillard’s truck is not
dispositive in this action. The issue here is not protecting the
public from under- or un-insured truckers; the issue is which
insurance policy is primary when both are valid and
collectible. 10
10
Defendants also note that Northstar is not authorized to
operate as a freight broker. (Carolina Casualty Reply ¶ 1.) Even
assuming, arguendo, that Northstar was improperly operating
without authorization as a broker, Defendants do not cite case
law or clauses in the insurance contracts establishing that the
14
D. Notice of Contemplation of Summary Judgment Against
the Moving De fendants
It appears beyond dispute, upon the facts submitted in the
record of these summary judgment motions, that, as a matter of
law, Plaintiff National Interstate may be entitled to judgment
in its favor declaring that its policy is not primary and
Carolina Casualty’s policy is primary. This prospect is probably
what Plaintiff sought to achieve in its Opposition/cross-motion
briefing titles previously mentioned, see Part III.B, supra.
Because such cross-motions were not actually perfected or
responded to, fairness requires that Defendants be given the
opportunity to address the specific issue.
Thus, Rule 56(f) provides: “After giving notice and a
reasonable time to respond, the court may: (1) grant summary
judgment for the nonmovant . . . .”
The Court will therefore give notice to Defendants Carolina
Casualty Co. and Johnny Davis that it is contemplating entering
summary judgment in favor of the nonmovant National Interstate
Insurance Co. declaring that Policy No. CBP 354244 issued by
Carolina Casualty Insurance Co. to Champion Services, Inc., is
the primary policy available to Northstar Services, Inc.,
Champion Services, Inc., and Paul Dillard with regard to the
underlying personal injury claim of Johnny Davis, and that
absence of freight broker authorization establishes that the
National Interstate Policy is primary.
15
Carolina Casualty Insurance, Co. has the duty to defend
Northstar Services, Ltd., Champion Services, Inc., and Paul
Dillard in such underlying lawsuit by Johnny Davis. The
Defendants will have fourteen (14) days hereof to file any
opposition, and Plaintiffs will have seven (7) days thereafter
to reply. (Reasonable extensions will be granted by consent or
if good cause is shown.)
IV.
CONCLUSION
The motions of Defendants John Davis and Carolina Casualty
will be denied. Northstar did not “hire” the Champion tractor
and, therefore, Northstar’s policy is not primary. The movants
will have fourteen (14) days to show cause why judgment should
not be entered in favor of nonmovant, National Interstate
Insurance Co., pursuant to Fed. R. Civ. P. 56(f)(1), as provided
in part III.D, above.
The accompanying order is entered.
March 21, 2013
Date
s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge
16
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