Opinion
Civil No. 99-0645-AH-C.
September 5, 2000.
JUDGMENT
This matter having come before the Court on motion for summary judgment and in accordance with the findings of fact and conclusions of law entered this day, It is accordingly ORDERED, ADJUDGED, and DECREED that St. Paul has no obligation to defend or indemnify the Estate of George Witherspoon in the state action Daniel P. Colton and Judy Colton v. McElroy Truck Lines, Inc., Anna Belle Newman, in her capacity as Administratrix of the Estate of George Witherspoon, Deceased, et al., no. CV-99-001325-CNG, pending in the Circuit Court of Mobile County.
ORDER
This matter is before the Court on Plaintiffs motion for summary judgment. (Doc. 77). The Plaintiff and Intervenors have filed briefs and evidence supporting their respective positions. The Estate of George Witherspoon has not opposed Plaintiffs motion. The Court heard oral argument from the parties on this matter on August 17, 2000. At oral argument, the Court ordered the parties to submit additional authorities in support of their positions. After considering the motion, supporting briefs, evidence on file, and applicable law, the Court finds that the Plaintiffs motion for summary judgment is due to be granted.
I. Facts
This is a declaratory judgment action. Saint Paul brought this action seeking a declaration from this Court that St. Paul has no duty to indemnify or defend the Estate of George Witherspoon. St. Paul issued a commercial automobile policy insuring McElroy Truck Lines. The Intervenor Coltons have brought an action in state court seeking to recover for injuries which they suffered in an accident with George Witherspoon.
By the parties consent, the Court adopts the parties "Agreed Facts" from the Joint PreTrial Order. The agreed facts are as follows:
This case stems from the collision of two truck no April, 20, 1998. One vehicle was being operated by George Witherspoon, deceased. Witherspoon was not pulling a trailer; in the parlance of the trucking industry he was "bobtailing," i.e., driving just the tractor portion of a tractor-trailer combination. The other vehicle was operated by Daniel Colton; his wife Judy was a passenger in the tractor. The Coltons' were pulling a trailer at the time of the accident. At approximately 9:20 a.m. on that Monday morning, George Witherspoon's tractor crossed the center line of Highway 45 in north Mobile County, striking the Coltons' vehicle. Witherspoon was killed and the Coltons were both injured.
Glynn Guidry is McElroy [Truck Lines]' "Safety Director." In April of 1998, Guidry was also in charge of McElroy's owner-operator program. Under this program, owners of tractors would enter into exclusive leases with McElroy ("Freight Transportation Agreements") to haul freight on behalf of McElroy.
On October 9, 1997, McElroy had employed Witherspoon to drive trucks owned by McElroy and Witherspoon drove trucks owned by McElroy until April 15, 1998. Three or four weeks prior to April 15, 1998, Witherspoon made an initial inquiry to Guidry about the owner-operator program. Guidry described McEkoy's owner-operator program to Witherspoon. Witherspoon said he would think about it and call Guidry back. Witherspoon called Guidry again approximately a week before April 15, 1998 and asked Guidry to go back over this information again with him. A final call was made by Witherspoon to Guidry on April 14, 1998, wherein Witherspoon told Guidry that he had made a decision to buy a truck and intended to lease it to McElroy. Witherspoon told Guidry that he had located a truck to purchase and asked Guidry what he needed to do to begin the process of becoming a McElroy owner-operator. In sum, Guidry instructed Witherspoon that he should turn in the McElroy truck that he (Witherspoon) was driving; that McElroy would terminate his employment as a driver of trucks owned by McElroy; and that he should proceed to acquire his truck. Witherspoon had located a used truck at the Jerry Arthur Truck Center in Ocala, Florida. Witherspoon did not tell Guidry anything about the truck he located to purchase (e.g. where it was located, how much it cost, etc.), nor was there any discussion at that point. Witherspoon turned in his McElroy truck the next day (April 15, 1998). He traveled by bus to Ocala, Florida, arriving there the morning of April 17, 1998.
While he was in Ocala at the truck dealership, Witherspoon called Glynn Guidry at McElroy. Witherspoon told Guidry that he was in Ocala, that he had the truck lined up to purchase, but that he had to have insurance before he would he allowed to drive the truck off the lot. Guidry then spoke to Jerry Arthur's salesman who told Guidry that Witherspoon would have to have insurance before he would be allowed to take possession of the truck and drive it off of the lot. Guidry consulted Sean McElroy, McElroy's vice president, and told McElroy that Witherspoon had been a driver of trucks owned by McElroy who was purchasing a truck to become an owner-operator for McElroy and needed some help with insurance. Sean McElroy asked Guidry whether Witherspoon was a good employee and Guidry said that he was. Sean McElroy then pulled up Witherspoon's driving record and examined it. Sean McElroy then told Guidry that Guidry should contact the insurance companies that insured McElroy and see what they could do. Sean McElroy also instructed Guidry to tell Witherspoon that he had to be at McElroy's Cuba, Alabama terminal first thing in the morning on Monday (April 20, 1998). Mr. Guidry then contacted both of McElroy's insurance carries through the carriers' representatives, Barksdale Bonding in Jackson, Mississippi, and Duckworth-Morris in Tuscaloosa, Alabama.
Initiated by Guidry's request (not Witherspoon's), Duckworth-Morris first faxed a certificate of insurance showing McElroy as the insured, St. Paul as the insurance carrier, and naming Jerry Arthur Truck Center as the certificate holder. The first certificate showed auto liability coverage exited under policy number 602NB2794 and stated, under the "Description" heading: "Owner-Operator-George Witherspoon, 1992 International S#H391033." The Jerry Arthur Truck Center did not ask for or need the certificate. The financing company (and title holder) was to actually receive the confirmation of coverage. A second certificate of insurance faxed by Duckworth, similar to the first, named R.E.S. Partners L.P. as the certificate holder and stated under "Description": "R.E.S. Partners, L.P. is Additional Insured with respects to George Witherspoon Owner Operator 1992 International S#H391033 for Liability Only."
Witherspoon had been pre-approved by the finance/lease company (RES/DFK) for the purchase of the 1992 International tractor approximately one month earlier. Jerry Arthur told Witherspoon that he would need proof of liability and physical damage insurance. This fact was communicated to Witherspoon on or about March 18, 1998. Witherspoon never discussed his need to have insurance to facilitate the purchase of his truck with anyone at McElroy at any time prior to leaving McElroy's employment on April 15, 1998.
According to the contract between Duckworth-Morris and St. Paul, while Duckworth-Morris had actual binding authority for commercial auto policies, it did not have actual binding authority to bind coverage on behalf of St. Paul for "truckers." Duckworth-Morris never had any direct communication with Mr. Witherspoon regarding insurance.
It is undisputed that McElroy did not advance any money to Witherspoon in anticipation of him signing on as an owner-operator. The parties further agree, with respect to Witherspoon's purchase of the subject tractor/truck that: (1) McElroy did not lend any money to George Witherspoon to purchase the tractor; (2) McElroy did not assist George Witherspoon in locating for purchase the tractor; (3) McElroy did not assist George Witherspoon in obtaining the financing for the tractor. McElroy had no ownership interest in the truck being driven by George Witherspoon at the time of the accident.
At the time of the accident on April 20, 1998, George Witherspoon had not executed a written lease or other written agreement with McElroy Truck Lines to become an owner-operator. Glynn Guidry, who was in charge of McElroy's owner-operator program at the time of the accident, will testify that before McElroy entered into a written lease with an owner-operator, the following things had to be done or accomplished:
• Driver presents certificate of title, heavy load use tax receipt, and bill of sale;
• Guidry physically inspects truck;
• Urine collection for a drug test;
• Results of current physical examination;
• Completing paperwork for his taxes and logs;
• Obtain temporary tag.
The accident involving Mr. Witherspoon occurred before these items could be accomplished.
There were no signs, placards or other marks on the Witherspoon vehicle which identified it as being operated for, by or on behalf of McElroy Truck Lines at the time of the accident. Further, Witherspoon had not been assigned a load to haul at the time of the accident on April 20, 1998.
It is believed that Witherspoon was on his way to McElroy's terminal located in Cuba, Alabama, to begin the process of becoming an owner-operator when the subject accident occurred. When Witherspoon failed to appear at McElroy's Cuba terminal on the morning of April 20, 1998, Guidry, not knowing that Witherspoon had failed to appear due to the accident, called DuckworthMorris and told them to cancel Witherspoon's insurance.
Guidry confirmed that a full background check on Witherspoon would not be necessary because Witherspoon was moving directly from McElroy's employment without an intervening job. A drug check and negative result were mandatory, however, as were the requirements that Witherspoon's vehicle pass Guidry's physical inspection, tax issues being confirmed, and the like. Mr. Guidry testified that the process to become an owner-operator takes at a minimum one-and-a-half days to complete.
II. Summary Judgment Standard
Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be granted:
"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 judgment as a matter of law." Fed.R.Civ.P. 56(c). "A factual dispute is 'genuine' if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. A fact is 'material' if it might affect the outcome of the suit under the governing substantive law." Beck v. Somerset Technologies, Inc., 882 F.2d 993, 996 (5th Cir. 1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)); accord Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 998 (11th Cir. 1992).
The basic issue before the Court on a motion for summary judgment is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." See Anderson, 477 U.S. at 25 1-252. The moving party has the burden of showing the absence of a genuine issue as to any material fact, and in deciding whether the movant has met this burden the Court must view the movant's evidence and all factual inferences arising from it in the light most favorable to the nonmoving party. See Adickes v. S.H Kress Co., 398 U.S. 144, 157 (1970); see also Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). "If reasonable minds could differ on the inferences arising from undisputed facts, then a court should deny summary judgment." Miranda v. B B Cash Grocery Store, Inc., 975 F.2d 1518, 1534 (11th Cir. 1992) (citing Mercantile Bank Trust v. Fidelity Deposit Co., 750 F.2d 838, 841 (11th Cir. 1985)).
Once the movant satisfies their initial burden under Rule 56(c) of demonstrating the absence of a genuine issue of material fact, as the movant has done in this case, the burden shifts to the nonmovant to "come forward with 'specific facts showing that there is a genuine issue for trial.'" See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed.R.Civ.P. 5 6(e)). Otherwise stated, the nonmovant must "demonstrate that there is indeed a material issue of fact that precludes summary judgment." See Clark v. Coats Clark Inc., 929 F.2d 604, 608 (11th Cir. 1991). "A mere 'scintilla' of evidence supporting the [nonmoving] party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party." Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citation omitted). "[T]he nonmoving party may avail itself of all facts and justifiable inferences in the record taken as a whole." Tipton, 965 F.2d at 998 (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)). "'The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.'" Tipton, 965 F.2d at 999 (quoting Anderson, 477 U.S. at 255). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Matsushita, 475 U.S. at 587 (internal quotation and citation omitted).
III. Terms of Policy
St. Paul contends that it has no duty to indemnify or defend the Estate of George Witherspoon by the terms of the policy.
Under the "Who is Protected Under This Agreement" section of the policy, the policy provides:
Corporation or other organization. If you are named in the Introduction as a corporation or other organization, you are a protected person for the use of a covered auto. Also, your executive officers and directors are protected persons. But only for the use of a covered auto. Also, your stockholders are protected persons, but only for their liability as your stockholders.
Any permitted user. Any person or organization to whom you've given permission to use a covered auto you own, rent, lease, hire or borrow is a protected person.
However, we won't consider the following to by a protected person:
• The owner or anyone else from whom you rent, lease, hire or borrow a covered auto unless that auto is a trailer that's connected to a covered auto you own.
• An employee of yours or a member of an employee's household if the covered auto is owned by that employee or a member of that employee's household.
* * * *
Anyone legally responsible for the actions of a protected person. Any person or organization who is legally responsible for the actions of a protected person described above is also a protected person for the use of a covered auto.
* * * *
But we won't consider the owner or anyone else from whom you rent, lease, hire or borrow a covered auto to be a protected person unless it's a trailer that's connected to a covered auto you own.
The policy also contains an endorsement for leased autos. The leased auto endorsement states:
The leased autos indicated below will be covered as if they are autos you own, not hired autos.
* * * *
Leased auto means an auto, including any substitute or replacement auto, that you've leased under a written agreement, that requires you to provide direct primary insurance on the auto.
The Who is Protected section of your Liability Agreement is changed by adding the following.
• The person or organization named below from whom you've leased an auto is protected.
Person or organization
Any person or organization from whom you've leased an auto under a written agreement, that requires you to provide direct primary insurance on the auto.
Where the terms of the policy are clear, courts may not rewrite the terms of a policy or interpret unambiguous policy language to provide coverage that was not intended by the parties. See Canal Insurance Co. v. Old Republic Insurance Co., 718 So.2d 8, 12 (Ala. 1998). In the instant case, the terms of the policy are clear. The parties have also agreed as follows:
• Witherspoon was not a McElroy employee at the time of the accident,
• Witherspoon was not hauling a load or pulling a trailer at the time of the accident,
• Witherspoon had not completed the procedure to become a McElroy owner-operator,
• McElroy had no ownership interest in Witherspoon's truck,
• McElroy and Witherspoon had not entered into a written lease,
• Witherspoon had not discussed his need for insurance with McElroy prior to his phone call from Ocala, Florida, and
• Witherspoon's truck displayed no McElroy placards, signs, tags or decals.
Consequently, by the above-stated terms of the policy, the Court finds that George Witherspoon was not a "protected person" under the policy.
MCS-90 Endorsement
The policy also contains an endorsement entitled "Endorsement For Motor Carriers Policies of Insurance For Public Liability Under Sections 29 and 30 of the Motor Carrier Act of 1980" ("MCS-90" endorsement). This endorsement provides:
In consideration of the premium 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 negligence in the operation, maintenance or use of motor carriers 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 other endorsement thereon, or violation thereof, shall relieve the company from liability or from the payment of any final judgment within the limits of the liability herein described.
The Federal Motor Carrier Safety Regulations require minimum levels of insurance for motor carriers engaged in the interstate transportation of property. See 49 C.F.R. § 387. The regulations further require that when a motor carrier enters into the lease for a vehicle that the motor carrier "shall have exclusive possession, control, and use of the equipment for the duration of the lease." 49 C.F.R. § 376.12 (c). Although the regulations require a written lease, some courts have found that the regulations impose liability on a motor carrier when the carrier enters into an oral lease with a driver for the use of the truck. See Zamolla v. Hart, 31 F.3d 911, 917 (9th Cir. 1994).
In the instant case, the Intervenors have argued that McElroy and Witherspoon entered into an oral lease for the use of Witherspoon's truck. The Intervenors claim that under the lease, Witherspoon was obtaining the truck for McElroy's later use and benefit. As consideration, the Intervenors argue that Witherspoon received McElroy's assistance in obtaining insurance.
The regulations provide that the "authorized carrier lessee shall have exclusive possession, control, and use of the equipment. . . ." 49 C.F.R. § 376.12. St. Paul contends that while the regulations require and the MCS-90 endorsement provides coverage for McElroy as the authorized carrier, the regulations do not extend coverage to Witherspoon. Therefore, while St. Paul may be obligated to indemnify and defend McElroy if it is shown that an agreement existed between McElroy and Witherspoon which constituted the "operation, maintenance, or use" of Witherspoon's vehicle, St. Paul does not have an obligation to indemnify or defend the Estate of George Witherspoon.
Alternatively, the Court finds that even if coverage were available under the MCS-90 endorsement, the Intervenors have failed to come forward with facts upon which the Court could find a disputed material issue of fact regarding the existence of an oral lease. As noted above, the facts show that McElroy had no interest in Witherspoon's truck, and further, that there were no discussions of an interest in Witherspoon's truck, including the provision of insurance, prior to Witherspoon's call from Ocala, Florida. Witherspoon had not completed the steps to associate with McElroy as an owner-operator, and had no obligation to complete the steps. In fact, McElroy believed that Witherspoon had abandoned his plans to pursue the owner-operator relationship when Witherspoon did not arrive at McElroy's Cuba terminal on the morning of April 20. Therefore, the Court finds that the Intervenor's have not come forward with sufficient evidence to show the existence of a disputed material fact regarding McElroy's "operation, maintenance, or use" of Witherspoon's vehicle.
Intervenors cite the case of Adams v. Royal Indem. Co., 99 F.3d 964 (10th Cir. 1996). However, the facts in the Adams case are different from those in the instant case. In Adams, the trailer in question was a leased trailer which Congress demonstrated an interest in having insured. Congress has not expressed an intention, however, to insure vehicles for which there may be some future intent to lease.
Due to the foregoing, the Court finds that summary judgment is due to be granted on St. Paul's claim that under the terms of the policy, St. Paul has no obligation to indemnify or defend the Estate of George Witherspoon.
IV. Agent Modification of Policy
The Intervenors have argued that even if the terms of the policy exclude coverage for George Witherspoon, the independent insurance agent Duckworth-Morris either modified the policy or St. Paul is estopped from denying coverage because of the certificates of insurance that were produced by Duckworth-Morris. McElroy is the named insured on both certificates. Under the "Description of Operations/Locations/Vehicles/Special Items" heading, the certificates both list George Witherspoon as "Owner Operator."
The certificates both included the following language:
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
* * * *
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS
As discussed above, George Witherspoon was not covered by the terms of the policy. The certificates clearly indicate that they serve only informational purposes and do not alter the terms of the policy.
Furthermore, the agreement between St. Paul and Duckworth-Morris provided that Duckworth-Morris did not have the authority to bind St. Paul to coverage for trucker policies. Where an agent is merely a soliciting agent without authority to bind coverage, the agent has not power to alter the terms of an insurance policy. See McGhee v. Paramount Life Ins. Co., 385 So.2d 969, 972 (Ala. 1980).
The Intervenors have argued that St. Paul is bound to provide coverage to George Witherspoon through the doctrine of apparent authority. Where one has been mislead by a principal that a purported agent is acting within the scope of his authority, the principal may be held liable for the purported agent's actions. See Northington v. Dairyland Ins. Co., 445 So.2d 283, 285 (Ala. 1984). "The doctrine of apparent authority does not rest upon what one thinks an agent's authority may be, or what the agent holds out his authority to be; rather, the doctrine of apparent authority is based on the principal's holding the agent out to a third person as having the authority under which he acts." Id. (internal quotations omitted).
In the instant case, George Witherspoon did not have any direct communications with St. Paul or Duckworth-Morris. The Intervenors claim of apparent authority is based on the issuance of the certificates of insurance. On this basis, the Court finds that the Intervenors have failed to come forward with sufficient evidence to show the existence of a material fact as to the modification of the policy through the doctrine of apparent authority.
And finally, the Alabama Insurance Regulations prohibit the modification of an insurance policy through the issuance of a certificate of insurance. The regulations provide:
No certificate of insurance shall contain references to construction or service contracts or insurance requirements for the purpose of amending coverage afforded by the policies to which the certificate applies. No certificate of insurance may be used to amend, extend, restrict or alter coverage afforded by the policies to which the certificate makes reference.
Alabama Dept. of Insurance Reg. No. 62 § III.
Due to the foregoing, the Court finds that Duckworth-Morris did not modify or bind St. Paul to coverage for George Witherspoon through the issuance of the certificates of insurance.
V. Conclusion
Due to the foregoing, the Court finds that Plaintiffs motion for summary judgment is due to be GRANTED.