Bits & Pieces

Ayala v. Fundamental Labor Strategies, Inc.

See Pa. Commonwealth Court Internal Operating Procedures, Sec. 414 before citing.

Commonwealth Court of Pennsylvania.

Wilfredo Ayala, Petitioner

Fundamental Labor Strategies, Inc. (Workers’ Compensation Appeal Board), Respondent

No. 1037 C.D. 2022

Submitted: April 28, 2023

FILED: January 2, 2024

BEFORE: HONORABLE ANNE E. COVEY, Judge HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE STACY WALLACE, Judge

OPINION NOT REPORTED

STACY WALLACE, Judge

*1 Wilfredo Ayala (Claimant) petitions for review of the order of the Workers’ Compensation Appeal Board (Board) dated August 31, 2022, which affirmed the decision and order of a workers’ compensation judge (WCJ), circulated February 16, 2022 (WCJ’s Decision). On appeal, Claimant argues it was error for the Board to affirm the WCJ’s finding he was an independent contractor at the time of his injury and, therefore, not entitled to workers’ compensation (WC) benefits. After review, we affirm the Board’s order.

BACKGROUND

Claimant, a commercial truck driver, began working as a delivery driver for Fundamental Labor Strategies, Inc. (FLS) in March 2019. Certified Record (C.R.), Item No. 13. On February 17, 2021, Claimant filed a claim petition alleging on February 6, 2020, he sustained a lumbar disc injury while unloading a window during the course and scope of his employment with FLS. Id. Claimant then filed a petition for penalties alleging FLS violated the Pennsylvania Workers’ Compensation Act¹ by failing to timely file Bureau of Workers’ Compensation documents accepting or rejecting liability for his work injury. Id. Claimant filed an additional claim petition alleging that also on February 6, 2020, he sustained adjustment disorder with anxious and depressed mood and chronic pain syndrome from his work injury. Id. After each of Claimant’s filings, FLS filed an answer denying an employment relationship with Claimant.

In support of his two claim petitions, Claimant testified FLS was not a motor carrier, and explained FLS sent him to different driving assignments with various clients. Id. After finishing his previous assignment, FLS emailed Claimant his assignments for the next day, which included the required arrival time, the address, and the items he was to deliver. Id. Claimant first testified he was permitted to accept or reject assignments, but later testified he did not feel he could decline an assignment. Id. When carrying out an assignment, Claimant received routing instructions from the motor carrier, and he drove trucks owned by the clients. Id.

Regarding his employment relationship with FLS, Claimant understood FLS treated him as an independent contractor, and he had worked as an independent contractor for other companies. Id. Claimant testified FLS provided him a hat with FLS’s logo, but he was not required to wear it. Id. Claimant never drove a truck owned by FLS or displaying FLS’s logo. Id. FLS paid Claimant by check and Claimant understood FLS made no tax deductions, and he was responsible for paying his own taxes. Id. Claimant admitted he signed an independent contractor occupational accident insurance enrollment form in March 2019, but claimed he did not understand FLS would take deductions from his pay for the insurance. Id.

In response, Curtis Ball (Ball), the president of FLS, testified FLS is a transportation broker with two brokerage services. Id. FLS offers a dedicated driver service, which private motor carriers use to haul their own goods, rather than hauling another’s goods for a fee. Id. Ball testified FLS considers dedicated service drivers employees of FLS and closely manages them. Id. FLS dictates the assignments and hours of dedicated service drivers, and these drivers are required to report to work to perform their assignments. Id. The dedicated service drivers receive life insurance, disability insurance, and health benefits, and are subject to FLS’s internal rules and regulations. Id. They also receive W2 tax forms. Id.

*2 Ball explained the other service offered by FLS is the flex driver brokerage service. Id. This service matches motor carriers having a short term need for a driver with drivers who want to work. Id. These assignments can range from a day to a week or a month. Id. Ball indicated flex drivers determine how much they want to work. Id. The flex drivers transport themselves to the clients’ locations and drive the clients’ vehicles. Id. The client provides any trip sheet or routing information. Id. The motor carrier or shipper sets the start time for the job and the number of stops to be made during the assignment. Id. Flex drivers are paid a flat fee and receive a 1099 tax form. Id. Flex drivers are free to accept or reject assignments. Id. In order to provide flex drivers with as much information as possible to make decisions about accepting assignments, FLS obtains as much information about the assignment from the client as possible including the work days available, the start times, the equipment that will be operated, the number of deliveries to be made, whether the equipment is temperature controlled, the type of transmission in the vehicle, and any other relevant information. Id. There are no repercussions if a flex driver rejects an assignment. Id. Additionally, flex drivers are permitted to drive for other companies. Id.

Regarding Claimant’s work with FLS, Ball testified Claimant was a flex driver and received driving assignments from FLS in 2019 and 2020. Id. Claimant executed a W2 in July 2018 on which he indicated he was a sole proprietor or LLC. Id. Additionally, Ball testified Claimant executed an application for independent contractor occupational accident insurance. Id. In his testimony, Ball explained flex drivers provide FLS with proof they are insured so FLS knows the driver is covered in the event of a loss, but FLS does not provide coverage or require specific accident insurance coverage for flex drivers. C.R., Item No. 26. Ball testified that as a flex driver, Claimant was permitted to accept or reject assignments, and he had documentation Claimant rejected 11 assignment offers. C.R., Item No. 13. There were no repercussions for Claimant rejecting the assignments. Id.

Based on the testimony presented, the WCJ found Claimant did not establish an employment relationship with FLS and dismissed Claimant’s claim petitions and petition for penalties. Id. The WCJ noted that to the extent “Claimant and [Ball’s testimony] differs, [Ball’s] testimony is accepted as credible, particularly where he testified that there were at least 11 instances of refused assignments, but ongoing assignments offered to Claimant.” Id. The WCJ found Ball’s testimony regarding the flex driver program crucial in establishing Claimant was an independent contractor rather than FLS’s employee. Id.

Claimant appealed to the Board. Ultimately, the Board determined the WCJ did not err in finding Claimant was an independent contractor. C.R., Item No. 16. The Board rejected Claimant’s challenges to the WCJ’s weight and credibility determinations, which determinations are binding on appeal. Id. Noting the WCJ’s findings were supported by substantial, competent evidence, the Board affirmed the WCJ’s Decision. Id.

Claimant now petitions this Court for review of the Board’s order. On appeal, Claimant argues the Board erred in concluding he was an independent contractor at the time of his injury. Claimant’s Br. at 10. Specifically, Claimant contends he was not an independent contractor because FLS exercised control over his work. Id. at 18. In response, FLS contends the Board properly affirmed the WCJ’s Decision as substantial evidence supported the WCJ’s finding Claimant was an independent contractor. FLS’s Br. at 6.

DISCUSSION

Our review in WC appeals is limited to “determining whether the WCJ’s findings of fact were supported by substantial evidence, whether an error of law was committed, or whether constitutional rights were violated.” Pierson v. Workers’ Comp. Appeal Bd. (Consol Pa. Coal Co. LLC), 252 A.3d 1169, 1172 n.3 (Pa. Cmwlth.), appeal denied, 261 A.3d 378 (Pa. 2021). Relevant to this appeal, the question of whether an employee-employer relationship exists is a question of law subject to our plenary, de novo review. Am. Rd. Lines v. Workers’ Comp. Appeal Bd. (Royal), 39 A.3d 603, 610-11 n.6 (Pa. Cmwlth. 2012). However, where substantial evidence supports the WCJ’s findings, we defer to those findings as the WCJ is the ultimate fact finder in workers’ compensation cases and “has exclusive province over questions of credibility and evidentiary weight.” Anderson v. Workers’ Comp. Appeal Bd. (Penn Ctr. for Rehab.), 15 A.3d 944, 949 (Pa. Cmwlth. 2010). The WCJ is free to accept or reject the testimony of any witness, Edward v. Workers’ Compensation Appeal Board (Epicure Home Care, Inc.), 134 A.3d 1156, 1161 (Pa. Cmwlth. 2016), and this Court is bound by those credibility determinations. A&J Builders, Inc. v. Workers’ Comp. Appeal Bd. (Verdi), 78 A.3d 1233 (Pa. Cmwlth. 2013).

*3 For a claimant to receive WC benefits, the claimant must prove an employer-employee relationship exists because “[a]n independent contractor is not entitled to benefits.” Universal Am-Can v. Workers’ Comp. Appeal Bd. (Minteer), 762 A.2d 328, 330 (Pa. 2000). Whether an employer-employee relationship exists depends on the unique facts and circumstances of each case. 3D Trucking v. Workers’ Comp. Appeal Bd. (Fine and Anthony Holdings Int’l), 921 A.2d 1281 (Pa. Cmwlth. 2007). In considering whether a claimant is an independent contractor versus an employee, we consider many factors, including:

(1) control of manner the work is done; (2) responsibility for result only; (3) terms of agreement between the parties; (4) nature of the work/occupation; (5) skill required for performance; (6) whether one is engaged in a distinct occupation or business; (7) which party supplies the tools/equipment; (8) whether payment is by time or by the job; (9) whether work is part of the regular business of employer; and, (10) the right to terminate employment.

Am. Rd. Lines, 39 A.3d at 611 (internal citation omitted). While no factor is dispositive, control over the work and the manner it is performed are primary factors in determining employment status. Universal Am-Can, 762 A.2d at 333. Where an alleged employer has the right to select the employee, the right and power to discharge the employee, the power to direct the manner of performance, and the power to control the employee, there is sufficient control to establish an employer-employee relationship. 3D Trucking, 921 A.2d at 1288. Additionally, payment of wages and payroll deductions are a significant consideration, as is a tax filing noting self-employment. Id. See also Guthrie v. Workers’ Comp. Appeal Bd. (The Travelers’ Club, Inc.), 854 A.2d 653, 662-63 (Pa. Cmwlth. 2004).

Because of the relationships among drivers, owner-operators and motor carriers and the thorough regulation of them, the trucking industry presents unique challenges in determining whether an employer-employee relationship exists. Am. Rd. Lines, 39 A.3d at 611. In these cases, in addition to the previously outlined factors, we also consider the degree of supervision and control over delivery routes and the timing of work or schedule. Id.

Here, the WCJ analyzed and weighed the testimony and each of the WCJ’s findings are supported by evidence in the record. See generally C.R., Item No. 13. Accordingly, we conclude substantial evidence supports the WCJ’s factual findings about Claimant’s employment relationship with FLS. Because the Board is bound by the same standard of review we are, it did not err in reaching the same conclusion.

Turning to the WCJ’s legal conclusion Claimant was an independent contractor, we note the WCJ rejected Claimant’s testimony to the extent it conflicted with Ball’s testimony. Ball testified Claimant had no guarantee of work and was free to refuse work or even work for another company. He also testified FLS paid Claimant by check and took no tax deductions, instead FLS provided Claimant a Form 1099 and he was responsible for paying his own taxes. As to the amount of control, FLS provided Claimant with assignments and information from the client about pick-up and drop-off locations. While requests about the manner of work may have come from the clients, FLS did not dictate to Claimant which assignments to accept, how to complete the assignments, what routes to travel, and what times to drive each day or for how long. FLS did not provide a uniform or the vehicles for Claimant to drive, nor did FLS train Claimant. While none of these facts are individually dispositive, taken as a whole, these findings reflect Claimant controlled the time and manner of his work, primarily by his ability to accept or reject assignments.

*4 In analyzing the WCJ’s legal conclusion Claimant was an independent contractor at the time of his injury, the Board explained:

Herein, the WCJ credited the testimony of Claimant and [Ball] that Claimant signed an independent contractor occupational accident insurance form so he would have his own insurance in the case of an accident since he was treated as an independent contractor with [FLS] similar to his prior independent contractor driving jobs. Additionally, the credible testimony of Claimant and [Ball] supports the Claimant did not drive [FLS’s] truck, since [FLS] did not own any trucks, trailers, or warehouses, and the hat provided by [FLS] with the company logo on it was a gift which was not required to be worn by Claimant during driving assignments as a uniform. Moreover, the credible testimony establishes that [FLS] had no control over Claimant’s daily routes, starting or ending times, etc., and that Claimant was entitled to, and in fact took advantage of, rejecting job assignments without repercussions. This credible evidence constitutes substantial evidence to support the WCJ’s finding that Claimant was an independent contractor rather than an employee for [FLS] based on the terms of the agreement that Claimant would be an independent contractor for [FLS], that [FLS] did not supply Claimant’s tools to perform his job, and [FLS] did not retain control [over] the manner of Claimant’s driving on assignments. Consequently, the WCJ properly determined Claimant failed to meet his burden establishing an employment relationship with [FLS].

C.R., Item No.16. We agree with the Board’s determination.

CONCLUSION

Because this Court may not reweigh the evidence or second-guess the WCJ’s credibility determinations, and because substantial evidence in the record supports the WCJ’s findings of fact and conclusions of law, we discern no error by the Board in affirming the WCJ’s Decision Claimant was an independent contractor. As an independent contractor, Claimant was not entitled to WC benefits. Accordingly, we affirm the Board’s Order.

Judge Fizzano Cannon did not participate in the decision of this case.

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Wilfredo Ayala, Petitioner

Fundamental Labor Strategies, Inc. (Workers’ Compensation Appeal Board), Respondent

No. 1037 C.D. 2022

ORDER

AND NOW, this 2nd day of January 2024, the Order of the Workers’ Compensation Appeal Board dated August 31, 2022, is AFFIRMED.

STACY WALLACE, Judge

All Citations

Footnotes

Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-2710.

End of Document

BITCO Gen. Ins. Corp. v. Smith

United States Court of Appeals, Eighth Circuit.

BITCO GENERAL INSURANCE CORPORATION, Plaintiff – Appellee

Bruce SMITH; Clayton Hamlin; Chris White, d/b/a Chris White Construction, Defendants – Appellants

No. 23-1043

Submitted: September 21, 2023

Filed: December 26, 2023

Synopsis

Background: Hauling company’s insurer brought action seeking declaratory judgment that it had no duty under business automobile policy to defend or indemnify trucking company and dump truck driver in underlying action. Defendants filed counterclaims for coverage. The United States District Court for the Western District of Missouri, Beth Phillips, Chief Judge, 646 F.Supp.3d 1039, entered summary judgment in insurer’s favor, and defendants appealed.

[Holding:] The Court of Appeals, Grasz, Circuit Judge, held that trucking company did not fall within scope of policy definition of “insured.”

Affirmed.

Colloton, Circuit Judge, concurred in judgment and filed opinion.

[1] Federal Courts

Court of Appeals reviews grant of summary judgment on insurance policy interpretation de novo, applying same summary judgment standard as district court and using state law to determine coverage issues.

[2] Insurance

Under Missouri law, interpretation of insurance policy is question of law.

[3] Insurance

Missouri law mandates that courts use general contract-interpretation principles to interpret meaning of terms in insurance policy.

[4] Insurance

Under Missouri law, in interpreting insurance contract, court must read contract as a whole and determine parties’ intent, giving effect to that intent by enforcing contract as written.

[5] Insurance

Under Missouri law, courts should generally interpret insurance policy according to policy’s plain meaning, enforcing unambiguous language as written.

[6] Insurance

Under Missouri law, ambiguity exists in insurance policy only when phrase is reasonably open to different constructions, or when there is duplicity, indistinctness, or uncertainty in meaning of language in policy.

[7] Insurance

Under Missouri law, courts construe ambiguities in insurance policy in insured’s favor, but only when reasonable person would expect coverage under policy terms.

[8] Insurance

Under Missouri law, simply because insured may point to coverage-friendly definition in dictionary does not mean that interpretation controls in interpreting insurance policy; any interpretation must be objectively reasonable in light of whole agreement and parties’ intent.

[9] Insurance

Missouri law forbids court from reading any one insurance policy term in isolation to create ambiguity; instead, court must determine how language fits in context of policy.

[10] Insurance

Under Missouri law, trucking company that hauling company had engaged to provide dump truck to haul rock did not fall within scope of hauling company’s business automobile policy definition of “insured” as “[a]nyone else while using with [company’s] permission a covered ‘auto’ [that company] own[s], hire[s], or borrow[s],” and thus hauling company’s insurer had no duty to defend or indemnify trucking company or its driver in underlying personal injury action arising from collision with dump truck; hauling company did not own or borrow dump truck, and term “hire” unambiguously required element of control, but hauling company did not drive or operate truck, or dictate truck’s route, speed, or any other aspect of its operation.

Appeal from United States District Court for the Western District of Missouri

Attorneys and Law Firms

Counsel who presented argument on behalf of the appellants and appeared on the brief was Kaci R. Peterson, of Jefferson City, MO. The following attorney(s) also appeared on the appellants’ brief; Donald L. O’Keefe, of Saint Louis, MO, Andrew J. Gelbach, of Warrensburg, MO, James Daniel Ribaudo, of Saint Louis, MO.

Counsel who presented argument on behalf of the appellee and appeared on the brief was Martin John Buckley, of Saint Louis, MO. The following attorney(s) also appeared on the appellee brief; Adrian Phillip Sulser, of Saint Louis, MO.

Before COLLOTON, GRASZ, and KOBES, Circuit Judges.

Opinion

GRASZ, Circuit Judge.

*1 The question in this appeal is whether an insurance policy issued by BITCO General Insurance Corporation (“BITCO”) covers damages from an accident involving a truck driven by a contractor engaged by the insured, KAT Excavation Company (“KAT”). The district court¹ concluded BITCO had no such obligation under the policy because “KAT did not hire” the contractor’s dump truck for purposes of the policy. We affirm.

I. Background

KAT was the general contractor on a construction project at Skyhaven Airport, which included work on the airport’s runway. KAT arranged for E&S Quarry (“E&S”) to supply rock for paving the runway. KAT’s own fleet of drivers and vehicles could not transport enough rock from E&S to the airport, so KAT engaged other hauling companies willing to furnish trucks with drivers. KAT’s “truck boss” in charge of arranging for extra trucks, Mike aLong, telephoned Chris White, doing business as Chris White Construction (“CWC”), who KAT had worked with before on another construction project. Long spoke with Chris White’s son, Tanner White, asking him if CWC had any available dump trucks. Long specified that the vehicle needed to be a dump truck, but otherwise any dump truck would do.

Tanner told Long he had a dump truck that could haul rock from E&S to the airport. Under their oral agreement, KAT would pay CWC a fixed amount for each ton of rock CWC hauled to the airport, irrespective of how many hours the driver spent hauling rock or how many miles were driven. Tanner did not specify, nor did Long ask, who would be driving the truck. Long gave the location of E&S and the airport, telling Tanner that E&S opened at 7:00 a.m. As Tanner and Long understood, CWC’s truck would work a full day, if possible, hauling as much rock as it could or until KAT met its rock requirements for the day. Long made similar arrangements with several other companies during the life of the project. Tanner contacted Clayton Hamlin, a driver CWC used in the past, and asked him to drive the dump truck the next day. Hamlin agreed.

The following day, Hamlin picked up the vehicle—a 1988 Peterbilt dump truck—from Tanner. Hamlin drove the truck to E&S and picked up a load of rock. E&S gave him a ticket to show KAT how many tons of rock Hamlin transported. Hamlin took the load of rock to the airport, where KAT workers directed Hamlin where to dump it. Hamlin then drove back to E&S. After Hamlin picked up another load of rock and on his second trip to the airport, an accident occurred between Hamlin and a vehicle driven by Bruce Smith.

Smith sued Hamlin in Missouri state court for injuries stemming from the accident.² KAT’s insurer, BITCO, then filed a declaratory judgment action in federal court, denying it had any responsibility to defend or indemnify CWC or Hamlin under KAT’s insurance policy.

*2 CWC and Hamlin counterclaimed against BITCO for coverage, arguing the policy’s omnibus clause covered Hamlin as the driver of the dump truck. Smith joined CWC and Hamlin (collectively, “the Appellants”) in demanding BITCO defend and indemnify Hamlin and CWC. The relevant omnibus clause defines an “insured” as “[a]nyone else while using with [KAT’s] permission a covered ‘auto’ [KAT] own[s], hire[s], or borrow[s.]” The omnibus provision also provides coverage for “[a]nyone liable for the conduct of an ‘insured[.]’ ” According to Appellants, if Hamlin is a covered insured, then BITCO also has an obligation to defend CWC as a party that could be “liable” for Hamlin’s conduct.

The parties filed competing motions for summary judgment over the scope of coverage. Appellants argued the undefined terms “permission” and “hire” were ambiguous, which meant Missouri law required adopting a coverage-favoring definition of those words. The district court disagreed, holding that the term “hire”—as used in the insurance policy—required KAT to exercise an element of “control” over the dump truck. The district court granted summary judgment to BITCO, deciding that the undisputed facts did not show, as a matter of law, that KAT exercised the requisite level of “control” over the dump truck, and thus Hamlin was not covered under the policy. Appellants appealed, arguing the district court improperly interpreted the insurance contract under Missouri law and that, regardless of whether “hire” requires an element of “control,” the undisputed facts show KAT “hired” the dump truck.

II. Analysis

^[1] ^[2]We review a grant of summary judgment on an insurance policy interpretation de novo, applying the same summary judgment standard as the district court and using state law to determine coverage issues. Wintermute v. Kan. Bankers Sur. Co., 630 F.3d 1063, 1067 (8th Cir. 2011). See also Fed. R. Civ. P. 56(a) (“The court shall grant summary judgment 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.”). “Under Missouri law, which the parties agree governs this diversity case, the interpretation of an insurance policy is a question of law, which we review de novo.” Brazil v. Auto-Owners Ins. Co., 3 F.4th 1040, 1042 (8th Cir. 2021).

^[3] ^[4]Appellants argue the terms “hire” and “permission” are ambiguous, and because of that ambiguity, Missouri law requires us to adopt a coverage-friendly definition. To answer whether those terms are ambiguous, Missouri law mandates we use general contract-interpretation principles to interpret the meaning of terms in the insurance policy. Id. “In interpreting an insurance contract, we are to read the contract as a whole and determine the intent of the parties, giving effect to that intent by enforcing the contract as written.” Id. (quoting Stotts v. Progressive Classic Ins., 118 S.W.3d 655, 662 (Mo. Ct. App. 2003)).

^[5] ^[6] ^[7] ^[8]Generally, courts should interpret an insurance policy according to the policy’s plain meaning, enforcing unambiguous language as written. Allen v. Cont’l W. Ins. Co., 436 S.W.3d 548, 554 (Mo. 2014). “An ambiguity exists only when a phrase is ‘reasonably open to different constructions[,]’ ” id. (quoting Mendenhall v. Prop. & Cas. Ins. Co. of Hartford, 375 S.W.3d 90, 92 (Mo. 2012)), or when “there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy,” Taylor v. Bar Plan Mut. Ins. Co., 457 S.W.3d 340, 344 (Mo. 2015). Courts construe ambiguities in favor of the insured, Seeck v. Geico Gen. Ins., 212 S.W.3d 129, 132 (Mo. 2007), but only when a reasonable person would expect coverage under the policy terms, Brazil, 3 F.4th at 1042 (citing Estrin Constr. Co. v. Aetna Cas. & Sur. Co., 612 S.W.2d 413, 420 (Mo. Ct. App. 1981)). Simply because an insured may point to a coverage-friendly definition in a dictionary does not mean that interpretation controls; any interpretation must be objectively reasonable in light of the whole agreement and the parties’ intent. See id. at 1044–45 (rejecting the plaintiffs’ argument that “subject to” was ambiguous because “they have not pointed to a second reasonable interpretation of the language”).

*3 The district court held that the term “hire” in the insurance policy necessarily requires an element of “control.” BITCO Gen. Ins. Corp. v. Smith, 646 F. Supp. 3d 1039, 1044 (W.D. Mo. 2022) (citing cases). In other words, there must be more than a mere engagement of transportation services: “[F]or a vehicle to constitute a hired automobile, there must be a separate contract by which the vehicle is hired or leased to the named insured for his exclusive use or control.” Toops v. Gulf Coast Marine Inc., 72 F.3d 483, 487 (5th Cir. 1996) (alteration in original) (quoting Sprow v. Hartford Ins. Co., 594 F.2d 418, 422 (5th Cir. 1979)). According to the district court, “a definition of ‘hiring’ that does not include an element of control makes the term overly broad and unreasonable.” BITCO Gen. Ins., 646 F. Supp. 3d at 1044. Because of its holding, the district court explicitly declined to address whether KAT gave permission to Hamlin to drive the truck. Id. at 1045 n.7.

In asking us to reverse the district court, Appellants argue we should hold “hire” to be ambiguous because the term is subject to more than one reasonable interpretation, including a definition that does not require an element of control, and Missouri law requires adopting a coverage-friendly definition against the drafter when policy language is ambiguous. See, e.g., Burns v. Smith, 303 S.W.3d 505, 509–10 (Mo. 2010). After all, omnibus clauses are meant to extend, not restrict, coverage for the insureds, Griffitts v. Old Republic Ins. Co., 550 S.W.3d 474, 479 (Mo. 2018), and our circuit has already concluded “that the term ‘hired auto’ is ambiguous,” Kresse v. Home Ins. Co., 765 F.2d 753, 755 (8th Cir. 1985) (interpreting North Dakota law). Also, at least one other jurisdiction has declined to add an element of control to the common definition of “hire.” See Pawtucket Mut. Ins. Co. v. Hartford Ins. Co., 147 N.H. 369, 787 A.2d 870, 873 (2001). Thus, Appellants argue, we should apply a common dictionary definition of “hire” that does not require an element of control. We disagree.

^[9]Missouri law forbids us from reading any one policy term in isolation to create an ambiguity. Owners Ins. Co. v. Craig, 514 S.W.3d 614, 617 (Mo. 2017). Instead, we must determine how the language fits in the context of the policy. Sanders v. Wallace, 884 S.W.2d 300, 303 (Mo. Ct. App. 1994). Read in isolation, the term “hire” may well be ambiguous. See Kresse, 765 F.2d at 755. But any ambiguity is extinguished by looking to the term “permission” within the same omnibus clause—a term that has no ambiguity. Winterton v. Van Zandt, 351 S.W.2d 696, 700 (Mo. 1961). (“There is no ambiguity in the meaning of the word ‘permission’.”). “Permission” means “[a]ct of permitting; formal consent; authorization; leave; license or liberty granted.” Id. (quoting Permission, Webster’s New International Dictionary (2nd ed.)).

Though “permission” as used in the omnibus clause may have a “flexible meaning,” McKee v. Travelers Ins. Co., 315 S.W.2d 852, 857 (Mo. Ct. App. 1958), being express or implied depending on the facts and circumstances of the case, see Hawkeye-Sec. Ins. Co. v. Bunch, 643 F.3d 646, 650 (8th Cir. 2011), that does not render the term ambiguous. “[Permission] carries with it the necessary aspect of the right, power, or privilege to give or to withhold the grant of license embodied in the term.” Allstate Ins. Co. v. Hartford Acc. & Indem. Co., 311 S.W.2d 41, 45 (Mo. Ct. App. 1958). If one is able to give permission, then one has the power to give or prevent leave, license, or authority to use. M.F.A. Mut. Ins. Co. v. Alexander, 361 S.W.2d 171, 179 (Mo. Ct. App. 1962).

^[10]In reading all the words of BITCO’s omnibus clause together in context, we conclude that “hire” unambiguously requires an element of control because the giving or withholding of “permission” unambiguously requires control. Any other interpretation of “hire” would be unreasonable in context with the way “permission” is used in the omnibus clause. Thus, we agree with the district court that the policy requires KAT to exercise an element of control over the truck. See BITCO Gen. Ins., 646 F. Supp. 3d at 1044.

*4 We now consider whether the undisputed facts—construed in the light most favorable to Appellants—could support a jury finding that KAT “hired” CWC’s dump truck. Whether a named insured exercises “control,” such that a vehicle becomes a “hired auto” will depend on the facts and circumstances of the case. See Kresse, 765 F.2d at 755–56. Looking to the facts here, we conclude that KAT did not “hire” CWC’s dump truck but merely engaged the truck for transportation services. As the district court reasoned:

KAT could not drive or operate the truck, or dictate the truck’s route, speed, or any other aspect of its operation (other than specifying the rock was to be picked up at E&S and was to be unloaded at a specific spot at the Airport). KAT did not select the truck CWC supplied, did not select Hamlin to be the driver, and had no right to reject either. It had no responsibility to pay Hamlin or any expenses related to the truck’s operation or maintenance.

BITCO Gen. Ins., 646 F. Supp. 3d at 1045 (footnote omitted). Significantly—given the policy language that KAT give “permission” to the user of the truck—the facts show Hamlin received permission to drive the truck from Tanner, not KAT. The service contract merely called for CWC to move as much rock as KAT needed, with KAT paying on a per-ton basis. Though KAT desired the trucks to work a full day if possible and to keep hauling rocks until KAT told them to stop, Hamlin and CWC had the discretion to decide the route to take, the number of trips or stops to make, and the hours worked.

Thus, the record reflects that CWC exercised exclusive control over the dump truck. As the district court summarized: “KAT hired CWC to perform a task, and in performing that task CWC used a truck. KAT did not hire the truck.” Id. Because the undisputed facts show Hamlin was not a covered insured under the omnibus clause, the policy does not provide coverage for either Hamlin or CWC for accidents involving the dump truck.

III. Conclusion

We affirm the district court’s grant of summary judgment to BITCO and its denial of summary judgment to Appellants.

COLLOTON, Circuit Judge, concurring in the judgment.

I concur in the judgment based on the court’s conclusion that truck driver Hamlin received “permission” to drive the dump truck at issue from Tanner White of Chris White Construction, not from KAT Excavation, Inc. Ante, at –––– (“Significantly—given the policy language that KAT give ‘permission’ to the user of the truck—the facts show Hamlin received permission to drive the truck from Tanner, not KAT.”). Hamlin was therefore not an “insured” under the policy because he was not using the truck with KAT’s “permission.” That conclusion is sufficient to affirm the judgment, and it is unnecessary to address whether KAT “hired” the dump truck.

All Citations

Footnotes

The Honorable Beth Phillips, Chief Judge, United States District Court for the Western District of Missouri.
Smith did not name CWC as a party in his initial state court petition, but he intends to name CWC as an additional defendant once a stay is lifted in that case.

End of Document