United States District Court,

D. Kentucky,

Southern Division,

Pikeville.

Elizabeth CHRISTENSEN, Administratrix of the Estate of Mayfield Pennington, Plaintiff,

v.

ATS, INC., et al., Defendants.

 

Civil No. 14–24–ART.

Signed May 30, 2014.

 

Michael Shane Hall, Shane Hall Attorney at Law, PLLC, Pikeville, KY, for Plaintiff.

 

Daniel E. Murner, Elizabeth Johnson Winchell, Landrum & Shouse LLP, Lexington, KY, for Defendants.

 

MEMORANDUM OPINION & ORDER

AMUL R. THAPAR, District Judge.

*1 Just as Cerberus stood watch at the entrance to Hades, the plaintiff’s many-headed theory of tort liability guards against removing this case from state to federal court. This Court lacks jurisdiction over this matter unless the defendants can demonstrate that none of the plaintiff’s theories could possibly succeed against defendant Bailey’s Furniture, LLC, whose presence as a defendant destroys federal diversity jurisdiction. Since the defendants have successfully defeated each of the plaintiff’s theories, the Court will deny the plaintiff’s motion to remand this case to the Kentucky court whence it came and dismiss Bailey’s Furniture as a defendant.

 

BACKGROUND

The trouble started when Bailey’s Furniture placed an order for mattresses with Corsicana Bedding. R. 1–2. Edward O. Carter, a truck driver employed by ATS, Inc., R. 1 at 2–3, picked up those mattresses from Corsicana Bedding and transported them to Bailey’s Furniture, in Salyersville, Kentucky, R. 12–2. After Carter left Bailey’s Furniture, he continued on his way toward Pikeville, Kentucky. Id. En route, he collided with Mayfield Pennington’s vehicle, and Pennington died as a result of injuries sustained during the accident. R. 1–1 at 6–10; R. 12–3.

 

The plaintiff, as administratrix of Pennington’s estate, filed suit in state court. R. 1–1 at 4. She brought state-law tort claims against three defendants: ATS, a Minnesota citizen; Carter, a Tennessee citizen; and Bailey’s Furniture, a Kentucky citizen. Id . at 5. As relevant here, she alleged that Bailey’s Furniture was negligent when it failed to exercise ordinary care in transacting business with ATS and Carter. Id. at 9. She also alleged, pursuant to Ky.Rev.Stat. § 446.070, that Bailey’s Furniture was negligent per se because it violated a state statutory duty of care. Id. at 9–10. The defendants quickly removed the case to federal court pursuant to 28 U.S.C. § 1441, R. 1, and the plaintiff moved to remand the case shortly thereafter, R. 9.

 

DISCUSSION

[1] Because the plaintiff presented no federal question in her state-court complaint, only one possible basis for federal jurisdiction remains: diversity. The Court possesses diversity jurisdiction under 28 U.S.C. § 1332 where there is complete diversity between the parties. See Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89, 126 S.Ct. 606, 163 L.Ed.2d 415 (2005). That is, a plaintiff cannot share her state of citizenship with any defendant and still pursue her claims in federal court. In this case, both the plaintiff and Bailey’s Furniture are Kentucky citizens. See R. 1 at 2; see also 28 U.S.C. § 1332(c)(2) (ascribing the decedent’s citizenship to the legal representative of his estate).

 

[2][3] To avoid remand for lack of diversity jurisdiction, the defendants contend that the plaintiff fraudulently joined Bailey’s Furniture to defeat federal jurisdiction. R. 1 at 2–3. Under the doctrine of fraudulent joinder, federal courts may sever a non-diverse defendant from the case if the claim against him is so frivolous that its only conceivable purpose is to destroy diversity and prevent removal. Murriel–Don Coal Co. v. Aspen Ins. UK Ltd., 790 F.Supp.2d 590, 594 (E.D.Ky.2011). To obtain this relief, the removing party must demonstrate that the plaintiff has “no colorable cause of action” against the non-diverse defendant. Saginaw Hous. Comm’n v. Bannum, Inc., 576 F.3d 620, 624 (6th Cir.2009). If the plaintiff has even a “glimmer of hope,” then any charge of fraudulent joinder fails, Murriel–Don Coal Co., 790 F.Supp.2d at 597 (internal quotation marks and citation omitted), and the Court must remand the case to state court for want of subject-matter jurisdiction, Saginaw Hous. Comm’n, 576 F.3d at 624.FN1

 

I. The Plaintiff Did Not State a Colorable Claim of Negligence Per Se.

*2 [4][5][6][7][8][9] The plaintiff’s first claim is for negligence per se. In Kentucky, negligence per se is “merely a negligence claim with a statutory standard of care substituted for the common law standard of care.” Young v. Carran, 289 S.W.3d 586, 588–89 (Ky.Ct.App.2008) (internal quotation marks omitted). The legislature codified this common law doctrine as Ky.Rev.Stat. § 446.070, which provides that “[a] person injured by the violation of any statute may recover from the offender such damages as he sustained by reason of the violation, although a penalty or forfeiture is imposed for such violation.” Young, 289 S.W.3d at 589. Interpreting this statute, Kentucky courts have identified several conditions that must exist before liability may attach. First, § 446.070’s “any statute” language refers only to Kentucky statutes and does not include federal law or local ordinances. Id . Next, the statute in question cannot provide an inclusive civil remedy. Id. The plaintiff must be within the class of persons the statute is intended to protect, id., and the legislature must have intended the statute to prevent the type of occurrence that took place, McCarty v. Covol Fuels No. 2, LLC, No. 4:10–cv–11, 2013 WL 5657599, at *6 (W.D.Ky. Oct.16, 2013) (citing Lewis v. B & R Corp., 56 S.W.3d 432, 438 (Ky.Ct.App.2001)). Finally, the violation must have been a substantial factor in causing the plaintiff’s injury. Id.

 

The fate of the plaintiff’s motion to remand hangs on whether Bailey’s Furniture had, and breached, a statutory duty of care. Analyzing this requires the Court to unpack the legal equivalent of Russian matryoshka dolls: a series of nested federal and state regulations and statutes. See McClung v. Songer Steel Servs., Inc. ., No. 2:12–341, 2014 WL 793133, at *9 n. 8 (W.D.Pa. Feb.26, 2014) (describing matryoshka dolls as “a set of wooden dolls of decreasing size placed one inside the other” (internal quotation marks omitted)). As the plaintiff explains, pursuant to the Federal Motor Safety Carrier Regulations (“FMCSR”), no one may operate a commercial motor vehicle without tires bearing a sufficiently deep tread groove pattern.FN2 R. 10 at 6 (citing 49 C.F.R. § 393.75); see also R. 10–1 (police report citing Carter for violating this regulation). Kentucky has absorbed this portion of the FMCSR into its administrative regulations. 601 Ky. Admin. Reg. 1:005. Administrative regulations have the force and effect of law in Kentucky, see Centre College v. Trzop, 127 S.W.3d 562, 566 (Ky.2003), and a Kentucky statute renders it unlawful “for the owner, or any other person, employing or otherwise directing the operator of any vehicle, to require or knowingly to permit the operation of such vehicle upon a highway in any manner contrary to law,” Ky.Rev.Stat. § 189.224. The upshot is this: for Bailey’s Furniture to have violated a statutory duty of care, it must (1) be an owner or other person, (2) have employed or otherwise directed Carter, and (3) have required or knowingly permitted him to operate his vehicle upon the highway with a tread groove pattern that violated the FMCSR.

 

*3 [10][11] The first prong of this analysis poses no problems for the plaintiff: Bailey’s Furniture plausibly qualifies as an “other person.” The second prong is harder, but ultimately tilts in the plaintiff’s favor. Bailey’s Furniture did not employ Carter (ATS did), but what does it mean to direct him? Might something as simple as giving Carter instructions on how to continue on his journey (e.g., “turn left at the light, merge onto the highway, and drive straight for 15 miles”) suffice? Common sense counsels against giving the word “direct” such an expansive interpretation that it captures the recipients of shipments. See R. 18 at 2 (describing a parade of horribles that could ensue if Kentucky makes buyers liable for tortious behavior during the course of the delivery of goods by a third party hired by the seller); Collins v. Buddy Moore Trucking, Inc., No. 11–173, 2012 WL 424890, at *3 (E.D.Ky. Feb.9, 2012) (same). But common sense alone does not rule the day in fraudulent joinder cases, and the Court acknowledges that “direct” remains ambiguous in the absence of Kentucky precedent interpreting the statutory language. See Banks v. Dep’t of Educ., Bureau of Rehab., 462 S.W.2d 428, 430 (Ky.1971) (making only a passing reference to § 189.224 in the only known state case to rely on the statute). The Court must resolve any ambiguities in the controlling state law in favor of the plaintiff. Walker v. Philip Morris USA, Inc., 443 F. App’x 946, 951 (6th Cir.2011) (citing Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir.1994)). “All doubts as to the propriety of removal are resolved in favor of remand.” Id. (citing Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir.1999)). Accordingly, the Court will assume that even de minimis directions by the recipient of a shipment of goods could trigger liability under § 189 .224.

 

[12] The plaintiff’s ship ultimately founders on the rocky shoals of the third prong. The relevant statutory language is this: “knowingly to permit the operation of such vehicle upon a highway in any manner contrary to law.” Ky.Rev.Stat. § 189.224. Construed according to ordinary principles of statutory interpretation, the word “knowingly” applies to the entire object of the transitive verb, “to permit.” See Flores–Figueroa v. United States, 556 U.S. 646, 650–53, 129 S.Ct. 1886, 173 L.Ed.2d 853 (2009) (explaining how to construe statutes containing “knowingly” according to ordinary usage and statutory interpretation principles). Thus, in the statute at issue here, knowingly modifies “in any manner contrary to law”—meaning that Bailey’s Furniture must have known of the wretched state of Carter’s tread grooves for liability to arise under § 189.224. And the plaintiff has not alleged—not in her complaint, and not elsewhere—that Bailey’s Furniture knew that Carter was driving an unsafe vehicle in violation of the FMCSR. In fact, she has suggested the opposite: that Bailey’s Furniture “was in the best and last position to observe [the condition of] the commercial motor vehicle” and failed to do so. R. 10 at 7.

 

*4 Without any reason to believe that Bailey’s Furniture violated § 189.224, the plaintiff has no “glimmer of hope” that her claim against Bailey’s Furniture for negligence per se might succeed. See Ky.Rev.Stat. § 446.070 (providing that “[a] person injured by the violation of any statute may recover from the offender such damages as he sustained by reason of the violation” (emphasis added)). The outcome of her motion to remand therefore turns on her sole remaining claim against Bailey’s Furniture.

 

II. The Plaintiff Has No Colorable Claim For Negligence.

[13][14] In order to state a negligence claim under Kentucky law, the plaintiff must establish (1) a duty on the part of Bailey’s Furniture, (2) a breach of that duty, and (3) injury. Collins, 2012 WL 424890, at *2 (citing Mullins v. Commonwealth Life Ins. Co. ., 839 S.W.2d 245, 247 (Ky.1992)). The plaintiff points to three sources that might supply Bailey’s Furniture’s duty of care: a contract, the common law, and the FMCSR. For the reasons discussed below, none of these vested Bailey’s Furniture with a duty toward Pennington. Accordingly, the plaintiff cannot sustain a negligence claim against Bailey’s Furniture.

 

The plaintiff first proposes a contractually created duty of care. Specifically, the plaintiff argues that a contract between Corsicana Bedding and ATS required those parties to ensure that Carter operated his vehicle with ordinary care and in compliance with applicable law. R. 10 at 5. As a third-party beneficiary, Bailey’s Furniture supposedly also had to adhere to the contract’s terms. Id. As far as the Court can tell, however, this contract and its terms spring entirely from the plaintiff’s imagination. The parties have provided the Court with no shipping contract, just with a sales invoice prepared by Corsicana Bedding after Bailey’s Furniture placed an order for its wares, R. 1–2. Nor have they described any specific terms that the contract, if it existed, contained. The Court cannot pull a contractual provision out of thin air, apply it to a third party like Bailey’s Furniture, and pronounce itself satisfied that Bailey’s Furniture owed a duty of care to Pennington. Cf. Collins, 2012 WL 424890, at *3 (citing Penco, Inc. v. Detrex Chem. Indus., Inc., 672 S.W.2d 948, 951 (Ky.Ct.App.1984)) (“Kentucky courts disfavor reading broad duties into contracts when it is not clear that a party intended to take on the responsibility.”).

 

[15] Second, the plaintiff draws on the common law to suggest that Bailey’s Furniture had the ability to exercise control over Carter while he waited on its premises, such that it assumed a duty for the condition of his vehicle. R. 15 at 8–10. In such claims, “the alleged tortfeasor’s ability to control the person causing the harm assumes primary importance.” Grand Aerie Fraternal Order of Eagles v. Carneyhan, 169 S.W.3d 840, 851 (Ky.2005) (emphasis in original). That is, the alleged tortfeasor must have had some sort of leverage over the person under control, and that leverage must relate to the harm caused by that person, “such that its exercise would restrict the person’s ability to cause harm.” Id. at 853. As the defendants rightly point out, Bailey’s Furniture’s relevant conduct consisted solely of ordering products from another company. That company, Corsicana Bedding, independently arranged for delivery by ATS, which employed and directed Carter. R. 12 at 6. Bailey’s Furniture therefore stood at two degrees of removal from Carter. Bailey’s Furniture could not have, for example, sent Carter off on a delivery that ATS had not expressly authorized him to make. Nor could it have ordered him to remain on its premises indefinitely. Therefore, the Court finds that Bailey’s Furniture lacked any ability to control Carter in any manner giving rise to a duty of reasonable care.

 

*5 Finally, the plaintiff argues that Bailey’s Furniture, as a registered motor carrier, had a heightened duty of care thanks to the FMCSR. R. 15 at 4–5. The responsibilities imposed by the FMCSR on motor carriers apply to Bailey’s Furniture only when it engages in the transportation of goods or passengers. See 49 C.F.R. § 390.5; Camp v. TNT Logistics Corp., 553 F.3d 502, 507 (7th Cir.2009). Bailey’s Furniture did not act in its capacity as a motor carrier when it interacted with Carter and ATS. Consequently, Bailey’s Furniture had no heightened duty of care simply by virtue of its status as a registered motor carrier.

 

Like the plaintiff’s negligence per se claim, the plaintiff’s negligence claim fails to pass “Go.” Since Bailey’s Furniture owed Pennington no applicable duty of care, there is no reasonable basis to predict that a Kentucky court would hold it liable for negligence in relation to Pennington’s death.

 

CONCLUSION

Ultimately, no hope remains that the plaintiff might prevail on her negligence or negligence per se causes of action. The Court will therefore sever Bailey’s Furniture as a defendant under the fraudulent joinder doctrine, thereby rendering all defendants diverse from the plaintiff and ensuring that the Court has diversity jurisdiction over this action.

 

Accordingly, it is ORDERED that

 

(1) The plaintiff’s motion to remand, R. 9, is DENIED.

 

(2) The Clerk shall TERMINATE Bailey’s Furniture as a defendant.

 

(3) Bailey’s Furniture’s motion to dismiss, R. 13, is DENIED AS MOOT.

 

FN1. The Court has previously explained that the doctrine of fraudulent joinder makes little sense, because it “requires federal courts to exercise jurisdiction where none exists over questions of state law that the state courts are better suited to address themselves.” Murriel–Don Coal Co., 790 F.Supp.2d at 597. However, fraudulent joinder remains the law of this circuit, so the Court will faithfully apply that doctrine.

 

FN2. The plaintiff also insinuates that someone violated 49 C.F.R. § 397.17. R. 10 at 6. But that regulation applies only to motor carriers engaged in the transportation of hazardous materials. § 397 .1. The Court has no cause to believe that Carter was carrying anything but mattresses and consequently finds this regulation inapplicable. See R. 10–1 (describing the cargo under Carter’s care as “Household Goods”).

Court of Appeal of Louisiana,

First Circuit.

Beverly V. KEMP and Mary Ann Kemp

v.

CLARENDON AMERICA INSURANCE COMPANY, Clarendon National Insurance Company, Western World Insurance Company, Larry G. Savoie, and John C. Holliday, Jr.

 

No. 2013 CA 0807.

June 3, 2014.

 

Appealed from the Sixteenth Judicial District Court in and for the Parish of St. Mary, State of Louisiana, Docket Number 118723, Division “A”, Honorable Gerard B. Wattigny, Judge.D. Patrick Daniel, Jr., Lafayette, Louisiana, for Plaintiffs/Appellees, Beverly V. Kemp and Mary Ann Kemp.

 

John P. Wolff, III, Nancy B. Gilbert, Chad A. Sullivan, Virginia J. McLin, Baton Rouge, Louisiana, for Defendants/Appellants, Segue Distribution, Inc., Chubb Custom Insurance Company.

 

Douglas K. Williams, Chris D. Billings, Baton Rouge, Louisiana, for Defendant/Appellee (Cross–Claim Appellee), Clarendon America Insurance Company.

 

Albert C. Miranda, Julie E. Vaicius, Rachael D. Johnson, Metairie, Louisiana, for Defendant/Appellee, Hartford Fire Insurance Company.

 

Jennifer L. Simmons, New Orleans, Louisiana, for Defendant/Appellee, Zurich America Insurance Company of Illinois.

 

Thomas P. LeBlanc, Lake Charles, Louisiana, for Holiday Trucking, Inc. John C. Holliday, Jr. and Larry G. Savoie.

 

Before PETTIGREW, McDONALD, AND McCLENDON, JJ.

 

McDONALD, J.

*1 This litigation arose as the result of an automobile accident in July 2007, in which a 2004 International Truck driven by Larry G. Savoie (Savoie) collided with a school bus driven by Beverly Kemp (Kemp). Kemp filed suit in June 2008 for injuries received in the accident, in which his wife, Mary Ann, joined with a loss of consortium claim. The issue in this appeal is the ranking of the three insurance policies that were undisputedly responsible for the insurance available to settle the claims of the plaintiffs. For the reasons that follow, we reverse and remand.

 

The 2004 International truck driven by Savoie was personally owned by Jason Holliday (Holliday). Holliday also owned Holliday Trucking, Inc. (Holliday Trucking), which he had established to get into the trucking and hauling business. At the time of the accident, Savoie was making a delivery for Segue Distribution, Inc. (Segue). Segue had a contract with Holliday Trucking for transportation services. Clarendon America Insurance Company (Clarendon) insured Holliday Trucking. Chubb Custom Insurance Company (Chubb) provided insurance to Segue from October 6, 2006 through October 6, 2007. Hartford Insurance Company (Hartford) provided insurance to Segue from May 18, 2007 through May 18,2008.

 

The underlying suit has been settled and there are no issues concerning the responsibility of each insurer for the settlement to Kemp. However, in the course of the litigation, Chubb provided a defense to Savoie and now seeks reimbursement from the other insurers for this cost. Each insurer had identical language in its policy concerning primary and excess coverage:

 

5. Other Insurance

 

For any covered “auto” you own, this Coverage Form provides primary insurance. For any covered “auto” you don’t own, the insurance provided by this Coverage Form is excess over any other collectible insurance….

 

d. When this Coverage Form and any other Coverage Form or policy covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms and policies covering on the same basis.

 

On December 27, 2006, Segue entered into a Transportation Service Agreement (TSA) with Holliday, whereby Holliday was to perform transportation services. Referring to Segue Distribution, Inc. as the “Company” and Holliday as the “Contractor,” the TSA’s provisions were extensive. It provided that the Contractor would be an Independent Contractor, including for tax purposes, and that “the transportation services performed by the Contractor shall be performed entirely at Contractor’s risk.” The Contractor was responsible for obtaining all permits and licenses, and paying all applicable sales, use, federal, and state income taxes.

 

Section 4.08 provided, in part:

 

Contractor shall, at no expense to Company procure, maintain and provide to Company certificates of insurance throughout the Initial Term and successive terms the following insurance with effective dates of coverage being the date hereof:

 

*2 Commercial Vehicle Liability Insurance covering all vehicles, whether owned, leased or hired, with a combined single limit of $300,000 per occurrence with no aggregate limitation.

 

Section 7.12 provided that the Contractor would indemnify and hold harmless the Company.

 

Pursuant to the TSA, Holliday obtained a commercial auto policy from Clarendon that provided a $1,000,000 limit for liability coverage and listed the 2004 International Truck as a covered auto with Larry Savoie as an approved driver. Savoie was employed and paid by Holliday; however, according to Savoie’s deposition testimony, his supervisor was Todd Achee, a Segue employee. Holliday Trucking, Inc., not Jason Holliday, was listed as the “insured” under the policy. As noted, the truck was owned by Holliday personally.

 

Hartford also issued an insurance policy that covered Segue with a $1,000,000 policy limit. All three insurers at issue, Hartford, Chubb, and Clarendon, were named as defendants in this matter based on the allegation that they each issued an insurance policy that provided coverage for the July 2007 accident and the damages sustained by the plaintiffs. All three policies contained identical “other insurance” provisions, and all policies provided $1,000,000 coverage. The “other insurance” provision is considered in ranking multiple policies to determine which insurer has the initial liability and which are excess.

 

The district court ruled that all three insurers provided coverage for the accident but that none provided primary coverage since none was providing coverage for a vehicle “owned” by the insured; thus, all provided excess coverage. Also, the district court found that no insurance company owed defense costs to another, which is a concomitant of the first ruling, because only a primary insurer could owe defense costs for an insured to an excess insurer that paid them. If all insurers provided excess coverage, the insurance companies would pay the damages in pro rata shares. The district court ruled that the three insurance companies each owed a third of the damages.

 

In February 2011, Chubb and its insured, Segue, filed for leave to file a cross-claim and third-party demand in the district court. These claims were dismissed in the court’s ruling of September 16, 2011, which was fmalized in a judgment signed on October 14, 2011, and is the judgment before us for review.

 

Chubb and Segue appeal, assigning as error the district court’s failure to find that Clarendon’s policy applies on a primary basis and the district’s failure to find that Clarendon owed Segue for the defense costs that Chubb had paid. Chubb also raises as error by the district court the decision that the October 14, 2011 judgment was a final judgment. It maintains that unresolved issues exist concerning the interpretation of the TSA, the status of the TSA as an “Insured Contract,” and Chubb’s entitlement to pursuit charges from Clarendon thereunder.

 

*3 The court’s finding that the October 14, 2011 judgment was a final judgment (although it was not designated as such until July 2012, based on a motion by Clarendon), required that Chubb’s claims be dismissed. Chubb’s assertion that unresolved issues remain regarding the TSA, is dependant on a finding that Holliday and Holliday Trucking, Inc. are a single entity or that the TSA creates a single business entity.

 

Louisiana jurisprudence is replete with cases holding the corporate veil can only be pierced in extraordinary circumstances, generally involving fraud.   Riggins v. Dixie Shoring, Co., Inc., 590 So.2d 1164, 1168–69 (La.12/2/91), contains a detailed discussion by the supreme court of factors to be considered in “veil piercing” cases and cites numerous cases for each of the factors reviewed. The case establishes that if plaintiffs (creditors) do not allege shareholder fraud, they bear a heavy burden of proving that shareholders disregarded the corporate entity to such an extent that it became indistinguishable from themselves. Some of the factors courts consider when determining whether to apply this “alter ego doctrine” include, but are not limited to: commingling of corporate and shareholder funds; failure to follow statutory formalities for incorporating and transacting corporate affairs; undercapitalization; failure to provide separate bank accounts and bookkeeping records; and failure to hold regular shareholders meetings. The case also establishes that courts are reluctant to hold a director of a corporation personally liable for corporate obligations, in the absence of fraud, malfeasance, or criminal wrongdoing. When a party seeks to pierce the corporate veil, the totality of the circumstances is determinative.

 

Holliday Trucking’s corporate charter was revoked by the Secretary of State in 2003. Holliday did maintain a business entity for some purposes after that date (to make certain payments), but we find that Holliday Trucking was not an entity separate from Holliday. Holliday Trucking did not maintain statutory formalities, and the charter was revoked for failure to file annual reports as required. After three consecutive years of failure to hold meetings, corporation law requires that the charter be revoked authority. There was commingling of Holliday’s personal funds and corporate funds. Although Holliday testified that an accountant reviewed and reported on transactions on the bank account of Holliday Trucking separate from Holiday’s personal account, the corporation was undercapitalized such that Holliday personally was required to deposit his own funds into the corporate account to pay bills. Holliday also testified that the corporation neither held meetings, nor did it maintain minutes.

 

Recognizing the principles of Riggins, this court has held that the fact that one person owns all or a majority of the stock of a corporation does not in itself make that person liable for corporate debts. Terrebonne Concrete, LLC v. CEC Enterprises, LLC, 11–0072 (La.App. 1 Cir. 8/17/11) 76 So.3d 502, 508, writ denied, 11–2021 (La.11/18/11), 75 So.3d 464. The instant case, however, is not a typical “piercing the veil” case. The main purpose of a corporation is to prevent shareholders from being personally liable for corporate debts. This ability to establish an identity to engage in business without being personally liable for its debts is considered to be an excellent way to stimulate the economy.

 

*4 [1] In this case, Holliday is not being held personally liable for a debt. The district court determined that the insurance policy that he purchased to insure the truck involved in the accident provided coverage for one third (1/3) of the damages. When the parties entered into the TSA contract, it required Holliday to maintain insurance to protect the “Company,” Segue. When the TSA established the contract between Holliday/Holliday Trucking and Segue in December 2006, it was the intention of Holliday to provide transportation services to other clients. At the time of the accident, July, 2007, however, Segue was Holliday’s only client.

 

The revocation of the corporate charter by the Secretary of State resulted in the corporate entity ceasing to exist. It is our finding that the totality of circumstances dictate that Holliday and Holliday Trucking, Inc. are a single entity. Accordingly, the fact that Holliday was the owner of the truck, but the Clarendon insurance policy insured Holliday Trucking is of no significance and Clarendon is the primary insurer.

 

[2] The district court’s finding that none of the insurers were primary insurers necessitated the dismissal of Chubb’s cross-claim and third-party demand. However, because we find that the Clarendon policy was primary, Chubb, having paid the costs of defense for Clarendon’s insured, had a right to file an action against Clarendon for recovery of those costs. We have determined that Holliday and Holliday Trucking, Inc. are a single entity. By Clarendon’s own argument, the Clarendon policy would be considered primary if Holliday Trucking owned the covered auto or if Holliday was a named insured such that the TSA is an insured contract. Since they are a single entity, it is a distinction without a difference.

 

Also, it is apparent from a reading of the TSA that one of its purposes was to provide Segue with protection against liability for any accidents Holliday/Holliday Trucking, Inc. was involved in when transporting Segue merchandise. The initial consideration in contract interpretation is to determine the intent of the parties. Where the language is clear and explicit “no further interpretation may be made in search of the parties’ intent.” La. C, C. Art.2046. Thus, the initial consideration is the language of the contract; only when it is not clear, is a search for the parties’ intent warranted. As noted, the TSA had multiple purposes, but it was clearly its intention to make Holliday the primary insurer for accidents.

 

That portion of the judgment holding that all three policies are excess, is reversed, and the matter is remanded to the district court for a determination of the amounts for which each insurer is liable in defense costs.

 

Chubb also challenges the district court’s designation of the October 14, 2011 judgment as a final judgment and the dismissal of its cross-claim and third-party demand as being in error. It is Chubb’s contention that several other issues remain, including interpretation of the ISA and the rights thereunder. If Chubb feels it has claims that have not been put before the district court, its motion and memorandum should be submitted by a date designated by the district court. We are not persuaded by Clarendon’s arguments that if they have not already been presented to the court, Chubb’s claims have been lost. An appropriate time to assert its claims would have been after the ruling by the district court, as to which, if any, insurance policy is primary.

 

CONCLUSION

*5 Based on the foregoing, we find that the policy numbered DSA019515 issued to Jason Holliday/Holliday Trucking, Inc. by Clarendon America Insurance Company provides primary coverage for the damages sued upon. The judgment of the district court that all insurers provided excess coverage and that none owed defense costs to any other is reversed. This matter is remanded to the district court for a determination of Chubb’s defense costs and for consideration of Chubb’s claims which are to be submitted to the district court by a date designated by that court. Costs of this appeal are assessed against Clarendon America Insurance Company.

 

REVERSED AND REMANDED.