Northland Cas. Co. v. Rocky Harrell

 

United States District Court,E.D. Arkansas,Western Division.

NORTHLAND CASUALTY COMPANY, Plaintiffs

v.

ROCKY HARRELL d/b/a Rocky Harrell Farms, et al., Defendant.

 

Aug. 9, 2007.

 

 

ORDER

JAMES M. MOODY, United States District Judge.

Plaintiff, Northland Casualty Company (“ Northland” ) filed a complaint seeking a declaratory judgment establishing that it has no obligation to defend or pay claims on behalf of Rocky Harrell D/B/A Rocky Harrell Farms (“ Harrell” ) in connection with an action filed in Pulaski Circuit Court by Barbara Meeks, individually and as Sepcial Administratrix of the Estate of Floyd Meeks, deceased and his heirs at law. Jurisdiction is based on diversity of citizenship.

 

Plaintiff has filed a Motion for Summary Judgment to which defendants have responded. For the reasons stated below the Motion for Summary Judgment will be granted.

 

Summary judgment is appropriate when there is no genuine issue of material fact and the dispute may be decided solely on legal grounds. Iowa Coal Min. Co. v. Monroe County, 257 F.3d 846, 852 (8th Cir.2001); Fed.R.Civ.P. 56. The initial inquiry is whether there are genuine factual issues that can be properly resolved only by a finder of fact because they may reasonably be resolved in favor of either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). Plaintiff as the moving party as the burden to show that the record does not disclose a genuine dispute on a material fact. RSBI Aerospace, Inc. v. Affiliated FM Ins. Co., 49 F.3d 399 (8th Cir.1995).

 

I. The Underlying Cause of Action

 

On October 4, 2002, Floyd Meeks was fatally injured in a one vehicle accident while transporting agricultural products for Harrell. Harrell had contracted with Meeks during the latter part of July, 2002 to transport products on “ as needed”  basis during the upcoming harvest season. Harrell would direct Meeks at the beginning of each week how many loads of soy beans Meeks was to pick up and deliver. This practice averaged two loads per week. Meeks had some discretion as to when he loads were picked up and delivered so long as it was within the designated week. Meeks was hauling exclusively for Harrell during the relevant time period and Harrell did not have the option of hiring other drivers in his stead to make the deliveries. The tractor used by Meeks was owned by Harrell and the trailer was leased by Harrell. All licenses and insurance on the vehicles were obtained by Harrell. Both Harrell and Meeks had the right to terminate their employment relationship at any time.

 

As a result of the fatal accident Meeks’ estate and heirs have sued Harrell for negligence for money damages under the Arkansas Wrongful Death Act.

 

II. The Insurance Policy

 

Northland issued a policy of insurance to Harrell providing business auto coverage with the effective dates of March 7, 2002 to March 7, 2003. The Policy contains the following exclusions and definitions:

SECTION II-LIABILITY COVERAGE

 

 

B. Exclusions

 

This insurance does not apply to any of the following:

4. Employee Indemnification and Employer’s Liability

“ Body injury”  to:

a. An “ employee”  of the “ insured”  arising out of and in the course of:

(1) Employment by the “ insured’ “  or

(2) Performing the duties related to the conduct of the “ insured’s”  business;”  or

b. The spouse, child, parent, brother or sister of the “ employee as a consequence of Paragraph a. above.

This exclusion applies:

(1) Whether the “ insured”  may be liable as an employer or in any other capacity; and

(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.

But this exclusion does not apply to “ bodily injury”  to domestic “ employees”  not entitled to workers’ compensation benefits or to liability assumed by the “ insured”  under an “ insured contract” . For the purposes of the Coverage Form, a domestic “ employee”  is a person engaged in household or domestic work performed principally in connection with a residence premises.

…

SECTION V-DEFINITIONS

C. “ Bodily injury”  means bodily injury, sickness or disease sustained by a person including death resulting from any of these.

…

F. “ Employee”  includes a “ leased worker” . “ Employee”  does not include a “ temporary worker” .

…

I. “ Leased worker”  means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. “ Leased worker”  does not include a “ temporary worker” .

…

O. “ Temporary worker”  means a person who is furnished to you to substitute for a permanent “ employee”  on leave or to meet seasonal or short-term workload conditions.

 

 

III. Opinion of the Court

 

The coverage issues raised in this action are governed by Arkansas law. Where, as here, jurisdiction is based upon diversity of citizenship the choice of law rules of the forum control. Under Arkansas law a insurance contract is governed by the law of the state where it has the most significant relationship. See Crisler v. Unum Ins. Co. of Am., 366 Ark. 130, — S.W.3d —-, 2006 WL 1118936 (2006) citing Ducharme v. Ducharme, 316 Ark. 482, 872 S.W.2d 392 (1994). Here the contract was made in Arkansas, delivered in Arkansas, and was the subject matter of the contract. Thus Arkansas law applies.

 

Plaintiff contends that, by the terms of the policy, that Meeks was an employee of Harrell at the time of the accident and that claims made on his behalf would be excluded. Defendants have raised three points in opposition to this assertion by plaintiff.

 

 

First, defendant claims that the Court lacks subject matter jurisdiction to determine if an employer-employee relationship existed and that the matter is solely within the jurisdiction of the Arkansas Workers’ Compensation Commission.

 

The cases cited by defendants on this issue involve whether the Arkansas Workers’ Compensation Act applies to a particular situation where benefits are being claimed under that Act. The issue before this Court is the interpretation of an insurance policy and jurisdiction is based upon diversity. The cases cited by defendants are easily distinguished and the Court finds expressly that it has subject matter jurisdiction to resolve this dispute.

 

Defendants second point is that there is a material dispute of fact as to whether an employer-employee relationship existed between Harrell and Meeks. The Court is obligated to look to Arkansas law on this issue and both sides cite to the same factors enumerated by the Arkansas Supreme Court and the Arkansas Court of Appeals. See Draper v. Conagra Food, Inc., 92 Ark.App. 220, 212 S.W.3d 61 (2005); Arkansas Transit Home, Inc. v. Aetna Life & Cas., 341 Ark. 317, 16 S.W.3d 545 (2000).

 

The factors are (1) the extent of control which, by the agreement, the master may exercise over the details of the work; (2) whether or not the one employed is engaged in a distinct occupation or business; (3) the kind of occupation, with reference to whether in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; (4) the skill required in the particular occupation; (5) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work; (6) the length of time for which the person is employed; (7) the method of payment, whether by the time or by the job; (8) whether or not the work is a part of the regular business of the employer; (9) whether or not the parties believe they are creating the relation of master and servant; and (10) whether the principal is or is not in business. Id.

 

The Court must analyze the facts surrounding the employment relationship within the framework of these factors considering the totality of the circumstances with no individual factor necessarily entitled to any greater weight than the others.

 

A. The extent of control that Harrell exercised over Meeks.

 

Harrell was in complete control of his operations. He retained the right to hire and fire all drivers. He told the drivers what loads to pick up and within a specific time frame when they needed to be delivered. He specified the location where the vehicle was to be refueled and he advised drivers on proper handling of loads.

 

B. Whether Meeks was engaged in a distinct occupation or business.

 

The Court has seen no evidence that Meeks had formed any business entity or held himself out to the public for employment as a truck driver. The evidence is that Meeks had other regular employment and was only driving on a temporary basis during the harvest season.

 

C. The nature of the work and whether it was usually done under the direction of an employer.

 

The evidence with respect to this factor favors a finding of an employer-employee relationship. As to most important tasks, Harrell was directing or supervising Meeks.

 

D. The skill required for driving a truck loaded with agricultural products.

 

Skill and experience are necessary for the operation of any large tractor trailer rig but that skill is not unique. The evidence here favors the employer-employer relationship.

 

E. Who supplies the tools and instrumentation.

 

All tools, instrumentalities, and equipment were furnished by Harrell.

 

F. The length of time for which the person is employed.

 

This factor is not particularly relevant since Meeks was a seasonal employee working only during the harvest season.

 

G. The method of payment used, whether by the time or by the job.

 

Meeks was paid by the load but would receive his money even if the customer did not pay Harrell. As such Harrell assumed the risk of nonpayment and payment to Meeks was more akin to a guaranteed hourly wage.

 

H. Whether driving is a regular part of Harrell’s business.

 

Delivery of agricultural products is an integral part of the farming operation conducted by Harrell.

 

 

I. The understanding of the parties.

 

The understanding of the parties is not evidenced by the record.

 

J. Whether Harrell was in a recognizable business.

 

Harrell did business as Rocky Harrell Farms and, as such, was a recognizable entity.

 

When all of these factors are considered in light of the record evidence, the Court finds as a matter of law that Meeks was acting as a employee of Harrell at the time of his fatal accident and not an independent contractor.

 

The Court is also persuaded by the reasoning of the Court of Appeals for the Fifth Circuit in Consumers County Mut. Ins. Co. v. P.W. Sons Trucking Inc., 307 F.3d 362 (5th Cir.2002). In that case the District Court relied on 49 C.F.R. § 390.5 in finding that an individual met the statutory definition of employee when driving a commercial vehicle. The regulation defined an employee as

Any individual, other than an employer, who is employed by an employer and who is the course of his or her employment directly affects commercial motor vehicle safety. Such term includes a driver of a commercial motor vehicle (including an independent contractor while in the course of operating a commercial motor vehicle) and mechanic, and a freight handler.

 

49 C.F.R. § 390.5.

 

Rule 17-1 of the safety rules of the Arkansas State Highway and Transportation Department extend all regulations of 49 C.F.R. 390.5 to intrastate operations of motor vehicles. See Code Ark. R. 001 00 004 (2007).

 

The reasoning of the Fifth Circuit in Consumer and of the Court of Appeals for the Ninth Circuit in Perry v. Harco Nat. Ins. Co., 129 F.3d 1072 (9th Cir.1997) applies to the facts of the instant case and forms a second basis for finding that Meeks was an employee of Harrell.

 

Defendants’ third point is, that even if Meeks was an employee of Harrell at the time of the accident, he was a “ temporary worker”  so that the employee exclusion would not apply.

 

Both parties are seemingly in agreement that Meeks was acting as a seasonal employee but plaintiff does not agree with defendants’ assertion that Meeks met the definition of a “ temporary employee.”  Plaintiff argues that it is undisputed that Meeks was not “ person who is furnished-to substitute for a permanent employee”  and therefore does qualify for the exemption. The Court agrees.

 

The Court finds the definition of a temporary employee to be clear and unambiguous. The definitions requires that the employee be “ furnished to the employer.”  Here, Meeks was not “ furnished”  by another entity, rather he was hired directly by Harrell.

 

 

Black’s Law Dictionary has defined “ furnish”  to mean,” [t]o supply, provide, or equip, for accomplishment of a particular purpose.”  Black’s Law Dictionary (6th ed 1990). Webster’s Third New International Dictionary defines “ furnish”  to mean “ to provide or supply with what is needed, useful, or desirable; equip.”  Webster’s Third New Int’l Dictionary of the English Language (15 ed.1966).

 

The Court, therefore, finds that the nature of Meeks’ employment on October 4, 2002 was such that he was not a “ temporary worker”  as defined in the Northland policy but rather he was an “ employee’ and is excluded from coverage.

 

IV. Conclusion

 

It is Ordered that plaintiff’s Motion for Summary Judgment is granted and declaratory judgment in favor of Northland is entered that there exists no coverage under policy # CT117470 effective March 7, 2002 to March 7, 2003 for claims arising from the fatal injuries to Floyd Meeks on October 4, 2002 as asserted in the complaint filed in Pulaski Circuit Court in Meeks v. Bridgestone/Firestone North American Tire, LLC et al., civil action CV05-9275.

 

 

IT IS SO ORDERED.

 

E.D.Ark.,2007.

Northland Cas. Co. v. Rocky Harrell

 

Jack A. Russo Corp. v. First Speciality Ins. Corp.

 

United States District Court,E.D. Michigan,Southern Division.

JACK A. RUSSO CORPORATION, Plaintiff,

v.

FIRST SPECIALITY INSURANCE CORPORATION, Defendant.

 

Aug. 20, 2007.

 

 

ORDER

JULIAN ABELE COOK, JR., United States District Court Judge.

This lawsuit, which was originally filed in the Wayne County Circuit Court of Michigan, arises from a dispute between the Plaintiff, Jack A. Russo Corporation , and the Defendant, First Speciality Insurance Corporation over the applicability, if any, of insurance coverage.

 

For purposes of simplicity, the parties will be identified in this order as “ Russo”  and “ First Speciality”  respectively.

 

On June 24, 2005, First Speciality issued a “ Commercial General Liability Insurance Policy”  which provided insurance protection to the Russo Corporation, a trucking business firm, for any claims of liability relating to bodily injuries, property damage and personal advertising injuries by third parties. This policy, which was effective from June 15, 2005 until June 15th of the following year, contained an “ Employee, Independent Contractors, Leased Workers or Volunteers”  endorsement.

 

This endorsement states, in pertinent part, as follows:

“ This insurance does not apply:

1. to ‘ bodily injury’  to an ‘ employee,’  independent contractor, leased worker or volunteer of the insured arising out of and in the course of employment by or service to the insured for which the insured may be held liable as an employer or in any other capacity;

2. to any obligation of the insured to indemnify or contribute with another because of damages arising out the ‘ bodily injury’  to an ‘ employee,’  independent contractor, leased worker or volunteer of the insured arising out of and in the course of employment by or service to the insured for which the insured may be held liable as an employer or in any other capacity….”

The policy also provides that “ [t]his exclusion applies:

(1) Whether the Insured may be liable as an employer or in any other capacity; and

(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.

‘ Bodily Injury’  is defined as:

Bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.”

 

On February 14, 2006, a conflict occurred between two independent contractors (KlodianYzo and Mike Underwood), both of whom were under a contractual agreement to operate their trucks and deliver material to designated sites and customers on behalf of the Russo Corporation. According to Yzo, he was severely injured by Underwood who struck him with a metal pipe and subjected him to unprovoked racial taunts and insults while they were on the premises of the Russo Corporation. Following this incident, Yzo filed a lawsuit in a state court against Underwood and the Russo Corporation, seeking an award of damages for assault and battery, ethnic intimidation, racial discrimination, harassment, hostile work environment, as well as the intentional infliction of emotional distress. Upon its receipt of Yzo’s pleading papers, the Russo Corporation forwarded them to First Speciality to whom it asked for an assumption of its defense and indemnification in the pending state court litigation. Although First Speciality initially acceded to the Russo Corporation’s request, this decision was subsequently changed when it decided to deny coverage. Thereafter, the Russo Corporation proffered a defense against Yzo’s claims with its own counsel.

 

Yzo also complains that Underwood had made racially insensitive comments to other Russo Corporation employees as well.

 

Thereafter, the Russo Corporation initiated this lawsuit in the Wayne County Circuit Court of Michigan. However, First Speciality caused the removal of the case to this federal court on March 1, 2007. In May 2007, the parties filed dispositive motions, both of which are now before the Court for its consideration.

 

On May 17, 2007, the Russo Corporation filed a motion for summary judgment, seeking to obtain coverage under the insurance contract between the parties. On the following day, First Speciality filed a motion for the entry of a judgment on the pleadings, contending that it does not have a duty to defend or indemnify the Russo Corporation because of certain provisions and exclusions with the parties’ insurance agreement. Fed.R.Civ.P. 12(C)

 

I.

 

The Supreme Court has opined that “ [o]ne of the principle purposes of the summary judgment rule is to isolate and dispose of factually unsupportable claims or defenses….”  Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). At the same time, the language within Fed.R.Civ. P.56(C) provides that a motion for summary judgment should be granted only if a party “ show[s] that there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law.”  Here, the burden is upon the movant to demonstrate the absence of a genuine issue of a material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

 

In assessing a summary judgment motion, the Court must examine any documents (i.e., pleadings, depositions, answers to interrogatories, admissions, and affidavits) in a light that is most favorable to the opposing party. Fed.R.Civ.P. 56(C); see United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Boyd v. Ford Motor Co., 948 F.2d 283, 285 (6th Cir.1991); Bender v. Southland Corp., 749 F.2d 1205, 1210-11 (6th Cir.1984). It is the obligation of the Court to determine “ whether … there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.”  Anderson, 477 U.S. at 250.

 

A dispute is genuine only “ if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”  Id. at 248. Hence, a moving party can successfully demonstrate that a genuine factual issue is lacking if the quality of the evidence is sufficient to make the issue “ so one-sided that [it] must prevail as a matter of law,”  id. at 252, or point to a failure by the nonmoving party to present evidence which is “ sufficient to establish the existence of an element essential to its case, and on which it will bear the burden of proof at trial.”  Celotex Corp., 477 U.S. at 322. Upon such a showing, the non-moving party must act affirmatively to avoid the entry of a summary judgment. Fed.R.Civ.P. 56(e). A mere scintilla of supporting evidence is insufficient. See Anderson, 477 U.S. at 252, quoted in Street v. J.C. Bradford & Co., 886 F.2d 1472, 1477 (6th Cir.1989). Indeed, “ [i]f the evidence is merely colorable or is not significantly probative, summary judgment may be granted.”  Anderson, 477 U.S. at 249-50 (citations omitted).

 

II.

 

Every motion, which has been filed pursuant to Fed.R.Civ.P. 12(C), assumes that (1) the factual allegations within the complaint are accurate, and (2) the opposing party will be unable to prove any legally cognizable set of facts that would support its position. Ross, Brovins & Oehmke, P.C. v. Lexis Nexis Group, 463 F.3d 478, 487 (6th Cir.2006). Upon its review of such a motion, a court must construe the complaint in a light that is most favorable to the opposing party. Ziegler v. IBP Hog Market, Inc., 249 F.3d 509, 512 (6th Cir.2001). Moreover, a motion, which has been filed under Rule 12(C), must establish that there are no genuine issues of a material fact, and the moving party is entitled to a judgment as a matter of law. See Alexander v. City of Chicago, 994 F.2d 333, 336 (7th Cir.1993).

 

Fed.R.Civ.P. 12(C) reads as follows:

“ After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.”

 

Typically, any ambiguities within insurance contracts must be construed against the insurer. American Bumper & Mfg. v. Hartford Fire Ins. Co., 452 Mich. 440, 452, 550 N.W.2d 475 (1996). It is also axiomatic that an insurer’s obligation to defend the insured is broader than its singular duty to indemnify. Id. at 450, 550 N.W.2d 475. In fact, a duty to defend reaches even those cases in which the allegations “ even arguably come within the policy coverage.”  Id. at 451, 550 N.W.2d 475. However, when determining whether a duty to defend and indemnify exists, a reviewing court should consider whether coverage exists under the policy, and if it does, whether an exclusionary clause applies. All Ins. Co. v. Freeman, 432 Mich. 656, 661, 443 N.W.2d 734 (1989). It is well established that an insurer is not obligated to defend those claims which have been excluded from the policy. See Protective Nat’l Ins. Co. v. Woodhaven, 43 8 Mich. 154, 159 (1991).

 

III.

 

In this case, the Russo Corporation has raised three basic arguments; namely, that (1) the language within the exclusion clause of the insurance policy is ambiguous and, as such, it cannot serve as a legitimate basis upon which to deny coverage, (2) Yzo’s claimed injuries were not caused as the result of his duties as an independent truck driver, and (3) Underwood’s misdeeds, if true, were acts which did not have any reasonable relationship with his service contract. The Russo Corporation contends that the exclusions within the policy, upon which First Specialty relied in making its decision against insurance coverage, are without justification and should not be considered to be an employment related action. The Russo Corporation also takes issue with First Speciality’s denial of coverage for Yzo’ claims of non-bodily injuries which include ethnic intimidation, racial discrimination and discrimination against national origin, harassment, hostile work environment, and intentional infliction of emotional distress.

 

Specifically, that portion of the policy reads as follows:

This insurance does not apply to:

“ Bodily Injury”  to:

(1) A person arising out of any:

(a) Refusal to employ that person;

(b) Termination of that person’s employment; or

(C) Employment-related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation or discrimination directed at that person …

This exclusion applies:

(1) Whether the insured may be liable as an employer or in any other capacity; and

(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.

 

In its opposition papers, First Speciality stands firm on its decision to deny defense coverage for the Russo Corporation, arguing that Underwood was within the course of his employment at the time of his altercation with Yzo. First Speciality also submits that Yzo’s claims in the state court action arose from the Russo Corporation’s inaction or failure to prevent his injuries. First Specialty points to the claims by Yzo who maintained that the Russo Corporation was aware, or should have been aware, of Underwood’s propensity for making racially inflammatory comments to other persons (i.e., employees) prior to the February 2006 incident. Thus, it is First Speciality’s view that Yzo’s claims, when intertwined with the issues of potential liability involving the Russo Corporation, support its decision to reject insurance coverage on the basis of the provisions within the exclusion clause in the policy. First Speciality also maintains that the Russo Corporation is not entitled to coverage for Yzo’s bodily and non-bodily injury claims. Given that Yzo failed to allege a physical manifestation of his mental injuries, First Speciality maintains that the Russo Corporation is not entitled to coverage for Yzo’s non-bodily claims. Greenman v. Michigan Mutual Insurance Company, 173 Mich.App. 88, 92, 433 N.W.2d 346 (1988).

 

IV.

 

The record supports the conclusion that Yzo was an independent contractor who was on Russo’s premises at the time of the incident. Although Underwood’s conduct was neither implicitly nor expressly authorized by the Russo Corporation, it arose during the course of his employment with the Russo Corporation and while he was providing services to the Russo Corporation. The February 2006 incident occurred while Yzo and Underwood were on the Russo Corporation property in connection with their employment as truck drivers. Although Underwood’s alleged misconduct may not have been within the scope of his employment (i.e. not authorized to engage in violent acts), it certainly arose out of his contractual relationship with the Russo Corporation. The policy specifically excludes coverage for bodily injuries sustained by independent contractors “ arising out of and in the course of employment by or service to”  the Russo Corporation. Accordingly, First Speciality does not owe defense and indemnity to the Russo Corporation for the lawsuit filed by Yzo or for the bodily injuries claimed by Yzo.

 

Furthermore, inasmuch as (1) Yzo has not alleged any physical manifestation arising out of his emotional trauma, and (2) the Russo Corporation has acknowledged that coverage may not apply for non-bodily injuries, the Court determines that First Speciality does not owe defense and indemnity for causes of action pertaining to non-bodily injuries in Yzo’s Complaint.

 

V.

 

For these reasons, the Court will deny Russo’s motion for summary judgment, and grant First Speciality’s motion for a judgment on the pleadings.

 

IT IS SO ORDERED.

 

E.D.Mich.,2007.

Jack A. Russo Corp. v. First Speciality Ins. Corp.