United States District Court, W.D. Virginia,

Big Stone Gap Division.

ALLSTATE INSURANCE COMPANY, Plaintiff,

v.

J.A.D. COAL COMPANY, INC., The New Coal Company, Inc., Federal Insurance Company, Liberty Mutual Insurance Company, Acceptance Indemnity Insurance Company, Defendants.

Civil Action No. 2:05-CV-00029.

 

Aug. 16, 2006.

 

MEMORANDUM OPINION

JAMES C. TURK, Senior District Judge.

The plaintiff, Allstate Insurance Company (“Allstate”), filed a complaint for declaratory judgment pursuant to 28 U.S.C. §  2201 in federal court against the defendants, J.A.D. Coal Company (“J.A.D.”), The New Coal Company (“New Coal”), Federal Insurance Company, Liberty Mutual Insurance Company, and Acceptance Indemnity Insurance Company, arising from a claim for coverage on a policy of business automobile insurance issued by Allstate to J.A.D.. This matter is before the Court on cross motions for summary judgment filed by defendants’ J.A.D. and New Coal and plaintiff Allstate pursuant to Rule 56 of the Federal Rules of Civil Procedure. This Court heard oral arguments on August 7, 2006. After consideration of the merits of the pleadings and arguments, the Court will grant plaintiff’s motion for summary judgment and deny defendants’ motion for summary judgment. The defendants, Federal Insurance Company, Liberty Mutual Insurance Company, and Acceptance Indemnity Insurance Company, have indicated that they have no interest in the outcome of this litigation.

 

 

I.

 

The facts in this case are not in dispute. Allstate issued a policy of business automobile insurance to J.A.D., Policy No. 04819846 (“the policy”), with effective dates of November 10, 2003 to November 10, 2004. The policy provided $1,000,000.00 of liability coverage to the insured with respect to covered autos. J.A .D. was the only named insured. Under the “LIABILITY INSURANCE” provision of the policy, the insuring agreement states, “[w]e will pay all sums the insured legally must pay as damages because of bodily injury or property damage to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto.”

 

The other pertinent portions of the policy determine what constitutes a “covered auto.” The relevant portion of Part II of the policy states that covered autos are “NON-OWNED AUTOS” defined as “autos, not owned, leased, hired or borrowed by J.A.D. Coal Company, Inc.,” but which are, “used in connection with your [J.A.D.’s] business.”

 

The underlying tort action, arising from a vehicular accident, has recently reached a settlement agreement. The facts relating to the underlying lawsuit are as follows. On March 13, 2004, J.A.D. owned a coal loading facility that was leased to and operated by New Coal. New Coal sold coal to J. Hall, Inc.  (“J.Hall”). J. Hall hired Walker Transportation, Inc. (“Walker”) to haul the coal from New Coal’s facility to a location designated by J. Hall.

 

On the date of the accident, Raymond G. Walker, an employee of Jamie Walker, doing business as Walker Trucking, drove a tractor trailer (owned by Jaime Walker) to the New Coal loading facility. The truck was not owned, leased, borrowed, rented or hired by J.A.D. or New Coal. Nor was the truck used with New Coal or J.A.D.’s permission or pursuant to their instruction. The trailer was loaded with coal by either Lisa Sutton, an employee of New Coal, or Jeff Dean, an employee of J.A.D. Sutton and Dean were the only loader operators present at the New Coal facility but neither party can affirmatively determine who loaded the coal.

 

Raymond Walker was driving the tractor and loaded trailer from the loading facility to the destination specified by J. Hall, and was over eighty miles from the loading facility, when it collided with a vehicle being operated by Glenn Stanfill and in which his son, Joshua Stanfill, was riding as a passenger. As a result of the collision, Glenn Stanfill died and Joshua Stanfill was injured. Janet Stanfill, the personal representative of Glenn Stanfill’s estate, and Joshua Stanfill (hereinafter “the Stanfills”) filed the underlying tort action seeking damages resulting from the accident.

 

The Stanfills alleged in their complaint that Walker was operating the tractor and an overloaded trailer at an excessive rate of speed when he lost control of the tractor trailer resulting in the collision. The Stanfills further alleged that J.A.D., New Coal, Sutton, and Dean overloaded the trailer and knew or should have known of the high likelihood that the trailer would overturn while in transit. The Stanfills also alleged that, inter alia, New Coal, J.A.D., Jeff Dean and Lisa Sutton were negligent per se in violating certain Kentucky statutes.

 

Allstate maintains that it has no duty to defend either J.A.D. or New Coal, nor pay any sum that J.A.D. or New Coal might be liable for as a result of this accident.

 

 

II.

 

Upon motion for summary judgment, the Court must view the facts, and inferences to be drawn from those facts, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 465 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.E.2d 538 (1986); Nguyen v. CNA Corp., 44 F.3d 234, 236-7 (4th Cir.1995). Summary judgment is proper where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. However, “[t]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When a motion for summary judgment is made and properly supported by affidavits, depositions, or answers to interrogatories, the non-moving party may not rest on the mere allegations or denials of the pleadings. Fed.R .Civ.P. 56. Instead, the non-moving party must respond by affidavits or otherwise present specific facts showing that there is a genuine issue of dispute fact for trial. Id. If the non-moving party fails to show a genuine issue of fact, summary judgment, if appropriate, may be entered against the non-moving party. See Celotex Corp. V. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

 

 

III.

 

Federal courts sitting pursuant to their diversity jurisdiction must apply the law of the forum state. Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817 (1938). Under Virginia law, “a contract is made when the last act to complete it is performed, and in the context of an insurance policy, the last act is the delivery of the policy to the insured.” Res. Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631, 636 (4th Cir.2005), cert. denied, 126 S.Ct. 568 (2005). Here, the policy was delivered in Virginia, and Virginia law applies.

 

 

IV.

 

“Under Virginia law, an insurer’s obligation to defend an action ‘depends on comparison of the policy language with the underlying complaint to determine whether the claims alleged [in the complaint] are covered by the policy.’ “ Am. Online, Inc. v. St. Paul Mercury Ins. Co., 347 F.3d 89, 93 (4th Cir.2003) (quoting Superperformance Int’l, Inc. v. Hartford Cas. Ins. Co., 332 F.3d 215, 220 (4th Cir.2003). A policy holder bears the burden of proving that the policyholder’s conduct is covered by the policy. Res. Bankshares Corp., 407 F.3d at 636 (citing Furrow v. State Farm Mut. Auto. Ins. Co., 237 Va. 77, 375 S.E.2d 738, 740 (1989). Yet this burden is not especially onerous since the insurer must defend unless “it clearly appears from the initial pleading the insurer would not be liable under the policy contract for any judgment based upon the allegations.” Res. Bankshares Corp., 407 F.3d at 636 (citing Reisen v. Aetna Life and Cas. Co., 225 Va. 327, 302 S.E.2d 529, 531 (1983). The duty to defend is broader than the duty to indemnify because “it arises whenever the complaint alleges facts and circumstances, some of which, if proved, would fall within the risk covered by the policy.” Brenner v. Lawyers Title Ins. Corp., 240 Va. 185, 397 S.E.2d 100, 102 (1990); Reisen, 302 S.E.2d at 531. “However, if it appears clearly that the insurer would not be liable under its contract for any judgment based upon the allegations, ‘it has no duty even to defend.’ “ Brenner at 102 (quoting Travelers Indem. Co. v. Obenshain, 219 Va. 44, 245 S.E.2d 247, 249 (1978)).

 

Allstate denies that it owes J.A.D. or New Coal any duty to defend or to indemnify because the tractor and trailer being operated by Walker is not a “covered auto” as required in the policy and contends that New Coal is not even an insured under the policy.

 

J.A.D. and New Coal contend that J.A.D. is entitled to summary judgment on both issues and that New Coal is entitled to partial summary judgment on the duty to defend issue. They claim that the operative language of the policy is ambiguous, which ambiguity must be construed against the insurer and in favor of coverage. The defendants’ contend that the policy language is susceptible to two reasonable interpretations. They also maintain that it is relevant that Allstate used the similar phrase, “in your business,” in the very next paragraph thus illustrating that Allstate had the option to require a more proximate nexus for coverage in the previous paragraph at issue.

 

In Virginia, “an insurance policy is a contract to be construed in accordance with the principles applicable to all contracts.” Seabulk Offshore, Ltd. v. Am. Home Assurance Co., 377 F.3d 408, 419 (4th Cir.2004) (citing Graphic Arts Mut. Ins. Co. v. C.W. Warthen Co., 240 Va. 457, 397 S.E.2d 876, 877 (1990)). As with other contracts, when interpreting a policy, courts “must not strain to find ambiguities” or “examine certain specific words or provisions in a vacuum, apart from the policy as a whole.” Res. Bankshares Corp., 407 F.3d at 636 (citing Salzi v. Virginia Farm Bureau Mut. Ins. Co., 263 Va. 52, 556 S.E.2d 758, 760 (2002) (“ ‘[A]s in the case of any other contract, the words used are given their ordinary and customary meaning when they are susceptible of such construction.’ ”) (quoting Graphic Arts, 397 S.E.2d at 877). See e.g., TM Delmarva Power, L.L.C. v. NCP of Va., L.L.C., 263 Va.116, 557 S.E.2d 199 (2002); First Am. Title Ins. Co. v. Seaboard Sav. & Loan Ass’n, 227 Va. 379, 315 S.E.2d 842, 845 (1984). A policy provision is ambiguous when, “in context, it is capable of more than one reasonable meaning.” Res. Bankshares Corp., 407 F.3d at 636. See Hill v. State Farm Mut. Auto. Ins. Co., 237 Va. 148, 375 S.E.2d 727, 730, 5 Va. Law Rep. 1510 (1989); Caldwell v. Transp. Ins. Co., 234 Va. 639, 364 S.E.2d 1, 3 (1988) (citing St. Paul Ins. v. Nusbaum Co., 227 Va. 407, 316 S.E.2d 734 (1984). Similarly, reasonable exclusions to coverage, when stated in the policy in clear and unambiguous language that is clearly applicable to a specific situation at hand, will be enforced. Federal Ins. Co. v. New Coal Co., 415 F.Supp.2d 647 (W.D.Va.2006) (citing Transcon. Ins. Co. v. RBMW, Inc., 262 Va. 502, 551 S.E.2d 313, 318 (2001)). Where exclusionary provisions are ambiguous, they will be interpreted in a manner that provides coverage. Id. (citing Lower Chesapeake Assocs. v. Valley Forge Ins. Co., 260 Va. 77, 532 S.E.2d 325, 331-32 (2000)).

 

In Pham v. Hartford Fire Ins. Co., 419 F.3d 286, 290 (4th Cir .2005) the court analyzed the phrase, “in your business or your personal affairs,” found in Part IV(D) of the Broad Form Endorsement amendment to the automobile insurance policy at issue in that case. The court determined that this language was “clear and unambiguous.” Id. The phrase, “in connection with your business,” used in the Allstate policy at issue is similar to the phrase considered by the Pham court. In fact, the court specifically “note[d] the similar and consistent wording” between the two phrases and stated that “the result is the same.” Id. Thus, contrary to the contentions of the defendants and despite the inconsequential factual differences between the two cases, this Court finds that the phrase “in connection with your business” is not ambiguous. Even if the Pham case, as defense counsel suggests, is distinguishable from the current case, the Court’s analysis would not change because the Court finds that the phrase “in connection with your business” is unambiguous on the face of the Allstate insurance policy.

 

 

A.

 

Since it has been determined that the operative phrase is not ambiguous, the sole issue, then, is whether the vehicle falls within the non-owned auto exception of the policy. Several other courts have confronted the interpretation of the phrase, “in connection with your business,” and have looked to two factors to determine the meaning. The first factor is the extent to which the vehicle at issue was used in the course and scope of the insured’s business. U.S. Fid. & Guar. Co. v. Sanders, No. Civ.A. 5:03-0702, 2006 WL 771914,(S.D.W. Va March 30, 2006) (citing Gore v. State Farm Mut. Ins. Co., 649 So.2d 162, 166 (La.Ct.App.1995)) (The “policy language requires that the accident occur while the ‘nonowned auto’ is being used in the course and scope of the insured’s business or personal affairs”); Adams v. Thomason, 753 So.2d 416, 421 (La.Ct.App.2000). In Adams, a farmer’s employee was driving the farmer’s truck and pulling a load of the farmer’s cotton in a trailer owned by the named insured. Adams, 735 So.2d at 418, 420. The insured was in the cotton gin business. Id. The court concluded that the farmer’s employee was acting in the course and scope of the farmer’s business and not of the insured. Id. at 421. Notably, the fact that the driver was employed by an entity other than the insured led the court to conclude that the vehicle’s use was not “in connection with” the insured’s business. Id.

 

 

Note that many courts have found that the phrases, “in your business” or “in connection with your business,” are equivalent to the phrase, “scope of employment.” See, e.g., O’Shea v. Welch, 101 Fed. Appx. 800, 805, 2004 WL 1376643 (10th Cir.2004) (citing Wasau Underwriters Ins. Co. v. Baillie, 281 F.Supp.2d 1307, 1316 (M.D.Fla.2002), aff’d, 82 Fed. Appx. 218 (11th Cir.2003); Lawler v. Fireman’s Fund Ins. Co., 163 F.Supp.2d 841, 852-53 (N.D.Ohio 2001), aff’d, 322 F.3d 900 (6th Cir.2003). Therefore, an analysis under Sanders and Adams is appropriate.

 

Similarly, in this case, the driver of the tractor and trailer was employed by Walker, not J.A.D. or New Coal. Walker did not have a contract or agreement with J.A.D. or New Coal but was hired by J. Hall to transport the coal. These facts indicate that the Walker tractor and trailer involved in the collision at issue was being used in the course and scope of Walker’s business, not the business of J.A.D. or New Coal. The mere fact that J.Hall, through Walker, had purchased the coal present in the truck at the time that it was involved in the collision from New Coal is insufficient to find that the truck was used in the course and scope of New Coal’s or J.A.D’s business.

 

 

B.

 

The second factor in determining whether use was “in connection with” the insured’s business is the “extent to which an insured held or exerted a right of control over the vehicle and its driver.” Sanders, 2006 WL 771914,(citing Liberty Mut. Fire Ins. Co. v. Canal Ins. Co., 1997 WL 786760,(N.D.Miss. Nov. 13, 1997); Adams, 753 So.2d at 421. In Liberty Mutual, a lumber company held an insurance policy with language nearly identical to J.A.D.’s Allstate policy. Liberty Mutual, 1997 WL 786760, *7. The lumber company made an oral contract for the hauling of wood with a trucking company. Id. The lumber company paid the trucking company a fee per ton for hauling and did not exert any control over the truck’s operation other than to indicate where the lumber should be picked up and dropped off. Id. at * 1-2. The trucking company’s employee was involved in an accident which resulted in the death of the driver of another vehicle. Id. at *2. A federal district court held that the truck involved was not used “in connection with” the lumber company’s business. Id. at *7. That court looked primarily to the lumber company’s lack of control over any aspect of the truck’s operation other than pickup and drop off point. Id. (citing Canal Ins. Co. v. T.L. James & Co., Inc., 911 F.Supp. 225, 228 (S.D.Miss.1995) (stating that “ ‘the term “using” … while not necessarily limited to actual physical operation of the vehicle (i.e., driving), is appropriately read as requiring more than just the ability to direct and control the vehicle’ ”). The Liberty Mutual court continued by stating that it is “unreasonable to attach … [a] broad interpretation to this provision of the Liberty Mutual policy, and such an interpretation would lead to quite absurd results.” Id.

 

The facts of this case illustrate that J.A.D. and New Coal are even further removed from controlling the actions of the trucking company than the lumber company in Liberty Mutual. Neither company was involved in a contract with Walker trucking as was the case in Liberty Mutual. Raymond G. Walker, the driver of the vehicle, was employed by Walker Trucking, Inc., not J.A.D. or New Coal. Neither J.A.D. nor New Coal had the ability or authority to direct the truck’s operation or to control the actions of the driver. New Coal and J.A.D. had no right to control the actions of Walker after he left the coal loading facility some 5 hours and 80 miles from the accident scene. No control was exerted by J.A.D. or New Coal over even the drop off point of the goods as was the case in Liberty Mutual. The coal was sold to Walker Trucking on the account of J. Hall for the purpose of Walker Trucking hauling this coal to Ohio and selling it to a J. Hall customer. The lumber being hauled in the Liberty Mutual case was for the customers of the lumber company who had contracted with the trucking company. Sale of the coal was completed when Walker left the loading facility. Subsequent to the accident, J. Hall was invoiced by New Coal for the coal that was in the Walker truck at the time of the accident and J. Hall paid the New Coal invoices.

 

 

C.

 

The defendants assert that the allegation by the Stanfills that a New Coal employee or, in the alternative, a J.A.D. employee negligently overloaded the coal truck is sufficient to connect J.A.D .’s business to the use to which the coal truck was being put at the time of the accident. Merely because the Stanfills may have been able to state a claim against J.A.D. for overloading Walker’s truck does not mean that the Walker truck was being used in connection with J.A.D.’s business at the time of the accident. The policy is an automobile policy, not a comprehensive general liability policy. Moreover, the mere fact that New Coal’s coal was in Walker’s truck at the time of the accident is insufficient to satisfy the plain language of the policy and Virginia law. This Court agrees with the aforementioned authorities in determining that such a broad interpretation of the phrase, “in connection with your business,” would lead to absurd results. If that logic were to be carried to the extreme, a retail establishment would be liable for the tortious actions of any customer who had recently purchased merchandise from the store. Similarly, simply because J.A.D. owned the loading facility and equipment but leased the facility and equipment to New Coal, New Coal is a subsidiary of J.A.D., and J.A.D.’s articles of incorporation state that the purposes of the corporation include loading and hauling coal, does not establish a sufficient connection.

 

 

The defendants’ contend that because the interests of the two companies “so overlapped, that the business of New Coal, is and was at the operative time, also the business of J.A.D.,” it would not matter which employee loaded the truck. The Court notes that the companies were and are separate corporate entities with different business, assets, and employees. They also obtained separate insurance. Regardless, the operative language of the policy does not grant coverage to J.A.D. much less New Coal so an in-depth analysis on the subject is irrelevant.

 

This Court does not find the defendants’ argument that New Coal still retained the possibility of rights to the coal under the remedy of reclamation to be sufficient to establish the requisite business connection.

 

Based on all of these factors and the aforementioned persuasive authority, this Court finds that the Walker vehicle was not being used in connection with J.A.D.’s business at the time of the accident. Thus, it does not qualify as a non-owned auto under the policy. J.A.D. is a named insured, but the accident at issue did not involve a covered vehicle, so J.A.D. has no coverage. This Court does not reach the issue of whether or not New Coal qualifies as an “insured” under the policy because the fact that the Walker truck does not meet the definition of a “covered auto” under the terms of the policy resolves the issue as moot. Allstate does not owe a duty to defend or indemnify in the instant matter because the policy does not provide coverage to J.A.D. or New Coal for the Kentucky suit. Where there is no coverage, there is not duty to defend. See Travelers Indem. Co. v. Obenshain, 219 Va. 44, 47, 245 S.E.2d 247, 249 (1978); See also, Morrow Corp. v. Harleysville Mut. Ins. Co., 110 F.Supp.2d 441, 446 (E.D.Va.2000) (finding that an insurer’s duty to defend is broader than its duty to indemnify). Moreover, the policy itself states that, “we have no duty to defend suits for bodily injury or property damage not covered by this policy.” Thus, under the law and the language of the policy, there is no duty to defend or indemnify where there is no coverage.

 

 

V.

 

For the reasons stated above, the Court will grant plaintiff’s motion for summary judgment and deny defendants’ motion for summary judgment.

 

 

ORDER

 

In accordance with the memorandum opinion entered this day, it is hereby ORDERED that 1) the plaintiff’s motion for summary judgment is GRANTED; and 2) the defendants’ motion for summary judgment is DENIED, the effect of which is to hold no duty on the part of Allstate to defend or indemnify.

 

The Clerk is directed to send certified copies of this Order to all counsel of record and to strike the case from the active docket of the Court.

Missouri Court of Appeals,Southern District.

Raul CABALLERO and K. Stacey Caballero, Plaintiffs-Appellants,

v.

Leland D. STAFFORD, Jr., Defendant,

andNew Prime, Inc., Defendant-Respondent.

No. 27272.

 

Aug. 23, 2006.

 

PHILLIP R. GARRISON, Judge.

Raul Caballero (“Caballero”), and his wife, K. Stacey Caballero (collectively referred to as “Appellants”), appeal from the trial court’s judgment granting summary judgment in favor of New Prime, Inc. (“Respondent”) in their suit arising from a tractor/trailer accident, in which Caballero was injured. The accident involved a tractor, leased by Caballero to Respondent, and a trailer, owned by Respondent. At the time of the accident, Caballero was in the sleeper of the tractor which was being operated by Leland Stafford (“Stafford”). This appeal involves the effect of contractual language in agreements between Caballero and Respondent. Specifically, contrary to the trial court’s ruling, Appellants allege that the contract language does not result in Respondent being relieved of liability as a matter of law. We agree and reverse and remand.

 

 

FACTS

 

In 2002, Caballero and Respondent entered into a written Independent Contractor Operating Agreement (“ICOA”) and a written Personnel Service Agreement (“PSA”). Pursuant to the ICOA, the parties established an independent contractor relationship, whereby Caballero would lease a 2003 Freightliner tractor (referred to in the contract as the “Equipment”) to Respondent, in order to haul freight for Respondent’s customers. Caballero could operate the Equipment himself, employ his own drivers, or lease drivers from Respondent pursuant to the terms of the PSA. Stafford was a driver “leased” by Respondent to Caballero.

 

Appellants allege that on January 17, 2003, a tractor-trailer unit driven by Stafford left the roadway and overturned on its side while Caballero was a passenger in the sleeping berth. On April 30, 2004, Appellants filed a four-count petition against Respondent and Stafford for injuries sustained by Caballero in the accident. In Count I, Appellants sought relief from Respondent under the doctrine of respondeat superior based upon the alleged negligence of Stafford in his operation of the truck. In Count II, K. Stacey Caballero alleged loss of consortium by reason of her husband’s injuries. In Count III, Appellants sought relief from Respondent for its alleged negligent hiring and retaining of Stafford, and in Count IV, Appellants sought punitive damages.

 

Respondent filed a motion to dismiss, which was later amended, asserting that it was not liable for Caballero’s injuries based on either of two grounds: (1) Stafford was the “borrowed servant” of Caballero, and (2) clauses in the contracts between the parties relieved Respondent from liability for Stafford’s negligence. Respondent’s amended motion to dismiss referenced both the ICOA and the PSA, and both were included with the motion as exhibits.

 

The terms and provisions of the ICOA provide in relevant part:

1. LEASE. You hereby lease to [Respondent] the Equipment from the date of this Agreement through December 31 of the same year. Thereafter, this Agreement shall continue from year to year unless otherwise terminated as provided herein. During the term of this Agreement, [Respondent] shall have exclusive possession, control and use of the Equipment and complete responsibility for the operation of the Equipment….

The parties agree that the intent of this Agreement is to establish an independent contractor relationship at all times.

….

2. SERVICE. You agree to make the Equipment available to [Respondent], with qualified and [Respondent] Certified drivers, to pick up loads and transport them to destinations designated by various shippers. Provided, however, You may refuse to haul any load offered to You by [Respondent][.]

….

10. DRIVERS. You shall (i) drive the Equipment Yourself, (ii) employ, on Your own behalf, drivers for the Equipment, or (iii) lease drivers for the Equipment.

….

11. INSURANCE

(a) Liability. [Respondent] shall provide and maintain auto liability insurance for the protection of the public pursuant to FHWA Regulations under 49 USC 13906. Said liability insurance may not necessarily insure You against loss.

….

(e) Occupational Injuries. You shall either (i) make an election to procure Workers’ Compensation insurance protection against injuries sustained while in pursuit of Your business, for Yourself and Your drivers, and thereafter provide and maintain at Your own expense such insurance; or (ii) provide and maintain at Your expense a suitable alternative insurance, such as occupational accident insurance, for Yourself and Your drivers, which insurance must be approved by [Respondent].

….

12. ACCIDENTS, CLAIMS, LOSSES AND EXPENSES.

….

(e) HOLD HARMLESS AND INDEMNIFICATION. YOU AGREE TO INDEMNIFY AND HOLD HARMLESS [RESPONDENT], ITS AFFILIATED COMPANIES AND THEIR RESPECTIVE OFFICERS, DIRECTOR, SHAREHOLDERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS, FROM AND AGAINST ANY AND ALL LIABILITIES AND EXPENSES WHATSOEVER, INCLUDING, WITHOUT LIMITATION, CLAIMS, DAMAGES, JUDGEMENTS, AWARDS, SETTLEMENTS, INVESTIGATIONS, COSTS AND ATTORNEY’S FEES (COLLECTIVELY, “CLAIMS”) WHICH ANY OF THEM MAY INCUR OR BECOME OBLIGATED TO PAY ARISING OUT OF YOUR ACTS OR OMISSION OR THOSE OF YOUR AGENTS AND EMPLOYEES (INCLUDING DRIVERS LEASED FROM [RESPONDENT] ). YOU FURTHER AGREE TO HOLD [RESPONDENT] HARMLESS AND TO INDEMNIFY [RESPONDENT] AGAINST ALL CLAIMS BY YOU AND YOUR AGENTS AND EMPLOYEES.

 

 

The terms and provisions of the PSA provide in relevant part:

1. DRIVERS.

(a) Supplying Drivers. [Respondent] shall, upon the request of [Caballero], lease drivers to [Caballero] who are employees of [Respondent] (“Drivers”) to operate motor vehicles transporting freight which are owned or leased by [Caballero]. (the “Equipment”).

(b) Status of Drivers. Drivers shall at all times be deemed to be and shall be employed by [Respondent] only.

(c) Qualification of Drivers. All Drivers shall be duly licensed and legally qualified under all state and federal regulations to drive the Equipment in interstate or intra-state commerce.

(d) Employment of Drivers. [Respondent] shall have the sole authority to hire and fire the drivers. If [Caballero] becomes dissatisfied with the performance of a Driver, [Caballero] may request [Respondent] to substitute another driver in his place and [Respondent] shall endeavor to provide a substitute driver as soon as practical. Any expenses incurred in relieving a Driver and replacing him with another driver, including the transportation of both Drivers to and from Springfield, Missouri shall be borne solely by [Caballero].

2. COMPENSATION OF DRIVERS.

(a) Wages and Deductions. [Respondent] shall be solely responsible for the payment of the Driver’s wages and shall have the responsibility of making all deductions from such wages as are required by law, and forwarding such deductions and reports of the same to the proper state and federal authority.

3. WORKERS[‘] COMPENSATION INSURANCE. [Respondent] shall provide workers [‘] compensation coverage on all Drivers as required by applicable law.

….

5. [CABALLERO’S] RESPONSIBILITIES WITH RESPECT TO DRIVERS.

(a) Supervisor of Drivers. On those occasions when the equipment is being furnished to [Respondent] by [Caballero] to haul freight, [Respondent] shall dispatch the Drivers. In all other respects, however, during the term of this Agreement, [Caballero] shall be responsible for the supervision and conduct of the Drivers, including causing the Drivers to abide by all work and safety rules of the Department of Transportation and [Respondent].

(b) Regulatory Compliance. [Caballero] shall require the Drivers to keep and maintain proper daily logs, daily vehicle inspections, on-the-road inspections by law enforcement officers, trip reports and all other records and data necessary to comply with all applicable regulations of the Department of Transportation and such other state and federal agencies having authority over the operation of [Caballero’s] equipment….

6. HOLD HARMLESS AND INDEMNIFICATION.

(a) Damage to [Caballero] and Equipment. [Caballero] agrees not to hold [Respondent] or the Drivers responsible for any damage or injuries suffered by [Caballero] or to [Caballero’s] Equipment as a result of any action by Drivers and hereby releases [Respondent] and the Drivers from any such claims.

(b) Other damage and Claims. Because [Caballero] is responsible for the supervision and conduct of the Drivers, [Caballero], notwithstanding the fact that the Drivers are the employees of [Respondent], shall pay to [Respondent] all amounts required by paragraph 12 contained in the separate Operating Agreement between the parties.

(c) Business Interruption. [Caballero] agrees not to hold [Respondent] responsible for any damage or loss of business suffered by [Caballero] caused by and [sic] interruption of services by the Drivers furnished to Lessee hereunder and hereby releases [Respondent] from any such claim.

 

 

On October 5, 2004, the court determined that Respondent’s amended motion to dismiss would be treated as a motion for summary judgment, because it presented matters outside the pleadings. Before filing their response, Appellants were given time to depose two employees of Respondent: Darrell Hopkins (“Hopkins”), who is responsible for accounting and administrative functions; and Donald Lacy (“Lacy”), Respondent’s director of safety.

 

Hopkins provided the following information in his deposition testimony: (1) Drivers such as Stafford were employed in order to further Respondent’s business interests, and Stafford was employed by Respondent on the date of the alleged accident; (2) Respondent carries workers’ compensation insurance for its employed drivers including Stafford; (3) at the time of the alleged accident, Stafford was operating the tractor-trailer unit under Respondent’s Department of Transportation (“D.O.T.”) authority; (4) although Respondent was reimbursed by Caballero for Stafford’s driving services, Respondent signed Stafford’s paychecks and was listed as Stafford’s employer on his W-2 forms; (5) Respondent dispatched the freight hauled by Stafford, thus dictating when and where Stafford was to pick up, haul, load, and unload freight for Respondent or Respondent’s customers; (6) Stafford could not haul freight for any other company while employed with Respondent; (7) any trailer pulled by Stafford was owned by Respondent; (8) Stafford was required to perform pre-trip inspections of any tractor-trailer unit he was driving; (9) Stafford was also required to submit to drug testing and physical examinations; and (10) Respondent maintained the authority to suspend Stafford if it felt that he was not driving safely.

 

Lacy provided the following information in his deposition testimony: (1) Respondent is responsible for all of the drivers operating under its D.O.T. authority, and must ensure that its drivers comply with the Federal Motor Carrier Safety Regulations; (2) if Respondent believes a driver is unsafe, it maintains the authority to disqualify him or her; (3) Respondent dispatches the loads being hauled by Stafford, and controls when and where the load is to be picked up or delivered; (4) Respondent controls the length of the haul and all other haul requirements; (5) Stafford is required by Respondent to comply with its policies regarding the loading and unloading of freight; (6) Respondent requires all of its drivers to adhere to information contained in: a driver handbook, the Federal Motor Carrier Safety Regulations, a pocket guide regarding hazardous materials, and an emergency response guide, all of which are supplied by Respondent; and (7) even when Stafford is a second seat driver placed with Caballero, Respondent can take action with regard to Stafford if it feels Stafford is driving unsafely.

 

After Appellants filed their response to the amended motion to dismiss, and Respondent filed its reply, the trial court granted summary judgment in favor of Respondent on Counts I and II of Appellants’ petition. In a memorandum explaining its decision, the trial court provided in relevant part:

The language included in the agreements is somewhat convoluted on the issue of which party has control of driver Stafford. The provisions are, no doubt, worded to include required DOT language, to avoid violation of DOT’s restrictions regarding delegation of safety requirements, and to comply with DOT’s prohibition of permitting multiple carriers to operate under a single carrier’s authority. The language also attempts to pass control to [Caballero] owner operator.

On the “hold harmless” issue, the agreements are quite precise, but do not include the exact language [Appellants] urge the Court to require.

….

Both parties refer to the Missouri Supreme Court case of Alack v. Vic Tanny International of Missouri, Inc., 923 S.W.2d 330 (Mo. [banc] 1996).That case involved an agreement between a health club and it’s [sic] injured member. The language in that agreement purports to release the club from liability for their own future negligence. The Court states:

“The words ‘negligence’ or ‘fault’ or their equivalents must be used conspicuously so that a clear and unmistakable waiver and shifting of risk occurs. There must be no doubt that a reasonable person agreeing to an exculpatory clause understands what future claims he or she is waiving.” Id. at 337-8.

The Court also advised that less precise language may be effective in certain commercial situations. Id. at 338 [n. 4].

The case before this court is unlike Alack. Here, any liability [Respondent] may have in counts one and two is based entirely on the legal fiction of vicarious liability for [ ] Stafford’s actions under the doctrine of Respondeat Superior. We have two entrepreneurs involved in a freight hauling venture enter into agreements, not to exculpate [Respondent] from their own negligence, but rather to make clear as between them, which party will be responsible for a third party’s negligence.

The contract between the parties on the “hold harmless” issue is precise, clear and unambiguous, and need not include the “magic” language suggested in Alack. The Court has not identified any statute, regulation or case law prohibiting parties from entering into agreements involved in this case. The plain language of the contracts should be enforced; therefore, [Respondent’s] motion for summary judgment as to count one of [P]laintiffs’ petition as well as [P]laintiff wife’s derivative consortium claim in count two is sustained.

 

 

On August 19, 2005, the trial court executed a “Partial Summary Judgment” in which it explained that “Counts I and II of [Appellants’] petition fail to state a claim upon which relief can be granted against [Respondent] for the reasons set forth in the Court’s prior Memorandum.” On August 24, 2005, Appellants dismissed, without prejudice, Counts III and IV of their petition. This appeal follows.

 

 

OPINION

 

Appellants’ two points on appeal are interrelated and will be discussed jointly. In essence, Appellants argue that the trial court erred in granting summary judgment in favor of Respondent because, contrary to the court’s finding, the contractual clauses were exculpatory in nature but do not comply with the requirements of Alack with regard to such clauses.

 

We give no deference to the trial court’s grant of summary judgment, as the propriety of summary judgment is strictly an issue of law. ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). We use the same principles employed by the trial court in determining whether to grant summary judgment. Id. Furthermore, we view the record in the light most favorable to the non-movant. Id. All facts set forth by affidavit or otherwise in support of summary judgment are taken as true unless contradicted by the non-movant’s response. Id.

 

A defending party is entitled to summary judgment if he can show:

(1) facts that negate any one of the claimant’s elements facts, (2) that the non-movant, after an adequate period of discovery, has not been able to produce, and will not be able to produce, evidence sufficient to allow the trier of fact to find the existence of any one of the claimant’s elements, or (3) that there is no genuine dispute as to the existence of each of the facts necessary to support the movant’s properly-pleaded affirmative defense. Regardless of which of these three means is employed by the “defending party,” each establishes a right to judgment as a matter of law. Where the facts underlying this right to judgment are beyond dispute, summary judgment is proper.

 

Id. at 381.

 

Once movant has met this burden, the non-moving party may only avoid summary judgment being entered against him/her if that party can “show-by affidavit, depositions, answers to interrogatories, or admissions on file-that one or more of the material facts shown by the movant to be above any genuine dispute is, in fact, genuinely disputed.” Id.

 

In its motion, Respondent relied on the following contentions: (1) it was not vicariously liable for the alleged negligence of Stafford because he was under the control of Caballero and was, therefore, his “borrowed servant”; and (2) the indemnity and hold harmless clauses in the contracts should be enforced because they are not “pure exculpatory clauses … because the language does not shift fault of [Respondent] itself; rather it merely defines which of the contracting parties is responsible for the performance of [Stafford].” In responding to the motion, Appellants contended there were genuine issues of fact regarding whether Stafford was a “borrowed servant” of Caballero, and that the indemnity and hold harmless clauses of the contracts constituted exculpatory clauses that were impermissibly vague and ambiguous and therefore not effective, under this scenario.

 

 

I. BORROWED SERVANT DEFENSE

 

In the present case, Appellants allege that Respondent is vicariously liable for any injuries resulting from Stafford’s negligence. Under the doctrine of respondeat superior, Respondent is vicariously liable for Stafford’s negligence only if, at the time of the accident, Stafford was Respondent’s employee and was engaged in an activity within the course and scope of his employment. Burrell ex rel. Schatz v. O’Reilly Automotive, Inc., 175 S.W.3d 642, 647 (Mo.App. S.D.2005). However, “[t]he borrowed servant doctrine can block a general employer’s vicarious liability for its employee’s negligence.” Wren v. Vaca, 922 S.W.2d 408, 410 (Mo.App. W.D.1996). Therefore, if Stafford was the “borrowed servant” of Caballero at the time of the accident, vicarious liability cannot be imposed on Respondent.

 

“The core of the ‘borrowed servant’ defense is that the general employer [Respondent in this case] has surrendered to the borrower [Caballero in this case] all control over the employee, so that the employee has become, with respect to the work for which he was loaned, exclusively the employee of the special employer or borrower .” Huff v. Belford Trucking Co., 809 S.W.2d 71, 73 (Mo.App. W.D.1991). The essential elements necessary to establish a “borrowed servant” relationship are as follows:

(a) consent on the part of the employee to work for the special employer; (b) actual entry by the employee upon the work of and for the special master pursuant to an express or implied contract so to do; and (c) power of the special employer to control the details of the work to be performed and to determine how the work shall be done and whether it shall stop or continue.

 

Ballard v. Leonard Bros. Transport Co., Inc., 506 S.W.2d 346, 350 (Mo.1974) (citations omitted).

 

“To escape liability the general employer must surrender full control of the employee in the performance of the particular work, it not being sufficient if the servant is partially under the control of a third party.” Koirtyohann v. Washington Plumbing & Heating Co., 471 S.W.2d 217, 219-20 (Mo.1971). “If the general employer retains some control over the employee as he goes about the work for which he has been lent and borrowed, the ‘borrowed servant’ defense … is not available to the general employer.”  Huff, 809 S.W.2d at 73. The mere fact that an employee obeys the orders of the temporary employer does not necessarily make that employee a “borrowed servant” of the temporary employer. Brickner v.Normandy Osteopathic Hosp., Inc., 746 S.W.2d 108, 114 (Mo.App. E.D.1988). By the same token, “in the leasing of equipment and operators to another, the mere fact that the general employer continues to pay the operator’s wages, the gas, oil and other expense, and is responsible for maintenance, does not prevent the operator from becoming a [borrowed servant] of the lessee.” Ballard, 506 S.W.2d at 351.

 

Respondent argues that “[t]he [PSA], pursuant to its own provisions and read in conjunction with the [ICOA], clearly and unambiguously provides that a driver supplied to Caballero at his request-such as [Stafford]-was the borrowed servant of Caballero.” The ICOA provides that “[Respondent] shall have exclusive possession, control and use of the Equipment and complete responsibility for the operation of the Equipment.” Pursuant to the ICOA, Caballero further agreed to make the equipment available to Respondent in order to transport freight for Respondent’s customers. Respondent, therefore, has exclusive control over the leased equipment, and dictates where and how freight is to be delivered. The PSA provides that Caballero is responsible for the supervision and conduct of Stafford, but also provides that Stafford shall be deemed an employee of Respondent only. Respondent is responsible for dispatching Stafford, and instructs Caballero about the manner in which he is to supervise Stafford:

[Caballero] shall require the Drivers to keep and maintain proper daily logs, daily vehicle inspections, on-the-road inspections by law enforcement officers, trip reports and all other records and data necessary to comply with all applicable regulations of the [D.O.T] and such other state and federal agencies having authority over the operation of [Caballero’s] equipment.

 

In sum, Respondent instructs Caballero how he is to supervise Stafford while Stafford is driving equipment under the complete control of Respondent. The deposition testimony of Hopkins and Lacy provides that Respondent controlled where and when the load was to be picked up and delivered, and determined the requirements for each haul. We fail to understand how Respondent can have complete control over the equipment operated by Stafford, and dictate the manner in which Caballero is to supervise Stafford, but at the same time have relinquished total control over Stafford to Caballero.

 

In arguing that Stafford is the “borrowed servant” of Caballero, Respondent relies heavily on the western district case, Wren. However, that case is distinguishable. In Wren, American Driver Leasing, Inc. (“ADL”) leased truck-driver Robert Vaca (“Vaca”) to Mo-Kan Express (“Mo-Kan”). 922 S.W.2d at 409. Vaca fell asleep while driving a tractor-trailer unit for Mo-Kan resulting in an accident. Id. Jack Wren (“Wren”), an employee of Mo-Kan, who was in the tractor’s sleeping compartment, was injured as a result of the accident. Id. Wren sued both Vaca and ADL. Id. ADL claimed it was not liable for Vaca’s negligence because Vaca was the “borrowed servant” of Mo-Kan. Id. at 410. The following facts were undisputed in that case:

Vaca received his pay from ADL which had leased Vaca to Mo-Kan…. Mo-Kan controlled Vaca’s day-to-day duties. Through Wren, it told Vaca when to report for work and where to go and how to perform his duties. ADL paid for Vaca’s health insurance, but Mo-Kan reimbursed it for this expense. ADL reserved the right to fire Vaca. It also exercised some control over its drivers by requiring them to obey its company policies and rules. It had a right to withhold payment from drivers who did not obey its policies and rules. ADL paid workers’ compensation benefits for Vaca.

 

Id. at 409-10. In determining that Vaca was the “borrowed servant” of Mo-Kan, the court explained, “ADL established that Mo-Kan controlled the details of Vaca’s work. It told him when to drive, where to drive, how to drive, and how to load and unload his cargo. This was sufficient to relieve ADL of liability for Vaca’s negligent operation of the tractor-trailer rig.” Id. at 410. The court further noted that “ADL’s requiring Vaca to obey its general policies and rules had no relevance to the particular work demanded by Mo-Kan…. Vaca did not drive unless Mo-Kan told him to drive. ADL had no right to assert control over when Vaca drove, where he drove, or how he drove.” Id at 410-11.

 

Respondent argues “[a]s in Wren, the issue before this Court is not whether [Respondent] was [Stafford’s] employer-[Respondent] acknowledges that it was. Rather, the issue is who controlled the details of [Stafford’s] work in connection with the operation of Caballero’s truck[.]” Respondent alleges that the parties “resolved this controlling issue on December 10, 2002[,] when they contractually agreed that Caballero ‘shall be responsible for the supervision and conduct of the Drivers.’ “ We disagree.

 

In Wren, the “borrowed servant” was leased to another trucking company; therefore the leasing employer had absolutely no control over when Vaca was to report for work, where he was to go and how he was to perform his duties. 922 S.W.2d at 410-11. In the present case, Stafford was not leased to another trucking company but to Respondent’s own independent contractor. This is an important distinction, because while Caballero agreed to supervise Stafford, Stafford was at all times performing work at the direction of Respondent. As such, Respondent told Stafford, whether through Caballero or directly, when to report for work, where to haul freight, and how to perform his duties.

 

The trial court found that “[t]he language included in the agreements is somewhat convoluted on the issue of which party has control of driver Stafford.” We agree with the trial court’s apparent conclusion that there remain material facts in dispute regarding the existence of the “borrowed servant” relationship. Certainly, the record does not permit us to conclude that Respondent was entitled to a judgment as a matter of law on that theory.

 

The PSA specifically provides that Stafford “shall at all times be deemed to be and shall be employed by [Respondent] only.” Since summary judgment would not have been appropriate on the issue of “borrowed servant,” Respondent would be entitled to summary judgment only if the indemnity and hold harmless provisions contained in the ICOA and PSA, purporting to release Respondent from liability for the actions of Stafford, are valid and enforceable. The issue, therefore, is whether the contract language is effective to relieve Respondent of vicarious liability as a matter of law.

 

 

II. ENFORCEABILITY OF INDEMNITY AND HOLD HARMLESS PROVISIONS

 

The relevant contractual provisions in the ICOA and PSA are labeled “Hold Harmless and Indemnification,” but the parties are in disagreement regarding whether they are indemnity clauses, exculpatory clauses, or both. In its amended motion to dismiss, Respondent asserts that the contractual provisions “are not pure exculpatory clauses … because the language does not shift fault of [Respondent] itself; rather, it merely defines which of the contracting parties is responsible for the performance of the ‘leased’ driver.” Similarly, the trial court found that the agreements do not “exculpate [Respondent] from their own negligence, but rather … make clear as between [Respondent and Caballero], which party will be responsible for a third party’s negligence.”

 

An “exculpatory clause” is “[a] contractual provision relieving a party from liability resulting from a negligent or wrongful act.” Black’s Law Dictionary 608 (8th ed.2004). An “indemnity clause” is “[a] contractual provision in which one party agrees to answer for any specified or unspecified liability or harm that the other party might incur.-Also termed hold-harmless clause; save-harmless clause.” Id. at 784. The Supreme Court of Missouri in Alack, 923 S.W.2d at 334, cites the Supreme Court of Texas case Dresser Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 508-09 (Tex.1993), in its analysis of the requirements necessary to release a party to a contract from its own negligence. In Dresser, the Supreme Court of Texas explains:

[A] release surrenders legal rights or obligations between the parties to an agreement. It operates to extinguish the claim or cause of action as effectively as would a prior judgment between the parties and is an absolute bar to any right of action on the released matter. For these reasons, a release is expressly designated as an affirmative defense…. An indemnity agreement is a promise to safeguard or hold the indemnitee harmless against either existing and/or future loss liability. The agreement creates a potential cause of action in the indemnitee against the indemnitor.

 

853 S.W.2d at 508 (citations omitted).

 

An exculpatory clause or release operates in a procedurally different manner than an indemnity or hold harmless provision. If a motorist, not party to the contracts, was injured in this accident due to the negligence of either Stafford or Caballero, and the motorist recovered damages from Respondent, then pursuant to the contracts, Respondent could bring an indemnity action against Caballero. On the other hand, while labeled “Hold Harmless and Indemnification,” the relative provisions in this case are being used by Respondent as an affirmative defense, which, if enforceable, would release Respondent from liability for Stafford’s negligence.

 

As previously set out, the trial court characterized the relative agreements as follows: “We have two entrepreneurs involved in a freight hauling venture enter into agreements, not to exculpate [Respondent] from their own negligence, but rather to make clear as between them, which party will be responsible for a third party’s negligence.” With that characterization in mind the trial court related that “[t]he contract between the parties on the ‘hold harmless’ issue is precise, clear and unambiguous, and need not include the ‘magic’ language suggested in Alack.”

 

[10] We disagree with the trial court’s analysis. As set out above, in the absence of a “borrowed servant” relationship, Respondent is responsible for the negligent acts of its employees under the doctrine of respondeat superior. “[R]espondeat superior imposes vicarious liability on employers for the negligent acts or omissions of employees or agents as long as the acts or omissions are committed within the scope of the employment or agency.”  Lindquist v. Scott Radiological Group, Inc., 168 S.W.3d 635, 655-56 (Mo.App. E.D.2005) (emphasis supplied). The parties do not dispute that Stafford is the employee of Respondent, and the PSA specifically provides that Stafford “shall at all times be deemed to be and shall be employed by [Respondent] only.” Through the doctrine of respondeat superior, Stafford’s negligence would be imputed to Respondent. Since the contractual clauses here are being sought to relieve Respondent from liability for its employee’s negligence, they are exculpatory in nature. See O’Connell v. Walt Disney World Co., 413 So.2d 444, 446 (Fla.Dist.Ct.App.1982) (explaining that an indemnification clause which attempts to shift the responsibility for the payment of damages back to the injured party produces the same result as an exculpatory provision).

 

[11][12][13][14] “Although exculpatory clauses in contracts releasing an individual from his or her own future negligence are disfavored, they are not prohibited as against public policy.” Twin Chimneys Homeowners Ass’ n v. J.E. Jones Const. Co., 168 S.W.3d 488, 497 (Mo.App. E.D.2005). Exculpatory clauses are strictly construed against the party seeking their enforcement. Gates v. Sells Rest Home, Inc., 57 S.W.3d 391, 397 (Mo.App. S.D.2001). “[T]he rule is clear ‘that a contract provision exempting one from liability for his negligence will never be implied but must be clearly and explicitly stated.’ “ Id. (quoting Poslosky v. Firestone Tire & Rubber Co., 349 S.W.2d 847, 850 (Mo.1961)). “Whether the contract or purported exculpatory clause is clear and explicit or ambiguous and nonexculpatory is a matter of law[.]” Id.

 

[15][16] In Alack, 923 S.W.2d at 337-38, the Supreme Court of Missouri set out a brightline test for courts to apply when assessing whether an exculpatory clause releases a party from its own negligence. “[E]xculpatory language must effectively notify a party that he or she is releasing the other party from claims arising from the other party’s own negligence…. General language will not suffice.” Id. at 337. The Court determined that an exculpatory clause purporting to shield a health club facility from liability for “any damages,” “any injuries,” and “any and all claims” arising from a member’s use of its facilities was ambiguous. Id. “As extensive as it is, the exculpatory clause at issue in this case is ambiguous because it did not specifically state that a member was releasing Vic Tanny for its own future negligence.” Id. The Court noted that “one may never exonerate oneself from future liability for intentional torts or for gross negligence, or for activities involving the public interest,” therefore “[a] contract that purports to relieve a party from any and all claims but does not actually do so is duplicitous, indistinct and uncertain.” Id . The Court then related that:

The better rule is one that establishes a bright-line test, easy for courts to apply, and certain to alert all involved that the future ‘negligence’ or ‘fault’ of a party is being released. The words ‘negligence’ or ‘fault’ or their equivalents must be used conspicuously so that a clear and unmistakable waiver and shifting of risk occurs. There must be no doubt that a reasonable person agreeing to an exculpatory clause actually understands what future claims he or she is waiving.

 

Id. Similarly, “[a] contract of indemnity will not be construed so as to indemnify one against loss or damage resulting from his own negligent acts unless such intention is expressed in clear and unequivocal terms.” Nusbaum v. City of Kansas City, 100 S.W.3d 101, 105 (Mo. banc 2003).

 

We disagree with the trial court and believe Alack is applicable to the case at bar. Where a party, such as Respondent, wishes to release itself from vicarious liability for the negligent acts of its employees, it must follow the rule of Alack. The language in the PSA provides that Caballero agrees not to hold Respondent or Stafford “responsible for any damage or injuries suffered by [Caballero] … as a result of any action by [Stafford] and hereby releases [Respondent] and [Stafford] from any such claims.” Likewise, the language contained within the ICOA indicates that Caballero will indemnify and hold Respondent harmless from “liabilities,” “expenses,” “claims, damages, judgments, awards, settlements, investigations, cost and attorneys’ fees.” The relative provisions do not use the words “negligence” or “fault” ‘ or their equivalents, therefore such provisions do not relieve Respondent from liability for Stafford’s negligence.

 

In holding that Respondent has not contractually released itself from liability for Stafford’s negligence, we do not ignore the Supreme Court of the United State’s holding in Transamerican Freight Lines, Inc. v. Brada Miller Freight Systems, Inc., 423 U.S. 28, 96 S.Ct. 229, 46 L.Ed.2d 169 (1975). In that case, the Court held that “the presence in an equipment lease of an indemnification clause directed to the lessor’s negligence is not in conflict with the safety concerns of the Commission or with the regulations it has promulgated.” Id. at 41. The Court noted that “[a]lthough one party is required by law to have control and responsibility for conditions of the vehicle, and to bear the consequences of any negligence, the party responsible in law to the injured or damaged person may seek indemnity from the party responsible in fact.” Id. at 40. In the present case, through the doctrine of respondeat superior, Respondent is the party responsible in fact, and is therefore seeking to release itself from its own negligence. As previously set out, in Missouri, if a party wishes to release itself from its own negligence, “[t]he words ‘negligence’ or ‘fault’ or their equivalents must be used conspicuously so that a clear and unmistakable waiver and shifting of risk occurs.” Alack, 923 S.W.2d at 337.

 

The trial court erred in granting partial summary judgment in favor of Respondent. The relevant contractual provisions do not include the words “negligence” or “fault” or their equivalents as required by Alack, and therefore, are not effective to release Respondent from liability for the alleged negligence of Stafford. Furthermore, Respondent has not demonstrated that it was entitled to judgment as a matter of law, because there are genuine issues of material fact regarding Respondent’s “borrowed servant” defense. Accordingly, the summary judgment entered by the trial court must be, and is hereby, reversed and the case remanded for further proceedings.

 

BATES, C.J., and SHRUM, P.J.,-concur.

 

Stafford’s motion to dismiss was denied, but the trial court entered an order in which it “expressly determine[d] that there [was] no just reason for delay.”

 

We do not ignore the principal that less precise language may be effective in agreements negotiated at arms length between equally sophisticated commercial entities. See Alack, 923 S.W.2d at 338 n. 4; see also Purcell Tire & Rubber Co., Inc. v. Executive Beechcraft, Inc., 59 S.W.3d 505, 510-11 (Mo. banc 2001). However, we can find nothing in the record supporting the proposition that Caballero is a sophisticated commercial entity.