Court of Appeals of Kentucky

February 18, 2022, Rendered

NO. 2020-CA-1344-MR

Reporter

2022 Ky. App. Unpub. LEXIS 91 *; 2022 WL 496004

RANDOLPH HOWELL, APPELLANT v. PEOPLES COVERAGE, INC.; GREGORY SCOTT COMPTON; PROGRESSIVE COMMERCIAL CASUALTY COMPANY; AND UNITED FINANCIAL CASUALTY COMPANY, APPELLEES

Notice: THIS OPINION IS DESIGNATED “NOT TO BE PUBLISHED.” PURSUANT TO THE RULES OF CIVIL PROCEDURE PROMULGATED BY THE SUPREME COURT, CR 76.28(4)(C), THIS OPINION IS NOT TO BE PUBLISHED AND SHALL NOT BE CITED OR USED AS BINDING PRECEDENT IN ANY OTHER CASE IN ANY COURT OF THIS STATE; HOWEVER, UNPUBLISHED KENTUCKY APPELLATE DECISIONS, RENDERED AFTER JANUARY 1, 2003, MAY BE CITED FOR CONSIDERATION BY THE COURT IF THERE IS NO PUBLISHED OPINION THAT WOULD ADEQUATELY ADDRESS THE ISSUE BEFORE THE COURT. OPINIONS CITED FOR CONSIDERATION BY THE COURT SHALL BE SET OUT AS AN UNPUBLISHED DECISION IN THE FILED DOCUMENT AND A COPY OF THE ENTIRE DECISION SHALL BE TENDERED ALONG WITH THE DOCUMENT TO THE COURT AND ALL PARTIES TO THE ACTION.

Prior History:  [*1] APPEAL FROM FLEMING CIRCUIT COURT. HONORABLE STOCKTON B. WOOD, JUDGE. ACTION NO. 16-CI-00127.

Core Terms

hazardous material, motor carrier, tow truck, hauling, trial court, transportation, coverage, motor vehicle, financial responsibility, towing, intrastate, insurers, petroleum, limits, declaratory judgment, pounds, proof of financial responsibility, question of law, require proof, argues, oil

Counsel: BRIEFS FOR APPELLANT: Bartley K. Hagerman, M. Austin Mehr, Elizabeth A. Thornsbury, Lexington, Kentucky.

BRIEF FOR APPELLEE UNITED FINANCIAL CASUALTY COMPANY: Christopher M. Mussler, Louisville, Kentucky.

BRIEF FOR APPELLEES PEOPLES COVERAGE, INC. AND GREGORY SCOTT COMPTON: Patrick L. Schmeckpeper, Susan L. Maines, Lexington, Kentucky.

Judges: BEFORE: CALDWELL, CETRULO, AND JONES, JUDGES. CALDWELL, JUDGE, CONCURS. JONES, JUDGE, CONCURS IN RESULT ONLY AND FILES SEPARATE OPINION.

Opinion by: CETRULO

Opinion

AFFIRMING

CETRULO, JUDGE: This is an appeal from a declaratory judgment order of the Fleming Circuit Court. A review of the record reveals numerous other orders of the court were not made final and appealable and did not finally adjudicate any claim as to any party. Thus, the sole Order being reviewed on this appeal is the October 2, 2020 order. No one asserts that this is not a final and appealable order under CR¹ 54.02(1). For reasons we will outline below, we affirm the ruling of the Fleming Circuit Court.

FACTUAL BACKGROUND

This case initially stems from a motor vehicle collision that occurred in 2015 when Reed, operating a tow truck, [*2]  ran a red light and collided with a motorcyclist, Howell, causing serious injuries. At the time of this collision, Reed insured that 1992 Chevrolet rollback tow truck with Progressive, under a commercial policy underwritten by United Financial Casualty Company (for ease throughout the Opinion, we will refer to both parties together as the “insurers”). Gregory Compton (“Compton”) and Peoples Coverage were the agent and employer of the agent, respectively, who accepted the application (we will refer to both simply as the “agent”). All parties agree that the written policy had a liability limit of only $25,000, the state minimum limit.

Howell filed suit against Reed, and the parties resolved that case by entry of an agreed judgment for $4.5 million. However, Howell agreed not to execute upon that judgment as to Reed. In exchange, Reed assigned to Howell his rights as to any claims against the insurers and/or the agent. Of course, Howell then filed a lawsuit alleging negligence claims against the insurers and the agent; including failure to properly advise Reed, failure to fully and properly insure the vehicle, and failure to comply with the provisions of KRS² 281.010, for a motor carrier vehicle.

 [*3] Some other pertinent facts are worth noting. The insurance application stated that Reed sought to purchase coverage for a rollback truck. He did not have a DOT³ number when he applied with the agent, and the application affirmatively stated that no state or federal filings were required. However, the application did state that this vehicle would be used for towing or hauling vehicles. The record indicates that Reed asked the agent how much insurance was needed and he was told that $25,000 was all that was required. Reed applied to the DOT for his DOT number a few days after the application was approved. No other insurance was requested of the carrier, and the DOT application was apparently not communicated to the insurers or agent. The collision occurred a month after the application for insurance. Reed was not towing a vehicle or hauling anything when the accident occurred. However, the record does indicate that he had begun intrastate hauling or towing of vehicles within that time frame.

After the prior lawsuit and settlement, with the assignment of the claims against the insurers and agent, the insurers and agent filed a declaratory judgment counterclaim in this action, asking the [*4]  trial court to address the issue of the correct amount of coverage required under these facts. The court’s ruling on the declaratory judgment is the sole issue in this appeal.

STANDARD OF REVIEW

This matter involves a review of questions of law as to the applicability of and interpretation of a statute in determining the correct amount of coverage required for the tow truck. Questions of law and matters of statutory construction are reviewed de novo on appeal. Lewis v. B & R Corp., 56 S.W.3d 432, 436 (Ky. App. 2001) (citation omitted). See also Halls Hardwood Floor Co. v. Stapleton, 16 S.W.3d 327, 330 (Ky. App. 2000).

ANALYSIS

The Fleming Circuit Court issued two specific rulings on the questions of law presented by the declaratory judgment filing. First, the court held that KRS 304.39-100 requires the $25,000 minimum liability insurance limit be afforded to the tow truck. Second, the court held that “If the . . . tow truck required proof of financial responsibility under KRS 281.655 for intrastate use, that amount is $100,000. Towing a motor vehicle does not constitute the transportation of hazardous materials.”

Appellant asks this Court to reverse the declaratory judgment order and find that the tow truck required proof of financial responsibility under KRS 281.655. He further asks that we rule that a minimum of $1 million in liability insurance [*5]  coverage was required for the tow truck because it hauls motor vehicles which, he argues, constitute “hazardous materials.” Finally, he asks that we direct that the $25,000 policy be amended to conform to the law and substitute $1 million for those minimum limits. We will address each of these requests in the order presented.

I. Minimum Liability Insurance Limits

Motor vehicle insurance requirements are detailed in KRS 304.39, the Kentucky Motor Vehicle Reparations Act (“MVRA”), which is generally applicable to all “regular” motor vehicles owned or operated within the Commonwealth. No one disputes that the minimum limits of $25,000 contained within the statute would be required for any motor vehicle. However, Appellant argues that tow trucks, designed for the business of hauling motor vehicles, are required to carry $1 million in coverage because the hauled motor vehicles would be cargo and therefore constitute hazardous materials. In short, Appellant argues, in part, that the trial court should not have applied the MVRA because the tow truck does not fit the definition of a motor vehicle under the MVRA. We disagree.

KRS 304.39-020(7) defines a motor vehicle as “any vehicle which transports persons or property [*6]  upon the public highways” then lists specific exceptions, which would not apply to this vehicle.⁴ KRS 304.39-110 sets forth the required minimum tort liability insurance for the use of any motor vehicle in the Commonwealth. The trial court did not err in determining as a matter of law that this rollback tow truck required at least the minimum liability limits of $25,000 under KRS 304.39-110.

However, there is a difference between mandatory minimum liability insurance limits under the MVRA and the financial responsibility requirements upon a motor carrier under KRS 281.655. The MVRA applies to all motor vehicles and provides insurance requirements for motor vehicles operated within the state. [*7]  When a person or business wishes to operate as a motor carrier, there is a further requirement of proof of financial responsibility under KRS 281.655. Appellant’s further argument is that the trial court should have held that the agent should have advised Reed to purchase additional insurance beyond what is required by the MVRA based upon some answers to questions posed by the agent that might have indicated his plan to use the tow truck as a motor carrier.

II. Motor Carriers

Chapter 281 of the Kentucky Revised Statutes deals with “motor carriers,” which are defined as “any person . . . who owns [or] operates . . . any motor vehicle for the transportation of passengers or property upon any highway, and any person who engages in the business of . . . U-Drive-It.” KRS 281.010. When a person or business wishes to operate as a motor carrier, proof of financial responsibility is required in an amount that is determined upon three criteria: 1) whether the motor carrier will be operating interstate or intrastate, 2) the commodity to be hauled, and 3) the gross vehicle weight. “The obvious purpose of the statute is to require of all motor carriers financial responsibility in the case of injuries or damages sustained [*8]  by third persons as a result of the negligent operation of their trucks.” Allen v. Canal Ins. Co., Greenville, S.C., 433 S.W.2d 352, 355 (Ky. 1968).

There is no question that the motor carrier in this instance did not provide the proof of financial responsibility required for a motor carrier’s intrastate use of a tow truck. Whether that failure or breach of duty will be placed upon the insurers or agent, as opposed to the motor carrier, has not yet been addressed by the trial court.

Similarly, the issues of negligence raised by Howell’s complaint are not before this Court. Instead, the trial court considered only the questions raised by the declaratory judgment counterclaim and concluded that if the 1992 Chevrolet rollback truck required proof of financial responsibility under KRS 281.655 for intrastate use, then the amount is $100,000. Thus, the trial court’s interpretation of the statute is the sole question before us.

Appellant contends that the act of towing a motor vehicle constitutes “transporting hazardous material.” Pursuant to KRS 281.655(6), that interpretation would require the motor carrier to then provide financial responsibility liability limits of not less than $1 million for any one accident or occurrence. The trial court did not agree and specifically held that towing [*9]  a motor vehicle does not constitute the transportation of hazardous materials. We agree.

In support of the contention that a towed vehicle would constitute hazardous material, Appellant relies upon regulations of the federal transportation department and the provisions of 49 U.S.C.A.⁵ § 5101. Generally, the statute lists eight classes of hazardous materials and includes a ninth miscellaneous class. 49 U.S.C.A. § 5103. The tow truck involved in this accident, even if it were towing another vehicle at the time of this accident, clearly would not qualify under any of the eight classes of hazardous materials contained in the statute. Appellant argues that a towed vehicle should qualify as a class nine “miscellaneous hazard,” but we do not find Appellant’s reliance upon federal regulations or the Congressional record sufficient to determine that the trial court’s interpretation was in error. In fact, nothing in 49 C.F.R.⁶ § 172 supports the conclusion that a single-engine gas-powered automobile transported within a single state of the United States constitutes transporting material “in a particular amount and form” so as to “pose an unreasonable risk to health and safety or property.” Id. § 5103(a).

Moreover, we find that this case can be determined [*10]  by consideration of Kentucky’s motor carrier statute alone. KRS 281.655(4) requires minimum liability limits of only $100,000 for a motor carrier of 18,000 pounds or less. Even a tanker vehicle carrying less than 10,000 pounds in gasoline would not be required to have $1 million in coverage. KRS 281.655(5).⁷ Finally, KRS 281.655(6) specifically states that hauling petroleum or petroleum products under 10,000 pounds is not considered hauling hazardous materials. Based upon the clear language of KRS 281.655, the trial court concluded that the hauling operation of a tow truck with a single vehicle upon it would similarly not be considered the hauling of hazardous materials.

Such a question is a matter of statutory interpretation and consequently a question of law only. The proper standard of review of a question of law does not require the adoption of the decision of the trial court as to the matter of law, but does involve the interpretation of a statute according to its plain meaning and its legislative intent. See Floyd Cty. Bd. of Educ. v. Ratliff, 955 S.W.2d 921, 44 13 Ky. L. Summary 13 (Ky. 1997); Reis v. Campbell Cty. Bd. of Educ., 938 S.W.2d 880, 43 13 Ky. L. Summary 16 (Ky. 1996); and Hardin Cty. Sch. v. Foster, 40 S.W.3d 865, 868 (Ky. 2001).

We agree with the trial court that the hauling or towing of a single automobile intrastate does not constitute the transportation of hazardous materials so as to trigger the application of KRS 281.655(6) and require $1 million [*11]  in coverage. As Appellant concedes, under 49 U.S.C.A. § 5125 and 49 C.F.R. § 171.1(f), Kentucky does have the right to set financial responsibility requirements for motor carriers and it has exercised that right with KRS 281.655. The trial court did not err in determining that the statute as applied to these facts requires only $100,000 in financial responsibility.

We also point out that the provisions of KRS Chapter 281 place obligations upon the motor carrier. The penalties are against the motor carrier for failure to comply and provide the required financial responsibility. It is not before this court to determine whether the obligations upon a motor carrier to comply with the financial responsibility requirements of KRS Chapter 281 can be placed upon the insurers or agent. The trial court determined that there were material issues of disputed fact, for a jury to determine, with respect to the agent’s duty to advise on the amount of coverage necessary to comply with the statutory proof of financial responsibility requirements. With that, we agree.

The court below ruled solely on the declaratory judgment counterclaim at this stage, finding that the intrastate towing of a vehicle simply does not constitute hauling of hazardous materials. The court further clarified [*12]  that the minimum limit of financial responsibility, if required of the motor carrier in this instance, was $100,000 under KRS 281.655. Even through the lens of de novo review, we do not find that determination to be in error and we affirm the judgment of the Fleming Circuit Court.

CALDWELL, JUDGE, CONCURS.

JONES, JUDGE, CONCURS IN RESULT ONLY AND FILES SEPARATE OPINION.

Concur by: JONES

Concur

JONES, JUDGE, CONCURRING: At issue in this appeal is the minimum amount of insurance coverage Reed needed to have in place before he could lawfully operate his tow truck to haul other vehicles in Kentucky. The trial court concluded that the required minimum liability insurance was $25,000 under KRS 304.39-110, but that if Reed wanted to operate the tow truck intrastate to haul other vehicles, KRS 281.655 requires proof of financial responsibility up to $100,000. The trial court, however, rejected Appellant’s argument that towing another vehicle constitutes the hauling of hazardous material such that Reed would have been required to show proof of financial responsibility up to $1,000,000.

The trial court also rejected Appellant’s assertion that the policy should be reformed to reflect the higher coverage as a matter of law, determining instead that there [*13]  were material issues of disputed fact with respect to the agent’s duty to advise on the amount of coverage necessary to comply with KRS 281.655‘s proof of financial responsibility requirements. Specifically, the trial court ordered that phase one of the bifurcated trial will focus on the “issue of whether the insurance companies/agent(s) were negligent/erred in not advising the tow truck owner/driver Melvin Reed that $100,000 was the minimum required coverage, and if so, what amount of coverage would likely have been purchased.”⁸

The parties agree that under the MVRA, the minimum amount of liability coverage is $25,000. The only real dispute at this point is whether Reed’s tow truck business hauled hazardous materials such that the required proof of financial responsibility was $1,000,000 as opposed to $100,000.⁹ On appeal, Appellant argues that hauling another vehicle is, as a matter of law, the transporting of hazardous material such that the trial court should have issued a declaration that Reed was required to have coverage of one million dollars in place.

Under KRS 281.010(33), “‘Motor carrier’ means any person in either a private or for-hire capacity who owns, controls, operates, manages, or leases, except [*14]  persons leasing to authorized motor carriers, any motor vehicle for the transportation of passengers or property upon any highway, and any person who engages in the business of automobile utility trailer lessor, vehicle towing, driveaway, or U-Drive-It[.]” The facts adduced before the trial court indicated that Reed was using his tow truck to transport property such that he would be considered a motor carrier for the purpose of KRS 281.010(33). As such, it is undisputed that Reed should have been required to have on file with the Department of Transportation “one (1) or more approved indemnifying bonds or insurance policies issued by some surety company or insurance carrier authorized to transact business within the Commonwealth of Kentucky” demonstrating Reed’s proof of financial responsibility.¹⁰ KRS 281.655(1).

The operative question before us is the amount of financial responsibility Reed was required to have in place given his plan to use his tow truck to haul other vehicles intrastate. KRS 281.655(4) lists “the types and minimum amounts of insurance to be carried on each vehicle[.]” Appellant asserts that KRS 281.655(6) is applicable because hauling another vehicle constitutes the transport of hazardous materials:

Any person, firm, or [*15]  corporation operating or causing to be operated any vehicle for the transportation of hazardous material as defined in KRS 174.405, except petroleum or petroleum products in bulk in amounts less than ten thousand (10,000) pounds, shall have on each vehicle single limits liability insurance coverage of not less than one million dollars ($1,000,000) for all damages whether arising out of bodily injury or damage to property as a result of any one (1) accident or occurrence.

KRS 281.655(6). The trial court rejected this argument. It reasoned Reed’s use of the tow truck to haul other vehicles did not require the “transportation of hazardous material” meaning that Reed was only required to show financial responsibility of up to $100,000 for the death or injury of one person. KRS 281.655(4).

“Hazardous material” is defined in KRS 174.405(2) as:

a substance designated hazardous by the Federal Hazardous Materials Transportation Law (49 U.S.C. sec. 5101 et seq.) and regulations issued pursuant thereto, including but not limited to hazardous and radioactive waste, but shall not include agricultural wastes, coal mining wastes, utility waste (fly ash, bottom ash, scrubber sludge), sludge from water treatment and sewage treatment facilities, cement kiln dust, gas and oil drilling [*16]  muds, oil production brines or waste oil.

KRS 174.405(2) (emphasis added).

I believe the operative word in the above definition is “substance.” As used in this context, a substance means a “matter of particular or definite chemical constitution.” Substance, MERRIAM-WEBSTER, https://www.merriam-webster.com/dictionary/substance (last visited Jan. 7, 2022). Although a vehicle may contain various substances (such as petroleum, water, and oil, to name a few), it is not a discrete substance. Therefore, even though the federal regulations cited to by Appellant might include a vehicle as a Class 9 hazardous material under 49 C.F.R § 172.101, I cannot agree that the Kentucky statute requires us to per se treat a vehicle in its finished form as a hazardous material.

Rather, I believe the intent behind the statute is that we must consider whether the vehicle contains any hazardous substances. In this case, it does. As noted by Appellants, a vehicle contains both oil and gas, which are petroleum products. However, problematic for Appellants, Kentucky’s statute excludes “petroleum or petroleum products in bulk in amounts less than ten thousand (10,000) pounds[.]” KRS 281.655(6). Since Reed would not have been using his tow truck to transport [*17]  petroleum of over ten thousand pounds, the trial court correctly determined that KRS 281.655(6)‘s one-million-dollar requirement would not have been applicable. I believe this interpretation is consistent with 49 C.F.R. § 387.9, which distinguishes between the intrastate transport of hazardous materials in bulk and in any form: “For-hire and Private (In interstate or foreign commerce, in any quantity; or in intrastate commerce, in bulk only; with a gross vehicle weight rating of 10,001 or more pounds)[.]” (Emphasis added.)

Accordingly, for the reasons set forth above, I agree with the majority’s conclusion that $100,000 is the correct amount of financial responsibility Reed would have been required to show pursuant to KRS 281.655(4). Likewise, I agree with the trial court’s determination that the insurance company’s and its agent’s duties with respect to the amount of insurance they should have advised Reed to purchase are questions of fact that must be decided by the jury based on the specific circumstances of this case.

End of Document

---

¹ Kentucky Rule of Civil Procedure.

² Kentucky Revised Statute.

³ United States Department of Transportation.

⁴ Such exemptions include,

road rollers, road graders, farm tractors, vehicles on which power shovels are mounted, such other construction equipment customarily used only on the site of construction and which is not practical for the transportation of persons or property upon the highways, such vehicles as travel exclusively upon rails, and such vehicles as are propelled by electrical power obtained from overhead wires while being operated within any municipality or where said vehicles do not travel more than five (5) miles beyond the said limits of any municipality.

KRS 304.39-020(7).

⁵ United States Code Annotated.

⁶ Code of Federal Regulations.

⁷ This provides, in pertinent part, “[a]ny person, firm, or corporation operating or causing to be operated any vehicle for the transportation of petroleum or petroleum products in bulk in amounts less than ten thousand (10,000) pounds shall have . . .” $100,000 in insurance for the death of or injury to any one person and $300,000 total liability for death of or injury to persons. (Emphasis added.)

⁸ The trial court has indicated that in the event the jury determines that the minimum coverage required was negligently misadvised by the insurance company or its agent, “then public policy requires that the insurance policy not be voided — rather, that a ‘fair term’ be inserted (as to the amount of the coverage which would likely have been purchased.”

⁹ Again, I reiterate that whether the agent was responsible for advising Reed to purchase coverage beyond what is required by the MVRA has not yet been determined at the trial court level. The trial court has explicitly determined that “[t]he [c]ourt believes whether Defendant(s) met a standard duty of care in advising Reed as to whether $25,000 or $100,000 in coverage was needed for the tow truck, based on the information provided by Reed, is a question of fact for the jury.”

¹⁰ Again, whether the insurance company and/or its agent had a duty to advise Reed of this requirement has been determined by the trial court to be an issue of fact for the jury. I agree. I do not believe this Court should opine on whether Reed should have been advised to purchase coverage exceeding that required by the MVRA. I believe the scope of the duty requires a consideration of the specific conversation between Reed and the agent.

Court of Appeals of Ohio, Twelfth Appellate District, Butler County

February 22, 2022, Decided

CASE NO. CA2021-08-097

Reporter

2022-Ohio-501 *; 2022 Ohio App. LEXIS 431 **; 2022 WL 518700

GREAT AMERICAN ASSURANCE COMPANY, Appellee, – vs – ACUITY, A MUTUAL INSURANCE COMPANY, et al. Appellants.

Prior History:  [**1] CIVIL APPEAL FROM BUTLER COUNTY COURT OF COMMON PLEAS. Case No. CV2020-04-0767.

Core Terms

Truck, detours, coverage, route, trial court, shipping, yard, summary judgment, time of an accident, dispatch, motor carrier, delivery, tractor, driver, covered automobile, provide coverage, garaged, weekend, drive, regularly, lessee, carrier’s, customary, traveling, chassis, insured, trailer, loaded, independent contractor

Case Summary

Overview

HOLDINGS: [1]-The trial court did not err by granting summary judgment under Civ.R. 56 in favor of insurer because insurer demonstrated that there were no genuine issues of material fact and that it was entitled to judgment as a matter of law as it was found that a reasonable trier of fact could only come to one conclusion: the subject insurance policy did not provide coverage based upon the application of the policy’s trucking or business use exclusion and as a result, no insurance coverage was available under the policy issued to the driver for any claims that were made, or may be asserted, arising out of the October 2019 accident.

Outcome

Judgment affirmed.

LexisNexis® Headnotes

Civil Procedure > … > Summary Judgment > Entitlement as Matter of Law > Appropriateness

Civil Procedure > Judgments > Summary Judgment > Entitlement as Matter of Law

Civil Procedure > Appeals > Summary Judgment Review > Standards of Review

Civil Procedure > Appeals > Standards of Review > De Novo Review

Civil Procedure > … > Summary Judgment > Entitlement as Matter of Law > Genuine Disputes

 Entitlement as Matter of Law, Appropriateness

An appellate court reviews a trial court’s summary judgment decision under a de novo standard. Summary judgment is appropriate under Civ.R. 56 when (1) there is no genuine issue of material fact remaining to be litigated, (2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds can come to but one conclusion and that conclusion is adverse to the nonmoving party, who is entitled to have the evidence construed in his or her favor.

Civil Procedure > … > Summary Judgment > Opposing Materials > Accompanying Documentation

Civil Procedure > Judgments > Summary Judgment > Burdens of Proof

Civil Procedure > … > Summary Judgment > Burdens of Proof > Nonmovant Persuasion & Proof

Civil Procedure > … > Summary Judgment > Burdens of Proof > Movant Persuasion & Proof

Civil Procedure > … > Summary Judgment > Entitlement as Matter of Law > Genuine Disputes

 Opposing Materials, Accompanying Documentation

The party requesting summary judgment bears the initial burden of informing the trial court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Once a party moving for summary judgment has satisfied its initial burden, the nonmoving party must then rebut the moving party’s evidence with specific facts showing the existence of a genuine triable issue; it may not rest on the mere allegations or denials in its pleadings. Civ.R. 56(E).

Insurance Law > … > Policy Interpretation > Ambiguous Terms > Construction Against Insurers

Insurance Law > Claim, Contract & Practice Issues > Policy Interpretation > Ordinary & Usual Meanings

Insurance Law > Claim, Contract & Practice Issues > Policy Interpretation > Exclusions

Insurance Law > Claim, Contract & Practice Issues > Claims Made Policies > Exclusions

Insurance Law > Claim, Contract & Practice Issues > Policy Interpretation > Plain Language

 Ambiguous Terms, Construction Against Insurers

The words and phrases contained in an insurance policy must be given their plain and ordinary meaning unless there is something in the contract that would indicate a contrary intention. Contracts of insurance are to be strictly construed against the insurer, especially when an exclusionary clause is at issue. An exclusion in an insurance policy will be interpreted as applying only to that which is clearly intended to be excluded. However, while exclusions in insurance contracts are read narrowly in Ohio to apply only to that which is clearly intended to be excluded, that rule of strict construction does not permit a reviewing court to ignore the obvious intent of an exclusionary provision.

Insurance Law > Types of Insurance > Motor Vehicle Insurance > Coverage

Torts > … > Motor Vehicles > Particular Actors, Circumstances, & Liabilities > Motor Carriers

 Motor Vehicle Insurance, Coverage

In the context of insurance coverage, minor personal detours do not take a driver out of the carrier’s business.

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Torts > … > Motor Vehicles > Particular Actors, Circumstances, & Liabilities > Motor Carriers

 Compulsory Coverage, Motor Carriers

In the context of insurance coverage, when a driver is operating a vehicle in the business of a motor carrier on a customary route, short personal detours do not take the driver out of the business of the motor carrier.

Counsel: Montgomery Johnson, LLP, and George D. Jonson, for appellee.

Lewis, Brisbois, Bisgaard & Smith LLP, and Judd R. Uhl and Katherine L. Kennedy, for appellant, Acuity, A Mutual Insurance Company.

Judges: HENDRICKSON, J. M. POWELL, P.J., and S. POWELL, J., concur.

Opinion by: HENDRICKSON

Opinion

HENDRICKSON, J.

 [*P1]  Appellant, Acuity, A Mutual Insurance Company (“Acuity”), appeals the decision of the Butler County Court of Common Pleas granting summary judgment to appellee, Great American Assurance Company (“GAAC”). For the reasons outlined below, we affirm the trial court’s decision.

Background

 [*P2]  This case arises from a vehicular accident that occurred on October 4, 2019 between a 2000 Volvo tractor owned by Herb Winsted (“the Truck”) and another motor vehicle. At the time of the accident, Winsted was an independent contractor for Wm. Hafer Drayage Co. (“Hafer”), which is an intermodal trucking company that hauls containers via company drivers and independent contractors. Pursuant to his independent contractor agreement with Hafer, Winsted provided transportation related services to Hafer and used the Truck to move containers to and from different [**2]  warehouses. Winsted began exclusively hauling loads for Hafer in 2019, and at the time of the accident, the Truck displayed Hafer’s name and “DOT” number on its door.

Winsted’s Insurance Coverage

 [*P3]  Pursuant to Winsted’s independent contractor agreement with Hafer, the Truck was covered by Hafer’s “public liability [and] property damage * * * insurance coverage[.]” At the time of the accident, Hafer was insured with Acuity via a Commercial Auto and Commercial Excess Liability Policy (“the Acuity Policy”). Pursuant to the Acuity Policy, Acuity agreed to “pay all sums an 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.” (Emphasis sic.) The parties do not dispute that the Acuity Policy includes the Truck in its schedule of covered autos.

 [*P4]  Winsted also obtained a Non-Trucking Liability and Physical Damage Policy from GAAC for the Truck while it was not being operated on behalf of Hafer (“the GAAC Policy”). Obtaining such a policy was a requirement of Winsted’s independent contractor agreement with Hafer. Pursuant to the GAAC Policy, GAAC [**3]  agreed to provide liability coverage for the Truck as described by Part (II)(A) of the policy. Specifically, the policy states that,

[GAAC] will pay all sums an 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.

Part (II)(C) of the GAAC Policy provides certain coverage exclusions, and indicates that,

[t]his insurance does not apply to any of the following:

* * *

13. TRUCKING OR BUSINESS USE

Bodily injury or property damage arising out of any accident which occurs while the covered auto is being used in the business of any lessee or while the covered auto is being used to transport cargo of any type. For purposes of this exclusion, the phrase “in the business of any lessee” means any of the following uses of the covered auto:

* * *

(f) while traveling from * * * (1) any terminal or facility of any lessee; * * * to any location where the covered auto is regularly garaged.

 [*P5]  The GAAC Policy defines “lessee” as “any person or organization to whom a covered auto is leased, rented or loaned.” The phrase “regularly garaged” is defined as “parked [**4]  or stored on a regular basis, whether indoors or outdoors.”

Winsted’s Business for Hafer and the Day of the Accident

 [*P6]  While working with Hafer, Winsted received his job assignments from Hafer’s dispatcher. On a typical workday, dispatch would direct Winsted to his first pickup assignment, which Winsted would drive to in the Truck directly from his home. After completing his initial pickup, Winsted would communicate with dispatch to pick up, drop off, and move containers to various locations using the Truck and a Hafer chassis, i.e., trailer. After completing his final assignment of the day, Winsted would either proceed to the Hafer shipping yard (“the shipping yard”), located at 11320 Mosteller Road, to return the chassis, or go directly to his home at 5360 Alert New London Road. Regardless of whether Winsted returned to the shipping yard after his final assignment or proceeded directly home, Winsted always garaged the Truck at his home. As a result, Winsted typically began and ended his workday with the Truck at his home.

 [*P7]  On October 4, 2019, the date of the accident, Winsted alerted dispatch at 7:53 a.m. that he had completed his first assignment of the day and planned to take the Truck [**5]  to Hafer’s shop for transmission fluid. After receiving the transmission fluid, Winsted continued to communicate with dispatch and completed several additional deliveries and pickups in Ohio and Kentucky. At 3:06 p.m., Winsted informed dispatch that he had completed a delivery, but still had a chassis. At that point, dispatch instructed Winsted to return to the shipping yard to return the chassis.

 [*P8]  The location of Winsted’s final delivery was approximately two or three miles from the Hafer shipping yard. Upon arriving at the shipping yard, Winsted returned the chassis and submitted his weekly paperwork to the dispatcher. After conversing with a few workers, Winsted left the shipping yard in the Truck and headed home. Winsted could not recall how long he remained at the shipping yard prior to heading home. On his way home, Winsted stopped at Ollie’s Bargain Outlet (“Ollie’s”), where his wife was working at the time, and purchased blue jeans. Winsted could not recall how long it took to get to Ollie’s or how long he spent inside the store. After leaving Ollie’s, Winsted continued his customary route home, stopping for fuel at a Marathon gas station on the way. The accident occurred after [**6]  Winsted left the Marathon gas station, around 5:00 p.m., and on Winsted’s typical route home from the shipping yard.

 [*P9]  From the time Winsted left the shipping yard until the accident, it is undisputed that Winsted took the same route, aside from a one-half mile deviation, that he would have taken had he traveled directly home without any detours. Typically, Winsted would have taken Interstate 275 westbound to State Route 126. At that point, Winstead would have turned onto State Route 27, also known as Colerain Avenue. He would have proceeded west onto Hamilton Cleves Road, followed by right turn onto Cincinnati Brookville Road and a left turn onto his street, Alert New London Road.

 [*P10]  Winsted’s stop at Ollie’s to purchase blue jeans only took him approximately one-half mile off Interstate 275. After purchasing the jeans, Winsted returned to Interstate 275 at the same place he exited and continued westbound on his normal route home. Winsted then pulled into the Marathon gas station, located on Hamilton Cleves Road, after exiting State Route 27. After purchasing fuel, Winsted continued on Hamilton Cleves Road, as he would have on a typical drive home. Approximately five to seven minutes from [**7]  Winsted’s home, at the intersection of Cincinnati Brookville Road and Brown Farm Drive, Winsted collided with another vehicle, allegedly causing harm to the vehicle’s minor passengers. Thus, despite the brief departures and returns to his normal route, Winsted’s drive home from the shipping yard was the same route he would have typically taken at the end of a workday.

The Declaratory Action and Summary Judgment Decision

 [*P11]  After the accident, GAAC filed a complaint for declaratory judgment in the trial court. Relevant here, GAAC requested the trial court to enter a judgment against Acuity declaring that, based on the language in the Trucking or Business Use Exclusion in Part (II)(C)(13)(f)(1), the GAAC Policy did not provide coverage for injury arising out of the October 2019 accident.

 [*P12]  Acuity denied that the GAAC Policy did not provide coverage for injuries arising from the accident and sought declaratory judgment in a counterclaim. Specifically, Acuity requested the trial court to enter a judgment declaring that Acuity has no coverage obligation under the Acuity Policy for Winsted because he is not an insured under Acuity’s Policy.

 [*P13]  On March 26, 2021, both parties moved the trial court [**8]  for summary judgment. After a hearing, the trial court granted GAAC’s motion for summary judgment and denied Acuity’s motion. In so doing, the trial court held that “based upon the undisputed facts, * * * the GAAC Policy does not provide coverage based upon the application of the GAAC Policy’s Trucking or Business Use Exclusion.” The trial court entered judgment in favor of GAAC declaring that no insurance coverage was available under the GAAC Policy for any claims that have been made, or may be asserted, as a result of the October 2019 accident.

The Appeal

 [*P14]  Acuity now appeals, raising the following assignment of error for our review:

 [*P15]  Assignment of Error No. 1:

 [*P16]  THE TRIAL COURT ERRED IN DETERMINING THAT GAAC’S NONTRUCKING POLICY DOES NOT PROVIDE COVERAGE FOR EARL WINSTEAD (sic).

 [*P17]    construed in his favor. BAC Home Loans Servicing, L.P. v. Kolenich, 194 Ohio App.3d 777, 2011-Ohio-3345, ¶ 17, 958 N.E.2d 194 (12th Dist.), citing Zivich v. Mentor Soccer Club, Inc., 82 Ohio St.3d 367, 369-370, 1998- Ohio 389, 696 N.E.2d 201 (1998).

 [*P18]  The party requesting summary judgment bears the initial burden of informing the court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Dresher v. Burt, 75 Ohio St.3d 280, 292, 1996- Ohio 107, 662 N.E.2d 264 (1996). Once a party moving for summary judgment has satisfied its initial burden, the nonmoving party “must then rebut the moving party’s evidence with specific facts showing the existence of a genuine triable issue; it may not rest on the mere allegations or denials in its pleadings.” Sexton at ¶ 7; Civ.R. 56(E).

 [*P19]  On appeal, Acuity argues the trial court erred in finding the Trucking or Business Use Exclusion precluded coverage under the GAAC Policy for two reasons. First, Acuity contends the trial court erred in concluding that the language of the Trucking or Business Use Exclusion Part (II)(C)(13)(f) excludes coverage for Winsted. Acuity further claims the remaining exclusions of the GAAC Policy do not apply to Winsted, and do not preclude coverage for the accident.

 [*P20]    is well established that contracts of insurance are to be strictly construed against the insurer, especially when an exclusionary clause is at issue. United Ohio Ins. Co. v. Vanosdol, 12th Dist. Warren Nos. CA92-09-073 and CA92-08-075, 1993 Ohio App. LEXIS 2746, *4 (June 1, 1993). “An exclusion in an insurance policy will be interpreted as applying only to that which is clearly intended to be excluded.” Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St.3d 657, 665, 597 N.E.2d 1096 (1992). However, while exclusions in insurance contracts are read narrowly in Ohio to apply only to that which is clearly intended to be excluded, that rule of strict construction does not permit a reviewing court to ignore the obvious intent of an exclusionary provision. AKC, Inc. v. United Specialty Ins. Co., Slip Opinion No. 2021-Ohio-3540, ¶ 11, citing Hybud Equip. Corp. at 665.

 [*P21]  As noted above, the trial court granted summary judgment in GAAC’s favor on the basis that Winsted was not covered by the GAAC Policy pursuant to its Trucking or Business Use Exclusion. The parties do not dispute that the Truck is a covered auto as defined by the GAAC Policy, that the Truck was regularly garaged at Winsted’s home, or that the shipping yard is a facility of Hafer, a lessee. Rather, the primary issue on appeal is whether Winsted was “in the business of [Hafer],” as that term is defined in the Trucking or Business Use Exclusion, at the time of the accident.

 [*P22]  In concluding that Winsted remained in the business of Hafer at the [**11]  time of the accident, the trial court relied upon the Sixth Circuit’s decision in Illinois Natl. Ins. Co. v. Ohio Security Ins. Co., 452 Fed. Appx. 651 (6th Cir. 2011). In Illinois Natl., the court considered an appeal related to insurance coverage after a motor vehicle accident. Like Winsted, the driver, Terry Moon, leased his tractor to a motor carrier and was driving the tractor, which displayed the motor carrier’s identification placard in its window, at the time of the accident. Illinois Natl. at 651-652.

 [*P23]  The motor carrier maintained liability insurance with Illinois National, which provided coverage for Moon’s tractor. Id. at 651. Moon also maintained a separate “nontrucking use” policy with Ohio Security, which provided coverage when Moon’s tractor was not being used in the business of any trucking company. Id. at 652. Like the GAAC Policy, Moon’s policy with Ohio Security provided certain exclusions, and excluded coverage when the tractor was being maintained or used “at the direction of, under the control of, under orders from, after being dispatched by, or in the business of any trucking company or lessee of such auto.” Id. The Ohio Security policy also excluded coverage when the tractor was “on a return trip to the place it is customarily garaged * * * after having delivered goods or merchandise under direction, [**12]  control, or dispatch to anyone other than the Named Insured under this policy.” Id.

 [*P24]  Like Winsted, Moon regularly parked his tractor at his home, was paid a flat rate per assignment, and did not drive for the motor carrier on the weekends. Id. On the date of the accident, Moon picked up a load at Dofasco, Inc. (“Dofasco”) in Marion, Ohio. Id. at 653. Moon planned to take the loaded trailer to his home for the weekend before making the delivery to Florida, however, the motor carrier instructed Moon to leave the loaded trailer at Dofasco for the weekend and to pick it up on Sunday night. Id. At that point, Moon detached his loaded trailer and headed toward Upper Sandusky, Ohio to look for a truck wash. Id. Unable to locate a truck wash after checking “a couple” places, Moon began to head home. Id. From the time Moon left Dofasco until the accident, he took the same route he would have taken had he traveled directly home without detouring to look for the truck wash, which consisted of a one-half mile departure from the highway. Id. After returning to the highway, Moon collided with a motorcycle, killing its driver and passenger. Id. After the driver and passenger’s estate sued Moon and [**13]  the motor carrier, Ohio Security denied coverage on the basis that the accident occurred while Moon was returning to his home terminal and acting in the business of the motor carrier. Id.

 [*P25]  On appeal, the court considered whether Moon was “in the business” of the motor carrier at the time of the accident, as he was en route to his home, where he typically parked his tractor, but took a detour to locate a truck wash. In answering that proposition in the affirmative, the court noted that, pursuant to Ohio law, “‘an owner-driver remains in the business of the carrier-lessee until the owner-driver “returns to the point where the haul originated * * * to the terminal from which the haul was assigned * * *, or to the ownerdriver’s home terminal from which he customarily obtained his next assignment.’” Illinois Natl. at 654, quoting Marine Ins. Co. Frankart, 69 Ill.2d 209, 218, 370 N.E.2d 1058, 13 Ill. Dec. 31 (1977); see also Cincinnati Ins. Co. v. Haack, 125 Ohio App. 3d 183, 708 N.E.2d 214 (2d Dist.1997). Thus, when considering the totality of the events prior to the accident, the court determined that Moon remained in the business of the motor carrier until he returned home from Dofasco and was excluded from Ohio Security’s coverage. Id. at 655.

 [*P26]  Particularly relevant here, the court further held that Moon’s detour to look for a truck wash did not remove him from the motor carrier’s [**14]  business. Rather, the court explained the following:

* * * Moon’s brief detour to look for a truck wash does not affect this analysis; the accident occurred after the detour was complete and Moon had returned to his customary route home. However, even if the detour were a relevant consideration, this Court has previously found that minor personal detours such as the one here do not take a driver out of the carrier’s business. See Auto-Owners Ins., 549 F.3d at 1046 (driver remained in carrier’s business where he left loaded trailer at delivery site then drove to find a motel); see also Frankart, 370 N.E.2d 1062 (driver’s detour to buy cheap fuel and find additional work from a different carrier did not take him out of dispatching carrier’s business).

Id. In light of its analysis above, the court affirmed the trial court’s decision granting summary judgment in favor of Ohio Security. Id.

 [*P27]  After our review, we agree with the basic principle set forth in Illinois Natl. that   the Truck “in the business of” Hafer at the time of the accident. This is because Winsted had completed his short personal detours and returned to his customary route home before the accident occurred. Consequently, because Winsted was traveling from a Hafer facility to the place where the Truck was regularly garaged at the time of the accident, the GAAC Policy excludes any coverage for damage or liability.

 [*P28]  Acuity attempts to distinguish Illinois Natl. on various grounds, including that the Trucking or Business Use Exclusion of the GAAC Policy is fundamentally different than the policy language interpreted by the court in Illinois Natl. and that while Moon made a single personal detour, Winsted made two detours, one to Ollie’s and one to Marathon. In light of these distinctions, Acuity argues Illinois Natl. should not govern the result in this case.

 [*P29]  After our review of the record and the relevant case law, we find these distinctions to be without a difference. As an initial note, the record reflects Winsted and Moon were in substantially similar circumstances at the time of their accidents. Winsted, like Moon, was en route to his home for the weekend, and did not anticipate receiving or working on another assignment until [**16]  the weekend concluded. Like Moon, Winsted did not typically work on the weekends and the accident occurred on a Friday after completing his last delivery for the week. While Moon’s delivery was not fully completed, he had been authorized to leave the trailer on location for the weekend. Accordingly, at the time of the accident, both Winsted and Moon had completed a delivery at a facility and were on a return trip home, the place where their vehicles were regularly garaged, for the duration of the weekend.

 [*P30]  Additionally, both made slight personal detours from their customary routes home, approximately one-half mile away from their typical path. While Acuity argues Winsted’s detours were more elaborate than Moon’s, lasting approximately two hours and consisting of two personal stops as opposed to one, we note that the court’s decision in Illiinois Natl. does not reference the length of Moon’s detour. Regardless, it is evident Moon stopped at more than one place to search for a truck wash. Furthermore, the record in this case indicates approximately two hours elapsed between Winsted completing his final delivery and the accident. During that time, Winsted drove to the shipping yard, removed [**17]  his chassis, turned in his paperwork, chatted with his fellow coworkers, and then began his drive home. Winsted could not recall how long he spent at Ollie’s or at Marathon gas station, however, given the description of those detours, we find they do not constitute anything greater than minor personal detours that were incidental to his drive home. This is particularly true given the brief nature of the detours and the fact that Winsted had completed the detours and returned to his customary route home before the accident occurred.

 [*P31]  Lastly, while we agree with Acuity that Winsted did not travel directly from the Hafer facility to his home, we disagree that such a fact precludes application of Part 13(f) of the GAAC Policy’s Trucking or Business Use Exclusion. That is, in light of our analysis above, Winsted’s brief personal detours did not negate that Winsted was traveling from the facility of the lessee to a location where the Truck was regularly garaged, nor did they alter his status of being in the business of Hafer at the time of the accident. On this basis, reasonable minds could only conclude that the GAAC Policy does not provide coverage in this instance.

 [*P32]  Thus, in light of the [**18]  plain and unambiguous language in the policy before us and given the evidence submitted by GAAC in support of its motion for summary judgment, we find that GAAC has demonstrated that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. Based on the evidence submitted, we find that a reasonable trier of fact could only come to one conclusion: the GAAC Policy does not provide coverage based upon the application of the GAAC Policy’s Trucking or Business Use Exclusion and as a result, no insurance coverage is available under the GAAC Policy issued to Winsted for any claims that have been made, or may be asserted, arising out of the October 2019 accident.

 [*P33]  Because the Trucking or Business Use Exclusion conclusively resolves this dispute, we have no need to consider whether coverage in this case is additionally barred under a different exclusion in the GAAC Policy. Finding no error in the trial court’s decision granting summary judgment in favor of GAAC, we overrule Acuity’s sole assignment of error and affirm the judgment of the trial court.

 [*P34]  Judgment affirmed.

M. POWELL, P.J., and S. POWELL, J., concur.

End of Document