DARRELL WELLS, Plaintiff–Appellant,

v.

US FOODSERVICE, INC.; JOHN DOE I; JOHN DOE II, Defendants–Appellees.

United States Court of Appeals, Tenth Circuit.

Before TYMKOVICH, McWILLIAMS, and PORFILIO, Circuit Judges.

ORDER AND JUDGMENT [FN*]

FN*. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. This court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.

The sole issue remaining in this appeal is whether the district court correctly held the New Mexico Workers Compensation Act (the Act) provides the exclusive remedy for this personal injury action. N.M. Stat. Ann. §§ 52-1-1 to 52-1-68. It did, and we affirm its grant of summary judgment to U.S. Foodservice, Inc., on the ground that its employee failed to allege facts bringing his claim within the ambit of Delgado v. Phelps Dodge Chino Mine, 34 P.3d 1148 (N.M.2001).

Darrell Wells was a truck driver for U.S. Foodservice, Inc., a wholesale food supplier. On February 16, 1999, a truck with a trailer loaded by a Foodservice employee in Lubbock, Texas, and driven by a Lubbock shuttle driver, arrived in Albuquerque, New Mexico. There, Mr. Wells picked up the trailer and began delivering its contents to Foodservice customers in Albuquerque and Santa Fe. At the first delivery stop in Albuquerque, he raised the trailer door only high enough to remove one box, and completed that delivery. At the next stop in Santa Fe, several boxes of products which had fallen inside the trailer fell to the ground as he opened the trailer door. Without moving these boxes aside, Mr. Wells began unloading and delivering fifteen boxes into the facility, maneuvering around the boxes strewn on the ground. As Mr. Wells bent over to pick up another box, a case of Tabasco sauce plummeted from the top of the load in the trailer and struck him on the back, seriously injuring him.

Mr. Wells filed this diversity action for personal injuries, fraud, and prima facie tort against Foodservice; John Does I and II, the Lubbock employees who loaded and drove the trailer (Foodservice, collectively); the U.S. Fidelity and Guaranty Company; and the St. Paul Companies. All Defendants moved for summary judgment. After Mr. Wells failed to respond to these latter insurers’ motion for summary judgment, the court dismissed the complaint against them.

In the district court, Mr. Wells’ diversity action in negligence sought to remove his recovery from under the Act by contending Foodservice’s failure to provide a load lock [FN1] on the trailer to prevent the cargo from shifting was an intentional omission under 49 C.F.R. § 393.100 of the Federal Motor Carrier Safety Administration, Department of Transportation Regulations (the Rules). [FN2] The Rules require, in part, a “tie down assembly” on all trucks, truck tractors, semitrailers, full trailers, and pole trailers to prevent loads from shifting and falling. 49 C.F.R. § 393.100. [FN3] There was no tie down assembly or load lock on Mr. Wells’ truck. Thus, this wilful act or omission, Mr. Wells contended, fell within the bounds of Delgado, 34 P.3d at 1148, and permitted him to seek recovery outside of the exclusive remedy provided by the Act. The court disagreed and granted Fordservice’s motion for summary judgment.

FN1. Foodservice’s division president, Larry Luman, testified a load lock is “an aluminum bar that can be configured several different ways. Some of them have rectangular loops on them, rubbery ends on them, spring tension on it so you can either set it up vertically or horizontally in your trailer to try to prevent your load from shifting.”

FN2. 49 CFR § 393.100(c) states:

Prevention against shifting of load. Cargo must be contained, immobilized or secured in accordance with this subpart to prevent shifting upon or within the vehicle to such an extent that the vehicle’s stability or maneuverability is adversely affected.

FN3. Other options under the Rule require equipping the vehicle with “sides, side-boards, or stakes, and a rear endgate, endboard, or stakes,” § 393.100(b)(1); or “at least one tiedown assembly that meets the requirements of Sec. 393.102 ….” § 393.100(b)(2).

We review the grant of summary judgment de novo, applying the same legal standard as did the district court. Truck Ins. Exchange v. MagneTek, Inc., 360 F.3d 1206, 1214 (10th Cir.2004). Summary judgment is then appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). Although we view the evidence and draw reasonable inferences in the light most favorable to the nonmoving party, the nonmoving party must still present facts susceptible of permitting a reasonable jury to find in its favor. Truck Ins., 360 F.3d at 1214 (citing Simms v. Oklahoma ex rel. Dep’t of Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir.1999)).

In its order, the district court quoted from Foodservice’s motion for summary judgment certain facts Mr. Wells did not dispute:

Even at this point, [Plaintiff] did not re-stack the load or otherwise take steps to secure it. Instead, he commenced deliveries in and out of Pinon Hills, delivering some boxes that had spilled on the ground and also climbing in and out of the trailer to retrieve and deliver other boxes of products.

[Plaintiff] alleges that at some point, after he had delivered a large quantity of the order to Pinon Hills, he was leaning over to pick up a box from the ground when a case of [T]obasco [sic] sauce fell from the top of the load in the truck and st[r]uck him in the back injuring his back.

The court then applied the analysis set forth in Delgado, which revised the New Mexico test for holding an employer liable for intentionally injuring his worker. 34 P.3d at 1156. Under that test, the New Mexico Supreme Court held “willfulness renders a worker’s injury non-accidental, and therefore outside the scope of the Act, when: (1) the worker or employer engages in an intentional act or omission, without just cause or excuse, that is reasonably expected to result in the injury suffered by the worker; (2) the worker or employer expects the intentional act or omission to result in the injury, or has utterly disregarded the consequences; and (3) the intentional act or omission proximately causes the injury.” Id.

On each facet of the Delgado test, our de novo review confirms Mr. Wells’ factual showing and legal argument fail. First, Mr. Wells ignores 49 C.F.R. § 392.9 of the Rules which catalogs a series of safe loading requirements a driver must also follow. These include “examin[ing] the vehicle’s cargo and its load-securing devices within the first 25 miles after beginning a trip and cause any adjustments to be made to the cargo or load-securing devices … as may be necessary to maintain the security of the commercial motor vehicle’s load; and reexamin[ing] the … vehicle’s cargo and its loading-securing devices periodically during the course of transportation and cause any adjustments to be made to the cargo or load-securing devices … as may be necessary.” § 392.9(b)(2), § 392.9(b)(3) (emphasis added).

Second, Mr. Wells testified he did not know if it was a requirement to inspect the load before driving but characterized that action as “something you did to basically save your own neck … to make sure it’s loaded right, make sure you’ve got the right product on your trailer before you leave to go 230 miles away.” Not only did Mr. Wells state he did not check or restack the load after removing product at Honeywell, the first stop, but he also stated he did not recall whether he even inspected the load on the day of the accident. When boxes fell out of the truck at the Pinon Hills stop in Santa Fe, Mr. Wells continued to unload and walk around the fallen boxes but did not restack the load that had already evidenced signs of instability.

Further, Mr. Wells testified that a load lock would not prevent products from falling off the top of a load or keep a load from shifting from side to side. [FN4] Instead, Mr. Wells agreed a load lock primarily prevented products from sliding down to the end of the truck. An improperly stacked load with heavier boxes placed on top of lighter boxes, as he noted, or one in need of restacking would, thus, by his own testimony, not be stabilized by a load lock. In the face of this evidence coupled with his statement he did not inspect or recheck his cargo, Mr. Wells’ contention Foodservice’s failure to equip the truck with a load lock, admittedly only one of several requirements for the safe transportation of cargo, must fail. As Foodservice counsel stated in oral argument, “This case is so not Delgado.”

FN4. The record contains testimony of other truckers who stated they did not use load locks, or that load locks were available but often not utilized because they did not fully keep cargo from falling. While witnesses testified a load lock would more likely be used on cargo placed on pallets, Mr. Wells’ cargo on the day of the accident was not stacked on pallets.

Although Mr. Wells admits he did not inspect the load when he began driving or restack the load as he either observed boxes shifting or removed products, he contends these actions are relevant only to apportion fault. At the same time, however, he insists only Foodservice’s omission produced the injury. Instead, Delgado requires the employer engage in intentional conduct that proximately causes the injury to remove the action from redress under the Act. See also, Cordova v. Peavey Co., 273 F.Supp.2d 1213 (D.N.M.2003). Under no view of the evidence or the Rules can Mr. Wells satisfy this showing on summary judgment. At best, even under his theory, Defendants’ conduct was negligent and not intentional.

Finally, because Mr. Wells failed to reply to the insurers’ motion for summary judgment or assert the grounds before the district court upon which he should have been permitted to file a surreply, a third issue raised here, we have no record to review. Mr. Wells’ unsupported and untested assertions cannot fill that void.

AFFIRMED.

Court of Appeal of Louisiana,

First Circuit.

Joann B. HOSE

v.

YOUNGER BROTHERS, INC., et al

April 2, 2004.

Before: FOIL, FITZSIMMONS, and GAIDRY, JJ.

FITZSIMMONS, J.

On March 29, 1995, plaintiff, Joann B. Hose, filed suit against defendants, Younger Brothers, Inc. (Younger Brothers) and its excess insurer, Carolina Casualty Insurance Company (Carolina). [FN1] In the suit, Ms. Hose alleged that she was injured in a multi-vehicle chain reaction accident, which began when a Younger Brothers’ truck rear-ended her car in April of 1994. Younger Brothers acted as its own primary insurer and was self-insured for the first $250,000.00 of a claim. On October 16, 2000, Carolina filed a third party demand against Younger Brothers asking for indemnification and reimbursement of damages up to the limits of the self insurance, $250,000.00. In November of 2000, more than five years after the original suit had been filed, Carolina, the excess insurer, settled the claim and paid $75,000.00 to Ms. Hose. In return, Ms. Hose subrogated and assigned all of her rights to Carolina. Carolina then amended its third party demand to assert its subrogation claim against Younger Brothers, in its role as the primary insurer.

After a trial, the trial court found that (1) Younger Brothers was the primary insurer, (2) the excess insurer, Carolina, was subrogated to the rights of Ms. Hose, and (3) Ms. Hose’s “claim was worth at least the $75.000.00 that Carolina paid in settlement.” On November 26, 2002, the trial court rendered judgment in favor of Carolina in the principal amount of $75,000.00. Younger Brothers appealed.

On appeal, Younger Brothers assigned error to: (1) the trial court’s finding of a valid subrogation without any showing of bad faith by Younger Brothers in its defense of the suit or in its failure to settle, and (2) the finding that Younger Brothers was liable and Ms. Hose’s damages amounted to $75,000.00. We affirm.

If an insured is exposed to an excess judgment arising from the insurer’s bad faith failure to settle, the insured may seek recovery from the insurer. Great Southwest Fire Insurance Company v.CNA Insurance Companies, 557 So.2d 966, 967 (La.1990). “In the absence of bad faith,” an insurer, primary or excess, may settle a claim without liability to its insured for bad faith failure to settle. Smith v. Audubon Insurance Company, 95-2057, p. 7 (La.9/5/96), 679 So.2d 372, 376; Gourley v. Prudential Property and Casualty Insurance Company, 98-0934, p. 6 (La.App. 1 Cir. 5/14/99), 734 So.2d 940, 944, writ denied, 99-1777 (La.10/8/99), 750 So.2d 969. An excess insurer may become subrogated to the insured’s claim for the amount of an excess judgment only if the excess insurer was properly subrogated to the rights of the insured. Great Southwest Fire Insurance Company, 557 So.2d at 971. However, unlike the duty owed by an insurer to the insured with regard to the defense or settlement of claims, the “primary insurer does not owe a duty of care or even good faith performance to the excess insurer of its insured.” Great Southwest Fire Insurance Company, 557 So.2d at 971 & 969. Logically, it must then follow that the excess insurer owes no greater duty to the primary insurer.

If the victim-obligee’s rights are assigned or subrogated to another, including an excess insurer, the excess insurer “steps into the shoes” of the victim. A. Copeland Enterprises, Inc. v. Slidell Memorial Hospital, 94- 2011, p. 5 (La.6/30/95), 657 So.2d 1292, 1296; see Prudential Assurance Company Limited v. London & Hull Maritime Insurance Co. Ltd., 621 So.2d 1165, 1166-67 (La.App. 1 Cir.1993) (excess insurer subrogated to rights of victim). Then, as the subrogee, the excess insurer may recover the amount of the proven debt, including recovery for “acts which make the excess insurer’s contract and liability more burdensome ….” Great Southwest Fire Insurance Company, 557 So.2d at 971; see La. C.C. arts. 1825-27, 2642, and Revision Comments. Louisiana Civil Code articles 1827 and 2642 allow contractual subrogation or assignment without the consent of the obligor, and legal subrogation occurs by operation of law. See La. C.C. arts. 1829 & 2642, Revision Comments-1993(b). The obligor is protected against having to pay a false or inflated debt by the requirement that an obligation or debt be proved. See La. C.C. art. 1831.

Our review of the record found no evidence that the damages at issue here arose from an excess judgment; or, that they were paid for an insurer’s tortious failure to defend its insured or settle the claim. Carolina’s amended third party demand against Younger Brothers, in its role as its own primary insurer, was based on Carolina’s subrogation to the plaintiff’s claim against Younger Brothers. Carolina is not prohibited from utilization of the rights imbued by the law of subrogation merely because it is an excess insurer. See Prudential Assurance Company Limited, 621 So.2d at 1166-67. Whether the subrogee is a stranger to the suit, or an excess insurer, when the subrogee is substituted for the original creditor-obligee, the obligation then “subsists in favor of the person who performed it ….” La. C.C. art. 1826A. Under the particular facts here, bad faith was not a necessary element of proof for Carolina’s subrogation claim. See La. C.C. arts.1825, et seq.

After a thorough review of the record on the issue of causation, we cannot say that the trial court was clearly wrong in finding that Younger Brothers was liable for Ms. Hose’s damages in the amount of $75,000.00. Contrary to Younger Brothers’ arguments, it was afforded an opportunity to refute the plaintiff’s injury and damage claims at trial. The substitution of Carolina for Ms. Hose did not interdict Younger Brothers’ ability to present a defense. In fact, the law of subrogation requires proof, and limits the recovery under a legal subrogation. See La. C.C. arts. 1830-31. Thus, the real issue is whether Younger Brothers’ evidence so contradicted the facts presented by the plaintiff, “that a reasonable factfinder would not credit the … story.” Stobart v. State, Department of Transportation and Development, 617 So.2d 880, 882 (La.1993).

In response to the medical evidence asserting that Ms. Hose’s injuries were caused by the accident at issue, Younger Brothers zealously argued that a prior medical condition and other accidents caused or greatly exacerbated the claimed injuries. However, based on our review, the record evidence simply does not support the Younger Brothers’ argument, and certainly does not establish manifest or clear error in the causation choice made by the trial court. See Stobart, 617 So.2d at 882-83.

The same is true on the issue of the amount of damages awarded. The record evidence of Ms. Hose’s medical condition reasonably supports the amount of the award. Defendant’s own expert assigned Ms. Hose a 10% whole body impairment. From our review, we find no abuse of the trial court’s discretion. See Youn v. Maritime Oversea Corp. ., 623 So.2d 1257, 1260-61 (La.1993).

For these reasons, we affirm the judgment of the trial court. The costs of the appeal are assessed to appellant, Younger Brothers.

AFFIRMED.

GAIDRY, J., concurs.

I respectfully concur in the result herein, based upon the conclusion that it would be better grounded conceptually on a holding that Carolina was contractually entitled to settle the principal action and to be indemnified by its insured, Younger Brothers, under the clear terms of the policy between them. Although Younger Brothers had the primary duty to defend claims against it within its combined liability deductible or self-insured retention of $250,000.00, the Loss Fund Agreement forming part of the policy authorized Carolina “at its discretion” to “take over the supervision of all or part” of a claim and “to take over the handling of a claim.” The Deductible Liability Insurance endorsement unambiguously provided that “[t]o settle any claim or suit, we [Carolina] may pay all or part of any deductible,” and that “[i]f this happens, you [Younger Brothers] must reimburse us for the deductible or the part of the deductible we paid.” There is nothing to suggest that this arrangement violates public policy or is otherwise contrary to law.

As insured, Younger Brothers agreed to the foregoing terms. Absent contravention of positive law or public policy, a policy of insurance constitutes the law between the parties. Such being the case, discussion of any claimed duties of primary and excess insurers toward each other is misplaced, and it is unnecessary to resort to principles of subrogation to resolve this dispute.

The sole issue relating to the amount of indemnity which Carolina may claim under the policy terms is the reasonableness of the settlement amount given the facts of the claim. The principle that good faith shall govern the conduct of the obligor and the obligee in whatever pertains to the obligation applies to all kinds of obligations, regardless of their origin. La. C.C. art. 1759; Great Southwest Fire Ins. Co. v. CNA Insurance Companies, 557 So.2d 966, 967 (La.1990). Younger Brothers was further protected against arbitrary or unreasonable exercise of Carolina’s right to settle by the general duty of good faith and fair dealing owed by insurers to insureds under La. R.S. 22:1220(A) and general principles of insurance law. Thus, once the trial court determined that Carolina exercised its contractual rights under the policy in good faith, given the potential value of the claim as shown by the evidence, it was clearly entitled to indemnity under the policy terms.

FN1. Other defendants were named, but they are not participants in this appeal.