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Progressive Northern Insurance Co. v. The Estate of Roos

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E-FILED 2020 JUN 30 9:09 AM SIOUX – CLERK OF DISTRICT COURT
IN THE IOWA DISTRICT FOR SIOUX COUNTY

PROGRESSIVE NORTHERN INSURANCE COMPANY,
Petitioner / Cross-Respondent / Counter-Respondent,
vs.
THE ESTATE OF JACOB PAUL ROOS; DRAGSTRA BROTHERS, INC.;1 and DREISEN TRANSPORT, INC.,
Respondents / Cross-Respondents,
vs.
JUSTIN DRAGSTRA TRUCKING, INC.,
Respondent / Cross-Petitioner / Counter-Respondent,
vs.
GRINNELL MUTUAL REINSURANCE COMPANY,
Respondent / Cross-Respondent / Counter-Petitioner.
NO. EQCV027457
RULING ON PETITIONER’S AND RESPONDENTS’ MOTIONS FOR SUMMARY JUDGMENT

The Petitioner, Cross-Respondent, and Counter-Respondent, Progressive
Northern Insurance Company (“Progressive”), filed a renewed motion for summary
judgment on February 17, 2020. On February 28, 2020, the Respondent and Cross-
Respondent, Driesen Transport, Inc. (“Driesen”), filed a resistance to Petitioner’s motion
and its own motion for summary judgment.2 On April 10, 2020, the Respondent, Cross-
1 On August 15, 2019, Julie Ann Dragstra and Kenneth Wayne Dragstra were dismissed as parties by the initial ruling on motions for summary judgment. 2 On March 3, 2020, Respondent and Cross-Respondent, the Estate of Jacob Paul Roos (the “Estate”), also filed a resistance to Petitioner’s motion, but they did not file their own motion for summary judgment.
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Petitioner, and Counter-Respondent, Justin Dragstra Trucking, Inc. (“Justin”), filed partial
resistance and partial joinder to the Petitioner’s motion, as well as joinder to Driesen’s
motion. On April 13, 2020, the Respondent, Cross-Respondent, and Counter-Petitioner,
Grinnell Mutual Reinsurance Company (“Grinnell”), filed a motion for summary judgment.
The Court heard these motions and resistance in a non-record telephonic hearing on
May 8, 2020. After reviewing the contents of the file, statements of facts, the arguments,
and the applicable law, the Court now issues the following ruling and order.
STATEMENT OF MATERIAL FACTS
1. Background Facts and Procedural History
On October 27, 2017, Jacob Roos (“Roos”) was killed at the age of 18 in a single
vehicle accident in Phillipsburg, Kansas, traveling from Sioux City, Iowa, to Stockton,
Kansas. Am. Pet. ¶¶ 1, 10. He was driving a 2013 Ford F350 pickup truck with a 2017
Wilson livestock trailer attached in the back at the direction of Justin to retrieve a load of
cattle. Id. at ¶ 10; Pet’r’s Br. 2. Dragstra Brothers, Inc. (“Dragstra”) owned the pickup truck,
and Driesen owned the trailer. Supra Pet. ¶ 6; Cross-Pet. ¶ 14. The Estate filed a claim
against Justin and others on May 8, 2018, alleging negligence per se, general negligence,
and wrongful death. Supra Pet. ¶ 26. Those claims were made in Sioux County case
number LACV027175. Cross-Pet. ¶ 9.
The Petitioner, Progressive, is Justin’s insurance provider. Supra Pet. ¶ 19. On
October 5, 2018, Petitioner asked the Court for a declaratory judgment finding the
Petitioner not liable for any damages that might arise from the causes of action brought
by the Estate. On May 31, 2019, Petitioner filed its initial motion for summary judgment
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on its petition for declaratory relief. On June 24, 2019, the Estate and Justin each filed
their own resistance and cross-motions for summary judgment on the petition.
On August 15, 2019, the Court ruled on the initial summary judgment. As part of
its order, the Court ruled that the ‘non-owned trailers’ identified on the declarations page
of Progressive’s Commercial Auto Liability Policy (the “Progressive Policy”) refer to
specific trailers used by, but not owned by Justin. However, the Court denied
Progressive’s motion in part as to the availability of coverage due to a factual question—
whether one of the non-owned trailers can be shown to be the same trailer that Roos was
towing to Kansas. The Court also held that the employee exclusions of the Progressive
Policy could not prevent recovery because Roos was an independent contractor for Justin
and not an employee under Iowa common law.
2. Petitioner Progressive’s Motion for Summary Judgment
Following the initial ruling, the Petitioner filed an amended petition for declaratory
judgment and a renewed motion for summary judgment on February 17, 2020. In the
motion, Progressive argues that there remains no genuine issue of fact material to the
construction of the Progressive Policy. More specifically, Progressive re-alleges that the
subject trailer is not covered by its Policy because none of the trailers listed on the
declarations page are ‘specifically described.’ It cites that even if the Court finds the Policy
language ambiguous, evidence of Progressive’s underwriting practice makes it clear that
said trailer was not ‘specifically described.’
Progressive further contends that the employee exclusions to coverage under the
Policy must be interpreted pursuant to federal regulations, 49 C.F.R. § 390.5,
promulgated under the Motor Carrier Act of 1980 (the “MCA”), and accordingly exclude
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Roos’ alleged damages and injuries from coverage irrespective of whether he qualifies
as an independent contractor according to the Iowa common law. Progressive goes on
to argue that the MCS-90 Endorsement for Motor Carrier Policies of Insurance for Public
Liability (the “MCS 90 Endorsement”) under the MCA does not apply to this Policy
because it does not extend the surety obligation to injuries sustained by ‘employees’ of
the motor carrier. Progressive alternatively claims that if the Court holds that 49 C.F.R. §
390.5 does not provide the applicable definition for purposes of the employee exclusions,
Justin qualifies as an insured under the Dragstra Brothers Grinnell Policy (the “Dragstra
Policy”) and the Driesen Grinnell Policy (the “Driesen Policy”), and then coverage will be
on a pro-rata basis between the Progressive Policy, the Dragstra Policy, and the Driesen
Policy. Based on its amended petition and renewed motion, seeing no evidence to the
contrary, Progressive prays the Court to grant summary judgment on its petition for
declaratory relief in its favor against Respondents as follows: 1) Neither available
insurance coverage nor the obligation of indemnification or defense to Respondents from
Progressive is required or exists in relation to the subject accident. 2) The MCS 90
Endorsement to the Progressive Policy does not obligate Progressive to satisfy any
judgment entered against Justin. 3) Justin is an ‘insured’ under the Driesen Policy and
the Dragstra Policy.
3. Respondent Driesen’s Motion for Summary Judgment
In response to the Petitioner’s renewed motion for summary judgment,
Respondent, Driesen, submitted a resistance and its own motion for summary judgment
on February 28, 2020. In the motion, Driesen contradicts Progressive’s allegation relating
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to ‘specifically described’ trailers because when the Progressive Policy was being
renewed according to its own instructions, the current retail values used to set the
premiums were real trailers described. Driesen further states that the new cost of the
2017 trailer involved in the crash was $60,500 on the Driesen Policy and that the current
retail value is inherently less than the purchase price new. Therefore, Driesen asserts
that the current retail value of one of the 2017 trailers on the declarations page—
$40,000—shows that the subject trailer was listed and, therefore, is covered under that
Progressive Policy as an insured vehicle. Thus, Driesen asks the Court to deny
Progressive’s renewed motion for summary judgment, instead, to grant Driesen for
summary judgment finding that the Progressive Policy covers damages from the use of
the listed non-owned trailer involved in the accident.
4. Cross-Petitioner Justin’s Motion for Summary Judgment
Following the previous ruling, on February 5, 2020, Cross-Petitioner, Justin
submitted an amended answer to Progressive’s initial petition and its cross-petition for
declaratory judgment. In the cross-petition, Justin prays the Court to enter an order finding
that Justin was an insured under the Dragstra Policy and the Driesen Policy, and thus
liability insurance coverage is afforded, and Grinnell has a duty to defend and indemnify
Justin under those two policies. Then, Justin filed partial resistance and partial joinder to
Progressive’s motion, as well as joinder to Driesen’s motion on April 10, 2020.
In its motion, Justin joins in Progressive’s motion against Grinnell in that Justin is
an ‘insured’ under the Dragstra Policy and the Driesen Policy. On the other hand, Justin
resists Progressive’s motion for the following reasons: First, the subject trailer is an
‘insured auto’ listed on the declarations page of the Progressive Policy. Second,
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Progressive’s ‘specifically described’ phrase is ambiguous. Third, Progressive’s position
relating to underwriting practices is irrational because the four non-owned trailers are
‘specifically described’ enough to collect different premiums. Lastly, the employee
exclusions under the Progressive Policy should not be interpreted pursuant to the federal
motor carrier regulations given that the term ‘employee’ is ambiguous in the Policy and
that the MCS 90 Endorsement does not amend or add terms or definitions to the Policy.
Justin also joins in Driesen’s motion against Progressive. Hence, Justin prays the Court
to deny in part and grant in part Progressive’s motion and grant Driesen’s motion finding
that Justin is entitled to insurance coverage under all the Progressive Policy, the Driesen
Policy, and the Dragstra Policy as a matter of law, and therefore, requiring Progressive
and Grinnell to provide defense and indemnification to Justin for the allegations and
damages being claimed by the Estate.
Counter-Petitioner Grinnell’s Motion for Summary Judgment
On March 27, 2020, Counter-Petitioner, Grinnell, submitted answers to
Progressive’s motion and Justin’s Cross-Petition, as well as a counterclaim for
declaratory relief against Progressive and Justin. On April 13, 2020, Grinnell filed a motion
for summary judgment, and then filed an amended and substituted motion on April 30,
2020. In it, in terms of the Driesen Policy, Grinnell argues that Justin is not an insured
pursuant to a Trucker’s Endorsement. Regarding the Dragstra Policy, Grinnell alleges
that the F350 truck is not ‘covered auto’ under the Farm Truck Endorsement. Grinnell
further asserts that the coverage for the pickup truck is not an exception to the business
exclusion. Lastly, Grinnell contends that if Roos is an employee under the Progressive
Policy according to the federal regulations, coverage is also excluded under employee
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exclusions of both the Driesen Policy and the Dragstra Policy. Therefore, Grinnell prays
for summary judgment in its favor finding that there is neither available coverage nor duty
to defend or to indemnify under the Driesen Policy and the Dragstra Policy to Justin for
the claims asserted by the Estate.
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate where the moving party demonstrates: (1) there
is no genuine issue of material fact; and (2) the party is entitled to judgment as a matter
of law. Iowa R. CIV. P. 1.981(3). The district court will consider the pleadings, the
depositions, answers to interrogatories, admissions, and affidavits in the record before
the court in applying the above standard. Id. “[T]he court should only consider ‘such facts
as would be admissible in evidence’ when considering the affidavits supporting and
opposing summary judgment.” Pitts v. Farm Bureau Life Ins. Co., 818 N.W.2d 91, 96
(Iowa 2012) (citing Iowa R. CIV. P. 1.981(5)).
The burden rests with the moving party to show that the facts are undisputed, and
there exists no issue of material fact, while the court should look at the facts in a light
most favorable to the nonmoving party. Estate of Harris v. Papa John’s Pizza, 679 N.W.2d
673, 677 (Iowa 2004) (quoting Phillips v. Covenant Clinic, 625 N.W.2d 714, 717–18 (Iowa
2001)). Alternatively, “[w]hile an adverse party generally cannot rest upon his pleadings
when the moving party has supported his motion, summary judgment is still not proper if
reasonable minds could draw different inferences and conclusions from the undisputed
facts.” Behr v. Meredith Corp., 414 N.W.2d 341 (Iowa 1987). The court must consider
every legitimate inference that can be reasonably deduced from the record on behalf of
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the nonmoving party. C & J Vantage Leasing Co. v. Wolfe, 795 N.W.2d 65, 73 (Iowa
2011) (quoting Pillsbury Co. v. Wells Dairy, Inc., 725 N.W.2d 430, 434 (Iowa 2008)).
A genuine issue of material fact does not exist where a reasonable factfinder
determines that no evidence would entitle the nonmoving party to relief. Keokuk Junction
R.R. v. IES Indus., Inc., 618 N.W.2d 352, 355 (Iowa 2000). A fact is material only if “its
determination might affect the outcome of the suit.” Seneca Waste Sols., Inc. v. Shaeffer
Mfg. Co., LLC, 791 N.W.2d 407, 411 (Iowa 2010) (quoting Baratta v. Polk Cty. Health
Servs., 588 N.W.2d 107, 109 (Iowa 1999)). When the record indicates only legal
consequences of undisputed facts are in conflict, then summary judgment should be
granted. See Wallace v. Des Moines Indep. Cmty. Sch. Dist. Bd. of Dirs., 754 N.W.2d
854, 857 (Iowa 2008) (quoting Fairfield v. Harper Drilling Co., 692 N.W.2d 681 (Iowa
2005)).
CONCLUSIONS OF LAW
The Iowa Supreme Court explained the standard for the construction of insurance
policies in Thomas v. Progressive Cas. Ins. Co., 749 N.W.2d 678 (Iowa 2008). The Court
held that “the cardinal principle is that the intent of the parties must control; and except in
cases of ambiguity this is determined by what the policy itself says.” Id. at 681 (citing A.Y.
McDonald Indus., Inc. v. Ins. Co. of N. Am., 475 N.W.2d 607, 618 (Iowa 1991)). Then, the
Court reviewed its approach to ambiguity as follows: “The test for ambiguity is … [whether]
the policy language [is] fairly susceptible to two interpretations.” Id. (citing Iowa Fuel &
Minerals, Inc. v. Iowa State Bd. Of Regents, 471 N.W.2d 859, 863 (Iowa 1991). “In
determining whether a policy provision is subject to two equally proper interpretations,
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[the Court] read[s] the insurance contract as an entirety rather than seriatim by clauses.”
Id.
Further, “[w]hen the terms of an insurance policy are ambiguous, [the court] will
construe them against the insurer.” Baker v. Catlin Specialty Ins. Co., 769 F. Supp. 2d
1157, 1165 (N.D. Iowa 2011). “Because of the adhesive nature of insurance policies, their
provisions are construed in the light most favorable to the insured.” LeMars Mut. Ins. Co.
v. Joffer, 574 N.W.2d 303, 307 (Iowa 1998) (citing Ferguson v. Allied Mut. Ins. Co., 512
N.W.2d 296, 299 (Iowa 1994)). Especially, “[e]xclusions from coverage are construed
strictly against the insurer.” Id.
In addition, Iowa Courts have addressed extrinsic evidence concerning the
interpretation of insurance policy. “Although interpreting the meaning of an insurance
policy is most often an issue of law for the court to decide, the interpretation becomes a
question of fact where the interpretation depends on ‘extrinsic evidence or on a choice
among reasonable inferences from extrinsic evidence.’” Baker, 769 F. Supp. 2d at 1166
(citing Jensen v. Jefferson County Mut. Ins. Ass’n, 510 N.W.2d 870, 871 (Iowa 1994)).
“[A] court may look to extrinsic evidence, including ‘the situation and relations of the
parties, the subject matter of the transaction, preliminary negotiations and statements
made therein, usages of trade, and the course of dealing between the parties.’”
Nationwide Agribusiness Ins. Co v. PGI Int’l, 882 N.W.2d 512, 515 (Iowa Ct. App. 2016)
(citation omitted).
ANALYSIS
Following the initial ruling, almost every party in this case has filed a motion for
summary judgment, arguing that the facts are not in dispute and that they are entitled to
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relief as a matter of law. There is enough evidence in the record for the Court to answer,
at least in part, the following two questions of law: (1) Whether the Progressive Policy
covers the claims made by the Estate; (2) Whether Justin is an ‘insured’ under the Driesen
Policy and the Dragstra Policy.
I. Whether the Progressive Policy covers the claims made by the Estate
In order for the Progressive Policy to cover the claims made by the Estate, it must
establish whether the F350 truck and the subject trailer that Roos was driving at the time
of the accident are listed on the declarations page as an insured auto. As noted in the
previous ruling, none of the cars listed on the declarations page relate to the F350 truck.
So, the remaining question was whether the subject trailer is an insured auto.
1. Whether the subject trailer is an ‘insured auto’ under the Progressive Policy
There are four ‘non-owned trailers’ listed on the declarations page of the
Progressive Policy. In its prior order, the Court ruled that the ‘non-owned trailers’ refer to
specific trailers used by, but not owned by Justin. However, following the ruling, in the
renewed motion, Progressive re-alleges that the ‘non-owned trailers’ are not ‘specifically
described,’ which could qualify as an ‘insured auto.’
A. Whether the ‘non-owned trailers’ are ‘specifically described’
In its renewed motion, Progressive asserts that descriptive information supplied
under each of the entries is insufficient to identify discrete and unique trailer. Progressive
cites that vehicles are commonly described by a Vehicle Identification Number (“VIN”),
and its underwriting department requires a VIN when an insured requests coverage for a
specific non-owned trailer. Pet’r’s Ex. 6, p. 3; Ex. 10, ¶ 10. Progressive goes on to contend
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that evidence for such underwriting practice makes clear that said trailer was not
‘specifically described.’ However, this cannot possibly be the case.
In the prior ruling, the Court rejected Progressive’s allegation that the four ‘non-
owned trailers’ of the declarations page are merely symbolic to indicate that Progressive
may cover non-owned trailers that happen to be attached to four declared power units3
at the time of an accident. The Court reasoned that Progressive would not need to list the
non-owned trailers on the declarations page given that the above ‘stand-in trailers’ would
already be covered elsewhere in the Policy. Id. at Ex. C, p. 15. Construing the Policy as
a whole is a principle to determine whether a policy provision is ambiguous.
Unlike Progressive’s assertion that the Policy language is unambiguous, the
meaning of a ‘specific description’ is unclear because a genuine uncertainty exists as to
which information is sufficient to describe a trailer specifically. So, the Court may look to
extrinsic evidence to interpret the meaning of specific description. Here, the ‘non-owned
trailers’ are specifically described with individualized characteristics—particular year,
current retail value, and garaging zip codes—to set the premium at every renewal
according to Progressive’s own instructions. Id. at Ex. 3, p.4. In practice, Progressive’s
‘stand-in trailers’ notion cannot be possible because four separate non-owned trailers are
listed with not only the individualized description, but also different charges for the actual
premium. So, Progressive’s position in citing underwriting practices of requiring VIN is
irrational because the four non-owned trailers are ‘specifically described’ enough to
collect different premiums when no VIN is provided.
3 A “power unit” is an industry term for the truck or automobile that pulls a commercial trailer.
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Thus, a factfinder could reasonably infer from these listings and instructions in the
declarations that the non-owned trailers were real trailers rather than hypothetical ones.
It also accords with the standard of construction for contracts of adhesion. Iowa Courts
construe insurance policies in the light most favorable to the insured. Accordingly, the
Court finds, as a matter of law, that the ‘non-owned trailers’ listed on the declarations
page of Progressive Policy are specifically described to qualify as insured auto. It is now
necessary to determine if the subject trailer is one of the non-owned trailers on the
declarations page of the Policy.
B. Whether one of the ‘non-owned trailers’ can be shown to be the same trailer
involved in the accident
As noted in the initial ruling, among the four ‘non-owned trailers’ on the
declarations page, one very well could be the said trailer that Roos was towing. More
specifically, Driesen asserts that the current retail value of one of the 2017 trailers,
$40,000, on the Progressive Policy shows that said trailer was listed on the grounds that
the new cost of the 2017 trailer involved in the crash was $60,500 on the Driesen Policy
and that current retail value is inherently less than the purchase price new.
Neither party refutes this assertion, and it would be consistent with the intent of the
parties for the following reasons: Justin admitted he used other trailers as well as the
Driesen’s trailer involved in this accident. Id. at Ex. 8, 59:15–21. He said it was not
uncommon for him to use the trailer belonging to whatever entities. Id. at 59:22–25. Justin
further testified in his affidavit that when he applied for the Progressive Policy, he
indicated to his insurance agent that he wanted to insure trailers owned by Driesen for
the livestock hauling jobs he performed on behalf of Driesen. Justin’s Ex. B, ¶ 5. He cited
that his insurance agent asked him to provide information on the trailers, including the
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year and the estimated value of the trailers, which he supplied to his insurance agent. Id.
at ¶ 6. Justin stated that it was his intent and belief the subject trailer was insured under
the Policy with Progressive. Id. at ¶ 7.
Moreover, Driesen understood that Justin had purchased individual insurance for
the trailer involved in the accident. As indicated in its prior ruling, although Driesen is not
a signatory to the Progressive Policy, it is clear there was a corroborating understanding
by the lender of the trailer at issue that it was to be insured under Progressive Policy
issued to Justin. At a minimum, all of these support an inference that Justin described to
his insurance agent four trailers he might use belonging to a regular customer, and one
of them was said trailer.
However, the Court still does not have enough information in the record to
determine if the subject trailer was one of the ‘non-owned trailers’ to be covered as an
insured auto. There seems to be more evidence needed, such as the retail value of said
trailer or other trailers in the same garage, if any. The Court concludes that under the
evidence presented, there remains a material fact in dispute that provides a genuine basis
for a finding by a reasonable factfinder. As such, the issue is not ripe for summary
judgment at this time.
Therefore, the Court finds, as a matter of law, that the ‘non-owned trailers’ listed
on the declarations page of the Progressive Policy are specifically described to qualify as
insured auto. On the other hand, there is a genuine issue of material fact in dispute as to
whether the subject trailer was one of the ‘non-owned trailers.’ Accordingly, summary
judgment finding that the Progressive Policy covers the listed non-owned trailer involved
in the accident is improper.
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2. Whether employment exclusions and the MCS 90 Endorsement preclude
recovery
In the previous ruling, the Court also held that the employee exclusions of the
Progressive Policy could not prevent recovery because Roos was an independent
contractor for Justin and not an employee under Iowa common law. Following the order,
in the renewed motion, Progressive argues that the employee exclusions to coverage
must be interpreted pursuant to federal regulations, 49 C.F.R. § 390.5, promulgated under
the MCA, and accordingly exclude Roos’ alleged damages and injuries from coverage
irrespective of whether he qualifies as an independent contractor under Iowa common
law. Progressive goes on to claim that the MCS 90 Endorsement under the MCA to the
Policy is not applicable because it does not extend the surety obligation to injuries
sustained by ‘employees’ of the motor carrier.
The critical question before the Court is whether the employee exclusions under
the Progressive Policy must be interpreted according to the federal motor carrier
regulations. 49 C.F.R. § 390.5 defines ‘employee’ as:
[A]ny individual, other than an employer, who is employed by an employer and who is in the course of his or her employment directly affects commercial motor vehicle safety. Such terms include a driver of a commercial vehicle (including an independent contractor while in the course of operating a commercial motor vehicle) …
(emphasis added).
Contrary to Progressive’s allegation, Justin asserts that the employee exclusions
of the Progressive Policy should not be interpreted pursuant to the federal motor carrier
regulations because the term ‘employee’ is ambiguous in the Policy. Justin cites the Iowa
Supreme Court case, which held that “[a]n insurer assumes a duty to define any
limitations or exclusionary clauses in clear and explicit terms[,]” Thomas, 749 N.W.2d at
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682 (citing Hornick v. Owners Ins. Co., 511 N.W.2d 371, 374 (Iowa 1993)). Based on this
case, Justin argues that Progressive has not defined its intent to exclude ‘employees’ as
defined by the MCA in clear and explicit terms. Justin reasoned that the fact Progressive
has defined ‘trucker’ but failed to define ‘employee’ somehow evidences that Progressive
did not intend ‘employee’ to be defined as broadly as a trucker.
However, the definition of ‘trucker’ cited by Justin is contained within the Motor
Truck Cargo Legal Liability Coverage Endorsement of the Progressive Policy.
Progressive limits that definition to that coverage endorsement noting “[t]he following
additional definitions ‘apply throughout this Motor Truck Cargo Legal Liability Coverage
Endorsement.’” Pet’r’s Ex. C, p. 77 (emphasis added). So, Justin’s attempt to read the
trucker definition into any other portion of the Progressive Policy is inconsistent with the
clear terms of the Policy. Moreover, the failure of an insurer to specifically define
‘employee’ in the Policy does not of itself preclude application of the § 390.5 definitions.
Instead, in Thomas, which Justin cited to assert the ambiguity of the term ‘employee’ in
the Progressive Policy, the Court held that “statutory law may … affect the interpretation
… of the policy provisions[,]” 749 N.W.2d at 682.
Justin further contradicts Progressive’s contention regarding the term ‘employee,’
in that the MCS 90 Endorsement does not amend or add terms or definitions to the Policy.
Justin cites a case in which the Court held that “the MCS 90 Endorsement does not evince
an intent that the federal ‘statutory employee’ definition be read into the underlying policy.”
Great W. Cas. Co. v. Nat’l Cas. Co., 53 F. Supp. 3d 1154, 1187 (D.N.D. 2014), aff’d, 807
F.3d 952 (8th Cir. 2015). However, it is distinguishable on the ground that, unlike the
Progressive Policy, the underlying policy, in that case, defined the term ‘employee’ and
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did not include independent contractors. Id. at 1185. The Court in Great W. Cas. Co.
explained the very factor as a basis not to apply the § 390.5 definitions of ‘employee.’ Id.
Accordingly, the authority cited by Justin provides no guidance here when the Progressive
Policy itself does not define ‘employee’ while containing the MCS 90 Endorsement.
Instead, in Barabash v. Love’s Travel Stops & Country Stores, the Court held that
“[t]he Motor Carrier Safety Act and its related regulations govern the meaning of terms
under insurance policies designed to comply with federal requirements for motor
carriers[,]” No. CIV.A. 10-4160, 2011 WL 4381730, at *4 (E.D. La. Sept. 20, 2011) (citing
Consumers Cty, Mut. Ins. Co. v. P.W. & Sons Trucking, Inc., 307 F.3d 362, 366 (5th Cir.
2002)). In Consumers Cty, Mut. Ins. Co., the Court explained that “[b]y eliminating the
common law employee/independent contractor distinction, the definition serves to
discourage motor carriers from using the independent contractor relationship to avoid
liability exposure at the expense of the public[,]” 307 F.3d at 366. The Court reasoned
that “[i]n light of the clear intention of the parties to comply with federal regulation and the
broad application of § 390.5 throughout those regulations, it is reasonable to conclude
that the parties intended § 390.5 to supply the definition of the term employee in the
policy.” Id.
Here, Progressive points out that the Policy is a public-liability policy designed for
use by motor carriers in the interstate trucking industry to comply with federal insurance
requirements under the MCA. So, Progressive alleges that the employee exclusions must
be read in light of federal regulations applicable to interstate motor carriers because the
Policy insures risk related to interstate commercial motor vehicle operations. Numerous
courts addressing employee exclusions under commercial auto liability policies issued to
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interstate motor carriers, such as the Progressive Policy in this instance, have deemed
the § 390.5 definitions of ‘employee’ to apply where the policy itself does not define that
term. See Progressive Mountain Ins. Co. v. Madd Transp., LLC, 633 Fed. Appx. 744 (11th
Cir. 2015); Ooida Risk Retention Group, Inc. v. Williams, 579 F.3d 469 (5th Cir. 2009);
Scottsdale Indem. Co. v. Rural Trash Serv., 142 F.Supp.3D 530 (S.D. Tx. 2015);
Progressive Express Ins. Co. v. Simmons, No. 8:17-CV-3003-T-30CPT, 2018 WL
8368966 (M.D. Fla. Oct. 12, 2018); Canal Indem. Ins. Co. v. Texcom Transp., LLC, No.
3-09-CV-1430-BD, 2010 WL 2301007 (N.D. Tex. June 4, 2010); United Fin. Cas. Co. v.
Abe Hershberger & Sons Trucking Ltd., No. 11AP-629, 2012 WL 457715 (Ohio Ct. App.
Feb. 14, 2012).
Accordingly, the Court agrees that Roos is a statutory employee of Justin under
§ 390.5 of the Department of Transportation regulations, regardless of whether he is
considered as an independent contractor at Iowa common law. So, the Court finds that
the employee exclusions under the Progressive Policy preclude Roos’ alleged damages
and injuries from coverage. Furthermore, the MCS 90 Endorsement under the MCA to
the Policy is not applicable because it does not extend the surety obligation to injuries
sustained by ‘employees’ of the motor carrier. Therefore, the Court finds, as a matter of
law, that the MCS 90 Endorsement to the Policy does not obligate Progressive to satisfy
any judgment entered against Justin or any others in relation to the subject accident.
II. Whether Justin is an ‘insured’ under the Driesen Policy and the Dragstra Policy
In its cross-petition, Justin asserts that Justin was an insured under the Driesen
Policy and the Dragstra Policy, and none of the exclusions contained with such policies
apply, and thus liability insurance coverage is afforded, and Grinnell has a duty to defend
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and indemnify Justin under those two policies. Conversely, Grinnell contends that if Roos
is an employee under the Progressive Policy according to the federal regulations,
coverage is also excluded under employee exclusions of both the Driesen Policy and the
Dragstra policy. In terms of the Driesen Policy, Grinnell argues that Justin is not an
insured under a Truckers Endorsement. Regarding the Dragstra Policy, Grinnell asserts
that the F350 truck is not covered auto pursuant to the Farm Truck Endorsement and that
the coverage for the pickup truck is not an exception to the business exclusion as well.
Therefore, Grinnell claims that there is neither available coverage nor duty to defend or
to indemnify under those two policies to Justin for the claims asserted by the Estate.
1. Whether the employee exclusions under the Driesen Policy and the Dragstra
Policy exclude coverage
Based upon Progressive’s above allegation that Roos was an “employee” under
the definition applicable to interstate motor carriers according to 40 C.F.R. § 390.5,
Grinnell contends that the employee exclusions to both the Driesen Policy and the
Dragstra Policy must apply to exclude coverage for the subject accident. As previously
explained, the Federal Motor Carrier Safety Administration (FMCSA) definition of
“employee” includes common law independent contractors. Under the cases mentioned
earlier, 40 C.F.R. § 390.5 defines “employee” for those auto liability policies that do not
define “employee” and contain the MCS 90 Endorsement. Progressive Policy does not
define “employee” and contains the MCS 90 Endorsement. Accordingly, the employee
exclusions to the Progressive Policy applies to Roos even though he was a common law
independent contractor to Justin. So, the issue here is whether the same is true
concerning either the Driesen Policy or the Dragstra Policy.
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The Driesen Policy
The Driesen Policy provides as follows:
F. “Employee” includes a “leased worker.” “Employee” does not include a “temporary worker.” I. “Leased worker” means a person leased … by a labor leasing firm under an agreement … “Leased worker” does not include a “temporary worker.” O. “Temporary worker” means a person who is furnished … to meet seasonal or short-term workload conditions.
Pet’r’s Ex. 9, p. 20–21. In this case, there is no indication of agreement with a labor leasing
firm in the record. Per the definition of the Policy, Roos is a temporary worker to meet
seasonal or short-term workload conditions as an independent contractor. So, unlike the
Progressive Policy, the Driesen Policy defines by its own terms “employee” and does not
include an independent contractor. Additionally, different from the Progressive Policy, the
Driesen Policy does not contain the MCS 90 Endorsement. Hence, as noted above, no
resort to the FMCSA definition is required. See Nat’l Cont’l Ins. Co. v. Vukovic, 386 F.
Supp. 3d 918 (N.D. Ill. 2019); Spirit Commerc. Auto. Risk Retention Grp., Inc. v. Kailey,
No. 4:15CV01091 ERW, 2017 WL 2935726 (E.D. Mo. July 10, 2017); Northland Ins. Co.
v. Rhodes, No. 09-CV-01691-REB-CBS, 2010 WL 5110107 (D. Colo. Dec. 9, 2010); Glob.
Hawk Ins. Co. v. Le, 225 Cal. App. 4th 593 (2014). For each of these reasons, the Court
finds as a matter of law that resorts to the definitions used by the FMCSA are not
warranted, and the employee exclusion to the Driesen Policy does not preclude coverage
for this loss.
A. The Dragstra Policy
The Dragstra Policy does not define employee; however, it also does not contain
the MCS 90 Endorsement. This is expected because it is a personal lines policy. Hence,
the FMCSA definition is not applicable because the Policy was not issued in connection
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with interstate motor carrier operations. Therefore, the Court finds, as a matter of law,
that ‘employee’ for purposes of the employee exclusion in the Dragstra Policy will be
interpreted under the Iowa common law, and will not exclude coverage for independent
contractors such as Roos.
2. Whether the Truckers Endorsement to the Driesen Policy exclude coverage for
the subject trailer
While the subject trailer is listed as a covered auto on the Driesen Policy, Grinnell
argues various exclusions to those qualifying as an insured under the Truckers
Endorsement to the Policy. First, Grinnell contends that it is a fact question on whether
Justin’s use of the trailer exceeded the scope of the permissive use when Justin allowed
Roos, who was under the age of 21, to drive the trailer in interstate commerce.
Conversely, Justin and Progressive assert that it is undisputed that Justin had permission
from Driesen to use the trailer involved in the accident based on the arrangement between
them.
In Driesen’s deposition, the evidence is clear Justin had permission, implied or
explicit, to use the trailer in connection with Justin’s business, including an interstate
shipment of livestock. Driesen’s permission for the use of its trailer was broad, featuring
minimal terms. See Pet’r’s Ex. 7, 9:17–10:11. Regarding the subject trailer at the time of
the accident, Driesen permitted Justin to use its trailers for loads Driesen found in
exchange for 20% of the fee. This was an ordinary course of operation between Justin
and Driesen. Further, after the subject accident, Driesen continued to allow Justin to use
its trailers despite knowledge of Justin’s potential violation of federal regulations. See id.
at 11:1–12:3. This shows Driesen did not limit the scope of Justin’s use of the Driesen’s
trailers, even if such use might run afoul of federal regulations. Therefore, there is no
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reasonable argument that Justin’s use of the subject trailer was anything other than
permissive use under the circumstances of this case.
Next, the Trucker Endorsement provides that,
none of the following is an “insured”: a. Any “trucker,” or his or her agents or “employees,” other than you and your “employees”: (1) If the “trucker” is subject to motor carrier insurance requirements and meets them by a means other than “auto” liability insurance. (2) If the “trucker” is not insured for hired “autos” under an “auto” liability insurance form that insures on a primary basis the owners of the “autos” and their agents and “employees” while the “autos” are being used exclusively in the “truckers” business and pursuant to operating rights granted to the “trucker” by a public authority.
Id. at Ex. 9, p. 35. Justin and Progressive contend that while Justin is a “trucker,” none of
above exceptions under the Truckers Endorsement apply in this case for the following
reasons: For the first exception, Justin did not meet the motor carrier insurances’
requirements by a means other than auto liability insurance; in contrast, it obtained the
Progressive Policy to satisfy such requirements. The Court agrees with this allegation as
an undisputed fact.
As for the second exception, Grinnell argues that Justin is not an insured because
Progressive Policy did not cover the trailer on a primary basis. Both Justin and
Progressive contradict Grinnell’s assertion given that Justin was not operating the said
trailer at the time of the subject accident ‘pursuant to operating rights granted to Justin by
a public authority.’ They reasoned that the FMCSA had not granted Justin operating
authority as a for-hire motor carrier. The record establishes that while Justin held a
USDOT number, it lacked any MC, FF, or MX number, which the FMCSA defined
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‘operating authority’ as equivalent to it.4 See id. at Ex. 13. Hence, the Court agrees that
this exclusion does not apply based on this issue.
Lastly, Grinnell alleges that an insurer of a borrowed vehicle is not required to
afford coverage to borrower motor carrier because, for Justin to be insured under the
Driesen Policy, the reciprocal coverage clause of the Policy required that Driesen be
covered under the Progressive Policy. Grinnell cites a case in which the Court denied
coverage where the driver was operating a borrowed vehicle because reciprocal
coverage provision in owner’s policy precluded coverage for borrower and driver whose
policy did not provide liability coverage for the owner, Zurich Am. Ins. Co. v. Key Cartage,
Inc., 923 N.E.2d 710 (Ill. 2009). As applied to the facts of this case, Grinnell asserts that
Justin is not covered under the Driesen Policy because Progressive is not suggesting that
it had coverage for Driesen.
However, Grinnell’s allegation is misleading given that the holding in Zurich Am.
Ins. Co. is not an absolute rule excluding insurer of a borrowed vehicle from its liability for
borrower. Instead, it is the application of the provision like the Truckers Endorsement
because the truck was used exclusively in the borrower’s business as stipulated in the
policy. In Zurich Am. Ins. Co., the Court’s clarified the reasoning behind the decision as
below: [t]ruck that was borrowed … was being used exclusively in borrower’s business, and, thus, reciprocal coverage provision in [owner]’s policy which defined “insured” to exclude any trucker, if the trucker’s liability policy did not cover owners … on primary basis while the truck was being used exclusively in the truckers business, precluded coverage for borrower and driver whose policy did not provide liability coverage for [owner].
4 See U.S.DOT, FMCSA, https://cms8.fmcsa.dot.gov/registration/get-mc-number-authority-operate#types-of- authority (last visited Jun 22, 2020).
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Id.
In this case, unlike Zurich Am. Ins. Co., Justin and Progressive contend that Justin
was not using the subject trailer ‘exclusively’ in its trucking business. As evidenced by
both the testimony from Justin and Driesen, Driesen was receiving 20% of the proceeds
from the dispatch. Justin and Progressive assert that such circumstances would not
trigger the exclusion for truckers under the Truckers Endorsement because it is
distinguishable from the above case. In Zurich Am. Ins. Co., the Court cites the fact that
the owner derived no economic benefit from the truck as one of the grounds finding that
the truck was being used exclusively in trucker’s business. Id. at 713. However, in this
case, the Court finds that Driesen was receiving financial gain from Justin’s use of the
subject trailer, and therefore, the said trailer was not being used exclusively in Justin’s
business as a trucker. Furthermore, regarding the second exception to the Truckers
Endorsement in Driesen Policy, Zurich Am. Ins. Co. did not address the above
circumstance where the motor carrier involved in the accident lacked operating authority,
or its operating authority was in question. Accordingly, its holding provides no guidance
on the interpretation of the terms of Truckers Endorsement in this case.
For each of the foregoing reasons, the Court finds, as a matter of law, that the
Truckers Endorsement to the Driesen Policy does not operate to exclude coverage in
favor of Justin in these circumstances.
3. Whether the Farm Truck Endorsement and the Business Use Exclusion to the
Dragstra Policy exclude coverage for the F350 truck5
A. Whether Farm Truck Endorsement to the Dragstra Policy excludes coverage
5 Grinnell previously relied upon the “public or livery conveyance” exclusion to deny coverage in favor of Justin under the Dragstra Policy. See Grinnell’s Mem. 8–9. However, it appears Grinnell has abandoned that argument in its amended and substituted memorandum.
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The definition of “your covered auto” under the Farm Truck Endorsement in the
Dragstra Policy is as below:
J. “Your covered auto” means: 1. Any vehicle shown in the Declarations which: a. Is used in the following farming operations: … (2) Raising and care of transportation of fowl or livestock; or (3) Maintenance of farm property; b. Has four or more wheels; and c. Is used exclusively to transport “your” property or “non-owned farm goods.”
Pet’r’s Ex. 11, p. 41. The requirements to qualify as “your covered auto” under the Farm
Truck Endorsement are met as follows: It is undisputed the F350 was shown on the
declarations page. It is also undisputed the F350 was used in farming operations,
including transportation of livestock, and it has four or more wheels.
On the other hand, Grinnell claims that the F350 does not qualify as “your covered
auto” relating to the last term of the Farm Truck Endorsement: the F350 was not being
used “exclusively” to transport ‘your [Dragstra’s]’ property or ‘non-owned farm goods.’
Grinnell cites that Justin used the truck on many prior occasions, and the accident at issue
did not involve Dragstra at all. See id. at Ex. 12, 4:16–22; 6:20–7:6. However, on those
prior occasions where Justin had used the F350, it was for the same purpose as on this
occasion—to transport non-owned farm goods. See id. at Ex. 8, 11:1–2; 11:10–12:1;
12:9–18; Ex. 7, 5:20–23; 8:6–8. There is no indication in the records that the F350 was
used for other purposes beyond the definition of “your covered auto” in the Truckers
Endorsement. Moreover, the Dragstra Policy defines “non-owned farm goods” as
“livestock which are not owned by you.” Id. at Ex. 11, p. 42. It is obvious under the plain
terms of the Policy that ‘non-owned farm goods’ will never be owned by Dragstra. Here,
the livestock Justin was transporting at the time of the subject incident was ‘non-owned
farm goods.’
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Even if Dragstra was not aware that Justin was using the F350 in interstate
commerce, nowhere within the Farm Truck Endorsement does it provide that
transportation of non-owned farm goods must be in connection with Dragstra’s operation
as Grinnell contends. Id. at Ex. 12, 10:23–11:4. So, this fact does not defeat coverage.
Thus, Grinnell’s allegation that the truck is not used exclusively because the livestock
Roos was transporting was not owned by Dragstra is at odds with the clear policy
language as a basis to deny coverage under the Farm Truck Endorsement.
Again, given that insurance policies are, by nature, contracts of adhesion, “[a]n
insurer assumes a duty to define any limitations or exclusionary clauses in clear and
explicit terms[,]” Thomas, 749 N.W.2d at 682; LeMars Mut. Ins. Co., 574 N.W.2d at 307.
So, “[e]xclusions from coverage are construed strictly against the insurer.” LeMars Mut.
Ins. Co., 574 N.W.2d at 307. To rule in such a way would be viewing the contract in the
light most favorable to the insured. Thus, the Court finds as a matter of law that the F350
qualified as “your covered auto” entitled to coverage under the terms of the Farm Truck
Endorsement of the Dragstra Policy.
B. Whether the Business Use Exclusion to the Dragstra Policy prevents
coverage
Grinnell also argues that the business use exclusion to the Dragstra Policy
operates to defeat coverage because Justin was engaged in a business of transporting
cattle for a profit. The exclusion states:
A. We do not provide Liability Coverage for any “insured”: … 7. Maintaining or using any vehicle while that “insured” is employed or otherwise engaged in any “business (other than farming or ranching) not described in Exclusion A.6. This Exclusion (A.7.) does not apply to the maintenance or use of a: a. Private passenger auto; b. Pickup or van; or c. “Trailer” used with a vehicle described in a. or b. above.
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Pet’r’s Ex. 11, p. 22. Grinnell alleges that the business exclusion applies to the F350,
even though it is a pickup given that the exception to the business exclusion was intended
for smaller passenger vehicles and not commercial motor vehicles being used as part of
a business venture. However, Grinnell makes an unsubstantiated claim because there is
absolutely no evidence in the record to support this proffered interpretation. Again, “[a]n
insurer assumes a duty to define any limitations or exclusionary clauses in clear and
explicit terms[,]” Thomas, 749 N.W.2d at 682. It accords with the standard that the Court
should look at the facts in a light most favorable to the insured.
In addition, Grinnell fails to quote the business use exclusion as modified by the
Farm Truck Endorsement. The exclusion, as modified by the Farm Truck Endorsement,
provides, The EXCLUSIONS section is amended as follows:
Exclusion 7. in section A. is deleted and replaced with the following: 7. Maintaining or using any vehicle while that “insured” is employed or otherwise engaged in any “business (other than farming, ranching, or hauling “non-owned farm goods”) not described in exclusion A.6. This Exclusion (A.7.) does not apply to the maintenance or use of a: a. Private passenger auto; b. Pickup or van; or c. “Trailer” used with a vehicle described in a. or b. above; or d. “Your covered auto” when used for hauling “non-owned farm goods.”
Pet’r’s Ex. 11, p. 42 (emphasis added). As noted above, it is undisputed that Roos was
driving the F350 pickup truck to haul non-owned farm goods at the time of the subject
accident. Therefore, the Court finds as a matter of law that the business use exclusion,
as modified by the Farm Truck Endorsement, does not apply to defeat coverage in favor
of Justin under the Dragstra Policy.
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CONCLUSION
Based on the foregoing discussion, the Court finds that a genuine issue of material
fact does not exist in this case as to whether the ‘non-owned trailers’ are ‘specifically
described’ on the declarations page of the Progressive Policy; however, it remains
regarding whether the subject trailer is one of the non-owned trailers. On the other hand,
as noted above, Roos is a statutory employee of Justin under 49 C.F.R. § 390.5,
irrespective of whether he qualifies as an independent contractor under Iowa common
law. Moreover, the MCS 90 Endorsement under the MCA to the Policy is not applicable
because it does not extend the surety obligation to injuries sustained by ‘employees’ of
the motor carrier. Thus, regardless of whether the said trailer is one of the non-owned
trailers, employment exclusions and the MCS 90 Endorsement to the Policy preclude
recovery. Therefore, the Court finds as a matter of law and declares that there is neither
insurance coverage nor the obligation of indemnification or defense to Respondents from
Progressive in relation to the subject accident, and that the MCS 90 Endorsement to the
Policy does not obligate Progressive to satisfy any judgment entered against Justin or
any others in relation to the subject accident.
On the contrary, the employee exclusions to the Driesen Policy and the Dragstra
Policy do not preclude coverage for this loss. When it comes to the Driesen Policy, the
Court finds that the Truckers Endorsement does not operate to exclude coverage in favor
of Justin. The Court also finds that the F350 qualified as “your covered auto” entitled to
coverage under the terms of the Farm Truck Endorsement and that the business use
exclusion does not apply to defeat coverage for Justin under the Dragstra Policy.
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Accordingly, the Court finds as a matter of law that Justin is entitled to insurance coverage
under the Driesen Policy and the Dragstra Policy.
For the reasons stated above, the Court finds as a matter of law that Progressive
is entitled to declaratory judgment on the issues of the Progressive Policy, the Driesen
Policy, and the Dragstra Policy. Accordingly, Petitioner’s Motion for Summary Judgment
is sustained, while Driesen’s Motion for Summary Judgment on the Progressive Policy is
overruled. Justin’s Motion for Summary Judgement is denied in part on the Progressive
Policy, and granted in part on the Driesen Policy and the Dragstra Policy. Finally,
Grinnell’s Summary Judgment on the issues of the Driesen Policy and the Dragstra Policy
is overruled.
ORDER
IT IS THEREFORE ORDERED as follows:
1) All of the above.
2) As to Progressive Northern Insurance Company:
a. Petitioner Progressive’s Motion for Summary Judgment declaring that no
insurance coverage is available to Respondents from Progressive is
SUSTAINED.
b. Further, the MCS 90 Endorsement to the Progressive Policy does not
obligate Progressive to defend or indemnify Justin or any others in relation
to the subject accident.
c. Further, that Justin is an ‘insured’ under the Driesen Policy and the Dragstra
Policy.
4. As to Driesen Transport Inc.:
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Respondent Driesen’s Motion for Summary Judgment finding the
Progressive Policy covers damages from the use of the listed non-owned
trailer involved in the accident, filed on February 28, 2020, is OVERRULED.
5. As to Justin Dragstra Trucking Inc.:
Cross-Petitioner Justin’s Motion for Summary Judgment filed on April 10, 2020,
is GRANTED IN PART declaring Justin is entitled to insurance coverage under
the Driesen Policy and the Dragstra Policy and therefore, requiring Grinnell to
provide defense and indemnification to Justin for the allegations and damages
being claimed by the Estate; and DENIED IN PART on the same issues
regarding the Progressive Policy.
6. As to Grinnell Mutual Reinsurance Company:
Counter-Petitioner Grinnell’s Motion for Summary Judgment declaring neither
available coverage nor duty to defend or to indemnify under the Driesen Policy
and the Dragstra Policy to Justin for the claims asserted by the Estate, filed on
April 13, 2020, is OVERRULED. Grinnell’s policy provides coverage for and a
duty to defend Justin for the claim asserted by the Estate.
So ordered. Clerk to notify.
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State of Iowa Courts
Type: OTHER ORDER
Case Number Case Title EQCV027457 PROGRESSIVE NORTHERN INSURANCE COMPANY VS THE ESTATE OF JACO
So Ordered
Electronically signed on 2020-06-30 09:09:36 page 30 of 30

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