Coverage - Central Analysis Bureau

Great West Cas. Co. v. Nationwide Agribusiness Ins. Co.

United States District Court, N.D. Illinois, Eastern Division.

GREAT WEST CASUALTY CO., Plaintiff,

NATIONWIDE AGRIBUSINESS INSURANCE CO.; Timothy A. Brennan; and Conserv FS, Inc., Defendant.

Case No. 23 C 2178

Signed January 9, 2024

Attorneys and Law Firms

Scott O. Reed, Robert J. Franco, II, Franco Moroney Buenik LLC, Chicago, IL, for Plaintiff.

Timothy A. Renfro, Jr., Swanson, Martin & Bell, LLP, Chicago, IL, for Defendants Nationwide Agribusiness Insurance Co., Conserv FS, Inc.

Richard Lee Turner, Turner Law Group, Sycamore, IL, for Defendant Timothy A. Brennan.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

*1 This is an insurance coverage dispute, in federal court via diversity jurisdiction. It involves two insurers whose insureds are named as defendants in a wrongful death case pending in state court. Each of the two insurers says that its policy provides “excess” coverage. The plaintiff, Great West Casualty Co., has moved for summary judgment. The motion requires the Court to decide the status of each insurer. In addition, if the Court concludes that both are “excess” insurers, the Court has to decide their relative responsibility regarding defense costs and liability.

Facts

On June 2, 2021, in Sycamore, Illinois, Patrick Brennan was driving a Chevrolet Equinox, and Robert Fisher was driving a tractor-trailer. Fisher was employed by Deerpass Farms Services, LLC (DFS). The tractor was owed by DFS and leased to a related entity, Deerpass Farms Trucking, LLC-II (DFT2). The trailer was owned by an unrelated entity, Conserv FS, Inc., and was also leased to DFT2. Brennan and Fisher both arrived at an intersection. Fisher allegedly failed to stop at a stop sign, and Brennan collided with the tractor-trailer. Brennan died from injuries suffered in the collision. The administrator of his estate sued Fisher, DFS, DFT2, and Conserv, alleging negligence.

Great West Casualty Co. provides liability insurance to DFT2. Nationwide Agribusiness Insurance Co. provides liability insurance to Conserv. (The Court omits as unnecessarily complicating the allegations regarding the insured status of Fisher under both policies and the insured status of DFT2 under the Nationwide policy.)

Both sides agree that Nationwide’s insurance coverage is “excess” insurance, under the following provision in the Nationwide insurance policy:

5. Other Insurance

a. For any covered “auto” you own, this Coverage Form provides primary insurance. For any covered “auto” you don’t own, the insurance provided by this Coverage Form is excess over any other collectible insurance. However, while a covered “auto” which is a “trailer” is connected to another vehicle, the Covered Autos Liability Coverage this Coverage Form provides for the “trailer” is:

(1) Excess while it is connected to a motor vehicle you do not own; or

(2) Primary while it is connected to a covered “auto” you do own.

Great West LR 56.1 Stat. ¶ 29 (emphasis added). Specifically, under this term of the Nationwide policy, its coverage is excess because the covered auto—the trailer—was connected to another vehicle—the tractor, and that was a motor vehicle that Conserv did not own, as DFS owned the tractor.

The key dispute in this case involves the status of Great West’s coverage. The issues before the Court involve construction of insurance policies. Under Illinois law, which both parties agree governs, the proper interpretation of an insurance policy is a question of law. The usual rules of contract interpretation apply. The primary goal is to ascertain and give effect to the parties’ intentions as expressed in the language of the insurance policy. The goal is to give effect to every provision when possible. Terms in an insurance policy are given their ordinary meaning, absent ambiguity. See generally Citizens Ins. Co. of Am. v. Wynndalco Enters., LLC, 70 F.4th 987, 995 (7th Cir. 2023) (citing cases for each of these propositions).

*2 The operative terms are all in the “Commercial Auto Coverage Part” portion of the Great West policy, and specifically in “Section V – Motor Carrier Conditions,” Paragraph B – “General Conditions.” The operative, or at least potentially operative, terms read as follows:

5. OTHER INSURANCE – PRIMARY AND EXCESS INSURANCE PROVISIONS

…

b. While any covered “auto” is hired or borrowed by you from another “motor carrier” this Coverage Form’s Covered Autos Liability Coverage is:

(1) Primary if a written agreement between the other “motor carrier” as the less or and you as the lessee does not require the lessor to hold you harmless, and then only while the covered “auto” is used exclusively in your business as a “motor carrier” for hire.

(2) Excess over any other collectible insurance if a written agreement between the other “motor carrier” as the lessor and you as the lessee require the lessor to hold you harmless.

…

e. Except as provided in Paragraphs a., b., c. and d. above, this Coverage Form provides primary insurance for any covered “auto” you own and excess insurance for any covered “auto” you do not own.

…

g. Regardless of the provisions of Paragraphs a., b., c., d. and e. above, this Coverage Form’s Covered Autos Liability Coverage is primary for any liability assumed under an “insured contract.”

Dkt. No. 14-4 (Great West policy) at ECF pp. 41-42 of 137.

The first issue regarding the Great West policy involves Section 5.b. First of all, the Court concludes that a “covered auto”—the tractor—was hired or borrowed by DFT2 from another “motor carrier,” namely DFS. Nationwide argues that the tractor was not “hired or borrowed” because it was leased. The term “hired or borrowed” is broad enough to include a vehicle that is leased. The proposition that the term “hired or borrowed” is coextensive with, or at least includes, vehicles that are leased is apparent from the language of Section 5.b.(1) and (2) itself, as both (1) and (2) refer to, and only to, leased vehicles. If “leased” in Section 5.b. meant something outside the scope of the term “hired or borrowed,” Section 5.b.(1) and (2) would effectively be superfluous. It is a basic principle of contract law that contracts are to be read so as to give meaning to every term and, conversely, to avoid any term being rendered superfluous. See, e.g., Land of Lincoln Goodwill Indus., Inc. v. PNH Fin. Servs. Grp., Inc., 762 F.3d 673, 679 (7th Cir. 2014). Section 5.b.(1)-(2), which is a single term of the policy, makes it clear from context that “hired or borrowed” has to include leased vehicles; nothing else makes sense.

In addition, when the Court asked Nationwide’s counsel at oral argument how “borrowed” meant something completely different from “leased,” counsel replied that borrowed means “you’re not paying for it.” That makes no sense; among other things, as the Court pointed out during oral argument, persons who “borrow” money from banks are typically expected to repay it. Counsel’s only other argument was that a separate part of the policy defines the term “leased auto.” But here we are dealing with Section 5.b., not some other part of the policy. The Court concludes that the phrase “hired or borrowed” in Section 5.b. includes autos that the insured has leased.

Nationwide and Brennan, who also weighed in on certain aspects of the dispute between the insurers, next argue that DFS is not a “motor carrier” within the meaning of Section 5.b. because it does not meet the definition of motor carrier in US Department of Transportation regulations. But those regulations don’t provide the appropriate definition. The term “motor carrier” is defined in the Great West policy itself, as follows: “ ‘Motor Carrier’ means a person or organization providing transportation by ‘auto’ in the furtherance of a commercial enterprise.” Dkt. No. 14-4 at ECF p. 45 of 137. DFS is an organization that provides transportation by auto—the tractor¹—in furtherance of a commercial enterprise—a farm. It therefore meets the policy’s definition of a motor carrier.

*3 In sum, Section 5.b. of the Nationwide policy applies, because a covered auto, the tractor, was hired or borrowed (in this case leased) by the insured, DFT2, from another motor carrier, DFS.

The next question involves the application of Section 5.b.(2). That provision says that Great West’s insurance is excess coverage “if a written agreement between the other ‘motor carrier’ as the lessor and [DFT2] as the lessee require the lessor to hold you harmless.” Dkt. no. 14-4 at ECF p. 41 of 137. There is such an agreement, specifically, the lease between DFS and DFT2. In that lease, the “Contractor” (DFS) expressly requires to “defend, indemnify, and hold [DFT2] harmless from and against any and all injuries (including death), claims,” and so on as a result of any acts or omissions of DFS or its employees, which is what Fisher was. See Dkt. no. 14-3 at ECF p. 7 of 17.

For these reasons, the Court concludes that under Section 5.b.(2) of the relevant part of the Great West policy, Great West’s coverage is excess coverage.

This does not end the discussion, however. Nationwide also cites Section 5.g., quoted earlier, which says that regardless of Section 5.b. (among other provisions), Great West’s insurance is primary “for any liability assumed under an ‘insured contract.’ ” Dkt. no. 14-4 at p. 42 of 137. The Great West policy defines “insured contract,” as applicable here, as follows:

5. That part of any other contract or agreement pertaining to your business … under which you assume the tort liability of another to pay for “bodily injury” or “property damage” to a third party or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement ….

Dkt. no. 14-4, ECF p. 44 of 137. Nationwide argues that the agreement between Conserv and DFT2—referred to as the Interchange Agreement—is an “insured contract” within the meaning of Section 5.g. That agreement contains the following indemnification provision:

Release and Hold Harmless. Except to the proportionate extent that any Losses are caused by the negligent acts or omissions of [Conserv], [DFT2] hereby releases and agrees to indemnify, defend and hold harmless [Conserv] … from and against any and all claims, lawsuits, causes of action, judgments, expenses, fines, cost [sic], losses, penalties, damages, liabilities and reasonable attorneys’ fees for bodily injury (including injury resulting in death) and loss of or damage to property (collectively, “Losses”) arising out of or released to [DFT2’s] use, operation, maintenance, possession, or Interchange of [Conserv’s] Equipment.

…

Dkt. No. 32-1 at ECF pp. 7-8 of 10.

Nationwide argues that any liability of its insured Conserv in the Brennan lawsuit, if any, is “liability assumed under an ‘insured contract’ ” within the meaning of Section 5.(g) of the Great West policy. Specifically, Nationwide argues, Conserv is not alleged to have been negligent in any way with respect to the underlying matter; thus DFT2’s liability, if any, is liability assumed under the hold harmless agreement in the Interchange Agreement. (The claim against Conserv in the Brennan lawsuit is based on an assertion of vicarious liability for the alleged negligence of Fisher—DFT2’s agent—not on Conserv’s own alleged negligence.)

*4 Great West contends that Section 5.g. does not apply. Among other points, Great West cites the policy’s definition of “insured contract”—an agreement under which DFT2 “assume[s] the tort liability of another”—and argues that what DFT2 assumed under the Interchange Agreement’s hold harmless provision is not “the tort liability of another.”

The Court agrees with Great West. Any liability that DFT2 assumed under the Interchange Agreement is not someone else’s tort liability; rather, DFT2 agreed to indemnify Conserv for liability arising from DFT2’s own actions. See, e.g., Hankins v. Pekin Ins. Co., 305 Ill. App. 3d 1088, 1093, 713 N.E.2d 1244, 1249 (1999). Thus Section 5.g. of the Great West policy does not apply.

In sum, the Court concludes that Great West’s insurance, like Nationwide’s, is excess insurance.

That leaves the question of who pays what. Great West argues that because of the particular wording of Section 5.b.(2), its coverage is what its lawyer referred to at oral argument as “super excess,” in other words excess over Nationwide’s excess coverage. The term in Great West’s policy says that if the conditions of section 5.b.(2) are satisfied, Great West’s insurance is “[e]xcess over any other collectible insurance.” Section 5.a.(1) of Nationwide’s policy simply says that its insurance is “[e]xcess”; there is no reference to “any other collectible insurance.” As support for the proposition that this difference matters, Great West cites a single case, Truck Insurance Exchange v. Liberty Mutual Insurance Co., 102 Ill. App. 3d 24, 428 N.E.2d 1182 (1981). That case does not support the weight that Great West seeks to place on it. In Truck Insurance Exchange the court, in reading the excess clauses in the two insurance policies at issue, relied on the insureds’ clear intent, as expressed in a lease, to have one insurer provide the primary insurance and the other to provide excess coverage to cover amounts over and above the limits in the primary policy. There is nothing in the present case that is similar. The Court concludes that Truck Insurance Exchange does not govern here. The language in the two separate insurance policies is functionally the same: the insurance provided, in the present situation, is excess.

When two insurers are both excess insurers and there is no primary insurer, the two excess provisions effectively cancel each other out, and the two excess insurers share responsibility on a pro rata basis. See Great West Cas. Co. v. Ross Wilson Trucking, 550 F. Supp. 3d 579, 586 (C.D. Ill. 2021). That is the case here.

The last question, therefore, is how defense costs and liability get divided. On this, both sides agree: it is done in proportion to the respective policy limits. Language to this effect appears in both policies. Section 5.h. of the relevant part of the Great West policy says that

[w]hen this Coverage Form and any other Coverage Form, policy or self-insurance covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms, policies and self-insurance covering on the same basis.

Dkt. no. 14-4, ECF p. 42 of 137. The Nationwide policy says exactly the same thing. See Great West LR 56.1 Stat. ¶ 29. The limit of the Great West coverage is $1 million; the limit of the Nationwide coverage is $2 million. The two insurers are to share defense costs and liability proportionately to these respective limits.

Conclusion

*5 The Court grants plaintiff Great West Casualty Co.’s motion for summary judgment [17] to the extent stated in this Memorandum Opinion and Order. The Court will enter a declaratory judgment accordingly. The parties are directed to confer and prepare a proposed judgment order, agreed as to form, consistent with the Court’s ruling. A Word version is to be submitted to Judge Kennelly’s proposed order e-mail address by no later than January 12, 2024. Entry of the declaratory judgment should conclude all remaining issues in this case, so the Court will close the case following entry of the judgment.

All Citations

Slip Copy, 2024 WL 98402

Footnotes

The Great West policy defines “Auto” to include “[a] land motor vehicle, ‘trailer’ or semitrailer designed for travel on public roads ….” Dkt. no. 14-4 at ECF p. 43 of 137.

End of Document

BITCO Gen. Ins. Corp. v. Smith

United States Court of Appeals, Eighth Circuit.

BITCO GENERAL INSURANCE CORPORATION, Plaintiff – Appellee

Bruce SMITH; Clayton Hamlin; Chris White, d/b/a Chris White Construction, Defendants – Appellants

No. 23-1043

Submitted: September 21, 2023

Filed: December 26, 2023

Synopsis

Background: Hauling company’s insurer brought action seeking declaratory judgment that it had no duty under business automobile policy to defend or indemnify trucking company and dump truck driver in underlying action. Defendants filed counterclaims for coverage. The United States District Court for the Western District of Missouri, Beth Phillips, Chief Judge, 646 F.Supp.3d 1039, entered summary judgment in insurer’s favor, and defendants appealed.

[Holding:] The Court of Appeals, Grasz, Circuit Judge, held that trucking company did not fall within scope of policy definition of “insured.”

Affirmed.

Colloton, Circuit Judge, concurred in judgment and filed opinion.

[1] Federal Courts

Court of Appeals reviews grant of summary judgment on insurance policy interpretation de novo, applying same summary judgment standard as district court and using state law to determine coverage issues.

[2] Insurance

Under Missouri law, interpretation of insurance policy is question of law.

[3] Insurance

Missouri law mandates that courts use general contract-interpretation principles to interpret meaning of terms in insurance policy.

[4] Insurance

Under Missouri law, in interpreting insurance contract, court must read contract as a whole and determine parties’ intent, giving effect to that intent by enforcing contract as written.

[5] Insurance

Under Missouri law, courts should generally interpret insurance policy according to policy’s plain meaning, enforcing unambiguous language as written.

[6] Insurance

Under Missouri law, ambiguity exists in insurance policy only when phrase is reasonably open to different constructions, or when there is duplicity, indistinctness, or uncertainty in meaning of language in policy.

[7] Insurance

Under Missouri law, courts construe ambiguities in insurance policy in insured’s favor, but only when reasonable person would expect coverage under policy terms.

[8] Insurance

Under Missouri law, simply because insured may point to coverage-friendly definition in dictionary does not mean that interpretation controls in interpreting insurance policy; any interpretation must be objectively reasonable in light of whole agreement and parties’ intent.

[9] Insurance

Missouri law forbids court from reading any one insurance policy term in isolation to create ambiguity; instead, court must determine how language fits in context of policy.

[10] Insurance

Under Missouri law, trucking company that hauling company had engaged to provide dump truck to haul rock did not fall within scope of hauling company’s business automobile policy definition of “insured” as “[a]nyone else while using with [company’s] permission a covered ‘auto’ [that company] own[s], hire[s], or borrow[s],” and thus hauling company’s insurer had no duty to defend or indemnify trucking company or its driver in underlying personal injury action arising from collision with dump truck; hauling company did not own or borrow dump truck, and term “hire” unambiguously required element of control, but hauling company did not drive or operate truck, or dictate truck’s route, speed, or any other aspect of its operation.

Appeal from United States District Court for the Western District of Missouri

Attorneys and Law Firms

Counsel who presented argument on behalf of the appellants and appeared on the brief was Kaci R. Peterson, of Jefferson City, MO. The following attorney(s) also appeared on the appellants’ brief; Donald L. O’Keefe, of Saint Louis, MO, Andrew J. Gelbach, of Warrensburg, MO, James Daniel Ribaudo, of Saint Louis, MO.

Counsel who presented argument on behalf of the appellee and appeared on the brief was Martin John Buckley, of Saint Louis, MO. The following attorney(s) also appeared on the appellee brief; Adrian Phillip Sulser, of Saint Louis, MO.

Before COLLOTON, GRASZ, and KOBES, Circuit Judges.

Opinion

GRASZ, Circuit Judge.

*1 The question in this appeal is whether an insurance policy issued by BITCO General Insurance Corporation (“BITCO”) covers damages from an accident involving a truck driven by a contractor engaged by the insured, KAT Excavation Company (“KAT”). The district court¹ concluded BITCO had no such obligation under the policy because “KAT did not hire” the contractor’s dump truck for purposes of the policy. We affirm.

I. Background

KAT was the general contractor on a construction project at Skyhaven Airport, which included work on the airport’s runway. KAT arranged for E&S Quarry (“E&S”) to supply rock for paving the runway. KAT’s own fleet of drivers and vehicles could not transport enough rock from E&S to the airport, so KAT engaged other hauling companies willing to furnish trucks with drivers. KAT’s “truck boss” in charge of arranging for extra trucks, Mike aLong, telephoned Chris White, doing business as Chris White Construction (“CWC”), who KAT had worked with before on another construction project. Long spoke with Chris White’s son, Tanner White, asking him if CWC had any available dump trucks. Long specified that the vehicle needed to be a dump truck, but otherwise any dump truck would do.

Tanner told Long he had a dump truck that could haul rock from E&S to the airport. Under their oral agreement, KAT would pay CWC a fixed amount for each ton of rock CWC hauled to the airport, irrespective of how many hours the driver spent hauling rock or how many miles were driven. Tanner did not specify, nor did Long ask, who would be driving the truck. Long gave the location of E&S and the airport, telling Tanner that E&S opened at 7:00 a.m. As Tanner and Long understood, CWC’s truck would work a full day, if possible, hauling as much rock as it could or until KAT met its rock requirements for the day. Long made similar arrangements with several other companies during the life of the project. Tanner contacted Clayton Hamlin, a driver CWC used in the past, and asked him to drive the dump truck the next day. Hamlin agreed.

The following day, Hamlin picked up the vehicle—a 1988 Peterbilt dump truck—from Tanner. Hamlin drove the truck to E&S and picked up a load of rock. E&S gave him a ticket to show KAT how many tons of rock Hamlin transported. Hamlin took the load of rock to the airport, where KAT workers directed Hamlin where to dump it. Hamlin then drove back to E&S. After Hamlin picked up another load of rock and on his second trip to the airport, an accident occurred between Hamlin and a vehicle driven by Bruce Smith.

Smith sued Hamlin in Missouri state court for injuries stemming from the accident.² KAT’s insurer, BITCO, then filed a declaratory judgment action in federal court, denying it had any responsibility to defend or indemnify CWC or Hamlin under KAT’s insurance policy.

*2 CWC and Hamlin counterclaimed against BITCO for coverage, arguing the policy’s omnibus clause covered Hamlin as the driver of the dump truck. Smith joined CWC and Hamlin (collectively, “the Appellants”) in demanding BITCO defend and indemnify Hamlin and CWC. The relevant omnibus clause defines an “insured” as “[a]nyone else while using with [KAT’s] permission a covered ‘auto’ [KAT] own[s], hire[s], or borrow[s.]” The omnibus provision also provides coverage for “[a]nyone liable for the conduct of an ‘insured[.]’ ” According to Appellants, if Hamlin is a covered insured, then BITCO also has an obligation to defend CWC as a party that could be “liable” for Hamlin’s conduct.

The parties filed competing motions for summary judgment over the scope of coverage. Appellants argued the undefined terms “permission” and “hire” were ambiguous, which meant Missouri law required adopting a coverage-favoring definition of those words. The district court disagreed, holding that the term “hire”—as used in the insurance policy—required KAT to exercise an element of “control” over the dump truck. The district court granted summary judgment to BITCO, deciding that the undisputed facts did not show, as a matter of law, that KAT exercised the requisite level of “control” over the dump truck, and thus Hamlin was not covered under the policy. Appellants appealed, arguing the district court improperly interpreted the insurance contract under Missouri law and that, regardless of whether “hire” requires an element of “control,” the undisputed facts show KAT “hired” the dump truck.

II. Analysis

^[1] ^[2]We review a grant of summary judgment on an insurance policy interpretation de novo, applying the same summary judgment standard as the district court and using state law to determine coverage issues. Wintermute v. Kan. Bankers Sur. Co., 630 F.3d 1063, 1067 (8th Cir. 2011). See also Fed. R. Civ. P. 56(a) (“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”). “Under Missouri law, which the parties agree governs this diversity case, the interpretation of an insurance policy is a question of law, which we review de novo.” Brazil v. Auto-Owners Ins. Co., 3 F.4th 1040, 1042 (8th Cir. 2021).

^[3] ^[4]Appellants argue the terms “hire” and “permission” are ambiguous, and because of that ambiguity, Missouri law requires us to adopt a coverage-friendly definition. To answer whether those terms are ambiguous, Missouri law mandates we use general contract-interpretation principles to interpret the meaning of terms in the insurance policy. Id. “In interpreting an insurance contract, we are to read the contract as a whole and determine the intent of the parties, giving effect to that intent by enforcing the contract as written.” Id. (quoting Stotts v. Progressive Classic Ins., 118 S.W.3d 655, 662 (Mo. Ct. App. 2003)).

^[5] ^[6] ^[7] ^[8]Generally, courts should interpret an insurance policy according to the policy’s plain meaning, enforcing unambiguous language as written. Allen v. Cont’l W. Ins. Co., 436 S.W.3d 548, 554 (Mo. 2014). “An ambiguity exists only when a phrase is ‘reasonably open to different constructions[,]’ ” id. (quoting Mendenhall v. Prop. & Cas. Ins. Co. of Hartford, 375 S.W.3d 90, 92 (Mo. 2012)), or when “there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy,” Taylor v. Bar Plan Mut. Ins. Co., 457 S.W.3d 340, 344 (Mo. 2015). Courts construe ambiguities in favor of the insured, Seeck v. Geico Gen. Ins., 212 S.W.3d 129, 132 (Mo. 2007), but only when a reasonable person would expect coverage under the policy terms, Brazil, 3 F.4th at 1042 (citing Estrin Constr. Co. v. Aetna Cas. & Sur. Co., 612 S.W.2d 413, 420 (Mo. Ct. App. 1981)). Simply because an insured may point to a coverage-friendly definition in a dictionary does not mean that interpretation controls; any interpretation must be objectively reasonable in light of the whole agreement and the parties’ intent. See id. at 1044–45 (rejecting the plaintiffs’ argument that “subject to” was ambiguous because “they have not pointed to a second reasonable interpretation of the language”).

*3 The district court held that the term “hire” in the insurance policy necessarily requires an element of “control.” BITCO Gen. Ins. Corp. v. Smith, 646 F. Supp. 3d 1039, 1044 (W.D. Mo. 2022) (citing cases). In other words, there must be more than a mere engagement of transportation services: “[F]or a vehicle to constitute a hired automobile, there must be a separate contract by which the vehicle is hired or leased to the named insured for his exclusive use or control.” Toops v. Gulf Coast Marine Inc., 72 F.3d 483, 487 (5th Cir. 1996) (alteration in original) (quoting Sprow v. Hartford Ins. Co., 594 F.2d 418, 422 (5th Cir. 1979)). According to the district court, “a definition of ‘hiring’ that does not include an element of control makes the term overly broad and unreasonable.” BITCO Gen. Ins., 646 F. Supp. 3d at 1044. Because of its holding, the district court explicitly declined to address whether KAT gave permission to Hamlin to drive the truck. Id. at 1045 n.7.

In asking us to reverse the district court, Appellants argue we should hold “hire” to be ambiguous because the term is subject to more than one reasonable interpretation, including a definition that does not require an element of control, and Missouri law requires adopting a coverage-friendly definition against the drafter when policy language is ambiguous. See, e.g., Burns v. Smith, 303 S.W.3d 505, 509–10 (Mo. 2010). After all, omnibus clauses are meant to extend, not restrict, coverage for the insureds, Griffitts v. Old Republic Ins. Co., 550 S.W.3d 474, 479 (Mo. 2018), and our circuit has already concluded “that the term ‘hired auto’ is ambiguous,” Kresse v. Home Ins. Co., 765 F.2d 753, 755 (8th Cir. 1985) (interpreting North Dakota law). Also, at least one other jurisdiction has declined to add an element of control to the common definition of “hire.” See Pawtucket Mut. Ins. Co. v. Hartford Ins. Co., 147 N.H. 369, 787 A.2d 870, 873 (2001). Thus, Appellants argue, we should apply a common dictionary definition of “hire” that does not require an element of control. We disagree.

^[9]Missouri law forbids us from reading any one policy term in isolation to create an ambiguity. Owners Ins. Co. v. Craig, 514 S.W.3d 614, 617 (Mo. 2017). Instead, we must determine how the language fits in the context of the policy. Sanders v. Wallace, 884 S.W.2d 300, 303 (Mo. Ct. App. 1994). Read in isolation, the term “hire” may well be ambiguous. See Kresse, 765 F.2d at 755. But any ambiguity is extinguished by looking to the term “permission” within the same omnibus clause—a term that has no ambiguity. Winterton v. Van Zandt, 351 S.W.2d 696, 700 (Mo. 1961). (“There is no ambiguity in the meaning of the word ‘permission’.”). “Permission” means “[a]ct of permitting; formal consent; authorization; leave; license or liberty granted.” Id. (quoting Permission, Webster’s New International Dictionary (2nd ed.)).

Though “permission” as used in the omnibus clause may have a “flexible meaning,” McKee v. Travelers Ins. Co., 315 S.W.2d 852, 857 (Mo. Ct. App. 1958), being express or implied depending on the facts and circumstances of the case, see Hawkeye-Sec. Ins. Co. v. Bunch, 643 F.3d 646, 650 (8th Cir. 2011), that does not render the term ambiguous. “[Permission] carries with it the necessary aspect of the right, power, or privilege to give or to withhold the grant of license embodied in the term.” Allstate Ins. Co. v. Hartford Acc. & Indem. Co., 311 S.W.2d 41, 45 (Mo. Ct. App. 1958). If one is able to give permission, then one has the power to give or prevent leave, license, or authority to use. M.F.A. Mut. Ins. Co. v. Alexander, 361 S.W.2d 171, 179 (Mo. Ct. App. 1962).

^[10]In reading all the words of BITCO’s omnibus clause together in context, we conclude that “hire” unambiguously requires an element of control because the giving or withholding of “permission” unambiguously requires control. Any other interpretation of “hire” would be unreasonable in context with the way “permission” is used in the omnibus clause. Thus, we agree with the district court that the policy requires KAT to exercise an element of control over the truck. See BITCO Gen. Ins., 646 F. Supp. 3d at 1044.

*4 We now consider whether the undisputed facts—construed in the light most favorable to Appellants—could support a jury finding that KAT “hired” CWC’s dump truck. Whether a named insured exercises “control,” such that a vehicle becomes a “hired auto” will depend on the facts and circumstances of the case. See Kresse, 765 F.2d at 755–56. Looking to the facts here, we conclude that KAT did not “hire” CWC’s dump truck but merely engaged the truck for transportation services. As the district court reasoned:

KAT could not drive or operate the truck, or dictate the truck’s route, speed, or any other aspect of its operation (other than specifying the rock was to be picked up at E&S and was to be unloaded at a specific spot at the Airport). KAT did not select the truck CWC supplied, did not select Hamlin to be the driver, and had no right to reject either. It had no responsibility to pay Hamlin or any expenses related to the truck’s operation or maintenance.

BITCO Gen. Ins., 646 F. Supp. 3d at 1045 (footnote omitted). Significantly—given the policy language that KAT give “permission” to the user of the truck—the facts show Hamlin received permission to drive the truck from Tanner, not KAT. The service contract merely called for CWC to move as much rock as KAT needed, with KAT paying on a per-ton basis. Though KAT desired the trucks to work a full day if possible and to keep hauling rocks until KAT told them to stop, Hamlin and CWC had the discretion to decide the route to take, the number of trips or stops to make, and the hours worked.

Thus, the record reflects that CWC exercised exclusive control over the dump truck. As the district court summarized: “KAT hired CWC to perform a task, and in performing that task CWC used a truck. KAT did not hire the truck.” Id. Because the undisputed facts show Hamlin was not a covered insured under the omnibus clause, the policy does not provide coverage for either Hamlin or CWC for accidents involving the dump truck.

III. Conclusion

We affirm the district court’s grant of summary judgment to BITCO and its denial of summary judgment to Appellants.

COLLOTON, Circuit Judge, concurring in the judgment.

I concur in the judgment based on the court’s conclusion that truck driver Hamlin received “permission” to drive the dump truck at issue from Tanner White of Chris White Construction, not from KAT Excavation, Inc. Ante, at –––– (“Significantly—given the policy language that KAT give ‘permission’ to the user of the truck—the facts show Hamlin received permission to drive the truck from Tanner, not KAT.”). Hamlin was therefore not an “insured” under the policy because he was not using the truck with KAT’s “permission.” That conclusion is sufficient to affirm the judgment, and it is unnecessary to address whether KAT “hired” the dump truck.

All Citations

Footnotes

The Honorable Beth Phillips, Chief Judge, United States District Court for the Western District of Missouri.
Smith did not name CWC as a party in his initial state court petition, but he intends to name CWC as an additional defendant once a stay is lifted in that case.

End of Document