IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
September 26, 2008
No. 07-31132 Charles R. Fulbruge III
Clerk
JOHN MAHAFFEY,
Plaintiff
v.
GENERAL SECURITY INSURANCE CO.; ET AL
Defendants
________________________________________________________________________
REDLAND INSURANCE CO.,
Third-Party Defendant–Appellant,
v.
FIRST COAST INTERMODAL SERVICE INC.; GENERAL SECURITY
INSURANCE CO.; ARTHUR WYNN,
Defendants–Third-Party Plaintiffs–Appellees.
Appeal from the United States District Court
for the Middle District of Louisiana
Before REAVLEY, STEWART, and OWEN, Circuit Judges.
PER CURIAM:
Appellant Redland Insurance Company (Redland) appeals a grant of
summary judgment in favor of appellee General Security Insurance Company
(GSI). The district court ruled that Redland provided primary insurance
No. 07-31132
coverage for a commercial truck accident, holding a “nontrucking use”
endorsement in the Redland policy did not exclude coverage because the driver
was not “in the business of” the trucking-company lessee at the time of the
accident. Because we hold that the driver was in the business of the lessee as
a matter of law, we reverse and render judgment for Redland.
I
In 1999, Farr Auto Sales (Farr) leased a truck and provided a driver,
Arthur Wynn, to First Coast Intermodal Service (First Coast) to haul a load from
Bowling Green, Kentucky, to New Orleans, Louisiana. Wynn dropped the load
off in New Orleans at approximately 4 p.m. and called the First Coast
dispatcher. The dispatcher told Wynn to “take the rest of the night off and call
[First Coast dispatch] in the morning to see if they had a load.” After speaking
with the First Coast dispatcher, Wynn drove the truck without its trailer
(“bobtailed”1) to a truck stop where he ate dinner, watched television, took a
shower, and played some slot machines. In total, Wynn stayed at the truck stop
for between six and seven hours.
Although Wynn usually slept in the cab of his truck, a leak left the
mattress in the main cabin wet, and Wynn decided to go to a motel for the night.
On his way to the motel, Wynn was involved in an automobile accident with
John Mahaffey. Mahaffey brought suit in Louisiana state court against Wynn,
First Coast, and First Coast’s insurance provider, GSI (collectively, Defendants).
First Coast and GSI removed the case to the Middle District of Louisiana.
Following removal, Defendants filed a third-party complaint against
Redland Insurance Company (Redland), alleging that because Wynn was
bobtailing at the time of the accident, the Redland insurance policy provided
primary coverage.
1
See SAUL SORKIN, GOODS IN TRANSIT § 45.01 (2008) (defining “bobtailing” as “[t]he
operation of a tractor without an attached trailer”).
2
No. 07-31132
Redland provided an insurance policy on the truck that included liability,
personal-injury, uninsured-motorist, and collision coverage, as well as coverage
for other specified causes of loss. The coverage was subject to exclusions and
endorsements, including a nontrucking use endorsement. Although insurance
with a nontrucking use endorsement is often referred to as “bobtail insurance,”
the coverage is not described in terms of bobtailing. Rather, the endorsement
provides that “the insurance does not apply to . . . [a] covered ‘auto’ while used
to carry property in any business . . . [or] a covered ‘auto’ while used in the
business of anyone to whom the ‘auto’ is rented.”
The terms of the lease agreement between Farr and First Coast required
Farr to carry nontrucking use liability insurance and required First Coast to
maintain its own public liability, property, and cargo insurance. Pursuant to a
“deduction notice” Farr signed, First Coast paid the nontrucking liability
insurance premiums and deducted the premiums from amounts paid to Farr
under the lease agreement. At the time of the execution of the lease agreement
between Farr and First Coast, the annual premium for the nontrucking use
policy was $360.00 per year, payable in advance in $30.00 monthly installments.
Although the deduction notice provided a fixed amount to be deducted for
nontrucking use liability insurance, the lease agreement also gave First Coast
the right to change the amount to be deducted for nontrucking use liability
insurance to the amount established by the insurance company.
Although conceding that the GSI policy provided coverage to Mahaffey for
his claim, Defendants filed a motion for partial summary judgment asking the
court to hold that the Redland policy provides primary coverage and the GSI
policy provides excess coverage. The magistrate judge recommended granting
the motion, concluding that because Wynn had no “pending, definite
assignment” and “no requirement from First Coast that he stay in New Orleans”
the night of the accident, Wynn was not in the business of First Coast at the
3
No. 07-31132
time of the accident and that, therefore, the Redland policy provided primary
coverage. The district court adopted the magistrate’s recommendation.
Redland first appealed the district court’s grant of partial summary
judgment in March 2002. This court held the appeal was premature. Redland
then filed a motion to make the judgment final pursuant to Federal Rule of Civil
Procedure 54(b). The district court granted the motion. Redland again appeals
the district court’s grant of summary judgment, arguing that Wynn was in the
business of First Coast at the time of the accident.
II
We review a district court’s grant of summary judgment de novo.2
Summary judgment is proper when there is no genuine issue of material fact and
the movant is entitled to judgment as a matter of law.3 In determining whether
there is a genuine issue of material fact, we view facts and inferences in the light
most favorable to the nonmoving party.4
GSI contends that certain deposition testimony of the corporate
representative of First Coast and of Farr was inadmissible lay opinion
testimony, lacks foundation, and has no basis other than hearsay. It is not clear
whether the magistrate judge or the district court relied on this testimony in any
way. Because the case does not turn on this testimony, we do not consider it or
its admissibility.
2
Essinger v. Liberty Mut. Fire Ins. Co., 529 F.3d 264, 269 (5th Cir. 2008).
3
FED. R. CIV. P. 56(c).
4
Essinger, 529 F.3d at 269.
4
No. 07-31132
III
The parties agree Louisiana law applies. Under Louisiana law,
“[i]nterpretation of an insurance contract generally involves a question of law.”5
The words of the insurance contract “must be given their generally prevailing
meaning.”6 If the language in the insurance policy is clear and unambiguous,
the insurance contract must be enforced as it is written.7
We have held that the phrase “in the business of” in a nontrucking use
endorsement is unambiguous.8 “That ‘contractual language may, on occasion,
pose difficult factual applications . . . ’ and that the parties disagree as to
coverage, does not create ambiguity.”9 Although the application of the
endorsement to these facts may pose difficult questions, the difficulty of the
questions does not create an ambiguity. Because “in the business of” as used in
the nontrucking use endorsement is unambiguous, the issue is properly resolved
as a matter of law on a motion for summary judgment.
The Louisiana Supreme Court has not yet considered when an
independent trucker is acting in the business of a lessee. In the absence of a
decision interpreting a particular insurance clause, we must ascertain how the
Louisiana Supreme Court would rule if faced with interpreting the insurance
5
In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir. 2007) (citing Bonin
v. Westport Ins. Corp., 05-0886 (La. 5/17/06); 930 So. 2d 906, 910).
6
Id. at 207 (quoting LA. CIV. CODE ANN. art. 2047 (1987)).
7
Id. (citing Cadwallader v. Allstate Ins. Co., 02-1637 (La. 6/27/03); 848 So. 2d 577, 580).
8
Empire Fire & Marine Ins. Co. v. Brantley Trucking, Inc., 220 F.3d 679, 681 (5th Cir.
2000); accord Liberty Mut. Ins. Co. v. Conn. Indem. Co., 55 F.3d 1333, 1335 (7th Cir. 1995)
(holding the exclusion “while used in the business of anyone to whom [it] is rented” to be
unambiguous).
9
Brantley Trucking, 220 F.3d at 681 (quoting Hartford Ins. Co. v. Occidental Fire &
Cas. Co., 908 F.2d 235, 239 (7th Cir. 1990)).
5
No. 07-31132
provision10 by looking to guidance from the constitution, codes, and statutes of
the state of Louisiana;11 decisions from Louisiana intermediate appellate courts
and federal courts applying Louisiana law;12 and decisions from other
jurisdictions.13
No constitutional provision, code, or statute defines when a trucker is
acting in the business of a lessee. The only Louisiana Court of Appeal case
considering whether a driver is in the business of a lessee is LeBlanc v. Bailey.14
In LeBlanc, a trucker was involved in an accident while en route to his home
after finishing deliveries that day.15 The lessee carried commercial automobile
insurance and the driver carried a bobtail policy that contained an endorsement
for nontrucking use, which provided that the bobtail insurance did not apply to
“a covered ‘auto’ while used in the business of anyone to whom the ‘auto’ is
rented.”16 The language of this endorsement for nontrucking use is identical to
the language in the endorsement for nontrucking use in the Redland policy.
The Louisiana Court of Appeal affirmed the trial court’s holding that the
bobtail insurance was primary for the accident as a matter of law.17 Noting that
there was not a bright-line rule to determine whether an independent trucker
is acting in the business of the lessee, the court emphasized that the driver was
10
See Cochran v. B.J. Servs. Co. U.S.A., 302 F.3d 499, 502 (5th Cir. 2002).
11
In re Katrina Canal Breaches Litig., 495 F.3d at 206.
12
Cochran, 302 F.3d at 502.
13
See Stanley v. Trinchard, 500 F.3d 411, 423-24 (5th Cir. 2007) (noting that in making
an “Erie-guess,” this court may consult “decisions from other jurisdictions”).
14
97-0388 (La. Ct. App. 4 Cir. 10/1/97); 700 So. 2d 1311.
15
Id. at 1314.
16
Id. at 1313.
17
Id. at 1314.
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No. 07-31132
“free to go where he pleased [and] . . . was not subject to [the lessee’s] control or
paid for his time or mileage. [The driver] was not under dispatch or standby for
further deliveries, and his drive home was more of a personal nature rather than
a work-related function.”18
Although the LeBlanc court did not specifically enumerate factors to be
considered in determining whether a driver is in the business of another for the
purpose of Louisiana insurance law, the decision indicated that relevant
considerations include: whether the driver was free to go where he pleased;
whether the driver was paid for time or mileage; whether the driver was under
dispatch or standby for further deliveries; and whether the activity was more of
a personal or work-related function.19 There is, however, no indication from
LeBlanc that these considerations are exclusive. The LeBlanc court also
expressed concern that construing the bobtail policy to exclude coverage when
the driver was driving home would “render the non-trucking use endorsement
meaningless and would defeat [the insured’s] very purpose in securing this type
of coverage.”20
Applying the reasoning of LeBlanc leads us to conclude that Wynn was
acting in the business of First Coast. One of the important considerations in
LeBlanc was whether the driver was “under dispatch or standby for further
deliveries,” or whether “his drive home was more of a personal nature rather
than a work-related one.”21 Unlike the driver in LeBlanc, who was heading
home after completing his deliveries and was not under predispatch for
18
Id.
19
See id.
20
Id. at 1314-15.
21
Id. at 1314 (emphasis added).
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No. 07-31132
deliveries the following day,22 Wynn was not heading home, and he was on
standby for further deliveries because the First Coast dispatcher told him to
“take the rest of the night off and call [First Coast dispatch] in the morning to
see if they had a load.” The First Coast dispatch had not yet released Wynn to
return to his home in Missouri. First Coast’s corporate representative testified
that First Coast drivers had the option to reject offered loads, but Wynn sought
an additional load from First Coast and complied with its request that he take
the night off and call the next day about a load. Although Wynn was “free to go
where he pleased” in the interim, in the sense that First Coast did not direct his
activities that evening, Wynn would have had to stay within close proximity to
New Orleans to be available to pick up a load. Wynn was not paid for his time
or mileage while waiting for the next load, but he would have lost the
opportunity to earn return-trip income if he left before ascertaining whether a
load would be available, and First Coast would have lost an available driver.
Wynn was furthering First Coast’s commercial interests to have a driver on
standby and available to take a load the next day, regardless of whether one
actually became available. Finally, unlike driving home after completing
deliveries, driving to a motel far from home in order to sleep to be adequately
rested, when asked to remain in the area to see if a load becomes available, is a
work-related function for a commercial driver because commercial drivers are
required to have a certain number of rest hours between hauls.23 Accordingly,
Wynn was acting in the business of First Coast as a matter of law.
Our conclusion, based on the reasoning of LeBlanc, that Wynn was in the
business of First Coast is consistent with the “commercial interest” test we
22
Id.
23
See 49 C.F.R. § 395.1 (2007) (providing time limits on driving hours and minimum
rest times).
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No. 07-31132
articulated in Empire Fire & Marine Insurance Co. v. Brantley Trucking, Inc.24
In Brantley Trucking, this court considered language nearly identical to the
nontrucking use policy in this case.25 Applying Texas law, we held that the
language in the endorsement for nontrucking use was unambiguous and “clearly
refers to occasions when the truck is being used to further the commercial
interests of the lessee.”26
In Brantley Trucking, the driver of a leased truck, while waiting for cargo
to load at the lessee’s terminal yard, bobtailed to have the truck’s oil changed,
pick up auto parts, and have other maintenance performed at a service station.27
On his way back to the lessee’s terminal, the driver was involved in an
accident.28 We held that the driver was acting in the lessee’s business as a
matter of law because the driver was furthering the commercial interests of the
lessee when he was “only biding his time while the cargo loaded” and was not
“out pursuing leisurely engagement.”29
Decisions in other jurisdictions determining whether a driver was acting
in the business of a lessee also support our holding that Wynn was acting in the
business of First Coast. Unlike driving home, which is generally found to be not
in the business of a lessee,30 Wynn was driving to a motel to sleep with a
24
220 F.3d 679 (5th Cir. 2000).
25
See id. at 680, 682 n.3 (excluding policy coverage “while a covered ‘auto’ is used in
the business of anyone to whom the ‘auto’ is leased or rented”).
26
Id. at 682.
27
Id. at 680.
28
Id.
29
Id. at 682.
30
See, e.g., Acceptance Ins. Co. v. Canter, 927 F.2d 1026, 1028 (8th Cir. 1991) (holding
that a driver was not in the business of a lessee where the driver was driving to his home after
being told there was no cargo available for hauling and to call back a few days later).
9
No. 07-31132
reasonable expectation that a load would be available the following day. Courts
have recognized that a driver can be acting in the business of another when
driving to or from a place to sleep or rest.31
Finally, GSI argues that applying the nontrucking use endorsement to
exclude coverage in this case would render the nontrucking use policy
“meaningless.” This argument is unavailing. LeBlanc exemplifies
circumstances under which the nontrucking use endorsement does not preclude
coverage—when a driver is driving home after dropping a load off without
further instructions.32 We could posit other circumstances in which a vehicle is
not being “used in the business of anyone to whom the ‘auto’ is rented,” but we
decline to offer what would be advisory rulings. Our holding reflects the
Redland policy’s purposely tailored coverage and does not render the
nontrucking use policy meaningless.
* * *
Because Wynn was in the business of First Coast at the time of the
accident as a matter of law, we REVERSE the trial court’s grant of summary
judgment and RENDER judgment for Redland.
31
See Liberty Mut. Ins. Co. v. Conn. Indem. Co., 55 F.3d 1333, 1334, 1337 n.5 (7th Cir.
1995) (holding that a driver was in the business of a lessee when returning to pick up a trailer
he left at a truck stop in order to bobtail to spend a night at home and noting the fact that the
driver went home instead of a hotel was not determinative as the driver “had to sleep
somewhere”); Auto-Owners Ins. Co. v. Redland Ins. Co., 522 F. Supp. 2d 891, 898 (W.D. Mich.
2007) (holding that a trucker going to find a place to sleep the night before picking up an
assigned load was in the business of a lessee because he was “on business far from both his
home and the home base of his employer,” the lessee “expected him to get rest so that he would
be eligible to pick up a load the next morning,” and the “essential purpose of [the driver’s]
actions was to benefit [the lessee] by getting the required hours of sleep and ensuring his
ability to make a pick up the following morning”).
32
See LeBlanc v. Bailey, 97-0388 (La. Ct. App. 4 Cir. 10/1/97); 700 So. 2d 1311.
10