N.D. Georgia,
Robert J. KOLENCIK, Individually and as Administrator of the Estate of Melissa
Kolencik, Plaintiff,
v.
PROGRESSIVE PREFERRED INSURANCE COMPANY, Defendant.
No. 1:04-CV-3507-JOF.
March 17, 2006.
OPINION AND ORDER
FORRESTER, Senior J.
This matter is before the court on Plaintiff's motion for summary judgment [35-1], Plaintiff's motion for leave to file excess pages [36-1], Defendant's motion for leave to file excess pages [37-1], Defendant's motion for summary judgment [38-1], and Plaintiff's motion for leave to file excess pages [41-1].
I. Background
A. Procedural History and Facts
Plaintiff, Robert J. Kolencik, individually and as administrator of the estate of Melissa Kolencik, filed suit against Progressive Preferred Insurance Company and Gulf Insurance Company on December 1, 2004, under the terms of Defendants' insurance policies to recover the full judgment awarded to Plaintiff against one of Defendants' insureds in a state court personal injury action. Alternatively, Plaintiff also filed a declaratory judgment action in Count II of his complaint seeking a declaration of the amount of coverage owed by Defendants under their insurance policies or, pursuant to O.C.G.A. § 46-7- 12, a direct action against Defendants for injuries suffered by Melissa Kolencik. Plaintiff voluntarily dismissed Gulf Insurance Company on September 21, 2005. Shortly thereafter, the parties filed the instant cross-motions for summary judgment.
On August 27, 2003,
Melissa Kolencik was killed when the vehicle she was
driving was involved in an accident with two dump trucks operated by Kenneth
Burnham and Darlene Sue Cleckner. Burnham and Cleckner were employees of Jerry Yarbrough, d/b/a J & J
Trucking and Excavating. On the day of the accident, Burnham and Cleckner had been hauling dirt from
On the day in
question, the two dump trucks finished their work at the HBW site at 6:30 p.m.
and were proceeding to gas up the trucks prior to stopping at a campground
where Yarbrough was providing overnight accommodations for the drivers so that
they could resume work the next day. See Cleckner Depo., at 37, 43. Cleckner
testified that she got separated from the other trucks. It was unclear from Cleckner's testimony whether she refueled her truck before
circling back to see what was keeping the other trucks. In any event, at a
point close to refueling, she discovered the accident involving Melissa Kolencik, which had occurred shortly after 7:00 p.m.
In her deposition,
Tammy Wood, president of T.I. Wood, testified that she considered J & J
Trucking to be an independent contractor. Her accountant instructed her this would have tax advantages. See Wood Depo., at
72. Jerry Yarbrough filled out a "Truck Rental Form" for T.I. Wood
listing his name, telephone numbers, insurance company, and make and model of
dump trucks, but Wood testified that the "truck rental form" filled
out by Yarbrough was an "informational form" only and was not
actually a rental agreement.
Pursuant to O.C.G.A. §
46-17-12, Plaintiff filed suit in the Superior Court of Cobb County
against T.I. Wood Enterprises, Inc., Jerry Yarbrough, d/b/a J & J Trucking
& Excavating and/or J & J Trucking & Excavating, Darlene Sue Cleckner, Kenneth Burnham, and Akil
Nishica, Civil Action No. 04-1-00549- 40. On November
18, 2004, Plaintiff secured several judgments against various defendants: (1)
In his capacity as surviving spouse, Plaintiff obtained three judgments of $4
million each, jointly and severally, against Jerry Yarbrough, Darlene Sue Cleckner, and Kenneth Burnham; (2) as administrator of his
wife's estate, Plaintiff obtained two joint and several judgments against
Darlene Sue Cleckner and Kenneth Burnham in the
amount of $1,083,210.26; and (3) as administrator of his wife's estate, he
obtained a separate judgment against Jerry Yarbrough for $7,416,543.60. The
total judgment against Cleckner and Burnham was
$5,083,210.26, and against Yarbrough was $11,416,543.60. No judgment was
entered with respect to T.I. Wood, and the state court judgment against the
other defendants specifically noted that because the plaintiff had not sought
summary judgment against T.I. Wood, T.I. Wood was "not required to counter
plaintiff's showing and [is] not bound by the findings in this Order."
At the time of the accident, T.I. Wood was insured by Progressive Preferred Insurance Company under policy number CA 4196911-3 for the period of November 27, 2002 through November 27, 2003. Under the 2003 Progressive policy, coverage would be paid for an "insured auto" involved in an accident. It is undisputed that none of the trucks owned by J & J Trucking was listed on the declarations page for the 2003 Progressive policy. As required by law, however, Progressive also filed a Form BMC-91X with the Federal Motor Carrier Safety Administration of the U.S. Department of Transportation, as well as a Form E (Uniform Motor Carrier Bodily Injury and Property Damage Liability Certificate of Insurance) with the Georgia Department of Motor Vehicle Safety which certified that T.I. Wood was insured by Progressive.
The policy also contained Form F endorsement which stated:
The Certificate to the policy, as proof of financial responsibility under the provisions of any State motor carrier law or regulations promulgated by any State Commission having jurisdiction with respect thereto, amends the policy to provide insurance for automobile bodily injury and property damage liability in accordance with the provisions of such law or regulations to the extent of the coverage and limits of liability required thereby provided only that the insured agrees to reimburse the company for any payment made by the company which it would not have been obligated to make under the terms of the policy except by reason of the obligation assumed in making such certification.
The 2003 Progressive policy also addresses the limits of coverage and provides:
Regardless of the number of insured autos, separate premiums paid, insureds, claims made, vehicles involved and lawsuits brought, we will pay no more than the Limit of Liability shown for this coverage in the Declarations, subject to the following:
[i]f we are required by any applicable filing which we have made on your behalf to provide coverage not otherwise provided by this policy under this PART 1--LIABILITY TO OTHERS, to any person or organization, the coverage provided hereunder for such person shall be the minimum coverage required by law. If we are required to make any payment under this policy that would not have been made except for the certification, you must reimburse us.
2003 Policy, Declaration.
Progressive had also issued a policy to T.I. Wood for the year 2001. Progressive did not file a Form K cancellation concerning this policy with the Georgia Department of Motor Vehicle Safety. The 2001 policy is materially identical to the 2003 policy.
B. Contentions
Plaintiff contends
that under
Progressive responds that there is no coverage under its policy because the dump trucks in question were not listed as "covered autos" under the policy. Further, Progressive argues that it has no obligations under its federal filing because the trucking operations conducted by T.I. Wood in general and on the day in question involved purely intrastate travel. Finally, if the state filing applies here, Progressive argues that its obligation is limited to the $100,000 state minimal coverage requirement.
II. Discussion
Before proceeding
further, it is necessary to describe the regulatory framework for the motor
carrier industry at both the state and federal levels. As the court in White v.
Excalibur Insurance Company, 599 F.2d 50 (5th Cir.1979), recognized, "[m]otor carriers had attempted to immunize themselves from the
negligence of the drivers who operated their vehicles by making them all
nominally 'independent contractors." '
The state of
Previously, this Rule had been numerated Rule 1-8-1-.01 and is referred to as such in prior cases cited by the court in this order.
A. Status of Cleckner and Burnham
O.C.G.A. § 46-7-12 authorizes a direct action against the insurer of a motor common carrier. Here, Plaintiff did not directly sue Progressive in the underlying state law action and, instead, made Count II of its complaint here a direct action against Progressive pursuant to O.C.G.A. § 46-7-12. The court must determine whether T.I. Wood can be held responsible for the actions of Cleckner and Burnham, employees of J & J Trucking but doing work for T.I. Wood on the day in question. As the court described above, the Interstate Motor Common Carrier Act was amended to more carefully regulate the relationship between motor common carriers and the vehicles they used. For example, the amendments require that the relationship between a lessor and lessee be set forth in writing in accordance with 49 U.S.C. § 11107(a). Each lease must set forth that the lessee has the "exclusive possession, control, and use of the equipment for the duration of the lease." The lease should also provide that the lessee "shall assume complete responsibility for the operation of the equipment for the duration of the lease." 49 C.F.R. § 1057.12(c)(1).
Here, no such written lease exists. Rather, the documentary evidence shows a truck rental form, checks made out for the purpose of equipment rental, and a register from T.I. Wood showing that the checks cut for J & J Trucking were for the purpose of truck rental. Wood testified, however, that she considered J & J Trucking to be an "independent contractor" and all other documentary evidence to the contrary was at the direction of her accountant for "tax purposes."
In determining
whether J & J Trucking and T.I. Wood were engaged in a lessor-lessee relationship
under the law, the court finds it instructive that the purpose of amending the
Interstate Motor Common Carrier Act in 1956 was to prevent companies from
eluding liability by engaging in sham "independent contractor"
relationships. Companies would hire uninsured, risky trucks and their drivers
as "independent contractors" and then disclaim any association when
those uninsured trucks and drivers caused injury to the general public. The
federal and state filing requirements were designed to provide a minimal form
of coverage for the general public when insolvent and uninsured actors injured
them. See White, 599 F.2d at 53 ("Congress wished to impose on
lessee-carriers responsibility for the operation of leased vehicles 'as if they
were the owners of such vehicles." ') (citing 49 U.S.C. § 304(e)(2), now codified at 49 U.S.C.
§ 11107(a)(4)). "Because the
carrier now has both a legal right and duty to control vehicles operated for
its benefit, the employees of the vehicle-lessor are deemed statutory employees
of the lessee-carrier to the extent necessary to insure the carrier's
responsibility for the public safety just as if the lessee-carrier were the
owner of the vehicles."
The court finds that Ms. Woods' conclusory labeling of J & J Trucking as an "independent contractor" is not sufficient to escape the legal reality that T.I. Wood treated the relationship as one of lessor-lessee through its payments and record-keeping. Thus, Cleckner and Burnham as J & J Trucking employees were "statutory employees" of T.I. Wood for the purposes of the Interstate Motor Common Carrier Act. See White, 599 F.2d at 54 ("the effort of the carrier and the vehicle lessor to create by contract an independent contractor relationship cannot operate to frustrate the federal design to impose responsibility on the carrier for acts of those who might otherwise be independent contractors"); see also Judy v. Tri-State Motor Transit Co., 844 F.2d 1496, 1051 (11th Cir.1988) ("Where members of the public are injured by the torts of the drivers of leased vehicles, the traditional common law doctrine of master-servant relationships and respondeat superior does not apply.").
The court rejects Defendant's contention that there is any dispute of fact as to the negligence of Cleckner and Burnham. Their negligence was clearly established in the underlying state litigation and criminal charges against Cleckner.
B. Coverage Under the Progressive Policy
Plaintiff contends that the Progressive insurance policy,
itself, is the basis for coverage of his claim. However, there is no dispute
that the dump trucks driven by Cleckner and Burnham
were not listed on the declaration pages of the insurance policy issued to T.I.
Wood by Progressive. In Ross v. Stephens, 269 Ga. 266 (1998), the Supreme Court
of
The court finds that Plaintiff's reading of Adams v. Royal Indemnity, 99 F.3d 964, 968 (10th Cir.1996), to state that the federal endorsement amends the policy, strains the reasoning set forth in that case and, in any event, is against the weight of authority on this point.
C. Coverage under Federal MCS-90
Plaintiff also argues
that the Federal Form MCS-90 endorsement amends the Progressive policy to provide
additional coverage here. As discussed above, Form MCS-90 applies only to those
motor common carriers that are engaged in interstate commerce. See generally
Century Indemnity Co. v. Carlson, 133 F.3d 591 (8th Cir.1998). Thus, in
Carlson, the issue the court addressed was whether the trip of a truck
delivering a shipment of grain from
In QBE, for example, the lower court judge had concluded
that the MCS-90 endorsement applied even to a trip that was entirely intrastate
simply because the carrier was a federally-registered interstate carrier.
This court does not
even need to reach the ultimate issue of which alternative should apply here
because it is undisputed that at the time of the incident that both (1) T.I.
Wood did not have federal authority to operate as an interstate carrier, and (2)
the trip involved on August 27, 2003 was purely intrastate. [] The testimony of
Tammy Wood that in 2003, none of her trucks engaged in interstate commerce
because she was no longer licensed by the Department of Transportation remains
undisputed. Furthermore, the J & J dump trucks transported dirt from a
building site in
Although the record shows that T.I. Wood used J & J Trucking dump trucks on eight other occasions in 2003, the record does not describe the nature of those trips.
The court finds this
case similar in nature to Roberts v. Levine, 921 F.2d 804 (8th Cir.1990), where
different products and different trips all commenced and completed entirely
within the state. However, one shipment involved fertilizer which would
eventually be moved by rail to
Plaintiff argues that the state court already determined that the dump trucks were engaged in interstate commerce and that Progressive is bound by that finding. Although Plaintiff did not attach the state court order discussing the interstate commerce issue, it appears from Plaintiff's excerpts that the state court's discussion involved safety regulations that might apply to the dump trucks. The court notes, however, that the concept of "interstate commerce" arises in a variety of statutory contexts, see McLeod v.. Threlkeld, 319 U.S. 491, 495 (1943) ("There is no single concept of interstate commerce which can be applied to every federal statute regulating commerce"), thus, the state court's apparent conclusion that the dump trucks owned by J & J Trucking were within the scope of certain federal safety regulations, does not impact this court's analysis as to whether the MCS-90 endorsement applies to the dump trucks hauling dirt from Cartersville, Georgia to Acworth, Georgia.
In the alternative, Plaintiff's failure to secure a judgment
against T.I. Wood at the state level would also preclude this court's
application of federal law to Plaintiff's claim. As the court in White noted,
while a judgment against the insured motor carrier is not required under
D. Extent of Coverage
Plaintiff contends in its brief that the Form F endorsement and the limiting language of Progressive's policy do not actually limit the amount of coverage, but rather operate to extend the coverage to Plaintiff's claims--in both individual and administrator capacities--against Yarbrough, Burnham, and Cleckner, allowing for a fivefold recovery. See Plaintiff's Brief, at 37-41. Plaintiff's reasoning strains credulity. Plaintiff argues that the limiting language is circular because if it applies, coverage would arise out of the policy itself. As the court found, however, the policy itself does not cover the two dump trucks at issue here, and the source of coverage is the Form F endorsement. Furthermore, even if coverage were to spring from the policy, the court finds that there is no ambiguity in the limiting language of Progressive's policy, but rather it is straightforward. Regardless of what vehicles or claims are made, Progressive will pay no more than the limits of the policy, or $1,000,000. However, if Progressive is required to pay a claim as a result of any filing required by law--that is the MCS-90 endorsement or the state filings--then Progressive will only pay the amount minimally required by the applicable law. There is nothing ambiguous about the phrase "minimum coverage required by law." The regulations of the Georgia Public Service Commission explicitly set forth a $100,000 per person and $300,000 per incident minimum. Similarly, the regulations of the Department of Transportation set forth a $750,000 minimum. The language of the policy comports with the intent of the federal and state legislators to provide a minimum level of coverage to the public in the event that an uninsured vehicle leased by an insured injures a member of the public.
In sum, a legislative choice was made to extend the liability coverage of the insurance company through the Form E and MCS-90 filings in order to protect the innocent public from "fly-by-night" leasing operations. The legislature, however, required only a minimal amount of coverage for these situations. It would defy logic to find that coverage provided only because of the federal and state requirements could be over and above that which the insurance company and the insured contracted for in the underlying policy. See also Ross, 269 Ga. at 269 ("The State's public policy is achieved by the assurance to the motoring public of existence of the financial compensation the PSC has deemed minimally necessary for a motor common carrier to receive a certificate of public convenience and necessity, and the insurer has provided no more than the liability coverage it agreed to provide the motor common carrier.").
In light of the foregoing discussion, therefore, the court finds that the only source of coverage for Plaintiff is through Form F endorsement of Progressive's policy. Under that endorsement, recovery is limited to the state mandated minimum requirement of $100,000 per injury and $300,000 per incident. []
Plaintiff argues that under the state minimum requirements, he is entitled to $200,000 because two dump trucks were involved in the accident. The Georgia Public Service Commission Rule, however, does not make any reference to "per vehicle" calculations. Rather, it states a $100,000 minimum limit for "bodily injury to or death of one person."
E. Stacking
Plaintiff next argues
that both the 2001 and 2003 years of Progressive's policy are currently in
effect, thereby doubling the recovery, because Progressive never filed a Form K
with the State of
In Ramirez v.
Progressive Preferred Insurance Company, 321 F.3d 1055 (11th Cir.2003), the
Eleventh Circuit addressed the effect of a failure of an insurance company to
file a Form K cancellation with the state. The court concluded that based on
Finding that the
issue was unclear in state law, the Court of Appeals certified the question to
the Supreme Court of Georgia which answered in Progressive Preferred Insurance Company
v. Ramirez, 277 Ga. 392 (2003). The Court held that the language of Form E
establishes that "it is the policy of insurance, not the certificate,
which establishes the extent of the insurer's liability
."
As Defendant notes, however, the question in DeHart and Ramirez was whether any policy coverage would exist at all. Here, Progressive renewed T.I. Wood's policy annually in 2002 and 2003. There was no need to put the public on notice through a Form K cancellation that T.I. Wood was not covered by a certificate of insurance because Progressive had renewed T.I. Wood's policy. As such, the court finds that the "continuous coverage" or "stacking" issues present in DeHart and Ramirez are not applicable here. The court has found no case law and the parties have directed the court to none which covers the situation here where the same insurance company provided continuous coverage to the insured through renewal policies but failed to file a Form K on one of the previous policies. The purpose of the Form K is to provide notice to the public--through the Public Service Commission--that an insurer would no longer be providing coverage for a given insured. Thus, as DeHart and Ramirez held, when an insurer fails to make the proper notice, it is required to provide coverage to the public even if the policy between the insured and the insurer has expired. But, here, there already is coverage provided by the 2003 Progressive policy, and, thus, there is concern about a gap in coverage to the public. Therefore, the court finds that coverage for the incident in question is found only in the 2003 Progressive policy. Based on the foregoing, Plaintiff is entitled to $100,000 of coverage under the state filings for Progressive's 2003 policy issued to T.I. Wood.
III. Conclusion
The court GRANTS IN PART AND DENIES IN PART Plaintiff's motion for summary judgment [35-1], GRANTS Plaintiff's motion for leave to file excess pages [36-1], GRANTS Defendant's motion for leave to file excess pages [37-1], GRANTS IN PART AND DENIES IN PART Defendant's motion for summary judgment [38- 1], and GRANTS Plaintiff's motion for leave to file excess pages [41-1].
IT IS SO ORDERED.