United States Fidelity v. Heritage Mutual Insurance
| Decision Date | 16 October 2000 |
| Docket Number | No. 00-1157,00-1157 |
| Citation | 230 F.3d 331 |
| Parties | (7th Cir. 2000) UNITED STATES FIDELITY & GUARANTY COMPANY, Plaintiff-Appellee, v. HERITAGE MUTUAL INSURANCE COMPANY, Defendant-Appellant |
| Court | U.S. Court of Appeals — Seventh Circuit |
Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 96-C-0523--Richard L. Young, Judge.
Before BAUER, DIANE P. WOOD, and EVANS, Circuit Judges.
Two insurance companies are battling here over coverage growing out of a serious accident involving a dump truck and two automobiles. The accident caused the death of the driver of one of the cars and injuries to the other. Heritage Mutual Insurance Company appeals from a decision finding that it, not United States Fidelity and Guaranty Company, must provide coverage for the damages.
The driver of the dump truck, Charles Oldham, was an employee of V&S Transport, Inc. Heritage insured V&S with both a primary and umbrella policy. V&S had an oral contract under which it did hauling for Irving Materials, Inc. (IMI), the owner of concrete manufacturing plants and sand and gravel pits. IMI was insured by USF&G.
After the collision, the estate of John Reeves, who was killed in the accident, filed a lawsuit, which Heritage settled. The injured man, John Grabowski, filed a separate suit. Contending that its primary policy will be exhausted by claims other than the one Grabowski was pursuing, Heritage looked to USF&G to step in and cover the Grabowski suit. Heritage argues that USF&G's policy should be paid out before it is forced to dip into its umbrella policy. Not surprisingly, USF&G maintains that its policy simply does not provide coverage for Oldham or V&S--none at all. The parties presented their positions on cross- motions for summary judgment. Judge Richard L. Young in the district court granted USF&G's motion, and we review that decision de novo. Kincaid v. Vail, 969 F.2d 594 (7th Cir. 1992).
The USF&G policy states
A. COVERAGE
* * * * * *
1. WHO IS AN INSURED
a. You for any covered "auto."
b. Anyone else while using with your permission a covered "auto" you own, hire or borrow except
(1) The owner or anyone else from whom you hire or borrow a covered "auto."
A basic issue, then, is whether IMI "hired" or "borrowed" the dump truck. If it did not, there is no coverage under the policy. Heritage thinks it is clear that the truck was "hired"; USF&G thinks it is just as clear that it was not hired. Instead, USF&G says that V&S was an independent contractor providing services to IMI.
The USF&G policy does not define what "hire" means, but that is not required. Jones v. Western Reserve Group, 699 N.E.2d 711 (Ind. App. 1998). And under the law of Indiana, which controls this case, the failure to define a term does not render it ambiguous. American Family Life Assurance Co. v. Russell, 700 N.E.2d 1174 (Ind. App. 1998). It does, however, mean that we must look to the ordinary meaning of the word as it is applied to the facts of the case. Even were we to find the word ambiguous, we need not construe its meaning in favor of Heritage because it has never paid "a penny's premium to the insurer." Harden v. Monroe Guar. Ins. Co., 626 N.E.2d 814 n.2 (Ind. App. 1993). Furthermore, because the dispute is between insurance companies, we are not required to construe the USF&G policy strictly in favor of Heritage but rather must determine the general intent of the agreement from a neutral perspective. Indiana Lumbermens Mut. Ins. Co. v. Statesman Ins. Co., 291 N.E.2d 897 (Ind. 1973).
On the issue whether the truck was hired, or whether V&S was an independent contractor providing services to IMI, Heritage's contention is that the amount of control IMI exercised over the hauling requires us to find that the trucks (particularly the one involved in the accident) were hired.
Heritage relies on factors which show that V&S had been hauling for IMI pursuant to an oral agreement since 1983. Each workday V&S's employee, Oldham, picked up his truck from V&S and reported to IMI to be dispatched to various jobs. IMI could contact Oldham on a two-way radio and direct him to particular locations. Oldham's workday was as long as IMI had loads for him to haul. In addition, V&S drivers were required to be union members in order to haul for IMI, and IMI retained the right to tell V&S not to send a particular driver to the IMI plant. V&S also operated a fuel facility on the premises of the IMI gravel pit.
USF&G, on the other hand, looks to other factors. It emphasizes that IMI used services of hauling companies to transport its product and dealt with all of them on an at-will basis with no formal contract. On a typical day, IMI would call V&S and request a number of trucks, but not a specific truck, based on its hauling needs that day; if V&S was unable to supply the trucks, IMI called a different company. The truck Oldham was driving was owned by V&S and had a V&S decal on its door. V&S provided the maintenance and the fuel for the trucks. IMI did not control how many hours a V&S driver worked, except to the extent that it would tell Oldham when there was no more hauling to be done. In addition, while Oldham regularly delivered materials for IMI, he also hauled for other contractors at the instruction of V&S. IMI did not pay V&S's drivers but paid V&S for its services. V&S, in turn, paid its drivers. V&S also provided its drivers with insurance benefits, withheld taxes, and paid social security on their behalf. All complaints from IMI customers regarding V&S drivers were referred to V&S.
We must determine what these facts add up to. Although we are not the first court to determine the scope of a hired-automobile clause, the fact- specific nature of the inquiry makes prior cases of limited help, to say nothing of the fact that they seem to come down firmly on both sides of the issue. For example, in Kresse v. Home Insurance Co., 765 F.2d 753 (8th Cir. 1985), a dump truck hit a train. Clarence Kresse, the owner of the truck, claimed that he was an insured under a policy issued by the Home Insurance Company to Cass County, North Dakota. For simplicity's sake, we will note that Kresse is in a similar position to V&S in the present case and Cass County is similar to IMI. The...
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