Paul v. Bogle
| Decision Date | 06 April 1992 |
| Docket Number | Docket No. 122204 |
| Citation | 193 Mich.App. 479,484 N.W.2d 728 |
| Parties | Ronald J. PAUL and Patricia Paul, Plaintiffs, v. George BOGLE, Defendant-Third-Party Plaintiff-Appellee, and Gregory C. FREED, Defendant-Third-Party Plaintiff/Counter-Defendant-Appellee, v. WOLVERINE EXPEDITING INC., d/b/a Wolverine Express, Third-Party Defendant/Counter-Plaintiff-Appellant. |
| Court | Court of Appeal of Michigan — District of US |
Brochert & Ward by David S. Anderson, Bloomfield Hills, for George Bogle and Gregory C. Freed.
Rutledge, Manion, Rabaut, Terry & Thomas, P.C. by Christopher L. Terry, Detroit, for Wolverine Expediting, Inc.
Before WAHLS, P.J., and JANSEN and KAVANAGH, * JJ.
This matter gives us occasion to examine the extent of liability a lessee of a semitrailer truck tractor has for damages sustained by another, due to negligent operation of the truck tractor, under the applicable federal law and regulations and the laws of the State of Michigan.
Defendant George Bogle was the owner of a 1981 semitrailer truck tractor. On June 11, 1985, he leased the truck to third-party defendant Wolverine, for use in its interstate transport business. The lease had no set expiration date, but was rather to be in effect until ten days after receipt, by certified mail, of written notice from either party terminating the lease. Under the terms of the lease, as required under federal regulations, Wolverine was granted exclusive supervision and control over the operation of the truck for the entire term of the lease. Wolverine was also "responsible for all claims of damages, or otherwise, arising out of the operations of this equipment during the full period of the lease." Bogle subsequently hired defendant Gregory C. Freed to drive the truck.
On October 8, 1985, Freed was driving the truck east on I-96 near Grand River Avenue in Wayne County. When changing lanes, Freed's truck struck the left rear of plaintiff Ronald J. Paul's vehicle. Paul's vehicle, in turn, spun out of control and was hit by a third vehicle. Paul suffered serious injuries as a result of being thrown out of his vehicle.
On July 18, 1986, plaintiffs filed suit against Bogle, Freed, and Wolverine, alleging general negligence and violation of several statutes on the part of Freed and vicarious liability with respect to Bogle and Wolverine. After plaintiffs stipulated Wolverine's dismissal from the lawsuit, Bogle and Freed filed a third-party complaint against Wolverine, alleging that Wolverine was primarily liable for plaintiffs' damages pursuant to the applicable regulations of the Interstate Commerce Commission. Wolverine, in its answer and affirmative defenses, denied that it was liable, relying on the terms of the lease agreement and, alternatively, on the factual circumstances existing at the time of the accident. Wolverine also asserted in a counterclaim that it was entitled to indemnification from Freed for any sums owed by it to Bogle.
Bogle, Freed, and Wolverine then each moved for summary disposition of the third-party claims. Bogle and Freed contended that the ICC regulations established Wolverine's liability. Wolverine, on the other hand, argued that plaintiffs' failure to name it as a defendant in the underlying lawsuit precluded a judgment against it in favor of Bogle and Freed, that the ICC regulations did not establish its liability, and that Wolverine was entitled to common-law indemnification from Freed for any judgment against it in favor of Bogle. In an opinion issued on June 27, 1989, the trial court found that the ICC regulations established Wolverine's primary liability and rejected Wolverine's claim for indemnification from Freed, finding that Freed was a "statutory employee" of Wolverine.
Wolverine then filed this timely appeal, raising a number of issues.
Given that its resolution is central to this dispute, we will first address Wolverine's assertion that the applicable ICC regulations are not intended to replace applicable state law regarding a lessee's liability under the lease.
The ICC regulations governing the use of leased semitrailer truck tractors in interstate commerce, in the version applicable to this matter, set forth a number of specific requirements for lease agreements between vehicle owners and licensed interstate carriers. To begin, any lease agreement must be in writing, 49 CFR 1057.11(a) (1985), must include a specific durational term, 49 CFR 1057.12(b) (1985), and must provide 49 CFR 1057.12(c)(1) (1985). As noted above, the written lease agreement between Wolverine and Bogle complied with these requirements.
The policy underlying these requirements has been succinctly described by the Tenth Circuit Court of Appeals in Empire Fire & Marine Ins. Co. v. Guaranty National Ins. Co., 868 F.2d 357, 362 (C.A. 10, 1989):
In the past, the use by truckers of leased or borrowed vehicles led to a number of abuses that threatened the public interest and the economic stability of the trucking industry. In some cases, ICC-licensed carriers used leased or interchanged vehicles to avoid safety regulations governing equipment and drivers. In other cases, the use of non-owned vehicles led to public confusion as to who was financially responsible for accidents caused by those vehicles.
In order to address these abuses, Congress amended the Interstate Commerce Act to allow the ICC to prescribe regulations to insure that motor carriers would be fully responsible for the operation of vehicles certified to them. In response to this mandate, the ICC promulgated regulations requiring that every lease entered into by an ICC-licensed carrier must contain a provision stating that the authorized carrier maintain "exclusive possession, control, and use of the equipment for the duration of the lease," and "assume complete responsibility for the operation of the equipment for the duration of the lease." Further, the ICC requires that all ICC-certified carriers maintain insurance or other form of surety "conditioned to pay any final judgment recovered against such motor carrier for bodily injuries to or the death of any person resulting from the negligent operation, maintenance, or use of motor vehicles" under the carrier's permit. [Citations omitted.]
Wolverine argues that the decision of the Sixth Circuit Court of Appeals in Wilcox v. Transamerican Freight Lines, Inc., 371 F.2d 403 (C.A. 6, 1967), should be followed by this Court because it is the decision that is binding upon federal district courts in this state and because it is consistent with a decision of the ICC decided after the accident that is the subject matter of this dispute. In Lease & Interchange of Vehicles, 3 ICC2d 92, 93 (1986), the ICC expressed its disagreement with the reliance of
certain courts ... on Commission regulations in holding carriers liable for the acts of equipment owners who continue to display the carrier's identification on equipment after termination of the lease contract. We prefer that courts decide suits of this nature by applying the ordinary principles of State tort, contract, and agency law. The Commission did not intend that its leasing regulations would supersede otherwise applicable principles of State tort, contract, and agency law and create carrier liability where none would otherwise exist. Our regulations should have no bearing on this subject. Application of State law will produce appropriate results.
However, state law has been applied without reference to the regulations of the ICC only in a few cases. 1 While a hybrid approach has been taken in some cases, 2 the so-called "statutory employee" approach 3 has been applied in the vast majority of reported cases. As succinctly described by the Texas Court of Appeals in John B. Barbour Trucking Co. v. Texas, 758 S.W.2d 684, 688 (Tex.App., 1988), the statutory employee approach holds an ICC carrier
vicariously liable for injury, caused by the driver's negligent operation of a vehicle, when three factors coincide: (1) the carrier does not own the vehicle; (2) the carrier operates the vehicle, under an "arrangement" with the owner, to provide transportation subject to the [Interstate Commerce] Commission's jurisdiction; and (3) the carrier does not literally employ the driver. In these circumstances, the driver is held to be the constructive or "statutory" employee of the carrier; and, in consequence of this fiction, the doctrine of respondeat superior imposes upon the carrier a vicarious liability for the negligence of its "employee" the driver. [Emphasis in original.]
Wilcox, which is relied upon by Wolverine, is cited as one of the few decisions to rely solely upon state law to determine a carrier's liability. However, we decline to follow Wilcox. We would note that the Sixth Circuit no longer adheres to that ruling, see Johnson v. S.O.S. Transport, Inc., 926 F.2d 516 (C.A. 6, 1991), and that, in any event, given the nature of our federal system, the decisions of that court are not binding upon us. However, we are persuaded by the subsequent, if somewhat tardily rendered, opinion of the ICC that rejects those decisions that have sought to impose liability solely on the basis of its regulations.
This is not to say that we reject those decisions of other courts that have given weight to the ICC regulations. We do not believe that the statutory employee doctrine, adopted by a substantial number of jurisdictions, imposes liability solely on the basis of the ICC regulations. Rather, the doctrine appears to impose liability under state law, after creating the fictional...
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