583 F.2d 717 (5th Cir. 1978), 76-4332, Blue Bird Body Co., Inc. v. Ryder Truck Rental, Inc.

Docket Nº:76-4332.
Citation:583 F.2d 717
Party Name:BLUE BIRD BODY COMPANY, INC., and Insurance Company of North America, Plaintiffs-Counterdefendants-Appellants, v. RYDER TRUCK RENTAL, INC., and Liberty Mutual Insurance Company,Defendants-Counterplaintiffs-Appellees.
Case Date:November 08, 1978
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

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583 F.2d 717 (5th Cir. 1978)

BLUE BIRD BODY COMPANY, INC., and Insurance Company of North

America, Plaintiffs-Counterdefendants-Appellants,


RYDER TRUCK RENTAL, INC., and Liberty Mutual Insurance


No. 76-4332.

United States Court of Appeals, Fifth Circuit

November 8, 1978

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[Copyrighted Material Omitted]

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James L. Carroll, H. H. Whitworth, Jackson, Miss., for plaintiffs-counterdefendants-appellants.

Junior O'Mara, Jackson, Miss., for defendants-counterplaintiffs-appellees.

Appeal from the United States District Court for the Southern District of Mississippi.

Before BROWN, Chief Judge, AINSWORTH and VANCE, Circuit Judges.

JOHN R. BROWN, Chief Judge:

Two insurance companies split the settlement cost of two personal injury law suits against the Blue Bird Body Company and a Blue Bird employee. Not content with this perfectly reasonable arrangement, the insurers have staged for our viewing this diversity slugfest in which each seeks to recover back its half of the amount paid in settlement by casting the other in the role of either the sole or the primary insurer. The District Court shifted all of the liability onto one of the insurers. We find both to be primary insurers and reverse, returning the parties to the position they were in prior to undertaking the time and expense of this lawsuit.

Gearing Up

The facts giving rise to the contested liability are not in dispute. The Blue Bird Body plant in Fort Valley, Georgia usually uses its own drivers and tractor-trailers to move material to other plants, but on occasion leases tractors from Ryder Truck Rental or some other truck-rental firm. One such occasion arose in early August of 1971. Blue Bird had an extra heavy load to move from its Fort Valley plant to its Mt. Pleasant, Iowa plant, so Walt Anderson, general foreman in charge of fleet truck and material handling for Blue Bird, got in touch with Wayne Ozment, the District Manager for Ryder in the Macon, Georgia area. Anderson arranged to lease a tractor from Ryder. He also asked Ozment if Ryder had any drivers available. Ozment stated that Ryder did not furnish drivers, but told Anderson of a driver, James Singleton, that he knew to be available. Ozment and Anderson did not, then or later, discuss arrangements for insurance.

Blue Bird hired Singleton to drive the tractor-trailer unit. Anderson and Ozment agreed that Singleton would pick up the tractor on the morning of August 13. On the afternoon of the 12th, Ozment gave Singleton an eye and a road test and satisfied himself that Singleton was qualified to drive a Ryder tractor.

Singleton picked up the tractor at Ryder as scheduled on the 13th and signed a rental contract on behalf of Blue Bird. Singleton

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then drove the tractor to Blue Bird's Fort Valley plant, where he hitched up to a loaded Blue Bird trailer. Singleton left the Fort Valley plant at around noon on the 13th.

Ten miles north of Fort Valley, Singleton stopped at a filling station and picked up a friend, Johnny Highsmith. Unbeknownst to Blue Bird or Ryder, Highsmith accompanied Singleton on the trip, and the two switched off on the driving. For some unknown reason, they went off their intended course, which would have avoided Mississippi altogether. Instead, they entered Mississippi from the east on Highway 82. Singleton, who was driving, intended to take Highway 82 to Winona, Mississippi, then turn off onto Interstate 55 North and head to Memphis.

Singleton and Highsmith approached the Interstate 55 exit near Winona at approximately 3:30 a. m. on the morning of the 14th. However, Singleton missed the exit ramp to I-55 North and got off instead on the ramp leading to I-55 South. After Singleton had driven onto the southbound ramp, Highsmith suggested that, rather than taking I-55 South and crossing over at the earliest opportunity, they back the truck onto Highway 82, head back east, make a u-turn, and catch the northbound entrance to I-55 they had just missed. Singleton agreed.

Singleton got out of the cab, and Highsmith took over the wheel. Singleton stood on Highway 82 and directed the backing operation. The rig was backed nearly all the way onto the highway when Singleton saw the headlights of a car approaching from the west. Singleton yelled to Highsmith to pull up. Highsmith started back up the exit ramp and managed to get the tractor and most of the trailer off the highway. But the approaching car never swerved or slowed down. It collided with the right rear of the trailer. The driver of the car was severely injured, and the passenger was killed.

In This Corner . . .

At the time of the accident, Blue Bird was the named insured under a policy issued by the Insurance Company of North America (INA). Ryder was the named insured under a policy issued by the Liberty Mutual Insurance Company (Liberty). The Liberty policy also extended coverage to certain lessees of Ryder trucks.

The Preliminary Bouts

The passenger's administrator sued the driver, Blue Bird, Singleton, and Ryder in Mississippi state court. Blue Bird and INA tendered defense on behalf of Blue Bird and Singleton to Ryder and Liberty. Ryder and Liberty refused to assume the defense, so INA provided the defense of Blue Bird and Singleton. A voluntary nonsuit was entered dismissing the claim against Ryder. The case was then settled by payment of $35,000 and costs to the plaintiff. INA paid one-half the settlement cost, Ryder and Liberty the other half.

The driver sued Blue Bird, Singleton, and Ryder in Mississippi state court. The suit was removed to the Northern District of Mississippi. Blue Bird and INA again tendered defense to Ryder and Liberty, Ryder and Liberty again refused to assume the defense, and INA again provided the defense of Blue Bird and Singleton. Ryder moved for and was granted summary judgment dismissing the claim against it. The suit was then settled for $50,000 and costs. INA again split the settlement payment with Ryder and Liberty.

The Main Event

Both settlement payments were made with the understanding that the parties to the present litigation Blue Bird, INA, Ryder and Liberty reserved the right to negotiate and, if necessary, litigate between themselves the questions of coverage. The parties, unfortunately, were unable to reach an amicable resolution of the coverage questions. Blue Bird and INA then filed this diversity suit against Ryder and Liberty seeking to recover its half of the money damages paid in settlement. They also sought recovery of attorney fees and expenses incurred in defending the suits on behalf of Blue Bird and Singleton. Ryder and Liberty counterclaimed for their half of the damages paid in settlement.

In the District Court, Liberty and Ryder decisioned INA and Blue Bird, the District

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Judge ruling that Blue Bird and INA take nothing on their claims against Ryder and Liberty and awarding judgment to Ryder and Liberty on their counterclaim. This appeal followed.

The basic contentions of the parties can be easily summarized. At issue is which policy INA's policy issued to Blue Bird or Liberty's policy issued to Ryder covers Blue Bird's liability for the settlement payment. Blue Bird and INA argue, first, that the INA policy provides no coverage for the liability, and, alternatively, that INA's coverage is excess and Liberty's primary. Ryder and Liberty's contentions track Blue Bird and INA's that is, they argue...

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