Planet Ins. Co. v. Transport Indem.

• Decision Date: 27 July 1987
• Docket Number: No. 86-1615,86-1615
• Citation: 823 F.2d 285
• Parties: PLANET INSURANCE CO., Plaintiff-Appellee, v. TRANSPORT INDEMNITY CO., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 285

823 F.2d 285

PLANET INSURANCE CO., Plaintiff-Appellee, v. TRANSPORT INDEMNITY CO., Defendant-Appellant.

No. 86-1615.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 12, 1987.

Decided July 27, 1987.

Bryan K. Gould and A. Bryce Dixon, Las Vegas, Nev., for defendant-appellant.

Amy Wrobel, Las Vegas, Nev., for plaintiff-appellee.

Appeal from the United States District Court for the District of Nevada.

Before SNEED, ALARCON and CANBY, Circuit Judges.

CANBY, Circuit Judge:

Transport Indemnity Company appeals from a declaratory judgment in favor of Planet Insurance Company. The district court ruled that Transport is financially responsible for losses resulting from a fatal accident involving Transport's insured, an authorized interstate motor carrier. We affirm.

INTRODUCTION

On the evening of December 30, 1982, Terry Ainsworth, an independent trucker, was driving his tractor-trailer combination when it collided with an automobile. The driver of the automobile, Larry Hoo, was killed. Ainsworth's tractor was insured by appellee Planet Insurance Company.

Ainsworth's Planet insurance policy contained a "trucker's endorsement." The endorsement excluded coverage for Ainsworth's truck when used to "carry property in any business" or "used in the business of anyone to whom the [truck] is rented." Similar exclusions are often included in policies designed to provide coverage for the trucks of owner-operators when their equipment is not being used for business. On the morning of December 30, Ainsworth leased his truck and driving services to Pacific States Transport, Inc. (PST) by means of a "trip lease." The lease provided for Ainsworth to pick up a load of wallboard in Apex, Nevada and deliver it to Southgate, California.

PST, the lessee, is an interstate motor carrier operating under authorization from the Interstate Commerce Commission (ICC). Defendant-appellant Transport Indemnity Company is PST's insurer. Transport provided insurance coverage to fulfill PST's statutory obligation to guarantee financial responsibility as a condition of ICC certification. See 49 U.S.C. Sec. 10927(a)(1). Federal regulations specify minimum liability coverage and the endorsement by which such insurance is secured. 49 C.F.R. Sec. 1043 (1985); see id. Sec. 1057. The mandatory endorsement here, ICC form BMC-90, provides that nothing in the policy between PST and Transport Indemnity can relieve Transport's obligation to cover "public liability resulting from negligence in the operation, maintenance, or use of [PST's] motor vehicles subject to the financial responsibility requirements" of 49 U.S.C. Sec. 10927. On its BMC-90 form, Transport unequivocally states that its insurance is "primary." ¹

When Mr. Hoo's children and estate brought a wrongful death action in state court against PST, Ainsworth, and others, Planet sought a declaratory judgment in the district court holding Transport responsible for liabilities arising from the accident. In the district court, Ainsworth testified that the accident occurred while he was on route to pick up the load of wallboard in Apex, Nevada as required by his lease-manifest with PST. The district court determined that the trip lease was in effect and that Ainsworth was driving in the scope of his employment with PST at the time of the accident. The court further determined that the Transport policy provided primary coverage. Because the court found that Ainsworth was operating the tractor pursuant to his lease with PST, it concluded that the trucker's endorsement to Planet's policy entirely excluded coverage by Planet.

Transport asserts that the district court erred in several respects. Transport first contends that the trip lease was not in effect at the time of the accident; second, that the BMC-90 and underlying federal provisions do not control whether Transport's coverage was in effect, and that, under Nevada law, Ainsworth was not acting in the scope and course of his employment; finally, Transport contends that the exclusion in Planet's trucker's endorsement was not operative at the time of the accident, and that the endorsement is void as against public policy. We address each contention in turn.

DISCUSSION

I. THE TERM OF THE TRIP LEASE

The form and content of motor carrier leases are specified by ICC regulations. 47 Fed.Reg. 53,858, 53,859 (1982); see, e.g., 49 C.F.R. Sec. 1057 (1985); id. Sec. 1057.42 (authorizing trip leasing for periods of less than 30 days from private carriers). ² Congress The ICC requires authorized carriers to assume complete responsibility in their written leases for the operation of equipment from the time the carrier takes possession until the equipment is returned to the lessor. 49 C.F.R. Sec. 1057.22(c)(2). A receipt must indicate the time and date that the authorized carrier takes possession of the leased equipment, and the lessor must give the lessee carrier a receipt upon redelivery to the lessor. Id. Secs. 1057.11(b)(1) & (2); see id. Sec. 1057.22(c)(2). The regulations also require the carrier to mount signs identifying the authorized carrier-lessee as the operator of the tractor for the duration of the lease. Id. Sec. 1057.22(2), 1057.11(c).

                and the ICC, through authorizing statutes and regulations, intended to impose financial responsibility requirements upon authorized carriers to protect the public.   E.g., Transamerican Freight Lines, Inc. v. Brada Miller Freight Systems, Inc., 423 U.S. 28, 37-39, 96 S.Ct. 229, 233-34, 46 L.Ed.2d 169 (1975);  Price v. Westmoreland, 727 F.2d 494, 496 (5th Cir.1984);  H.R. Rep. No. 2425, 84th Cong., 2d Sess. ---, reprinted in 1956 U.S.Code Cong. & Admin.News 4304, 4307, 4309
                

PST checked the condition of lessor Ainsworth's equipment and found it acceptable upon taking possession. While the date December 30, 1982 appears on the receipt, the time was omitted. The lease-manifest specified pick-up and delivery points but did not require Ainsworth to use a particular route and did not set a time for beginning the trip. Because the accident occurred before the load was picked up and before Ainsworth affixed the carrier's signs to his doors, ³ Transport contends he was not yet driving for PST.

Express contract language indicates, however, that the lease was in effect the morning of December 30. In a clause apparently designed to satisfy the requirements of 49 C.F.R. Sec. 1057.22(c)(2), PST's trip-lease specified that "[t]he Lessor shall surrender full control, possession and management of said equipment to the Lessee during the term of this lease which shall start at delivery of equipment and end with delivery of cargo at destination." (emphasis supplied). Although the precise time for transferring possession was not documented, Transport does not dispute that the lease was executed and that the equipment was delivered into PST's possession in North Las Vegas the morning before the accident. ⁴ The receipt for the equipment was delivered to Ainsworth at that same time.

We conclude that the lease term began when the tractor was delivered into the lessee's possession. See 49 C.F.R. Sec. 1057.22(c)(2); id. Sec. 1057.11(b). We would stray impermissibly from the allocation of responsibility contemplated by Congress and the ICC if we held that the lease did not come into effect until PST's signs were affixed to the truck or the load actually picked up. Thus, the district court properly concluded that the lease term began on the morning of December 30.

II. TRANSPORT'S INSURANCE COVERAGE

Transport contends that even if the lease was in effect, Ainsworth was not, as We rely on the federal statutory and regulatory scheme to decide the issue of authorized carrier responsibility. E.g., Westmoreland, 727 F.2d at 496-97; Rodriguez v. Ager, 705 F.2d 1229, 1234-36 (10th Cir.1983) (discussing cases); see Simmons v. King, 478 F.2d 857, 867 (5th Cir.1973); contra Wilcox v. Transamerican Freight Lines, Inc., 371 F.2d 403 (6th Cir.) (per curiam), cert. denied, 387 U.S. 931, 87 S.Ct. 2053, 18 L.Ed.2d 992 (1967). Cf. Transport Indemnity Co. v. Carolina Casualty Insurance, 133 Ariz. 395, 405-06, 652 P.2d 134, 144 (1982) (uniform interpretation of motor carrier insurance contracts implements federal policy to ensure authorized carrier responsibility). The special interstate character of the authorized carrier insurance industry underscores the need to refer to the federal scheme to determine when mandatory coverage comes into effect.

the district court found, acting in the scope of his employment with PST when the accident occurred. We reject the contention that Nevada standards of respondeat superior govern the responsibility of Transport's insured for liability arising from the accident.

The BMC-90 endorsement and the federal scheme do not require that covered losses occur while the driver is in the scope of employment or acting under common-law principles of vicarious liability. ⁵ For purposes of determining Transport's liability, such findings by the district court are unnecessary. ⁶ Westmoreland, 727 F.2d at 496-97; Rodriguez, 705 F.2d at 1234-36; Proctor v. Colonial Refrigerated Transportation, Inc., 494 F.2d 89, 92 (4th Cir.1974); Simmons, 478 F.2d at 867; Aetna Casualty & Surety Co. v. Fairchild, 620 F.Supp. 1245, 1250 (D.Idaho 1985); Cosmopolitan Mutual Insurance Co. v. White, 336 F.Supp. 92, 99 (D.Del.1972).

Transport's BMC-90 was expressly intended to meet PST's obligation to assure financial responsibility whenever PST leased vehicles from others to transport freight. See 49 U.S.C. Sec. 10927; 49 C.F.R. Secs. 1057.22(c)(2), 1043; see also id. Secs. 1057.12(d); 1057.12(k)(1) (requiring lessee to assume responsibility for insurance in written leases for periods longer than 30 days). In compliance with Sec. 1057.22(c)(2), the written lease specified that PST was responsible for damage to the public. It would be anomalous to hold that Transport, employed by the carrier to insure for public...