P.I. & I. Motor Express, Inc. v. RLI Ins. Co.
| Decision Date | 06 July 2022 |
| Docket Number | s. 21-3412/3442 |
| Citation | 40 F.4th 398 |
| Parties | P.I. & I. MOTOR EXPRESS, INC., Plaintiff-Appellee/Cross-Appellant, v. RLI INSURANCE COMPANY, Defendant-Appellant/Cross-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
ARGUED: Todd S. Schenk, TRESSLER LLP, Chicago, Illinois, for Appellant/Cross-Appellee. Amanda M. Leffler, BROUSE MCDOWELL LPA, Akron, Ohio, for Appellee/Cross-Appellant. ON BRIEF: Todd S. Schenk, Thomas D. Donofrio, TRESSLER LLP, Chicago, Illinois, Richard M. Garner, COLLINS ROCHE UTLEY & GARNER LLC, Columbus, Ohio, for Appellant/Cross-Appellee. Amanda M. Leffler, P. Wesley Lambert, Matthew G. Vansuch, BROUSE MCDOWELL LPA, Akron, Ohio, for Appellee/Cross-Appellant.
Before: SUHRHEINRICH, STRANCH, and MURPHY, Circuit Judges.
Insurers routinely provide businesses with commercial general liability policies to reimburse them for liabilities resulting from accidents (such as a grocery-store customer slipping on a negligently maintained wet floor). See 9A Steven Plitt et al., Couch on Insurance §§ 129:1–:3 (3d ed.), Westlaw (database updated June 2022). But these policies are not substitutes for workers’ compensation insurance. They thus typically exclude liabilities arising from a workers’ compensation law or from an injury to an employee. See id. § 129:11.
The liability at issue in this case sits in the unclear middle between the two types of insurance.
After a truck driver suffered an injury, a state agency found that P.I. & I. Motor Express ("Motor Express") was the driver's "statutory" employer (a unique workers’ compensation concept). But Motor Express had not obtained workers’ compensation coverage for this truck driver, so the driver could sue Motor Express in tort. Motor Express settled his tort suit. It then sought to recover most of the settlement amount from RLI Insurance Company, which had issued it a commercial general liability policy. RLI refused to pay on the ground that Motor Express sought workers’ compensation coverage. The district court concluded that the policy could cover Motor Express's claim, and a jury found for the company. We must decide two questions about the policy's language: Did the tort settlement arise "under" a workers’ compensation law? And was the driver a Motor Express "employee" within the meaning of the policy? Ultimately, we agree with the district court's interpretation of the policy and reject RLI's other challenges to the court's trial management. We thus affirm.
On June 27, 2014, Ryan Marshall was seriously injured while working as a truck driver at a plant in Duquesne, Pennsylvania. Marshall had stepped out of his flatbed truck when others were loading large metal pipes onto it. A worker accidentally ran a forklift into the pipes, causing one of them to dislodge and roll off the truck. The pipe crashed into Marshall as it fell. Doctors unfortunately had to amputate both of Marshall's legs, leaving him totally disabled.
This insurance case stems from a factual dispute over who (if anyone) employed Marshall. Three potential employers exist. The first is Dura-Bond Industries, the owner of the Duquesne plant. At this large facility, Dura-Bond coats pipes with corrosion-resistant materials and stores the finished pipes until its oil-and-gas customers need them in their energy businesses. To transfer pipes between locations within the plant, Dura-Bond relies on flatbed trucks like the one Marshall was driving. Yet Dura-Bond does not own most of the trucks; the company finds it cost-effective to use trucks owned and operated by others.
This trucking operation leads to Marshall's second potential employer: Motor Express, the plaintiff. A family-owned Ohio company founded in 1951, Motor Express has federal licenses to conduct a motor-carrier business between and within many states. It primarily hauls metal building materials for automotive and steel companies. Motor Express must ensure that any truck using its license (listing its name and license number on the door) meets federal safety regulations. It also must ensure that any driver of a licensed truck passes, among other things, a background check and drug test.
Motor Express hauls loads using different business models. For over half of its business, it relies on truckers employed by a corporate affiliate who drive trucks owned by another affiliate. For the rest, Motor Express relies on independent fleet operators or owner-operators. Fleet operators own several trucks, whereas owner-operators drive their own trucks. Motor Express enters into truck-specific contracts with these independent parties, allowing them to use its license and receive its administrative services for each truck in exchange for a percentage of the truck's revenue.
Motor Express came to do business at the Dura-Bond plant through its affiliation with a fleet operator—Wallace Trucking. Wallace Trucking's owner, Robert Wallace, had long provided trucking services at the plant and continued to do so after contracting with Motor Express. Given the volatile nature of the energy industry, though, Wallace Trucking sometimes could not meet all of Dura-Bond's trucking needs.
This fact leads to Marshall's third potential employer: Sam Russell Trucking. Technically, Sam Russell Trucking is not a distinct corporation; it is a trade name for a family business run by Sam Russell and his wife, Mary Russell. Robert Wallace knew Sam Russell and would ask him for help at the Dura-Bond plant when things got too busy. Like Wallace Trucking, Sam Russell Trucking had contracted with Motor Express to use its license. Motor Express would ensure that the drivers of Russell trucks met the basic federal requirements, but the Russells could otherwise retain the drivers they wanted.
That fact brings us back to Marshall, the injured driver. By December 2013, Marshall had spent decades on the road as a long-distance truck driver and wanted to spend more time with his family. He took a job with Dura-Bond loading and unloading pipes at its plant. While working there, Marshall noticed the trucks driving around. In April 2014, he approached Sam Russell about driving a truck. Russell told Marshall that he hired through Motor Express and had Marshall fill out a Motor Express application. After Marshall passed a background check, he spent two weeks training with Russell.
In May, Marshall leased a truck from Russell and started driving it under Motor Express's license. Although he signed a contract stating that he was an independent contractor, Marshall believed that he was an employee of both Motor Express and Sam Russell Trucking. On the night before each potential shift, Marshall would call Mary Russell to see if there would be work for him in the morning. Sam Russell or Dura-Bond employees directed Marshall's efforts while at the plant.
After Marshall's June accident, he filed a workers’ compensation claim in Pennsylvania. Sam Russell Trucking, Motor Express, and Dura-Bond all became involved in the agency proceedings. Each party disclaimed an employment relationship with Marshall. For his part, Marshall conceded that he had agreed to obtain his own workers’ compensation insurance and had failed to do so.
An administrative judge nevertheless found that Sam Russell Trucking had been Marshall's "immediate employer." Pa. Op., R.58-2, PageID 975. The judge also found that Motor Express and Dura-Bond had been Marshall's "statutory employers" under Pennsylvania's workers’ compensation statute. Id. A statutory employer "is a master who is not a contractual or common-law one, but is made one by" unique provisions in the statute. Peck v. Del. Cnty. Bd. of Prison Inspectors , 572 Pa. 249, 814 A.2d 185, 187–88 (2002) (plurality opinion) (citation omitted). Ordinary employers generally must obtain workers’ compensation insurance, and statutory employers must do so if the ordinary employers do not. See 77 Pa. Stat. & Cons. Stat. Ann. §§ 461, 501(a)(1). Yet neither Motor Express nor Russell had insurance for Marshall. The judge thus ordered Dura-Bond (which had this insurance) to pay Marshall's benefits and allowed it to seek indemnity from Motor Express and Russell. An agency appeal board affirmed this decision in relevant part. Motor Express later reimbursed Dura-Bond for these benefits.
Typically, employees covered by the Pennsylvania workers’ compensation statute may seek relief only through that statute's remedial scheme and cannot bring a separate tort suit against their ordinary or statutory employers. See id. § 481(a). If, however, an employer fails to obtain workers’ compensation insurance for an employee, the employer loses this immunity and may be held liable to the employee in a common-law suit. See id. § 501(d); Bowman v. Sunoco, Inc. , 620 Pa. 28, 65 A.3d 901, 908 (2013). Marshall thus brought tort claims against Motor Express and Russell () in a Pennsylvania state court.
His suit leads to this separate case's defendant: RLI. RLI had issued Motor Express a commercial general liability policy covering bodily injuries to those harmed by the company's operations. RLI had not, by contrast, issued Motor Express a workers’ compensation policy that would cover bodily injuries to employees. Motor Express asked RLI to defend it in Marshall's tort suit. RLI agreed under a reservation of rights. Ultimately, the parties settled that suit for $2.4 million. Motor Express then asked RLI to reimburse it for the settlement. RLI refused.
Motor Express sued RLI seeking indemnification for the settlement up to the insurance policy's $2-million limit. Motor Express, by contrast, did not request reimbursement for the amounts that it paid Dura-Bond to cover Marshall's workers’ compensation benefits. RLI moved for summary judgment on the ground that two policy exclusions barred coverage for the tort-suit settlement. RLI first relied on an exclusion for "[a]ny obligation" "under a workers’ compensation" "law." Ins. Pol'y, R.58-6,...
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