Fort v. C.W. Keller Trucking, Inc.
| Citation | 330 F.3d 1006 |
| Decision Date | 05 June 2003 |
| Docket Number | No. 02-1342.,02-1342. |
| Parties | Vanesse FORT, individually and as personal representative of the Estate of Eric K. Fort, Deceased, Plaintiff-Appellee, v. C.W. KELLER TRUCKING, INC., Defendant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
John F. Townsend, Jr. (argued), Townsend & Montross, Indianapolis, IN, for Plaintiff-Appellee.
Ronald J. Waicukauski (argued), Price, Potter, Jackson, Waicukauski & Mellowitz, Indianapolis, IN, for Defendant-Appellant.
Before COFFEY, ROVNER, and WILLIAMS, Circuit Judges.
Vanesse Fort sued C.W. Keller Trucking, Inc. for the wrongful death of her husband, Eric Fort. Before trial, the plaintiff received $2.25 million under the terms of a loan receipt agreement with Ryder Integrated Logistics, Inc. At trial the jury awarded Vanesse Fort approximately $1 million. Keller asked the district court to setoff the jury award by the $2.25 million. The district court rejected that request and on appeal, Keller asserts that setoff is warranted because the $2.25 million advanced is not a loan. Specifically, Keller argues that Fort and Ryder never intended full repayment of the loan, and in any case the jury award was too small to allow for full repayment. Because we find that the parties intended full repayment such that the money advanced was truly a loan, and because money received under loan receipt agreements is generally not subject to setoff, we affirm the district court's ruling. Keller also raises claims relating to the admissibility of the loan receipt agreement, the sufficiency of the evidence, and improper jury instructions, which we also reject.
In 1999, C.W. Keller Trucking, Inc. was approved by Toyota Motor Corporation to haul parts to Toyota's Kentucky plant as a subcontractor for Ryder Integrated Logistics, Inc. Keller earned approximately $1.00 per mile and retained control over the trucks used to haul parts. Additionally, Ryder had an owner-operator agreement with E.C. Trucking, Inc., under which E.C. Trucking provided drivers and leased three tractors to Ryder, and in exchange received about $.85 cents per mile to haul Toyota parts to the same Kentucky plant as Keller.
That same year, E.C. Trucking entered into an assets purchase agreement with Keller, acquiring Keller's stock and trucks, as well as Keller's permits, licenses, and certificates necessary for the trucks' operation. E.C. Trucking also obtained Keller's Interstate Common Carrier (ICC) authority and Canadian counterpart, in addition to Keller's subcontractor agreement with Ryder. Following this transaction, E.C. Trucking operated its trucks using Keller's placards and ICC authority, and was legally entitled to use the name "E.C. Trucking d/b/a C.W. Keller Trucking."
On March 15, 2000, Eric Fort died after his car was hit by a truck driven by Jacob Nance. Although Nance had been assigned to a truck with Keller's placards and ICC authority, it broke down the day before the accident, and Nance used a truck with Ryder's placards and ICC authority. Ryder asserts that use of this truck was unauthorized.
Vanesse Fort (Eric Fort's widow) sued Ryder, Nance, E.C. Trucking, and Keller for wrongful death. Fort then entered into a loan receipt agreement with Ryder releasing all defendants except Keller. Under this agreement, Fort received $2.25 million, but promised to pay Ryder one-third of the money recovered from Keller or Keller's insurer up to a maximum of $2.25 million.
Fort's suit against Keller went to trial. The only issues in dispute were whether Keller was legally responsible for Nance's negligence and if so, how much money the plaintiff should receive. A Ryder representative testified that even though Nance used a truck owned by Ryder, Keller was responsible for the trip as Ryder's subcontractor. Keller argued that it was not in business at the time of the accident, and was therefore not Nance's employer. Also, Keller objected to the court's refusal to admit evidence of the loan receipt agreement to establish that Brad Scroggins, a Ryder employee, was biased against Keller. At the close of evidence, the court instructed the jury regarding the difference between Keller and E.C. Trucking's liability. The jury found Keller liable for Fort's death and awarded Fort's estate slightly over $1 million.
Following the jury verdict, Keller filed a motion for set-off, arguing that as a matter of law the jury award should be offset by the amount that Fort retained from the loan receipt agreement. The district court determined that Keller was not entitled to a setoff and denied the motion. Keller appeals this ruling, and also contests the district court's refusal to introduce the loan receipt agreement into evidence, the sufficiency of the evidence establishing that Keller was in business at the time of the accident, and the jury instructions regarding the laws governing separate corporate entities.
Indiana courts1 encourage the use of loan receipt agreements, see, e.g., Scott County v. Vaughn, 704 N.E.2d 1029, 1032 (Ind.Ct.App.1998), and define such agreements as follows:
A loan receipt agreement, in its simplest form, provides that one with potential liability to a claimant will advance funds in the form of a non-interest loan to the claimant in order that the claim may be prosecuted against another who is also potentially liable for the claim. In return for the funds advanced, the claimant agrees that he will not sue or will not seek to enforce a judgment against the lender and will repay the loan according to some formula based upon the claimant's recovery against the other party. Such an agreement, then, serves to limit the liability of one against whom a claim might be pressed and, at the same time, gives the claimant an immediate `bird in hand' instead of forcing him to await but possible recovery following protracted litigation.
Burkett v. Crulo Trucking Co., 171 Ind. App. 166, 355 N.E.2d 253, 258 (1976); see also American Transp. Co. v. Cent. Ind. Ry. Co., 255 Ind. 319, 264 N.E.2d 64, 67 (1970).
It is against this backdrop that Keller contests the district court's denial of its motion for setoff. Specifically, Keller points out that under the terms of the agreement at issue, Fort received $2.25 million from Ryder, but had to pay back one-third of the amount of any jury award. The jury award was slightly over $1 million thus requiring Fort to repay Ryder approximately $347,377. Keller reasons that the approximately $1.9 million left over ($347,377 subtracted from $2.25 million) should be used to offset Keller's $1 million jury award to Fort (thus reducing Keller's payment to zero) because this amount will never have to be repaid. We are unpersuaded by this argument.
Despite Keller's contentions to the contrary, under Indiana law, whether setoff is warranted generally does not depend on whether all funds advanced under the terms of the loan receipt agreement were repaid. Rather, a setoff entitlement hinges on whether the contract at issue can properly be construed as a loan receipt agreement in the first place; if so, no setoff is allowed. See American Transp. Co., 264 N.E.2d at 67; Sanders v. Cole Mun. Fin., 489 N.E.2d 117, 120 (Ind.Ct. App.1986) (); Barker v. Cole, 396 N.E.2d 964, 971 (Ind. Ct.App.1979).2
We thus examine whether Fort and Ryder entered into a loan receipt agreement, "look[ing] to the express terms of the agreement to determine the intent of the parties as to the true nature of the agreement." Barker, 396 N.E.2d at 971; see also Sanders, 489 N.E.2d at 120 ( ) (citation omitted). The agreement states in part that:
Ryder will advance to the Estate [$2.25 million] all of which will be repayable without interest only in the event and to the extent that the Estate recovers from Keller or its insurer by trial or settlement; and in that event Thirty-three and a third percent (33 1/3%) of all monies received by the Estate shall be repaid to Ryder until the full amount is repaid.
This type of contract, which contemplates full repayment, is clearly a loan receipt agreement. The fact that repayment is based on a formula (one-third of the jury award rather than dollar-for-dollar repayment) does not make it any less so. Burkett, 355 N.E.2d at 258 () (emphasis added); see, e.g., Bymaster v. Bankers Nat'l Life Ins. Co., 480 N.E.2d 273, 280 (Ind.Ct.App.1985) (); Barker, 396 N.E.2d at 971 (). Thus, Keller is not entitled to setoff.
Keller contends that notwithstanding the agreement's express terms, neither Ryder nor Fort ever intended full repayment because Fort's lawyer only asked for $2.95 million at trial, and Fort would have had to recover $6.75 million to repay Ryder in full. We are unconvinced. The record reveals that Fort initially sought $7 million in damages, and Keller has not shown that this figure was unreasonable; additionally, the loan receipt agreement states that Ryder believed there was a "substantial possibility" that Fort would receive a jury award of at least $5...
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