Logan v. Commercial Union Ins. Co.

• Decision Date: 20 September 1996
• Docket Number: No. 95-3231,95-3231
• Citation: 96 F.3d 971
• Parties: Leo LOGAN, Plaintiff-Appellant, v. COMMERCIAL UNION INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 971

96 F.3d 971

36 Fed.R.Serv.3d 106

Leo LOGAN, Plaintiff-Appellant, v. COMMERCIAL UNION INSURANCE COMPANY, Defendant-Appellee.

No. 95-3231.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 23, 1996.

Decided Sept. 20, 1996.

R. Douglas Hailey (argued), Ramey & Hailey, Indianapolis, IN, Bryan Leo Bradley, Gold & Polansky, Chicago, IL, for Plaintiff-Appellant.

Susan L. Williams, Charles S. Cassis (argued), Brown, Todd & Heyburn, New Albany, IN, for Defendant-Appellee.

Before POSNER, Chief Judge, and FLAUM and KANNE, Circuit Judges.

KANNE, Circuit Judge.

After Leo Logan suffered a work-related injury, he filed a claim with Commercial Union Insurance Co., his workers' compensation insurance carrier. Commercial Union, however, disputed the claim, and thus Logan did not receive salary continuance or payments for his medical bills until the dispute was settled eleven months after Logan's injury. Logan filed a diversity action claiming that Commercial Union had wrongfully delayed paying his claim and that the delay had damaged Logan physically, psychologically, and financially, but the district court granted summary judgment in favor of Commercial Union on all counts. Logan appeals the entry of summary judgment, as well as the district court's determination during discovery that certain Commercial Union documents, of which Logan had sought production, were protected as privileged work product. Finding that the relevant documents are in fact subject to a qualified privilege, that Logan has not demonstrated compelling need in order to overcome the privilege, and that Logan has failed to put forth sufficient evidence to support essential elements of his claims, we affirm.

I. HISTORY

Logan first began driving a truck in 1965, in Milwaukee, Wisconsin, and he has driven trucks for various moving companies during most of the years since then. He started working for American Red Ball Transit Company, Inc., in their Indianapolis warehouse in late 1988. Five months later, in April of 1989, he became a truck driver for Red Ball. As part of this change in his occupational duties, Logan and Red Ball entered into a series of contractual agreements describing the contours of their relationship, which ostensibly characterized Logan not as a Red Ball employee but as an independent contractor exclusively devoted to transporting household goods for Red Ball.

One of these agreements was an Equipment Purchase Contract, under which Logan agreed to buy a 1984 tractor from Red Ball for a total cost of $25,402.66, to be paid in installments over a period of three years. Logan's payment of the purchase price was secured by a security interest in the tractor, which could be recovered by Red Ball upon Logan's default. According to the contract, the possible instances of default included if Logan ceased driving exclusively for Red Ball.

The central contract entered into by Logan and Red Ball was a Contract Truckman's Agreement, which provided that for the duration of the agreement Logan would operate his truck exclusively for Red Ball (the agreement was renewed on May 18, 1990, to extend the term of coverage). Under this agreement, Logan agreed to comply with all Red Ball rules relating to truck operation, to contact Red Ball's dispatcher on a daily basis to obtain driving orders, and to make pickups and deliveries at times specified by Red Ball. Logan was not required to accept all Red Ball transport assignments, but once accepted he was to perform the assignment as instructed by Red Ball. Red Ball had the right to control Logan's payment and to direct Logan's work in packing, crating, loading, and unloading household goods that Red Ball's customers contracted with Red Ball to have shipped. In addition, Logan was required to "perform such other transportation or incidental or supplemental accessorial services as may be necessary and consistent with the shipping contracts between Red Ball and its customers." Although Logan was responsible for paying all his own transportation expenses and obtaining a vehicle license, Red Ball obtained state and federal motor carrier permits for his transportation and had Logan's power of attorney to sign licenses and make reports necessary to obtain state credits for fuel that Logan purchased.

Red Ball possessed workers' compensation insurance for its employees through Hartford Accident & Indemnity Co. However, Red Ball arranged for Logan to obtain his own workers' compensation and employer liability insurance directly from Commercial Union. Red Ball selected Commercial Union and then contacted the company on Logan's behalf. In fact, Logan had no idea which insurance carrier he had until after he was later injured.

Concurrent with his application for insurance with Commercial Union, Logan elected under IND. CODE § 22-3-6-1(b)(4) for workers' compensation coverage as a sole proprietor who is "actually engaged in the proprietorship business." Notice of this election was served upon both Commercial Union and the Indiana Workers' Compensation Board. At Red Ball's request, Logan also executed an affidavit acknowledging that he was self-employed and that his own workers' compensation insurance, rather than Red Ball's, would cover workers' compensation liability for any work-related injury suffered by him or any of his employees. Logan's insurance premium, together with his truck payment under the Equipment Purchase Contract and his withholding for income taxes and social security contributions, was deducted from his Red Ball paycheck.

On July 25, 1990, Logan was dispatched by Red Ball to Colorado Springs, Colorado, to pick up a load of furniture and haul it to Macon, Georgia. On July 30, while helping to unload the furniture in Macon, Logan fell off a ladder and injured his back, rendering him unconscious. As a result of his injuries, Logan spent three days in intensive care and then remained hospitalized in Macon until September 26, 1990.

Within days after Logan's fall, an accident report was submitted notifying Commercial Union of Logan's injuries, and Commercial Union began its investigation of the claim. On August 13, 1990, Logan filed an action for workers' compensation benefits with the Kansas Workers' Compensation Board (Logan was a resident of Kansas at the time of the injury). The next day, Logan gave a statement to a Commercial Union claims representative, in which he claimed that he was an employee of Red Ball. On the basis of its investigation and Logan's statement, Commercial Union formally denied Logan's claim on August 17, 1990. Logan's attorney immediately sent a letter to Commercial Union demanding that it pay the medical bills and compensation benefits stemming from Logan's July 30 injury. The letter reviewed the applicable laws of Kansas, Indiana, and Georgia, and it reaffirmed Logan's previous statement by concluding that "under the facts presented here and the well-settled law in all jurisdictions, Mr. Logan is clearly not an independent contractor but is an employee of American Red Ball." This conclusion, however, was Commercial Union's exact reason for denying Logan's claim.

Before the Kansas Workers' Compensation Board, Commercial Union argued that Logan had been injured in the capacity of an employee of Red Ball and therefore that Red Ball's insurance carrier, rather than Commercial Union, should pay for Logan's injuries. Commercial Union maintained that jurisdiction was properly in Indiana, not Kansas, because the locus of Logan's and Red Ball's alleged employment was in Indiana. The Kansas board agreed that it did not have jurisdiction and dismissed Logan's action.

On September 17, 1990, Logan filed an action with the Indiana Workers' Compensation Board, naming Red Ball, Hartford, and Commercial Union as defendants. Before an Indiana board hearing officer, Commercial Union again argued that at the time he was injured Logan was acting as an employee of Red Ball, rather than as an independent contractor, and moved to have itself dismissed as a defendant in the workers' compensation action. In the alternative, Commercial Union argued that if the hearing officer were to find that Logan had been injured while acting as an independent contractor, jurisdiction would then properly lie in Kansas, which being Logan's state of residence is the location of Logan's self-employment.

On December 20, 1990, the hearing officer determined that Logan had been injured while acting as an independent contractor and, thus, that Commercial Union was the proper defendant in the workers' compensation action. The hearing officer also seems to have determined that jurisdiction was proper in Indiana, presumably because the workers' compensation insurance contract between Logan and Commercial Union had been entered into in Indiana. Accordingly, on January 18, 1991, the hearing officer issued an order dismissing Red Ball and Hartford as defendants in the action and ordering Commercial Union to resolve Logan's claim. On February 7, 1991, Commercial Union filed an application requesting that the hearing officer's order be reviewed by the full board. Red Ball responded with a motion on February 28, 1991, arguing that the order had not been a final award and, thus, was not immediately appealable. Before this matter could be resolved, however, Commercial Union settled its claim with Logan in June 1991 by paying a lump sum of $13,500 for Logan's medical bills and agreeing to pay benefits of $294 per week until Logan returned to work in late 1992.

Two years later, on July 9, 1993, Logan filed a complaint in the Southern District of Indiana, alleging that Commercial Union's nine-month delay in paying his claim had exacerbated his injuries and resulted in his financial ruin. The complaint charged that Commercial Union's conduct in handling Logan's claim constituted: (1) breach of contract, (2) gross negligence, ¹ (3) breach of Commercial Union's fiduciary duty of good faith, and (4)...