Lopez v. Western Surplus Lines Agency, Inc.
| Decision Date | 30 September 2021 |
| Docket Number | 1:19-cv-00349-JCH-LF |
| Citation | 564 F.Supp.3d 1082 |
| Parties | Todd LOPEZ, as Personal Representative of the Estate of Michael Ponce, Melissa Dominguez, as Next Friend to Izaiah Ponce, a minor, and individually, Pauline Ponce, as Next Friend to Angelina Ponce, a minor and individually, Joe Ponce, individually, Plaintiffs, and Lee Hunt, as Personal Representative of the Estate of Fernando M. Garcia, Rosa V. Garcia, Emilio Garcia Vega, Maria Elizabeth Garcia Vega, Reynaldo Garcia Vega, Martha Zulema Garcia Vega and Juan Jose Garcia Vega, Intervenor-Plaintiffs, v. WESTERN SURPLUS LINES AGENCY, INC., Redpoint County Mutual Insurance Company, and Ramon Fabelo, Defendants. |
| Court | U.S. District Court — District of New Mexico |
Jeffrey Cluff, Fadduol Cluff & Hardy PC, Lubbock, TX, Maureen A. Sanders, Sanders & Westbrook, PC, Albuquerque, NM, for Plaintiffs Todd Lopez, Melissa Dominguez, Pauline Ponce, Joe Ponce.
David H. Fadduol, Law Office of David Fadduol, LLC, B. Kent Buckingham, Buckingham Barrera Law Firm, Albuquerque, NM, Gregory L. Gowan, Gowan Elizondo, Corpus Christi, TX, Richard Barrera, Jr., Buckingham Barrera Law Firm, Midland, TX, for Intervenor-Plaintiff Lee Hunt.
Brian J. Fisher, David C. Larsen, Mayer LLP, Nicholas James Rimmer, Chapman and Priest, P.C., Albuquerque, NM, for Defendant Redpoint County Mutual Insurance Company.
This is a dispute over insurance coverage for a wrongful death lawsuit arising from a fatal crash between a pick-up truck and a tractor-trailer. The decedents' estates and their family members (Plaintiffs and Intervenor-Plaintiffs, collectively referred to as "Plaintiffs") sued the tractor's named insured, Ramon Fabelo. Fabelo's insurer, Redpoint County Mutual Insurance Company ("Redpoint"), denied coverage after determining that Fabelo was leasing the tractor to a lessee who was using it for its own commercial use. After considering the parties' cross-motions for summary judgment (ECF Nos. 53, 55), the Court concludes that Redpoint's motion will be GRANTED and Plaintiffs' motion will be DENIED .
On February 18, 2018, Leonardo Ferras was driving an unloaded tractor-trailer in southern New Mexico on his way to pick up sand. Def.'s UMF ¶ A, ECF No. 53; Pls.' AUMF ¶ 1, ECF No. 63. Ferras was employed by Oil Field Outfitters, LLC (Outfitters). Id. ¶ 16. Ferras crossed into the wrong lane of traffic on Highway 285 near Loving, crashing head-on with a vehicle driven by Michael Ponce. First Am. Compl. ¶¶ 16, 18, 20, ECF No. 37. Ponce and his passenger Fernando Garcia were killed. Id. ¶ 21.
The owner of the tractor (a 2004 Freightliner) was Texas resident Ramon Fabelo, an independent contractor. Pls.' UMF ¶¶ 2, 4, ECF No. 56. Redpoint was Fabelo's insurer. Id. ¶ 6. Redpoint is organized under Texas laws and based in Texas. Notice of Removal, ¶ 14, ECF No. 1. Redpoint issued Fabelo a combined liability policy with $1 million limits per accident for the period of December 1, 2017 – December 1, 2018. Def.'s UMF ¶ B; Pls.' AUMF ¶ 4. The policy's declarations page was titled "Texas Business Auto Coverage Form Declarations" and listed Fabelo as the named insured and Fabelo's Midland, Texas mailing address. Def.'s Ex. C, ECF No. 59-3, 7 (Policy).
The policy stated that Redpoint would "pay all sums an insured legally must pay as damages because of bodily injury or property damage to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto." Pls.' AUMF ¶ 7. An endorsement to the policy, titled "Truckers – Insurance for Non-Trucking Use," on Form TE23 09 changed liability coverage for a covered auto. Policy at 35. Because the parties dispute not only the proper interpretation of the exclusions in the endorsement, but also their appearance, the Court displays the exclusions as Ramon Fabelo would have encountered them.
This endorsement modifies insurance provided under the following:
BUSINESS AUTO COVERAGE FORM GARAGE COVERAGE FORM
This endorsement changes the policy effective on the inception date of the policy unless another date is indicated below:
Endorsement Effective Policy Number
12/01/2017 WRPB1710392
Named Insured
RAMON FABELO Countersigned by
(Authorized Representative)
SCHEDULE
Description of covered auto:
LIABILITY COVERAGE for a covered auto described in the Schedule or in the Declarations is changed as follows:
The parties refer to provisions 1(a) and (b) as "bobtail exclusions." " ‘Bob-tail’ in trucking parlance is the operation of a tractor without an attached trailer," and "bobtail insurance" typically refers to insurance for when a tractor is not being used in the business of an authorized carrier. Prestige Casualty Co. v. Michigan Mutual Insurance Co. , 99 F.3d 1340 (6th Cir. 1996) ; Clarendon Nat. Ins. Co. v. Medina , 645 F.3d 928, 932 (7th Cir. 2011) () Bobtail exclusions, according to Redpoint, "preclude coverage when a tractor is in the use to further commercial interests of a party to whom the truck is being leased."1 Def.’s Mot. at 16.
At the time of the crash Ramon Fabelo was leasing the tractor to Oil Field Outfitters. Def.'s UMF ¶ H. Outfitters is a motor contract carrier of property authorized to provide transportation of property under contract with shippers and receivers of general commodities. Def.'s Ex. D, ECF No. 57-4, 1 (Lease). "Federal regulations governing motor carriers require carriers to either own their trucking equipment or to enter into written leases in which the ‘owner’ of the equipment ‘grants the use of equipment, with or without driver, for a specified period ... for use in the regulated transportation of property, in exchange for compensation.’ " Medina , 645 F.3d at 931 (citation omitted).
Fabelo and Outfitter's signed December 3, 2017 lease provided that Outfitters had "exclusive possession, control, and use of the equipment," and stipulated that Outfitters "assume[d] complete responsibility for the operation of the equipment for the duration of the lease." Def.'s UMF ¶¶ E, F, H; Lease at 3. The lease stated that Fabelo "agree[d] to properly identify equipment with" Outfitters' name and Federal Highway Administration's MC number. Id. at 2. The lease also stipulated that Outfitters would "maintain liability and cargo insurance coverage for the protection of the public," under federal highway requirements. Def.'s UMF ¶ G. Outfitters maintained a commercial general liability policy on the leased tractor with coverage in the amount of $2 million general aggregate and $ 1 million per occurrence. Id. ¶ I.
Concerning the driver, Leonardo Ferras, the parties agree that he "was operating the truck with permission from and solely under Outfitters, and he was driving under Department of Transportation (DOT) operating authority of Outfitters." Id. ¶ K. They further agree that Ferras was "not attending to personal matters" when the crash occurred. Id. ¶ J. Rather, he was driving the tractor "solely" under Outfitters' authority and was on his way to pick up a load and awaiting further instructions from either Outfitters or Shield Transport, LLC (Shield), a company with whom Outfitters had a "service agreement." Id. ¶¶ J, K, L; Pls.' AUMF ¶ 17.
Outfitters' owner Pedro Sotelo stated at a later deposition that Outfitters does not own its trucks. Deposition of Pedro Sotelo, 66:22-23, ECF No. 63-1 (Sotelo Depo.) When asked about Outfitters and Shield's business arrangement, Sotelo stated that the two companies operated as a joint venture and that most of Outfitters' sand division trucks, including the one involved in the accident, were "dedicated" to Shield. Id. 61:9-20; 65:6, 20-22, ECF No. 64-1. Because Outfitters lacked MSAs – a term undefined by the parties – if Outfitters "wanted to haul ... sand," it "needed to do it through Shield's MSA[.]" Id. 62:17-19. Ramon Fabelo and Outfitter's lease stated that Fabelo was "aware [he] will be operating solely under [Outfitters] dedicated to Shield...." Lease at 5. Shield is never otherwise mentioned as party to the lease and the lease does not define the term "dedicated."
The parties dispute whether Ferras, the driver, was "leased to Shield," as Plaintiffs claim. Although not specifically cited by either party, Outfitters could neither admit or deny that Ferras "was acting in the course and scope of his employment with [Outfitters]," because it was "unclear" to Outfitters "who employed Mr. Ferras." Def.'s Ex. G., 3. As evidence that Ferras was leased to Shield, Plaintiffs cite Redpoint's claim investigation in which the investigator, summarizing his review of documents, wrote that: "In the ... loss notice, the notice states ‘I [Ferras] am leased to Shield Transport and was working at the time." ECF No. 25-6. The next immediate sentence, which neither party cites to, states that, "With regard to ‘relation to the insured’ Mr. Ferras is described as ‘employee.’ " Id. Plaintiffs also cite Pedro Sotelo's deposition statements which they perceive to be inconsistent. Sotelo testified that Outfitters employed Ferras. Sotelo Depo. 113:4-6. As Plaintiff correctly point out, he also testified that Ramon Fabelo "hired" Ferras to drive the tractor...
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