Merriam v. National Union Fire Ins. Co. of Pitts.

• Decision Date: 07 October 2008
• Docket Number: No. 4:07-cv-130.,4:07-cv-130.
• Citation: 580 F.Supp.2d 838
• Parties: Timothy L. MERRIAM, an individual; Justine Merriam, individually and as next best friend of Christopher Merriam, Kayla Merriam an Collin Merriam, minors Plaintiffs, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, a corporation; Landstar Ranger, Inc., a corporation; and Gallagher Transportation Services, a division of Arthur J. Gallagher and Co. Kansas City, a corporation, Defendants.
• Court: U.S. District Court — Southern District of Iowa

580 F.Supp.2d 838

Timothy L. MERRIAM, an individual; Justine Merriam, individually and as next best friend of Christopher Merriam, Kayla Merriam an Collin Merriam, minors Plaintiffs, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, a corporation; Landstar Ranger, Inc., a corporation; and Gallagher Transportation Services, a division of Arthur J. Gallagher and Co. Kansas City, a corporation, Defendants.

No. 4:07-cv-130.

United States District Court, S.D. Iowa, Central Division.

October 7, 2008.

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Marc A. Humphrey, Humphrey Law Firm, P.C., Urbandale, IA, Alan 0. Olson, Olson Law Office PC, Des Moines, IA, for Plaintiffs.

Daniel F. Church, McAnany Van Cleave & Phillps PA, Reoland Park, KS, Stephen E. Doohen, Whitfield & Eddy, PLC, Des Moines, IA, Robert E. Konchar, Moyer & Bergman, PLC, Cedar Rapids, IA, Abbe M. Stensland, Coralville, IA, for Defendants.

MEMORANDUM OPINION AND ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

ROBERT W. PRATT, Chief Judge.

Before the Court are three motions for summary judgment. First, on August 1, 2007, Defendant Landstar Ranger, Inc. ("Landstar") filed a Motion for Summary Judgment. Clerk's No. 20. Plaintiffs filed a resistance to Landstar's Motion on March 6, 2008. Clerk's No. 33. Plaintiffs filed a supplemental resistance to Landstar's Motion on April 8, 2008. Clerk's No. 38. Landstar filed a Reply on May 1, 2008. Clerk's No. 46. Second, on April 11, 2008, Plaintiffs filed a Motion for Summary Judgment against Defendants National Union Fire Insurance Company ("National Union") and Gallagher Transportation Services ("Gallagher"). Clerk's No. 40. Plaintiffs filed a "Supplemental Motion for Summary Judgment" against National Union and Gallagher on April 16, 2008.¹ Clerk's No. 44. National Union and Gallagher filed a resistance to Plaintiffs' Motion on May 5, 2008. Clerk's No. 49. Plaintiffs filed a Reply on May 27, 2008. Clerk's No. 57. Finally, National Union and Gallagher filed a Motion for Summary Judgment against Plaintiffs on May 16, 2008. Clerk's No. 55. Plaintiffs filed a resistance to the Motion on June 12, 2008. Clerk's No. 60. National Union and Gallagher replied on June 27, 2008. A hearing was held on all pending motions for summary judgment on July 16, 2008. Clerk's No. 69. The matters are fully submitted.

I. FACTUAL BACKGROUND

Landstar is an interstate trucking company that independently contracts with individual truck owners and operators to transport freight. Landstar's Statement of Material Facts (hereinafter "Landstar's Material Facts") ¶ 1. At all times relevant to this case, Timothy Merriam ("Merriam") was an owner-operator, working as an independent contractor for Landstar. National Union's and Gallagher's Statement of Material Facts (hereinafter "Gallagher's Material Facts") ¶ 1.² In order to haul for Landstar, every independent contractor is required to provide Landstar with verification that he or she is covered, amongst other things, by a qualified accident or workers' compensation policy. Landstar's Material Facts ¶ 2.³ If an independent contractor meets certain criteria as articulated by Landstar in the "Independent Contractor Operating Agreement" (the "Contract"), that independent contractor may elect to obtain a blanket trucker's occupational accident policy, also known as a "Contractor Protection Plan" ("CPP"), in lieu of either traditional workers' compensation coverage or the occupational accident insurance. Landstar's Material Facts ¶ 6.⁴

Prior to entering the Contract with Landstar,⁵ Merriam⁶ had been employed for many years as an over the road trucker for other trucking companies and, as such, had never been required to obtain his own insurance coverage. Pls.' Statement of Additional Material Facts which Preclude Summ. J. (filed in response to Landstar's Motion for Summary Judgment, hereinafter "Pls.' Additional Facts") at ¶ A1-B2. Merriam had also never sustained an on-the-job injury that would have familiarized him with the benefits of a workers' compensation policy. Id. at ¶ A3. In 1999, Merriam began the qualification process to become an Independent Contractor with Landstar.⁷ Id. ¶ B1. This process was handled entirely by mail.⁸ Merriam's contact during the qualification process was a Landstar employee named Kevin Elder ("Elder"), who had offices in Texas and Missouri. Id. at ¶ B3. Elder mailed Merriam a packet of information which contained highlighted documents to be filled out and returned and which also contained a flier outlining CPP coverage available through Gallagher. Id. at ¶ B4; Elder Dep. at 22-23. There is no dispute that Elder did not provide fliers or information about the two other options for insurance coverage, i.e., workers' compensation or occupational accident coverage. Elder Dep. at 28 (Q: "In the paperwork that you would send the trucker interested in leasing out to Landstar, did you provide any options for workers' compensation coverage as opposed to CPP coverage?" A: "Not that I remember, no, sir."). There is also no dispute that Merriam and Elder never discussed what insurance coverages were necessary before Merriam could successfully complete the qualification process or the distinctions between workers' compensation, occupational accident, and CPP coverage.⁹ Pls.' Additional Facts ¶ B5, Pls.' Response to Landstar's Material Facts ¶ 7. It is also true that Merriam never inquired about his options for insurance coverage, despite the provisions in the Contract discussing requirements for insurance and alternatives regarding what would satisfy those requirements. Landstar's Response to Pls.' Additional Facts ¶ B5. Additionally, Merriam admits that he obtained additional insurance coverage required by the Contract, i.e., "bobtail insurance," ¹⁰ on his own without assistance from Landstar. Merriam Dep. at 290 (Q. "Did you obtain your own bobtail insurance then?" A. "Yeah."). Elder testified that if any driver going through the qualification process had questions about CPP coverage or about Landstar's insurance requirements generally, he would "refer them on down to—to Jacksonville, Florida to the home office to the—the—there was a person down there. We had a contact that handled the CPP and they would work with them, either explain more to `em about the CPP or other options." Pls.' Additional Facts ¶ 9. Elder further testified that he thought that the "contact," Cindy Chambers, was actually "with Gallagher but [her office was] at headquarters there at Landstar."¹¹ Elder Dep. at 25.

Regardless of Plaintiffs' understanding of the distinctions between types of insurance coverage, Merriam applied for and obtained a CPP policy from National Union, purportedly under the belief that it was the only option available to him since it was the only "offering" included in the packet of materials provided by Elder. Landstar's Material Facts ¶ 11; Gallagher's Material Facts ¶ 4. Merriam's CPP policy had an effective date of January 1, 2005. See Landstar's App. at 47. The policy contained coverage for "occupational accident benefits," as well as for "non-occupational accident benefits." Id. at 48-49. Plaintiffs claim it was Merriam's understanding that the CPP plan would provide coverage any time he was outside his truck and that it would also provide death benefits to his wife if he was killed while driving. Pls.' Additional Facts in Response to National Union's and Gallagher's Mot. for Summ J. (hereinafter "Pls.' Additional Facts II") ¶ 3. On January 2, 2004, Plaintiffs received a letter from Gallagher, the claims adjuster for National Union insurance policies, stating: "It is important for you to note the occupational accident insurance policy you have purchased does NOT provide workers compensation coverage in accordance with any state's workers' compensation act. It is not intended as a workers' compensation policy and will NOT satisfy any state law that may require you to obtain workers' compensation insurance."¹² Landstar's App. at 38. While Merriam never received a physical copy of the CPP insurance policy itself, he did receive a copy of the Schedule of Benefits for the policy,¹³ along with the January 2, 2004 letter from Gallagher. Pls.' Additional Facts ¶ 4. The January 2, 2004 letter from Gallagher informed Merriam that he could "obtain a copy of the insurance policy that outlines the terms, conditions and exclusions (a/k/a Contractor Protection Plan or "CPP") either via the Internet or by contacting the Gallagher Insurance Coordinator at Gallagher Transportation." Landstar's App. at 38. The letter provided both a contact phone number and an internet address. Id.

In the month of March 2005, Merriam was employed as an Independent Contractor with Landstar, and he was covered by the CPP policy issued by National Union. On March 24, 2005, Merriam picked up a load in Sparks, Nevada destined for Cedar Rapids, Iowa. Pls.' Additional Facts II ¶ 2. After leaving Sparks, he traveled to Pine Bluffs, Wyoming where he took a three-day fishing trip. Pls.' Additional Facts ¶ C2; Gallagher's Material Facts ¶ 16. On March 29, 2005, Merriam brought his load into Iowa¹⁴ and stopped at his home in Boone, Iowa on a federal Department of Transportation ("DOT") break.¹⁵ Landstar's Material Facts ¶ 14.

Merriam's home is a three acre parcel located just west of Boone, Iowa. Pls.' Additional Facts ¶ 1. He claims that it was not uncommon for him to stop and take his "on duty, not driving" DOT breaks at his Boone home while en route with a load to Cedar Rapids. Pls.' Additional Facts ¶ 4. Merriam also claims that it "was not necessary for him to deviate at all off of his normal route back to Cedar Rapids along Highway 30" in order to stop at his home in Boone.¹⁶ Pls.' Additional Facts II ¶ A5. Regardless, Merriam's property had two driveways, one purportedly for his personal use vehicles and one he constructed in 1999 for purposes of parking his...