Northland Cas. Co. v. Meeks

• Citation: 540 F.3d 869
• Decision Date: 28 August 2008
• Docket Number: No. 07-3057.,No. 07-3199.,07-3057.,07-3199.
• Parties: NORTHLAND CASUALTY COMPANY, Appellee, v. Barbara MEEKS, individually and as Special Administratrix of the Estate of Floyd Meeks, Deceased; Floyd Meeks Jr., individually; Jewel Meeks, individually; Lloyd Gene Meeks, individually; Shelia Meeks Hale, individually; James Rual Meeks, individually; Deanie Renee Meeks Hester, individually; Jewel Meeks Webb, individually; Andrew Thomas Meeks, individually; Don Henry Paul Meeks, individually, Appellants. Northland Casualty Company, Appellee, v. Rocky Harrell, doing business as Rocky Harrell Farms, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

540 F.3d 869

NORTHLAND CASUALTY COMPANY, Appellee, v. Barbara MEEKS, individually and as Special Administratrix of the Estate of Floyd Meeks, Deceased; Floyd Meeks Jr., individually; Jewel Meeks, individually; Lloyd Gene Meeks, individually; Shelia Meeks Hale, individually; James Rual Meeks, individually; Deanie Renee Meeks Hester, individually; Jewel Meeks Webb, individually; Andrew Thomas Meeks, individually; Don Henry Paul Meeks, individually, Appellants.

Northland Casualty Company, Appellee, v. Rocky Harrell, doing business as Rocky Harrell Farms, Appellant.

No. 07-3057.

No. 07-3199.

United States Court of Appeals, Eighth Circuit.

Submitted: April 18, 2008.

Filed: August 28, 2008.

Brian Gene Brooks, argued, Greenbrier, AR, Donna Wolfe McHenry, Little Rock, AR, on the brief, for appellant.

Scott W. McMickle, argued, Atlanta, GA, James M. Duckett, Little Rock, AR, on the brief, for appellee.

Before GRUENDER, BRIGHT and BENTON, Circuit Judges.

GRUENDER, Circuit Judge.

The estate and heirs of Floyd Meeks (collectively "Meeks") and Rocky Harrell appeal the district court's¹ grant of summary judgment to Northland Casualty Company ("Northland"). The district court held that Harrell's commercial insurance policy with Northland that provided business auto coverage ("the Policy") did not cover claims arising from the fatal injuries suffered by Floyd Meeks ("Floyd") because it determined that Floyd was Harrell's employee. On appeal, Meeks and Harrell argue that the Policy covered their claims because Floyd was either an independent contractor or a temporary worker. For the reasons discussed below, we affirm.

I. BACKGROUND

In August 2002, Floyd and Harrell agreed that Floyd would transport agricultural products for Harrell's hauling company on an "as needed" basis during the harvest season. Harrell was a farmer who also owned and operated a transportation company that was in the business of hauling agricultural products. While Floyd drove a school bus for the North Little Rock School district, he asked Harrell for a full-time driver position. Harrell denied this request because the work was seasonal. Every week during the harvest season, Harrell told Floyd and the other drivers the loads to pick up, from whom to pick them up, and where to deliver them. The drivers were able to choose the exact times they would pick up the loads and what routes to take to complete the deliveries, so long as the deliveries were completed within a week. Harrell owned the trucks and leased the trailers, but he permitted his drivers to keep them at their houses. Harrell also paid all vehicle operating costs, including licensing, insurance and gas. The drivers could supplement the insurance if they chose to do so. Each driver received weekly payments equivalent to twenty-five percent of the amount charged by Harrell for the loads that driver transported. Harrell paid the drivers even if a customer did not pay him. No taxes were withheld from the drivers' paychecks, and the drivers received 1099 tax forms, not W-2 forms. While Harrell had no written contracts with his drivers, he prohibited them from hiring subcontractors. Either Harrell or the drivers could terminate the drivers' employment at any time.

The Policy that Harrell purchased from Northland provided coverage for Harrell's tractors and trailers with certain exclusions. Section B of the liability coverage section states, "This insurance does not apply to ... (4) ... `Bodily injury' to: (a.) An `employee' of the `insured' arising out of and in the course of: (1) Employment by the `insured'; or (2) Performing the duties related to the conduct of the `insured's' business...." The Policy also defined the relevant terms as follows:

"Employee" includes a "leased worker". "Employee" does not include a "temporary worker".

...

"Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker".

...

"Temporary worker" means a person who is furnished to you to substitute for a permanent "employee" on leave or to meet seasonal or short-term workload conditions.

On October 4, 2002, Floyd was fatally injured in an accident while transporting agricultural products for Harrell using Harrell's tractor-trailer. After Floyd's death, Meeks filed a state court action against Harrell under the Arkansas Wrongful Death Statute, Ark.Code Ann. § 16-62-102. Harrell sought defense and coverage from Northland. Relying on our diversity jurisdiction, Northland then brought this declaratory judgment action to disclaim these obligations. Northland filed a motion for summary judgment, which Meeks and Harrell opposed. They argued that a genuine issue of material fact existed as to whether Floyd was an "independent contractor" or a "temporary worker." Rejecting this argument, the district court held that no genuine issues of material fact existed and that Floyd was Harrell's employee as a matter of law. In reaching its conclusion, the district court applied Arkansas's ten-factor test. Alternatively, the court held that Floyd was an employee under Arkansas's extension of the definition of employee found in 49 C.F.R. § 390.5 to intrastate operations of motor vehicles in Rule 17.1 of the Arkansas State Highway Commission Regulations. Finally, the district court held that Floyd was not covered by the Policy as a "temporary worker" because he was not "furnished to" Harrell by another entity. Meeks and Harrell appeal.

II. DISCUSSION

"We review the district court's grant of summary judgment de novo, viewing the evidence in the light most favorable to the nonmoving party." Source Food Tech., Inc. v. U.S. Fid. & Guar. Co., 465 F.3d 834, 836 (8th Cir.2006). "We also review the district court's interpretation of an insurance policy provision de novo." Id. In this diversity case, we apply Arkansas law. See id.

A. Employee/Independent Contractor

Meeks and Harrell argue that summary judgment was not appropriate because there is a genuine issue of material fact as to whether Floyd was an employee under Arkansas law. "Although agency is a question of fact ordinarily determined by the trier of fact, where the facts are undisputed, and only one inference can reasonably be drawn from them, it becomes a question of law." Howard v. Dallas Morning News, Inc., 324 Ark. 91, 918 S.W.2d 178, 185 (1996); accord Cotton v. Commodore Exp., Inc., No. 02-604, 2007 WL 283135, at *1 (E.D.Ark. Jan. 30, 2007) (stating that an agency determination is "a legal conclusion, requiring both a determination of facts and application of law," and "where the material undisputed facts permit only one reasonable legal conclusion, summary judgment is appropriate") (citing Howard, 918 S.W.2d at 185). Because the facts attendant to Floyd's employment relationship are undisputed, we now review de novo the district court's legal conclusion that Floyd was Harrell's employee.

Applying Arkansas law to determine whether Floyd was an employee or an independent contractor, we consider the totality of the circumstances by applying Arkansas's ten-factor test. See Shelter Mut. Ins. Co. v. Jones, 343 F.3d 925, 926 (8th Cir.2003) (per curiam). The factors we consider are:

(a) the extent of control which, by the agreement, the master may exercise over the details of the work;

(b) whether or not the one employed is engaged in a distinct occupation or business;

(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;

(d) the skill required in the particular occupation;

(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;

(f) the length of time for which the person is employed;

(g) the method of payment, whether by time or by the job;

(h) whether or not the work is a part of the regular business of the employer;

(i) whether or not the parties believe they are creating the relation of master and servant; and

(j) whether the principal is or is not in business.

Blankenship v. Overholt, 301 Ark. 476, 786 S.W.2d 814, 815 (1990) (citing Restatement (Second) of Agency § 220 (1958)). The primary factor in this analysis is the extent of control an employer may exercise over his worker. Shelter, 343 F.3d at 926 & n. 2. "It is the right to control, not the actual control, that determines the relationship." Ark. Transit Homes, Inc. v. Aetna Life & Cas., 341 Ark. 317, 16 S.W.3d 545, 548 (2000).

Applying these factors, we conclude that the district court did not err in determining that Floyd was Harrell's employee. Significantly, Harrell had and exerted full control over the critical details of Floyd's work. Harrell could terminate Floyd's employment at will, and he prohibited Floyd from subcontracting his work. Harrell also received all customer orders, assigned all delivery requests and required the drivers to complete each delivery within one week. Floyd had to charge all fuel purchases to Harrell's account at a specified gas station, which limited the routes available to Floyd. Furthermore, Harrell instructed Floyd on proper load handling and required Floyd to contact him directly in case of any problem or emergency.

In addition to the control Harrell established over Floyd, the remaining factors also support the determination that Floyd was an employee. Floyd hauled exclusively for Harrell and was not engaged in an independent hauling business. While Floyd needed some skill to drive a tractor-trailer, that skill was not unique and not more prevalent among independent contractors than employees. Harrell also supplied all necessary equipment to Floyd and paid all operating costs. Although Harrell hired Floyd only for harvest season, Floyd was employed for the entire season and not for one...