Northland Ins. Co. v. Rhodes
| Decision Date | 09 December 2010 |
| Docket Number | Civil Case No. 09-cv-01691-REB-CBS |
| Parties | NORTHLAND INSURANCE COMPANY, Plaintiff, v. CHRISTINA RHODES, individually and on behalf of the Estate of David Bates, Deceased, TIMASH INVESTMENTS, LLC, and JOHN DOE, personal representative of Enoch Annor, Deceased, Defendants. |
| Court | U.S. District Court — District of Colorado |
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDERS
This matter came before me for trial to the court on November 29-30, 2010. Plaintiff, Northland Insurance Company, appeared through its attorneys, and defendant, Christina Rhodes, appeared in person and through her attorney. Defendant, Timash Investments, LLC, has not answered or otherwise appeared in this action and did not appear through counsel or otherwise at the hearing. It appears that the John Doe defendant has not been served.
Having judicially noticed all relevant adjudicative facts in the file and record of this case pro tanto; having considered the evidence educed in its various forms; having determined the credibility of the witnesses; having weighed the evidence; having considered the reasons stated, arguments advanced, and the authorities cited by the parties; and being otherwise sufficiently advised of the facts and premises, I enter the following findings of fact that are established by a preponderance of the evidence, conclusions of law, and orders.1
1. The primary parties to this lawsuit are plaintiff, Northland Insurance Company (Northland), a Minnesota corporation, and defendant Christina Rhodes, individually and on behalf of the estate of David Bates (Bates), deceased, a Colorado resident.
2. Bates and Enoch Annor (Annor) were hired as drivers by Timash Investments, LLC (Timash). Stephen Agyei was the Operations Manager of Timash. Alexander Aplerku owned the company.
3. In January, 2008, Timash submitted an application for insurance to Northland. At the time, Timash listed a 2008 Volvo truck as the only vehicle to be covered by the policy. (Trial Exh. 2.) The Volvo was a "day cab," meaning that it did not have a sleeper compartment.
4. The application noted that the Volvo's "maximum radius" from the Denver area was 500 miles. (Trial Exh. 2.) Other applications for insurance submitted by Timash in February, 2008, stated that the company's business consisted of transporting shipments of groceries within Colorado not exceeding 300 miles from the Denver area. (See Trial Exh. 6 at COLLINS 00047; Trial Exh. 7 at COLLINS 00051.)
5. The insurance premiums paid on a policy of motor carrier insurance such as that sought by Timash from Northland are based in part on and proportional to the maximum radius the covered vehicles are anticipated to travel from a defined location.
6. Northland issued a commercial insurance policy, Policy No. TN593380, to Timash, effective from January 23, 2008, to January 23, 2009 (policy). (Trial Exh. 1.)
7. The policy provides coverage for "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.'" (Trial Exh. 1 § II.A at NIC 00032.)
8. The policy contains the following exclusions:
This insurance does not apply to any of the following:
3. Workers' Compensation
Any obligation for which the "insured" or the "insured's" insurer may be held liable under any workers' compensation, disability benefits or unemployment compensation law or any similar law.
4. Employee Indemnification and Employer's Liability "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 "insured's" business;...
(Trial Exh. 1 § II.B. at NIC 00034.)
9. Under the express terms of the policy, (Trial Exh. 1 § VI.F. at NIC 00042.) A "leased worker^' is defined by the policy as "a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm to perform duties relates to the conduct of your business." (Trial Exh. 1 § VI.J. at NIC 00043.) A "temporary worker" is "a person who is furnished to you to substitute for a permanent 'employee' on leave or to meet seasonal or short-term workload conditions." (Trial Exh. 1 § VI.Q. at NIC 00044.) Neither Bates nor Annor was a "leased worker" or a "temporary worker."
10. The policy also contains an endorsement to coverage as follows:
RADIUS RESTRICTION
The premium for this policy is based on your telling us that certain "autos" will not be used for regular and frequent trips outside a 500 mile radius of the address stated in Item One of the DECLARATIONS.
X LIABILITY COVERAGE X PHYSICAL DAMAGE COVERAGE is changed by adding the following exclusion:
The following "autos" are not covered if used for regular and frequent trips outside the radius described above:
ALL COVERED AUTOS.
(Trial Exh. 1 at NIC 00053.) The radius restriction was effective from the date of the issuance of the policy, January 23, 2008.
11. Agyei's testimony that the 500-mile radius restriction shown on the application of insurance was a fabrication or alteration is not credible. Timash submitted applications for insurance to at least two other insurance companies in early 2008, both of which stated that the maximum radius traveled by Timash trucks was well less than 500 miles from Denver. (Trial Exh. 6 at COLLINS 00047; Trial Exh. 7 at COLLINS 00051.)
12. In 2008, the Volvo truck was used for regular and frequent trips to destinations more than 500 miles from the Denver area. Agyei acknowledged that the Volvo drove regularly to California. (See, e.g., Trial Exhs. 21-29, 31, 34, 40-41, 46-47, 49, 51-52, 54, 58, 63-64, 70, 76, 78, 80-82, 159, 171) He testified also that the Volvo was used for other out-of-state trips. (See, e.g., Trial Exh. 20, 30, 32-33, 38, 42-45, 6162, 65-66, 68, 137, 152.) Indeed, there is no evidence that the Volvo was ever used to transport loads exclusively within Colorado.
13. On August 4, 2008, Timash purchased a 2001 Freightliner tractor for use in its business. The Freightliner had a sleeper compartment. By virtue of a General Change Endorsement dated August 14, 2008, the Freightliner was added to the Northland policy. (Trial Exh. 1 at NIC 00078-00078.) The Freightliner was not leased.
14. Agyei's testimony that the radius restriction was added subsequent to the effective date of the Northland policy to save money when Timash did not have a truck in operation is not credible. There was never a point in time prior to the date of the subject accident in which Timash did not have at least one truck available to transport loads.
15. Also not credible was Agyei's testimony that the radius restriction applied only to the Volvo, while the Freightliner was not subject to any such restriction. The radius restriction applied by its terms to "all covered autos." The Freightliner was a "covered auto" to which the radius restriction applied.
16. On August 7, 2008, Bates, while working for Timash, was involved in a single-vehicle accident while returning from California in the Volvo truck. The Volvo was taken out of service for repairs. Thereafter, Timash required Bates to drive the Freightliner with another driver. Timash hired Annor to drive with Bates. The drivers were to drive in four-hour shifts, alternatively using the Freightliner's sleeper compartment to rest.
17. From August 7, 2008, to September 8, 2008, Bates and Annor transported four loads for Timash between Colorado and California. (See Trial Exhs. 90, 91, 94, 95.) All these trips were more than 500 miles from Denver.
18. Had the Freightliner not been destroyed in the subject accident, it would have continued to make regular and frequent trips of more than 500 miles from the Denver area, as the Volvo had done prior to the August, 2008, accident. Indeed, there would have been little purpose in purchasing a truck with a sleeper compartment other than to allow Timash drivers to travel more than a day's drive from Denver.
19. Annor was hired by Timash pursuant to a Standard Employment Agreement/Contract (contract). (Trial Exh. 14.) Agyei gave Bates an identical contract at the time of his hire. Although Bates never returned an executed copy to Timash, Bates never objected to the contract generally or to any contract provision specifically. While at Timash, the terms of employment of Annor and Bates were identical. In fact, Agyei testified that Timash considered both Annor and Bates to be working for it pursuant to the terms of the contract and that he informed Bates at the time he was hired that the employment contract was "part of the deal." Both Timash and Bates intended to be bound by the terms of the contract.
20. The employment contract specified that the driver would "render exclusive and full-time services in a driving capacity to Timash Investments" and would "devote his best efforts to the affairs of the Company and to perform such duties as Employee shall reasonable [sic] be directed to perform by officers of the Company." (Trial Exh. 14 ¶ 1.1 at 1.)
21. The contract required further that the driver would "not render any services for others, or for [his] own account... and [would] not render any services to any supplier or significant customer" of Timash. (Trial Exh. 14 ¶ 1.2 at 1.)
22. Under the terms of the contract, drivers were paid $.40 (40 cents) per mile per load. Each driver was responsible for paying taxes on this compensation. (Trial Exh. 14 ¶ 3.1 at 1.) Timash did not withhold federal or state income or other taxes from Bates's pay. (See Trial Exh. 15.)
23. Bates was paid...
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