Roberts v. Aetna Cas. & Sur. Co.

• Court: U.S. District Court — Western District of Virginia
• Writing for the Court: James Michael Shull, Gate City, Va., for plaintiffs
• Citation: Roberts v. Aetna Cas. & Sur. Co., 687 F. Supp. 239 (W.D. Va. 1988)
• Decision Date: 12 May 1988
• Docket Number: Civ. A. No. 87-0115-A.
• Parties: William ROBERTS, et al., Plaintiffs, v. AETNA CASUALTY & SURETY COMPANY, et al., Defendants.

687 F. Supp. 239

William ROBERTS, et al., Plaintiffs, v. AETNA CASUALTY & SURETY COMPANY, et al., Defendants.

Civ. A. No. 87-0115-A.

United States District Court, W.D. Virginia, Abingdon Division.

May 12, 1988.

James Michael Shull, Gate City, Va., for plaintiffs.

William W. Eskridge, Abingdon, Va., for Aetna.

Charles E. Schelin, Lebanon, Va., for Salyers.

Ford C. Quillen, Gate City, Va., for State Farm.

MEMORANDUM OPINION

GLEN M. WILLIAMS, District Judge.

This suit involves the validity of an insurance policy provision which excludes from coverage injuries to employees of the insured. The court upholds the validity of the provision under Tennessee law as it does not violate any strong Virginia public policy.

FINDINGS OF FACT

William Roberts (Roberts), a Tennessee resident, owns and operates a farm in Scott County, Virginia on which he raises tobacco. He employed Helen Salyers (Salyers), a Virginia resident, to grade tobacco in December of 1985. Salyers and her husband had previously been sharecroppers for Roberts.¹ She was to begin working when the tobacco was in case² and ready for grading.

In the late afternoon on the fifth of December, Salyers went to Roberts' son's farm which was on a tract adjoining Roberts' farm to inquire of Roberts whether the tobacco was in case. Roberts was not certain of the tobacco's condition and suggested they proceed to his tobacco barn to examine the tobacco. Roberts, Salyers and two members of her family rode over to the barn where he inspected the tobacco and concluded it was ready for grading. While Salyers remained in the cab, the others loaded the tobacco on the truck to take it to the grading shed. After the tobacco was loaded, Roberts, with Salyers by his side, drove the truck to the shed, which is located near the crest of a hill close to what Salyers termed a "cliff." All the witnesses agree Roberts was driving very slowly, no faster than a walking pace. While turning the truck in order to back it into the shed to facilitate unloading, Roberts crossed the face of the hill (traversed the fall line). The earth was muddy due to a drizzle and earlier snow and the truck began to slide sideways down the hill. In spite of the presence of all weather tires on the vehicle, the fact that the truck was in all-wheel drive mode, and Roberts' efforts to arrest the slide by alternating efforts of accelerating to straighten out and braking to stop, the truck continued sliding down the hill for approximately two hundred feet before tumbling into a creek. Salyers sustained injuries to her face, neck and appendages.

Roberts, a retired truck driver with several decades of driving experience, had insured the truck with Aetna Casualty & Surety Company through Price & Ramey, an insurance agent in Kingsport, Tennessee. Roberts called on Aetna to defend the negligence action brought by Salyers in Scott County Circuit Court.³ Aetna denied coverage because of an exclusion in the insurance contract for persons sustaining bodily injury during the course of employment.⁴ Roberts in turn filed this suit in Scott County Circuit Court against Aetna, Salyers, and State Farm Mutual Automobile Insurance Company (State Farm), the uninsured motorist carrier for plaintiff, seeking a declaratory judgment of Aetna's obligations to Roberts relative to Salyers' negligence claim. Aetna removed the suit to this court under diversity jurisdiction pursuant to 28 U.S.C. § 1441 (1982).

The case has been submitted to the court for decision on the summary judgment motions of the parties based on the stipulations, depositions and memoranda. As there are no affidavits setting forth specific facts showing that there is a genuine issue for trial, see Fed.R.Civ.P. 56(e), the court sets forth its opinion on the merits of the motions.

CONCLUSIONS OF LAW

Initially, the court must determine what law governs the dispute. A federal court sitting in diversity jurisdiction must apply the choice of law rules of the state in which it sits. See Goad v. Celotex Corp., 831 F.2d 508, 510 (4th Cir.1987), cert. denied, ___ U.S. ___, 108 S.Ct. 2871, 100 L.Ed.2d ___ (1988). This case is about an exclusion clause within an insurance contract, an issue which goes to the validity and interpretation of the contract. In Virginia, the law of the place of contracting controls the "nature, validity and interpretation" of the contract. Woodson v. Celina Mutual Ins. Co., 211 Va. 423, 426-27, 177 S.E.2d 610, 613 (1970); Occidental Fire & Cas. Co. v. Bankers & Shippers Ins. Co., 564 F.Supp. 1501, 1503 (W.D.Va. 1983); Crosson v. Conlee, 745 F.2d 896, 902 (4th Cir.1984), cert. denied, 470 U.S. 1054, 105 S.Ct. 1759, 84 L.Ed.2d 822 (1985). Although Roberts states simply "Virginia substantive law applies" without analysis, the other parties do not dispute that Tennessee was the place of formation as Roberts, a Tennessee resident, procured the policy through Price & Ramey, a Tennessee insurance broker. However, State Farm points to the exception to the lex contractus rule which is that the law of the place of performance shall govern the contract if it is different from the place of contracting. Poole v. Perkins, 126 Va. 331, 334, 101 S.E. 240, 240-43 (1919); accord Heavner v. State Auto. Mut. Ins. Co. of Columbus, Ohio, 350 F.Supp. 859, 862 (W.D.Va.1972).

The facts do not indicate in which state the parties intended the contract to be performed. Although Roberts is a Tennessee resident, his farm is located in Nickelsville in Scott County, Virginia. His son's farm adjoins his farm and, in fact, he was at his son's the day Salyers came to inquire about the tobacco. The farm had an old dwelling house which Roberts renovated and used on weekends or when "we'd go up there and spend time." Deposition at 126. However, vandals later rendered the house unfit for dwelling, so Roberts converted it to a grading shed. He stated that he spent most of his time in Tennessee. However, he specifically told the insurance brokers the truck was for "farm use," which they presumably considered in calculating premium cost from risk of liability.

The court concludes from these facts that the parties intended the contract to be performed in both Virginia and Tennessee since this is a border area. See Restatement (Second) of Conflict of Laws § 188 comment e. at 580 (1971) ("the place of performance can bear little weight in the choice of the applicable law when ... (2) performance by a party is to be divided more or less equally among two or more states with different local law rules on the particular issue.") The court will apply the general rule and not its exception. Therefore, the law of Tennessee shall govern the validity of the employees-of-the-insured clause.⁵

WHETHER SALYERS WAS ROBERTS' EMPLOYEE UNDER TENNESSEE LAW

The insurance policy excludes Roberts from coverage for injury to any person he has employed during that person's course of employment.⁶ Tennessee courts refer to workers' compensation concepts to determine whether one is an employee under an insurance contract. See Vaughn v. Standard Surety & Casualty Co., 27 Tenn.App. 672, 676, 184 S.W.2d 556, 558 (1944). The general rule is that an employee commuting to work is not in the course of employment. Woods v. Warren, 548 S.W.2d 651, 652 (Tenn.1977). However, an employee is considered to be in the course of employment if the employer furnishes the transportation, Vaughn, 27 Tenn.App. 676, 184 S.W. at 558, the employee must travel a required route with special hazards, Frazier v. Normak Intern., 572 S.W. 2d 650 (Tenn.1978) or where the employee is on the employer's property as an incident of the employment. See Kaylor v. Magill, 181 F.2d 179, 181 (6th Cir.1950). Aetna argues that Salyers falls within each of the three exceptions.

The facts reveal that Roberts suggested he and Salyers proceed to his barn to inspect the tobacco and determine whether it was in case. The parties rode in Roberts' truck. Salyers stated that the private road off the highway to the farm was too rough for her to drive by means of her husband's 1971 Plymouth sedan. Roberts was to pay Salyers an hourly wage for her grading services. She was not being compensated for the time consumed with Roberts' inspection of the tobacco. Roberts stated it was not certain whether Salyers would begin grading that night. However, Salyers stated she had previously graded tobacco "at night."

The court believes those facts fall within the purview of the employer-provided transportation exception enunciated in Vaughn. In that case a minor was injured while riding in employer-provided transportation. 27 Tenn.App. 671, 874 S.W.2d 556. All laborers, including Vaughn, were to report to work no later than seven o'clock in the morning when their employer would send them to various parts of Warren County to construct power lines. Id. at 676, 184 S.W.2d at 559. The laborers were not compensated for the time spent commuting to their assigned site. Vaughn was injured on the return commute at the end of the day. He was not required to return to the morning site but could have availed himself of other transportation home. Salyers was in a similar situation. Due to the rough terrain on the private road to Roberts' farm, she could not transport herself; she was dependent on Roberts for a ride in a truck or all-terrain vehicle. The road condition was exacerbated due to the weather. A necessary incident of her employment was performing her services in the grading shed on Roberts' farm. He was obliged to transport her to the grading shed. The time spent during the ride was within the course of her employment. Therefore, Aetna is not bound to defend or indemnify Roberts against Salyers' negligence suit.

WHETHER VIRGINIA HAS A STRONG PUBLIC POLICY AGAINST VIOLATION OF THE OMNIBUS PROVISIONS

Although the court concluded that under Tennessee law the policy's exclusion for injury to employees of the insured allows Aetna to legally deny Roberts coverage, the...