Robertson v. Motor Cargo, Inc.
| Decision Date | 30 November 1999 |
| Docket Number | No. 1 CA-CV 98-0186., No. 1 CA-CV 97-0395 |
| Citation | 197 Ariz. 126,3 P.3d 1046 |
| Parties | Thomas ROBERTSON, an unmarried man, Plaintiff-Appellant, v. MOTOR CARGO, INC., a Utah corporation, Defendant-Appellee. |
| Court | Arizona Court of Appeals |
Jensen Law Firm, P.C. by Christopher W. Jensen, Prescott, for Appellant.
Holloway, Odegard & Sweeney, P.C. by Sally A. Odegard, Charles M. Callahan, Peter C. Kelly II, Phoenix, for Appellee.
¶ 1 The question before us is whether a motor carrier that leased equipment and services from an independent trucking company incurs liability for injuries to a third party due to the negligence of the motor carrier's driver.
¶ 2 We view the facts in the light most favorable to appellant Thomas Robertson, against whom summary judgment was entered. State ex rel. Corbin v. Challenge, Inc., 151 Ariz. 20, 24, 725 P.2d 727, 731 (App.1986). Appellee Motor Cargo, Inc. (Motor Cargo), a trucking company that transports freight, engages other companies, known as cartage companies, to transport freight from Motor Cargo to its consignors and consignees.
¶ 3 Under such a cartage agreement, Kifsco, Inc. (Kifsco) performed transport services for Motor Cargo in Coconino, Yavapai, and Navajo counties. Kifsco used both tractors it owned and trailers owned by Motor Cargo to transport freight at Motor Cargo's request. Motor Cargo's Interstate Commerce Commission (ICC) placards affixed to both Kifsco's tractors and Motor Cargo's trailers identified the equipment as operating under Motor Cargo's ICC registration number.
¶ 4 Craig Wolsey, the sole shareholder of Kifsco, had formed Northern Arizona Pallets (NAP) to enable Kifsco's manager, Ron Wolsey, to supplement his income. NAP operated from Kifsco's terminal in Flagstaff, sharing a phone line and equipment with Kifsco. When Kifsco delivered freight for Motor Cargo to a consignee, the pallets carrying the freight became property of the consignee. NAP either purchased pallets from consignees for $1.00 each or received them free in exchange for hauling them away. Motor Cargo knew that NAP/Kifsco used Motor Cargo's trailers to ship pallets. NAP sent unbroken pallets back to Motor Cargo for shippers requesting their return.
¶ 5 In June 1993, Molly Shultz, a Kifsco driver preparing to leave its yard in Flagstaff to make a delivery to Ace Hardware in Prescott Valley for Motor Cargo, was asked by Polo Castro, an employee of NAP, to deliver 100 pallets to Western States Stone (Western States) in Ashfork. Shultz agreed to do so. Castro loaded the pallets onto Shultz's trailer along with the freight destined for Ace Hardware. Shultz did not inspect the trailer to make sure the pallets were loaded safely.
¶ 6 The pallets shifted during the drive and fell against the trailer doors. When Robertson, a Western States employee, opened the doors, the pallets fell out and injured him.
¶ 7 Robertson sued Kifsco, Motor Cargo, Wolsey dba NAP, Castro, and Shultz. In its motion for summary judgment, Motor Cargo denied any actual or implied agency relationship with Kifsco and argued it had never authorized Castro, Schultz, Wolsey, or NAP to act on its behalf to deliver pallets to Western States and also denied knowledge of that transaction.
¶ 8 Robertson replied that because Kifsco and Motor Cargo enjoyed an agency relationship under the cartage agreement and the negligence of Kifsco's employee caused Robertson's injury, Motor Cargo, as principal, was vicariously liable. He also argued that public policy supported a finding of actual agency because ICC trucking regulations held Motor Cargo liable for using its agent Kifsco to deliver freight under Motor Cargo's directions. Robertson also argued that Motor Cargo was estopped from denying an agency relationship because its own placards were affixed on the Kifsco tractor and trailer that delivered the pallets. He concluded that Kifsco had an implied agency relationship with Motor Cargo as to the pallet business because Motor Cargo allowed Kifsco/NAP to use its trailers to transport and deliver them.
¶ 9 The trial court granted Motor Cargo's motion for summary judgment and denied Robertson's cross-motion. It explained that Robertson had not presented facts sufficient to support alter ego, vicarious liability, or partnership theories against Motor Cargo. The liability of Kifsco was determined by default. The jury found Robertson's damages to be $315,138, with Kifsco 100% at fault. The trial court entered a judgment on the jury verdict and a second judgment in favor of Motor Cargo.
¶ 10 Robertson timely appealed from the trial judgment and from the denial of his cross-motion for summary judgment. He also filed a motion to set aside the summary judgment on the grounds of fraud and misconduct under Rule 60(c)(1), (3) and (6), Arizona Rules of Civil Procedure. This court suspended the appeal and revested jurisdiction in the trial court to consider the Rule 60(c) motion, which the trial court denied, prompting this appeal. Upon motion by Robertson, we consolidated the two appeals.
¶ 11 On appeal, Robertson raises two primary issues: First, did the trial court err in ruling that neither Arizona nor Interstate Commerce Commission (ICC) law makes Motor Cargo vicariously liable for his injuries? Second, did the trial court err in concluding that the theory of apparent agency excused Motor Cargo from liability for Robertson's injuries? We need to address only the first of these issues.
¶ 12 Robertson now argues that under both Arizona and ICC law, a truck driver is irrebuttably presumed to be the employee of the motor carrier whose ICC placards he manifests. Therefore, Robertson contends, because Shultz was driving a Kifsco truck with Motor Cargo placards when Robertson was injured, she was an employee of Motor Cargo, which thereby becomes liable for her negligence.
¶ 13 Motor Cargo first replies that Robertson failed to raise this vicarious liability theory in the trial court and thus waived this argument on appeal. Our examination of the record reveals that Robertson did in fact raise the issue. His response to Motor Cargo's motion for summary judgment and his own cross motion for partial summary judgment noted that the tractor and trailer driven by Shultz bore placards displaying Motor Cargo's logo and ICC numbers and that the public policy underlying the ICC regulations would be served by preventing Motor Cargo from escaping liability. He cited two cases from the Ninth Circuit Court of Appeals in which the carrier-lessees were found to be the statutory employers of the negligent drivers under ICC regulations. His reply in support of his cross motion for summary judgment reiterated his policy argument and noted that the United States Supreme Court had held motor carriers vicariously liable for damages caused by trucks showing their placards. He then argued:
Even the Arizona Supreme Court has held that the presence of placards on the tractor/trailer is a basis of vicarious liability for the carrier named on the placard, based upon federal law and ICC regulations. Transport Indem. Co. v. Carolina Cas. Ins., 133 Ariz. 395, 397, 652 P.2d 134, 136 (1982). Transport Indemnity cites Brannaker v. Transamerican Freight Lines, Inc., 428 S.W.2d 524 (Mo. 1968),Cox v. Bond Transportation, Inc., 53 N.J. 186, 249 A.2d 579 (1969), and Mellon National Bank & Trust Co. v. Sophie Lines, Inc., 289 F.2d 473, 477 (3d Cir.1961), "holding that federal law creates an irrebuttable presumption that the lessor's driver is the employer [sic—employee] of the vehicle [sic—lessee] whose placards identify the vehicle." [Emphasis added]. Therefore, despite Motor Cargo's protestations, Arizona law, by analogy, requires a finding of implied agency because of the undisputed evidence of Motor Cargo's placards on the negligently loaded trailer.
¶ 14 We conclude that these written arguments and citations sufficiently raised the ICC issue in the trial court.
¶ 15 We turn now to the question of vicarious liability. The Arizona Supreme Court in Transport Indemnity Co. v. Carolina Casualty Insurance Co., 133 Ariz. 395, 652 P.2d 134 (1982), considered ICC regulations bearing on the tort liability of an ICC-licensed interstate carrier leasing a tractor, trailer, and driver from an independent trucker. The Interstate Commerce Act provides that the ICC may prescribe regulations "`reasonably necessary in order to insure that while motor vehicles are being . . . used [under lease] the motor carriers will have full direction and control of such vehicles and will be fully responsible for the operation thereof. . . as if they were the owners of such vehicles. . . .'" Id. at 397, 652 P.2d at 136 (quoting 49 U.S.C. § 304(e))1 (emphasis added in Transport Indemnity). The court also noted that ICC regulations mandate that leases provide that the lessee have exclusive possession, control and use of the equipment and complete responsibility for it.
¶ 16 The intent of this law, said Transport Indemnity, is "to prevent the operation of unregulated, uninsured or underinsured vehicles on interstate trips by imposing responsibility for operation of trip-leased vehicles on the lessee holding the ICC certificate of convenience and necessity." Id. Congress in effect made the driver of the leased unit a statutory employee of the lessee: "federal law creates an irrebuttable presumption that the lessor's driver is the employee of the lessee whose placards identify the vehicle." Id. See also Zamalloa v. Hart, 31 F.3d 911, 914 (9th Cir.1994)
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