United Suppliers, Inc. v. Hanson
| Decision Date | 11 March 2016 |
| Docket Number | No. 14–1553.,14–1553. |
| Citation | 876 N.W.2d 765 |
| Parties | UNITED SUPPLIERS, INC. d/b/a Greenbelt Transport, Appellant, v. Renny HANSON, R. Hanson Trucking, Inc., and Kenneth DiRisio, Appellee. Renny Hanson, R. Hanson Trucking, Inc., and Kenneth DiRisio, Cross–Appellants, v. Nationwide Agribusiness Insurance Company, Cross–Appellee. |
| Court | Iowa Supreme Court |
Matthew J. Haindfield, Seth R. Delutri, and Jason Palmer of Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, for appellant United Suppliers and cross-appellee Nationwide.
Rene Charles Lapierre of Klass Law Firm, LLP, Sioux City, for appellee and cross-appellant Hanson and R. Hanson Trucking.
Troy A. Howell of Lane & Waterman LLP, Davenport, for appellee and cross-appellant DiRisio.
, Justice.
This dispute over who will pay the bill for an overturned and wrecked semi-trailer and the ensuing chemical spill presents a number of legal issues. In particular, it requires us to interpret an Iowa law, a lease agreement, and an insurance policy.
The plaintiff, an agricultural supply company that was delivering its own products, paid the bill for the ruined trailer and the cleanup, mostly through insurance. However, because the supply company had been leasing the semi-tractor and its driver from another source, it brought suit against the lessors and their allegedly negligent driver in an attempt to shift the accident costs to them. The district court granted summary judgment to the defendants. It found that Iowa Code section 325B.1 (2011)
and the lease terms barred any recovery by the supply company.
On appeal we now reverse. We hold that section 325B.1
is intended to govern relations between authorized motor carriers and shippers and does not apply to this dispute. We further hold that the lease terms can be reconciled and the indemnification provisions in the lease are valid and enforceable. However, we also hold that the anti-subrogation rule limits potential recovery in this case because the driver is an insured under the supply company's insurance policy. Accordingly, we reverse and remand for further proceedings consistent with this opinion.
This somewhat complicated insurance dispute arises out of relatively simple facts.
United Suppliers is a wholesale distributor of agricultural fertilizers and chemicals. It purchases its inventory in bulk, stores it in warehouses located in various states, and then sells it to retailers. Once sold, these products must be transported from United Suppliers' warehouses to its retail customers.
United Suppliers owns and operates 95 semi-tractors and 135 semi-trailers under the name Greenbelt Transport. These vehicles are used only to deliver the company's own inventory from the warehouse to the customer. United Suppliers does not offer transportation services for any purpose other than to deliver its own fertilizers and chemicals. It does not advertise transportation services. United Suppliers does add a delivery charge to the customer's price based on the distance traveled. These charges account for about five percent of United Suppliers' net profits. While its fertilizers and chemicals are in transit, United Suppliers bears the risk of loss.
Hanson personally owned the 2000 Freightliner semi-tractor that he leased to United Suppliers. Hanson also was the sole owner of a business known as R. Hanson Trucking Inc. (Hanson Trucking). Hanson and Hanson Trucking later admitted that the Lease was executed by Hanson individually and as president of Hanson Trucking.
Initially, Hanson himself drove the 2000 Freightliner pursuant to the Lease. However, in late March 2011, Hanson arranged for Hanson Trucking to hire Kenneth DiRisio as the driver for the vehicle. DiRisio signed an "Independent Contractor Agreement" with Hanson Trucking, and Hanson Trucking paid DiRisio a percentage of the revenue it received from United Suppliers for each load. United Suppliers required DiRisio to complete an "Application for Employment," performed a drug test and background check on him, and furnished logbooks and some instruction and training. During the spring of 2011, DiRisio transported approximately forty to fifty loads for United Suppliers in the Freightliner without incident.
However, on June 9, DiRisio was driving the Freightliner and pulling a United Suppliers trailer loaded with United Suppliers fertilizers and chemicals. He was heading from United Suppliers' Eldora warehouse to another warehouse in Gibbon, Nebraska. While on Interstate 80 near Lincoln, Nebraska, DiRisio lost control of the tractor-trailer. The police report indicated that DiRisio was distracted when trying to change a CD and veered off the road. In deposition, DiRisio acknowledged he had been changing a CD but maintained he actually lost control of the vehicle when he looked up and had to swerve to avoid hitting a deer. Regardless, there is no dispute the vehicle went off the highway and overturned in a single-vehicle accident.
The trailer was wrecked in the accident. Making matters worse, the trailer's contents spilled out and rain dispersed them. The spill contaminated several hundred cubic yards of soil. A costly environmental cleanup was required.
United Suppliers suffered a loss totaling $974,366.20, primarily for the environmental remediation but also for the value of the trailer and its contents. United Suppliers' insurer, Nationwide Agribusiness Insurance Company (Nationwide), paid the entire loss except for a $5000 deductible.1
On February 19, 2013, United Suppliers—on behalf of itself and Nationwide—filed suit against Hanson, Hanson Trucking, and DiRisio in the Hardin County District Court. The petition had four counts: (1) breach of contract—i.e., the Lease—against Hanson and Hanson Trucking, (2) negligence against DiRisio, (3) respondeat superior negligence against Hanson and Hanson Trucking, and (4) negligent hiring against Hanson and Hanson Trucking. The contract claim alleged, among other things, that Hanson and Hanson Trucking breached the Lease provision requiring them to indemnify United Suppliers for "any loss or damage resulting from the negligence or incompetence of the driver" they had provided.
In addition to answering and denying liability, Hanson, Hanson Trucking, and DiRisio filed a third-party petition against Nationwide. This petition sought a declaration that Hanson, Hanson Trucking, and DiRisio were insureds under the Nationwide policy, that Nationwide had a duty to defend and indemnify them, and that Nationwide could not seek subrogation from its own insureds.
The parties filed cross-motions for summary judgment on the question of whether Hanson, Hanson Trucking, and DiRisio were insureds under the Nationwide policy. That policy included a "Business Auto Coverage Form" which contained the following definition of an "insured":
1. Who Is An Insured
The following are "insureds":
The Nationwide policy also contained a "Truckers' Endorsement," which provided coverage "[f]or any operations [United Suppliers] engage[d] in as a ‘trucker.’ " The endorsement in turn defined "trucker" as "any person or organization engaged in the business of transporting property by ‘auto’ for hire."
In their summary judgment filings, Hanson, Hanson Trucking, and DiRisio argued they were covered under the Truckers' Endorsement. United Suppliers countered that the third-party plaintiffs were insured neither by the Truckers' Endorsement (because United Suppliers was not engaged in trucker operations) nor by the Business Auto Coverage (because someone "from whom you hire or borrow a covered ‘auto’ " cannot be an insured). The third-party plaintiffs...
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