VANCOUVER PLY. CO., INC. v. NATIONAL AUTO. & C. INS. CO.

Decision Date15 January 1975
Docket NumberCiv. A. No. 16732.
Citation387 F. Supp. 311
PartiesVANCOUVER PLYWOOD COMPANY, INC., v. NATIONAL AUTOMOBILE AND CASUALTY INSURANCE COMPANY et al.
CourtU.S. District Court — Western District of Louisiana

Merritt B. Chastain, Jr., Smitherman, Smitherman, Lunn, Hussey & Chastain, Shreveport, La., for plaintiff.

Val Irion, Lunn, Irion, Switzer, Johnson & Sally, Shreveport, La., for defendant National Automobile and Cas. Ins. Co.

Henry A. Politz, Booth, Lockard, Jack, Pleasant & LeSage, Shreveport, La., for defendant George W. Greer.

James Robert Jeter, Cook, Clark, Egan, Yancey & King, Shreveport, La., for defendant Steelcraft.

DAWKINS, Senior District Judge.

OPINION

In 1970, plaintiff, Vancouver Plywood Company, Inc., (Vancouver), a Louisiana corporation, entered into separate contracts with defendants Steelcraft Corporation (Steelcraft), a Tennessee corporation, and George W. Greer, a citizen of Texas, to construct a new dry refuse burner upon the premises of Vancouver's Florien, Louisiana plant. During construction of the incinerator, the boom of a crane being used to lift prefabricated steel panels in place collapsed, causing substantial damage to the then partially erected new burner.

Vancouver filed this action for damages against Greer and his liability insurer, National Automobile and Casualty Insurance Company (National) in the First Judicial District Court of Caddo Parish, Louisiana. On April 30, 1971, the case was removed here. After removal, Steelcraft was named as a principal defendant in an amended complaint filed by Vancouver.

National then filed a motion for summary judgment, seeking to be dismissed as a party, on the ground that the provisions of its policy of insurance in favor of Greer did not provide coverage for the accident. We denied the motion. It now appears that National has abandoned this contention so that any monetary award against Greer emanating from damage to Vancouver's refuse burner may be satisfied out of Greer's policy with National.1

Vancouver claims that Greer and his liability insurer, National, are liable in solido with Steelcraft for damages to the partially erected incinerator and certain additional damages caused by the alleged negligence of employees of both Greer and Steelcraft. Vancouver also contends that National is liable to it for penalties and attorney's fees because of National's alleged arbitrary refusal to pay Vancouver's claim.

Greer urges alternative grounds as a basis for denial of liability. He claims that no member of his crew was negligent and, alternatively, that they were borrowed servants of Vancouver or Steelcraft so that their negligence, if any, may not be imputed to him. Greer also has counter-claimed against Vancouver for $5,872.80 withheld from the amount due Greer for work performed pursuant to his contract with that company. Further, Greer has cross-claimed against National for his expenses of litigation, including reasonable attorney's fees, alleging that National's refusal to provide him with a defense in this action was arbitrary, capricious, and without probable cause; this cross-claim includes a claim for indemnity under his policy for the amount of any judgment rendered against him.

Steelcraft also disclaims any responsibility for Vancouver's losses. Among its contentions are that its employee at the job site, Donald Gray, at the time of the accident was a borrowed servant of Vancouver so that his negligence, if any, should be imputed to the latter and not to Steelcraft; alternatively, that, in its purchase order, Vancouver granted complete indemnity to Steelcraft for all losses suffered during construction of the incinerator; in the further alternative, that the same purchase order freed Steelcraft from responsibility for any consequential damages.

Finally, National, who refused to give any indication that it was defending Greer until it filed post-trial briefs in this matter, raises the same basic defenses against liability as does Greer. It also resists Vancouver's claim that its denial of coverage was arbitrary, capricious, and without probable cause.

We turn now to a complete discussion of the full facts of these controversies.

As noted, in 1970, Vancouver decided to replace its worn-out incinerator with a new one. To accomplish this, it was necessary to obtain the services of a consulting engineer, the parts for the incinerator itself, and an erection crew to install it. Howard W. Bullard, who was a consulting engineer for Vancouver on other projects, was retained. Steelcraft agreed to furnish the burner parts and a "working supervisor" to instruct the erection crew in assembling the burner. Vancouver said that it would provide a "working supervisor" and erection crew. It then contracted with Greer to provide the erection crew, motor crane and crane operator, and all tools, rigging, scaffold, etc., necessary to erect the burner.

Before construction began, Vancouver had a concrete base prepared upon which the new burner was to be erected; it also prepared the site upon which a Lorain Moto-Crane was to be placed for use on the job. Some of Greer's employees then "spotted" the crane on that site. However, it was "spotted" in such a manner that it was required to make its heaviest lifts from its side instead of from the rear of the crane. It is undisputed that the crane's safe lifting capacity was reduced when operating over its side rather than its rear.

The crane had an effective "boom length" of about 150 feet. In other words, it could lift objects approximately 150 feet from the cab of the crane, which was attached permanently to the bed of a truck.

On November 23, 1970, the first ring of the steel fabricated panels of the cone-shaped incinerator had been permanently bolted to the prepared concrete base. Work then was commenced upon installation of the second, higher ring of panels. Three panels were lifted and bolted to each other and to the top of the first ring of panels. During placement of the first two panels, which were bolted together and lifted simultaneously, Steelcraft's "working supervisor," Don Gray, injured a tooth, which required immediate dental attention. Consequently, he was not present when the next single panel was lifted into place. He did return to the scene, however, before the next double panel was lifted. It was during this lift that the crane's boom collapsed.

Exactly what took place just prior to the accident is in dispute. But it is not seriously controverted that this lift required the crane to "boom out" almost 100 feet, resulting in a major reduction of its lifting capacity; and expert testimony clearly shows that the particular lift, given the weight to be lifted, the "boom out" required, and the fact that the lift was over the crane's side, was unsafe. Therefore, we must ascertain whether the "last lift" negligently was made, and, if so, who was responsible legally.

Greer's crane operator, W. R. Morrison, testified he was aware that the crane was overloaded; in fact, that he "knew" the crane would fall if he went ahead. He said he told Don Gray of the danger but that Gray told him to proceed because the crane could handle it. He then appealed to Bill Greer, the crew's foreman, who told him to follow Gray's instructions. Contrarywise, Gray flatly denies speaking with Morrison prior to the accident. We find Gray's testimony on this point to be not credible. The testimony of other members of Greer's crew supports Morrison's account; Gray's self-interested testimony is unsupported and, in our judgment, unbelievable. Therefore, we find that Gray, together with Bill Greer and Morrison, clearly was negligent in the performance of his duties.

Morrison was negligent in making a lift which he "knew" would cause the crane to collapse. His alleged fear of losing his job if he did not make the lift does not absolve him of blame. Bill Greer, as foreman, should not have permitted the lift. Don Gray was negligent in instructing Morrison to make the lift after being informed of the danger. The combined negligence of these individuals clearly was the direct, proximate cause of the damage done to the partially erected incinerator. Therefore, unless there were facts which would insulate them from liability, their respective employers, George W. Greer and Steelcraft, are responsible for any damages proved under the doctrine of respondeat superior. La.Civ.Code art. 2320. So is National under its policy issued to Greer.

We already have mentioned that one of the theories being asserted by Greer, National, and Steelcraft to escape liability is the "borrowed servant" or employee pro hac vice doctrine. They all contend Gray was Vancouver's borrowed servant; Steelcraft also asserts that the members of Greer's crew were Vancouver's borrowed servants; on the other hand, Greer's attorney contends that Greer's employees were Steelcraft's borrowed servants. To determine whether any of these claims are valid, we first must direct our attention in this diversity action to Louisiana jurisprudence concerning the borrowed servant defenses.

The seminal Louisiana decision as to the borrowed servant thesis is Benoit v. Hunt Tool Co., 219 La. 380, 53 So.2d 137 (1951). There the Louisiana Supreme Court said:

". . . In determining liability under this doctrine in some cases the courts have imposed liability on the person in whose business the employee was engaged at the time the tort was committed. In others the test has been the right to control over the servant at the time the tort was committed. It has been pointed out that in applying the latter test it is often difficult to decide just what fact or facts constitute control. Mere division of control does not, in itself, raise the presumption of surrender of control, but there is a presumption that the general employer is liable, and it rests upon him to show that, as to the particular work in question, the servant has been lent and is performing
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