The opinion of the court was delivered by: CALDWELL
Invoking our diversity jurisdiction, the plaintiff, Connecticut Indemnity Co., filed this action seeking a declaratory judgment under 28 U.S.C. § 2201 that defendant, Commerce & Industry Insurance Co., has to provide coverage for injuries defendant, Mary L. Stringfellow, suffered in an automobile accident with defendant, Gerald Nash, Jr.
At the time of the accident, Nash was driving his own tractor, which he routinely leased to defendant, Page E.T.C., Inc., t/d/b/a/ Page Transportation, Inc., and operated on its behalf. He was also pulling a trailer owned by Page. Commerce and Page have filed an answer alleging that Nash was not operating the tractor-trailer on Page's business at the time of the accident and that Commerce's policy provides no coverage.
Connecticut provided Nash with liability insurance except for injuries occurring, in part, while he was driving "in the business of anyone" to whom he had rented a covered auto. Commerce provided Page with liability insurance for anyone operating a tractor-trailer on its behalf or under a lease agreement with it.
We are considering cross-motions for summary judgment, one motion filed by plaintiff, the other by Commerce and Page. The question presented by Connecticut's motion is one of insurance law and principally requires us to decide whether at the time of the accident Nash was operating the tractor-trailer in Page's "business" or instead was pursuing personal matters.
The question presented by Page and Commerce's motion does not involve insurance law but whether Page can be held legally liable for Nash's conduct at the time of the accident under principles of respondeat superior in the context of a master-servant or employer-employee relationship. Page and Commerce assert that Page cannot be held liable and that, in turn, its insurer cannot be held responsible for coverage.
We will evaluate the cross-motions under the well established standard. See Davis v. Portline Transportes Maritime Internacional, 16 F.3d 532, 536 n.3 (3d Cir. 1994).
At all times pertinent to this action, the following policy provisions were in effect. Connecticut provided Nash with commercial auto liability insurance for nontrucking use of his tractor, sometimes referred to simply as "bobtail" insurance.
The policy had the following exclusion, which was added by endorsement:
This insurance does not apply to:
a. A covered "auto" while used to carry property in any business.
b. A covered "auto" while in the business of anyone to whom the "auto" is rented.
(Plaintiff's motion for summary judgment, exhibit D). This endorsement also provided that:
WHO IS AN INSURED does not include anyone engaged in the business of transporting property by "auto" for hire who is liable for your conduct.
Commerce provided Page, through two endorsements to its policy, with liability insurance for anyone operating a tractor-trailer on its behalf or under a lease agreement with it. Specifically, the "Blanket Additional Insured Endorsement" read:
(Plaintiff's statement of material fact. no. 11)
The "Named Insured" endorsement read, in pertinent part:
Page E.T.C. - Owner-Operators specifically designated parties as having entered into a contractual lease agreement with either Page E.T.C. Inc. . . . Page Transportation Inc to provide certain equipment as designated herein.
(Plaintiff's motion for summary judgment, exhibit C).
Nash and Page had the following business relationship. For some eight years before the accident, Nash had been a tractor-trailer driver for Page, operating as an independent contractor. Page had authority from the Interstate Commerce Commission (ICC) to operate an interstate trucking business. Nash did not.
On December 16, 1994, about a week before the accident, they entered into a 1-year agreement, captioned as "Motor Vehicle Agreement Between Independent Contractor and Carrier," but which is commonly called a lease in the industry. As part of the contract, Nash agreed to contract his tractor to Page Transportation, Inc., "for the purpose of loading and transporting freight," (defendants' exhibit C, P A), and, as required by ICC regulation at 49 C.F.R. § 1957.12 (1995), Page had "exclusive possession, control and use of the equipment" and "complete responsibility for the operation thereof." (Plaintiff's statement of material facts, no. 7). Nash was obligated to maintain the tractor in operating condition, but the agreement did not require him to wash it. (Defendant's statement of material facts, nos. 28 and 29).
In the fall of 1994, Nash had the following routine. From his home in Liverpool, New York, he would call Ed VanHorn, Page's dispatcher in Weedsport, New York, for assignments. Among those assignments was a trip Nash had made since 1991, hauling calcium chloride from Oswego, New York, to Sprague Energy in Frederick, Maryland. His route for this trip from ...