Opinion ID: 780230
Heading Depth: 2
Heading Rank: 1

Heading: Claims Against Malone

Text: 15 We can add little to the district court's thorough analysis of Graham's negligent entrustment and statutory employment claims against Malone. The district court correctly determined that the lease between Malone and Washington was terminated according to its terms on April 29, 1993, two days after Malone had mailed a certified letter of cancellation to Washington's home address. Thus, the lease was terminated several weeks prior to the accident, which occurred on May 21, 1993. 16 Although Graham points out that the lease agreement was a standard Malone form, she makes no convincing argument that the lease's notice of cancellation provision, was unconscionable or was for some other reasons invalid. Graham says that a carrier-lessee such as Malone should make reasonable efforts to notify a driver of the cancellation of a lease, but she does not explain why notice given by mailing a certified letter to the driver's designated address would be unreasonable. The written notice cancellation method provided for in the lease seems a practicable and sensible arrangement for parties like Washington and Malone, where Washington was likely to spend much of his time out on the road delivering loads. 17 Graham contends that Malone acted negligently in entrusting the tractor-trailer to one like Washington whose driver's license bore on its face an intrastate restriction although Malone was apparently unaware of the fact when it entered into the lease. Assuming, without deciding, that what Malone did amounted to an entrustment of the tractor-trailer, which Washington and Sabree in fact owned, the cancellation of the lease relieved Malone of any liability under a negligent entrustment theory. Once the lease was canceled, Washington ceased to operate under Malone's authority, on its behalf, or with its permission. 6 18 The absence of a valid lease precludes imposition of vicarious liability against Malone under the statutory employment doctrine, which holds carrier-lessees vicariously liable for injuries resulting from the use of leased equipment. See, e.g., Jackson v. O'Shields, 101 F.3d 1083, 1086-87 (5th Cir.1996) (statutory employment doctrine applies only where valid lease of equipment is in effect). That Washington's tractor-trailer bore Malone's vehicle identification placards at the time of the accident does not constitute grounds for imposing vicarious liability against Malone. The lease provided that Washington was responsible for returning these materials to Malone upon cancellation. 7 The notice of cancellation sent to Washington's home on April 27, 1993 stated that any further use of Malone's ICC placards would be unlawful. While Washington himself apparently never received notice of cancellation, we conclude, as have other courts, that the presence of Malone's ICC placards does not vitiate the otherwise valid termination notice. See id. at 1088 (holding that presence of carrier's ICC insignia at time of accident did not provide basis for liability); see also Tartaglione v. Shaw's Express, Inc., 790 F.Supp. 438, 442 (S.D.N.Y.1992) (same). 19 In her motion for summary judgment, Graham argued that Malone was an insurer against injuries arising from Washington's operation of the tractor-trailer under Illinois's mandatory automobile insurance law, 625 Ill. Comp. Stat. Ann. 5/7-601 et seq., having failed to cancel the truck's Illinois registration until after the accident. 8 The district court concluded that cancellation of the lease precluded holding Malone liable under the Illinois automobile insurance statute and that, in any event, [d]eeming Malone an insurer due to the failure to terminate the registration is not a remedy permitted by Illinois law. 948 F.Supp. at 1137. In her motion for reconsideration, Graham abandoned reliance on the Illinois mandatory automobile insurance statute, asserting instead that Malone was liable under Illinois statutes requiring motor carriers operating within Illinois to retain on file with the Illinois Commerce Commission a certificate or other proof of insurance. See 625 Ill. Comp. Stat. Ann. 5/18c-4901 (No motor carrier or property shall operate within this State unless it has on file with the Commission or its agent continuous insurance or surety coverage in accordance with Commission regulations). At the time of the accident, Malone did in fact have a certificate of insurance on file with the Illinois Commerce Commission. The district court stated that Graham's shift in statutory focus fails to persuade me that my original ruling was in error. 43 F.Supp.2d at 82. 20 We agree with the district court that Graham's argumentative change does not assist her. The cancellation of the lease undermines Graham's contention based upon the Illinois proof of insurance provisions. Section 4903 of Chapter 18c, upon which Graham now relies, provides, in part, that 21 [e]ach certificate or other proof of insurance or surety coverage shall have, as an implied term, that the insurance or surety coverage will remain in effect continuously until notice of cancellation is filed in accordance with Commission regulations, and that all motor vehicles operated by or under authority of the carrier will be covered, whether or not such vehicles have been reported to the insurance, surety, or other company. 22 625 Ill. Comp. Stat. Ann. 5/18c-4903 (emphasis supplied). Because the lease had been canceled before the accident, Washington's truck was no longer operated by or under authority of Malone. Thus, the maintenance by Malone of the Illinois insurance certificate provides no basis under Illinois law for holding Malone strictly liable as Washington's insurer. 23 For the foregoing reasons, we conclude that the district court did not err in granting summary judgment in favor of Malone on all claims against it.