Court Opinion

ID: 4191891
Source: CourtListenerOpinion
Date Created: 2017-08-02 17:01:24.331824+00
Date Added: 2024-06-11T14:40:04.755986
License: Public Domain

FILED
                                                     United States Court of Appeals
                      UNITED STATES COURT OF APPEALS         Tenth Circuit

                            FOR THE TENTH CIRCUIT                         August 2, 2017
                        _________________________________
                                                                       Elisabeth A. Shumaker
                                                                           Clerk of Court
STAR INSURANCE COMPANY,

      Plaintiff Counter Defendant -
      Appellee,                                             No. 16-6098
                                                     (D.C. No. 5:14-CV-00716-L)
v.                                                          (W.D. Okla.)

FEDERAL INSURANCE COMPANY,

      Defendant Counterclaimant -
      Appellant.
                     _________________________________

                            ORDER AND JUDGMENT*
                        _________________________________

Before LUCERO, McKAY, and HARTZ, Circuit Judges.
                  _________________________________

      Donald J. Flint is the president of C&C Tank Truck Services, Inc. (C&C) and

D.J.F. Services, Inc. (DJF). He owns all of DJF; he and his wife are each 50% owners of

C&C. C&C, based in Wewoka, Oklahoma, transports fluids for oil-rig operations. DJF,

based in Holdenville, Oklahoma, provides oilfield services and operates ten oil and gas

wells near or in Spur, Texas. Wewoka and Holdenville are nine miles apart, but Spur is

about 340 miles southwest of both. Roger Cellars, a mechanic for C&C, was assigned by

*
  After examining the briefs and appellate record, this panel has determined unanimously
that oral argument would not materially assist in the determination of this appeal. See
Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted
without oral argument. This order and judgment is not binding precedent, except under
the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R.
32.1.
Flint to work on DJF equipment in Spur. On the return trip he caused a serious motor-

vehicle accident. The issue in this case is whether Cellars was a loaned servant of DJF at

the time of the accident. If so, Cellars’s liability is covered under a policy issued by

Federal Insurance Company. If, however, Cellars was acting as an employee of C&C, he

was covered under a policy issued by Star Insurance Company. The district court ruled

on summary judgment that Cellars was a loaned servant of DJF, and Federal appeals.

Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

       “We review the district court’s grant of summary judgment de novo, applying the

same standards that the district court should have applied.” Higby Crane Serv., LLC v.

Nat’l Helium, LLC, 751 F.3d 1157, 1160 (10th Cir. 2014) (internal quotation marks

omitted). Summary judgment shall be granted “if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a matter

of law.” Fed. R. Civ. P. 56(a). We review the evidence in the light most favorable to the

nonmoving party. See Higby Crane, 751 F.3d at 1160.

       I.     BACKGROUND

       In early March 2012 a DJF pulling unit in Spur needed repair. Flint decided to

send Darryl Cornell, who acted as DJF’s chief mechanic. Federal contends, and we will

assume, that Cornell was an independent contractor, not an employee of DJF. To

perform his job, he owned a service truck that carried the tools he needed for work; he

had no employees of his own. Chad Collins, a DJF employee, was to accompany

Cornell. Flint also instructed C&C supervisor Barry Wood to send Cellars, a mechanic

for C&C, to assist on the job. Cornell, however, fell ill, so Cellars and Collins had to go

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alone. On March 6, Cellars met with Cornell, who told him what he needed to do.

Cornell provided his tools and truck, which Cellars and Collins drove to Spur.

        In Spur the two men replaced the air compressor on the rig. But when that did not

solve the problem, they called Cornell for advice. During some downtime Cellars

provided routine maintenance on a C&C truck that had been loaned to DJF for use in

Spur.

        By March 8, Cornell had gotten permission from his doctor to travel. He

borrowed a truck from DJF and drove to Spur to assist Collins and Cellars. Once there,

Cornell determined that the others had installed the compressor incorrectly and the motor

needed to be taken to Holdenville for repair. He directed Collins and Cellars how to

remove the motor from the pulling unit and the two men loaded it into the DJF truck per

his instructions.

        On March 9, Cornell, Collins, and Cellars drove back to Holdenville. Collins

drove the DJF truck with the oil-rig motor in the back, and Cellars followed in Cornell’s

service truck. Cornell rode with Collins because that truck was more comfortable and

Cornell was still not feeling well. The trucks were traveling in Oklahoma when Cellars

collided with a car in which Loretta Rolen was a passenger. She sustained serious

injuries and sued Cellars, C&C, and DJF.

        The suit was settled. The liability insurer for Cornell’s truck, as the primary

insurer, paid an amount that exhausted its policy limits, and Star (C&C’s insurer) and

Federal (DJF’s insurer) paid equal amounts to fund the rest of the settlement. The two

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insurers reserved their rights to recover from each other the moneys paid toward the

settlement and for the defense of the underlying suit.

       Star then brought this action claiming that Federal was liable for the portion that

Star contributed to the settlement because Cellars was a loaned servant to DJF at the time

of the accident. Federal counterclaimed that Star was entirely liable because Cellars was

a C&C employee who was not acting as a loaned servant to DJF at the time of the

accident.

       II.    ANALYSIS

       The parties agree that we apply Oklahoma law. In Oklahoma an employer is

generally liable for the acts of its employees within the scope of employment. See Bosh

v. Cherokee Cty. Bldg. Auth., 305 P.3d 994, 998–99 (Okla. 2013), as corrected (June 28,

2013). But when an employer loans an employee to another master, the loaned-servant

doctrine sometimes renders the temporary employer liable for the acts of the loaned

employee. See Wylie-Stewart Mach. Co. v. Thomas, 137 P.2d 556, 558–59 (Okla. 1943).

The applicable Oklahoma test is: “In the act which the servant was performing at the

time, was he in the business of and subject to the direction of the temporary employer as

to the details of such act?” Crutchfield v. Melton, 270 P.2d 642, 645 (Okla. 1954).

       Despite the apparent simplicity of the test, “[t]he application of the loaned servant

doctrine in any given case presents one of the nicest questions for any court’s

determination.” Id. at 644. Sixty years ago the Oklahoma Supreme Court stated: “In the

typical or usual ‘loaned servant’ case it is not the usual business of the original master to

loan or hire out such servant and the business of such master is not directly furthered

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thereby, the borrowing master alone benefiting from the servant’s labor and the original

master making no profit from the borrowing of his servant.” Ishmael v. Henderson, 286
P.2d 265, 268 (Okla. 1955). But almost all the Oklahoma case law on the subject

concerns a loaning employer whose business apparently was providing equipment with or

without an operator. In that circumstance, there can be fine distinctions regarding how

much the loaning employer controls how the loaned servant performs the work. See, e.g.,

City Diesel Serv. v. Collier, 630 P.2d 1293, 1295 (Okla. 1981); Chickasha Plumbing Co.

v. Rogers, 366 P.2d 410, 412–13 (Okla. 1961); Wylie-Stewart Mach., 137 P.2d at 557;

Hull v. Enid Gen. Hosp. Found., 152 P.2d 693, 693–94 (Okla. 1944); W. Cas. & Sur. Co.

v. J. R. Adams, Inc., 465 P.2d 794, 795–96 (Okla. Civ. App. 1970). We think it

significant that in the two cases we have found where the loaning employer was not in

such business, the Oklahoma courts have held that there was a loaned servant. See

Crutchfield, 270 P.2d at 645 (loaning employer “was not engaged in the business of

hiring out tractors and bulldozers with drivers for them”); Oklahoma Ordnance Works

Auth. v. Garrison, 424 P.2d 983, 985 (Okla. 1967) (loaning employer exchanged cranes

and operators with another company for a single assignment). In that circumstance—

when the loaned servant is in no sense performing the work of the loaning employer—the

analysis of who has control is much simpler.

      That is the circumstance here. C&C was in the business of transporting fluids, not

the business of hiring out mechanics to repair oilfield equipment. When Flint directed

one of his C&C employees to travel more than 300 miles from headquarters to work on

equipment of his other company, DJF, he was temporarily relinquishing any interest of

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C&C in that employee’s work. It is undisputed that Flint’s control of the employee—

directing him where to go and what to work on—was in his capacity as president of DJF,

and that no purpose of C&C was being served. Federal has not disputed these facts.

Federal points out that C&C’s manager, Barry Wood, testified that he generally could

recall C&C employees who were doing some work for DJF, but, as the district court

explained, that testimony was taken out of context. When asked about Cellars’s trip to

Spur, Wood said that the assignment was ordered by Flint and that during the trip Cellars

was unavailable to him for C&C purposes. It would strain belief to say that he had

authority to override his boss and on his own order Cellars to return 340 miles. See

Carney v. City and Cty. of Denver, 534 F.3d 1269, 1276 (10th Cir. 2008) (“Although our

summary judgment standard requires us to view the facts in the light most favorable to

the non-moving party, it does not require us to make unreasonable inferences in favor of

the non-moving party.” (brackets and internal quotation marks omitted)).

      Federal argues that C&C retained authority to control Cellars because it paid for

his time and expenses during the Spur trip. The evidence on this point is mixed. Cellars

continued his usual practice of turning in daily timesheets to C&C during the period

when he was in Spur. He also received his usual biweekly paycheck from C&C for that

pay period, and the paycheck included his usual allowances of $25 toward a cell phone

and $25 toward work clothes. DJF did not reimburse C&C for Cellars’s wages and

allowances. But Flint gave additional money to Collins for the Spur trip so that he and

Cellars could pay for meals, housing, and gas. He testified that this money “came from

DJF.” Aplt. App. Vol. I at 88. In any event, who paid for what is not particularly

                                            6
significant in determining whether Cellars was a loaned servant: “The mere fact that the

general employer continues to pay the wages of the wrong doer will not make him liable

for the wrongful act where it appears that the person to whom he was lent controls him

entirely in regard to the work to be done.” Wylie-Stewart Mach. Co., 137 P.2d at 559

(internal quotation marks omitted); see City Diesel Serv., 630 P.2d at 1295 (“[Several

factors, including] the obligation to pay his wages are merely incidental indicia of the

control and not exclusively determinative.”).

       Federal also points to Flint’s testimony that Cellars continued to be C&C’s

employee during the Spur trip. But this would always be the situation when there is a

loaned-servant issue. The loaned-servant doctrine would add nothing to the law if it

required “an out and out change of employment.” Wylie-Stewart Mach. Co., 137 P.2d at

558; see Spriggs v. Sirinek, 402 F. Supp. 2d 739, 743 (W.D. Tex. 2004) (The loaned-

servant “doctrine applies in the situation . . . in which an employee of one entity is

‘loaned’ to another entity, but maintains his employment with the first entity.”). The

doctrine presupposes that Cellars remained a C&C employee in Spur; the only question is

whether DJF became responsible for his on-the-job tort.

       A related fact relied on by Federal is that after Cellars’s return from Spur, Flint

prepared a disciplinary memorandum memorializing Cellars’s deficient performance

before the Spur trip and during the Spur assignment, including his causing the accident

when returning from Spur. The memorandum was signed by Flint in his capacity as

president of C&C and was placed in Cellars’s C&C personnel file. But this proves only

that Cellars was an employee of C&C. He did not have a DJF personnel file, so the only

                                              7
place Flint could keep that memorandum was in Cellars’s C&C file. These facts have no

bearing on whether Cellars was loaned to DJF for the Spur assignment.

       We also think it largely irrelevant that Cellars worked on a C&C vehicle that

happened to be in Spur at the time. There is no evidence that he was directed to perform

that work by C&C or anyone else. It was simply a matter of doing some routine

maintenance during “downtime” on his DJF assignment. Aplt. App. Vol. I at 193. It was

a nice thing to do (and probably something he enjoyed doing). And his work helped DJF

at least as much as C&C because the truck had been loaned to DJF. In any event, the

maintenance work in no way signifies who had authority to control his other work; it was

at most a hiatus in his DJF duties. Cf. Palmer v. Bassett, 95 P.2d 872, 876 (Okla. Sup.

Ct. 1939) (employer’s liability for employee’s tort resumed when employee returned

from interruption in service).

       Federal also presents an argument concerning who controlled Cellars during the

Spur trip. First, it notes that Cellars apparently received no further direction from Flint,

or anyone else at DJF, after he departed for Spur. But whether DJF exercised control is

not the question; the relevant consideration “is the right to control a servant rather than

the exercise of it,” Chickasha Plumbing Co. v. Rogers, 366 P.2d 410, 413 (Okla. 1961).

Telling a mechanic where to go and what to fix is typical control by an employer.

       Federal then asserts that it was Cornell, an independent contractor, who directed

Cellars’s work while he was in Spur, and even before his departure to Spur. Federal

suggests that therefore Cellars was a loaned servant of Cornell, not DJF, or at least that

DJF lacked the complete control over Cellars necessary to make him a loaned servant.

                                              8
We are not persuaded. The role of both Cornell and Cellars was to do the business of

DJF; neither was there to do the business of the other. Cornell testified that Flint, not he,

had the ultimate authority to control Cellars’s actions. And Flint exercised that authority

by sending Cellars to Spur to work with Cornell on the repairs. The difference between

Cornell and Cellars was that Cornell had special expertise regarding DJF equipment that

Cellars lacked. Even if Cornell was an independent contractor, not an employee of DJF,

an employer does not relinquish the right to control an employee (or a loaned servant) by

directing the employee to obtain expert guidance. Federal has supplied no authority, and

we know of none, that when a lending employer uses an independent contractor to give

the loaned servant direction in performing the lending employer’s work, he or she thereby

reverts to being the general employer’s employee or becomes the loaned servant of the

person giving directions. Case authority points the other way. Cf. Akers & Van Hook

Const. Co. v. Beller, 356 P.2d 738, 740 (Okla. 1960) (employee X of company A was

given direction by employee Y of company B but did not become loaned servant of B

because Y was acting as agent of A); Spriggs, 402 F. Supp. 2d at 743 (Air Force

physician remained hospital’s loaned servant despite direct supervision from

independent-contractor surgeon). These authorities have particular force given Cornell’s

intimate relationship to DJF even if he was an independent contractor. Cornell acted in

the capacity of chief mechanic for DJF, was working almost exclusively, if not

exclusively, for DJF (although Flint occasionally loaned him to C&C), and regularly

supervised DJF employees (such as Collins). Cellars was working for DJF, not Cornell.

                                              9
        Finally, Federal argues that even if Cellars was a loaned servant of DJF in Spur,

that relationship ended before the trip home when the accident occurred. We disagree.

Returning to DJF headquarters was an obvious and implicit part of the Spur assignment.

And Cellars was serving DJF’s interest by bringing back Cornell’s truck, which

contained the tools that Cornell uses to fix DJF equipment. Indeed, even if one could say

that Cellars was subject to detailed control of his work by Cornell while he was in Spur,

that was not the case on the drive home. There is no evidence that Cornell gave him any

instructions. Rather it was Collins, a DJF employee, who was leading the way back from

Spur.

        In sum, the district court properly concluded from undisputed facts that Cellars

was the loaned servant of DJF when he caused the accident.

        III.   CONCLUSION

        We AFFIRM the judgment of the district court.

                                              Entered for the Court

                                              Harris L Hartz
                                              Circuit Judge

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