Court Opinion

ID: 9486120
Source: CourtListenerOpinion
Date Created: 2023-08-05 11:38:18.921034+00
Date Added: 2024-06-11T17:51:32.107354
License: Public Domain

RIPPLE, Circuit Judge,
dissenting.
I respectfully dissent. In my view, the district court made a factual finding which precludes our applying the Indiana statute. Furthermore, I see no incompatibility between the lease-back arrangement at issue here and either the ICC regulations or the Supreme Court’s decision in Transamerican *659Freight v. Brada Miller, 423 U.S. 28, 96 S.Ct. 229, 46 L.Ed.2d 169 (1975).
At the time of the accident, the parties had a freight contract with one another. Pursuant to the freight contract, Summit City provided cartage services to Hover. When it provided these services, Summit City maintained complete control of the vehicle, the freight being carried, and the driver. Furthermore, Summit City operated pursuant to its own ICC authority; it did not rely on the authority of any other carrier to deliver goods. The freight contract also contained a section which allowed Hover to lease trucks and drivers from Summit City for intertermi-nal hauls. Subsection G of the section on leasing vehicles provided that the lease provision may be superseded by individual leases of vehicles. The parties entered such a lease on December 27, 1988; this “Motor Vehicle Lease” covered the truck involved in the accident.
The district court determined that the parties conducted their business in the following way. Pursuant to the freight contract, Summit City provided cartage services for Hover and other carriers during the day. When it provided these services, it operated under its own ICC authority. Each night, Summit City would lease a vehicle and driver to Hover to perform interterminal hauls. This lease was effectively terminated each morning when Summit City resumed cartage services. The district court further found that, when the accident occurred, Summit City was providing cartage services pursuant to its freight contract with Hover.
My colleagues suggest that the Motor Vehicle Lease governed the relationship between the parties, that Indiana law therefore governs the outcome of the case, and furthermore, that the Motor Vehicle Lease was necessary to comply with federal regulations. I respectfully disagree. The Motor Vehicle Lease only superseded the lease provisions of the freight contract; the rest of the freight contract remained intact. The Motor Vehicle Lease, therefore, had no effect on the relationship between Summit City and Hover when cartage services were being performed.
Because the parties were operating under the freight contract at the time of the accident, the Indiana statute is not implicated. It states:
When a claim arises from the operation of a motor vehicle leased under a written lease agreement, if under the agreement the lessee agrees to provide coverage for damage resulting from his operation of the vehicle, then the motor vehicle liability insurance policy of the lessee is primary.
Ind.Code § 27-8-9-9. The first clause of the provision, “[wjhen a claim arises from the operation of a motor vehicle leased under a written lease agreement,” effectively removes the situation at issue from the statutory coverage. This claim did not arise from the operation of a motor vehicle leased under a written lease agreement; Summit City was not performing interterminal hauls pursuant to the lease when the accident occurred. Instead, the claim arose from the operation of a motor vehicle by the company which owns it; Summit City was performing cartage services in its own vehicle pursuant to its own ICC operating authority when the accident occurred. Consequently, the Indiana statute does not apply.
My colleagues also rely upon federal regulations and the Transamerican case to bolster their determination that the Motor Vehicle Lease was necessary for a lawful arrangement between Summit City and Hover, and that therefore the Motor Vehicle Lease, and not the freight contract, governs this situation. I cannot agree. The cited regulations do not make the lease-back arrangement here unlawful. The regulations define a lease as “[a] contract or arrangement in which the owner grants the use of equipment, with or without driver, for a specified period to an authorized carrier for use in the regulated transportation or property, in exchange for compensation.” 49 C.F.R. § 1057.2(e). Under the regulation, a written lease is required when a carrier is performing transportation authorized by its certificate in equipment that it does not own. 49 C.F.R. § 1057.11(a). Such a lease, according to the regulations, must provide specific information and must allocate insurance requirements to the lessee. These regulations do not apply, however, when an authorized carrier is performing services in its own vehi*660cles pursuant to its own authority, as Summit City was when the accident occurred. Admittedly, if Summit City’s rig was being used for interterminal hauls at the time of the accident, the regulations would mandate the outcome my colleagues suggest. However, such is not the case.
The Transamerican decision does not alter this conclusion. Transamerican discusses whether an indemnification agreement pursuant to a lease of equipment was contrary to public policy given the regulations discussed above. In addressing this question, the Court first looked at the policies underlying the regulations. The Court stated that one of the major concerns behind the regulations was the “problem of a transfer of operating authority, with its attendant difficulties of enforcing safety requirements and of fixing financial responsibility for damage and injuries to shippers and members of the pub-lic_” Transamerican, 423 U.S. at 35, 96 S.Ct. at 233. This abuse was especially likely to occur in a lease arrangement. Id. at 36, 96 S.Ct. at 233. When such a lease arrangement was at issue, the Court held, an indemnification agreement was the appropriate method of reallocating the burdens imposed by the regulations. If a lease arrangement were at issue, I would agree that Transamer-ican dictates the only way in which the parties may reallocate the insurance burdens. However, when the parties are not operating according to a lease arrangement, and thus, when there is not the concern of “sharing or lending operating authority,” the regulations concerning insurance do not apply and, consequently, Transamerican does not apply. Therefore, because Summit City was not leasing the rig and driver to Hover at the time the accident occurred, but instead was operating pursuant to its own authority providing cartage services, these federal requirements are not applicable.
For the foregoing reasons, I would affirm the judgment of the district court.