Petition — Grinnell Mutual Reinsurance Co. v. Empire Fire & Marine Insurance Co.

CASE NO.

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FILED

MAR 1 1984

ALEXANDER , STEVag.

IN ‘tHE UNITED STATES SUPREME COURT

SPRING TERM

GRINNELL MUTUAL REINSURANCE COMPANY,

AN IOWA CORPORATION,

PETITIONER,

vs.

EMPIRE FIRE & MARINE INSURANCE COMPANY,

A NEBRASKA CORPORATION, ET AL,

RESPONDENTS.

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ON WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Lowell A. O'Grady

O'GRADY, MORLEY & MORLEY, LTD.

P. O. Box 239

Grand Forks, ND 58206-0239

(701)772-7266

Attorneys for Petitioner

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IN THE UNITED STATES SUPREME COURT

SPRING TERM

GRINNELL MUTUAL REINSURANCE COMPANY,

AN IOWA CORPORATION,

PETITIONER,

vs.

EMPIRE FIRE & MARINE INSURANCE COMPANY,

A NEBRASKA CORPORATION, ET AL,

RESPONDENTS.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

QUESTIONS PRESENTED FOR REVIEW

I. As long as a truck under permanent

ICC lease to an authorized and

regulated ICC common carrier, has

attached to it and displays an ICC

permit number and insignia of the ICC

common carrier, and as long as no

formal transfer possession of the . ay

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truck has been made back to the

non- regulated owner, will! the

regulated ICC motor carrier be

completely responsible for the

operation of the truck while the ICC

lease is in effect, and will the

regulated ICC carrier be deemed to

have the exclusive possession,

control and use of the truck

equipment for the duration of the ICC

lease?

When the regulated ICC carrier is

subject to the leasing rules and

regulations promulgated by the

Interstate Conmerce Commission, and

when the regulated ICC carrier has

entered into lease agreements with

the non-regulated truck owner, which

release agreements provide that the

carrier shall provide and maintain in

force for the leased motor vehicle

public liability insurance, is the

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regulated ICC carrier solely

obligated to provide liability

insurance coverage covering the

leased truck while the ICC lease is

in effect?

In light of the ICC rules and

regulations concerning lease and

interchange of vehicles, and when an

ICC lease is in effect between the

truck owner and the regulated

carrier, does an exclusion in the

non-regulated truck owner's insurance

policy excluding coverage for any

automobile while rented to others by

the insured, exclude any coverage for

the insured vehicle while it is

covered by the ICC lease and while

the ICC lease regulations are in

effect and while the truck still

carries the ICC insignia and permit

number of the regulated ICC carrier?

(in this ease, the above insurance

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contract was issued to the

non-regulated truck owner and not to

the regulated ICC carrier.)

IV. Is a policy of insurance issued to n

insure the garage operations and

related service type operations,

intended to cover the liability

incurred when a truck engaged in

interstate commerce transportation

operations, and which truck has

attached to it the ICC permit and

insignia number of the reguiated ICC

carrier, is involved in a motor

vehicle accident causing injury to

third-parties?

V. When a truck engaged in interstate

commerce operations, and which

contains the ICC permit number and

insignia number of the regulated ICC .

ms carrier, is involved in an accident,

| is the regulated ICC carrier whose a

permit and insignia is ‘attached to ee

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1 ae the truck at the time, solely

responsible for any damage or 45

. liabilities arising out of the

operation of the truck?

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LIST OF ALL PARTIES TO THE PROCEEDING IN

THIS COURT WHOSE JUDGMENT TS SOUGHT TO BE

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Grinnell Mutual Reinsurance

Company

Empire Fire & Marine Insurance

Company —

Matthew Youngren, an infant

Michael Youngren, an infant

John Youngren

Timothy Youngren

Sheri Emch

Hamel Service Company, Inc., an

Illinois corporation

Gilbert Culver, a resident of the

State of Illinvis

Excalibur Insurance Company of

Minnesota, a Texas Corporation

Riechmann Enterprises, Inc., a

Missouri corporation

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Table of Authorities..........

Questions for a ae ae

Bist. of Partie a..

Opinion of the Eighth Circuit

Court of Appeals..........

Statement of Grounds..........

Federal Regulations Involved..

Statement of the Case.........

Basis of Federal Jurisdiction

Argument in Support of Allow-

ance’ Of Writ. ....

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TABLE OF AUTHORITIES

Cases:

1. Krieder Truck Service, Inc.

Vv. a CARL INN. E. Id T1735

> Cee 5333333333333 42 p 8

2. Schedler ve. Rowley Interstate

III tet Co., 3658 N.E. Id 138

Cee 333 2 pP 8

3. Trans american Freight Lines

Inc., V. Brada er Fre

Systems, Inc., 7 ; 6

“96 S.Ct. 229 (1975)..p. 8

4. Wellman v. Liberty Mutual

Mut. Ins. Co., 456 5.0 131 (8th

. ‚( 735353321 p 8

A>

Statutes:

2101(c), Title 28 U.S.C.S.........p. 1

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1 U:8.6)8. 6 280%. ........s, 00s

28 b. s. C. S. $$ 1332...........----p.

. ese

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Regulations:

49 C.F.R. Part 1057, et seq

(ICC Lease and Interchange of

vehicles). p 2,4, 9

The official opinion of the Eighth

Circuit Court of Appeals which we ask this

Court to review is contained at 722 F.2d

1400 (8th Cir. 1983.)

- STATEMENT OF THE GROUNDS ON WHICH

THE JURISDICTION OF THIS COURT TS INVOKED

1. The Judgment of the United States

Court of Appeals for th Eighth Circuit for

which Petitioner seeks review was dated

and entered on the 8th day of December,

1983. This was a new Opinion of the

Eighth Circuit Court of Appeals which had

vacated an earlier Opinion of the Eighth

Circuit Court of Appeals.

2. There was no rehearing sought

from the Circuit's new Opinion. ;

3. There is no cross-petition for 0

Writ of Certiorari involved hercin. 4

4. Pursuant to Section 2101(e) of 5

Title 28 u. s. C. s., this Court. has

jurisdiction to review a judgment or

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decree in a civil action rendered by a

court of appeals.

FEDERAL REGULATIONS INVOLVED

The federal regulations which this 7

case involves are contained at 49 b. 8. C. 8.

Section 304; 49 USCS Section 1107, and 49

CFR, Part 1057, concerning lease and

interchange of vehicles involved in

interstate commerce activities. The

pertinent text of these statutes and

regulations are set forth in the

accompanying appendix.

STATEMENT OF THE CASE

The underlying lawsuit arose out of a

three-vehicle accident on July 9, 1979,

near Belfield, North Dakota. A

5 tractor-trailer unit owned by Hamel

K Service Company and driven by one Gilbert

Ry

4. Culver, collided with an automobile driven

| by one Timothy Youngren. A truck driven

by one Sheri Emch was also involved. As a

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the Youngren automobile died and three

were injured.

At the time of the accident, the

tractor-trailer unit owned by Hamel

Service Company was subject to a

three-year ICC equipment lease to

Riechmann Enterprises, Inc., a regulated

interstate commerce motor carrier. The

owner of the tractor-trailer unit, namely

Ilamel Service Company, was not a regulated

or authorized interstate commerce carrier

or operator. At the time of the accident,

the tractor-trailer unit leased to

Riechmann Enterprises, the regulated

carricr, had displayed on it the ICC

permit number and insignia of Riecchmann

Enterprises, Inc. The truck was empty and

was on its way to pick up a load of goods

in Baker, Montana for return to the St.

Louis, Missouri area. It is also undis~

puted that at the time of the accident:

involving the leased motor a. N Cy

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leasing regulations promulgated by the

Interstate Commerce Commission, and

contained in 49 CFR, Part 1057 concerning

lease and interchange of vehicles, were in

effect. Furthermore, at the time of the

accident, formal transfer of the

possession of the truck had not been given

back to the non-regulated truck owner.

Therefore the leasing regulations and

requirements concerning the truck were

still in effect.

At the time of the accident, the

regulated ICC carrier had a policy of

liability insurance issued to it by

Excalibur Insurance Company of Minnesota.

That insurance was issucd and delivered to

specifically cover the operations of

Riechmann Enterprises, the regulated

carrier.

At the time of the aceident, the

truck owner, namely Hamel Service Company ,

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policy of insurance, however, was issued

to cover the station operations, including

related service garage operations, of

5 Hamel Service Company. The policy was not

issued to insure any ICC hauling

operations. The policy excluded coverage

for an automobile while rented to others

by the insured.

A declaratory judgment action was

tried in the United States District Court

for the District of North Dakota,

Southwestern Division, The Honorable Bruce

M. Van Sickle presiding. Judge Van Sickle

declared that the policy of insurance :

issued by Excalibur Insurance Company to

the regulated carrier Riechmann

Enterprises, provided the primary

insurance coverage for the operation of

the leased semi tractor-trailer unit

involved in the accident. The District

Court held that any insurance coverage of

the petitioner was ‘secondary or excess.

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On appeal of that determination to the

United States Court of Appeals for the

Eighth Circuit, the Eighth Circuit ;

reversed that part of the District Court's by

judgment and ruled that the garage

liability policy issued by the petitioner ‘

to the truck owner was the primary

insurance coverage and that the insurance

policy issued by Excalibur Insurance

Company to the regulated ICC carrier was

merely secondary or excess. The Eighth

Circuit specifically stated that the

exclusion in the petitioner's policy for

automobiles rented or leased to another a

did not apply, despite the undisputed fact ;

that at the time of the accident the ICC 4

lease agreement concerning the truck was 1

in effect. The Eighth Circuit noted that 5

: although the accident involving the truck | 7

occurred during the period of the lease,

at the time of the accident the owner

(Hamei) had retaken control of ‘the veniele

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and had embarked on a trip for its own

benefit, and therefore the lease or rental

exclusion would not be effective.

BASIS OF FEDERAL JURISDICTION BELOW

Jurisdiction in the United States

District Court was based upon diversity of

citizenship of the parties and the

requisite amount in controversy, pursuant

to 28 U.S.C.A., Sections 1332 and 2201.

Jurisdiction in the Court of Appeals,

whose judgment review is sought, is

founded and based upon 28 U. S. C. A. Section

1291, and Rule 4, Federal Rules of

Appellate Procedure, since the appeal to

the Appeals Court by petitioner involved

an appeal of a final judgment or decision

from a district court.

ARGUMENT IN SUPPORT OF ALLOWANCE OF A WRIT

This Court should grant this writ and

review the decision of the United States

Court of Appeals for the Eighth Circuit

for the following reasons: 3

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a. The Eighth Circuit Court of

Appeals has rendered a decision in

conflict with the decision of other

federal courts of appeal in the same

matter, and in conflict with a decision of

this Court (Transamerican Freight Lines,

Inc. v. Brada Miller Freight System, Inc.,

423 U.S. 28 (1975). It has also decided

this question in conflict with State

courts of last resort on the same issuc,

(see Schedler v. Rowley Interstate Transp.

Co., 368 N. E. 2d 128 (111. 1977) and

Krieder Truck Service, Inc. v. Augustine,

304 N. E. 2d 1179 (111. 1979)), and the

Eighth Circuit has also decided this case

in conflict with one of its earlier

decisions on the same issue. See Wellman

v. Liberty Mutual Ins. Co., 496 F.2d 131

(8th Cir. 1974) - Re: "Control Issue".

b. The Federal Court of Appeals has

decided an important question of federal

law, which has not been, but should be

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settled by this court, and petitioner

believes that the Court of Appeals has

decided this important question of federal

law improperly and has not followed the

express federal Interstate Commerce

Commission leasing regulations involved

herein, and petitioner seeks final

direction from this court on an important

question of federal law, concerning the

ICC leasing regulations.

Petitioner submits that under the ICC

leasing regulations found in 49 CFR 1057,

that as long as the leased motor nete

contains the ICC permit and insignia

number of the regulated carrier, and as

long as the lease agreement of the vehicle

is in effect, then the vchicle, pursuant

to the lease and these regulations, should

be deemed to be in the exclusive

possession and control of the regulated

carrier and that that carrier should be

obligated to respond in any damages out of ©

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the operation of that truck. However the

Eighth Circuit's decision stating that

despite the fact that the ICC leases were

in effect, and despite the fact that the

regulated carrier's ICC permit number and

insignia number were on the truck, that

because of the factual situation

involved, the regulated carrier did not

have actual control or possession of the

vehicle and that the control and

possession was instead in the hands of the

owner (petitioner's insured). Petitioner

believes that this part of the Fighth

Circuit's Opinion is in derogation of the

express words and the public policy

reasons behind the ICC leasing

regulations, and that the regulations were

meant to fix responsibility in the

regulated carrier whenever the lease

regulations were in effect, and that the

regulations were imposed to prevent this

type of arguing over who actually has

ae

control of the vehicle and to protect this

public in that fashion. That the Eighth

Circuit's decision herein allows the

factual question of actual possession and

control to be interjected in a case

subject to the ICC leasing rules and

regulations, when it was the intent of the

Interstate Commerce Commission to avoid

such disputes and to fix absolute

responsibility and control on the

regulated carrier whenever the lease was

in effect on the regulated motor vehicle.

Included in the accompanying Appendix

are:

(1) Opinion of Eighth Circuit Court

of Appeals entered on December

8, 1983;

(2) Memorandum and Order of the

United States District Court

entered May 5, 1982; Order of

the United States District Court

dated May 11, 1982; Judgment of

the United States

District en.

da tod August 18, 1982

(3) Independent Contractor

Transportation Agreement

Equipment Lease; BMC980

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Endorsement for Motor Carrier

Policies of Insurance;

Federal Statutes; ICC Leasing

Regulations.

Respectfully submitted this 2nd day

of March,

1984.

O'GRADY, " MORLEY & MORLEY, LTD.

212 South 4th St.

P. O. Box 239

Grand Forks, ND 58206-0239

(701) 772-7266

Attorneys for Petitioner