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

: Office Supreme Court. US

83-1586 ELLE D

ALEXANDER L. STEVWAS

IN THE CLERK

Supreme Court of the Anited States

SPRING TERM

Grinnell Mutual Reinsurance Company, an Iowa Corpora:

tion,

Petitione;,

VS.

Empire Fire & Marine Insurance Company, a Nebraska

Corporation, et al,

Respondents.

ON WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR RESPONDENTS EXCALIBUR INSURANCE

COMPANY OF MINNESOTA AND RIECHMANN EN-

TERPRISES, INC. IN OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI

Phillip A. Cole

LOMMEN, NELSON, SULLIVAN &

COLE, P.A.

1120 Twin City Federal Tower

121 South Eighth Street

Minneapolis, MN 55402

(612) 339-8131

1984—Northwest Brief Printing Co., 3010 2nd St. No., Minneapolis 55411—588-7506

A. QUESTIONS FOR REVIEW

1. Did the Eighth Circuit correctly apply Illinois in-

surance law in determining that petitioner Grinnell Mutual

Reinsurance Company (Grinnell) extended coverage to

Hamel Service Company (Hamel) and Gilbert Culver (Cul-

ver) for the motor vehicle accident of July 9, 1979?

Respondent submits this must be answered in the affir-

mative.

2. Was the Eighth Circuit’s determination that the

common law liabilities of a negligent tortfeasor-employee

and his employer are not eliminated by imposition of a

vicarious liability upon an ICC licensed lessor correct?

Respondent submits this must be answered in the affir-

mative. .

;

.

re:

3

RULE 28(1) - LISTING OF ALL PARENT COMPANIES, ETC.

1. Exclaibur Insurance Company of MN

Parent Company - Excalibur Holdings, Inc.,

b. No Subsidiaries and Affiliates

2. Riechmann Enterprises

a. Parent Company, Subsidiaries or

Aref lines

B. LIST OF PARTIES

Respondent adopts petitioner's list of parties.

C. TABLE OF CONTENTS

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Statement Of Jurisdiction .....ccccccccccccceses 1

Federal Regulations Involved .................+. 2

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Summary of the Argument ...............0e0005 4

Argument Against Allowance of Writ ............ 4

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TABLE OF AUTHORITIES

Cases:

Associated Indemnity Company vs. Insurance Com-

pany of North America, 68 Ill. App. 807, 386 N.E.

TE 6.0546 c. ec ke 006s pRbpes bh deen ce’

Carolina Casualty Company vs. Insurance Company

of North America, 595 F.2d 128 (3rd Cir. 1979)

Peterson vs. Marlowe, 264 N.W.2d 133 (Minn. 1977)

Simmons vs. King, 478 F.2d 857 (5th 973) .

Transamerican Freight Lines, Inc. vs. Brada Miller

Freight Systems, Inc., 423 U.S. 28, 96 S.Ct. 229,

SEA EAST 8 058 ook secwsek cede 6.7

Vance Trucking Company vs. Canal Insurance Com-

pany, 249 F. Supp. 33 (D. S. Car. 1966), aff'd, 395

F.2d 391 (4th Cir. 1968), cert. denied, 393 U.S. 845

PE chivab vEes ce podekeve so cebbegiachneass

Wells vs. Allstate Insurance Company, 327 F. Supp.

Bes

Ann

IN THE

Supreme Court of the Anited States e.

SPRING TERM

CASE NO.

Grinnell Mutual Reinsurance Company, an Iowa Corpora:

tion,

Petitioner,

vs.

Empire Fire & Marine Insurance Company, a Nebraska

Corporation, et al,

Respondents.

ON WRIT OF CERTIORARI TO

THE UNITED STA COURT OF APPEALS

FOR THE ERGHTH CIRCUIT

2

F. FEDERAL REGULATIONS INVOLVED

Respondent adopts petitioner’s statement of federal regu-

lations involved.

G. STATEMENT OF THE CASE

This is a declaratory judgment action to determine which

insurers should respond to defend and indemnify various

defendants in suits for bodily injury damages resulting from

a motor vehicle accident occurring on July 9, 1979, near

Belfield, North Dakota. A tractor-trailer owned by Hamel

and driven by its employee, Culver, collided with an auto-

mobile driven by Timothy Youngren. A third vehicle driven

by Sheri Emch was also involved. The separate liability

trial determined that Culver was 70 percent responsible

and Emch, 30 percent, under North Dakota’s comparative

negligence law. That finding was affirmed by the Eighth

Circuit and is not before this Court.

The Hamel truck with Culver as its driver had been

leased to Riechmann Enterprises, Inc. (Riechmann) an IIli-

nois based ICC licensed carrier, previous to the accident.

The leased equipment and driver were used by Riechmann

to transport cargo under its ICC permit. Culver had de-

livered a Riechmann dispatched load to Beulah, North

Dakota, but Riechmann had no return cargo for Culver.

Rather than return empty, Culver, acting on behalf of

Hamel, engaged a “trip lease” through another carrier.

Culver was enroute to Montana from Beulah, North Da-

kota, to pick up the cargo for the trip lease when the acci-

dent happened. Culver’s truck was empty at the time of

the accident, Riechmann possessed no interest in the rev-

enue to be earned from the trip lease as that was an enter-

prise solely to benefit Hamel and Culver. Despite the fact

(

.

a

3

that Riechmann had no interest in this prospective load,

Culver continued to display the Riechmann decals on the

truck while enroute.

Grinnell had issued to Hamel an Illinois garage liability

policy containing a special endorsement known as Auto-

mobile Hazard No. 1. Respondent Excalibur Insurance

Company of Minnesota (Excalibur) had issued to Riech-

mann a policy of liability insurance.

The District Court, after entering an amended Order,

determined that Grinnell insured both Hamel and Culver;

that Culver was Hamel’s agent; that Excalibur extended

coverage only to Riechmann; that Riechmann possessed a

vicarious liability to the public for Culver’s negligence

based upon ICC regulations; that Grinnell was secondarily

“liable” and that neither Riechmann nor Hamel were en-

titled to indemnity from each other.

On appeal, the Eighth Circuit affirmed the District

Court’s finding that under Illinois law the Grinnell policy

afforded coverage to Hamel and Culver for the accident.

In its review of the issues of liability, the Eighth Circuit

affirmed the District Court’s finding that ICC regulations

placed upon Riechmann a statutory liability to the public

for the acts of Culver. The Eighth Circuit also observed that |

while the regulations may impose a liability to the public

upon the ICC licensed lessor, they do not obviate either the

liability of the negligent tortfeasor or that of his employer.

4

to the loss and that Excalibur’s coverage to Riechmann

was excess. Petitioner does not challenge the Eighth Cir-

cuit’s determination that the policy language makes its cov-

erage primary and Excalibur’s excess. The petitioner, Grin-

nell, was required to pay the incurred loss to the limit of

its insurance coverage simply because it was the primary

insurance carrier on the loss. In its essence this case is a

garden variety insurance coverage dispute. The Eighth Cir-

cuit’s opinion did not involve a controversial construction

of the nature of an ICC carrier’s statutory liability.

H. SUMMARY OF ARGUMENT

The issues presented for review lack overall national im-

portance and were correctly decided by the court below

after full consideration.

1. ARGUMENT AGAINST ALLOWANCE OF WRIT

1. The Eighth Circuit Correctly Applied State

Law In Determining That Grinnell Extend-

ed Coverage To Hamel And Culver.

The issues of substantive insurance law for which review

is sought present neither a federal question nor a constitu-

tional issue. These issues are too narrow in scope and lack

the national importance necessary to warrant review by this

Court on certiorari. Furthermore, the issues were correctly

decided. The Eighth Circuit's decision that the language of

petitioner’s insurance policy was ambiguous and thus ex-

tended coverage to Hamel and Culver is in accord with

Illinois case law construing the identical policy provision.

Associated Indemnity Company vs. Insurance Company of

North America, 68 Ill. App. 807, 386 N.E.2d 529 (1979).

5

The Eighth Circuit’s determination that the grant of cover-

age extended by petitioner’s policy was not negated by an

exclusionary clause is also well supported. Wells vs. Allstate

Insurance Company, 327 F. Supp. 622 (D. S. Car. 1971);

Peterson vs. Marlowe, 264 N.W. 2d 133 (Minn. 1977).

These issues of insurance law are, in any case, state law

issues and pose no issue of circuit conflict or of national

importance.

2. The Eighth Circuit Was Correct In Deter-

solve A Tort Feasor From Liability.

Petitioner’s assertion that the Eighth Circuit’s decision is

in conflict with decisions of this and other courts is based

upon an apparently erroneous reading of the decision. The

Eighth Circuit found that ICC regulations impose upon the

ICC licensed carrier a vicarious liability for the negligent

acts of petitioner’s insured, Culver. Although not directly

stated, the crux of the petition appears to be a claim that

the statutory vicarious liability of the ICC carrier must be

held to displace the liability of the negligent truck driver

and his employer as determined under applicable state law

theories of negligence and the doctrine of respondeat super-

ior. This argument was deservedly rejected by the Eighth

The Eighth Circuit’s determination that the ICC regula-

tions do not release a negligent tortfeasor from the conse-

quence of his actions is consistent with the public policy

behind the regulations and well established authority. The

public policy of protecting the motoring public is satisfied

by imposing a vicarious liability upon the regulated carrier

who must demonstrate financial responsibility through the

6

procurement of insurance. It does not follow that the pub-

lic carrier’s statutory liability must exist in lieu of or even

primary to, the established liability of the tortfeasor under

state law. Eliminating or subordinating the liability of a

negligent truck driver would endanger public safety on the

highways and contravene the purpose of the ICC regula-

tions by needlessly depriving the injured public of a source

of recovery. Neither the Interstate Commerce Act nor the

ICC regulations excuse Culver and Hamel from their re-

spective liabilities or make those liabilities secondary to

any vicarious liability Riechmann may have. Carolina Cas-

ualty Company vs. Insurance Company of North America,

595 F.2d 128 (3rd Cir. 1979); Vance Trucking Company

vs. Canal Insurance Company, 249 F. Supp. 33 (D. S. Car.

1966), aff'd, 395 F.2d 391 (4th Cir. 1968), cert. denied,

393 U.S. 845 (1968); and Simmons vs. King, 478 F.2d 857

(Sth Cir. 1973).

Petitioner’s contention that the Eighth Circuit’s holding

is contrary to this court’s opinion of Transamerican Freight

Lines, Inc. vs. Brada Miller Freight Systems, Inc., 423 U.S.

28, 96 S.Ct. 229, 46 L.Ed.2d 169 (1975) is incorrect. In

Brada Miller, supra, this Court held that the ICC regula-

tions did not prevent an ICC licensed carrier from receiv-

ing indemnity for any liability it derived from the regula-

tions. In its discussion, this Court specifically noted that

the regulations were not offended by making a negligent

lessor bear the burden of its own negligence.

Likewise, petitioner’s assertion that the Eighth Circuit’s

holding is in conflict with decisions of other circuits is un-

supportable. There are no federal circuit court opinions

holding that the ICC regulations absolve a negligent tort-

feasor of his responsibility because of the separate vicarious

7

responsibility placed upon an ICC carrier. Petitioner fails to

cite any authority attesting to this asserted conflict. The

notion that the statutory liability of an ICC carrier is ex-

clusive (the “sole” liability) is singular to petitioner and in

direct contradiction with Brada Miller. Even if this singular

notion was adjudged as law, Grinnell’s determined liability

would not be altered since it was Riechmann’s primary in-

surance carrier: “We find Grinnell’s garage liability policy

applicable as providing primary coverage for the July 19th

accident; to the extent of its policy limits, Grinnell must

reimburse Excalibur for sums paid out under the judgments

and the settlement of the Youngren claims; . . .” 722 F.2d

1406 (8th Cir. 1983).

J. CONCLUSION

This case is not one of national significance. The issues

of substantive state insurance law are restricted to a narrow

area of insurance practice and present neither a federal

question nor a constitutional issue. Those issues, together

with questions concerning ICC regulations, were fully con-

sidered by the Court below and correctly decided in accord

with well established authority. This case does not merit

the attention of this Court.

Dated: April 1, 1984.

Respectfully submitted,

LOMMEN, NELSON, SULLIVAN &

COLE, P.A.

By /s/ Phillip A. Cole

Attorneys for Respondents Excalibur

Insurance Company and Riechmann