# Petition for Writ of Certiorari — Hathcock v. Acme Truck Line, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0993%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2002 - **Citation:** 535 U.S. 928 ## Text ————— Supreme Court, U.S. ( FILED O01 97 6 DEC 282001 Supreme Court of the United States BOBBY HATHCOCK, Petitioner, ACME TRUCK LINE, INC., Respondent. PETITION FOR A Writ OF CERTIORARI TO THE UNITED StaTES Court OF APPEALS FOR THE FIFTH CIRCUIT PETITION }°OR WRIT OF CERTIORARI a RicHarp N. Counrtiss Counsel of Record LAW OFFICE OF RICHARD N. COUNTISS 8441 Gulf Freeway Suite 600 Houston, Texas 77017-5001 (713) 230-2203 Attorney for Petitioner i QUESTION PRESENTED Federal statutes assess social security (FICA) and unemployment (FUTA) taxes against an employer and prohibit the employer from recouping those taxes from the employee. State unemployment compensation statutes (SUTA) have similar provisions. Acme Truck Line, Inc. (“Acme”), a trucking company, has devised a scheme by which it leases a truck from the owner, employs the owner to drive the truck, and pays employment taxes on the owner’s wages. (App. 25a.) However, as part of the lease agreement, (App. 26a), Acme then requires the owner to reimburse it for the taxes it pays on the owner’s wages. Bobby Hathcock (“Hathcock”) is one of those lessor/drivers. The District Court and the Court of Appeals found no fault with this arrangement. Thus, the case presents the following issue: Can an employer circumvent federal and state statutes, which impose social security and unemployment taxes solely on an employer, by leasing equipment from a person and employing the person to use the equipment, then deducting from the person’s lease payment the social _— security and unemployment taxes paid because of the person’s employment? ii TABLE OF CONTENTS QUESTIONS PRESENTED .............ccsceeeeee icdsspcbialiibeninleienesractenienin i ee ITED ccicicicneaseincoususetabnascieipisieusssecanatodenearcerniess ii SE Fa REET esisevitisssninisintehiinininiataitiivislecsbadtaeniain iii So ETT ENEEE TT Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). ‘ See Olabisiomotosho v. City of Houston, 185 F.3d 521, 525 (5th Cir. 1999). 10a * Celotex Corp., 477 U.S. at 323. ° Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150, 147 L. Ed. 2d 105, 120 S. Ct. 2097 (2000). [**5] “Td. at 151. * FICA refers to Social Security or Federal Insurance Contribution Act taxes. FUTA refers to _ Federal Unemployment Tax Act taxes. SUTA refers to the state analogues of the FUTA taxes. In the case at bar, SUTA will refer to both the Texas and Louisiana counterparts to FUTA. * See Helms v. Sinclair Refining Co., 170 F.2d 289, 291 (5th Cir. 1948) (There is not necessarily such repugnance between them that both relationships [that of independent contractor-employer and that of master-servant] could not exist at the same time in connection with different phases of the work. An employee might be an independent contractor as to certain work and a mere servant as to other work not embraced within the independent contract."); see also, Rakowitz v. Zurich American Ins. Co., Docket No. SA/98- 107023/01-CC-SA45 (Tex. Workers' Comp. Comm'n 1999) (deciding that the deceased occupied dual roles of lessor and driver with Acme and that on the day of his accident, he was acting as a lessor and therefore could not recover benefits due to him as an employee). "’ Newcomb v. North East Ins. Co., 721 F.2d 1016, 1017 (5th Cir. 1983) (discussing the Louisiana test); Hoechst Celanese Corp. v. Compton, 899 S.W.2d 215, 220 (Tex. App. - Houston 1994). " Hoecsht, 899 S.W.2d at 220 (citing Pitchfork Land and Cattle Co. v. King, 162 Tex. 331, 346 S.W.2d 598 (1961)). " Deal v. State Farm County Mutual Ins. Co., 5 F.3d 117, 118-19 (5th Cir. 1993). " Herman v. Express Sixty-Minutes Delivery Service, 161 F.3d 299, 303 (Sth Cir. 1998) (rigorously applying the five factors to the specific facts of the case and stating, "no — single factor is determinative."). lla “ See, e.g., Marshall v. East Carroll Parish Hosp., 134 F.3d 319, 324 (5th Cir. 1998) (citing Clark v. America's Favorite Chicken Co., 110 F.3d 295, 297 (5th Cir. 1997) ("Unsupported allegations . . . or deposition testimony setting forth ultimate or conclusory facts and conclusions of law are insufficient to defeat a motion for summary judgment.")); Hoecsht, 899 S.W.2d at 221 ("The key inquiry in such a situation is control, not a party's belief as to their status."). ' Acme allows lessors who choose their own drivers to select a percentage, between 10% and 25% of their lessors' revenue, as the drivers' wage. ' Newcomb, 721 F.2d at 1017; Hoechst, 899 S.W.2d at 220 ("An independent contractor has been defined as any person who, in the pursuit of an independent business, undertakes to do a specific piece of work for other persons, using his own means and methods, without submitting himself to their control in respect to all its details.") (internal quotations omitted) (citations omitted). “ Herman, 161 F.3d at 305 (citing Usery v. Pilgrim Equipment Co., 527 F.2d 1308, 1314 (Sth Cir. 1976) ("Routine work which requires industry and efficiency is not indicative of independence and nonemployee status.")). '’ Here, we assume that when driving the truck Hathcock was discharging his driver obligations, including pick-up and delivery of items pursuant to Acme's business. When Hathcock drove his own truck for the limited purpose of discharging his contractual obligation of truck maintenance and service, then he was acting in the capacity of lessor. ” Hathcock relies on the following federal and state tax statutes: 26 U.S.C. § 3111: "Old age, survivors, and disability insurance In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ...paid by him with respect to employment..." 26 U.S.C. § 3301: "There is hereby imposed on every employer...an excise tax, with respect to having individuals in 12a his employ..." Tex. Labor Code § § 204.002, 204.003: "An employer shall pay a contribution on wages for employment paid during a calendar year..." "An employer may not deduct any part of a contribution from the wages of an individual in the employer's employ." La. Rev. Stat. Ann. § 23:1531: "Contributions shall accrue and become payable by each employer...with respect to wages for employment. These contributions shall become due and be paid by each employer...and shall not be deducted, in whole or in part, from the wages of individuals in the employer's employ." * Pursuant to federal law, Acme withholds the employees’ share of required federal and state income and social security (FICA)taxes, including deductions from drivers. 13a No. 00-20810 UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT BOBBY HATHCOCK, Plaintiff-Appellant, Versus ACME TRUCK LINES, INC., Defendant-Appellee. October 11, 2001 Filed Appeal from the United States District Court for the Southern District of Texas, Houston. Before JOLLY, SMITH, and WIENER, Circuit Judges. JUDGMENT This cause was considered on the record on appeal and was argued by counsel. It is ordered and adjudged that the judgment of the District Court is affirmed. IT IS FURTHER ORDERED that plaintiff-appellant pay to defendant-appellee the costs on appeal to be taxed by the Clerk of this Court. ISSUED AS MANDATE: OCT 11 2001 l4a No. 00-20810 CIVIL ACTION NO. H-99-2216 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION BOBBY HATHCOCK, Plaintiff, Versus ACME TRUCK LINES, INC., Defendants. July 14, 2000 Filed ORDER Pending before the Court is the Motion for Summary Judgment (Document #48) filed by the plaintiff Bobby Hathcock (“Hathcock”), the Motion for Summary Judgment (Document #49) filed by the defendant Acme Truck Line, and the Motion to Strike Plaintiffs Summary Judgment Evidence and Alternative Evidentiary Objections (Document #57) filed by Acme. Having considered the motions, submissions, and applicable law, the Court determines that Acme’s motion for summary judgment should be granted and Hathcock’ s motion for summary judgment denied. Acme’s motion to strike is denied as moot. Acme is a Louisiana corporation with truck terminals in Louisiana and Texas. Acme transports equipment, materials, and supplies throughout the United States. Acme does not own its own trucks. Rather, it leases vehicles of various sizes from other corporations, partnerships, and individuals. Acme employs drivers about half of whom own theft own trucks. Hathcock owns a 1990 Ford pick-up truck. In July, 15a 1996, Hathcock and Acme executed a Lease Agreement for that truck. Pursuant to the terms of the Lease Agreement, Acme paid Hathcock seventy percent of the earned revenue derived by the lessee from the leased equipment, less inter alia driver’s wages, payroll taxes (including FICA and other deductions), and such other costs or payments made by Lessee by reason of driver employment. Pursuant to the Lease Agreement, Hathcock received a rental check whenever his truck was used to deliver supplies, materials and other goods as requested by Acme customers. Acme contends that the twenty-three percent it charged lessors was not the actual withholding of FICA, FUTA or other taxes paid to Hathcock under the lease. Rather, the twenty three percent deducted from the lease payments to Hathcock was a percentage of the driver's wages, intended to cover part of Acme’s payroll taxes with respect to those wages as provided for under the lease. Thus, the 23 percent did not represent the withholding of taxes but was an amount calculated by Acme and intended to defray part of Acme’s cost for FICA, FUTA, SUTA, worker's compensation and other taxes as a result of paying wages to drivers. Acme also employed Hathcock to drive his own truck. Pursuant to the employment agreement, Hathcock would receive a separate employment check and separate truck rental check. Hathcock filed the instant complaint alleging that Acme engages in an illegal scheme whereby it deducts the employer’s portion of FICA/Medicaid, the employees portion of FICA/Medicaid, FUTA and SUTA from the paychecks of its employees. Hathcock asserted claims of fraud, breach of contract, conversion and unjust enrichment. Hathcock filed a motion for summary judgment arguing that he is entitled to prevail in this lawsuit as there are no genuine issues of material fact. Acme also has filed a motion for summary judgment. In its motion, Acme argues 16a that it is entitled to summary judgment with respect to each of the claims asserted by Hathcock. Summary judgment is mandated “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Initially the movant bears the burden of demonstrating to the Court that there is an absence of a genuine issue of any material fact. Id. at 323. The burden then shifts to the party who bears the burden of proof on the claims on which summary judgment is sought, to present evidence beyond the pleadings to show there is a genuine issue for trial, Id. A genuine issue for trial exists when “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986) (citations omitted). The Court has reviewed Hathcock’s motion for summary judgment and determines that it should be denied. Hathcock, as a plaintiff, has failed to establish that he is entitled to prevail on summary judgment. Acme, however, has established that it is entitled to prevail on summary judgment on each of Hathcock’ s claims, as is more filly discussed, infra. In his complaint, Hathcock alleges that he was an independent contractor when he worked for Acme. Thus, he alleges that Acme should not have withheld various taxes which are only applicable for employees. In response, Acme has exhaustively briefed the issue of why Hathcock is an employee and not an independent contractor. However, in his motion for summary judgment, Hathcock argues that the issue of whether or not he is an employee is irrelevant to this case. Whether the plaintiff and class members are independent contractors or whether they are employees of the Defendant is immaterial. If 17a the plaintiff and these class members are employees, the owners/operators have no liability for FUTA taxes and hence the deductions are patently and purposefully unlawful. If the Plaintiff and class are independent contractors, they may not be assessed FUTA taxes because they are, by statute, the sole obligation and responsibility of an employer for the benefit of an employee and an independent contractor is not an employee. Plaintiffs Motion for Summary Judgment at 18. Notwithstanding Hathcock’s equivocation on this point, the Court determines that the summary judgment evidence submitted establishes that Hathcock was an employee and not an independent contractor during the time he worked for Acme. Acme seeks summary judgment with respect to Hathcock’ s allegations of fraud. To establish a cause of action for fraud a plaintiff must prove an intentional misrepresentation or omission regarding a material fact upon which one reasonably and detrimentally relies. Abbott v. Equity Group, Inc., 2 F.3d 613, 624 (5th Cir. 1993), cert. denied, 114 S.Ct. 1219 (1994). According to Acme, it should prevail on summary judgment with respect to the fraud claim because: (1) Hathcock knew, pursuant to the rental agreement that he signed that he would receive two separate checks, one for driving his truck and one for leasing his vehicle to Acme; and (2) Hathcock knew that Acme would withhold twenty three percent of driver wages from his rental check, pursuant to the lease agreement. Thus, Acme argues that Hathcock cannot maintain a fraud cause of action as no misrepresentations were made. The Court agrees with Acme’s argument with respect to the fraud claim. Hathcock signed a lease agreement which specifically sets forth the amount of money that Acme would 18a withhold from the rental paymnents. Hathcock has offered no summary judgment evidence to the contrary. Accordingly, summary judgment is granted with respect to the fraud/misrepresentation claim. The thrust of Hathcock’s breach of contract claim is that Acme was in a special business relationship with him that gave rise to an implied covenant of good faith and fair dealing. Acme breached this implied covenant by deducting money for taxes for which Hathcock did not owe, by not informing Hathcock that he owned no taxes, and by charging Hathcock an excessive administrative fee to accomplish these unlawful takings. Acme argues that it did not breach any contract with Hathcock or breach any terms of its employment agreement with Hathcock. Hathcock, in response, has failed to adduce summary judgment evidence to support his breach of contract claim, other than to rely upon his general contention that Acme wrongfully deducted FICA, SUTA, FUTA, worker’s compensation and other taxes from its employees’ paychecks. The Court determines that there is no summary judgment evidence to support a claim for breach of contract and summary judgment is proper with respect to this claim. Hathcock has alleged that Acme converted funds from the paychecks of its employees for its own use, while representing that the funds were being used to pay for plaintiff's tax liability under SUTA, FUTA, FICA, worker’s compensation and other taxes when in fact, plaintiff has no obligation to pay such taxes. Pursuant to Texas and Louisiana law, a party commits conversion if it exercises wrongful dominion and control over personal property belonging to another. Mitchell Energy Corp. v. Samson Resources Co., 80 F.3d 976, 984 (Sth Cir. 1996); Dual Drilling Co. v. Mills Equip. Inv., Inc., 712 So.2d 853, 857 (La. 1998). Acme argues that summary judgment is proper with respect to the conversion claim because where a party consents to the complained of conduct, a party cannot be held liable for conversion under either Texas or Louisiana / 19a law. Gronberg v. York, 568 S.W.2d 139, 145 (Tex. App—Tyler 1978); Seal v. Knorpp, 957 F.2d 1230, 1238 (5th Cir. 1992). In Gronberg, the court rejected the plaintiffs conversion claim in a similar factual setting, stating that: Where a person has knowledge that funds are being deducted from his weekly earnings .. . and he does not object or forbid the same to be done, he certainly acquiesces in such taking and cannot base an action of conversion on such circumstances. . . Prior to entering into the lease agreement with Acme, Hathcock knew that Acme would be deducting twenty-three percent from his rental check. Thus, even assuming the facts in the light most favorable to Hathcock, he has presented no summary judgment evidence that he was unaware that funds were being withdrawn from his rental payments (even assuming arguendo that the withdrawal of such funds was unlawful). Accordingly, summary judgment will be granted on the conversion claim. Hathcock also has alleged a cause of action for unjust enrichment. According to the complaint, Acme took deductions of the various taxes from the plaintiff on the pretext that the funds taken were taken lawfully and were the employee’s burden to pay. Through this practice, Hathcock argues that Acme was unjusfly enriched. In its motion for summary judgment, Acme argues that neither Texas nor Louisiana law recognizes unjust enrichment claims where the parties have a contractual relationship. Marple v. Kurzweg, 902 F.2d 397, 401 (Sth Cir. 1990); Green v. Levis Motors. Inc., 994 F. Supp. 735, 741-42 (M.D. La. 1997). Thus, because the lease agreement in this case constitutes a contract, extra-contractual remedies, such as unjust enrichment, are not available to Hathcock. The Court agrees and determines that as a matter of law, Hathcock is precluded from asserting a cause of action for unjust enrichment in this case. 20a Hathcock’s final cause of action is money had and received. Specifically, Hathcock alleges that Acme wrongfully took money from Hathcock’ s compensation, purportedly pursuant to the requirements of SUTA, FUTA, FICA, worker's compensation, and various other taxes, when in fact no such taxes were owed. Thus, Hathcock argues that these monies belong to him and must be returned to him. Acme argues that this claim should be dismissed because Acme’s two-check system is legal and valid.’ Acme contends that it did not deduct or withhold SUTA, FUTA, FICA, worker’s compensation premiums, or any other taxes from the paychecks of those driving the leased trucks. Rather, Acme has passed along some of the costs to the lessor of the trucks. According to Acme, this does not constitute a violation of the statutes upon which. Hathcock relies, as those sums have not been deducted from the paychecks of the drivers. Thus, Acme did not violate the laws prohibiting it from passing along these costs to the its employees. The Court agrees with Acme’s analysis. The twenty-three percent deducted from the rental payments did not represent withholdings of the various taxes but rather was an amount estimated by Acme to defray Acme’s cost for the taxes as a result of its having to pay wages to the drivers. The summary judgment evidence presented to the Court convincingly establishes that this practice did not violate the federal laws or the laws of Texas or Louisiana. Accordingly, summary judgment is proper. Based upon the foregoing, the Court hereby ORDERS the following: (1) the Plaintiffs Motion for Summary Judgment (Document #48) is DENIED; (2) the Defendant’s Motion for Summary Judgment (Document #49) is GRANTED; and (3) the Motion to Strike Plaintiffs Summary Judgment Evidence and Alternative Evidentiary Objections 2la (Document #57) is DENIED AS MOOT. All parties shall bear their own costs. SIGNED at Houston, Texas on this the 14 day of July, 2000. DAVID HITTNER United States District Judge Footnote ‘In Fact, Acme argues that Hathcock actually earned more money under the twocheck system than he would have earned if had received only one global paycheck. obi nd 22a CIVIL ACTION NO. H-99-2216 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION BOBBY HATHCOCK, Plaintiff, Versus ACME TRUCK LINES, INC., Defendants. July 14, 2000 Filed FINAL JUDGMENT As the Court has entered an Order granting summary judgment in favor of the defendant and against the plaintiff the Court hereby ORDERS that judgment be entered in favor of the defendant THIS IS A FINAL JUDGMENT. All parties shall bear their own costs. SIGNED at Houston, Texas on this the 14 day of July, 2000. 23a CIVIL ACTION NO. H-99-2216 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION BOBBY HATHCOCK, Plaintiff, Versus ACME TRUCK LINES, INC., Defendants. August 29, 2000 Filed ORDER Pending before the Court is the Motion for Reconsideration and Motion for Rehearing of Summary Judgment (Document #64) filed by the plaintiff Having considered the motion, submissions, and applicable law, the Court determines that the motion should be denied. Accordingly, the Court hereby ORDERS that the Motion for Reconsideration and Motion for Rehearing of Summary Judgment (Document #64) is DENIED. SIGNED at Houston, Texas on this the 28 day of August, 2000. DAVID HITTNER United States District Judge 24a No. 00-20810 UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT BOBBY HATHCOCK, Plaintiff - Appellant Vv. ACME TRUCK LINE INC., Defendant - Appellee. October 3, 2001, Filed PRIOR HISTORY: Appeal from the United States District Court for Southern District of Texas, Houston. Original Opinion of September 6, 2001, Reported at: Hathcock v. Acme Truck Lines, Inc., 262 F.3d 522, 2001 U.S. App. LEXIS 19693. JUDGES: | Before JOLLY, SMITH, and WIENER, Circuit Judges. ON PETITION FOR REHEARING PER CURIAM: IT IS ORDERED that the petition for rehearing is DENIED. ENTERED FOR THE COURT: Jacques L. Wiener, Jr. United States Circuit Judge 25a LEASE AGREEMENT STATE OF TEXAS COUNTY/PARISH OF HARRIS DATE: JULY 18, 1996 THIS LEASE AGREEMENT made and entered into on this 18 day of July 1996, by and between Robert Hathcock, Jr., (Owner) of 5650 Timber Creek Place Dr. #509 (Resident Address) Houston (City) Texas 77084(County/Parish and State) (hereinafter called the “Lessor”), and Acme Truck Line, Inc. of Post Office Box 183, Harvey, Jefferson Parish, Louisiana 50059 (hereinafter called the “Lessee”). FOR AND IN CONSIDERATION of the mutual covenants, agreements and stipulations as hereinafter provided, the parties hereto agree as follows: 1.Robert H. Hathcock, Jr., Lessor, represents and does by these presents, lease and let unto Acme Truck Line, fnc., Lessee, for a term of five (5) years, beginning on the 18 day of July, 1996 and ending on the 17 day of July, 2001, as hevein provided the following commercial motor vehicle equiriment (hereinafter called “Leased Equipment”): Year Make Truck Vehicle I.D. # License and a # Type Ford 1990 F250 1FTHF25M1LNA45402 MF4111 a0 8 & 2. Lessor warrants and represents that he is the owner or agent and attorney-in-fact for the owner of the Leased Equipment and that said Leased Equipment, including all accessories and parts, is in good operating and mechanical condition in every respect, capable and suitable for the transportation of Lessee’s commodities, in full compliance i eee 26a with the U.S. Department of Transportation, Federal Highway Administration rules and regulations for safety, and that said Leased Equipment meets all rules and regulations of the Interstate Commerce Commission and all other regulatory authorities, as well as all statutes, ordinances or other laws of all local, state and federal governmental authorities having jurisdiction, and that said Leased Equipment is not subject to any other lease, memorandum or agreement. 3. As consideration for the use of the Leased Equipment, as herein provided, Lessee agrees to pay Lessor seventy (70%) percent of the “Earned Revenue derived by the Lessee from the Leased Equipment”, as defined herein, less driver’s wages; payroll taxes (including FICA and other deductions); cost of medical or hospitalization insurance, if applicable; pre- employment driver application information costs, including cost of obtaining motor vehicle driving record; cost of pre- employment driver medical examinations, testing and screening; cost of driver medical examinations, testing and screening, including driver drug testing, screening, medical evaluations and consultations, and biannual medical examinations as may be required by the U.S. Department of Transportation, Federal Highway Administration or any other governmental body, and such other costs or payments made by Lessee by reason of driver employment, and less any “Operating and costs and expenses”, and other charges, hereinafter provided, which are incurred by Lessee in connection with the use and/or operation of the Leased Equipment and for which Lessor shall be responsible. 4. “arned Revenue derived by the Lessee from the Leased Equipment” shall include the following charges in connection with the operation and/or use of the Leased Equipment from which Lessee has derived earned revenues pursuant to the applicable tariffs or contracts, to-wit: line haul charges, hourly work and detention time charges, diversion or reconsignment charges and pipe stringing and pick-up charges. Other earned revenues involving non-Leased Equipment and extra labor charges shall not be included in the “Earned Revenue derived by the Lessee from the Leased Equipment”. On earned revenues involving contract rates, there shall be deducted an amount equal to the current 27a interstate tariff insurance surcharge percentage which deduction shall not be considered “Earned Revenue derived by Lessee from the Leased Equipment”. 5. “Operating costs and expenses” which are incurred by Lessee in connection with the operation and/or use of the Leased Equipment and for which Lessor shall be responsible shall, without limitation, include the following, to-wit: advances made by Lessee (wired money, purchase orders, fuel card purchases and cash advances): wrecker service charges; vehicle inspection charges; loading and unloading charges; interchange fees; license plate fees; cab cards; fuel taxes; road taxes; sales taxes; equipment use and ad valorem taxes and fees; state and federal registration fees, taxes, tags or stamps; empty mileage; permits of all types; tolls; ferries; detention and accessorial services; base plates and licenses; driver fines and penalties for violations of traffic or highway regulations or laws as imposed by any governmental body; and, any other fees, charges, penalties, fines, tolls, or other taxes which may be assesses of levied against the Leased Equipment or its driver or against Lessee resulting from the operation an/or use of the Leased Equipment. Notwithstanding the above, except when a violation results from any acts or omissions of the Lessor, Lessee shall assume the risks and costs of fines for overweight and oversize trailers when the trailers are pre-loaded, sealed, or the load is containerized, or when the trailer or lading is otherwise outside of Lessor’s control, and for improperly permitted overdimension and overweight loads, and Lessee will reimburse Lessor for any fines paid by Lessor in this connection. In addition, Lessor shall be solely responsible for all maintenance and repairs to the Leased Equipment, including, without limitation, cost of fuel, gasoline, oil, tires, tubes, tarpaulins, chains, binders, accessorial equipment, parts and repairs, and all cost, advances, and/or expenses incurred by Lessee in this regard shall be deducted from this amounts due Lessor. In this connection, Lessor agrees to maintain the Leased Equipment and its accessories in good working order and condition during the term of this lease, and Lessor agrees to hold Lessee harmless and to indemnify Lessee against any and all loss damages. Cost or expenses 28a which the Lessor may hereafter incur, suffer or be required to pay by reason of the failure of the Lessor to properly maintain and repair the Leased Equipment and _ its accessories. The Lessor shall be afforded copies of those documents which are necessary to determine the validity of any of the above described charges. 6. It is understood and agreed that Lessor shall be responsible to Lessee for payment of an Administrative Service Charge in the amount of TWENTY AND NO/100 ($20.00) in addition to all costs incurred by Lessee in connection therewith for issuance of wired money, fuel card purchases, purchase orders, registration items and cash advances made by Lessee in connection with the operation and/or use of the Leased Equipment. In addition, Lessor shall be responsible to Lessee for payment of a fixed Administrative Service Charge of ONE THOUSAND AND NO/100 ($1000.00) for any accident involving a cargo claim and ONE THOUSAND AND NO/100 ($1000.00) DOLLARS for any accident involving a liability claim involving bodily injury and/or property damages. Lessor shall be responsible for an additional Administrative Service Charge of FIVE HUNDRED AND NO/100 ($500.00) DOLLARS for any cargo claim involving rain and/or water damage to any cargo. These Administrative Service Charges shall be deducted from Lessor’s weekly settlements in an amount not to exceed ONE HUNDRED AND NO/100 ($100.00) DOLLARS a week. The Administrative Service Charges provided herein shall be non- refundable and will be used to defray administrative expenses incurred by Lessee. Lessor will be provided with a written explanation and itemization of all of the above described charges. 7. Payment to the Lessor pursuant to this Lease shall be made within fifteen (15) days after submission by Lessor to Lessee of the necessary “delivery documents” and other “paperwork” concerning a trip in the service of the Lessee. Necessary “delivery documents “ shall include bills of lading/waybills properly signed by shipped/customer (complete), customer purchase orders, weight tickets and delivery receipts, and other “paperwork” of the rated freight bill (invoice) shall be surrendered by Lessee prior to or at the 29a time of settlement and the Lessor shall be granted the right to examine copies of the applicable tariff. 8. It is understood and agreed that Lessee shall have continuous and exclusive possessicn, control and use of the Leased Equipment for the duration of this Lease. Lessee assumes complete responsibility for the operation of the leased equipment for the duration of this lease. During the term hereof, the Leased Equipment shall not be operated for any purpose other than the transportation for Lessee and on Lessee’s behalf of machinery, equipment and materials as authorized by Interstate Commerce Commission Certificate # 120675, Louisiana Public Service Commission Certificate # 5266-C, Texas Railroad Commission Certificate # 5206, Alabama Public Service Commission Certificate # 3269, Mississippi Public Service Certificate # 3040-T and Georgia Public Service Commission Certificate #2605, and any other authority which hereafter may be granted to Lessee herein. Further, Lessor is specifically prohibited from entering into any trip-lease, interchange or other agreement or contract involving the Lease Equipment or otherwise with any other carrier or entity, nor shall Lessor permit the unauthorized use of the Leased Equipment at any time whatsoever. In connection with these prohibitions, Lessor agrees to hold Lessee harmless and to indemnify Lessee against any and all liability, loss, damages, costs and expenses which Lessee may hereafter incur, suffer or be required to pay by reason of such lease violations. 9. It is understood and agreed that Lessee shall make all management decisions regarding the use and/or operation of the Leased Equipment, including, but without limitation, decisions concerning when and where the Leased Equipment is to operate and the type of functions it is to perform within the scope of Lessee’s authority; Lessor hereby acknowledges that Lessee has made no representations, guarantees or warranties regarding minimum revenues which may be derived from the operation and/or use of the Leased Equipment and/or which will accrue to the Lessor during the term of this Lease, and Lessor acknowledges that Lessee has made no representations or guarantees as to the amount of work or number of loads which will be handled by said 30a Leased Equipment, and it is hereby agreed by the parties hereto that any solicitation for work regarding the Leased Equipment shall be within the sole and exclusive discretion of the Lessee. : 10. Lessor agrees to be familiar with the Federal Motor Carrier Safety Regulations as prescribed by the US. Department of Transportation, Federal Highway Administration and to comply with all applicable rules and regulations thereof as well as all applicable policies and rules of Lessee. ll. Lessee agrees to provide insurance coverage on the Leased Equipment for the protection of the public with minimum limits of liability as required by Interstate Commerce Commission regulations under 49 U.S.C. 10927, insuring Lessee for public liability for bodily injury, property damage liability and cargo damage liability during the term of this Lease. Lessor understands and agrees that it may not be named as an insured on the above specifies policy of insurance provided by Lessee herein, and Lessor agrees to provide adequate liability insurance for its protection, including bobtail insurance which is not provided by Lessee herein. It is understood that Lessor will not initiate nor participate in any third-party claims against Lessee relation to any loss or damage involving bodily injury liability, property damage liability or cargo damage liability and Lessor agrees to hold Lessee harmiess and to indemnify Lessee in connection therewith. Lessor agrees to provide and maintain adequate insurance on the Leased Equipment covering physical damage to the Leased Equipment and _ its accessories, including comprehensive and collision coverage and Lessor shall be responsible for all claims related thereto, and agrees to hold Lessor harmless in connection herewith. Further, Lessor agrees to immediately report to Lessee any accident, claims, losses, or damages of any kind relation to the Leased Equipment or any cargo carried theron, and agrees to provide Lessee with all written reports, affidavits, or other assistance as may be necessary to adjudicate or settle of such claim. A penalty of ONE HUNDRED AND NO/100 ($100.00) DOLLARS will be charged to Lessor’s settlement for failure to report any accident within twenty- 3la four (24) hours of that accident. 12. It is understood and agreed between the parties hereto that Lessor shall hold Lessee harmless and indemnify Lessee against any and all liability, loss, damages, costs or expenses which Lessee may hereafter incur, suffer or require to pay by reason of any breech of any obligation or responsibility on the part of Lessor as contained in this Lease Agreement. 13. It is understood and agreed that Lessor shall furnish Lessee with any and all information or documents required by any governmental agency or authority; further, Lessor shall be responsible to Lessee and ultimately to all regulatory commissions or authorities for all required records and schedules, including, but without limitation, driver’s logs, mileage reports, fuel receipts and other relevant documents. In this connection, Lessor agrees to fully cooperate with Lessee and assist Lessee in requiring drivers of the Leased Equipment to submit to required medical examinations, testing, and screening as may be required for driver qualification and certification or in order to meet such requirements as are imposed by the U.S. Department of Transportation, Federal Highway Administration or any other governmental body. In addition and without limitation, Lessor shall specifically cooperate and assist Lessee in requiring drivers to maintain and submit daily logs, fuel receipts, mileage reports, accident reports, vehicle inspection reports and any other reports required by federal, state, county/parish, or municipal body, If through the negligence or fault of Lessor, Lessee is penalized or fined as a result hereof, then Lessee reserves the right to collect the amount of all such penalties or fines from Lessor. 14. Lessor understands and agrees, under penalty of immediate cancellation of said Lease, that at no time shall non-authorized individuals drive, rid in or accompany the Leased Equipment; only authorized employees listed on Lessee’s payroll and acting in the course and scope of their employment shall be permitted to drive, ride in or accompany said Leased Equipment. 15. It is understood and agreed between the parties that the Lessor is not required to purchase or rent any products, equipment or services from Lessee as a condition of entering 32a into this Lease Agreement. Other that the lease provisions contained herein, no other equipment purchase or rental is provided herein. 16. It is understood and agreed between the parties hereto that this Lease may be immediately cancelled at the option of either Lessor or Lessee upon advance written notice to the other party; however, this Lease shall not be cancelled by either party within the initial thirty (30) days of its term hereof, except for cause. 17. ‘It is understood and agreed that upon termination or cancellation of this Lease, Lessor shall immediately surrender to Lessee all cab cards, stamps, fuel decals, lease acknowledgements and all other regulatory documents in Lessor’s possession issued by Lessee; further, all company identification of Lessee shall be immediately removed by Lessor from the Leased Equipment. and_returned to Lessee. Lessor shall immediately surrender all for-hire apportioned license plates issued for the Leased Equipment to the Lessee or appropriate state governmental agency or department, and any monies received by Lessee in this connection shall be refunded to Lessor. In addition, there is an Administrative service charge of FIFTY AND NO/100 ($100.00) DOLLARS to effectively cancel this Equipment and Lease Agreement with all regulatory commissions and agencies as prescribed by law. 18. At the option of Lessee, an escrow fund will be established upon execution of this Lease in the amount of FIVE HUNDRED AND NO/100 ($500.00) DOLLARS to be funded by Lessor and administered and maintained by Lessee for the purpose of covering those herein-provided obligations incurred by Lessor, including, but without limitation “Operating costs and expenses”, driver's expenses, maintenance expenses, service charges, penalties, and in addition, shall include the amount of all charge back items and overpayments. Lessee agrees to provide individual settlement sheets indication the amount and description of any deduction or additions made to the escrow fund. However, Lessor shall have the right to demand an accounting for transactions involving the escrow fund at any time. While the escrow fund is under the control of Lessee, x Lx&@