State Farm Mutual Automobile Insurance v. Logisticare Solutions, LLC
2014 U.S. App. LEXIS 9664
5th Cir.2014Background
- Volunteer driver Elizabeth Mosley provided non‑emergency Medicaid transports for LogistiCare and used a personal vehicle insured by State Farm; a passenger, Pearlie Graham, was injured in an accident.
- LogistiCare reimbursed drivers by a per‑mile schedule (with higher rates for wheelchair riders) and permitted stacking reimbursements for multiple passengers; drivers could not accept payment directly from members.
- State Farm sued for a declaratory judgment that its policy’s “for a charge” exclusion (excluding coverage for "carrying persons for a charge") bars coverage, and district court granted summary judgment for State Farm on both duty to defend and duty to indemnify.
- LogistiCare (and Graham’s heirs) argued collateral estoppel, that the underlying complaint does not allege a charge, that extrinsic facts show only reimbursement, that the policy’s “share‑the‑expense” exception applies, and that the exclusion/exception are ambiguous.
- The Fifth Circuit reviewed Mississippi law on insurance exclusions, concluding the duty to defend is based on the complaint (or plausible allegations) while duty to indemnify depends on the actual record and facts proven.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Collateral estoppel from prior Georgia case bars relitigation of the exclusion | Myers held the same exclusion didn’t bar coverage; precludes State Farm from relitigating | Prior decision differs and was not necessary to the judgment | Denied — prior Georgia trial ruling was not necessary to its judgment, so no issue preclusion |
| Does the underlying complaint allege facts triggering the “for a charge” exclusion (duty to defend)? | Complaint alleges Mosley acted "d/b/a Mosley’s Transportation" and as a business driver — implies carriage for charge | Absence of an allegation that the ride was free implies a charge; complaint alleges business activity akin to taxi | Held for insureds on duty to defend: complaint does not plausibly show passenger paid or that Mosley received more than reimbursement, so duty to defend exists |
| Do extrinsic facts show exclusion does not apply (for indemnity)? | LogistiCare points to IRS‑rate reimbursements, Mosley’s reported losses, and testimony that she merely received reimbursement | State Farm points to record evidence that Mosley organized a business, earned some net income, benefited from mileage rounding and stacking reimbursements | Held for State Farm on indemnity: record shows Mosley intended to and did profit beyond mere reimbursement, triggering exclusion |
| Does the "share‑the‑expense" exception reinstate coverage for indemnity? | Exception applies where payments merely share actual costs; LogistiCare contends reimbursements were cost‑based | If insured received more than expenses, exception does not apply | Held for State Farm: exception does not apply because record indicates Mosley received more than expenses (profit) |
Key Cases Cited
- Kerstetter v. Pac. Scientific Co., 210 F.3d 431 (5th Cir.) (summary judgment standard de novo)
- Baker Donelson Bearman & Caldwell, P.C. v. Muirhead, 920 So.2d 440 (Miss.) (duty to defend triggered by complaint plausibly alleging covered conduct)
- Progressive Gulf Ins. Co. v. We Care Day Care Ctr., Inc., 953 So.2d 250 (Miss. Ct. App.) (interpreting "for a charge" exclusion and construing ambiguities for insured)
- State Farm Mut. Auto. Ins. Co. v. Travelers Ins. Co., 274 F.2d 208 (5th Cir.) ("for a charge" exclusion aimed at taxi‑type use; mileage reimbursement akin to expense coverage)
- Estate of Bradley v. Royal Surplus Lines Ins. Co., 647 F.3d 524 (5th Cir.) (distinction between duty to defend and duty to indemnify)