United Suppliers, Inc. D/B/A Greenbelt Transport v. Renny Hanson, R. Hanson Trucking, Inc., and Kenneth Dirisio v. Nationwide Agribusiness Insurance Company, Cross-Appellee. Appeal From the Iowa District Court for Hardin County, Michael J.
876 N.W.2d 765
Iowa2016Background
- United Suppliers (Greenbelt Transport) ships its own fertilizers/chemicals and supplemented its fleet by leasing a 2000 Freightliner and driver from Renny Hanson under a one-year Lease; United Suppliers otherwise acts as a private carrier (transporting only its own goods).
- Hanson owned the tractor and later had Hanson Trucking hire driver Kenneth DiRisio under an independent-contractor agreement; DiRisio had driven many loads for United Suppliers.
- On June 9, 2011 DiRisio lost control, the trailer wrecked, and fertilizer/chemicals spilled, producing about $974,366 in losses; Nationwide (United Suppliers’ insurer) paid the loss less a $5,000 deductible.
- United Suppliers sued Hanson, Hanson Trucking, and DiRisio for breach of the Lease indemnity clause plus negligence and respondeat superior; defendants counterclaimed seeking a declaratory ruling that they were insureds under Nationwide’s policy.
- The district court granted summary judgment to defendants, holding Iowa Code §325B.1 barred indemnity clauses collateral to motor-carrier transportation contracts and that the Lease’s exclusive-control clause made United Suppliers solely responsible.
- The Iowa Supreme Court reversed: it held United Suppliers is a private carrier (§325B.1 inapplicable), the Lease indemnity is enforceable and harmonizable with the exclusive-control clause, but Nationwide’s anti-subrogation rule and the Business Auto coverage language make DiRisio (and derivatively Hanson/Hanson Trucking) insureds under the policy, limiting subrogation recovery.
Issues
| Issue | Plaintiff's Argument (United Suppliers) | Defendant's Argument (Hanson/Hanson Trucking/DiRisio) | Held |
|---|---|---|---|
| Applicability of Iowa Code §325B.1 (anti-indemnity law) to the Lease | Lease is not a motor-carrier transportation contract; United Suppliers is a private carrier so §325B.1 does not apply | Lease is collateral to for-hire transportation and §325B.1 voids indemnity for promisee’s negligence | Held: United Suppliers is a private carrier; §325B.1 does not apply |
| Meaning of Lease provisions: exclusive control vs. indemnity clause | Both provisions can be harmonized: exclusive-control governs public liability; indemnity governs lessee–lessor relations and obligates lessor to indemnify for driver negligence | Indemnity limited to non-operational faults (competence/dishonesty), not driving negligence; exclusive-control precludes indemnity for operation-related losses | Held: Indemnity clause is enforceable and coexists with exclusive-control clause; indemnity can cover driver negligence vis-à-vis lessor-lessee relations |
| Whether defendants are insureds under Nationwide’s Truckers’ Endorsement | N/A (United Suppliers) — endorsement inapplicable because United Suppliers is not a trucker for hire | Endorsement applies; defendants covered | Held: Truckers’ Endorsement does not apply because United Suppliers is not a for-hire trucker |
| Whether defendants are insureds under Nationwide’s Business Auto Coverage Form (and effect on subrogation) | Policy exception (“owner or anyone else from whom you hire or borrow a covered ‘auto’ ”) covers lessor/driver; defendants not insured | DiRisio was using the covered auto with permission and is not an owner/ person from whom United Suppliers hired/borrowed it; Hanson/Hanson Trucking derivatively insured | Held: DiRisio is an insured under the Business Auto coverage; Hanson/Hanson Trucking are insured to the extent of derivative liability — this limits Nationwide’s subrogation against its own insureds |
Key Cases Cited
- Transamerican Freight Lines, Inc. v. Brada Miller Freight Sys., Inc., 423 U.S. 28 (1975) (lease exclusive-control requirement does not bar a separate indemnity clause between lessor and lessee)
- Gateway Transp. Co. v. Phillips & Phillips Co., 261 N.W.2d 175 (Iowa 1978) (applying Transamerican to uphold lessor indemnity in a lease where lessee retains public responsibility)
- McNally & Nimergood v. Neumann-Kiewit Constructors, Inc., 648 N.W.2d 564 (Iowa 2002) (indemnification for indemnitee’s own negligence requires clear, unambiguous expression)
- Martin & Pitz Assocs., Inc. v. Hudson Constr. Servs., Inc., 602 N.W.2d 805 (Iowa 1999) (indemnity provisions strictly construed against indemnitor and drafter)
- Allied Mut. Ins. Co. v. Heiken, 675 N.W.2d 820 (Iowa 2004) (insurer has no right of subrogation against its own insured)
- Boelman v. Grinnell Mut. Reins. Co., 826 N.W.2d 494 (Iowa 2013) (ambiguities in insurance policies construed for the insured)