UNITED SUPPLIERS, INC. d/b/a Greenbelt Transport, Appellant, v. Renny HANSON, R. Hanson Trucking, Inc., and Kenneth DiRisio, Appellee. Renny Hanson, R. Hanson Trucking, Inc., and Kenneth DiRisio, Cross-Appellants, v. Nationwide Agribusiness Insurance Company, Cross-Appellee.
No. 14-1553.
Supreme Court of Iowa.
March 11, 2016.
876 N.W.2d 765
Rene Charles Lapierre of Klass Law Firm, LLP, Sioux City, for appellee and cross-appellant Hanson and R. Hanson Trucking.
Troy A. Howell of Lane & Waterman LLP, Davenport, for appellee and cross-appellant DiRisio.
MANSFIELD, Justice.
I. Introduction.
This dispute over who will pay the bill for an overturned and wrecked semi-trailer and the ensuing chemical spill presents a number of legal issues. In particular, it requires us to interpret an Iowa law, a lease agreement, and an insurance policy.
The plaintiff, an agricultural supply company that was delivering its own products, paid the bill for the ruined trailer and the cleanup, mostly through insurance. However, because the supply company had been leasing the semi-tractor and its driver from another source, it brought suit against the lessors and their allegedly negligent driver in an attempt to shift the accident costs to them. The district court granted summary judgment to the defendants. It found that
On appeal we now reverse. We hold that
II. Facts and Procedural Background.
This somewhat complicated insurance dispute arises out of relatively simple facts.
United Suppliers is a wholesale distributor of agricultural fertilizers and chemicals. It purchases its inventory in bulk, stores it in warehouses located in various states, and then sells it to retailers. Once sold, these products must be transported from United Suppliers’ warehouses to its retail customers.
United Suppliers owns and operates 95 semi-tractors and 135 semi-trailers under the name Greenbelt Transport. These vehicles are used only to deliver the company‘s own inventory from the warehouse to the customer. United Suppliers does not offer transportation services for any purpose other than to deliver its own fertilizers and chemicals. It does not advertise transportation services. United Suppliers does add a delivery charge to the customer‘s price based on the distance traveled. These charges account for about five percent of United Suppliers’ net profits. While its fertilizers and chemicals are in transit, United Suppliers bears the risk of loss.
Because United Suppliers’ vehicle fleet and driver workforce are insufficient to meet its transportation needs, the company also enters into agreements with owner-operators and trucking companies. On or about October 5, 2010, United Suppliers entered into a one-year “Long Term Motor
d) Warrants (1) that driver[] furnished with such motor vehicle[] is ... competent and qualified to operate said equipment, and meets all requirements of all laws, rules and regulations[;] (2) that the said equipment is in good state of repair and (3) meets all the requirements of all applicable State and Federal Laws, rules and regulations of the Interstate Commerce Commission and the Public Service Commission[s] of the States, in, into or through which it is to be operated.
e) Agrees that [United Suppliers] shall not be liable for any loss or damage to or destruction of said leased vehicle[] while it is being operated by or is in the care and control of driver[] furnished therewith.
f) Agrees to indemnify [United Suppliers] against (1) any loss resulting from the injury or death of such driver[] and (2) any loss or damage resulting from the negligence, incompetence or dishonesty of such driver[.]
Additionally, the Lease provided that United Suppliers
a) Agrees that during the term of this lease, the said vehicle[] shall be solely and exclusively under the direction and control of [United Suppliers] who shall assume full carrier responsibility (1) for the loss or damage to cargo transported in such motor vehicle[] and (2) for the operation of such vehicle[ ].
Hanson personally owned the 2000 Freightliner semi-tractor that he leased to United Suppliers. Hanson also was the sole owner of a business known as R. Hanson Trucking Inc. (Hanson Trucking). Hanson and Hanson Trucking later admitted that the Lease was executed by Hanson individually and as president of Hanson Trucking.
Initially, Hanson himself drove the 2000 Freightliner pursuant to the Lease. However, in late March 2011, Hanson arranged for Hanson Trucking to hire Kenneth DiRisio as the driver for the vehicle. DiRisio signed an “Independent Contractor Agreement” with Hanson Trucking, and Hanson Trucking paid DiRisio a percentage of the revenue it received from United Suppliers for each load. United Suppliers required DiRisio to complete an “Application for Employment,” performed a drug test and background check on him, and furnished logbooks and some instruction and training. During the spring of 2011, DiRisio transported approximately forty to fifty loads for United Suppliers in the Freightliner without incident.
However, on June 9, 2011, DiRisio was driving the Freightliner and pulling a United Suppliers trailer loaded with United Suppliers fertilizers and chemicals. He was heading from United Suppliers’ Eldora warehouse to another warehouse in Gibbon, Nebraska. While on Interstate 80 near Lincoln, Nebraska, DiRisio lost control of the tractor-trailer. The police report indicated that DiRisio was distracted when trying to change a CD and veered off the road. In deposition, DiRisio acknowledged he had been changing a CD but maintained he
The trailer was wrecked in the accident. Making matters worse, the trailer‘s contents spilled out and rain dispersed them. The spill contaminated several hundred cubic yards of soil. A costly environmental cleanup was required.
United Suppliers suffered a loss totaling $974,366.20, primarily for the environmental remediation but also for the value of the trailer and its contents. United Suppliers’ insurer, Nationwide Agribusiness Insurance Company (Nationwide), paid the entire loss except for a $5000 deductible.1
On February 19, 2013, United Suppliers—on behalf of itself and Nationwide—filed suit against Hanson, Hanson Trucking, and DiRisio in the Hardin County District Court. The petition had four counts: (1) breach of contract—i.e., the Lease—against Hanson and Hanson Trucking, (2) negligence against DiRisio, (3) respondeat superior negligence against Hanson and Hanson Trucking, and (4) negligent hiring against Hanson and Hanson Trucking. The contract claim alleged, among other things, that Hanson and Hanson Trucking breached the Lease provision requiring them to indemnify United Suppliers for “any loss or damage resulting from the negligence or incompetence of the driver” they had provided.
In addition to answering and denying liability, Hanson, Hanson Trucking, and DiRisio filed a third-party petition against Nationwide. This petition sought a declaration that Hanson, Hanson Trucking, and DiRisio were insureds under the Nationwide policy, that Nationwide had a duty to defend and indemnify them, and that Nationwide could not seek subrogation from its own insureds.
The parties filed cross-motions for summary judgment on the question of whether Hanson, Hanson Trucking, and DiRisio were insureds under the Nationwide policy. That policy included a “Business Auto Coverage Form” which contained the following definition of an “insured“:
1. Who Is An Insured
The following are “insureds“:
a. You for any covered “auto.”
b. Anyone else while using with your permission a covered “auto” you own, hire or borrow except:
(1) The owner or anyone else from whom you hire or borrow a covered “auto.”
....
c. Anyone liable for the conduct of any ‘insured’ described above but only to the extent of that liability.
The Nationwide policy also contained a “Truckers’ Endorsement,” which provided coverage “[f]or any operations [United Suppliers] engage[d] in as a ‘trucker.’ ” The endorsement in turn defined “trucker” as “any person or organization engaged in the business of transporting property by ‘auto’ for hire.”
In their summary judgment filings, Hanson, Hanson Trucking, and DiRisio argued they were covered under the Truckers’ Endorsement. United Suppliers coun-
On January 15, 2014, the district court granted United Suppliers’ summary judgment motion and denied the cross-motion of Hanson, Hanson Trucking, and DiRisio. The court found the Truckers’ Endorsement in the Nationwide policy did not apply because United Suppliers was not engaged in trucker operations. It did not address the Business Auto Coverage, presumably because Hanson, Hanson Trucking, and DiRisio were not arguing at that time that it provided coverage for them. The court accordingly dismissed the third-party petition for declaratory judgment.
Hanson, Hanson Trucking, and DiRisio sought leave to file an interlocutory appeal.2 We denied the application on March 5.
On June 23, Hanson, Hanson Trucking, and DiRisio moved for reconsideration of the district court‘s summary judgment order entered over five months earlier. Their motion urged that the district court had erroneously dismissed their declaratory judgment claim without addressing whether they were insureds under the Business Auto Coverage Form. Specifically, they insisted that the exception from the definition of “insured” for “[t]he owner or anyone else from whom [United Suppliers] hire[d] or borrow[ed] a covered ‘auto’ ” did not apply to DiRisio. DiRisio, in their view, was neither the owner of the 2000 Freightliner, nor a person from whom United Suppliers hired or borrowed it. They further argued that the Hanson and Hanson Trucking were insureds under the next subparagraph in the Business Auto Coverage Form to the extent they were derivatively liable for DiRisio‘s conduct.
United Suppliers responded that the motion for reconsideration was untimely for two reasons: (1) the third-party plaintiffs had not filed a timely resistance to the summary judgment motion arguing coverage under the Business Auto Coverage Form; and (2) they had not filed a timely motion under
Meanwhile, on May 29, United Suppliers had filed a motion for summary judgment on its petition, arguing that it was entitled to a determination as a matter of law that DiRisio had been negligent, that the claimed damages should be awarded, and that Hanson and Hanson Trucking were also liable for DiRisio‘s negligence under
On August 11, the district court entered an order denying United Suppliers’ motion for summary judgment.3 The court‘s denial was based on a matter not raised by the defendants, namely the paragraph in the Lease providing United Suppliers had sole and exclusive “direction and control” of the vehicle and “assume[d] full carrier responsibility” for the operation of the vehicle. As the court explained,
Plaintiff has focused only on the Lessor‘s agreement to indemnify Lessee against “... any loss or damage resulting from the negligence, incompetence or dishonesty of such driver(s).” Both parties seem to have completely ignored the Lessee‘s promises under the agreement to assume full carrier responsibility for the loss or damage to cargo and for the operation of the vehicle. They have also ignored the language “... during the term of this lease, the said vehicle(s) shall be solely and exclusively under the direction and control of the Lessee.”
....
... [T]he Court FINDS that the term “any loss or damage resulting from the negligence, incompetence or dishonesty of such driver(s)” refers to the sins of omission and commission of an unworthy employee, but does not include loss or damage from the operation of the vehicle. In paragraph d the Defendant warrants that the drivers furnished with the motor vehicle are competent and qualified to operate said equipment and meet all requirements of all applicable laws, rules and regulations. Then, in paragraph f Defendant agrees to indemnify Plaintiff if the drivers furnished are not as warranted. Obviously Plaintiff was demanding conscientious, capable and honest drivers. However, Plaintiff agreed that the operation of the vehicle would be solely and exclusively under its control, and that it would assume full carrier responsibility for the loss or damage to cargo and for the operation of the vehicle. Therefore, the loss or damage for which Defendant agreed to indemnify Plaintiff must necessarily relate to some other kind or type of loss or damage, which does not involve the operation of the vehicle.
The court raised additional concerns about the Lease sua sponte, including that the indemnification sought by United Suppliers would violate
On September 5, the court entered an order granting summary judgment to Hanson, Hanson Trucking, and DiRisio. The court concluded that: (1) the Lease between United Suppliers and Hanson was “a contract which is collateral to or affecting a motor vehicle contract“; (2) the Independent Contractor Agreement between Hanson Trucking and DiRisio was likewise “a contract collateral to or affecting a motor vehicle transportation contract“; (3) therefore,
United Suppliers appealed. We retained the appeal.
III. Standard of Review.
We review grants of summary judgment for correction of errors at law. Robinson v. Allied Prop. & Cas. Ins. Co., 816 N.W.2d 398, 401 (Iowa 2012). “Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Id.; accord
IV. Applicability of Iowa Code Section 325B.1.
This case requires us to interpret
shall not contain a provision ... that purports to indemnify ... a promisee from or against any liability for injury, death, loss, or damage resulting from the negligence or intentional acts or omissions of that promisee, or any agents, employees, servants, or independent contractors who are directly responsible to that promisee.
A key point in construing the statute is the definition of “motor carrier.”
As noted, the district court found that
United Suppliers argues the district court erred in its reading of the statute. In United Suppliers’ view, the statute simply has no applicability here because the Lease with Hanson was not an agreement related to “[t]he transportation for hire of property by a motor carrier.” See
It is clear that the Lease itself is not a motor carrier transportation contract, a point acknowledged by the district court. However, the district court found that the Lease was “related to,” “collateral to,” or “affecting” a motor carrier transportation contract.
We will assume for present purposes that
Chapter 325A was enacted in 1997 when there was already a considerable body of judicial precedent on private as opposed to for-hire carriage. See
In the present case, the association‘s event is limited in scope and duration to only a few days each year. Its main business is not to transport all people from one area to another, but rather to entertain those who have paid a fee to attend. Patrons are ferried around the area by a train for which they have paid an additional fee. The purpose of this train is not only to provide transportation around the grounds, but also to entertain the public. Only those who have paid the additional fee may use the train. The association does not hold itself out to the public as being in the business of carrying passengers for hire.
Id. at 811; see also State ex rel. Bd. of R.R. Comm‘rs v. Rosenstein, 217 Iowa 985, 987-88, 992-93, 252 N.W. 251, 253, 255 (1934) (rejecting the claim by the owner of a truck who transported theatrical films and advertising to theaters for compensation that he was a private carrier, despite the owner‘s claim that he was a private carrier because he had organized an association to which most of the theaters belonged and that purported to operate the truck, although the association never had any meetings and had no officers).
The primary business test comes with a series of factors. In Admiral Disposal Co. v. Department of Revenue, an Illinois appellate court applied these factors in determining that a garbage collection company was a private carrier rather than a carrier for hire. 302 Ill.App.3d 256, 235 Ill.Dec. 858, 706 N.E.2d 118, 121-23 (1999).8 The court thus cited twelve criteria “for evaluating the primary business test‘s application to a specific case“:
1. Whether the carrier is the owner of the property transported.
2. Whether orders for the property are received prior to its purchase by the carrier.
3. Whether the carrier utilizes warehousing facilities and the extent of this use as a storage place.
4. Whether the carrier undertakes any financial risks in the transportation-connected enterprise.
5. Whether the carrier includes in the sale price an amount to cover transportation costs and its relation to the distance the goods are transported.
6. Whether the carrier transports or holds out to transport for anyone other than itself.
7. Whether the carrier advertises itself as being in a noncarrier business.
8. Whether its investment in transportation facilities and equipment is the principal part of its total business investment.
9. Whether the carrier performs any real service other than transportation from which it can profit.
10. Whether the [carrier] at any time engages for-hire carriers to effect delivery of the products, as might be expected, for example, when it is called upon to fill an order and its own equipment is otherwise engaged.
11. Whether the products are delivered directly from the shipper to the consignee (i.e., without intermediate warehousing).
12. Whether solicitation of the order is by the supplier rather than the truck owner.
Id., 235 Ill.Dec. 858, 706 N.E.2d at 121 (quoting Russell v. Jim Russell Supply, Inc., 200 Ill.App.3d 855, 146 Ill.Dec. 152, 558 N.E.2d 115, 125-26 (1990)). The court concluded, “[T]he actual transportation of refuse was merely incidental to Admiral‘s business as a refuse collector.” Id., 235 Ill.Dec. 858, 706 N.E.2d at 122.
The summary judgment record confirms that United Suppliers fits the private-carrier definition. United Suppliers only hauls its own fertilizer and chemicals. And this hauling is secondary to the company‘s fertilizer and chemical business; it represents about five percent of profits. Thus, United Suppliers “transports commodities of which [it] is the owner, lessee, or bailee and the transportation is a furtherance of [its] primary business or occupation.”
It is true that United Suppliers receives “compensation” for transportation, which is one aspect of the motor carrier definition. See
Caselaw predating
In addition, if
One more point: We should consider the legislature‘s goal in enacting
The indemnity provision in Paragraph 12.2 of the parties’ Agreement invoked by Illini in its Counterclaim is not void and unenforceable under the statute because the promisee is not being indemnified for its own negligence. Paragraph 12.2 does not require Carmeuse to indemnify, defend, and hold harmless Illini for Illini‘s negligence, intentional acts, or omissions. Rather, Paragraph 12.2 requires Carmeuse to indemnify, defend, and hold harmless Illini (the promisee) for Carmeuse‘s (the promissor) negligence, intentional acts, or omissions. Thus, the indemnity provision in Paragraph 12.2, on its face, is not void or unenforceable....
Id. at *4. In a footnote, the court indicated that the Indiana law was enacted in response to “the history of indemnity provisions in motor carrier agreements in which a motor carrier was required to indemnify a shipper for the shipper‘s own negligence.” Id. at *4 n. 1.
More than 30 states have adopted anti-indemnification laws. Many motor carrier transportation contracts have broad indemnity clauses, some of which indemnify the promisee even in cases where the promisee‘s negligence, intentional acts, or omission may have caused or contributed to an accident or injury. This bill makes void any provision in a motor carrier transportation contract that indemnifies the promisee from liability when the loss or damage was the result of the promisee‘s negligence, intentional act, or omission.
For all these reasons, we conclude that United Suppliers is a private carrier rather than a motor carrier, and therefore
V. Interpretation of the Lease.
Even though we have concluded that
Two provisions of the Lease are at issue. One says the semi-tractor
shall be solely and exclusively under the direction and control of [United Suppliers] who shall assume full carrier responsibility (1) for the loss or damage to cargo transported in such motor vehicle[] and (2) for the operation of such vehicle[ ].
The other provides that Hanson “[a]grees to indemnify [United Suppliers] against (1) any loss resulting from the injury or death of [DiRisio] and (2) any loss or damage resulting from the negligence, incompetence or dishonesty of such driver[].” Our present task is to “reconcile and give proper effect to arguably conflicting terms.” Alta Vista Props., LLC v. Mauer Vision Ctr., PC, 855 N.W.2d 722, 729 (Iowa 2014).
United Suppliers urges that the provisions can be reconciled by recognizing that the “full carrier responsibility” provision governs United Suppliers’ obligations to the outside world, whereas the indemnity provision controls the relations between the lessee (United Suppliers) and the lessor (Hanson and Hanson Trucking). Hanson and Hanson Trucking take a different view. They maintain that the Lease should be harmonized by holding that they are only “obligated to indemnify loss relat-
“Ordinarily, indemnifying agreements will be enforced according to their terms, as in any other contract case.” Martin & Pitz Assocs., Inc. v. Hudson Constr. Servs., Inc., 602 N.W.2d 805, 808 (Iowa 1999); see also McNally, 648 N.W.2d at 571 (“A contract for indemnification is generally subject to the same rules of formation, validity and construction as other contracts.“).
However, two rules of interpretation aid the defendants here. First:
[W]here an indemnification is not given by one in the insurance business but is given incident to a contract whose main purpose is not indemnification, the indemnity provision must be construed strictly in favor of the indemnitor.
Martin & Pitz Assocs., 602 N.W.2d at 809 (quoting 41 Am. Jur. 2d Indemnity § 13 (1995)). Second, “an indemnity contract is strictly construed against the drafter.” Id.
While these rules favor the defendants, the defendants’ interpretation of the Lease suffers from a more serious infirmity. Basically, it asks us to disregard the clear language making Hanson and Hanson Trucking responsible for DiRisio‘s driving negligence. United Suppliers’ interpretation, by contrast, offers a path to actual harmonization. See Iowa Fuel & Minerals, Inc. v. Iowa State Bd. of Regents, 471 N.W.2d 859, 863 (Iowa 1991) (“[A]n interpretation which gives a reasonable, lawful, and effective meaning to all terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect.“).
Furthermore, the Lease language, like
The lease shall provide that the authorized carrier lessee shall have exclusive possession, control, and use of the equipment for the duration of the lease. The lease shall further provide that the authorized carrier lessee shall assume complete responsibility for the operation of the equipment for the duration of the lease.
In 1975, the United States Supreme Court essentially dealt with the interpretive situation presented here. In that case, one carrier had leased equipment and a driver from another carrier. See Transamerican Freight Lines, Inc. v. Brada Miller Freight Sys., Inc., 423 U.S. 28, 30 (1975). As here, the lease contained both (1) a paragraph tracking the federal regulation on the lessee‘s (Transamerican‘s) control and responsibility over the leased equipment and (2) a paragraph requiring the lessor (Brada Miller) to indemnify the lessee for any losses sustained due to the negligence of the lessor or the lessor‘s agents or employees. Id. at 31.
The Supreme Court rejected the lessor‘s defense. Id. at 40. It held the indemnification provision did not conflict with the federally-required lease provision. Id. at 38-40. As the Court put it,
We readily conclude ... that the two provisions are not in conflict and that the indemnification clause does not impinge upon the requirements of the lease and of § 1057.3(a) [now 376.12(c)(1)] that operational control and responsibility be in the lessee. Paragraph 4 of the lease is, of course, express and clear. The parties agreed in writing that “the control and responsibility for the operation of said equipment” were in Transamerican, as lessee. This is what § 1057.3(a) requires and it is all that it formally requires. Moreover, added to the bare words of assumption of control and responsibility, was the specification that this was directed “to the public, shippers and Interstate Commerce Commission.” The separate indemnification clause in the subsequent paragraph 9 of the lease did not affect this basic responsibility of the lessee to the public; it affected only the relationship between the lessee and the lessor.
Id. at 38-39. In sum, the Supreme Court resolved the apparent inconsistency in lease terms the same way United Suppliers urges us to do here.
Subsequently, in Gateway Transp. Co. v. Phillips & Phillips Co., 261 N.W.2d 175, 178 (Iowa 1978), our court applied the Supreme Court‘s Transamerican decision. That case likewise involved a carrier (Gateway) that had leased equipment and a driver from another carrier. Id. at 176. While the leased driver was operating the leased tractor-trailer on behalf of Gateway, a fatal collision occurred, allegedly due to the negligence of the driver. Id. Gateway settled the claim and then sought indemnification. Id. The equipment trip lease required the lessor (Phillips) to indemnify Gateway for the negligence of Phillips‘s driver. Id. at 178. The trial court, however, found that this indemnity provision was illegal and contrary to public policy because federal regulations required the lessee to have “exclusive control over leased equipment and borrowed drivers.” Id. at 178. On the authority of Transamerican, we reversed. Id. We noted,
The Supreme Court held such terms do not offend against public policy as long as the lessee remains initially responsible to the public and to shippers. If this condition is met—and it is in the present case—the fact that Gateway contracted with others to indemnify it against loss is not contrary to public policy.
Relying on Transamerican and its progeny, courts in other jurisdictions have continued to rule that provisions making the lessee fully responsible and provisions requiring the lessor to indemnify the lessee can cohabit comfortably in the same lease.
An example of this is Reid v. Bootheel Transportation Co., 771 F.Supp. 237 (N.D.Ill.1991). In that case, Interstate had leased a tractor-trailer with a driver, Mays, from Bootheel. Id. at 238. Thereafter the leased vehicle collided with a van driven by plaintiff Reid. Id. Interstate‘s insurer settled with Reid and then sought recovery from Bootheel. See id. at 239. Bootheel moved for summary judgment on the ground that the lease‘s indemnification clause was “inconsistent with the [l]ease as a whole.” Id. at 240. The parties stipulated that Interstate had prepared the lease. Id. Nonetheless, the court denied Bootheel‘s motion and granted Interstate‘s cross-motion for summary judgment. Id. at 240-42. The court found that under Transamerican, “the indemnification provision in the [l]ease is not in conflict with the [l]ease provision requiring Interstate, the lessee, to assume operational responsibility and control for the leased tractor and trailer.” Id. at 241. “Reviewing the [l]ease as a whole, the court finds that the ... operational control and responsibility[] and indemnification provisions of the [l]ease are consistent, and ... can be given effect together.” Id. The court added, “The [l]ease‘s requirement[] that Interstate ... assume operational control over and responsibility for the leased tractor and trailer, do[es] not relieve Bootheel‘s contractual obligation to indemnify Interstate for loss or damage resulting from Mays‘s negligence or incompetence.” Id. at 241-42; see also Malone v. Barnette, 772 S.E.2d 256, 263 (N.C.Ct.App.2015) (“Enforcement of the indemnity provision in the present case does not leave victims of the alleged negligent acts of Young‘s without financial recourse. Instead, it merely shifts the financial responsibility for such negligence from one entity to another.“).10
Accordingly, we find that Hanson and Hanson Trucking‘s obligations under Lease paragraphs (d), (e), and (f) quoted above, including the obligation to “indemnify [United Suppliers] against ... any loss or damage resulting from the negligence, incompetence or dishonesty of [DiRisio],” are enforceable and not qualified by paragraph (a) quoted above, which states that United Suppliers “shall assume full carrier responsibility ... for the operation of” the 2000 Freightliner. We are not asked to decide and do not decide the ultimate question of whether an actual duty to indemnify has arisen, for example based on DiRisio‘s negligence.
VI. The Anti-Subrogation Rule.
“The insurer has no right of subrogation against the insured.” Allied Mut. Ins. Co. v. Heiken, 675 N.W.2d 820, 824 (Iowa 2004). Hanson, Hanson Trucking, and DiRisio invoke this principle to limit any potential recovery by United Suppliers, noting that all but $5000 of United Suppliers’ claim is a subrogation claim for the benefit of Nationwide. The defendants insist they are also insureds under the Nationwide policy and, therefore, subrogation recovery is not available. The district court‘s grant of summary judgment to Hanson, Hanson Trucking, and DiRisio rendered this issue moot, but our reversal of that summary judgment revives this controversy.
The guidelines we follow when interpreting insurance policies are familiar ones. “If the policy is ambiguous, we adopt the construction most favorable to the insured.” Boelman v. Grinnell Mut. Reins. Co., 826 N.W.2d 494, 502 (Iowa 2013). Also, “we strictly construe exclusions against the insurer.” Id. However, “[i]f an insurance policy and its exclusions are clear, the court ‘will not “write a new contract of insurance” for the parties.’ ” Id. (quoting Thomas v. Progressive Cas. Ins. Co., 749 N.W.2d 678, 682 (Iowa 2008)).
Alternatively, Hanson, Hanson Trucking, and DiRisio argue they are insureds under the Business Auto Coverage Form of the Nationwide policy. They maintain that DiRisio qualifies as an insured because he was using the 2000 Freightliner with United Suppliers’ permission, it was a hired or borrowed vehicle, and DiRisio was not “[t]he owner or anyone else from whom [United Suppliers] hire[d] or borrow[ed] a covered ‘auto.’ ” Moreover, if DiRisio is an insured, Hanson and Hanson Trucking urge they are also insureds for any derivative liability for DiRisio‘s conduct. That is because the form provides coverage for “[a]nyone liable for the conduct of an ‘insured’ described above but only to the extent of that liability.”
United Suppliers’ first-line response is that these contentions were not preserved below. It points out correctly that when the parties filed cross-motions for summary judgment on the coverage question, the defendants did not invoke the Business Auto Coverage Form, only the Truckers’ Endorsement. In fact, Hanson, Hanson Trucking, and DiRisio did not assert coverage under the Business Auto Coverage Form until they filed a motion for reconsideration five months after the district court had granted partial summary judgment to United Suppliers on the policy interpretation issues on January 14, 2014.
However, under the special circumstances present here, we believe the question of interpretation of the Business Auto Coverage Form is properly before us. When the district court granted the defendants summary judgment in the entire case based on
Both parties have extensively briefed the meaning of this form. Yet despite this briefing, neither side has located much in the way of pertinent authority. United Suppliers comes the closest, drawing our attention to the Georgia Court of Appeals’ decision in Park Pride Atlanta, Inc. v. City of Atlanta, 246 Ga.App. 689, 541 S.E.2d 687 (2000). In that case, a Park Pride volunteer was killed, and her husband was seriously injured when a City of Atlanta employee negligently operated a dump truck that was owned by the city and that had been furnished with its driver to Park Pride. Id. at 688. The city made a tort settlement with the volunteer‘s husband and then sought indemnification from Park Pride and its insurer. Id. As here, the insurance policy had a coverage exception for “the owner or anyone else from whom you hire or borrow a covered ‘auto.’ ” Id. at 691. The city sought a summary judgment that it was an insured under the policy, and the trial court denied the city‘s motion. Id. at 689.
The court of appeals affirmed the denial. Id. at 691. Unfortunately for present purposes, the court‘s opinion did not focus on the policy language. See id. Thus, the court did not explain why the coverage exception would apply to a driver who was not actually “the owner or anyone else from whom [Park Pride] hire[d] or borrow[ed]” the dump truck. See id. Instead, the court relied heavily on testimony from Park Pride‘s insurance broker that the policy was not “designed” to cover city vehicles when operated by city employees. Id. Because the Park Pride decision appears to be driven by fact-specific testimony rather than the terms of the insurance policy, we find it of limited value in our analysis.
Instead, we find another decision of the same court to be more pertinent. See Nationwide Mut. Ins. Co. v. Holbrooks, 187 Ga.App. 706, 371 S.E.2d 252 (1988). In that case, Campana—an employee of Holbrooks—was driving a truck that Holbrooks had leased to Apache Transport. Id. at 252-53. Allegedly, Campana crossed the center line while driving the vehicle and caused a fatal collision. Id. at 253. Nationwide, Apache‘s insurer, brought a declaratory judgment action to determine whether its policy provided coverage for the collision. Id. at 252-53. The trial court found that Campana and Holbrooks were insureds and entered summary judgment against Nationwide. Id. at 253. The Georgia Court of Appeals affirmed. Id. at 257.
Importantly, when addressing the coverage exclusion for “[t]he owner or anyone else from whom you hire or borrow a covered auto,” the court said that “it does not apply at all to Campana because Apache did not hire or borrow the vehicle from Campana.” Id. at 256 (emphasis omitted). And notably, unlike the later Park Pride decision, this decision centered on the actual policy terms. Id.
Moreover, as we scour for relevant caselaw, we have found insurance policies with broader exceptions than the present policy that clearly would have denied coverage to a person in the position of DiRisio. See Canal Indem. Co. v. Rapid Logistics, Inc., 514 Fed.Appx. 474, 478 (5th Cir.2013) (noting the policy provides coverage for “[a]nyone else while using with your permission a covered ‘auto’ you own, hire or borrow except ... [t]he owner, or any employee, agent or driver of the owner, or anyone else from whom you hire or borrow a covered ‘auto’ ” (emphasis added)); Daniel v. Nat‘l Cas. Ins. Co., 135 F.Supp.3d 355, 368, 2015 WL 5694287, at *11 (D.Md. Sept. 25, 2015) (noting the policy covered “[a]nyone using a covered ‘auto’ you own, hire or borrow except the owner, or any ‘employee,’ agent or driver of the owner, or anyone else from whom you hire or borrow a covered ‘auto’ “); see also Pa. Nat‘l Mut. Cas. Ins. Co. v. Traveler‘s Ins. Co., 405 Pa.Super. 149, 592 A.2d 51, 54 (1991) (“This insurance does not apply to the owner of a non-owned automobile or any agent or employee of such owner....” (Emphasis added.)). This demonstrates that when the insurer wants to make clear there is no insurance coverage for employees or agents of vehicle lessors, it can readily do so.12
Applying our usual rules of interpretation for insurance policies, we find that DiRisio was an insured under the Nationwide policy. This means that Hanson and Hanson Trucking are also insured to the extent of any liability for DiRisio‘s conduct.
VII. Conclusion.
For the reasons stated, we conclude that
REVERSED AND REMANDED.
All justices concur except WATERMAN, J., who takes no part.
Notes
Notwithstanding any provision of law to the contrary, a motor carrier transportation contract, whether express or implied, shall not contain a provision, clause, covenant, or agreement that purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, a promisee from or against any liability for injury, death, loss, or damage resulting from the negligence or intentional acts or omissions of that promisee, or any agents, employees, servants, or independent contractors who are directly responsible to that promisee. This prohibition applies to any provisions or agreements collateral to or affecting a motor carrier transportation contract. Any such provisions, clauses, covenants, or agreements are void and unenforceable. If any provision, clause, covenant, or agreement is deemed void and unenforceable under this section, the remaining provisions of the motor carrier transportation contract are severable and shall be enforceable unless otherwise prohibited by law.Iowa Code § 325B.1(2) .
6. “Motor carrier” means a person defined in subsection 8, 9, or 10.
....
8. “Motor carrier of bulk liquid commodities” means a person engaged in the transportation, for hire, of bulk liquid commodities upon a highway in this state.
....
9. “Motor carrier of household goods” means a person engaged in the transportation, for hire, of personal effects and property used or to be used in a dwelling, and includes the following:
a. Furniture, fixtures, equipment, and the property of stores, offices, museums, institutions, hospitals, or other establishments when a part of the stock, equipment, or supply of such establishment; except, this paragraph shall not be construed to include the stock-in-trade of any establishment, except when transported as an incident to the removal of the establishment from one location to another.
b. Articles including objects of art, displays, and exhibits, which because of their unusual nature or value, require the specialized handling and equipment usually employed in moving household goods.
10. “Motor carrier of property” means a person engaged in the transportation, for hire, of property by motor vehicle including a carrier transporting liquid commodities or compressed gases in a vehicle having a total cargo tank shell capacity of two thousand gallons or less.
Federal law now codifies this test. See
[A]ny person engaged in the transportation of property or passengers by motor vehicle other than for hire, whether the person is the owner, lessee or bailee of the lading or otherwise, when the transportation is for the purpose of sale, lease, or bailment and in furtherance of the person‘s primary business, other than transportation.Admiral Disposal, 235 Ill.Dec. 858, 706 N.E.2d at 121 (quoting
The defendants also assert that United Suppliers is “a large operation.” However, we do not believe the relative size of United Suppliers and Hanson Trucking should drive the analysis. Typically our rules of law do not vary with the size of the litigants. In any event, the record indicates that the defendants—like United Suppliers—had insurance, although it does not disclose the specifics of their policy. This case may be, for the most part, a contest between two insurers.