Jackson v. Builders Transport ( 1996 )


Menu:
  • UNPUBLISHED
    UNITED STATES COURT OF APPEALS
    FOR THE FOURTH CIRCUIT
    CASSANDRA DIANNE JACKSON,
    Plaintiff-Appellee,
    v.
    BUILDERS TRANSPORT, INCORPORATED,
    a Virginia corporation,                                         No. 95-2983
    Defendant-Appellant,
    and
    HARVEY L. DONAHUE,
    Defendant.
    Appeal from the United States District Court
    for the Northern District of West Virginia, at Clarksburg.
    Irene M. Keeley, District Judge.
    (CA-92-13)
    Argued: July 8, 1996
    Decided: August 2, 1996
    Before WILKINSON, Chief Judge, HAMILTON, Circuit Judge,
    and JOSEPH F. ANDERSON, JR., United States District Judge for
    the District of South Carolina, sitting by designation.
    _________________________________________________________________
    Affirmed by unpublished per curiam opinion.
    _________________________________________________________________
    COUNSEL
    ARGUED: Alan M. Gelb, FISCHBEIN, BADILLO, WAGNER,
    HARDING, New York, New York, for Appellant. Barry M. Hill,
    GOMPERS, MCCARTHY, HILL & MCCLURE, Weirton, West Vir-
    ginia, for Appellee. ON BRIEF: Pamela Phillips, FISCHBEIN,
    BADILLO, WAGNER, HARDING, New York, New York; John E.
    Busch, BUSCH & TALBOTT, Elkins, West Virginia, for Appellant.
    _________________________________________________________________
    Unpublished opinions are not binding precedent in this circuit. See
    Local Rule 36(c).
    _________________________________________________________________
    OPINION
    PER CURIAM:
    Cassandra Dianne Jackson (Jackson) brought this action against
    Builders Transport, Inc. (BTI), a long-distance trucking company, and
    Harvey L. Donahue (Donahue), a truck driver employed by BTI.
    Jackson sought damages for personal injuries resulting from an acci-
    dent that occurred as she was riding in a BTI truck being driven by
    Donahue. BTI appeals from a $500,000 judgment entered in favor of
    Jackson. We affirm.
    I.
    In 1991, while on a driving trip for BTI, Donahue met Jackson at
    a truck stop in Houston, Texas. Although BTI had a written policy
    prohibiting drivers from carrying passengers, Donahue allowed Jack-
    son to ride with him for several weeks. On November 22, 1991, as
    he was driving along a mountain road near Elkins, West Virginia,
    Donahue lost control of the truck, causing the truck to plummet down
    the side of a mountain. The accident rendered Jackson a quadriplegic.1
    At the time of the accident, BTI was self-insured for bodily injury
    and property damage liability up to $500,000. For liability in excess
    of $500,000, BTI had an insurance policy issued by Insurance Com-
    pany of North America (INA) that provided $14,500,000 of coverage
    _________________________________________________________________
    1 Jackson has regained some use of her arms.
    2
    over the self-insured limit of $500,000. Before the accident occurred,
    the Interstate Commerce Commission (ICC) had authorized BTI to
    self-insure the first $500,000 of its bodily injury and property damage
    liability under 
    49 U.S.C. § 10927.2
     BTI also received permission from
    the West Virginia Public Service Commission (PSC) to satisfy West
    Virginia's financial responsibility requirements through self-insurance.3
    Jackson brought this action in United States District Court for the
    Northern District of West Virginia,4 alleging that the accident
    occurred while Donahue was acting within the scope of his employ-
    ment with BTI and that the accident resulted from Donahue's negli-
    gence. Jackson demanded judgment against Donahue and BTI in an
    amount in excess of $5,000,000. BTI moved for summary judgment,
    arguing that it was not vicariously liable to Jackson for Donahue's
    negligence because Donahue violated BTI's rules in allowing Jackson
    to ride with him. The district court denied the motion.
    At the hearing on BTI's summary judgment motion, a question
    arose regarding whether BTI's self-insurance constituted coverage for
    Donahue even if BTI was not vicariously liable for Donahue's negli-
    gence. BTI asserted that its self-insurance did not constitute such cov-
    erage. Because the West Virginia Supreme Court of Appeals had
    _________________________________________________________________
    2 Under 
    49 U.S.C. § 10927
    , motor carriers must file with the ICC a cer-
    tificate of insurance, proof of qualifications as a self-insurer, or some
    other form of security in order to obtain a permit to provide interstate
    transportation services. See 
    49 U.S.C. §§ 10923
    , 10927; 
    49 C.F.R. §§ 1043.1
     to .5. The ICC required BTI to have a minimum of $750,000
    of liability coverage. See Jackson v. Donahue , 
    457 S.E.2d 524
    , 531 (W.
    Va. 1995).
    3 West Virginia law requires all owners of motor vehicles to maintain
    "proof of financial responsibility," i.e. , liability insurance in the mini-
    mum amounts of $20,000 for injury to one person and $40,000 for injury
    to more than one person arising out of one accident. See W. Va. Code
    §§ 17D-2A-3, 17D-4-2. At the time BTI obtained permission to self-
    insure, the West Virginia PSC required motor carriers to obtain liability
    insurance in the minimum amounts of $50,000 for injury to one person
    and $100,000 for injury to more than one person arising out of one acci-
    dent. See Jackson, 
    457 S.E.2d at 531
    .
    4 Jurisdiction was based on diversity of citizenship. See 
    28 U.S.C. § 1332
    .
    3
    never addressed the question of whether, under West Virginia law, a
    self-insured employer owes insurance coverage to its employees
    regardless of vicarious liability, the district court indicated that it
    would be inclined to certify this question to the West Virginia
    Supreme Court of Appeals.
    Although BTI disputed whether its self-insurance provided cover-
    age for Donahue's negligence, INA acknowledged that the insurance
    policy it issued to BTI provided coverage for Donahue's negligence,
    but only for damages in excess of $500,000 and then only to the pol-
    icy limits. Accordingly, after the summary judgment hearing, INA
    negotiated a settlement agreement with Jackson. Although BTI was
    not a party to the settlement agreement, it is apparent that the settle-
    ment agreement was negotiated as part of an effort among all the par-
    ties and the district court to isolate questions that would be certified
    to the West Virginia Supreme Court of Appeals. The district court
    entered an order summarizing the settlement agreement as follows:
    A settlement has been reached between the plaintiff and
    [INA] for payment of $2 million on behalf of the defen-
    dant[s]. This $2 million is a settlement for the amount of the
    plaintiff's claim against the defendants which exceeds
    $500,000.00. Defendant BTI is self-insured for the first
    $500,000.00 of the plaintiff's claim, and the plaintiff's enti-
    tlement to this first $500,000.00 is an issue yet to be
    resolved. In essence the settlement represents a compromise
    of the amount of the plaintiff's damages at $2.5 million,
    with the $2 million in excess of BTI's self-insurance being
    paid now, and with the plaintiff's entitlement to the first
    $500,000.00 to be determined as an issue of law in the
    future. The $2 million settlement will release [INA] and
    defendant Donahue completely from liability to the plaintiff,
    and it will release defendant BTI from liability in excess of
    its $500,000.00 of self-insurance.
    (J.A. 333-34). With Donahue and INA thus removed from the case,
    attorneys for BTI and Jackson, along with the district court, devised
    two questions to be certified to the West Virginia Supreme Court of
    Appeals:
    4
    1. Under West Virginia law, does a foreign commercial
    trucking company which has been granted authority to self-
    insure its automobile liability exposure in West Virginia
    owe coverage to an employee irrespective of vicarious lia-
    bility?
    If the answer to question 1 is yes, then:
    2. Where there is up to $500,000 in self-insurance avail-
    able, is the extent of the company's coverage obligation lim-
    ited to the dollar amounts [i.e., $20,000] provided for in [W.
    Va. Code § 17D-4-2]?
    Jackson, 
    457 S.E.2d at 526-27
    .
    The West Virginia Supreme Court of Appeals answered the first
    question in the affirmative, holding in effect that BTI must provide
    insurance coverage for Donahue for this accident. See 
    id. at 530
    . The
    court then answered the second certified question in the negative,
    holding that the extent of BTI's coverage obligation was not limited
    to $20,000. 
    Id. at 532
    .
    After the West Virginia Supreme Court of Appeals rendered its
    decision, Jackson filed a motion in the district court for entry of judg-
    ment in the amount of $500,000 against BTI. BTI moved to dismiss
    the case, or in the alternative, for a determination that BTI's liability
    to Jackson was limited to $20,000, rather than $500,000. The district
    court denied BTI's motion to dismiss and granted Jackson's motion
    to enter judgment in the amount of $500,000 against BTI, rejecting
    BTI's argument that the judgment amount should be limited to
    $20,000. BTI appeals, arguing that the district court erred in entering
    judgment in the amount of $500,000.5
    II.
    At the outset, we note that by agreeing to submit the second certi-
    fied question to the West Virginia Supreme Court of Appeals, BTI
    _________________________________________________________________
    5 BTI does not appeal the denial of its motion to dismiss.
    5
    agreed to allow that court to determine, as a matter of West Virginia
    law, the amount of insurance coverage it was required to provide for
    Donahue's negligence. By answering the second certified question in
    the negative, the West Virginia Supreme Court of Appeals signified
    that BTI, as an insurer, was obligated to provide $500,000 of insur-
    ance coverage for Donahue's negligence. Because federal courts sit-
    ting in diversity must apply state law on state law matters, see Erie
    R. Co. v. Tompkins, 
    304 U.S. 64
    , 77 (1938), we are bound to enforce
    the West Virginia Supreme Court of Appeals' decision.
    BTI argues that we are not bound by the decision of the West Vir-
    ginia Supreme Court of Appeals because that court did not base its
    decision on West Virginia law, but rather on an erroneous application
    of federal law. More specifically, BTI posits that the West Virginia
    Supreme Court of Appeals based its decision on an erroneous applica-
    tion of federal preemption principles, and that because federal courts
    are not bound by state court determinations regarding federal preemp-
    tion, see Grantham v. Avondale Indus., 
    964 F.2d 471
    , 473-74 (5th Cir.
    1992), this court is free to disregard the West Virginia Supreme Court
    of Appeals' answer to the second certified question. To evaluate this
    argument, it is necessary to review the reasoning used by the West
    Virginia Supreme Court of Appeals in answering the second certified
    question.
    The second certified question simply asked whether the extent of
    BTI's insurance obligation was limited to the dollar amount, i.e.
    $20,000, provided for in W. Va. Code § 17D-4-2. To answer this
    question, the West Virginia Supreme Court of Appeals began its anal-
    ysis by recognizing that W. Va. Code § 17D-4-2 required liability
    insurance in the minimum amount of $20,000 for personal injuries to
    one person and that a regulation of the PSC applicable to motor carri-
    ers required liability insurance in the minimum amount of $50,000 for
    personal injuries to one person. Jackson, 
    457 S.E.2d at 531
    . The court
    went on to reject the contention that these amounts constituted caps
    on the extent of BTI's liability. 
    Id. at 532
    . In reaching this conclusion,
    the court was influenced by the fact that "in granting self-insurer sta-
    tus to BTI, the Public Service Commission weighed substantially"
    BTI's compliance with the federal minimum requirement of
    $750,000. 
    Id. at 531
    . Indeed, the PSC piggybacked on to the federal
    requirements by requiring BTI to provide the PSC with "``any and all
    6
    supplementary information that it provides to the ICC on the same
    time basis.'" 
    Id.
     The court was further influenced by the fact that in
    pursuit of permission to self-insure, BTI informed the PSC that the
    ICC had authorized BTI to self-insure and that BTI"``will self-insure
    its bodily injury and property damage liability to a level of
    $500,000.'" 
    Id.
     The court concluded:
    Obviously, BTI was operating in interstate commerce
    during the period in question and could not have done so
    without complying with the federal requirements. It was
    self-insured in other states, in addition to West Virginia.
    Accordingly, we hold that a foreign commercial trucking
    corporation operating in interstate commerce pursuant to a
    federal regulatory scheme, which provides federal minimum
    limits of liability coverage, is not subject to the[liability]
    limits set forth in W. Va. Code, 17D-4-2 [which provides a
    $20,000 limit], concerning this State's financial responsibil-
    ity provisions, even though the corporation was granted
    authority to self-insure by the West Virginia Public Service
    Commission. Therefore, we answer the second certified
    question in the negative.
    
    Id. at 532
    .
    Accordingly, the West Virginia Supreme Court of Appeals con-
    cluded that, as a matter of state law, BTI's obligation to provide insur-
    ance coverage was not limited to $20,000 because the decision to
    grant BTI permission to self-insure under state law was based on the
    existence of the federal minimum requirements and the fact that BTI
    informed the PSC that the ICC had authorized BTI to self-insure the
    first $500,000 of its bodily injury and property damage liability under
    
    49 U.S.C. § 10927
    .
    An unpublished order certifying the case back to the district court
    states that the West Virginia Supreme Court of Appeals answered the
    second certified question by finding that "federal minimum limits of
    liability coverage imposed on foreign commercial trucking corpora-
    tions operating in interstate commerce preempt general state mini-
    mum limits of liability coverage set forth in W. Va. Code § 17D-4-2
    7
    . . . ." (J.A. 368). This order was signed by the clerk of the West Vir-
    ginia Supreme Court of Appeals.
    Seizing on the word "preempt" in the order certifying the case back
    to the district court, BTI argues that the West Virginia Supreme Court
    of Appeals based its answer to the second certified question on fed-
    eral preemption tenets rather than on West Virginia law. Our review
    of the West Virginia Supreme Court of Appeals' decision, however,
    convinces us that the court did not base its decision on federal pre-
    emption. At no point did the court use the words"preempt" or "pre-
    emption," cite cases concerning federal preemption, or in any way
    discuss federal preemption tenets. Instead, the court emphasized the
    factors relied on by the West Virginia PSC in allowing BTI to self-
    insure, including the crucial factor that BTI had complied with the
    ICC requirements to self-insure. Considering that the PSC "weighed
    substantially" BTI's compliance with the higher ICC requirements for
    self-insurance, even to the point of ordering BTI to file copies of any
    documents it filed with the ICC to the PSC, the court reasoned that
    the PSC did not intend for BTI's obligation to provide coverage to be
    limited by the West Virginia statutory or regulatory minimum
    requirements. As the court stated, "In essence, the PSC granted BTI,
    as a self-insured entity, permission to carry bodily injury liability
    insurance in the amount of $14,500,000 (with its excess liability car-
    rier) and $500,000 in primary self-insurance for total coverage in the
    amount of $15,000,000." Jackson, 
    457 S.E.2d at
    526 n.3.
    Viewed in the context of the court's emphasis in its published opin-
    ion on the factors relied on by the PSC in allowing BTI to self-insure,
    the lone reference to the word "preempt" in the unpublished order cer-
    tifying the case back to the district court is of no import. The clerk's
    use of the word "preempt" did not imply that the federal minimum
    requirements preempt state minimum requirements as a matter of fed-
    eral law because the West Virginia Supreme Court of Appeals clearly
    did not rely on preemption in answering the certified questions.
    Rather, properly understood, the clerk's use of the word "preempt"
    was a shorthand way of stating that the federal minimum require-
    ments, coupled with the ICC's authorization for BTI to self-insure the
    first $500,000 of its bodily injury and property damage liability, pro-
    vided the cap on BTI's liability under West Virginia law.
    8
    Because the West Virginia Supreme Court of Appeals based its
    answer to the second certified question on West Virginia law, we are
    bound to enforce that court's decision. See Erie , 
    304 U.S. at 77
    .
    Accordingly, we affirm the district court's entry of judgment in the
    amount of $500,000 in favor of Jackson.
    AFFIRMED
    9
    

Document Info

Docket Number: 95-2983

Filed Date: 8/2/1996

Precedential Status: Non-Precedential

Modified Date: 4/18/2021