Amerisure Insurance Company v. Navigators Insuranc ( 2011 )

Case: 11-20117 Document: 00511618770 Page: 1 Date Filed: 09/30/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
September 30, 2011
No. 11-20117 Lyle W. Cayce
Summary Calendar Clerk
AMERISURE INSURANCE COMPANY,
Plaintiff–Appellant
v.
NAVIGATORS INSURANCE COMPANY,
Defendant–Appellee
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:06-CV-2096
Before REAVLEY, SMITH, and PRADO, Circuit Judges.
PER CURIAM:*
I. FACTUAL AND PROCEDURAL BACKGROUND
This case is the second appeal arising from a diversity insurance
subrogation case regarding an underlying tort lawsuit. The previous panel
capably set out the facts of that underlying suit and we reproduce the relevant
portions of them here:
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
Case: 11-20117 Document: 00511618770 Page: 2 Date Filed: 09/30/2011
No. 11-20117
On October 9, 2003, William Sylvester drove two employees of Texas
Crewboats Inc., Captain Dixie Clanton and Deckhand Jimmy
Satterfield, from Freeport, Texas to Morgan City, Louisiana where
the two were to board and crew the Florida Lilly, one of Texas
Crewboats's vessels. While en route, Sylvester fell asleep at the
wheel, thereby causing the vehicle to veer off of the road and flip
over. Clanton and Satterfield suffered significant injuries as a
result. They sued Texas Crewboats and Sylvester in Louisiana state
court, claiming negligence and recklessness against Sylvester and
bringing similar claims under the Jones Act against Texas
Crewboats. Clanton and Satterfield claimed that Sylvester was
driving in the course and scope of his employment with Texas
Crewboats and that Texas Crewboats was vicariously liable. They
also sued Texas Crewboats for maintenance and cure benefits.
At the time, Texas Crewboats carried three insurance policies that
the incident potentially implicated. Amerisure provided $1 million
of primary automobile-liability insurance. Under that policy,
Sylvester, who was driving the vehicle with the permission of Texas
Crewboats, was also an insured. . . . Navigators was the excess
insurer, covering up to $9 million. Under this arrangement, if an
incident fell within the coverage of any of the primary insurers, that
insurer must indemnify the insured up to $1 million, and then,
Navigators would cover the remainder up to $9 million. Under the
circumstances, Texas Crewboats wanted the case settled, and all of
the interested parties, including the insurers, agreed. Following
mediation, the parties agreed to the following settlement: Clanton's
claims would be settled for $1,325,000 and Satterfield's for
$1,025,000. The insurers, however, could not agree on which of them
should pay. Amerisure argued that only the Fireman's and
Navigators policies applied. Navigators insisted that the incident
also fell within the Amerisure policy, and therefore, demanded that
Amerisure pay its $1 million limit.
...
In April 2006, Amerisure moved for summary judgment in
Louisiana state court, seeking a declaration that its policy did not
cover the incident. On June 15, 2006, Amerisure voluntarily
withdrew that motion. Ultimately, Amerisure paid $1 million and
Navigators paid $1.35 million. . . . In the settlement agreement,
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Amerisure reserved its right to seek reimbursement from
Navigators through subrogation. During those settlement
negotiations, Amerisure filed this subrogation action in the United
States District Court for the Southern District of Texas.
Amerisure Ins. Co. v. Navigators Ins. Co., 611 F.3d 299, 302–04 (5th Cir. 2010).
The district court granted summary judgment to Navigators, and that
order was appealed to this Court. The previous panel reversed the district court,
holding that Amerisure could subrogate against Navigators. Id. at 313. The
previous panel then remanded the case to the district court to determine
whether Sylvester was an employee of Texas Crewboats or just an independent
contractor. Both parties conducted discovery, and the district court held a bench
trial on the issue of Sylvester’s employment status. Finding that Sylvester was
an independent contractor and not an employee of Texas Crewboats, the district
court found for Navigators. Amerisure filed this appeal.
II. STANDARD OF REVIEW
When sitting in diversity, we must apply the substantive law of the forum
state, in this case Texas. Holt, 627 F.3d at 191 (citing Erie R.R. v. Tompkins,
304 U.S. 64 (1938)). Our review of a district court’s “legal conclusions as to the
content of state law [is] de novo,” but we review factual determinations under
the state substantive law for clear error. Northrop Grumman Ship Sys., Inc. v.
Ministry of Defense of the Republic of Venex., 575 F.3d 491, 499 (5th Cir. 2009)
(citations and emphasis omitted).
The ultimate conclusion that a person is either an employee or an
independent contractor is a legal conclusion (reviewed de novo), cf. Brock v. Mr.
W Fireworks, Inc., 814 F.2d 1042, 1044 (5th Cir. 1987), but the test to determine
that ultimate issue is “whether the employer has the right to control the
progress, details, and methods of operations of the employee's work.” Thompson
v. Travelers Indem. Co. of R.I., 789 S.W.2d 277, 278 (Tex. 1990). In determining
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the right to control, Texas courts look at a variety of factors, see Limestone Prods.
Distrib., Inc. v. McNamara, 71 S.W.3d 308, 312 (Tex. 2002) (listing factors), but
the “right of control is ordinarily a question of fact.” Sparger v. Worlley Hosp.,
Inc., 547 S.W.2d 582 (Tex. 1977); see also Campbell v. Keystone Aerial Surveys,
Inc., 138 F.3d 996, 1006 (5th Cir. 1998) (citing Halliburton v. Tex. Indem. Ins.
Co., 213 S.W.2d 677[, 680–81] (Tex. 1948)). It is only a question of law where
there is “no dispute as to controlling facts and only one reasonable conclusion
can be drawn from those facts.” Campbell, 138 F.3d at 1006 (citing Indus.
Indem. Exchange v. Southard, 160 S.W.2d 905, 906 (Tex. 1942)).
III. DISCUSSION
As this Court in Brock discussed with respect to determinations of
workers’ status under the federal Fair Labor Standards Act, there are really
multiple determinations being made by the district court. See Brock, 814 F.2d
at 1044–45. At base, there are those facts that underlie the factual findings
under the Limestone factors.1 The court in Brock described these as “historical
facts.” Id. at 1044. In this case, these include the district courts findings that
Sylvester had no special training and that Sylvester was paid by the trip in cash
and not a salary or hourly wage. One level up are the findings on the Limestone
factors themselves, another factual determination. Cf. id. at 1044. In the
language of the Texas caselaw in this area, these might be described as the
“controlling facts.” See Indus. Indem. Exch. v. Southard, 160 S.W.2d at 906.
1
In Limestone Products Distribution v. McNamara, the Texas Supreme Court laid out
factors it considers when “meausr[ing] the right to control”:
(1) the independent nature of the worker's business; (2) the worker’s obligation
to furnish necessary tools, supplies, and materials to perform the job; (3) the
worker’s right to control the progress of the work except about final results; (4)
the time for which the worker is employed; and (5) the method of payment,
whether by unit of time or by the job.
71 S.W.3d 308, 312 (Tex. 2002) (citations omitted).
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Though the district court did not specifically describe its findings in this way,
these findings here include, as to Limestone factor one, that “Sylvester retained
control over the details of each assignment” and as to Limestone factor three that
the nature of driving allowed Sylvester to “exercise independent discretion.”
Amerisure Ins. Co. v. Navigators Ins. Co., No. 4:06-CV-2096, 2011 WL 677338,
at *2 (S.D. Tex. Feb. 15, 2011). While the Brock court only had three levels of
inquiry, the nature of the Texas precedent requires four determinations. The
FLSA has factors that go to whether there was an employment relationship and
right of control is one of those. Brock, 811 F.2d at 1043–44 (citing United States
v. Silk, 331 U.S. 704, 715 (1947)) (listing “the right of control” as one of the five
Silk factors). But in Texas, the factors discussed in Limestone go to the right of
control and right of control determines the ultimate legal question as to the
worker’s status. Thompson, 789 S.W.2d at 278.
The heart of the dispute here is over the controlling facts and the weight
afforded them by the district court in determining whether Texas Crewboats had
the right to control Sylvester and in turn, Sylvester’s status as an employee or
independent contractor. Since there is a dispute as to the controlling facts and
the determination of right to control under Texas law is a question of fact, our
review is for clear error. See Campbell, 138 F.3d at 1006 (applying the clear
error standard to a determination of a worker’s status under Texas law). If, as
here, “there are two permissible views of the evidence, the factfinder’s choice
between them cannot be clearly erroneous.” In re Jacobsen, 609 F.3d 647, 662
(5th Cir. 2010) (quoting Anderson v. City of Bessemer City, N.C., 470 U.S. 564,
574 (1985)) (internal quotation marks omitted).
Navigators showed that Sylvester maintained discretion over route
selection, which speaks to a lack of control over the details of the work. It proved
that though Sylvester worked about twenty hours per week for three years, he
chose when to work and did not have to accept any particular job from Texas
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Crewboats. Sylvester took no part in any benefits programs of Texas Crewboats
(retirement, health insurance) and was paid by the job. Finally, Navigators
showed that Sylvester was allowed to work other jobs during his time driving for
Texas Crewboats. To be sure, Amerisure did show that Sylvester’s truck was
owned and maintained by Texas Crewboats at all relevant times. Moreover,
these considerations are “prima facie” evidence of control under Texas law.
Ochoa v. Winerich Motor Sales Co., 94 S.W.2d 416, 418 (Tex. 1936).
Nonetheless, there was enough conflicting evidence marshaled by Navigators to
render the district court’s finding that Texas Crewboats did not have the right
to control Sylvester not clearly erroneous.
IV. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s judgment for
Navigators.
AFFIRMED.
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