Redland Ins. Co. v. Shelter Mutual Ins. , 193 F.3d 1021 ( 1999 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 98-3726
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Redland Insurance Company, as *
Assignee of Charlene Harvell and *
Lonnie Joe Harvell, *
*
Appellee, *
*
v. *
*
Shelter Mutual Insurance Company, *
*
Appellant, *
*
Robert McAdams, Douglas G. Voyles, *
*
Appellees. *
Appeals from the United States
District Court for the
No. 98-3763 Eastern District of Arkansas.
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Redland Insurance Company, as *
Assignee of Charlene Harvell and *
Lonnie Joe Harvell, *
*
Appellant, *
*
v. *
*
Shelter Mutual Insurance Company, *
*
Appellee, *
*
Robert McAdams, Douglas G. Voyles, *
*
Appellees. *
Submitted: September 14, 1999
Filed: October 12, 1999
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Before WOLLMAN, Chief Judge, HEANEY, and BEAM, Circuit Judges.
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HEANEY, Circuit Judge.
This case is before us for a second time. The facts giving rise to this action are
adequately set forth in our prior opinion. See Redland Ins. Co. v. Shelter Gen. Ins.
Cos., 121 F.3d 443 (8th Cir. 1997). In the first appeal, we decided that Redland could
not avoid its responsibility as an insurer of a joint tortfeasor to pay its equitable share
of the judgment by purchasing an assignment of the judgment from the Harvells
(plaintiffs in the underlying tort action) and then collecting 100% of that judgment from
the remaining joint tortfeasors. We determined, however, that Redland’s complaint in
its action to collect the purportedly assigned judgment was sufficient to state an
alternative cause of action for contribution. We therefore remanded the case to the
district court with instructions to permit Redland to proceed with an action for
contribution. See id. at 446.
On remand, the district court concluded that Arkansas law entitled Redland to
seek contribution from Shelter as a joint tortfeasor, rejecting Shelter’s argument that
the federally-mandated MCS-90 endorsement required coverage for public liability
only, and not for purposes of disputes among insurers over ultimate liability. However,
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the district court also determined that the record was insufficient to establish that
Redland had in fact fully satisfied the judgment obtained by the Harvells in the
underlying tort action, a precondition under Arkansas law to an action for contribution.
The district court thus dismissed Redland’s contribution action without prejudice. See
Redland Ins. Co. v. Shelter Gen. Ins. Cos., No. J-C-95-261 (E.D. Ark. Sept. 23, 1998).
Shelter appeals the district court’s decision that Redland may seek contribution,
and Redland cross-appeals from the district court’s decision that Redland failed to
demonstrate that it was entitled to contribution. Redland has moved to supplement the
record on appeal with a satisfaction of judgment executed by the Harvells after the
district court’s dismissal of Redland’s action against Shelter. This document indicates
that Redland satisfied the Harvells’ judgment when it paid them $505,782.21 for the
purported assignment. We now affirm the district court’s determination that Redland
may seek contribution. Further, we grant Redland’s motion to supplement the record
on appeal, reverse the district court’s dismissal of Redland’s contribution action, and
remand for entry of judgment in favor of Redland.
We agree with the district court that the federally-mandated MCS-90
endorsement does not bar Redland from seeking contribution as provided by Arkansas
law. Although it is true that the endorsement and the pertinent regulations of the now-
defunct Interstate Commerce Commission (ICC) address only public liability and “do
not fix the liability between insured or insurance companies,” Grinnell Mut.
Reinsurance Co. v. Empire Fire & Marine Ins. Co., 722 F.2d 1400, 1404 (8th Cir.
1983), we believe the regulations’ silence on the issue does not require preemption of
state-law doctrines that do resolve such questions, see Occidental Fire & Cas. Co. v.
International Ins. Co., 804 F.2d 983, 986 (7th Cir. 1986) (holding that as long as
injured member of public is compensated, state laws and private agreements may be
applied to allocate ultimate financial burden); Carolina Cas. Ins. Co. v. Insurance Co.
of N. Am., 595 F.2d 128, 138 n.31 (3d Cir. 1979) (stating that preemptive effect ICC
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regulations may have upon state regulation of motor carriers does not extend to
displace state-law doctrines regarding, inter alia, respondeat superior and contribution
among tortfeasors).
To the extent this position runs contrary to the position taken by the Fifth Circuit
in such cases as John Deere Insurance Co. v. Truckin’ USA, 122 F.3d 270, 274-75 (5th
Cir. 1997), and Industrial Indemnity Co. v. Truax Truck Line, Inc., 45 F.3d 986, 991-
92 (5th Cir. 1995), we decline to follow those cases. We agree with the district court
that the policy embodied in the regulations, namely, ensuring speedy satisfaction of
judgments attributed to negligent truckers, is best served by a rule that allows ultimate
financial burdens to be allocated after injured members of the public are compensated.
To hold otherwise would encourage insurers that are jointly and severally liable either
to engage in wrangling over such allocations before the public is compensated, or to
play what Redland aptly terms a game of “chicken,” attempting to evade being tagged
first by the injured party and thereby shouldering the entire financial liability.
We also agree with the district court that Arkansas law permits Redland to seek
contribution from Shelter as a “joint tortfeasor” under Ark. Code Ann. § 16-61-201
(Michie 1987) (“‘joint tortfeasors’ means two (2) or more persons jointly or severally
liable in tort for the same injury to person or property, whether or not judgment has
been rendered against all or some of them”). Our reading of Arkansas law indicates
that Redland’s contribution action is not defeated merely because the tort liability
shared by the two insurers arises by virtue of principles of vicarious liability. See
Shelton v. Firestone Tire & Rubber Co., 662 S.W.2d 473, 474-75 (Ark. 1983) (noting
that after tendering amount of judgment, directly-liable joint tortfeasor should be
permitted to seek contribution from joint tortfeasor whose liability arose by virtue of
employer-employee relationship).
Because we believe the district court correctly determined that Redland is
entitled to contribution from Shelter, we believe we can best ensure a just and speedy
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resolution of this case by granting Redland’s motion to supplement the record.
Although we decline to decide whether or not the satisfaction of judgment is necessary
to establish that Redland has fulfilled the conditions of Arkansas law for seeking
contribution, see Ark. Code Ann. § 16-61-202(2) (Michie 1987) (joint tortfeasor is not
entitled to contribution until making payment discharging the common liability), we
believe it is certainly sufficient to establish that Redland has extinguished the liability
shared by the joint tortfeasors. We thus grant Redland’s motion to supplement the
record and remand to the district court for entry of judgment in favor of Redland in the
amount of $252,891.11 (50% of the amount Redland paid the Harvells), plus 6%
interest from the date Redland made the Harvells whole.1
A true copy.
Attest.
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
1
Although the satisfaction of judgment indicates Redland paid the Harvells on
an unspecified date in August 1995, Redland represents that it made the payment to the
Harvells on August 15, 1995. Shelter does not dispute this date.
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