American Southern Insurance Company v. Spn Trans, LLC. ( 2021 )

FIRST DIVISION
BARNES, P. J.,
GOBEIL and MARKLE, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
https://www.gaappeals.us/rules
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COURT. ALL FILINGS MUST BE SUBMITTED WITHIN
THE TIMES SET BY OUR COURT RULES.
June 3, 2021
In the Court of Appeals of Georgia
A21A0174. AMERICAN SOUTHERN INSURANCE COMPANY GO-007
v. SPN TRANS, LLC. et al.
GOBEIL, Judge.
American Southern Insurance Company (“ASIC”) filed a petition for
declaratory judgment in the trial court seeking a determination as to whether it was
responsible for providing insurance coverage for a motor vehicle accident. Following
a bench trial, the trial court found as a matter of law that at the time of the accident
the truck driven by ASIC’s insured was being used for personal reasons, and thus,
ASIC was responsible for coverage for the accident under its non-trucking policy.
ASIC now appeals, arguing that the trial court erred by: (1) failing to properly
interpret the unambiguous language contained in the non-trucking policy to find that
routine maintenance to the truck constitutes a business use; (2) ignoring this Court’s
prior decisions, which define when a truck driver’s actions are considered to be part
of their trucking business versus for personal use; (3) ignoring the applicable federal
regulations, which state that transporting a truck for maintenance does not constitute
a personal use; (4) failing to consider the policy implications of its ruling on
Georgia’s trucking and insurance law; and (5) applying inadmissible evidence to its
judgment. For the reasons that follow, we affirm.
On an appeal from an entry of judgment following a bench trial,
we apply a de novo standard of review to any questions of law decided
by the trial court, but will defer to any factual findings made by that
court if there is any evidence to sustain them. Nevertheless, if the trial
court makes a finding of fact which is unsupported by the record, that
finding cannot be upheld, and any judgment based upon such a finding
must be reversed.
Denapoli v. Owen, 341 Ga. App. 517, 518 (801 SE2d 314) (2017) (citation and
punctuation omitted). So construed, the record shows that Petrov Tchotrov is the
owner and sole employee of SPN Trans, LLC (“SPN”). As part of its business
operations, SPN owns and operates a 2003 Freightliner tractor (the “truck”) and
attached trailer, which it leased to motor carriers in order to haul cargo loads.
On March 16, 2016, SPN and FBM Express, Inc. (“FBM”) entered into a
twelve-month lease, creating a carrier-independent contractor relationship wherein
2
SPN served as the independent contractor hauling loads for FBM, the carrier. The
lease contained an automatic one-year renewal provision, unless either party gave
written notice of intent not to renew at least 30 days before its expiration. Section V
of the lease, titled “Independent Contractor Warranty and Representation,” included
the following provision:
[SPN] warrants and represents that it is the owner of every unit of leased
equipment and that [FBM] shall have possession of the equipment
during the term of this [l]ease. [SPN] further warrants that every such
unit of leased equipment shall be in safe mechanical and operating
condition, free of defects, properly licensed[,] and in full compliance
with the Motor Carrier Safety Regulations of the U. S. Department of
Transportation (DOT) and all other applicable laws, regulations[,] and
ordinances of Federal, State or Municipal authorities having jurisdiction
[as] of the date it is delivered to [FBM] and shall be maintained as such
throughout the term of this [l]ease.”
The lease required FBM to secure insurance coverage for any claims for when
the truck was being operated for business purposes on behalf of FBM, which was
done through a policy issued by Spirit Commercial Auto RRG (“Spirit”). The lease
further required SPN to obtain insurance for non-trucking liability that would cover
SPN and Tchotrov when the truck was not being used for FBM business. SPN
secured this required coverage by purchasing a commercial non-trucking liability
3
insurance policy with ASIC (the “Policy”), which contained a $1,000,000 limit for
any one accident or loss. The Policy’s Certificate of Insurance contained the
following exclusions from coverage, including when the truck: “[i]s being operated,
maintained or used to carry property in any business or en route for such purpose”;
“[i]s under [FBM] direction, control[,] or dispatch”; or “[i]s not under ‘permanent
lease’ with [FBM].”
As relevant here, on December 23, 2016, Evan Parrish was riding his
motorcycle when he was struck by Tchotrov, who was driving the truck without the
trailer. The truck left the scene, and Tchotrov initially denied knowledge of the
accident. However, he admitted that he drove the truck on the day of the accident to
have it repaired at an acquaintance’s house. The acquaintance, a mechanic, intended
to install a new air compressor in the truck at no charge. According to Tchotrov, FBM
later learned that the truck had been involved in an accident and then alerted Tchotrov
of this fact.
On January 5, 2017, ASIC learned of the December 23, 2016 accident
involving the truck. ASIC’s counsel sent SPN written notice on January 27, 2017,
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indicating that ASIC was “investigating this matter subject to a full reservation of its
rights regarding coverage for this matter” under the Policy it had issued to SPN.
In mid-December, before the accident, Tchotrov had contacted the president
of FBM to discuss terminating the lease. According to Tchotrov, they agreed that
SPN would work for FBM through the end of 2016. FBM countered that Tchotrov
quit on December 22, 2016, and did not haul another load for FBM after that date.
On January 30, 2017, FBM sent Tchotrov a notice of the termination of the
lease with a Release of Equipment form, back-dating the termination to December 22,
2016, the day before the accident. In her deposition, FBM’s president testified that
the termination notice was sent on December 22, 2016. The form sent on January 30,
2017, suggests that it was signed by Tchotrov on December 22, 2016, but Tchotrov
insisted that he did not sign it until January 30, 2017, when he opened the email from
FBM.
ASIC filed a petition for a declaratory judgment in April of 2017, naming SPN,
Tchotrov, and Parrish as respondents.1 In its petition, ASIC sought a determination
1
ASIC later filed a motion for leave to amend its petition to add FBM as a party
respondent, which the trial court granted. ASIC then filed a first amended petition for
declaratory judgment, and completed service on FBM. After FBM failed to file a timely
response, ASIC filed a motion for default judgment, which the trial court granted. FBM is
not a party to the instant appeal.
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that any potential claims raised in connection with the accident would not be
compensable under the terms of the Policy issued to SPN. Approximately a year later,
ASIC moved for summary judgment, arguing in pertinent part that neither SPN nor
Tchotrov was entitled to coverage as neither was an insured under the Policy because
a valid long term lease with a motor carrier was not in place when the accident
occurred, which was a policy coverage requirement.
The trial court denied ASIC’s motion for summary judgment, concluding that
there remained a disputed issue of fact as to whether SPN was still under a valid long
term lease with FBM in light of the contentions of each party as to how and when the
lease terminated. The court also stated that any assertion by ASIC that there was an
oral agreement by FBM and SPN to terminate the lease on December 22, 2016, failed
because retroactive cancellation of insurance is against public policy. The trial court
certified its order for immediate review. ASIC filed an application for interlocutory
review, which we denied. See Case No. A19I0060 (denied Oct. 26, 2018).
After a bench trial, the trial court issued a final judgment, ruling that ASIC was
liable to provide coverage to SPN and Tchotrov in connection with the accident under
the terms of the Policy. Specifically, the court found that: (1) the long-term lease
between SPN and FBM had not terminated prior to the December 23, 2016 collision
6
between Tchotrov and Parrish, as this would be “contrary to the applicable legal
precedent in Georgia as well as public policy”2; and (2) there was no indication that
Tchotrov was “under orders” from FBM or engaged in trucking business on behalf
of FBM at the time of the collision as he was driving the truck to the home of an
acquaintance to obtain help with the repair of a compressor on the truck. The instant
appeal followed.
In several interrelated enumerations of error, ASIC argues that the trial court
erred in concluding that the Policy provides coverage for damages stemming from the
December 23 accident. The crux of ASIC’s contention is that because Tchotrov was
driving the truck to get its air compressor replaced at the time of the accident, this
constituted a business use excluded from the scope of the coverage under the terms
of Policy. We disagree for the reasons explained below.
1. ASIC contends that the trial court erred in failing to properly interpret and
apply the Policy’s unambiguous language, which demanded a judgment in its favor
under the laws of contract construction.
Under Georgia law,
2
ASIC has not challenged this ruling on appeal.
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[i]t is well settled that insurance policies, even when ambiguous, are to
be construed by the court, and no jury question is presented unless an
ambiguity remains after application of the applicable rules of contract
construction. Because insurance policies are contracts of adhesion,
drawn by the legal draftsman of the insurer, they are to be construed as
reasonably understood by an insured. Exceptions, limitations and
exclusions to insuring agreements require a narrow construction on the
theory that the insurer, having affirmatively expressed coverage through
broad promises, assumes a duty to define any limitations on that
coverage in clear and explicit terms.
First Financial Ins. Co. v. American Sandblasting Co., 223 Ga. App. 232, 232-233
(1) (477 SE2d 390) (1996) (citations and punctuation omitted) (physical precedent
only). “The insurer, in preparing the language of its policy, has the burden of using
language that is clear and precise.” Ga. Farm Bureau Mut. Ins. Co. v. Meyers, 249
Ga. App. 322, 324 (548 SE2d 67) (2001). “The test is not what the insurer intended
its words to mean, but what a reasonable person in the position of the insured would
understand them to mean.” U. S. Fire Ins. Co. v. Capital Ford Truck Sales, 257 Ga.
77, 78 (1) (355 SE2d 428) (1987) (citation and punctuation omitted). “[I]f a provision
of an insurance contract is susceptible of two or more constructions, even when the
multiple constructions are all logical and reasonable, it is ambiguous, and the
statutory rules of contract construction will be applied.” American Strategic Ins.
8
Corp. v. Helm, 327 Ga. App. 482, 485 (759 SE2d 563) (2014) (citation and
punctuation omitted).
As relevant here, the Business Auto Coverage endorsement in the Policy
provided:
[ASIC] will pay all sums an “insured” legally must pay as damages
because of “bodily injury” or “property damage” to which this insurance
applies, caused by [an] “accident” involving the personal use of a
“covered commercial auto(s)” or “trailers” owned, maintained, or used
as a “covered commercial auto(s)”.
The Policy, however, expressly excluded liability coverage for
[a] “covered commercial auto(s)” or “trailer(s)” when being used, or for
any maintenance when under orders from or after being dispatched by
any trucking company or lessee of such “covered commercial auto(s)”
until you have finished the assignment including return to your initial
point of dispatch or your principle place of garaging, whichever comes
first.
ASIC asserts that, because Tchotrov was driving the truck to get its air compressor
replaced — as required to keep the truck in good working order under the terms of
its lease with FBM — he was using the truck for “trucking business,” and not for his
personal use, at the time of the accident. As a result, ASIC contends it was not liable
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to provide coverage under the terms of the Policy. According to ASIC, the trial court
erred by focusing on whether Tchotrov was acting “under orders” from FBM, while
failing to address whether the truck was being “maintained” as it was being driven to
be repaired at the time of the accident, and thus, being used “in the business of” FBM.
At trial, Tchotrov testified that the truck belonged to him, and thus “if [he
found] something [ ] wrong with the tractor and the trailer, [he would] have to fix it.”
He further clarified that FBM did not pay for repairs on the truck, nor did FBM
instruct him to get the truck fixed on December 23, 2016, the date of the accident. In
fact, Tchotrov had not informed FBM that he was taking the truck to be repaired that
day. Tchotrov explained that he was not hauling loads on the date of the accident, as
he had hauled his last load for FBM the previous day, December 22, 2016. On the day
of the accident, Tchotrov drove just the truck, without the trailer attached, to have the
air compressor replaced at an acquaintance’s house. Tchotrov’s driver’s logs, which
he was required to complete under the Federal Motor Carrier regulations, showed that
he did not drive the truck at any other time that day. Tchotrov picked up the truck
from his acquaintance’s house the next day, December 24, and drove home.
ASIC counters that Tchotrov was clearly engaged in trucking business as he
was on his way to get the truck repaired at the time of the accident. In support, ASIC
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highlights that Tchotrov’s driver’s daily log for December 23, indicates that he was
“on duty” at the time of the accident, and completed a pre-trip inspection of his truck,
which was part of his typical routine before driving the truck for a carrier. Tchotrov
also testified that he did not use the truck for personal use; he had a separate vehicle
for that purpose.
The trial court rejected ASIC’s arguments, relying on a Minnesota Supreme
Court case, Protective Ins. Co. v. Dart Transit Co., 293 Minn. 402 (197 NW2d 668)
(1972). In that case, the policy in question contained the following exclusion: “No
coverage is granted if the equipment is operating under orders of any trucking
company.” Id. at 403. The owner/independent contractor began experiencing trouble
with his oil pressure while on the road and made an appointment with a mechanic to
have repairs done. Id. An accident occurred while the driver was en route from his
home to a repair shop in anticipation of hauling a load for the carrier as soon as the
repairs were completed. Id. The trial court agreed with the insurance company that
the driver was operating “under orders” from the carrier since the lease required him
to keep his tractor in good running order, and thus, the insurance company was under
no obligation to provide coverage. Id. at 403-404. The Supreme Court of Minnesota
reversed, explaining as follows:
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[t]he fact that the lease provided that the equipment would be under the
exclusive control of the lessee, who was to assume full responsibility to
the public for its operation, merely reflected a requirement of the law
that the lessee be liable to the public for the operation of the equipment.
It did not mean, as between the parties, that the lessor was “under
orders” of the carrier 24 hours a day. [The driver] was not under orders
from [the carrier] to repair his equipment.
Id. at 404. Although we have not found a Georgia case precisely on point with the
instant facts, we find the reasoning in Protective Ins. helpful in this case and
consistent with our case law. There is no dispute that Tchotrov was driving the truck
to the home of an acquaintance to repair the truck at the time of the accident. Similar
to Protective Ins., the lease in the instant case required that SPN ensure that the
“leased equipment shall be in safe mechanical and operating condition, free of
defects, properly licensed and in full compliance with the Motor Carrier Safety
Regulations of the U. S. Department of Transportation (DOT) and all other applicable
laws . . . .” As noted by the trial court, and supported by Tchotrov’s testimony at trial,
Tchotrov was not “under orders” from FBM to repair the truck at the time of the
collision; rather Tchotrov “was simply abiding by the general maintenance
responsibility established within the lease itself” to maintain the truck. Additionally,
ASIC presented no evidence to show that Tchotrov was engaged in the trucking
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business of FBM at the time of the collision, such as picking up or dropping off a
load. In fact, Tchotrov testified that he drove the last load for FBM on December 22,
the day before the accident.
In light of the foregoing, including the terms of the Policy and Tchotrov’s
testimony, we conclude that the trial court was authorized to find that Tchotrov was
not driving the truck for business reasons on behalf of FBM at the time of the
accident, and therefore, ASIC was liable to provide coverage under the terms of the
Policy. See Gibson v. Gibson, 301 Ga. 622, 624 (801 SE2d 40) (2017) (“In reviewing
a bench trial, we view the evidence in the light most favorable to the trial court’s
rulings, defer to the trial court’s credibility judgments, and will not set aside the trial
court’s factual findings unless they are clearly erroneous.”).
2. ASIC argues that the trial court erred in ignoring applicable Georgia law,
which clearly excludes coverage under a non-trucking policy for accidents “while the
driver was engaged in trucking business” or “under orders” from the carrier. ASIC
misconstrues the holdings of our cases in this area.
In AXA Global Risks v. Empire Fire & Marine Ins. Co., we found that the
driver of a truck was not engaged in the carrier’s business, but rather a “personal
errand,” where the accident occurred over a long weekend after the driver completed
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his last run. 251 Ga. App. 543, 544-547 (554 SE2d 755) (2001). Similar to the instant
case, the truck driver in AXA had a commercial auto policy which provided “liability
coverage for ‘non-trucking use’ of the tractor and excluded coverage for business
use.” Id. at 544. In AXA, we rejected “the trial court’s conclusion that any use with
permission of the [carrier] is by definition use in the [carrier’s] business.” Id. at 546(emphasis in original). For example, we highlighted that “[a] driver bobtailing[3] a
tractor may be using the tractor in the [carrier’s] business, as when he is taking the
tractor to, or returning from, a repair shop.” Id. On the other hand, “a driver may use
a tractor, although with the [carrier’s] permission, for wholly personal reasons, such
as driving the tractor for personal transportation after completing one job and before
beginning another.” Id. at 547. Contrary to ASIC’s contention, however, we did not
categorically hold that every instance in which a truck is driven for repairs constitutes
a business use of the vehicle. Rather than solely focusing on whether the driver’s use
of the vehicle was with permission from the carrier, we explained that the more
relevant inquiry is whether (1) the driver was “under dispatch” as that phrase is used
in the trucking industry; (2) there were any restrictions on the driver’s activities; and
3
“Bobtailing” refers to “driving [a tractor] with no trailer attached.” AXA Global
Risks, 251 Ga. App. at 543.
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(3) whether the trip was part of the driver’s “regular work pattern or operational
routine.” Id. Applying these factors, we concluded that the driver in AXA “was not
acting in the scope of his employment with” the carrier at the time of the accident. Id.
We have addressed policies similar to that in AXA and the issue of trucking
business exclusions in non-trucking use policies in at least two other cases. In Hot
Shot Express, Inc. v. Assicurazioni Generali, SPA, the driver collided with a van
while en route from one trucking terminal in Florida to which he had just delivered
a load to another freight terminal in Florida where he hoped to pick up an additional
load with which to drive home to Ohio. 252 Ga. App. 372, 373-375 (556 SE2d 475)
(2001). Under these facts, we found that the driver was still engaged in trucking
business at the time of the accident. Id. at 374. We distinguished AXA and found that
even though the driver was not under dispatch, he was en route for the purpose of
picking up another load; he was clearly within his “work pattern” and “operational
routine”; and it could not be said that the trip from the original terminal to the freight
terminal in Ocala was not related to the trucking company’s business. Id. at 374-375.
Similarly, in Liberty Mut. Fire Ins. Co. v. Axis Surplus Ins. Co., the accident
occurred while the driver was returning to the terminal after dropping off a load. 294
Ga. App. 417, 418 (669 SE2d 219) (2008). The insurer asserted that the accident was
15
not covered under its policy because the driver had already delivered his load, and
thus was no longer engaged in trucking business. Id. at 419 (2). We rejected the
insurer’s argument, highlighting that unlike the driver in AXA, this driver had not
“completed his run” by returning to the carrier’s yard and dropping off an empty
trailer. Id. (punctuation omitted). Rather, the driver was en route to the usual end of
his run, but he had not yet reached it, and thus was still acting within his regular work
pattern or operational routine. Id. at 419-420 (2).
Turning to the instant case, as previously discussed in Division 1, based on the
totality of the circumstances — including that Tchotrov was not “under dispatch” by
FBM at the time of the accident, there were no restrictions on his activities that day,
and driving to a friend’s house to get a air compressor replaced was not part of his
regular work pattern — the trial court did not err in finding that ASIC was liable to
provide coverage under the Policy as Tchotrov was not engaged in trucking business
at the time of the accident. See AXA Global Risks, 251 Ga. App. at 546-547.
3. ASIC contends that the trial court erred in ignoring the applicable federal
regulations in considering whether transporting a commercial vehicle for maintenance
qualifies as a personal activity. In support of its contention, ASIC points to question
26 of regulation 395.8 of the Federal Motor Carrier Safety Administration
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(“FMCSA”), which lists examples of when the use of a commercial vehicle does not
qualify as personal, including “[t]ime spent transporting [the vehicle] to a facility to
have vehicle maintenance performed.” 49 CFR § 395.8, Question 26, (b) (5),
https://www.fmcsa.dot.gov/regulations/title49/section/395.8 (last visited April 16,
2021).
ASIC’s obligations, however, are governed by the terms of the Policy. The
terms of the Policy do not define whether Tchotrov’s driving the truck to his
acquaintance’s house for repairs constitutes a “personal use.” Indeed, the Policy does
not define the term “personal use.” Importantly, the Policy does not reference the
FMCSA regulations in outlining the scope of its coverage. Based on the terms of the
Policy and Tchotrov’s testimony, the trial court did not err in finding that Tchotrov
was not driving the truck for business reasons on behalf of FBM at the time of the
accident.
4. ASIC alleges that affirming the trial court’s judgment would “upend trucking
law” as driving a truck for repairs constitutes a business use. Our holding in this case
is not intended to create a bright-line rule that driving a truck for repair purposes can
never constitute a business use. Rather, based on the specific facts of this appeal, we
17
conclude the trial court was authorized to find that Tchotrov was not driving the truck
for business reasons on behalf of FBM at the time of the accident.
5. Finally, ASIC asserts that the trial court considered “irrelevant and
inadmissible evidence” in arriving at its final judgment.
FBM’s trucking insurance provider — which was responsible for coverage if
Tchotrov was driving the truck for FBM’s business at the time of the accident — was
not identified at trial. In a post-trial memorandum of law, Parrish identified the
insurer as Spirit, and indicated that the entity had been placed into receivership and
liquidation. ASIC objected to this information as “wholly irrelevant” to whether
ASIC was responsible for coverage for the accident, as well as prejudicial. In its final
judgment, the trial court “note[d] that Spirit appears to be in a permanent receivership
. . . and perhaps insolvent.” Nevertheless, the court immediately clarified that “this
factor has no bearing whatsoever on this [j]udgment.” We have no reason to second
guess this assertion. See CSX Transp. v. McDowell, 294 Ga. App. 871, 873 (1) (a)
(670 SE2d 543) (2008) (“Generally, a trial court will be presumed to have performed
its duties.”). As a result, ASIC’s contention that the trial court’s consideration of
18
irrelevant and inadmissible evidence was harmful to the outcome of the proceeding
is without merit.4
Judgment affirmed. Barnes, P. J., and Markle, J., concur.
4
In its reply brief, ASIC seeks to strike a portion of the appellees’ brief, to the extent
that it suggests that ASIC’s counsel “was party to or participated in a criminal conspiracy”
with respect to the circumstances surrounding the termination of the lease between FBM
and SPN. Because ASIC moved to strike a portion of the appellees’ brief within the body
of its brief, its request is denied. See Court of Appeals Rule 41 (b) (“All motions and
responses to motions shall be filed as separate documents, and not as joint, compound, or
alternative motions.”); Ridley v. Turner, 335 Ga. App. 108, 113 (6) (778 SE2d 844) (2015)
(refusing to consider a party’s motion for frivolous-appeal penalty when same was not filed
as a separate document).
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