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The 7th Circuit Court of Appeals isn’t letting an insurance company off the hook in paying out a man who was involved in an accident with an interstate trucking company it previously covered.
When Decardo Humphrey was a driver for Riteway Trucking, he would begin his trips in South Holland, Illinois. With Riteway, Humphrey would receive instructions where to unload his truck and where to pick up the next load – often across state lines.
In 2013, Humphrey drove to Fort Wayne, Indiana, to drop off a load. After making it to his destination, on his way to another site in Fort Wayne, his truck collided with a car driven by Darnell Wright.
After working with both Wright and the police, Humphrey picked up his new load and delivered it in Illinois.
Wright accused Humphrey of negligence and sued Riteway in state court. Because Riteway did not appear, the default judgement of $400,000 was entered. Riteway also did not cooperate with its insurance company, Prime Insurance Co., and thus forfeited the benefit of the policy that Prime had issued.
While Riteway lost its insurance coverage, the policy had an endorsement that allowed payments to the injured party when the insurer didn’t need to defend or indemnify its client.
The U.S. District Court for the Northern District of Indiana concluded Riteway’s actions cast it the benefit of Prime’s policy but questioned if Wright could recover with the endorsement.
Meanwhile, the Court of Appeals of Indiana declined to allow Prime to attack the default judgment, Prime Insurance Co. v. Wright, 133 N.E. 3d 749 (Ind. App. 2019), leading to Prime to filing a second suit in federal court seeking a declaratory judgment that the endorsement does not entitle Wright to any money.
The district court held that the endorsement applies and ordered Prime to pay.
Before the 7th Circuit Court of Appeals, Prime contended the judges should follow the “trip specific” approach adopted by Canal Insurance Co. v. Coleman, 625 F.3d 244 (5th Cir. 2010). Under that approach, the endorsement would apply only when a truck is loaded with freight and moving from one state to another at the moment of the collision.
Conversely, Wright urged the judges to follow the “fixed intent” approach used in Century Indemnity Co. v. Carlson, 133 F.3d 591 (8th Cir. 1998).
The 7th Circuit Court avoided any test and looked at the language of the endorsement, ultimately affirming the district court’s ruling.
“The Endorsement asks whether particular travel was subject to certain financial responsibility requirements,” Judge Frank Easterbrook wrote. “That sends us to §31139, which sends us to §13102(23). Section 13501 adds a general definition. None of these destinations tells us to ask about anyone’s intent, about whether a truck was carrying freight at the moment of impact, or about the ‘totality’ of anything (let alone what would be in the list of circumstances that must be totally contemplated). All we need to know is whether the collision occurred during an interstate journey to deliver freight or one of the steps mentioned in §13102(23)(B). The answer to that question is ‘yes.’
“… Prime’s other arguments do not require discussion. It is not entitled to relitigate the state court’s decision in favor of the default judgment,” Easterbrook concluded. “And the award of interest from the date of the state judgment is not problematic.”
The case is Prime Insurance Company v. Darnell Wright, 22-1002.
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