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146433-5 - Hunt v Drielick

Marie Hunt, Personal Representative for the Estate of Eugene Wayne Hunt,
Bruce F. Trogan
David Carbajal
(Appeal from Ct of Appeals)
(Bay – Caprathe, W.)
Roger Drielick and Corey Drielick, d/b/a Roger Drielick Trucking,
et. al.,
Defendants/Counter-Plaintiffs/Cross-Plaintiffs/Third Party-
Sargent Trucking, Inc.,
Steven M. Hickey
Andrew Finn
Noreen Luczak and Thomas Luczak,
Peter J. Riebschleger
Empire Fire and Marine Insurance Company,
Garnishee Defendant-Appellee.
Nicolette S. Zachary
Brandon James Huber,
Joseph S. Harrison
Corey Drielick and Roger Drielick, d/b/a Drielick Trucking, et. al.


Roger Drielick owns Roger Drielick Trucking.  On January 12, 1996, Roger’s brother, Corey Drielick, was operating a 1985 freightliner semi-tractor without a trailer (referred to as “bobtail”), when he caused a multi-vehicle accident on M-13 in Bay County. One person was killed, and two others seriously injured.

Roger Drielick Trucking was not an authorized motor carrier under federal or state law, so the semi-tractor could only be lawfully operated if it was under lease to an authorized motor carrier.  Drielick had the 1985 freightliner under written lease to Sargent Trucking from September 1995 to September 1996, but Roger Drielick verbally ended that written lease before December 1995, after Drielick was offered more money to haul freight for Great Lakes Carrier Corporation.  At the time of the accident, a Great Lakes representative had dispatched Corey Drielick to pick up a trailer and load at Great Lakes’ yard for transport to Cheboygan; the accident occurred within a mile or two of the Great Lakes’ yard.  There was no written lease between Drielick Trucking and Great Lakes, and Great Lakes had not contacted its insurer to add the semi-tractor to its policy covering leased vehicles.  The semi-tractor had a Great Lakes placard, but Great Lakes had not issued Drielick a state ID card, as required by federal and state law. 

Three separate lawsuits were filed, which have since been consolidated.

The central issue remaining in these lawsuits is whether Empire Fire and Marine Insurance Company, which issued a non-trucking use (bobtail) policy to Roger Drielick Trucking, is liable under the policy.  The policy was entitled “Insurance for Non-Trucking Use,” and covered damages and liability when the semi-tractor was not engaged in the business of hauling a trailer or under lease to a carrier.  In particular, the policy’s business use exclusion states that Empire is not liable for “bodily injury or property damage while a covered auto is used to carry property in any business or while a covered auto is used in the business of anyone to whom the auto is leased or rented.”  Empire denied coverage, arguing among other things that the policy’s business use exclusion precluded coverage.  Empire contended that the truck was under lease to or being used in the business of Great Lakes at the time of the accident. 

The trial court disagreed, ruled that neither prong of the policy’s business use exclusion applied.  The trial court noted that Corey Drielick had not yet picked up the trailer at the time of the accident, that he was not required to be at Great Lakes’ yard at any particular time, and that there was an oral agreement that he would not be paid until the trailer was attached to the cab.  The trial court also concluded that the lack of a written lease and a state identification card from Great Lakes suggested that the truck was not being used in the business of anyone who had leased the truck.  Empire’s policy was in full force at the time of the accident, the trial court ruled.

Empire appealed to the Court of Appeals, which reversed the trial court in a published opinion.  The Court of Appeals focused on the first prong of the business use exclusion:  whether bodily injury or property damage occurred “while a covered auto is used to carry property in any business . . . .”  The panel concluded that this exclusion applied, and that Empire was not liable under the policy.  “[T]he parties agree that Corey was under dispatch at the time of the accident and was only a couple of miles away from the yard.  Even though Corey did not have to be at the yard at a specific time, he was not driving aimlessly, and there is no dispute that he was specifically driving to the yard to attach the loaded trailer and drive to Cheboygan.”  This is not a case, the panel explained, “in which the driver was engaged in an activity unrelated to the business of transporting property, such as driving a truck on a personal matter, to which the exclusion would not apply.”  Because the first prong of the business use exclusion applied, Empire was relieved from any obligation to provide coverage under the contract, the Court of Appeals held.  Given this holding, the Court of Appeals did not also consider whether coverage was precluded under the second prong of the business use exclusion.

The plaintiffs appealed.  On September 18, 2013, the Supreme Court granted leave to appeal, directing the parties to address:  (1) whether a lease agreement is legally implied between Roger Drielick Trucking and Great Lakes under the facts of the case and under applicable federal regulation of the motor carrier industry; and (2) if so, whether the Court of Appeals erred in resolving this case on the basis of the first clause of the business use exclusion, instead of on the basis of the second clause, which excludes coverage for bodily injury or property damage “while a covered auto is used in the business of anyone to whom the auto is leased or rented.”