The U.S. Court of Appeals for the Eleventh Circuit, affirming a decision by a federal district court in Georgia, has ruled that an umbrella insurance policy did not cover either the operator of a tractor-trailer or his employer, a limited liability company, for a lawsuit stemming from a fatal accident involving the tractor-trailer.
The Case
Jose Castro was struck and killed by a tractor-trailer operated by Jerry Marella at a landfill in Polk County, Georgia. The trailer Mr. Marella was pulling was owned by Stafford Logistics, Inc., which had contracted out the job of pulling the trailer to Mr. Marella's employer, Freddie Payne, LLC. At the time of the accident, Mr. Marella was acting within the scope of his employment with Freddie Payne.
An umbrella insurance policy issued by Gemini Insurance Company covered the trailer. Gemini brought a declaratory judgment action against Betty Ortega Castro, Mr. Castro's surviving spouse, and Ann Herrera, the administrator of Mr. Castro's estate. Gemini asserted that even though the Stafford trailer was covered under its umbrella policy, the policy excluded Mr. Marella and Freddie Payne from coverage
The U.S. District Court for the Northern District of Georgia determined that Mr. Marella and Freddie Payne were not insureds under Gemini's policy, and entered partial judgment on the pleadings in Gemini's favor.
The dispute reached the Eleventh Circuit.
The Gemini Policy
Subsection II.2.b of the Gemini policy provided:
Anyone . . . while using with your permission a "covered auto" you own, hire, or borrow is . . . an insured. . . .
(Emphasis added).
The policy also provided in an "LLC limitation" that:
No person or organization is an insured with respect to the conduct of any current or past partnership, joint venture or limited liability company that is not shown as a Named Insured in the Declarations.The Eleventh Circuit's Decision
The circuit court affirmed.
In its decision, the circuit court explained that because Stafford had contracted with Freddie Payne to pull Stafford's trailers, Freddie Payne and Mr. Marella (the driver employed by Freddie Payne) presumably were insureds because they had Stafford's permission in pulling the trailer.
The circuit court then pointed out, however, that neither Freddie Payne nor Mr. Marella were named insureds. It then ruled that because Freddie Payne was a limited liability company, the LLC limitation "clearly" excluded it from the definition of covered insureds.
The Eleventh Circuit then found that Mr. Marella fell under the LLC limitation even though he was sued both in his individual capacity and as a Freddie Payne employee. The circuit court pointed out that the LLC limitation stated that there was no coverage of any "person . . . with respect to the conduct of any current or past . . . limited liability company" – and that Mr. Marella was a "person" acting on behalf of Freddie Payne. The Eleventh Circuit added that an LLC could "not act without its agents," and pointing out that Mr. Marella and Freddie Payne were different entities was "not an escape hatch to the inevitable conclusion that without [Mr.] Marella, Freddie Payne . . . would not have been able to act here."
Therefore, the circuit court concluded, Mr. Marella and Freddie Payne were not covered insureds under Gemini's insurance contract.
The case is Gemini Ins. Co. v. Castro, No. 17-10817 (11th Cir. Jan. 24, 2018). Attorneys involved include: For GEMINI INSURANCE COMPANY, Plaintiff – Appellee: Philip Wade Savrin, Jessica Samford, Freeman Mathis & Gary, LLP, ATLANTA, GA. For BETTY ORTEGA CASTRO, ANN HERRERA, Defendants – Appellants: John Hamilton Peavy, Jr., Peavy Law, LLC, ATLANTA, GA; T. Charles Blaska, Thomas Charles Blaska, The Blaska Law Firm, ATLANTA, GA; Manuel Salvador Campano, Law Office of Campano & Sperling, ATLANTA, GA; Kate S. Cook, Matthew Evan Cook, Cook Law Group, LLC, GAINESVILLE, GA; Dana Joel Norman, Kaufman Miller & Sivertsen, ATLANTA, GA. For SERVICE: Jason William Hammer, Erica Leigh Parsons, Lueder Larkin & Hunter, LLC, ATLANTA, GA; William Welsh Horlock, Jr., Scrudder Bass Quillian Horlock Taylor & Lazarus, LLP, ATLANTA, GA; Thomas James Knight, Hubbard & Knight, ANNISTON, AL.