Decision by Louisiana First Circuit Impacts Carrier-lessees of Tractor-trailer Equipment

A recent case will be of interest to owners and insurers of tractor-trailer equipment. In Jackson v. Wise, ACME Truck Line, Inc. and First Guard Ins. Co., 2017 CA 1062 (La. App. 1 Cir. 4/13/18), the plaintiff filed suit for personal injuries after she was thrown from a Mardi Gras float in Franklin, Louisiana, wherein she named the driver, ACME and First Guard Insurance Company, the non-trucking liability insurer for the tractor trailer, as defendants. Before the accident, the plaintiff and the driver of the 1999 Peterbilt 18-wheeler, which the driver owned, entered into an agreement where the plaintiff, on behalf of her carnival organization, would pay the driver $100.00 for the use of his tractor-trailer.

The Tractor-trailer Lease Agreement

Years before the accident, the driver and ACME entered into a five-year lease agreement wherein the driver leased his tractor-trailer to ACME to transport cargo for ACME. The lease agreement provided in part that the leased equipment would not be operated for any other purpose other than the transportation of ACME authorized shipments. It further provided that the leased equipment would not be used for any parades, social events, or any private use whatsoever.

ACME Filed Motion for Summary Judgment

Based on the lease agreement, ACME filed a motion for summary judgment arguing that the only allegation against it was that the tractor-trailer was owned and/or being driven by ACME.  ACME contended that it was not the owner of the tractor-trailer, and even if it was, it could not be liable based on ownership. At the hearing on the motion, ACME stressed that the driver was not in the course and scope of his employment with ACME, while plaintiff argued that FMCSA regulations, 49 CFR § 350-399, and specifically 49 CFR § 376.12(c)(1), created strict liability on the part of ACME for the actions of the driver.

The trial court ruled that FMCSA regulations only applied to interstate, not intrastate trips, and the accident occurred during an intrastate trip. It also held that the driver was not in the course and scope of his employment with ACME, and granted summary judgment in ACME’s favor.  The plaintiff filed a motion for new trial, which urged that ACME presented new grounds for summary judgment in its reply memorandum and at the hearing, which were not set forth in its original motion and memorandum. The trial court denied the motion for new trial and the plaintiff appealed to the Court of Appeal of Louisiana for the First Circuit.

The Plaintiff’s Appeal

The First Circuit affirmed the trial court’s decision to grant ACME’s Motion for Summary Judgment. The First Circuit noted that the purpose of 49 CFR § 376.12(c)(1) is to protect the public from motor carriers’ attempts to escape liability for the negligence of drivers by claiming that their drivers are independent contractors. The regulation mandates that under a regulated lease, the carrier-lessee assumes exclusive possession, control, and use of the equipment for the duration of the lease and assumes complete responsibility for the operation of the equipment for the duration of the lease.

The First Circuit held that none of the case law cited by the parties were determinative of the issue and because ACME’s trucking liability insurer had not been sued, the issue of whether the federally mandated insurance was not before the court. The First Circuit also held that because the driver was acting outside of the scope of his employment, the requirement that the carrier-lessee assumed exclusive possession, control, use, and responsibility of the tractor-trailer under 49 CFR § 376.12(c)(1) did not apply to ACME under the facts to hold it vicariously liability for the actions of the driver.

The Upshot for Carrier-lessees of Tractor-trailer Equipment

This case highlights the First Circuit’s refusal to interpret 49 CFR § 376.12(c)(1) as imposing strict liability on carrier-lessees of tractor-trailer equipment when the actions of the driver have no connection to the furtherance of the carrier-lessees’ business. While the regulation does impose strict responsibilities on the carrier-lessee, the First Circuit’s decision sets forth limitations in its applicability depending on the facts of the case.