text:
    Joseph and Lynn SENESE, Plaintiffs, v. David PEOPLES and S & L Pinehurst Lodge, Inc., Defendants.
    Civ. No. 84-0965.
    United States District Court, M.D. Pennsylvania.
    May 23, 1985.
    Arthur L. Pressman, Abraham, Pressman & Bauer, P.C., Philadelphia, Pa., for plaintiffs.
    Cody H. Brooks, Timothy E. Foley, Scranton, Pa., John H. Klemeyer, Beecher, Wagner, Rose & Klemeyer, Milfore, Pa., for defendants.
   MEMORANDUM AND ORDER

NEALON, Chief Judge.

. Plaintiffs filed this diversity action on July- 31, 1984, as a result of injuries sustained when Joseph Senese attempted to exit the cab of Defendant Peoples’s truck. On February 15, 1985, Defendant Peoples filed a Motion for Summary Judgment and brief in support thereof. The plaintiffs filed a Brief in Opposition to the motion dated March 22, 1985 and Defendant Peoples filed a reply brief dated March 28, 1985. Both parties have also submitted letters to the court responding to arguments made by their opponent. The motion is now ripe for disposition. For the reasons set forth below, the court will grant the defendant's motion.

This action arises out of injuries sustained by Joseph Senese when he fell out of or off a motor vehicle on September 17, 1983. Immediately prior to this incident, Senese and Peoples had been drinking alcoholic beverages at the Defendant Pinehurst Lodge. They left the Pinehurst Lodge at approximately 4:00 P.M. and proceeded south on Route 519 in Peoples’ pickup truck operated by Peoples with Senese seated as a passenger. While the vehicle was in operation, Senese attempted to exit the cab of the truck, whereupon he fell to the pavement. The plaintiff alleges Senese attempted to exit the truck through an open window on the passenger side of the vehicle and that Peoples did not attempt to brake his vehicle or restrain the plaintiff until after Senese had fallen out of the window. The plaintiff further contends that at the time of the incident Peoples was driving erratically and/or at an excessive rate of speed. Defendant Peoples, however, avers that Senese fell from the cab of the truck while climbing out the window from the front of the truck in order to reach the back. Peoples also contends that he was not traveling erratically or at an excessive rate of speed and that he immediately brought his vehicle to a stop when he realized what had happened.

The elements necessary to maintain a negligence action include: “[1] a duty or obligation recognized by the law, requiring the actor to conform to a certain standard of conduct; [2] a failure to conform to the standard required; [3] a causal connection between the conduct and the resulting injury and [4] actual loss or damage resulting to the interests of another.” Morena v. South Hills Health System, 501 Pa. 634, 642 n. 5, 462 A.2d 680 (1983). Therefore, the plaintiff must first establish that the defendant breached a duty of care owed to the plaintiff in order for this action to be continued. Where the defendant’s alleged negligence consists of a failure to act, the duty not to act negligently is quite limited. “It extends to those who have relied in some special way upon the defendant, to those whom defendants have helped place in a position where they are likely to depend upon his avoiding negligent omissions ____ Thus, ... [one] may have a moral obligation to extend a helping hand [under particular circumstances], but he does not necessarily have a legal obligation to do so.” Carrier v. Riddell, Inc., 721 F.2d 867, 868-69 (1st Cir.1983) (emphasis in original). See also Yania v. Bigan, 397 Pa. 316, 321-22, 155 A.2d 343 (1959); Restatement (Second) of Torts §§ 314, 314A (1965).

The Restatement (Second) of Torts Section 314 which has been adopted in Pennsylvania, see Yania v. Bigan, 397 at 322, 155 A.2d 343, states: “Duty to Act for Protection of Others[:] The fact that the actor realizes or should realize that action on his part is necessary for another’s aid or protection does not of itself impose upon him a duty to take such action.” Id. See also Yania v. Bigan, 397 Pa. at 322, 155 A.2d 343. The comments to this section indicate that this general rule applies “irrespective of the gravity of the danger to which the other is subjected and the insignificance of the trouble, effort, or expense of giving him aid or protection.” Id. § 314 Comment c. The rule, however, does not apply where the peril in which the other is placed is due “to any active force which is under the actor’s control.” Id. § 314 comment d. The Restatement gives the following illustration to explain this principle:

A, a trespasser in the freight yard of the B Railroad Company, falls in the path of a slowly moving train. The conductor of the train sees A, and by signalling the engineer could readily stop the train in time to prevent its running over A, but does not do so. While a bystander would not be liable to A for refusing to give such a signal, the B Railroad is subject to liability for permitting the train to continue in motion with knowledge of A’s peril.

Id. § 314 comment d Illustration 3.

There are a number of special relationships which give rise to a duty to aid or protect another. Section 314A of the Restatement lists a number of these special relationships:

(1) A common carrier is under a duty to its passengers to take reasonable action
(a) to protect them against unreasonable risk of physical harm, and
(b) to give them first aid if it knows or has reason to know that they are ill or injured, and to care for them until they can be cared for by others.
(2) An innkeeper is under a similar duty to his guests.
(3) A possessor of land who holds it open to the public is under a similar duty to members of the public who enter in response to his invitation.
(4) One who is required by law to take or who voluntarily takes the custody of another under circumstances such as to deprive the other of his normal opportunities for protection is under a similar duty to the other.

Id. § 314A. The duty even under these situations, however, is only one to exercise reasonable care under the circumstances. “The defendant is not liable where he neither knows or nor should know of the unreasonable risk, or of the illness or injury.” Id. § 314A comment e.

The defendant here argues that the plaintiff cannot show that Senese breached a duty of care as there is no evidence that Peoples was operating his vehicle negligently. Additionally, Peoples contends that there is no evidence that he committed an act or omission which amounts to breach of duty to prevent the plaintiff from exiting the moving vehicle. The threshold question, however, is whether a duty of care exists here. The parties have thoroughly briefed the issue of duty of care and neither party has submitted to the court any Pennsylvania decisions regarding the duty of care owed by the defendant in a situation such as this. The defendant has submitted one Pennsylvania Supreme Court case in which a passenger fell out of a moving vehicle and the court held that there was no evidence of the defendant’s negligence. See Miller v. Adams, 394 Pa. 46,145 A.2d 540 (1958). In the Miller case, the driver of the vehicle did not own the vehicle, had no knowledge of any defect in the door’s mechanism and had done everything possible to insure the passenger’s safety. Therefore, the Court held that judgment in favor of the plaintiff was justified. In another Pennsylvania Supreme Court case involving duty of care, the court determined that there is no legal duty to rescue a person who has voluntarily placed himself in a position of peril. Yania v. Bigan, 397 Pa. 316, 155 A.2d 343 (1959). In Yania, the decedent, in full possession of his mental faculties, was asked by the defendant to help him in starting a pump. The decedent then deliberately jumped into the water from the side wall of the trench, approximately 10 to 18 feet, and was drowned. The plaintiff widow claimed, inter alia, that the defendant’s failure to go to the decedent’s rescue after he jumped into the water was negligence. The Court found that although there may have been a moral obligation on the part of the defendant to rescue, unless he was legally responsible for placing the decedent in the perilous position, there was no legal duty to attempt to rescue him. Id. at 321-22, 155 A.2d 343 (citing Restatement, Torts § 314). See also Carrier v. Riddell, Inc., 721 F.2d 867 (1st Cir.1983).

In the case sub judice, the only real issues of fact appear to be whether the plaintiff climbed out of the window or exited the vehicle through the door and whether he announced to Peoples that he was going to get into the back of the pickup truck prior to the time he began exiting the vehicle. Whether Peoples could have either stopped the truck or attempted to restrain Senese is an inquiry that can only be made after it is determined that there was a duty on the part of Peoples to act. The relevant case law and general principles of the law of negligence lead the court to conclude that there is, in fact, no duty on the part of a driver of a vehicle to attempt to prevent a passenger from injuring himself when, as here, the passenger has placed himself in a position of peril. Accordingly, there was no legal duty on the part of Peoples to prevent Senese from exiting the vehicle and injuring himself.

Even assuming arguendo that the court could find a legal duty on the part of Peoples to prevent Senese from injuring himself, the motion for summary judgment would still be granted. The plaintiffs bald assertion that seventy-nine feet of skid marks would show erratic driving or driving at an excessive rate of speed is simply not supported in the record. The plaintiff has been given an opportunity to demonstrate why the skid marks would establish reckless driving or speeding under the circumstances but neither the trooper’s nor the defendant’s deposition as submitted to the court carries the plaintiff’s burden. Plaintiff must respond specifically to the arguments contained in defendant’s summary judgment motion and cannot expect to escape the entry of summary judgment by identifying facts in a vacuum. If the length of skid marks had some factual consequences, or would form the basis for an expert’s opinion, then such contentions should be particularized. Additionally, while the court recognizes that there is a conflict as to whether the plaintiff went out the window or door of the defendant’s vehicle, there is nothing in the record to indicate that this discrepancy would provide a jury question on the issue of defendant’s due care or on proximate cause which would support a verdict for plaintiff if resolved in his favor. Regarding the amount of time Peoples had to restrain the plaintiff, the only relevant evidence comes from Peoples’ deposition of September 24, 1984. In his deposition, the defendant indicates plaintiff said “I am getting in back” at the time he opened the door. Therefore, there is no evidence in the record showing Peoples had sufficient time to restrain the plaintiff when he became aware the plaintiff was going to exit the truck. Accordingly, the court will grant the defendant’s Motion for Summary Judgment.

An appropriate Order will enter.

      . In the case sub judice, there is nothing to show that the defendant could have stopped the vehicle before Senese fell out of the truck. Therefore, this case is distinguishable from the Railroad in the above illustration in that the engineer in the illustration was conscious of the fact tat a person was on the tracks in a position of peril and could have prevented the injury from occurring.

      . The court need not address the plaintiffs argument regarding the last clear chance doctrine as this theory would not be applicable at this stage in the case. In Jeng v. Witters, 452 F.Supp. 1349 (M.D.Pa.1978), aff'd sub nom. 591 F.2d 1334 (3rd Cir.1979), Judge Herman explained, "[l]ast clear chance, at least as it was applied in Pennsylvania before the adoption of comparative negligence, only had a place in determining as between two independent tortfeasors whose negligence was the proximate cause of a plaintiffs injury.” Id. at 1368, citing Coleman v. Dahl, 371 Pa. 639, 92 A.2d 678 (1952). Therefore, even if the last clear chance doctrine is still applicable in Pennsylvania after the adoption of comparative negligence, there must first be a duty and a breach thereof before reaching the issue of causation. Since it has already been determined supra that there was no duty, and even if there’ was a duty there was no breach of the duty, the last clear chance argument need not be addressed.


source: Caselaw Access Project

author: NEALON, Chief Judge.

license: Public Domain

text:
    UNITED STATES of America on Behalf of SMALL BUSINESS ADMINISTRATION, Plaintiff, v. Edmund WIDEMAN, Jr. and Edmund Wideman, III, Defendant, v. Anthony FORGIONE and Slushy, Inc. v. Seymour HIRSCHHORN and Frieda Hirschhorn.
    Civ. No. 83-1865.
    United States District Court, M.D. Pennsylvania.
    May 30, 1985.
    Mary Spearing, Ass’t. U.S. Atty., Harrisburg, Pa., Barbara Kosik, Ass’t. U.S. Atty., Scranton, Pa., for plaintiff.
    John Q. Durkin, Myles R. Wren, Howard Rothenberg, Scranton, Pa., Elliot B. Edley, John H. Doran, Wilkes-Barre, Pa., Bruce J. Phillips, Forty Fort, Pa., for defendant.
   MEMORANDUM AND ORDER

NEALON, Chief Judge.

Plaintiff, Small Business Administration [SBA], filed this civil action December 29, 1983 pursuant to 28 U.S.C. § 1345 against Defendants Edmund C. Wideman, Jr. and Edmund C. Wideman, III, alleging that defendants signed a guaranty agreement for a loan presently in default and that defendant-guarantors are liable for the outstanding balance.

By Order dated December 28, 1984, the court ordered the parties to file supplemental briefs to enable the court to resolve the plaintiff’s motion for summary judgment. Defendant Wideman, III filed a cross-motion for summary judgment and a brief in support thereof February 28, 1985 and March 14, 1985, respectively. A supplemental brief in support of its motion for summary judgment was filed April 23,1985 by SBA. While Defendant Wideman, Jr. has not filed a supplemental brief, he has indicated, through his attorney, that because of the similarity of interests between himself and E.C. Wideman, III in this matter, he will rely upon the briefing submitted by E.C. Wideman, Ill’s attorney. The motions are now ripe for disposition. For the reasons set forth below, SBA’s motion for summary judgment will be granted.

I. FACTS

The undisputed facts as established by the affidavits are as follows: Defendants Wideman, Jr. and Wideman, III executed Guaranty Agreements with Plaintiff SBA in the Fall of 1972. The purpose of the Guaranty Agreements was to secure a promissory note in the amount of $199,-000.00 which had been extended to Slushy, Inc. by SBA. As collateral for the loan, a security interest in Slushy’s equipment and machinery was taken by SBA in 1972. This security interest, while renewed in 1977, was not renewed in the Fall of 1982. The payments under the loan to be made by Slushy became delinquent and warning notices were sent to the principals and guarantors that the maturity date of the loan would be accelerated if the payments did not become current. In May of 1982, Defendant Wideman, III sent SBA $5,000.00 to bring the interest on the loan current. In return, SBA reinstated that maturity date of the loan. The Slushy loan, however, went into default again and in November, 1983, SBA demanded immediate payment of the delinquent balance from the guarantors. This action ensued.

II. MERITS

Defendants argue that they are relieved of their obligation under the Guaranty Agreement due to the failure of SBA to renew its security interest in Slushy equipment. Had the security interest been renewed, defendants allege, that collateral would have been available to satisfy the debt owed by Slushy. Defendants contend that SBA’s conduct was willful in this regard. The specific language in the Guaranty Agreement upon which defendants rely reads as follows:

The obligations of the Undersigned, and the rights of the Lender in the collateral shall not be released, discharged or in any way affected, nor shall the Undersigned have any rights against Lender: ... by reason of any deterioration,, waste, or loss by fire, theft, or otherwise of any of the collateral, unless such deterioration, waste or loss be caused by the willful act or willful failure to act of Lender.

Document 1 of the Record at 7, ¶ 5 (emphasis added). In failing to renew the security interest, defendants maintain that SBA’s conduct was a willful failure to act which relieves defendants of all obligations under the agreement.

The court believes that defendants misconstrue the meaning of this paragraph. As noted in the previous Order dated December 28, 1984, the Guaranty Agreement grants to SBA considerable authority and power. Memorandum (December 28,1984), Document 33 of the Record at 4. SBA, in its uncontrolled discretion, may deal with the liabilities and collateral in any manner. In the face of this strong language, defendants argue that failing to perfect the security interest in the collateral — collateral which SBA could release, if it so wished— constitutes a willful loss, deterioration or waste of the collateral. SBA, however, argues that the clause refers to physical loss or deterioration and cites a number of different circuits which have adopted this theory. See, e.g., United States v. Houff, .202 F.Supp. 471 (W.D.Va.1962); United States v. Abbruzzese, 553 F.Supp. 11 (E.D. Mich.1982); Duke v. Reconstruction Furnace Corp., 209 F.2d 204 (4th Cir.1954). The court believes such a conclusion is a more reasonable interpretation of the clause.

The guaranty contract at issue contains a provision specifically preserving the liability of the guarantor even where a valid lien is not created in favor of the SBA. That specific provision expresses the intent of the parties with respect to the failure to create a lien, and in reading the guaranty in pari materia, the more precisely tailored provision, rather than the deterioration clause, should govern the instant facts. A reasonable, and harmonious, reading of the guaranty as a whole suggests that the two clauses take their meaning from one another, that the former clause applies to the failure to perfect a lien, and that the latter be restricted to those occurrences of physical damage suggested by the words “or loss by fire, theft or otherwise.” In addition, the principle of ejusdem generis counsels that the words “or otherwise” be interpreted to mean a loss similar in kind or quality to those specified (fire and theft) and that, when read together with the preceding clause regarding failure to create a valid lien, they not be expanded to embrace the much broader meaning of waste or deterioration that Defendants would ascribe to them.

United States v. Abbruzzese, 553 F.Supp. 11, 12-13 (E.D.Mich.1982).

This interpretation simply makes more sense. If under the agreement, SBA may dispose of the collateral or release it at any time without the consent of the guarantors, then a mere failure to perfect a security interest in the collateral should not extinguish the obligation of the guarantors. United States v. Ross, 554 F.Supp. 928, 931 (E.D.Mich.1983) (“Language in the guaranty... making SBA liable for loss to the property caused by its own willful acts or omissions should not be read to apply to diminishment in value caused by failure to take possession” of the property.) (citations omitted). See also United States v. Andresen, 583 F.Supp. 1084 (W.D.Va.1984); United States v. Flasher Co. of Texas, 460 F.Supp. 231, 233 (S.D.Tex.1977); Duke v. Reconstruction Finance Corporation, 209 F.2d 204 (4th Cir.1954). The court is persuaded that this is a more rational approach and thus will reject defendants’ argument.

Even assuming arguendo that defendants properly asserted this clause as a defense, the court would still grant SBA’s Motion for Summary Judgment. While defendants allege a willful failure to act, they do so in a conclusory fashion absent a corroborating factual basis for such an allegation.

“Willful, at the very least, implies an intent to bring about deterioration in the specific collateral.” United States v. Slezak, 543 F.Supp. 63 (N.D.Iowa 1981) (citing U.S. v. Proctor, 504 F.2d 954 (5th Cir.1974) and Houff, supra). In support of their argument that the failure to renew the security interest in the collateral was willful, defendants excerpt particular portions of the deposition transcript of James D. Servidio, the SBA administrator in charge of the defaulted Slushy loan. This testimony, however, does not remotely imply any specific intention to act in a manner which would be harmful to the guarantors or to the collateral. The very most that could be said for the facts as stated, and the court is not expressing an opinion, is that there was negligence.

The relevant portions of Mr. Servidio’s deposition read as follows:

Q Mr. Servidio, you indicated that the system, apparently failed in not having the security agreements, financing statements revived which would have been in late 1982.
Was it ever brought to your attention through any of the system, that the statements were about to lapse?
A No.
Q Did it ever come to your attention where you had to make a decision or recollection relative to renewal or not renewal?
A No, the period in which they apparently — we know they weren’t renewed. They had to be renewed on or before November ‘82.
Q Were you able to make any determination as to at what point the system failed to have them renewed?
A I assume it was the system. I don’t know what happened. There was, apparently an oversight, whether it was human error or computer error or what.
Q But your knowledge and analysis of what the inventory may have consisted of, did not attribute to the fact that there was no renewal in November of ’82?

ORDER

NOW, this 30th day of May, 1985, IT IS HEREBY ORDERED THAT plaintiff’s motion for summary judgment is granted; defendants’ cross motion for summary judgment is denied and judgment is hereby entered for plaintiff in the amount of $154,-335.27 plus accrued interest and costs and against Defendant-Guarantors Wideman, III and Wideman, Jr.

      . Also in this action are Anthony Forgione and Slushy, Inc., (Third Party Defendants and Fourth Party Plaintiffs) and Seymour and Freída Hirschhorn (Fourth Party Defendants). While several cross-claims and counter claims have been filed among the parties, only the original plaintiff and original defendants are involved in this Order.

      . Defendants had argued previously that SBA should seek payment from other sources before demanding payment from the guarantors. The court held that the clear language of the Guaranty Agreement precluded this argument. Memorandum (December 28, 1984), Document 33 of the Record at 3-4.

      . While Defendant Wideman, III advances the argument that SBA willfully and knowingly abandoned any collection attempt in the collateral, this is a secondary argument and is precluded by the Agreement and this Court’s holding in its previous Order dated December 28, 1984. Again, the pertinent clause of the Guaranty Agreement reads:
      Lender shall not be required... to make any demand upon or pursue or exhaust any of its rights or remedies against the Debtor or others with respect to the payment of any of the Liabilities, or to pursue or exhaust any of its rights or remedies with respect to any part of the collateral.

      Document 1 of the Récord at 7, ¶ 4 (emphasis added). SBA is empowered to pursue the guarantors before pursuing the debtor or the collateral. Thus, whether a decision was made by SBA to abandon collection attempts on the collateral is plainly irrelevant.


text:
    Eugene KRUSHINSKI, Plaintiff, v. ROADWAY EXPRESS, INC., Defendant.
    Civ. No. 84-1006.
    United States District Court, M.D. Pennsylvania.
    May 30, 1985.
    Peter Loftus, Scranton, Pa., for plaintiff.
    Jeffrey Ivan Pasek, Philadelphia, Pa., for defendant.
   MEMORANDUM AND ORDER

NEALON, Chief Judge.

Plaintiff Krushinski instituted this Title VII action on July 25, 1984 after having obtained a right to sue letter from the Equal Employment Opportunity Commission. Plaintiff, previously employed as a dock worker by the defendant, Roadway Express, Inc., alleges that he was discharged because of his religious beliefs. As a member of The Worldwide Church of God, plaintiff maintains that his religion observes a doctrine which requires abstaining from work from Friday at sundown until Saturday at sundown. Plaintiff alleges defendant denied him time off from work to observe the Sabbath, and as a result, plaintiff was forced to use personal and sick-leave time. When these days were exhausted, plaintiff apparently did not report for work and was subsequently suspended and terminated from his employment.

Plaintiffs action is brought pursuant to 42 U.S.C. § 2000e et seq. [Title VII]. Defendant has moved for summary judgment by motion dated February 7, 1985 and filed a brief in support thereof on the same date. The plaintiff filed a brief in opposition to the motion dated March 4, 1985 and the defendant filed a reply brief dated March 22, 1985. The motion is now ripe for disposition. For the reasons set forth below, the defendant’s Motion for Summary Judgment will be granted.

Title VII, as amended, makes it an unlawful employment practice for an employer to discriminate against an employee because of his religion. 42 U.S.C. § 2000e-2(a)(1). Religion is defined to include all aspects of religious observance and practice unless the employer demonstrates that he cannot “reasonably accommodate” the employee’s religious needs without “undue hardship.” 42 U.S.C. § 2000(e)(j). In Transworld Airlines, Inc. v. Hardison, 432 U.S. 63, 97 S.Ct. 2264, 53 L.Ed.2d 113 (1977), a case analogous to the one presented here, the Supreme Court held that TWA, which had made reasonable efforts to accommodate respondent’s religious needs, did not violate Title VII since an agreed-upon seniority system is not required to give way to accommodate religious observances and to require TWA to bear more than a de minimis cost in order to give respondents Saturdays off would be an undue hardship. In Hardison, plaintiff was an aircraft maintenance stores clerk, whose work was in demand by his employer twenty-four hours of every day. The plaintiff, also a member of the The Worldwide Church of God, refused to work on all holydays as well as every Saturday so that he could observe the Sabbath. TWA, his employer, accommodated his observance of the holydays but refused to accommodate his demand to have every Saturday free. The court concluded that TWA had engaged in significant efforts to accommodate his needs. First, TWA and the airline had adopted a seniority system which minimized the number of occasions when an employee must work when he would prefer to attend to other needs. Second, the company reduced its weekend work force to the bare minimum needed. Third, the company indicated it would approve any exchange of shifts for Hardison that could be arranged with the union. Accordingly, the Supreme Court found that the employer’s duty of reasonable accommodation under Title VII was not violated. Id. See also Brener v. Diagnostic Center Hospital, 671 F.2d 141 (5th Cir.1982); Turpén v. Missouri-Kansas-Texas Railroad Company, 736 F.2d 1022 (5th Cir.1984); Equal Opportunity Commission v. Caribe Hilton International, 597 F.Supp. 1007 (D. Puerto Rico 1984); Niederhuber v. Camden City Vocational and Technical School District Board of Education, 495 F.Supp. 273 (D.N.J.1980), affd. 671 F.2d 496 (3d Cir. 1981).

Regarding an established seniority system, Title VIPs reasonable accommodation mandates only that an employer make good faith efforts to accommodate an employee’s religious beliefs. It does not require that in doing so an employer override an established seniority system, nor does it require that an employer take steps that go beyond those a reasonable person would take. See Turpén, 736 F.2d at 1028. The Supreme Court in Hardison explained:

It would be anomalous to conclude that by “reasonable accommodation” Congress meant that an employer must deny the shift in job preference of some employees, as well as deprive them of their contractual rights, in order to accommodate or prefer the religious needs of others, and we conclude that Title VII does not require an employer to go that far.

Hardison, 432 U.S. at 81, 97 S.Ct. at 2275. The Court further observed that its conclusion is supported by the fact that seniority systems are afforded special treatment under Title VII itself. Id. See 42 U.S.C. § 2000e-2(h). Since there was no suggestion of discriminatory intent and it was only coincidental that in the plaintiffs case the seniority system acted to compound his problems in exercising his religion, the Court determined that TWA was not required by Title VII to “carve out a special exception to its seniority system in order to help Hardison to meet his religious obligations.” Id. at 82-83, 97 S.Ct. at 2275-2276.

Additionally, while it is well understood that individuals bringing a Title VII action are under no burden to propose to their employers specific means of accommodating their religious practices, it is also recognized that they have a duty to cooperate with the measures suggested by their employers. See Brener, 671F.2d at 145. The Fifth Circuit went on to explain:

These cases confirm what the statute’s use of the term “reasonable” suggests: bilateral cooperation is appropriate in the search for an acceptable reconciliation of the needs of the employee’s religion and the exigencies of the employer’s business. Although the statutory burden to accommodate rests with the employer, the employee has a correlative duty to make a good faith attempt to satisfy his needs through means offered by the employer. A reasonable accommodation need not be on the employee’s terms only.

Id. at 145-46.

In the case sub judice, the efforts made by Roadway Express to accommodate plaintiff’s religious needs are certainly comparable to those which existed in Hardison Prior to terminating plaintiff’s employment, Roadway officials investigated opportunities which might be available to the plaintiff under the union contract. Due to the plaintiff’s low seniority, he was not able to hold a bid job that would allow him to have time off to observe his Sabbath. Roadway also sought assistance from the plaintiff’s union. The union determined that they would not agree to any exceptions in the plaintiff’s case. They stated they would not tolerate any deviation from the equal application of the seniority in job bidding procedures to all employees. The company then wrote to twenty-two employees all of whom held bid jobs which would have accommodated the plaintiff. The company explained the plaintiff’s religious needs and asked each of these employees to consider changing shifts with him to allow him to observe his Sabbath. No affirmative responses were received. Copies of each of these letters were also sent to the plaintiff. After the letters were sent, plaintiff made no effort to explore the possibilities for accommodation by means of swapping shifts with another employee. Roadway, thereafter, applied its normal progressive disciplinary system to plaintiff’s absenteeism. After plaintiff had accumulated more than twenty unexcused absences in 1982 he was discharged. The court therefore concludes that the efforts made to accommodate the plaintiff’s religious need were reasonable.

In the instant case, plaintiff’s work schedule was determined on the basis of a routine application of the seniority system applicable to all of the defendant's dock workers. To have accommodated plaintiffs needs Roadway would have been required to ignore seniority provisions of the contract which dictate when an employee shall work and when an employee shall have time off. Under this seniority system, Roadway was not free to let plaintiff have time off from sundown Friday to sundown Saturday unless every other employee with more seniority was first offered the same opportunity.

Plaintiff has suggested only two possible ways that Roadway could have accommodated his religious needs. Both of these suggestions, however, would have violated the collective bargaining agreement. First, plaintiff asserted that the company could have called in casuals to replace him on weekends. The arbitration panel at plaintiffs hearing rejected this suggestion because under the union contract Roadway was not permitted to replace plaintiff with a casual employee since casual employees may not be used until all employees on the call board have first been called to work. Second, the plaintiff suggested that the company could simply let him take time off whenever required to observe his religion. This also would have violated the collective bargaining agreement for, as the union insisted, plaintiff should have time off only in his seniority position. Additionally, if Roadway did allow plaintiff to take time off for his religious observances as requested, the union could insist that every employee receive the same right for additional excused absences regardless of whether they were based on religious needs or not. Accordingly, since the duty to accommodate does not require an employer to take steps inconsistent with an otherwise valid agreement and in order to accommodate plaintiff the employer would have to violate the union contract, the decision to reject plaintiffs suggestions for accommodation was not improper.

The plaintiffs additional claims of discriminatory treatment must also be dismissed since at the time of his deposition he indicated he had no personal knowledge of anyone who has been discriminated against on account of religion besides himself. He also stated that his allegations regarding a policy of classifying and segregating applicants in the employment process by religion did not apply to him nor was he ever purposely assigned to a shift which would conflict with his religious observances. All work assignments were governed by the seniority system that governed all dock workers covered by the union contract. He further indicated that the remaining allegations in his complaint either do not apply to him directly or are related solely to the disciplinary letters issued to him as a result of his absenteeism. There was no intimidation, harassment or other discriminatory practices created by Roadway for him or anyone else on account of religion. See Krushinski Deposition, September 13, 1984, attached to Defendant’s Motion for Summary Judgment as Exhibit 2 Document No. 17 of the Record.

Therefore, the court will grant the defendant’s Motion for Summary Judgment regarding the plaintiff’s remaining Title VII claims.

An appropriate Order will enter.

      . The plaintiff had initially filed a grievance under Article 37 of the union contract when he was suspended. Following a hearing held before the Joint Area Committee on September 8, 1982, the grievance was denied. At the hearing, plaintiff asserted that he was a victim of religious discrimination. The plaintiff also filed a grievance after his discharge concerning the propriety of the discharge. The Joint Area Committee considered this grievance on November 11, 1982 after which the grievance was denied and the discharge upheld.

      . Pursuant to Local Rule 401.4, movant submitted a statement of 149 material facts for which, movant contended, there was no genuine issue to be tried. Plaintiff did not oppose this statement as required under the rule thereby admitting the validity of all relevant factual assertions contained in the submission.

      . "Casuals” are defined by the collective bargaining agreement to be "an employee who maintains seniority with another Employer in the industry or is currently employed outside the industry.” The agreement further states, "[C]asual employees are employees used basically to cover situations such as replacements for absenteeism____ Employers use of casuals as a subterfuge to evade this Agreement or deprive regular employees of their normal work opportunity shall subject the Employer to the grievance procedure.” National Master Freight Agreement at 90, attached to Motion for Summary Judgment, Document No. 17 of the Record.

      . The Joint Area Committee rejected both of plaintiffs suggestions of accommodations as being prohibited by the Union Contract. See Baum Affidavit at 2, Document 17 of the Record. The court notes that plaintiff had no other suggestions and, aside from the filing of the grievances, never requested help from fellow employees or his union. See Krushinski Deposition at 75, Document 17 of the Record.


author: O’KELLEY, District Judge.

text:
    SOUTHEASTERN FIRE INSURANCE CO. v. Jackson M. HEARD, et al.
    Civ. No. C-84-150-G.
    United States District Court, N.D. Georgia, Gainesville Division.
    June 14, 1985.
    Michael J. Gorby, Atlanta, Ga., for plaintiff.
    G. Thomas Davis, Allen Gordon, Glenn Frick, Atlanta, Ga., for defendant.
   ORDER

O’KELLEY, District Judge.

Presently pending before the court are the motions of plaintiff Southeastern Fire Insurance Company (Southeastern) and defendants Jackson Heard, Mark Heard, and Heard Fuel Company (the Heards) for summary judgment. Southeastern filed this declaratory judgment action seeking a determination that its policy did not cover a boating accident. Upon consideration, the court grants Southeastern’s motion for summary judgment, and denies the Heards’ motion for summary judgment.

The following facts are not in dispute. Southeastern issued homeowner’s insurance policy No. HP-502-96-43 (the policy) to Jackson Heard. The policy contains the following exclusion:

1. Coverage E — Personal Liability ... [does] not apply to bodily injury or property damage:
e. arising out of the ownership, maintenance, use, loading or unloading of:
(3) a watercraft:
(a) owned by or rented to any insured if the watercraft has inboard or inboardoutdrive motor power of more than 50 horsepower or is a sailing vessel, with or without auxiliary power, 26 feet or more in overall length____

(Homeowners Policy “76,” at 9, Ex. A to Southeastern’s Complaint).

Ciffone, also a defendant in this action, alleges that defendants invited her to a business party on August 28, 1982 at Lanier Harbor Condominiums on Lake Lanier in Buford, Georgia. Ciffone went swimming in the lake and allegedly was run down by a boat operated by Craig Campbell, another person invited to the party. Jackson Heard owned this boat, which was 17 feet in length and contained an inboard/outboard motor of 140 horsepower.

Ciffone filed suit against the Heards in state court, alleging serious injuries suffered as a result of the Heards’ negligent entrustment of the boat to Campbell, failure to warn, and breach of duty of care. The Heards assert that Southeastern would be liable for any judgment rendered against them, and have requested that Southeastern provide a defense in Ciffone’s state court action. Southeastern filed this declaratory judgment action to determine whether its insurance covered the action. It claims that the exclusion applies to the incident.

The Heards concede that the policy excludes coverage of watercraft with an inboard or inboard/outdrive motor greater than 50 horsepower, and that the boat in question has an inboard/outboard motor of 140 horsepower. They contend, however, that the policy affords them coverage because the exclusion’s language is unclear. According to them, the policy’s wording indicates that power boats, as well as sailing vessels, are excluded only if they are 26 feet or more in length. The boat is 17 feet long.

An insurance contract is like any other; when it is clear and unambiguous the court will construe it as written. Richards v. Hanover Ins. Co., 250 Ga. 613, 299 S.E.2d 561 (1983); Travelers Indemnity Co. v. Whalley Construction Co., 160 Ga. App. 438, 441, 287 S.E.2d 226, 229 (1981); Cherokee Credit Life Ins. Co. v. Baker, 119 Ga.App. 579, 582, 168 S.E.2d 171, 174 (1969). The court will construe an ambiguous policy, especially the exclusions or limitations, against the insurer. Richards, 250 Ga. at 615, 299 S.E. at 563. The court is not to create ambiguity by lifting a clause out of context, nor “to call forth doubt or make hypercritical constructions.” Baker, 119 Ga.App. at 583, 168 S.E.2d at 174-75. The natural, obvious meaning is preferred. Id. The policy is to be read in accordance with the insured’s reasonable expectations whenever possible. Richards, 250 Ga. at 615, 299 S.E.2d at 563.

In the instant case, the court finds that the exclusionary language is clear and unambiguous. As the court reads the clause, it excludes coverage of a motorboat of more than 50 horsepower or a sailing vessel 26 feet or more in overall length. The court cannot find another logical reading of the clause, and will not twist its unambiguous meaning to obtain the construction that the Heards seek. The clause clearly indicated to Jackson Heard that his boat was excluded, and thus he could not have reasonably expected its coverage. Because the clause is clear and unambiguous, the court will not construe it against Southeastern but must interpret it as written. Therefore, the court finds that the exclusion covers the boat.

The Heards also assert that Ciffone based her cause of action against them on negligent entrustment, and not on their negligence in the ownership, maintenance, or use of the boat. Because an insurer’s duty to defend is premised upon the injured party’s allegations in her complaint, Haley v. Georgia Farm Bureau Mutual Ins. Co., 166 Ga.App. 596, 305 S.E.2d 160 (1983), the Heards claim that the exclusion does not cover the incident.

Georgia courts have not addressed whether an insurance policy excluding coverage of an instrumentality covers negligent entrustment of that instrumentality. The court therefore must attempt to predict how Georgia will deal with this issue. In making that determination, the court will examine Georgia cases on insurance law, and decisions from other jurisdictions discussing the precise issue.

Numerous other jurisdictions considering the issue have taken both sides. Some courts have held that the exclusion pertains not to negligent entrustment, but to injury arising out of ownership, use, operation, or maintenance of the instrumentality. The tort of negligent entrustment, on the other hand, is based on the insured’s negligently entrusting the instrumentality to someone else. Thus, negligent entrustment is a separate tort. The injury does not arise out of ownership or use of the instrumentality, but out of is negligent entrustment. These courts often hold that the language of the phrase “arising out of the ownership, maintenance, operation, or use” is ambiguous, and construe it against the insurer. A few courts have held that when the injury arises from instrumentality-related and noninstrumentality-related causes, the latter are not excluded, and the insurer must defend.

Other courts have found that the exclusion applies to negligent entrustment. Although several theories for this interpretation are offered, these cases in common have held that the language is clear and unambiguous. Some courts have used the “dovetail” approach, when an insured has both homeowner’s and, for example, automobile policies. These courts have held that the homeowner’s policy exclusions and the auto policy’s coverage fit together, or dovetail. To stretch the homeowners exclusion to cover auto-related injuries would merely be duplicative.

Courts also have applied the exclusion based on an approach akin to the dovetail theory. These courts found that the purpose of homeowner’s insurance is to insure against home risk, and that the parties’ reasonable expectations are of this type of coverage. The cost of the insurance takes this risk into account. Automobiles clearly are excluded. To allow coverage for excluded instrumentalities is contrary to the policy’s language and the parties’ expectations. Additionally, such a result would broaden the risk anticipated in homeowner’s policies and could lead to an increase in rates.

The most well reasoned and convincing rationale for exclusion of negligent entrustment is an analysis of the tort itself. Negligent entrustment is composed both of the entrustor’s negligence in entrusting the instrumentality and the entrustee’s negligent use of the instrumentality. Thus, the triggering element is negligent use of the item, for even if the entrustment was negligent, no cause of action could arise without an injury caused by negligent use of the item. Because negligent use is essential, negligent entrustment arises out of the use of a certain instrumentality. Thus, the exclusion applies. This construction is true to the exclusion’s plain meaning.

As stated earlier, no Georgia court has ruled on the precise issue of coverage for negligent entrustment. A review of Georgia insurance law and cases from other jurisdictions indicates that Georgia courts would follow those cases which hold that the clause excluding injury arising out of the use, inter alia, of an instrumentality applies to injury arising out of negligent entrustment of the instrumentality. First, the language of the exclusion in the instant action is clear and unambiguous. Ciffone’s injuries allegedly occurred when Campbell drove the boat over her. The Heards cited Hartford Accident & Indemnity Co. v. Booker, 140 Ga.App. 3, 230 S.E.2d 70 (1976) as stating that the definition of use is elusive. The court noted that one is using an object when control over it is easily at hand. 140 Ga.App. at 4-5, 230 S.E.2d at 72. By this definition, Campbell was using the boat when it ran over Ciffone. Additionally, in Booker, the court interpreted “use” in the context of the state uninsured motorist statute, not an insurance policy.

In Assurance Co. of America v. Bell, 108 Ga.App. 766, 134 S.E.2d 540 (1963), the court defined use as it appeared in an insurance policy. The word, in connection with the phrase “arising out of the use, operation, or maintenance,” must be taken in its usual meaning as use of a motor vehicle. Id. at 772, 134 S.E.2d 540. Use implies ordinary use or employment of the instrumentality. Id. In Bell, a child released the brake, causing the car to drift. The court held that such action was not ordinary use as contemplated by the parties, such as driving. Id. Under the Bell court’s definition of use, Ciffone’s alleged injuries clearly arose out of use of the boat. Campbell was driving the boat in the lake, clearly an ordinary and normal use of a boat. While Campbell was driving the boat, it allegedly struck and injured Ciffone. Thus, the court finds that the language of the exclusion is clear.

Analysis of the Georgia definition of negligent entrustment indicates that the exclusive is applicable. Liability for the tort is predicated upon the entrustor’s negligent act in lending the instrumentality to one whom he knows is incompetent, and in the negligent conduct of the entrustee in operating the instrumentality. Bettis v. United States, 635 F.2d 1144, 1148 (5th Cir. Unit B 1981). The negligent entrustment must concur with the negligent conduct of the entrustor. Id. Thus, both the entrustor’s negligence in entrusting the vehicle and the entrustee’s negligent use of the vehicle must cause the injury to show negligent entrustment. Id.

In the instant case, Ciffone alleged both elements of negligent entrustment in her complaint. By its allegations, then, the complaint averred that the injury arose out of negligent use of the boat, an essential element of negligent entrustment. Any injury arising out of the use of an excluded instrumentality is not covered; thus, Southeastern is not obliged to defend the instant action.

Additionally, Georgia cases support this interpretation of the exclusion. In Cotton States Mutual Insurance Co. v. Crosby, 244 Ga. 456, 260 S.E.2d 860 (1979), a child who was raped sued the school claiming negligent breach of duty to safeguard the premises. The school’s policy excluded damages arising out of bodily injury. The Georgia Supreme Court held that in a tort action some injury or initiating event must occur. Id. at 457, 260 S.E.2d 860. In this action, the initiating event was the rape. The child’s right to recovery was based thereon. Id. The phrase “bodily injury” is not ambiguous, and rape clearly fit within that category. Id. at 459, 260 S.E.2d 860. Even though the cause of action was negligent breach of duty to safeguard the premises, the court found that the claim arose out of bodily injury and that the exclusion applied.

In St. Paul Fire & Marine Ins. Co. v. Cohen-Walker Inc., 171 Ga.App. 542, 320 S.E.2d 385 (1984), an individual sued Cohen-Walker, claiming that it incorrectly advised him in choosing an insurer, because that insurer became insolvent and could not pay his claims. Cohen-Walker’s insurance policy excluded claims based on an insurer’s inability to pay its debts. The court of appeals found that this language is unambiguous. Id. at 544, 320 S.E.2d 385. It noted that even though the complaint was in tort for Cohen-Walker’s negligence, the underlying injury was caused by the recommended insurance company’s failure to pay its debts. Id. at 545, 320 S.E.2d 385. Thus, the exclusion applied.

The cases cited previously indicate that Georgia courts look to the underlying cause of the injury to determine coverage, and not just to the specific theory of liability alleged. The negligent use of an entrusted vehicle is an essential part of the tort of negligent entrustment in Georgia. Looking to the underlying cause of injury in this action, a Georgia court would find that alleged negligent use of the boat as well as the alleged negligence of the entrustor caused Ciffone’s injuries. By the-clear and unambiguous language of the exclusion, the incident is not covered.

Finally, the court notes that the out of state cases which exclude negligent entrustment coverage are well reasoned and logical. In fact, the more recent cases are following this trend. The interpretation comports well with the policy’s language and the parties’ expectations. The specific theory of liability alleged should not serve to ignore totally the straight-forward meaning of the clause. To carry the Heards’ argument to its logical conclusion, an insurer would have to exclude every conceivable theory of liability. Obviously, this is impractical and illogical. So long as the injury arose out of use, maintenance, or ownership of an excluded instrumentality, the exclusion should prevail.

In summary, the court grants Southeastern’s motion for summary judgment, and denies the Heards’ motion for summary judgment.

      . Defendant Martha McPheeters Ciffone (Ciffone) opposed Southeastern’s motion. Defendant Georgia Casualty and Surety Company has not responded to either motion.

      . As stated in the order’s text, she also alleged failure to warn and breach of duty to a business invitee.

      . Courts in states which follow this line of reasoning are Colorado; Douglass v. Hartford Ins. Co., 602 F.2d 934 (10th Cir.1979) (Colorado law); United Fire & Casualty Co. v. Day, 657 P.2d 981 (CoIo.App.1982); Illinois; U.S. Fidelity & Guaranty Co. v. State Farm Mutual Automobile Ins. Co., 107 Ill.App.3d 190, 63 Ill.Dec. 14, 437 N.E.2d 663 (1982); Kansas; Upland-Mutual Ins. Inc. v. Noel, 214 Kan. 145, 519 P.2d 737 (1974); Minnesota: Republic Vanguard Ins. Co. v. Buehl, 295 Minn. 327, 204 N.W.2d 426 (1973); New Jersey: McDonald v. Home Ins. Co., 97 N.J.Super. 501, 235 A.2d 480 (1967); New York: Lalomia v. Bankers & Shippers Ins. Co., 35 A.D.2d 114, 312 N.Y.S.2d 1018, (1970). Note, however, that later decisions in Minnesota and New Jersey indicate a trend away from this reasoning, see infra note 6; and that in another case, the Illinois appellate court found that a similar exclusion covered negligent entrustment, see infra note 5.

      . The cases cited supra in note 3 for the most part indicate that phrases such as "use, maintenance, or operation” are ambiguous. In Grigsby v. Coastal Maritime Serv. of Texas, 412 F.2d 1011 (5th Cir.1969), injury occurred when an employee who had come on board ship was asphyxiated. The language of the clause read: "This policy does not apply ... to the ownership, maintenance, operation, use, loading or unloading of (1) watercraft____” Id. at 1037. The court found this language to be unclear and held that it should be interpreted to read maintenance, et al, by the assured. Id. Grigsby is distinguishable from the instant suit. First, it concerns Louisiana and maritime law; this suit revolves around Georgia law. Second, the factual situation is different. The employer of the deceased employee was not involved in maintenance, but merely supplied equipment. Id. The word maintenance in that fact situation was held to be ambiguous. In the instant case, the boat admittedly driven by Campbell and owned by Jackson Heard caused Ciffone’s injury. The word use in this fact situation is not ambiguous: the injury arose out of the boat's use. Additionally, a district court held that although Grigsby "stands for the proposition that the standard watercraft exclusion does not apply in instances where an insured's involvement with the watercraft is peripheral, it does apply when the activity giving rise to the risk is closely connected to the activities of the watercraft owner.” Farrell Lines, Inc. v. Insurance Company of North America, 600 F.Supp. 740, 745 (E.D. La. 1985). The court concurs with the Farrell court’s interpretation of Grigsby.

        . In these cases, the key is whether the injury was so linked to the automobile that without it, no harm would have occurred. In Payne v. Southern Guaranty Ins. Co., 159 Ga.App. 67, 282 S.E.2d 711 (1981), a person had a loaded gun in the car. In the course of driving the gun went off, injuring the passenger. The policy insured injury arising out of the use of an auto. The court held that in a motor vehicle insurance policy context, the term “arising out of did not mean proximate cause. Id. at 68, 282 S.E.2d 711. The question was whether the injury originated from or grew out of, use of the vehicle. Id. In Payne, enough of a connection between the injury and use of the auto existed so that the policy covered the incident.
      In Washington v. Hartford Accident & Indemnity Co., 161 Ga.App. 431, 288 S.E.2d 343 (1982), a passenger in a school bus was assaulted with a gun by another passenger. The school’s insurance policy covered damages resulting, inter alia from use of a vehicle. The court held that the injury did not “arise out of use of the bus. The operation of the bus had no impact upon the incident; instead, the assailant simply shot the passenger on the bus because that is where they happened to be. Id. at 432, 288 S.E.2d 343. Thus, the insurance policy did not cover the incident.
      A case in which the policy excluded injury arising out of use, of an auto is State Farm Mutual Automobile Ins. Co. v. Partridge, 10 Cal.3d 94, 514 P.2d 123, 109 Cal.Rptr. 811, (1973). In Partridge, a car drove off the road and a gun discharged. The court found that the insured was negligent both in modifying the gun and in driving the car. Because the injury could have occurred independently of the car, the court found that the occurrence was covered. See also Waseca Mutual Ins. Co. v. Noska, 331 N.W.2d 917 (Minn.1983) in which the insured negligently failed to seal barrels of burning ashes placed in his truck and drove negligently, causing a fire. Because the negligent failure to cover the barrels was a separate and distinct cause of the fire, the court found that the damage was covered notwithstanding an automobile exclusion.
      In the cases cited supra, the separate cause must be truly separate and independent. The Illinois Court of Appeals in U.S. Fidelity and Guaranty Co. v. State Farm Mutual Automobile Ins. Co., 107 Ill.App.3d 190, 63 Ill.Dec. 14, 437 N.E.2d 663 (1982) (USF & G) found that the injury was caused by negligent supervision of a child who fell getting out of a car, and that the policy excluded injury arising out of automobile use. Citing Partridge, the court held that negligent supervision was the covered act and thus coverage existed for the entire incident. An earlier Illinois appellate case, State Farm Fire & Casualty Co. v. McGlawn, 84 Ill.App.3d 107, 39 Ill.Dec. 531, 404 N.E.2d 1122 (1980), held that negligent entrustment was not a separate cause, but arose out of the use of a motor vehicle. The court in USF & G noted McGlawn and referred to its dissent, but did not attempt to distinguish it.

      . Courts in the following states have held that the exclusion applies to negligent entrustment: Alabama: Cooter v. State Farm Fire & Casualty Co. 344 So.2d 496 (Ala. 1977); Alaska: Allstate Ins. Co. v. Ellison, 757 F.2d 1042 (9th Cir.1985) (Alaska law); Arizona: Lumbermans Mutual Casualty Co. v. Kosies, 124 Ariz.App. 136, 602 P.2d 517 (1979); Arkansas: Fox Hills Country Club, Inc. v. American Ins. Co., 264 Ark. 239, 570 S.W.2d 275 (1978); California: Safeco Ins. Co. v. Gilstrap, 141 Cal.App.3d 524, 190 Cal.Rptr. 425 (1983) ; Delaware: Insurance Co. of North America v. Waterhouse, 424 A.2d 675 (Del.Super.Ct. 1980); Florida: Gargano v. Liberty Mutual Ins. Co., 384 So.2d 220 (Fla.Dist.Ct.App.1980); Illinois: State Farm Fire & Casualty Co. v. McGlawn, 84 Ill.App.3d 107, 39 Ill.Dec. 531, 404 N.E.2d 1122 (1980); Louisiana: Picou v. Ferrara, 412 So.2d 1297 (La.1982) (reversing 404 F.2d 1265 (La.App.1981)); Maine: American Universal Ins. Co. v. Cummings, 475 A.2d 1136 (Me. 1984); Massachusetts: Barnstable County Mutual Fire Ins. Co. v. Lally, 374 Mass. 602, 373 N.E.2d 966 (1978); Whitney v. Continental Ins. Co., 595 F.Supp. 939 (D.Mass.1984) (Massachusetts law); Michigan: Michigan Mutual Ins. Co. v. Sunstrum, 111 Mich.App. 98, 315 N.W.2d 154 (1981); Shelby Mutual Ins. Co. v. U.S. Fire Ins. Co., 12 Mich.App. 145, 162 N.W.2d 676 (1968); Minnesota: St. Paul Sch. Dist. v. Columbia Transit, 321 N.W.2d 41 (Minn.1982); Faber v. Roelofs, 311 Minn. 428, 250 N.W.2d 817 (1977); Torbert v. Anderson, 301 Minn. 339, 222 N.W.2d 341 (1974); Fillmore v. Iowa Natl Mutual Ins. Co., 344 N.W.2d 875 (Minn.App.1984); Missouri: Shelter Mutual Ins. Co. v. Politte, 663 S.W.2d 777 (Mo.App.1983); New Hampshire: Hanover Ins. Co. v. Grondin, 119 N.H. 394, 402 A.2d 174 (1979); New Jersey: Bartels v. Romano, 171 N.J.Super. 23, 407 A.2d 1248, (1979); South Dakota: Great Central Ins. Co. v. Roemmich, 291 N.W.2d 772 (S.D.1980); Texas: Fidelity & Guaranty Ins. Underwriters, Inc. v. McManus, 633 S.W.2d 787 (Tex.1982); Utah: National Farmers Union Property and Casualty Co. v. Western Casualty & Surety Co., 577 P.2d 961 (Utah 1978); Wisconsin: Bankert by Habush v. Threshermen's Mutual Ins. Co., 110 Wis.2d 469, 329 N.W.2d 150 (Bankert II) (1983), (aff’g Bankert v. Threshermens Mutual Ins. Co., 105 Wis.2d 438, 313 N.W.2d 854 (1981) (Bankert I)). See also LaBonte v. Federal Mutual Ins. Co., 159 Conn. 252, 268 A.2d 663 (1970), which deals with a parent’s statutory liability for a child’s use of a vehicle. The court held that liability under any theory of recovery, whether personal negligence, agency, or other type of vicarious liability, arising from an automobile is excluded. Id., 268 A.2d at 666. As noted supra in note 3, courts in Minnesota and New Jersey have held that the exclusion does not apply to negligent entrustment, in Buehl, (Minnesota) and in McDonald, (New Jersey). Later cases in those states, however, have distinguished Buehl and McDonald. In 1974, the Minnesota Supreme Court in Torbert noted that in those cases, the vehicles were owned by the insureds’ children, unlike the case before it in which the insured owned the vehicle. 222 N.W.2d at 344. Additionally, in the earlier cases nothing in the complaint brought the claim within the exclusion; in Torbert the complaint alleged that the defendants operated and that one owned the boat. Id. at 344-45. The general allegations of the complaint were insufficient to bring the claim within Buehl's purview. Id. at 345.
      In Faber, decided in 1977, and St. Paul School District, written in 1982, the Minnesota Supreme Court again distinguished Buehl. The clause in the cases before it excluded injury “arising out of the use” of a vehicle. In Buehl, the exclusion stated that coverage did not apply, inter alia, to the use of a vehicle. The court held in both later cases that the exclusion applied to negligent entrustment. St. Paul, 321 N.W.2d at 46; Faber 250 N.W.2d at 821. In 1979, the New Jersey Superior Court, Appellate Division, in Bartels distinguished McDonald, because no automobile policy covered the loss in that case, and the complaint did not allege that the insured owned the vehicle. 407 A.2d at 1250.
      The Minnesota courts have been limiting Buehl strictly and have been moving toward exclusion of claims of negligent entrustment. The situation in New Jersey is less clear, because no New Jersey Supreme Court case discussing the issue was found. Bartels limited McDonald, however, which indicates that the state is moving in line with the national trend.

      . See Cooter, 344 So.2d at 497. See also Water-house, 424 A.2d at 682 (Delaware); Sunstrum, 315 N.W.2d at 157 (Michigan); Bartels, 407 A.2d at 1250 (New Jersey).

      . See Waterhouse, 424 A.2d at 682 (Delaware); Sunstrum, 315 N.W.2d at 157 (Michigan); Fillmore, 344 N.W.2d at 878 (Minnesota); Torbert, 222 N.W.2d at 344 (Minnesota); Bankert I, 313 N.W.2d at 857 (Wisconsin).

      . See supra note 6.

      . This rationale also is applied to allegations of negligent supervision. See e.g., Atlantic Mutual Fire Ins. Co. v. Cook, 619 F.2d 553, 554 (5th Cir.1980) (Alabama law); Faber, 250 N.W.2d at 821 (Minnesota); St. Paul, 321 N.W.2d at 46 (Minnesota); Fillmore, 344 N.W.2d at 881 (Minnesota); Bankert II, 329 N.W.2d at 153 (Wisconsin); Grondin, 402 A.2d at 175 (N.H.); Western Casualty & Surety, 577 P.2d at 962 (Utah).

      . See supra note 4. Additionally, the exclusion did not state that the use of the boat out of which the injury arose had to be used by the insured. The clause merely excludes a watercraft owned by or rented to an insured. In Bankert I, the Wisconsin Court of Appeals held that negligently entrusting the vehicle to a youth was an exercise of the powers of "ownership" and "use” of the vehicle. 313 N.W.2d at 856. The Wisconsin Supreme Court affirmed, but noted that this rationale, although correct, was "superfluous.” 329 N.W.2d at 154.

      . See supra note 2. All of the theories of liability are based on the use of the boat, for if the boat had not been used Ciffone would not have been injured.
      The Heards claim that Ciffone did not allege ownership or use of the boat in her negligent entrustment count. That count, however, stated that the Heards were in possession and control of the boat, and that Ciffone was injured by the boat driven by the Heards’ guest. (¶ 6 of Complaint). Additionally, the court will consider the entire complaint’s allegations, which mention ownership and use of the boat as causing Ciffone’s injury.

      . The child also alleged that the school unlawfully detained her after the rape. The court held that this cause of action did not arise out of the bodily injury. She could have alleged unlawful detention or have been detained regardless of the rape. The injury complained of in that count was the unlawful detention itself. 244 Ga. at 458, 260 S.E.2d at 862.

      . See also Pacific Indemnity Co. v. N.A., Inc., 120 Ga.App. 793, 172 S.E.2d 192 (1969), in which a policy excluded loss by theft. Someone had removed copper flashing from the roof of the insured’s building, causing property damage. The court found that the damage was excluded by the express policy terms, because it occurred incident to theft. Id. at 795, 172 S.E.2d 192.
      In Bell, supra, the court noted that the insured was attempting to bring the accident, which occurred when a child released the car brake, under the policy by claiming negligent supervision. The court did not decide the issue, but noted that the insurer's adjustor knew of this claim, concluded that the insurance covered, arid instructed that the car be repaired. The court found that his actions constituted estoppel, which prevented the insurer from denying coverage. 108 Ga.App. at 775-76, 134 S.E.2d at 546.

      . The dovetail approach does not fit the instant case, because no evidence was presented of a watercraft coverage policy.

      . The Heards attempt to distinguish the instant policy from those in other cases, based on the absence of "operation" in the clause at hand. The court believes that this is a distinction without a difference. Use must be taken in its usual meaning. Bell, 108 Ga.App. at 772, 134 S.E.2d at 544. Thus use of a boat includes driving it on water. The cases made no distinction between policies with or without the word "operation.” In fact, some of the policies with or without the word “operation." In fact, some of the policies in those cases left out that word. E.g., Taber v. Nationwide Mutual Ins. Co., 447 So.2d 698 (Ala. 1984); Ellison, 757 F.2d at 1043-44 (Alaska law); Faber, 250 N.W.2d at 821 (Minnesota); Fillmore, 344 N.W.2d at 877 (Minnesota App.).


author: STECKLER, District Judge.

text:
    AETNA FINANCE CORPORATION, d/b/a Thorp Credit Inc. of Indiana v. MASSEY-FERGUSON, INC.
    No. IP 82-1531-C.
    United States District Court, S.D. Indiana, Indianapolis Division.
    July 11, 1985.

      Lawrence M. Reuben, Atlas, Hyatt & Reuben, Indianapolis, Ind., for plaintiff.
    Christopher Kirages, Dutton & Overman, Indianapolis, Ind., for defendant.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

STECKLER, District Judge.

This matter is before the Court for a decision on the merits following trial to the Court.

In this case the Court is called upon to determine which of two secured creditors is entitled to possession of a tractor or to the proceeds of its sale. Plaintiff, Thorp Credit Inc. of Indiana (Thorp), has a security interest in the tractor by virtue of its purchase of a retail installment sales contract from the dealer, Martinsville Equipment Co. Defendant, Massey-Ferguson, Inc., has a security interest in the same tractor by virtue of its role as manufacturer and inventory financer for Martinsville Equipment. Martinsville Equipment precipitated the parties’ conflict by selling the tractor and transferring the installment sales contract, for new value, to Thorp without reporting the sale or remitting the proceeds to Massey-Ferguson.

Thorp contends that pursuant to I.C. § 26-1-9-318 its security interest as retail financer is superior to that of Massey-Ferguson. Massey-Ferguson argues that Thorp’s security interest is not enforceable because the buyer of the tractor never acquired an interest in it, and therefore Thorp’s security interest never attached. Massey-Ferguson also argues that Thorp’s claim is barred by laches, waiver and estoppel. The Court previously rejected Massey-Ferguson’s statute of limitations defense.

Having heard the evidence and reviewed the parties’ briefs, the Court concludes that the law is with Thorp. Although apparently a case of first impression in Indiana, Thorp’s position has been upheld by a number of cases in other jurisdictions. See e.g., Borg-Warner Acceptance Corp. v. C.I.T. Corp., 679 S.W.2d 140, 39 UCC Rep.Serv. 1864 (Texas Ct.App.1984); American State Bank v. Avco Financial Services, 71 Cal. App.3d 774,139 Cal.Rptr. 658, 22 UCC Rep. Serv. 235 (1977); Rex Financial Corp. v. Great Western Bank & Trust, 23 Ariz. App. 286, 532 P.2d 558, 16 UCC Rep.Serv. 1155 (1975); Chrysler Credit Corp. v. Sharp, 56 Misc.2d 261, 288 N.Y.S.2d 525, 5 UCC Rep.Serv. 226 (Sup.Ct.1968). The Court agrees with the conclusions of those decisions that the inventory financer is in the better position to guard against sales out of trust and that the smooth flow of commerce, an explicit policy of the Uniform Commercial Code, requires that the retail financer be able to rely on the chattel paper it acquires. The one case cited by Massey-Ferguson in which the inventory financer’s security interest was deemed superior to the retail financer, Chartered Bank of London v. Chrysler Corp., 115 Cal.App.3d 755, 171 Cal.Rptr. 748, 30 UCC Rep.Serv. 1438 (1981), involved a warehouse receipt with specific instructions on release of the collateral for sale. There were no such restrictions in this case.

Accordingly the Court hereby enters its findings of fact and conclusions of law.

Findings of Fact

1. Plaintiff, Aetna Finance Corporation d/b/a Thorp Credit Inc. of Indiana is a Delaware corporation with its principal place of business in Indiana.

2. Defendant, Massey-Ferguson, Inc., is a Maryland corporation with its principal place of business in Iowa.

3. Thorp is engaged in the finance business which involves primarily the extension of credit both consumer and commercial in nature.

4. Massey-Ferguson is engaged in the manufacture and, through authorized dealers, the sale of farm equipment.

5. Martinsville Equipment was a dealer for the sale and service of Massey-Ferguson farm equipment pursuant to the terms of a Dealer Sales and Service Agreement (Dealer Agreement) executed by and between it and Massey-Ferguson on or about June 13, 1977.

6. Under terms of the Dealer Agreement, Massey-Ferguson retained a security interest in the equipment sold by it to Martinsville Equipment to be held in the inventory of the latter for resale at retail.

7. To perfect its security interest, Massey-Ferguson filed its UCC-1 Financing Statements with the Recorder of Morgan County, Indiana, and with the Indiana Secretary of State.

8. On or about August 9, 1979, Donald I. Dyer (“Dyer”) executed a Retail Installment Contract for the purchase of a Massey-Ferguson 4840 Tractor with Campbell & Morris Equipment Company, Inc., d/b/a Martinsville Equipment Company.

9. The Retail Contract was assigned by Martinsville Equipment to Thorp on August 9, 1979, and Thorp, on the same date, issued its check payable to Martinsville Equipment in the sum of $45,000.00 as the balance of the cash price less the allowance for a trade-in. That check was thereafter endorsed on behalf of Martinsville Equipment by its principal stockholder and owner, John Ream (“Ream”) to R & D Farms, a farm partnership then existing between Ream and Dyer as the sole partners.

10. The taking of the assignment and possession of the contract and paying new value therefor by plaintiff, Thorp, were in the ordinary course of its business.

11. By virtue of said assignment, Thorp was granted and took a security interest in the tractor.

12. To perfect its security interest, Thorp filed UCC-1 Financing Statements with the Recorder of Morgan County, Indiana, and with the Indiana Secretary of State.

13. Dyer did not take immediate delivery and possession of the tractor. Instead he left it at Martinsville Equipment to have service performed so that the tractor would meet his specific needs.

14. Martinsville Equipment did not complete the service, and the tractor remained on the premises of Martinsville Equipment. Dyer, nevertheless, possessed rights to the tractor as evidenced by the installment sales contract and Dyer’s directives that certain changes be made to the tractor.

15. The tractor remained on Martins-ville Equipment Company’s unsold inventory list. No reference was made in the books and records of Martinsville Equipment of any sale to Dyer, no sales ticket was issued, and no entry was made in the sales and receipt ledger.

16. On or about October 18, 1979, Massey-Ferguson terminated the dealership of Martinsville Equipment and, incident to such termination, repossessed from the premises of the dealer the tractor together with all other items of equipment which were held as unsold items of equipment by the dealer pursuant to the floor plan arrangement between it and Massey-Ferguson.

17. On or about December 21, 1979, Dyer issued his check in the amount of $29,108.30 payable to Thorp which represented the first annual installment due under the retail contract of $14,815.00, the balance of such check representing payment of the first annual installment due on a Sperry-New Holland Combine which was also the subject of a retail contract by Dyer with Martinsville Equipment financed by and assigned to Thorp.

18. Dyer thereafter defaulted on his obligations under the contract, failing to remit installment payments as due.

19. In or about August of 1980, Thorp obtained an order of the Morgan County, Indiana, Circuit Court in Cause No. C80-C279, a replevin action brought by it against Dyer, ruling that, as between Thorp and Dyer, Thorp was entitled to possession of the tractor.

20. At the time of the execution of the retail contract by Dyer on August 9, 1979, Thorp had no knowledge of the fraudulent nature of the business transactions involving Martinsville Equipment, Ream and Dyer and was not a participant therein.

21. Thorp’s conduct does not indicate that it waived, or should be estopped from asserting, its claim to the tractor or its proceeds.

22. Any conclusion of law stated herein-below to the extent that it constitutes a finding of fact is herein incorporated by reference as an additional finding of fact by this Court.

Based upon the foregoing findings of fact the Court now makes the following conclusions of law.

Conclusions of Law

1. This Court has jurisdiction over the subject matter and the parties to this action.

2. Thorp’s security agreement with respect to the tractor did, as a matter of law, attach.

3. Thorp’s security agreement has, in accord with I.C. § 26-1-9-308, priority over defendant Massey-Ferguson’s security agreement.

4. Thorp was a purchaser as defined by I.C. § 26-1-1-201(33).

5. The Retail Installment Contract executed by Dyer and Martinsville Equipment and assigned to plaintiff, Thorp, was “chattel paper” as defined by I.C. § 26-1-9-105(l)(b).

6. Thorp gave “new value” as consideration for said Contract.

7. This is an action to recover possession of personal property, or damages in lieu thereof, and is governed by a six-year limitation period. I.C. § 34-1-2-1.

8. Thorp has established that it has been damaged and that, in lieu of the personal property, it is entitled to recover the sum of $30,184.90 principal plus $14,260.35 interest to November 1984 and interest at an appropriate rate since then.

9. Any finding of fact stated herein-above to the extent that it constitutes a conclusion of law is herein incorporated by reference as an additional conclusion of law by this Court.

JUDGMENT

The Court having heard the evidence of the parties at trial and having entered its memorandum, findings of fact and conclusions of law this date,

IT IS HEREBY ORDERED, ADJUDGED and DECREED that plaintiff, Aetna Finance Corp., d/b/a Thorp Credit Inc. of Indiana, recover from defendant, Massey-Ferguson, Inc., the sum of $30,-184.90, plus $14,260.35 interest to November 1984, plus interest at the appropriate rate from November 1984 to the date of this judgment.