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WATKINS MOTOR LINES, INC. v. ZERO REFRIGERATED LINES

September 11, 1974

WATKINS MOTOR LINES, INCORPORATED, A FLORIDA CORPORATION, ET AL., PLAINTIFFS,
v.
ZERO REFRIGERATED LINES, A TEXAS CORPORATION; AND CONTINENTAL NATIONAL ASSURITY GROUP, AN ILLINOIS CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Austin, District Judge.

MEMORANDUM OPINION

This is an action by one trucking company against another for indemnification under the regulations of the Interstate Commerce Commission for damages the plaintiff paid in settlement of a personal injury case. In the course of pleading, the defendant filed a counterclaim for indemnification pursuant to the terms of an interchange of equipment agreement between the two companies. The other parties to the action are the companies' respective liability insurers. Federal jurisdiction is predicated upon the diversity of the parties' citizenship and an amount in controversy in excess of $10,000. The case is presently before this court to resolve the issues of law presented by plaintiffs' motion for summary judgment. For the reasons that follow, that motion is denied. Furthermore, summary judgment is entered in favor of the defendants as to the complaint.

I.

The undisputed facts in this case are as follows:

Plaintiff Watkins Motor Lines, Incorporated ("Watkins") and defendant Zero Refrigerated Lines ("Zero") are common carriers in interstate commerce. Each company is authorized by the I.C.C. to operate over certain truck routes where the other company is not so authorized. For example, Zero is authorized to operate between Dallas, Texas and Tucson, Arizona, whereas Watkins is not.

The gross revenue generated by the trip was $1,084.20. That sum was divided up so that Zero would receive $407.12 and Watkins would receive $677.08. However, Zero paid back $346.05 for "rental" of the truck, resulting in a net income to Zero of $61.07.

On February 25, 1972, the loaded truck arrived at the Zero truck yards where it was inspected by a Zero employee. The Watkins name on the truck was replaced by the Zero name, the "lease" papers were signed, and Nixon and Reynolds then embarked on the last leg of their trip. Several days later, before the goods were delivered, the truck was involved in an automobile accident in Tucson which resulted in the death of Patricia Uphaus.

In January of 1973, the Uphaus family sued Nixon, Reynolds, Watkins and Zero for the wrongful death of Patricia Uphaus. Watkins made a tender of the defense of the action to Zero, but it was refused. The parties subsequently settled the lawsuit for $575,000 with Watkins' insurers contributing $275,000 and Zero's insurer contributing $300,000. In settling, Watkins and Zero specifically reserved all the rights which they might have against each other. This litigation followed.

Watkins' complaint is comprised of two counts. Count I claims that the I.C.C. regulations governing interstate truck leasing practices obligated Zero to take over the defense in the Uphaus action and to indemnify Watkins and its insurer for any damages that the latter were required to pay out. Count II basically sets forth the same claim against Zero's insurer.

Zero's counterclaim seeks to recover $300,000 from Watkins on the ground, inter alia, that the equipment interchange agreement with Watkins required the latter to hold Zero harmless from any liability connected with the use of the truck on Zero's route between Dallas and Tucson. That agreement reads, in pertinent part:

  "Lessor agrees, during the term of this lease
  —
  F.  To indemnify lessee against any loss or
      damage resulting from the negligence,
      incompetence or honesty ...

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