Insurance Company Held Liable in Trucking Accident Case

The 7th Circuit Court of Appeals has ruled that an insurance company must compensate a man involved in an accident with a trucking company it had previously insured.

Decardo Humphrey, while working as a driver for Riteway Trucking, regularly began his trips in South Holland, Illinois. He would receive directions on where to unload his cargo and pick up new loads, often traveling across state borders.

In 2013, while delivering a load in Fort Wayne, Indiana, Humphrey’s truck collided with a vehicle driven by Darnell Wright. After the accident, and cooperating with both Wright and local authorities, Humphrey continued his trip, delivering his next load back in Illinois.

Wright later filed a negligence lawsuit against Humphrey and Riteway in state court. Using Riteway’s failure to respond, the court entered a default judgment of $400,000 against the company. Furthermore, Riteway did not work with its insurer, Prime Insurance Co., thereby losing the benefits under the policy.

Despite Riteway’s loss of coverage, the policy included an endorsement that allowed for payments to the injured party even if the insurer was not required to defend its client. The U.S. District Court for the Northern District of Indiana affirmed that Riteway’s actions forfeited its benefits, but raised questions about Wright’s entitlement to funds through the endorsement.

Following this, the Indiana Court of Appeals disallowed Prime from contesting the default judgment, prompting Prime to file a second suit in federal court for a declaratory judgment denying Wright any payment. The district court ultimately ruled in Wright’s favor, citing that the endorsement was applicable.

Before the 7th Circuit, Prime argued for a “trip specific” approach linking payments to whether the truck was actively transporting freight at the time of the crash. In contrast, Wright advocated for a “fixed intent” standard. The 7th Circuit opted for a straightforward interpretation of the endorsement language, maintaining the lower court’s decision and confirming that the accident occurred during an interstate journey related to freight delivery.

Judge Frank Easterbrook stated, “The endorsement considers whether the travel met specific financial responsibility criteria,” emphasizing that the key question was whether the collision occurred during an interstate delivery process, which it did. He further noted that Prime could not re-argue the state court’s decision and addressed that calculating interest from the state judgment was not an issue.

The case is formally titled Prime Insurance Company v. Darnell Wright, 22-1002.