                            UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT


                            No. 06-1045



REPUBLIC WESTERN INSURANCE COMPANY,

                                            Plaintiff - Appellant,

          versus


LATHADDEUS   WILLIAMS;   ELIZABETH   NICHOLS;
CAROLINA CASUALTY INSURANCE COMPANY; HAROLD
NICHOLS; P.B. EXPRESS, INCORPORATED,

                                           Defendants - Appellees,

          and


MORGAN TREVATHAN & GUNN, INCORPORATED,

                                                        Defendant.


                            No. 06-1046



REPUBLIC WESTERN INSURANCE COMPANY,

                                             Plaintiff - Appellee,

          versus


ELIZABETH NICHOLS; HAROLD NICHOLS,

                                          Defendants - Appellants,

          and
LATHADDEUS    WILLIAMS;   CAROLINA    CASUALTY
INSURANCE COMPANY; P.B. EXPRESS, INCORPORATED;
MORGAN TREVATHAN & GUNN, INCORPORATED,
                                                        Defendants.


Appeals from the United States District Court for the District of
South Carolina, at Charleston.   Patrick Michael Duffy, District
Judge. (CA-04-449-2)


Argued:   September 19, 2006            Decided:   January 10, 2007


Before SHEDD and DUNCAN, Circuit Judges, and Richard L. VOORHEES,
United States District Judge for the Western District of North
Carolina, sitting by designation.


Reversed by unpublished per curiam opinion.


ARGUED: Richard C. Foster, HICKS, CASEY & FOSTER, P.C., Marietta,
Georgia, for Appellant/Cross-Appellee. John Robert Murphy, MURPHY
& GRANTLAND, P.A., Columbia, South Carolina; Daniel Roy Settana,
Jr., MCKAY, CAUTHEN, SETTANA & STUBLEY, P.A., Columbia, South
Carolina, for Appellees/Cross-Appellants. ON BRIEF: Weston Adams,
III, MCANGUS, GOUDELOCK & COURIE, L.L.P., Columbia, South Carolina,
for Appellant/Cross-Appellee.    Stephen L. Hall, MCKAY, CAUTHEN,
SETTANA & STUBLEY, P.A., Columbia, South Carolina, for Appellees
Carolina Casualty Insurance Company and P.B. Express, Incorporated.


Unpublished opinions are not binding precedent in this circuit.




                                2
PER CURIAM:

     Lathaddeus Williams is an independent owner-operator of a 1991

Freightliner    tractor      (“the   Freightliner”).           Republic    Western

Insurance    Company   (“Republic”)         issued   an   insurance    policy   to

Williams providing coverage for his vehicles that are not used for

commercial     purposes.          Carolina     Casualty     Insurance      Company

(“Carolina”) issued an insurance policy to P.B. Express, Inc.

(“PBX”), which leased the Freightliner from Williams. The Carolina

policy provided PBX coverage for the company’s vehicles used in

commercial transportation.           After a vehicle accident involving

Williams (who was then driving the Freightliner) and Elizabeth

Nichols, Williams filed a tort action against Nichols in state

court,   and   she   filed    a   counterclaim       against    him.      Republic

thereafter filed this declaratory judgment action against Williams,

Nichols, Carolina, and PBX seeking a determination of the parties’

respective rights and obligations arising from the state-court

litigation.1

     On cross-motions for summary judgment, the district court

originally granted summary judgment in favor of Republic and

against Carolina.      However, on motion for reconsideration, the

district court reversed its prior ruling and granted summary

     1
      In its amended complaint, Republic also named Harold Nichols
and Morgan Trevathan & Gunn, Inc. (“MTG”) as defendants. Although
Harold Nichols is a party to this appeal, MTG is not. For our
purposes, Harold Nichols’ interest is identical to Elizabeth
Nichols’ interest.

                                        3
judgment in favor of Carolina, holding inter alia that Williams is

covered under the Republic policy but not under the Carolina

policy. Republic and Nichols now appeal. Because we conclude that

Williams’ accident is covered under the Carolina policy but not the

Republic policy, we reverse the summary judgment and remand with

instructions for the district court to enter judgment in a manner

consistent with this opinion.




                                  I

     Summary   judgment   is    appropriate   “if   the   pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no genuine

issue as to any material fact and that the moving party is entitled

to a judgment as a matter of law.”     Fed. R. Civ. P. 56(c).    “We

review the district court’s order granting summary judgment de

novo, viewing the facts in the light most favorable to, and drawing

all reasonable inferences in favor of, the nonmoving party.”

Garofolo v. Donald B. Heslep Assocs., Inc., 405 F.3d 194, 198 (4th

Cir. 2005). When faced with cross-motions for summary judgment, we

review “each motion separately on its own merits to determine

whether either of the parties deserves judgment as a matter of

law.”   Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003).

“Although an order denying summary judgment is not independently

appealable, we may review such an order when it is appealed along

                                  4
with an order granting a cross-motion for summary judgment.”

National Coalition for Students with Disabilities Educ. and Legal

Defense Fund v. Allen, 152 F.3d 283, 293 (4th Cir. 1998).

                                          A.

      The material facts of this case are undisputed.                         In January

2002,   Williams       and   PBX    entered       into   a   written       agreement   for

services and a permanent lease of the Freightliner.                              The lease

provided that PBX would have exclusive control of, and would assume

complete responsibility for the operation of, the Freightliner when

it was in use for PBX.             PBX maintained a policy with Carolina to

cover      the     company’s     commercial        transportation,         and    Williams

maintained a policy with Republic to cover his vehicles when in

non-commercial use.

      At     the     inception     of   the       lease,     Williams      completed    an

employment application with PBX and a pre-employment drug screen.

PBX provided Williams with placards containing the PBX logo that

were affixed to the sides of the Freightliner.                      PBX’s placards and

all   of    its     identifying     numbers       remained     on    the    Freightliner

throughout the lease.          PBX also supplied Williams with an accident

kit to be kept in the Freightliner at all times.                     The accident kit

contained a disposable camera, a Carolina accident information

form, and an insurance card indicating proof of PBX’s insurance

with Carolina.



                                              5
     Pursuant to the lease, Williams would operate the Freightliner

as a local driver for PBX.         Under this arrangement, Williams used

the Freightliner to haul containers between the PBX terminal and

three    Charleston,     South    Carolina,    shipyards.       PBX       typically

employed four local drivers at any given time, and it required

these drivers to come to its terminal and obtain their assignments

personally from the city dispatcher.               PBX gave its drivers one

assignment at a time, and when a driver was sent to a shipyard, he

had to return to the PBX terminal to get the next assignment.

     Williams, like all PBX local drivers, was paid only for time

spent hauling containers. Although PBX did not require Williams to

arrive   at    the   terminal     at   any   specific    time   for       his   first

assignment of each day, he normally went to the PBX terminal with

the expectation that work was immediately available. PBX permitted

Williams to drive the Freightliner to and from work everyday and to

park it overnight in a lot on a side street about one mile from his

home.    PBX did not direct Williams’ route between his home and the

PBX terminal, and it did not direct the routes he took while

hauling containers.

     PBX      required   its     local   drivers    to   perform      a    pre-trip

inspection before starting and driving a truck. Williams performed

his daily pre-trip inspection every morning in the lot near his

home where he parked the Freightliner. Williams testified that the

Freightliner was “for business, not for pleasure,” J.A. 272, and

                                         6
that he only drove it for business; when he was not conducting

business, he parked the truck.

                                  B.

     On April 30, 2003, Williams was driving the Freightliner from

the overnight parking lot to the PBX terminal when he was involved

in an accident with Elizabeth Nichols.               At the time of the

accident, Williams was on his way to work, expecting to receive

his first assignment for the day.      That morning, Williams acted in

his usual course by walking to the lot near his home, performing

the required pre-trip inspections, and driving to the PBX terminal,

with the Carolina placards affixed to the Freightliner, to obtain

his assignments for the day.    Because Williams had not yet arrived

at the PBX terminal, he was not hauling a container (i.e., he was

“bobtailing”).

     Immediately   following    the    accident,      Williams   gave   the

investigating officer his license, vehicle registration, and the

Carolina   insurance   card   contained   in   the    PBX   accident    kit.

Williams then called PBX as required by PBX procedures.           Williams

spoke to James Floyd, the PBX southeast regional manager, who

advised him to get the disposable camera from the accident kit and

take pictures.     Floyd also advised Williams to fill out the

Carolina accident information form contained in the accident kit.

Shortly after Williams called PBX, Patrick Crowell of PBX prepared

a “First Report of Accident” on a PBX form.            In describing the

                                   7
accident on the form, Crowell wrote that the driver was pulling

onto the interstate when a lady pulled into his lane.        Crowell also

noted that the driver was coming from home to work.

     Floyd met Williams at the hospital.           Upon arriving at the

hospital, Floyd secured the camera and the Carolina accident

information form completed by Williams.           Floyd also instructed

Williams to undergo drug and alcohol testing, which Williams did.

Crowell later collected the information obtained from Williams and

had it sent to PBX’s corporate office.

     Williams’ employment with PBX was terminated in January 2004,

at which time a Termination Record Form was prepared.             This form

contained an “Accident Detail” showing that Williams was involved

in one accident while with PBX, namely, the April 30, 2003,

accident. The form stated that this accident was “DOT recordable.”

PBX acknowledged that an accident is not “DOT recordable” if the

PBX driver was on his own time and in his own vehicle.

                                      C.

     Williams   sued   Nichols   in    state   court   alleging   that   her

negligence caused the accident, and Nichols filed a counterclaim

alleging that the accident resulted from his negligence.                 Upon

receipt of a demand letter from Williams, Republic defended him

under a reservation of rights.




                                      8
     Thereafter, Republic filed this declaratory judgment action in

the district court against Williams, Elizabeth and Harold Nichols,

Carolina, PBX, and MTG seeking a determination of the parties’

respective rights and obligations arising from the state-court

litigation.   Subsequently, each party moved for summary judgment.

Carolina and PBX argued that Republic’s non-commercial policy

applied because Williams was not operating the Freightliner in the

“actual use of, or in the business of,” PBX at the time of the

accident.     Conversely,   Republic    maintained   that    it   was   not

obligated to provide coverage because Williams was operating in the

business of PBX at the time of the accident, and therefore the

exclusionary language of Republic’s policy applied.         Republic also

asserted that PBX is not an insured under Republic’s policy and

therefore lacked standing to assert claims for coverage, defense,

or bad faith against Republic.2        Nichols asserted that both the

Republic and Carolina policies provide coverage to Williams because

under the Carolina policy, the Freightliner was a hired auto and

Williams was using the Freightliner with PBX’s permission, and

under Republic’s policy the business exclusion does not apply

because the Freightliner was not being used in the business of PBX

at the time of the accident.



     2
      PBX had filed a counterclaim against Republic asserting that
it was an insured under the Republic policy, that Republic had a
duty to defend any lawsuit under the policy, and that Republic was
acting in bad faith by not providing coverage or a defense.

                                  9
      On cross-motions for summary judgment, the district court held

(1) Williams was not owed coverage under the Republic policy

because of that policy’s business exclusion; (2) Williams was owed

coverage as a permissive user under PBX’s policy with Carolina; and

(3) PBX was not an insured under Republic’s policy.         Carolina and

PBX then moved for reconsideration, which the district court

granted. On reconsideration, the district court reversed its prior

order and held that Williams was not acting in the business of PBX

at the time of the accident and that coverage for Williams applied

under Republic’s policy.       The district court further held that

Williams was not covered under the Carolina policy because he was

not   a   permissive   user   as   defined   by   that   policy.    Upon

reconsideration, the district court did not address whether or not

PBX was an insured under the Republic policy; however, by granting

summary judgment in favor of PBX, the district court effectively

held that PBX was an insured under the Republic policy.




                                    II

      On appeal, Republic contends that the district court erred in

holding that the business exclusion of its policy does not apply.

Republic also contends that the district court erred in holding

that Williams was not covered under the permissive use provisions

of the Carolina policy.       On cross appeal, Nichols contends that



                                    10
both policies apply.3    For the reasons stated below, we agree with

Republic.

                                   A.

     We    first   address   Republic’s   argument   that   coverage   for

Williams is excluded under the Republic policy because Williams was

acting “in the business of” PBX at the time of the accident.           The

Republic policy reads in relevant part:

     No Liability Coverage is afforded when described vehicles
     . . . [are] used to carry property in any business or in
     route for such purpose.

J.A. 664.4    Although at the time of the accident Williams was not

carrying a load and did not have a specified load to pick up, the

parties do not dispute that he was on his way to the PBX terminal

with the purpose of obtaining a work assignment. As such, Williams

was acting in accordance with his usual course of business, which

was to drive to the PBX terminal to obtain his work assignments for

the day.     We conclude that these undisputed facts establish that

Williams was “in route . . . to carry property” for PBX’s business

at the time of the accident.            Accordingly, we hold that the


     3
      Republic also contends that the district court abused its
discretion by granting the motion for reconsideration. We find no
merit to this contention.
     4
      Nichols contends that the exclusion is not part of the
insurance contract because it is contained in the certificate of
insurance and not in the contract. We have reviewed this issue and
find that Williams’ certificate of insurance was expressly
incorporated into the policy.

                                   11
Republic    policy   excludes   coverage   for   Williams   regarding    the

underlying accident.5

                                    B.

     We now turn to the question of whether Williams is covered

under the Carolina policy based on the permissive use provision of

that policy.    The Carolina policy reads in relevant part:

     We will pay all sums an “insured” legally must pay as
     damages because of “bodily injury” . . . to which this
     insurance applies caused by an “accident” resulting from
     the ownership, maintenance, or use of a covered “auto.”

J.A. 585.    The Carolina policy defines “insureds” as being:

     a.     You for any covered “auto.”
     b.     Anyone else while using with your permission a
            covered “auto” you own, hire, or borrow.

J.A. 585.    PBX is the named insured in the Carolina policy.           This

provision thus requires two elements in order for someone other

than PBX to qualify as an additional insured: (1) use of an owned,

hired, or borrowed auto; and (2) permission from PBX.            Carolina


     5
      Although the actions taken by PBX immediately following the
accident do not independently establish that Williams was “in route
to carry property” for PBX, the following facts provide further
support for such a finding. After the accident, PBX conducted a
thorough investigation. PBX acknowledged that this investigation
would not have been necessary if Williams had not been either on
the job, under dispatch, or acting in the business of PBX at the
time of the accident. Furthermore, PBX listed the accident as DOT
recordable on Williams’ termination form, and it admitted that an
accident is not DOT recordable if the PBX driver is on his own time
and in his own vehicle. J.A. 368-69. Finally, Williams testified
that the Freightliner was “for business, not for pleasure” and that
he only drove the truck for business. J.A. 272.

                                    12
does not contend that the Freightliner is not a “hired auto.”

Therefore, for our purposes the only question is whether Williams

was using the Freightliner with permission from PBX.

      Carolina    contends      that    the    permissive      use     provision   is

inapplicable     because     Williams         operated    as      an    independent

contractor; as such, he had the right to use the Freightliner

without     permission   from    PBX.         Carolina   further       asserts    that

pursuant to the lease, PBX had no authority to grant permission to

Williams to operate the Freightliner at the time of the accident or

at any other time the Freightliner was not in “actual use” for PBX.

We disagree with Carolina.

      The lease reads in relevant part:

      Carrier shall have Exclusive possession, control, and use
      of the equipment and shall assume complete responsibility
      for the operation of the equipment while in actual use
      for the Carrier. Whenever the equipment is not in actual
      use for Carrier, the equipment shall bear no placard or
      other reference of any kind to Carrier.

J.A. 444 (emphasis added).           The lease defines PBX as the “carrier”

and   the    Freightliner       as     “equipment.”         The      Department    of

Transportation has issued the following regulation with respect to

equipment leases between motor carriers and owner/operators (such

as the lease in this case):

      (c) Exclusive possession and responsibilities:
      (1) The lease shall provide that the authorized carrier
      lessee shall have exclusive possession, control, and use
      of the equipment for the duration of the lease.      The


                                         13
      lease shall further provide that the authorized carrier
      lessee shall assume complete responsibility for the
      operation of the equipment for the duration of the lease.

49 C.F.R § 376.12(c)(1) (emphasis added).

      Although the lease specifies that PBX (the lessee) will assume

responsibility for the operation of the Freightliner only “while in

actual     use”    for   PBX,   this   regulation   requires   that   PBX   have

exclusive possession and assume complete responsibility for the

Freightliner “for the duration of the lease.” The lease, which was

in effect at the time of the underlying accident, thus fails to

meet the requirements of the regulation.             Because parties may not

enter into a contract that violates the law,6 PBX -- by operation

of the regulation -- had exclusive possession and control of the

Freightliner throughout the term of the lease.            Therefore, because

PBX allowed Williams to drive the Freightliner to and from work,

his   use     of    the    Freightliner       was   necessarily   permissive.

Accordingly, Williams was a permissive user at the time of the

accident, and coverage for Williams is provided under the Carolina

policy.7


      6
      Ohio law governs interpretation of the Carolina policy. “It
is elementary that no valid contract may be made contrary to
statute, and that valid, applicable statutory provisions are parts
of every contract.” Bell v. Northern Ohio Tel. Co., 78 N.E.2d 42,
43 (Ohio 1948).
      7
      Like other federal trucking regulations, § 376.12(c)(1) was
“intended to safeguard the public by preventing authorized carriers
from circumventing applicable regulations by leasing the equipment
and services of independent contractors exempt from federal

                                         14
                               III

     For the reasons stated above, the judgment of the district

court is reversed and the case is remanded to the district court

with instructions to enter judgment in a manner consistent with

this opinion.8

                                                          REVERSED




regulation.” Hartford Ins. Co. of the Southeast v. Occidental Fire
& Cas. Co. of N.C., 908 F.2d 235, 238 (7th Cir. 1990).
     8
      Because we conclude that the Republic policy does not provide
coverage for Williams, we hold that PBX does not have a claim for
bad faith against Republic.

                                15
