                                      2014 IL App (1st) 130745
                                            No. 1-13-0745
                                    Opinion filed September 3, 2014
                                                                       Third Division
     ______________________________________________________________________________

                                                IN THE

                                  APPELLATE COURT OF ILLINOIS

                                     FIRST DISTRICT
     ____________________________________________________________________________

                                                   )
     ARGONAUT MIDWEST INSURANCE                    )
     COMPANY,                                      )
                                                   )
            Plaintiff-Appellee,                    )
                                                     Appeal from the Circuit Court
                                                   )
                                                     of Cook County.
     v.                                            )
                                                   )
     GABRIEL MORALES, LAND TRUCK INC., and )
                                                     No. 09 CH 27901
     INSURANCE COMPANY OF THE STATE OF             )
     PENNSYLVANIA, INC., an Illinois Corporation, )
                                                   )
                                                     The Honorable
            Defendants-Appellants                  )
                                                     Rodolfo Garcia,
                                                   )
                                                     Judge, presiding.
     (Raymond J. Jones, Stanley Herbert, Morris K. )
     Stevens, and Gloria Stevens,                  )
                                                   )
            Defendants).                           )
                                                   )
     ______________________________________________________________________________

            PRESIDING JUSTICE HYMAN delivered the judgment of the court, with opinion.
            Justice Neville concurred in the judgment and opinion.
            Justice Mason dissented, with opinion.


                                                 OPINION

¶1          This case involves cross motions for summary judgment on issues involving insurance

     coverage of a trucking accident. Appellants-Defendants Gabriel Morales, Land Truck, Inc., and

     Insurance Company of the State of Pennsylvania, Inc., appeal the trial court's summary judgment
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     order in favor of plaintiff Argonaut Midwest Insurance Company, which held that Argonaut's

     policy did not cover the accident. Appellants raise two issues on appeal: (i) whether coverage is

     excluded under the "Trucker—Insurance for Non-Trucking Use" endorsement; and (ii) whether

     Land Truck is entitled to a defense under the policy. We affirm, holding that Argonaut has no

     duty to defend or indemnify Morales under the "Trucker—Insurance for Non-Trucking Use"

     exception, and that Land Truck is not considered an insured under Argonaut's policy.

¶2                                           BACKGROUND

¶3          Gabriel Morales entered into an "Owner Operator Contract" with Land Truck in April

     2007. The contract described Land Truck as "a common carrier by motor vehicle holding

     authority from the Federal Highway Administration." The contract identifies Morales as an

     independent contractor and the owner of a motor vehicle who "is engaged in an independently

     established business of hauling commodities by motor vehicle pursuant to contract with contract

     or common carriers." Land Truck agreed to pay Morales a "flat rate percentage of Gross

     revenue." (Strikeout in original.)

¶4          Regarding insurance, the contract provides that "[u]nless required by statute or

     ordinance," Land Truck will not provide any insurance to Morales. Moreover, the contract

     required Morales carry his own insurance, including "Bobtail Insurance naming Land Truck Inc

     as an 'Additional Named Insured' and Certificate Holder." " 'Bob-tail' in trucking parlance is the

     operation of a tractor without an attached trailer," and "bobtail insurance" typically refers to

     insurance for when a tractor is not being used in the business of an authorized carrier. Prestige

     Casualty Co. v. Michigan Mutual Insurance Co., 99 F.3d 1340 (6th Cir. 1996). Land Truck

     required Morales pay "all costs and expenses incident to the performance of" the contract,




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     including premiums for insurance to cover physical damages, vehicle operating and maintenance

     costs, fees and taxes, and tolls, among others.

¶5          Morales agreed to haul commodities for Land Truck, but could refuse loads and do

     business with other carriers as long as Land Truck received proper notice. Morales would display

     Land Truck's placards and identifications when hauling for it, and remove them when not.

     Morales had sole responsibility for the "direction and control" of his operators, and discretion

     regarding the "methods and means" of fulfilling his obligations to Land Truck.

¶6          Land Truck agreed to comply with the rules and regulations of the Interstate Commerce

     Commission, the Department of Transportation, and state regulatory authorities. Subject to those

     rules and regulations, Morales had the right to "control and direct, in all respects, the operation of

     the equipment used in the performance" of the contract. The contract lasted one year, subject to

     automatic renewal.

¶7          Effective early March 2009, plaintiff Argonaut Midwest Insurance Company issued a $1

     million insurance policy to Morales. Under the policy, Argonaut agreed to "pay all sums an

     'insured' legally must pay as damages because of 'bodily injury' or 'property damage' to which

     this insurance applies, caused by an 'accident' and resulting from the ownership, maintenance or

     use of a covered 'auto'." Argonaut agreed to "defend any 'Insured' against a 'suit' asking for these

     damages *** . However, [it had] no duty to defend any 'insured' against a 'suit' seeking damages

     for 'bodily injury' or 'property damage' *** to which this insurance does not apply."

¶8          The policy defines "insureds" to include "You [Morales] for any covered 'auto'." Among

     the schedule of covered autos, Morales's 2003 Freightliner truck is listed. An endorsement titled

     "Truckers – Insurance for Non-Trucking Use" states, "This insurance does not apply to: *** A




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       covered 'auto' while used in the business of anyone to whom the auto is rented." (Emphasis

       added.)

¶9               Later in March 2009, Land Truck notified Morales of a pickup from Waukegan, Illinois.

       Morales got a dispatch sheet from Land Truck, went to get his truck and trailer from a parking

       spot he rented, and went to retrieve the empty container. Morales paid tolls with an I-Pass

       provided by Land Truck. Morales was driving north on I-294 when he struck a vehicle carrying

       Stanley Herbert, Raymond Jones, and Morris Stevens.

¶ 10             In 2009, Herbert, Jones, and Stevens sued Morales and Land Truck. Their amended

       complaint alleges negligence against Morales and Land Truck, and Stevens' wife, Gloria, alleges

       lost of consortium.

¶ 11             Argonaut filed a complaint for declaratory judgment against Morales, Land Truck,

       Herbert, Jones, and the Stevenses, claiming it had no duty to defend or indemnify Morales or

       Land Truck in the underlying suit. Alternatively, Argonaut claimed that the defense costs of the

       underlying suit should be apportioned between itself and Land Truck's insurer, defendant

       Insurance Company of the State of Pennsylvania.

¶ 12             The parties filed cross motions for summary judgment. The trial court granted Argonaut

       summary judgment, holding that it had no duty to defend either Morales or Land Truck. This

       appeal timely followed.

¶ 13                                      STANDARD OF REVIEW

¶ 14             Summary judgment may be granted where no triable issue of material fact is present and

       the movant is entitled to a judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2010). "A

       genuine issue of material fact *** exists where the material facts are disputed or, if the material

       facts are undisputed, reasonable persons might draw different inferences from the undisputed


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       facts." (Internal quotation marks omitted.) Windmill Nursing Pavilion, Ltd. v. Cincinnati

       Insurance Co., 2013 IL App (1st) 122431, ¶ 18. Cross motions for summary judgment indicate

       none of the movants believe a factual disputes exist regarding the issues raised. Illinois Emcasco

       Insurance Co. v. Waukegan Steel Sales Inc., 2013 IL App (1st) 120735, ¶ 11. "We review the

       circuit court's grant of summary judgment de novo." Skokie Castings, Inc. v. Illinois Insurance

       Guarantee Fund, 2013 IL 113873, ¶ 27.

¶ 15                                               ANALYSIS

¶ 16          Appellants argue (i) the "Trucker – Insurance for Non-Trucking Use" endorsement does

       not apply, and (ii) Land Truck is an insured under Argonaut's policy. We conclude that neither

       argument has merit.

¶ 17                                      Non-Trucking Endorsement

¶ 18          Appellants assert two reasons for the inapplicability of the endorsement: (i) Land Truck

       did not rent the Freightliner because it did not take exclusive possession or control of it; and (ii)

       the term "rented" is ambiguous. We reject both assertions.

¶ 19          We interpret an insurance policy as we would any other contract, reading the terms to

       give effect to the intent of the parties. Gaudina v. State Farm Mutual Automobile Insurance Co.,

       2014 IL App (1st) 131264, ¶ 17. We give unambiguous policy terms their plain, ordinary,

       popular meaning. Id. ¶ 18. Ambiguity exists where the policy terms can produce more than one

       reasonable interpretation. Id. Where there is ambiguity, we construe the policy liberally in favor

       of coverage. Id.

¶ 20          Appellants note that the endorsement excludes coverage where the Freightliner "used in

       the business of anyone to whom the auto is rented." They argue that Morales's truck was never

       rented under the terms of the agreement between Land Truck and Morales. "Rent," they assert,


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       requires the right to exclusive possession and control. Dictionary definitions of "rent," however,

       do not require exclusive possession. See Black's Law Dictionary 1410 (9th ed. 2009) (as a noun,

       "Consideration paid, usu. periodically, for the use or occupancy of property"); Webster's Third

       New International Dictionary 1923 (1993) (as a verb, "to grant the possession and enjoyment of

       for rent: hire out").

¶ 21           Appellants also cite foreign case law indicating that renting or leasing property requires

       the transfer of exclusive possession. E.g., Canal Insurance Co. v. Liberty Mutual Insurance, 395

       F. Supp. 962 (N.D. Ga. 1975) (holding use of truck incidental to service contract did not

       constitute lease of vehicle). In addition, they point to Millenium Park Joint Venture, LLC v.

       Houlihan, 241 Ill. 2d 281, 309 (2010), where our supreme court stated, regarding real property,

       "[i]f the contract gives exclusive possession of the premises against all the world, including the

       owner, it is a lease, but if it merely confers a privilege to occupy the premises under the owner, it

       is a license." (Internal quotation marks omitted.) They cite as well the Automobile Renting

       Occupation and Use Tax Act (35 ILCS 155/1 et seq. (West 2012)), which defines vehicle rental

       as requiring "any transfer of the possession or right to possession of an automobile." 35 ILCS

       155/2 (West 2012). Appellants acknowledge this statute does not apply to commercial trucks.

¶ 22           Further, appellants argue that Morales did not transfer complete possession or control of

       his truck to Land Truck, and therefore the non-trucking endorsement does not apply, noting the

       owner operator contract states, "Subject to the specific requirements of the Interstate Commerce

       Commission and/or D.O.T. and of any State regulatory agency having jurisdiction: *** The

       Contractor [Morales] shall control and direct, in all respects, the operation of the equipment

       used in the performance of this Contract." (Emphasis added.) Because the agreement purports to

       leave control of the Freightliner in Morales's possession, appellants assert that it is not a "rental"


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       agreement. They conclude that Land Truck did not rent Morales's truck, and therefore the non-

       trucking endorsement does not apply.

¶ 23          We disagree with appellants' logic. Under the facts here, transferring exclusive control,

       possession, and use of a vehicle do constitute renting, and the owner operator contract between

       Morales and Land Truck is a rental agreement.

¶ 24          While the agreement does not say so, statutes and regulations require Land Truck to

       assume exclusive control of Morales's truck. As the owner operator contract states, Land Truck

       is a common carrier registered with the United States Department of Transportation (DOT).

       Registration requires motor carriers be willing and able to comply with DOT rules and

       regulations. 49 U.S.C. § 13902(a)(1)(A)(i) (2012). Those rules provide that an "authorized

       carrier may perform authorized transportation in equipment it does not own only" if there is "a

       written lease granting the use of the equipment." (Emphasis added.) 49 C.F.R. § 376.11(a)

       (2012). Federal law further requires that a written lease "provide that the authorized carrier lessee

       shall have exclusive possession, control, and use of the equipment for the duration of the lease.

       The 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." (Emphasis

       added.) 49 C.F.R. § 376.12(c)(1) (2012).

¶ 25          While the owner operator contract appears to contradict these terms, those contradictory

       terms are "[s]ubject to the specific requirements of the Interstate Commerce Commission and/or

       D.O.T. and of any State regulatory agency having jurisdiction." (Emphasis added.) Critically, the

       words "subject to" create a condition to apply the terms that follow. Catholic Charities of the

       Archdiocese of Chicago v. Thorpe, 318 Ill. App. 3d 304, 309 (2000). That is, the agreement that

       Morales controls the use of his truck is conditioned on the conformance of those contract terms


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       with DOT regulations. Because those contract terms contradict DOT regulations, the regulations

       control. 11 Richard A. Lord, Williston on Contracts § 30:19 (4th ed. 2012) ("When a contract

       expressly incorporates a statutory enactment by reference, that enactment becomes part of the

       contract for the indicated purposes just as though the words of that enactment were set out in full

       in the contract."). Thus, under DOT regulations and the owner-operator agreement, Land Truck

       assumed "exclusive possession, control, and use" of Morales's Freightliner. 49 C.F.R.

       § 376.12(c)(1) (2012).

¶ 26          Argonaut notes that, under Illinois law, the motor carrier's exclusive possession is

       implied in the lease:

              "The following terms, if not stated in a lease, shall be implied. Any contrary provisions in

              the lease shall be void.

                   1) Exclusive possession and control. The lessee shall have exclusive possession and

              control of leased equipment during all periods when the equipment is operated under the

              lease. Such exclusive possession and control shall extend also to the drivers of leased

              equipment." (Emphasis added.) 92 Ill. Adm. Code 1360.40(b)(1) (1993).

       But it is unclear whether Land Truck is subject to this code provision, which only applies to

       carriers "regulated by the Illinois Commerce Commission." 92 Ill. Adm. Code 1360.10(a)(1)

       (1987). Under the Illinois Commercial Transportation Law (625 ILCS 5/18c-1101 et seq. (West

       2010)), the commission's jurisdiction over "for-hire transportation by motor carrier" is limited to

       intrastate commerce. 625 ILCS 5/18c-1201 (West 2010); Canal Insurance v. A & R

       Transportation & Warehouse, LLC, 357 Ill. App. 3d 305, 312-13 (2005). It is unclear from the

       record whether Land Truck and Morales's business involves intrastate or interstate commerce.

       Thus, we cannot say that the above section of the administrative code applies. See Triple 7


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       Illinois, LLC v. Gaming & Entertainment Management-Illinois, LLC, 2013 IL App (3d) 120860,

       ¶ 22 ("interpreting the regulations to apply to agreements between nonlicensed entities would

       violate the right of private parties to freely contract").

¶ 27           Appellants urge the court to follow Canal Insurance Co. v. United States Fire Insurance

       Co., an unpublished order from the United States District Court for the Southern District of

       Alabama. Canal Insurance Co. v. United States Fire Insurance Co., No. 04-0094-KD-C (S.D.

       Ala. May 26, 2006). We decline. There, a semi truck lost a break drum, which flew through the

       windshield of a nearby vehicle, striking one of the occupants who died several days later. A

       trucking company owned the semitruck, and a peanut company owned the trailer. The trucking

       company's insurer filed a suit for declaratory judgment, arguing that a "Truckman's

       Endorsement" limited coverage. That endorsement (similar to the one here) read, "no coverage is

       extended to any person, firm or organization using the described automobile pursuant to any

       lease, contract for hire, bailment, rental agreement, or any similar contract or agreement." The

       federal district court held under Georgia law that the agreement between the trucking and peanut

       companies was a service contract, and not a lease or rental agreement.

¶ 28           The court noted that federal law might have defined the agreement as a "lease." The

       statute defines such a lease as a between a truck owner and "an authorized carrier." 49 C.F.R. §

       376.2(e) (2012). But the insurer offered nothing to prove that the peanut company was an

       authorized motor carrier under the statute and regulations. In addition the court noted that the

       agreement did not require the peanut company to take exclusive possession of any truck, which

       was a required term of the lease. 49 C.F.R. § 376.12(c)(1) (2012). The court reasoned that,

       because the contract between the trucking and peanut companies was a service contract, the

       endorsement did not apply.


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¶ 29          The Canal case is distinguishable in that no evidence identified the peanut company as a

       DOT-regulated authorized carrier. It was therefore not subject to DOT regulations. Unlike

       Canal, no one disputes that Land Truck is an authorized carrier, as acknowledged in the owner-

       operator contract. Moreover, the contract incorporates DOT requirements into the agreement. No

       similar provision appears in the Canal case.

¶ 30          Appellants next argue that the term "rented" is ambiguous. Ambiguity exists where

       language is subject to more than one reasonable interpretation. Gaudina v. State Farm Mutual

       Automobile Insurance Co., 2014 IL App (1st) 131264, ¶ 18. Appellants fail to explain what

       definitions of the term "rented" lead to multiple, reasonable interpretations of coverage. We

       cannot discern any definitions of "rented" that would lead to differing outcomes regarding

       coverage. Thus, appellants' argument is not well taken.

¶ 31          Even if the owner operator agreement is read in light of DOT regulations, according to

       appellants that simply indicates Morales "leased" his vehicle to Land Truck, as federal law does

       not describe the document at a "rental" agreement. They note that Argonaut's policy uses the

       terms "lease" and "rent" separately, and that the terms must be interpreted differently to avoid

       surplusage.

¶ 32          But appellants fail to cite any sources that define these terms differently, or that define

       "lease" as requiring exclusive possession while "rent" does not. We acknowledge that Argonaut's

       policy uses both terms, and while courts endeavor to avoid reading a contract to create

       surplusage, it happens nevertheless. Coles-Moultrie Electric Cooperative v. City of Sullivan, 304

       Ill. App. 3d 153, 159 (1999). Out of an abundance of caution, contract drafters often string

       synonyms or closely related words together to prevent a narrow interpretation. If courts were to

       attempt to interpret every synonym differently, the strain would produce absurdities. See Rubin


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       v. Laser, 301 Ill. App. 3d 60, 68 (1998) ("Courts construe contracts so as to avoid absurd

       results."). Generally, when referring to types of contracts, "rent" and "lease" are synonymous,

       and we detect no meaningful differences in their definitions. See Black's Law Dictionary 970

       (9th ed. 2009) (defining "lease" as "[a] contract by which a rightful possessor of real property

       conveys the right to use and occupy the property in exchange for consideration, usu. rent.");

       Webster's 3d New International Dictionary Unabridged 1923 (1993) (defining "rent" as "to take

       and hold under an agreement to pay rent").

¶ 33          Appellants next argue that, even if regulations must be used to interpret the owner-

       operator contract as giving exclusive control of Morales's vehicle to Land Truck, the regulations

       are irrelevant because, in reality, Land Truck did not control Morales's vehicle. In support,

       appellants point to Roberson v. Industrial Comm'n, 225 Ill. 2d 159 (2007). In Roberson, a trucker

       operated his own truck under contract with a federally regulated motor carrier. Id. at 162-63. The

       contract expressly stated that under federal regulations, the carrier had "exclusive possession,

       control and use of the" truck, and "assumed complete responsibility for" its operation. (Internal

       quotation marks omitted.) Id. at 162. The contract also labeled the trucker as an independent

       contractor, and gave the trucker great leeway in satisfying the contractual duties. Id. at 163.

¶ 34          The trucker was injured while unloading freight for the carrier and filed a worker's

       compensation claim. Id. at 164-66. The arbitrator found that as an independent contractor, the

       trucker was ineligible for compensation. Id. at 170. The Industrial Commission reversed, finding

       that the trucker was an employee and noting that the carrier had the right to exclusive possession

       and use of the trucker's vehicle. Id. at 172. The supreme court affirmed, finding the conclusion

       was not against the manifest weight of the evidence. Id. at 187.




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¶ 35          Appellants and the dissent argue that, under Roberson, regulations between motor

       carriers and truckers do not alter the contractual relationship between the two. We disagree.

       Roberson does not stand for the proposition that federally mandated language in the owner

       operator contract is meaningless. As the supreme court noted, "the regulation requiring a motor

       carrier to have exclusive possession, control, and use of leased equipment does not mandate that

       the driver is an employee for all purposes. *** Compliance with federal regulations is merely a

       factor that may be considered in a common law analysis of whether a driver is an employee of a

       trucking company." Id. at 178. The Roberson court concluded that courts may consider federally

       mandated language included in the contract between a motor carrier and a trucker (among many

       other factors) to determine whether the trucker is an employee or independent contractor. Id. at

       184-87. Accordingly, this language is not meaningless, and use of federal regulations to interpret

       the owner operator agreement is proper.

¶ 36          Even if this court reads federal regulations into the agreement between Land Truck and

       Morales, appellants contend those terms create a "legal fiction" and do not reflect whether Land

       Truck in fact had exclusive control over Morales's vehicle. (A "legal fiction" is a rule that

       assumes "that something is true even though it may be untrue." Black's Law Dictionary 976 (9th

       ed. 2009).) In support, appellants cite Transamerican Freight Lines, Inc. v. Brada Miller Freight

       Systems, Inc., 423 U.S. 28 (1975). There, the Supreme Court noted that an owner who leases a

       truck to a motor carrier maintains an "aspect of control" over the truck. Id. at 39. But the court

       described that as "ministerial control," and not the kind of control that federal regulations were

       concerned with. Id. Rather, the concern

              "was with operating authority, with routes and destinations and classes of freight, with

              the integrity of certifications, and with that ultimate control in the lessee [motor carrier]


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               that makes and keeps it responsible to the public, the shipper, and the Commission. The

               Commission observed:

                       It now seems to be accepted that when an authorized carrier furnishes service in

                   vehicles owned and operated by others, he must control the service to the same extent

                   as if he owned the vehicles, but need control the vehicles only to the extent necessary

                   to be responsible to the shipper, the public, and this Commission for the

                   transportation." (Internal quotation marks omitted.) Id.

       Legal fiction or not, if a motor carrier opts not to exercise its right to control the vehicle, it does

       so at its own peril, as its responsibility for the vehicle does not abate. See Carl Subler Trucking,

       Inc. v. Splittorff, 482 N.E.2d 295, 297 (Ind. Ct. App. 1985) ("regulations require that carriers

       operating under permits exert actual control over leased equipment; the borrowed drivers and the

       carriers are not permitted to circumvent such regulation by contract"); Hershberger v. Home

       Transport Co., 103 Ill. App. 3d 348, 352 (1982) (noting one goal of regulation which imposes

       responsibility on carrier includes preventing carriers from avoiding safety standards by leasing

       equipment from non-regulated carriers). Regardless whether Land Truck chose to exercise its

       right to control Morales’s vehicle, the terms giving it those rights make the owner operator

       contract a rental agreement.

¶ 37           Appellants next maintain that Argonaut failed to prove Morales rented his vehicle to

       Land Truck. Appellants assert that there are no "extrinsic facts" suggesting that Morales gave

       possession and control of his vehicle to Land Truck. But appellants point to no case law

       requiring extrinsic facts be found in the owner operator agreement, nor do they explain why

       extrinsic facts are necessary to establish that Land Truck had exclusive control over Morales's




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       vehicle. The term "rented" typically refers to a contract. Accordingly, the agreement between

       Morales and Land Truck sufficiently to prove the rental of the vehicle.

¶ 38           Appellants and the dissent further maintain that DOT regulations should not be used to

       guide an insurance coverage dispute. In support, they cite Carolina Casualty Insurance Co. v.

       Insurance Co. of North America, 595 F.2d 128 (3d Cir. 1979). The dissent puts much stock in the

       Roberson court’s citing Carolina Casualty for the proposition that terms inserted in private

       contracts by federal regulations do not alter obligations " 'under contracts allocating financial risk

       among private parties.' " (Emphasis omitted.) Roberson, 225 Ill. 2d at 178 (quoting Carolina

       Casualty, 595 F.2d at 138).

¶ 39           The Carolina Casualty case involved a motor carrier that entered into a trip-lease

       contract with a truck owner. Carolina Casualty, 595 F.2d at 129-31. When the trucker was

       involved in a car accident, the trucker's insurer filed a declaratory judgment action against the

       carrier's insurer to determine which policy was primary. Id. at 130. The trial court held that,

       because the DOT "responsibility-and-control" regulations made the carrier liable to the injured

       parties, the carrier and its insurer were primarily liable. Id. at 132. The court of appeals

       disagreed, holding that courts should not rely solely on those regulations when determining

       which policy is primary. Id. at 138. Instead, the court "should consider the express terms of the

       parties' contracts." Id.

¶ 40            In Carolina Casualty, the issue was whether the carrier's or the trucker's insurance was

       primary. Neither policy contained a nontrucking endorsement like the one here. Absent the

       endorsement, we agree that these DOT regulations would not control the interpretation of which

       policy is primary. The question of whether a policy is primary versus excess may sometimes be




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       resolved by referencing the policy terms alone. See, e.g., Certain Underwriters at Lloyd's,

       London v. Central Mutual Insurance Co., 2014 IL App (1st) 133145, ¶¶ 10-12.

¶ 41          But we disagree that either Roberson or Carolina Casualty stands for the proposition that

       DOT regulations are irrelevant in an insurance coverage dispute. Our inquiry differs from that of

       Carolina Casualty. Argonaut’s nontrucking endorsement conditions coverage on the type of

       relationship between Morales and Land Truck at the time of the accident. That is to say, whether

       the contract between Land Truck and Morales constitutes a rental agreement. When one party

       takes exclusive possession, control, and use of a vehicle in exchange for money, that's a rental

       agreement. The fact that the source of the possession-and-control terms is federal law is

       irrelevant to our interpretation of the endorsement. But federal law does control our

       interpretation of the owner-operator agreement because that agreement is "subject to" DOT

       regulations.

¶ 42          Our analysis aligns with the purpose of Argonaut's bobtail insurance policy, providing

       coverage when Morales is using his truck for his own purposes, not when he is renting it to Land

       Truck. For the latter circumstances, federal law requires Land Truck to procure its own insurance

       to cover Morales when Land Truck is using his vehicle. 49 C.F.R. § 376.12(j)(1) (2012) ("The

       lease shall clearly specify the legal obligation of the authorized carrier to maintain insurance

       coverage for the protection of the public pursuant to [Federal Motor Carrier Safety

       Administration] regulations under 49 U.S.C. 13906. The lease shall further specify who is

       responsible for providing any other insurance coverage for the operation of the leased equipment,

       such as bobtail insurance.").

¶ 43          Accordingly, the "Trucker—Insurance for Non-Trucking Use" endorsement applies, and

       Argonaut has no duty to defend or indemnify Morales.


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¶ 44                                     Land Truck's Status as Insured

¶ 45          As a threshold issue, Argonaut argues that the denial of a motion for summary judgment

       is not appealable. Arangold Corp. v. Zehnder, 187 Ill. 2d 341, 357 (1999). This is true, but not

       here where the case is disposed of on cross motions for summary judgment. Ruby v. Ruby, 2012

       IL App (1st) 103210, ¶ 34.

¶ 46          Appellants assert that Land Truck is an insured under Argonaut's policy. We disagree.

¶ 47          Included under the "Who Is An Insured" section of Argonaut's policy, is "[a]nyone liable

       for the conduct of an 'insured' described above but only to the extent of that liability." But, the

       "Insurance for non-trucking use" endorsement adds, "Who Is An Insured does not include

       anyone engaged in the business of transporting property by 'auto' for hire who is liable for your

       conduct."

¶ 48          Appellants argue that the term "for hire," like the term "rented," requires the exercise of

       control, and the right to direct the use of the vehicle. See Selective Way Insurance Co. v.

       Travelers Property Casualty Co. of America, 724 F. Supp. 2d 520, 526 (E.D. Pa. 2010) ("The

       majority of courts that apply the plain meaning of 'hire' when interpreting policies like the one at

       issue have found the term to contain an element of control."). As already noted, the owner

       operator agreement and applicable federal law require Land Truck to control and possess

       Morales's vehicle. Under the agreement, Land Truck is "engaged in the business of transporting

       property by 'auto' for hire." Thus, the endorsement applies. Sprow v. Hartford Insurance Co.,

       594 F.2d 418, 422 (5th Cir. 1979). ("for a vehicle to constitute a hired automobile, there must be

       a separate contract by which the vehicle is hired or leased to the named insured for his exclusive

       use or control").




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¶ 49             Accordingly, Argonaut has no duty to defend or indemnify Land Truck under Morales's

       policy.

¶ 50             Affirmed.

¶ 51             JUSTICE MASON, dissenting.

¶ 52             Because I do not agree that Argonaut has sustained its burden, under the unambiguous

       language of its policy, to demonstrate the applicability of the exclusion it relies on, I respectfully

       dissent.

¶ 53             The majority acknowledges that the terms of the owner operator contract between

       Morales and Land Truck contradict the conclusion that Morales agreed to "rent" his truck to

       Land Truck. That contract clearly provides that Morales retains exclusive possession and control

       over the truck, which is clearly inconsistent with the notion that the contract constitutes an

       agreement to rent the truck to Land Truck.

¶ 54             The legal effect of incorporation of the federal regulations into the owner operator

       contract is to render Land Truck liable for Morales's operation of his truck, but that does not lead

       to the conclusion that we should construe this private agreement as something other than it is. In

       other words, despite the clear provisions of the private contract between Land Truck and Morales

       that unambiguously provide that Morales shall have exclusive control over the operation of the

       truck, Land Truck's liability as a common carrier is governed by federal law and thus Land Truck

       is precluded from contending that it is not liable for Morales' conduct because he is an

       independent contractor. But this conclusion does not either (1) compel us to rewrite the owner

       operator contract or (2) control the interpretation of the terms of Argonaut's insurance policy in

       which it agreed to insure Morales as a named insured and the truck as a scheduled vehicle.




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¶ 55          Whether Argonaut must defend Morales depends on whether, under the terms of its

       policy measured against the owner operator contract, Argonaut has established the applicability

       of the exclusion for a covered auto "while used in the business of anyone to whom the auto is

       rented." And because it is clear that the terms of the owner operator contract refute Argonaut's

       contention that Morales "rented" his vehicle of Land Truck, I believe Argonaut's argument

       should be rejected.

¶ 56          The purpose of the federal regulations providing for the liability of common carriers was

       recognized by our supreme court in Roberson v. Industrial Comm'n, 225 Ill. 2d 159 (2007). In

       that case, Roberson was injured while unloading steel coils delivered for P.I. & I. Motor Express

       (P.I. & I.) from a truck Roberson owned. P.I. & I. contended that pursuant to an agreement with

       Roberson, the latter was an independent contractor who could not be deemed an "employee" for

       purposes of claiming workers compensation benefits. The supreme court ultimately disagreed

       with P.I. & I., not because federal regulations required P.I. & I., as a common carrier, to have

       "exclusive possession, control, and use of the equipment" for the duration of the lease, but

       because the particular facts and circumstances of Roberson's relationship with P.I. & I. created

       an employer-employee relationship.

¶ 57          In the course of its opinion, the supreme court in Roberson discussed the purpose of the

       federal regulations at issue here. In particular, the court noted that the regulations were prompted

       by a decades-old practice of common carriers to shield themselves from liability for their drivers'

       negligence by leasing trucks from independent contractors. Id. at 176. "Such arrangements

       invariably led to abuses that threatened public safety, as unscrupulous motor carriers leased

       inexpensive, and unsafe, equipment from shallow-pocket drivers." Id. The federal regulations, as




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       ultimately enacted, "prevent[ed] motor carriers from escaping liability to injured persons by

       claiming that their drivers were independent contractors, rather than employees." Id. at 177.

¶ 58          But notwithstanding regulations requiring motor carriers to have exclusive possession,

       control and use of leased equipment, the Roberson court concluded that the regulations did not

       mandate treating the driver as an employee for all purposes, stating, " '[w]hile a lessee cannot

       free itself of its federally imposed duties when the protection of the public is at stake, the federal

       requirements are not so radically intrusive as to absolve lessors *** of otherwise existing

       obligations under applicable state tort law doctrines or under contracts allocating financial risk

       among private parties.' " (Emphasis in the original.) Id. at 178, quoting Carolina Casualty

       Insurance Co. v. Insurance Co. of North America, 595 F.2d 128, 138 (3d Cir. 1979). Thus, the

       court concluded that Roberson and P.I.&I. were free to "structure their relationship as they see

       fit, provided they do not neglect the requirements of federal law." Id.

¶ 59          As applied in the context of this case, the reasoning of Roberson mandates a finding that

       Land Truck and Morales were free to structure their relationship in any way that did not

       circumvent federal regulations requiring Land Truck to be responsible for Morales's operation of

       the truck. And it is clear that they did not. Notwithstanding the provisions of the owner operator

       contract that vested exclusive control of the truck in Morales, the parties agreed to incorporate

       federal regulations applicable to Land Truck as a common carrier. Incorporation of the federal

       regulations thus preserves, in the interest of public safety, Land Truck's liability for Morales'

       operation of the truck, but does not alter the private contractual relationship between Land Truck

       and Morales, pursuant to which Morales retained possession and control of the truck.

¶ 60          Nothing in the federal regulations renders the terms of the owner operator agreement

       "illegal," as Argonaut contends; rather, those regulations simply require that the terms of the


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       otherwise enforceable agreement cannot be used by Land Truck to escape responsibility for

       injuries caused by Morales's operation of the truck in furtherance of Land Truck's business.

       Further, because pursuant to the terms of the owner operator contract, Morales did not "rent" his

       truck to Land Truck, the exclusion relied on by Argonaut does not apply.

¶ 61          Argonaut contends that the purpose of the policy of insurance issued to Morales is

       consistent with the interpretation of the owner operator agreement adopted by the trial court. In

       particular, Argonaut asserts that its "Truckers – Insurance for Non-Trucking Use" endorsement

       provides only limited coverage "during those times when possession of the vehicle, and any

       liability for its operation, remain with the owner-insured itself." Argonaut reasons that because

       Land Truck remains responsible for damages resulting from Morales's operation of the truck,

       Morales did not need insurance while traveling to pick up a load for Land Truck.

¶ 62          But while this may have been Argonaut's intent in drafting the endorsement, this is not

       what the endorsement says. The endorsement provides that Argonaut's agreement to pay "all

       sums" Morales must pay "as damages" because of "bodily injury" caused by an "accident" does

       not apply to his truck "while used to carry property in any business" or "while used in the

       business of anyone to whom [the truck] is rented." Because the truck was not "rented" to Land

       Truck according to the plain terms of the owner operator contract and because Morales was on

       his way to pick up a load when the accident occurred, his truck was not then being used to "carry

       property" either. In any event, Argonaut has not invoked the "while used to carry property"

       clause of its endorsement. While Argonaut certainly could have drafted an exclusion that limited

       its insuring agreement in the manner it urges on appeal (e.g., "when used in the business of

       anyone subject to state or federal regulation as a common carrier"), the exclusion included in

       Morales' policy does not accomplish this result. See Outboard Marine Corp. v. Liberty Mutual


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       Insurance Co., 154 Ill. 2d 90, 117 (1992) ("if the insurer had desired to restrict coverage to only

       those suits seeking legal, compensatory damages, it could have easily included among its

       exclusionary provisions an exclusion pertaining to the costs of complying with mandatory

       injunctions").

¶ 63          I do not believe the decision in Clarendon National Insurance Company v. Medina, 645

       F.3d 928 (7th Cir. 2011), compels a different result. The driver of the truck involved in the

       accident in Medina was not the owner of the truck (which was owned by his wife), but he signed

       the agreement with the common carrier. On appeal, the husband and wife contended that the

       agreement with the common carrier could not be a lease because the owner of the vehicle did not

       execute it. The Seventh Circuit rejected this contention finding that the wife gave her husband

       permission to enter into the agreement with the common carrier. The Medina court also

       concluded that the agreement between the driver and the common carrier was a lease as a matter

       of law. Medina did not address the terms of the agreement between the driver and the common

       carrier and, in particular, did not discuss whether the agreement in that case contained terms

       similar to those here, i.e., providing that the driver retained "exclusive possession and control" of

       the truck, terms that are inconsistent with construction of the owner operator contract as an

       agreement to lease Morales' truck to Land Truck. Therefore, while I agree with the Medina

       court's conclusion that, as a matter of law and for purposes of Land Truck's liability to injured

       parties, the owner operator contract must be deemed to be a lease despite its terms, I do not

       believe it appropriate to completely disregard those terms in determining Argonaut's

       responsibility to defend and potentially indemnify its insured.

¶ 64          Because the provisions of the owner operator contract do not constitute an agreement by

       Morales to "rent" his vehicle to Land Truck, it is unnecessary to address whether the term "rent"


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       is ambiguous and whether any ambiguity must be construed in favor of coverage under

       Argonaut's policy. I do note that several provisions of Argonaut's policy use "rent" and "lease" in

       the same paragraph, but the endorsement at issues here does not, thus lending credence to the

       appellants' argument that the terms are not necessarily synonymous. Further, because the trial

       court denied summary judgment to appellants on count II of Argonaut's complaint, which

       invoked a provision of the endorsement excluding from the definition of an "insured" under the

       Argonaut policy "anyone engaged in the business of transporting property by 'auto' for hire who

       is liable for your conduct," I would not address this issue and instead leave that to the trial court

       on remand.

¶ 65          For these reasons, I would reverse the trial court's award of summary judgment to

       Argonaut, direct that summary judgment on the applicability of paragraphs A. and B. of the

       "Truckers – Insurance for Non-Trucking Use" endorsement be entered in favor of Morales and

       Land Truck, and remand for further proceedings as to whether Land Truck qualifies as an

       additional insured under Argonaut's policy.




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