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Landstar Inway, Inc. v. Samrow

Court of Appeals of Washington, Division 2

May 6, 2014

Landstar Inway, Inc., Appellant ,
v.
Frank Samrow et al., Respondents

Oral Argument January 9, 2014.

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Appeal from Pierce County Superior Court. Docket No: 11-2-07869-3. Date filed: 06/22/2012. Judge signing: Honorable Susan K Serko.

David B. Jensen and Sylvia J. Hall (of Merrick Hofstedt & Lindsey PS ), for appellant.

Richard W. Lockner, Thomas G. Krilich, and Paul L. Crowley (of Lockner & Crowley Inc. ), for respondents.

AUTHOR: Thomas R. Bjorgen, J. We concur: Lisa Worswick, C.J., Jill M Johanson, J.

OPINION

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[181 Wn.App. 113] Bjorgen, J.

¶ 1 Landstar Inway Inc. sued Frank Samrow and others over an accident involving a Landstar truck allegedly caused by the negligence of a pilot car operator dispatched through a limited liability corporation (LLC) of which Samrow was a member. Samrow sought and obtained summary judgment dismissing him from the lawsuit, [181 Wn.App. 114] arguing that he was shielded from liability as a member of the LLC. Landstar appeals this order and the denial of its motions to reconsider summary judgment and amend its complaint. Landstar argues that the trial court erred because material issues of fact remain as to whether Samrow was (1) personally liable for the LLC's obligations as one of its members under the doctrine of corporate disregard, (2) personally liable as a partner in an unnamed partnership with the LLC, and (3) personally liable for his own tortious acts. Because genuine issues of fact remain about Samrow's personal liability under the doctrine of corporate disregard, we partially reverse the order for summary judgment and remand for further proceedings.

FACTS

¶ 2 Washington is among the minority of states that do not require the road transportation of tall cargo loads on designated routes. Instead, Washington allows cargo carriers to select their own routes, so long as " pilot car" vehicles escort any tall cargo shipments. Where necessary to ensure that the load can safely travel beneath an overpass, a " pole car," a pilot car with a survey pole exceeding the height of the load attached to the front bumper, must precede the load. In theory, if the pole car can pass through without the pole striking the overpass, so may the cargo shipment. Regrettably, this theory may not always survive its passage through the real world.

¶ 3 In 2003, Samrow became a pilot car operator. For several years, Samrow offered his services in the form of his sole proprietorship, Blacksands Safety and Pilot Car Service. During these years, Samrow often worked with another pilot car operator, Terry Walker. The two of them occasionally provided pilot car services to Landstar.

¶ 4 In 2007, Samrow and Walker realized that they were receiving more offers for work than they could personally handle. They were referring the excess jobs to other contractors [181 Wn.App. 115] but decided that they should receive payment for this service. This realization gave birth to Oasis Pilot Car Service LLC. Samrow testified that he and Walker never intended that Oasis would provide pilot car services but would only dispatch other pilot car operators.

¶ 5 Samrow testified also that he and Walker decided to form Oasis as an LLC because " it would give [them] some protection." Clerk's Papers (CP) at 138. Samrow noted that he and Walker had tried to get insurance for the dispatching business, but no insurer would agree to provide them with a policy because, as a dispatcher, Oasis lacked any " direct link to the jobs." CP at 138. Even after Oasis's incorporation as an LLC, Samrow never successfully obtained insurance for the entity.

¶ 6 Under its business model, when a request for pilot car services came in, Oasis would offer the work to trusted pilot car operators and handle all the billing for the operator, taking 10 percent of the total fee for these services. Because they considered Oasis a dispatcher, both Samrow and Walker kept their sole proprietorships and often did work referred by Oasis.

¶ 7 After Samrow and Walker formed Oasis, Landstar transferred its business to the new LLC. In July 2009, Landstar and related corporate entities signed two agreements with Oasis: a " Master Independent

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Contractor Agreement" (Agreement) and a " Route Survey Indemnity Addendum to Master Independent Contractor Agreement" (Addendum). Through the former, Oasis became one of Landstar's independent contractors providing pilot car services, although it had no obligation to accept every job Landstar offered. Through the latter, Oasis also agreed to provide route surveying services in conjunction with its pilot car services.

¶ 8 The Agreement laid out Oasis's obligations to Landstar. One of Oasis's primary duties was insuring Landstar against any loss it might cause. Part IV.B.1 of the Agreement required Oasis to maintain [181 Wn.App. 116]

Commercial Automobile Liability insurance with a combined single limit for bodily injury and property damage of not less than ONE MILLION DOLLARS ($1,000,000) for each occurrence with respect to all vehicles owned, leased, hired, or assigned by Contractor to escort shipments on behalf of Companies. Commercial General Liability insurance coverage of not less than ONE HUNDRED THOUSAND DOLLARS ($100,000) per occurrence for personal property in the care, custody or control of Companies while such property is being escorted by Contractor. The Contractor[']s Automobile Liability and Commercial General Liability insurance policies must be endorsed to name the Companies as an additional insured for claims and liabilities arising out of the Contractor's work or services provided or performed under this Agreement.

CP at 103 (emphasis omitted). The Agreement required Oasis to prove it had " procured" and continued to " maintain[ ]" the required insurance. CP at 103. In the event that Oasis failed to " provide satisfactory proof of the liability insurance" required by the Agreement, Landstar reserved the right to purchase insurance at Oasis's expense. CP at 103. Oasis also agreed to

indemnify and hold harmless Companies and any and all motor carriers for whom Companies are providing transportation services from any and all claims, judgments, costs, expenses and losses (including attorneys' fees) by reason of any claim of damage or injury to person (including death) or property, including but not limited to damage or injury sustained by Companies, its employees, drivers, or customers, caused in whole or in part by the negligence, breach of contract, breach of warranty, or other fault or default on the part of Contractor or its employees or agents in the performance of, or pursuant to, its work under this Agreement.

CP at 104. The Addendum contained a similar indemnification clause.

¶ 9 The Agreement also contained a nonassignability clause that declared that " none of the rights or obligations attaching to either party hereunder shall be assignable." CP at 105. However, the Agreement did not specifically require [181 Wn.App. 117] that Samrow perform the contract on Oasis's behalf. In fact, in keeping with Oasis's status as an independent contractor, the Agreement gave Oasis sole discretion to determine how to perform its contractual duties. CP at 102 (" [Oasis] shall have complete control over the means and method of providing services required to be performed." ). To give effect to this discretion, the Agreement speaks generally to Oasis's agents and employees performing its contractual duties and no mention is made of any obligation for Samrow to personally provide the services.

¶ 10 Samrow signed the Agreement on behalf of Oasis using the title " Partner." CP at 106. The signature block where Samrow indicated his title contained Oasis's phone and federal tax numbers, as well as Oasis's e-mail address. Samrow later testified that he did not know whether there was ...


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