Central Transport, LLC v. Balram Trucking, Ltd

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 18a0424n.06
Case No. 17-3963
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
CENTRAL TRANSPORT, LLC,
Plaintiff-Appellee,
v.
BALRAM TRUCKING, LTD,
Defendant-Appellant.
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ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF
OHIO
Before: KEITH, ROGERS, and BUSH, Circuit Judges.
DAMON J. KEITH, Circuit Judge. This case involves the question of whether a lessee of
property, as opposed to the property’s owner, may sue to recover the value of the property when
it is destroyed as a result of third party negligence. Here, Central Transport, LLC (“Central”), the
lessee of a tractor and trailer owned by lessor, GLS LeasCo, Inc. (“GLS”), sought to sue Balram
Trucking, LTD (“Balram”) for leased property destroyed during a vehicular collision indisputably
caused by Balram. The district court, applying Indiana law to hold that Central has standing as a
real party in interest to sue Balram, awarded damages to Central on two alternative grounds. Upon
consideration of the district court’s findings, we likewise conclude on appeal that Central, as the
party contractually liable to cover all loss and damage to the leased property under provisions of

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the Central/GLS lease agreement, was entitled to equitable subrogation under Indiana law. 1 We
affirm.
I.
This appeal arises from a dispute over rights conferred by the Central/GLS lease agreement
and the validity of an assignment subsequently executed between Central and GLS, the owner of
property destroyed during a fatal vehicular collision on August 28, 2013, in Tipp City, Ohio.2
Following the filing of Central’s complaint, which sought damages in excess of $110,069.00 for
tort and contractual claims, Balram filed its motion for partial summary judgment on September
29, 2016, alleging that Central lacked standing to pursue claims arising from damage to a tractor
and trailer it did not own, and that Central lacked a valid assignment of any right to pursue claims
on behalf of GLS. The district court denied Balram’s motion. Following a bench trial on the
remaining issue of standing, the district court entered judgment for Central in the amount of
$87,288.26 in property and other damages, finding that: (1) under Indiana law, an equitable right
of subrogation conferred standing on Central to pursue property damage claims to cover its
contractual obligation to pay for loss and damage to the leased property; and (2) GLS, in any event,
subsequently executed a valid assignment, enabling Central to pursue property damage claims on
its behalf.
1 In addition to its standing challenge, Balram attempts to challenge the district court’s denial of summary
judgment entered prior to the bench trial conducted on April 13, 2016. Because “[the] district court’s summary-
judgment denial is ‘interlocutory’ in nature,” this court lacks appellate jurisdiction to consider the merits of Balram’s
challenge to a pre-trial denial of summary judgment. Hill v. Homeward Residential, Inc., 799 F.3d 544, 550 (6th Cir.
2015). Accordingly, Balram’s standing argument remains the only challenge properly before this panel for
consideration on appeal.
2 There is no dispute regarding Balram’s ultimate liability.

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II.
We review the district court’s conclusions of law de novo and its factual findings, following
a bench trial, for clear error. See Kalamazoo River Study Grp. v. Menasha Corp., 228 F.3d 648,
652 (6th Cir. 2000) (citation omitted).
A.
Balram contends that the district court erred in finding that Central, the lessee of the
property owned by GLS, had standing to pursue property damage claims on behalf of GLS
pursuant to either the lease agreement or the assignment, the latter of which Balram contends was
invalidly executed after the expiration of the two-year statute of limitations. Central, endorsing
the district court’s analysis, asserts that it had standing to pursue the pertinent claims pursuant to
both the valid assignment of rights and the lease agreement.
We turn first to Central’s assertion of standing under the lease agreement pursuant to the
equitable doctrine of subrogation. “Equitable subrogation is a legal fiction through which a person
who pays a debt for which another is primarily responsible is substituted or subrogated to [] the
rights and remedies of the other.” Fed. Ins. Co. v. Hartford Steam Boiler Inspection & Ins. Co.,
415 F.3d 487, 494 (6th Cir. 2005) (quoting In re Lewis, 398 F.3d 735, 747 (6th Cir. 2005)) (internal
quotation marks omitted). Application of this equitable doctrine is considered on a case-by-case
basis and is proper only where “the [prospective] subrogee [] [has] some obligation to pay the debt
of another and [is] not [] a ‘mere volunteer.’” In re Lewis, 398 F.3d at 748; see also Prairie State
Nat. Bank v. United States, 164 U.S. 227, 231 (1896).
In its August 21, 2017 order, the district court, appropriately applying Indiana law in its
analysis of the Central/GLS lease agreement, determined that Central had standing to pursue

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property damage claims pursuant to Indiana’s equitable doctrine of subrogation.3 Relying
primarily on Steury v. N. Ind. Pub. Serv. Co., 510 N.E.2d 213, 215 (Ind. Ct. App. 1987), the court
found that pursuant to the “Risk of Loss, Irreparable Damage” provision of the Central/GLS lease
agreement, Central was contractually obligated to “bear the entire risk of loss and damage to the
Equipment, whether or not insured against” and “pay [GLS] for the irreparably damaged Unit[s]
or to replace the irreparably damaged Unit[s].” As a result of this contractual obligation, the court
determined that Central was properly subrogated as a real party in interest capable of pursuing
claims associated with damage to the leased property owned by GLS. These facts closely resemble
the circumstances under which the court invoked subrogation rights in favor of the claimant in
Steury. Citing the express contractual language defining the contractor’s liability for casualty
losses, the Indiana Court of Appeals in Steury determined that the contractor could be equitably
substituted as a real party in interest for the building owners he contracted with as the “person[]. .
. legally obligated to pay for a loss caused by another’s tort.” Id. at 214. In the instant case, the
district court applied the same rationale from Steury to conclude that the contractual obligation
expressly set forth in the “Risk of Loss, Irreparable Damage” provision of the Central/GLS lease
agreement conferred upon Central the right to pursue claims for damages pursuant to the equitable
doctrine of subrogation.
Balram’s primary contention in opposition is that the express contractual terms referring
to the assignment of other rights in the lease agreement preclude the application of a subrogation
right not expressly provided for in the contract. However, Balram’s characterization of this
principle of contract interpretation as a rule of complete exclusivity is inconsistent with the liberal
invocation of equitable subrogation under Indiana law. See Coppolillo v. Cort, 947 N.E.2d 994,
3 It is undisputed that the Central/GLS lease agreement contains a choice-of-law provision indicating that any
dispute over the terms of the agreement would be governed by the law of the state of Central’s incorporation, Indiana.

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998 (Ind. Ct. App. 2011) (“[T]he existence of a contract, in and of itself, does not preclude
equitable relief which is not inconsistent with the contract.”). Moreover, Balram fails to direct this
court to any Indiana legal authority where the presence of a pre-existing contract alone precluded
the court’s ability to invoke the equitable doctrine of subrogation. To the contrary, the relevant
case law instructs that, as a decision determined by equitable considerations, our analysis of
Central’s subrogation claim is independent of any consideration of the terms of an existing contract
between the parties. See Aetna Cas. & Sur. Co. v. Katz, 177 Ind. App. 44, 46 (Ind. Ct. App. 1978)
(“The right of subrogation is not founded upon contract, expressed or implied. . . .”). Under
Indiana law, subrogation is a doctrine based “upon principles of equity and is applicable in every
instance in which one party, not a mere volunteer, pays the debt of another which, in good
conscience, should have been paid by the one primarily liable.” Loving v. Ponderosa Sys., Inc.,
479 N.E.2d 531, 536 (Ind. 1985) (emphasis added). It is “a highly favored doctrine, which is to
be given a liberal interpretation,” “long recognized” by the courts of Indiana. Erie Ins. Co. v.
George, 681 N.E.2d 183, 186 (Ind. 1997); Liberty Mortg. Corp. v. Nat’l City Bank, 755 N.E.2d
639, 641 (Ind. Ct. App. 2001).
We recognize that the invocation of equitable subrogation is not an automatic presumption,
but rather a judicial act that requires a case-specific analysis to be undertaken by the court,
dependent primarily on the obligation owed by the prospective subrogee. Under the particular
circumstances of this case, it is undisputed that Central, as the party obligated to bear the risk of
loss pursuant to the “Risk of Loss, Irreparable Damage” provision of the lease agreement, is not a
volunteer. Further, because Central is the obligor under the lease agreement, equitable
considerations weigh in Central’s favor to ensure that it fully recovers its losses from Balram, the
liable party. A survey of Indiana case law illustrates the courts’ proclivity towards liberal

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application of the doctrine of subrogation to claimants contractually obligated to shoulder the risk
of loss, like Central. See Loving, 479 N.E.2d at 537 (“[I]t is a highly favored doctrine. . . which
the courts are inclined to extend rather than to restrict.”). Balram has failed to adequately
distinguish the contractual status of Central and the subrogee in Steury to convince us that the
district court’s invocation of subrogation rights was improper.
B.
Because the district court’s standing determination with respect to the claim of equitable
subrogation was correct, we need not reach the issue of the validity of the assignment of rights or,
whether, if valid, the assignment properly conferred standing to Central.
III.
The right of equitable subrogation was permissibly invoked by the district court in
Central’s favor because of Central’s position as the party contractually liable to GLS for all loss
and damage to the leased property. Thus, the district court’s judgment is affirmed.

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