United States District Court, W.D. Virginia,

Roanoke Division.

DAILY EXPRESS, INC., Plaintiff,

v.

HOWELL’S MOTOR FREIGHT, INC., Defendant.

 

Civil Action No. 7:11CV00159.

June 6, 2012.

 

Robert Glenn Rothstein, Franklin & Prokopik, Herndon, VA, for Plaintiff.

 

Lori J. Bentley, Johnson Ayers & Matthews PLC, Roanoke, VA, for Defendant.

 

MEMORANDUM OPINION

GLEN E. CONRAD, Chief Judge.

This diversity action arises from an accident that occurred in the parking lot of a truck stop. A tractor trailer operated by Howell’s Motor Freight, Inc. (“Howell’s”) struck a windmill blade that Daily Express, Inc. (“DXI”) was transporting for General Electric Company and General Electric Energy, causing irreparable damage to the blade. DXI filed the instant action against Howell’s, asserting claims of negligence, equitable indemnification, and contribution. The case is presently before the court on the parties’ cross-motions for partial summary judgment and the defendant’s motion to exclude the plaintiffs expert. For the reasons explained during the hearing and for those set forth below, the motion for partial summary judgment filed by DXI will be denied and the motion for partial summary judgment filed by Howell’s will be granted. Additionally, the court will deny the motion to exclude the plaintiff’s expert.

 

Background

On October 13, 2009, DXI was engaged in the transportation of a windmill blade from Wilmington, Delaware to Rupert, West Virginia. Because of the size of the windmill blade, DXI was required to obtain a hauling permit from the Virginia Department of Motor Vehicles prior to traveling over the state’s highways. The permit authorized DXI to travel on certain interstate roadways between sunrise and sunset.

 

At approximately 6:00 p.m., DXI’s driver, Bob Long, exited off Interstate 81 and parked at the Wilco/Hess Truck Stop in Raphine, Virginia for the night. Because there was no room left in the area around the perimeter of the parking lot where Long normally stopped, he parked his truck in a double parking space in the upper left side of the lot. The back of the windmill blade faced a travel lane.

 

Charles Cecil Lashley, who was operating a tractor trailer on behalf of Howell’s, arrived at the truck stop around midnight. The accident at issue occurred as Lashley was circling the parking lot to find a place to park. Lashley observed the DXI truck and its cargo as he made a right turn onto the travel lane in which the DXI truck was parked. Although Lashley’s tractor successfully cleared the windmill blade, his trailer struck the blade and damaged it beyond repair.

 

DXI filed the instant action against Howell’s on April 1, 2011, asserting claims of negligence, equitable indemnification, and contribution. Following the completion of discovery, DXI moved for summary judgment on the claim for negligence, and Howell’s moved for summary judgment on the claims for equitable indemnification and contribution. Additionally, Howell’s moved to preclude DXI from using Don D. Lacy as an expert witness. The court held a hearing on the parties’ motions on June 1, 2012.

 

Discussion

I. Motions for Summary Judgment

Under Rule 56, an award of summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). For a party’s evidence to raise a genuine issue of material fact to avoid summary judgment, it must be “such that a reasonable jury could return a verdict for the non-moving party.” Anderson v. Liberty Lobby. Inc., 477 U.S. 242. 248 (1986). In determining whether to grant a motion for summary judgment, the court must view the record in the light most favorable to the non-movant.   Terry’s Floor Fashions, Inc. v. Burlington Indus., Inc., 763 F.2d 604, 610 (4th Cir.1985).

 

A. Neg ligence

As set forth above, DXI has moved for summary judgment on its claim for negligence. Relying primarily on Charles Lashley’s deposition testimony, DXI argues that it is clear from the record that Lashley was negligent and that his negligence was the sole and proximate cause of the damage to the windmill blade. In response, Howell’s argues that conflicting evidence in the record makes summary judgment inappropriate on the issue of negligence, and that a reasonable jury could find that DXI’s driver was guilty of contributory negligence.

 

Under Virginia law, the issues of negligence, contributory negligence, and proximate cause are ordinarily issues to be decided by a fact finder. Meeks v. Hodges, 306 S.E.2d 879, 881 (Va.1983). “Therefore, a jury should weigh the evidence, determine the credibility of witnesses, and ultimately decide these issues where reasonable minds could differ about them. Kimberlin v. PM Transport, Inc., 563 S.E.2d 665, 667 (Va.2002). It is “[o]nly when reasonable minds could not differ [that these issues become] questions of law to be decided by a court.” Id.

 

The Supreme Court of Virginia has held that a driver has “a duty to look with reasonable care and to heed what a reasonable lookout would have revealed.”   Reams v. Doe, 372 S.E.2d 405, 406 (Va.1988). As the Court explained in Oliver v. Forsyth, 58 S.E.2d 49 (Va.1950), “the duty is to look with reasonable care, not an absolute duty to discover by looking, unless the thing to be looked for is in such plain view that looking with reasonable care was bound to have discovered it.” Oliver, 58 S.E.2d at 51 (holding that the lower court erred in imposing an absolute duty to see). If a driver fails to use reasonable care to maintain a proper lookout, “he is negligent.”   Litchford v. Hancock, 352 S.E.2d 335, 337 (Va.1987). See Id. (“In the discharge of his duties, a driver is required to use ordinary care to observe other vehicles …, to see what a reasonable person would have seen, and to react as a reasonable person would have reacted under the circumstances to avoid collision.”).

 

Applying these principles, and viewing the evidence in the light most favorable to Howell’s, the court concludes that the issue of negligence must be decided by a jury. The evidence is in dispute as to whether, and to what extent, the windmill blade was intruding into the travel lane. Whereas DXI’s driver testified that both his truck and the windmill blade fit entirely within the two spaces in which he was parked, the defendant’s evidence indicates that DXI’s vehicle and cargo may have exceeded the combined length of the parking spaces by as much as seventeen feet. While Lashley testified on a number of occasions that he saw the windmill blade prior to striking it, it is unclear from his deposition testimony whether he saw the entire blade or fully appreciated the extent to which it may have been intruding into the travel lane. Additionally, the evidence is in dispute as to the adequacy of the truck stop’s lighting, and with respect to whether the DXI driver placed cones or other warning devices around the windmill blade to caution other drivers about the oversized load.

 

Based on these and other factual disputes, the court is unable to conclude, as a matter of law, that Lashley was negligent. As the court noted during the hearing on the instant motions, the plaintiff’s case is somewhat strong based on Lashley’s own deposition testimony. However, the court is convinced that this issue, and that of contributory negligence, which presents a clear jury question under the facts of this case, should be decided by a jury. Accordingly, the plaintiff’s motion for summary judgment will be denied.

 

B. Equitable Indemnification and Contribution

Howell’s has moved for summary judgment on the plaintiff’s alternative claims for equitable indemnification and contribution. Both claims were previously the subject of a Rule 12(b)(6) motion filed by Howell’s. The court took the motion under advisement pending further factual development. For the following reasons, the court concludes that Howell’s is entitled to summary judgment on both claims.

 

The Supreme Court of Virginia has held that a claim for equitable indemnification is viable under Virginia law when “a party without fault is nevertheless legally liable for damages caused by the negligence of another.”   Carr v. The Home Ins. Co., 463 S.E.2d 457, 458 (Va.1995). The Supreme Court has emphasized, however, that “a prerequisite to recovery based on equitable indemnification is the initial determination that the negligence of another caused the damages.” Id. (emphasis added). In Carr, the Supreme Court held that “the elements necessary to support equitable indemnification in favor of [the insurer] were not met,” since, at the time the insurer filed its motion for judgment, there had been no determination that the insured’s actions were negligent or that her negligence caused the damages at issue. Id.; see also Pulte Home Corp. v. Parex, Inc., 579 S.E.2d 188, 193 (Va.2003) (holding that the trial court properly sustained a demurrer to the plaintiff’s indemnification claim, since “there ha[d] been no determination that any act or omission of [the defendant] caused the damage” to the property at issue); AMCO Water Metering Sys. v. Travelers Cas. Sur. Co., 2003 U.S. Dist. LEXIS 17758, at * 11 (W.D .Va. Sept. 30, 2003) (dismissing an equitable indemnification claim where there had been no prior determination of negligence).

 

In this case, there has been no prior determination that the negligence of Howell’s caused the damage to the windmill blade, and the court agrees with Howell’s that DXI’s allegation of negligence is not sufficient to satisfy the “prerequisite” set forth in Carr. Accordingly, the court will grant the defendant’s motion with respect to this claim.

 

The court will also grant the defendant’s motion with respect to the claim for contribution. Under Virginia law, contribution is a statutory cause of action that is available only to joint tortfeasors. See Va.Code § 8.01–34 (“Contribution among wrongdoers may be enforced when the wrong results from negligence and involves no moral turpitude.”) (emphasis added). As the Supreme Court explained in Sullivan v. Robertson Drug Co., 639 S.E.2d 250 (Va.2007), “[a] right of contribution against a joint tortfeasor lies when one wrongdoer has paid or settled a claim not involving moral turpitude for which other wrongdoers are also liable. The party seeking contribution has the burden of proving that the concurring negligence of the other parties was a proximate cause of the injury for which damages were paid.” Sullivan, 639 S.E.2d at 255.

 

In this case, DXI continues to maintain that there was no concurring negligence, and that the negligence of the defendant’s driver was the sole and proximate cause of the damage to the windmill blade. Given DXI’s repeated assertion that its driver was not negligent in any way, the court concludes that Howell’s is entitled to summary judgment on the claim for contribution. Stated differently, plaintiff’s claim for contribution is subsumed by its negligence claim under count one of the complaint.

 

II. Motion to Exclude

Howell’s also moved to preclude DXI from offering expert testimony or other evidence from Don D. Lacy, who was not timely identified by DXI. For the reasons stated during the hearing, the court will deny the motion to exclude. However, the court will grant Howell’s the opportunity to identify its own expert witness to address the issues raised in Lacy’s expert report. Each side may depose the opposing party’s expert orally or by written question.

 

Conclusion

For the reasons stated, the plaintiff’s motion for partial summary judgment will be denied, the defendant’s motion for partial summary judgment will be granted, and the defendant’s motion to exclude will be denied.

 

The Clerk is directed to send certified copies of this memorandum opinion and the accompanying order to all counsel of record.

United States District Court,

N.D. Indiana,

Hammond Division.

FAIRMONT SPECIALTY INSURANCE COMPANY, Plaintiff,

v.

1039012 ONTARIO, INC., d/b/a Hummer Transportation, Ltd., Kimberly Spoa–Harty, and Jesse Harty, Defendants.

Kimberly Spoa–Harty and Jesse Harty, Counter-claimants

v.

Fairmont Specialty Insurance Company, Counter–Defendant.

 

Cause No. 2:10 CV 070.

June 19, 2012.

 

OPINION AND ORDER

WILLIAM C. LEE, District Judge.

After being injured in an accident with a tractor-trailer, Defendants Kimberly Spoa–Hoarty and Jesse Harty (“the Hartys”) filed suit in state court against 1039012 Ontario Inc, d/b/a Hummer Transportation, Ltd (“Ontario”), the lessee of the tractor-trailer involved in the accident and Hummer Transportation, Inc. (“Hummer”), the lessor of the tractor-trailer. A state court jury awarded the Hartys in excess of five million dollars. Thereafter, the Hartys sought payment of Ontario’s liability from Fairmont Specialty Insurance Co. (“Fairmont”), based upon an MCS– 90 endorsement policy  it issued to Ontario. Fairmont, in turn, filed the present declaratory judgment action wherein it named Ontario, and the Hartys as defendants and asserted that the MCS 90 endorsement did not apply and it had no duty to pay under the endorsement policy. On August 19, 2011, the undersigned granted, in part, the Hartys’ Motion for Summary Judgment and concluded that the MCS– 90 endorsement policy was applicable to this case. [DE 53]. The Court took under advisement the Hartys’ request for prejudgment interest on the full amount of the endorsement policy. The parties were then ordered to file supplemental briefing on the issue of prejudgment interest as well as the amount the Hartys’ were entitled to under the endorsement policy. After those briefs were filed and it was disclosed that the parties did not undertake settlement discussions despite strong encouragement to do so in the Court’s order, the undersigned ordered the parties to participate in settlement discussions with the Magistrate Judge. [DE 57]. The parties did so to no avail. Accordingly, the court now has before it the remainder of the Hartys’ Motion for Summary Judgment seeking prejudgment interest as well as their request for the full amount of the MCS 90 endorsement policy limits. For the following reasons, the court concludes that the Hartys’ motion [DE 44] will be granted in part and denied in part.

 

An MCS– 90 endorsement must be attached to the vehicle liability policy of certain regulated motor carriers to ensure that federally mandated insurance coverage under the Motor Carrier Act, 49 U.S.C. § 10927, et seq., is in place.

 

DISCUSSION

The underlying facts of this case have been fully set out in the prior summary judgment ruling, (see DE 53) and need not be recounted in detail here. It suffices to say that the state court entered final judgment against Ontario and Hummer and in favor of the Hartys. The jury awarded damages to Kimberly Spoa–Harty in the amount of $4,270,000 and an additional $950,000 to her husband, Jesse. Hummer’s insurance carrier paid the Hartys $750,000 which constituted the policy limits under its MCS– 90 endorsement insuring agreement along with interest on the judgment. The remainder of the judgment has not been satisfied.

 

At the time of the accident, Ontario was insured by Markel Insurance Company of Canada. Fairmont, by collateral agreement, endorsed the Markel Policy by issuing an MCS– 90 endorsement with limits of $1,000,000. This court has concluded that Fairmont is liable to the Hartys under this MCS– 90 endorsement. The remainder of this dispute involves the amount of endorsement owed to the Hartys and the amount of prejudgment interest to assess, if any.

 

The Markel policy did not have the tractor-trailer listed as a covered vehicle. Markel has denied coverage for the accident because the tractor-trailer is not listed in the policy and the policy excludes coverage for leased vehicles. Because an MCS– 90 endorsement operates as a surety rather than primary insurance coverage, the denial of coverage by the primary insurer is a precondition to the MCS– 90 coverage becoming operable. As a result of Markel’s denial of coverage, the Hartys’ sought payment under Fairmont’s endorsement policy.

 

Amount of Endorsement

The Hartys contend that the unambiguous language in the endorsement itself clearly entitles them to recovery of the full policy limits. They point out that the MCS– 90 endorsement contains the following limits of liability:

 

This insurance is primary and the company shall not be liable for amounts in excess of $1,000,000 for each accident.

 

The agreement further provides:

In consideration of the premium stated in the policy to which this endorsement is attached, the insurer (the Company) [Fairmont] agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured [Ontario] for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980 regardless of whether or not each motor vehicle is specifically described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere … It is understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, this endorsement, or any other endorsement thereon, or violation thereof, shall relieve the company from liability or from the payment of any final judgment, within the limits of liability herein described, irrespective of the financial condition, insolvency or bankruptcy of the insured.

 

(Fairmont MCS– 90, Hartys’ Exhibit 1).

 

In contrast, Fairmont asserts that it is only required to pay $750,000 not the full $1,000,000 because the endorsement contains different limits applicable to the various types of carriage and the commodity being transported. (Fairmont brief, p. 3). To support its view, Fairmont looks to the regulations which are incorporated as part of the last page of the endorsement. These regulations contain different minimum insurance requirements vis-a-vis the type of carriage involved (i.e., for hire in interstate and foreign commerce vs. for hire and private in interstate or foreign commerce) as well as the type of material transported (i.e., hazardous vs. non-hazardous). Motor carriers must maintain at least $750,000 in financial responsibility coverage for vehicles transporting non-hazardous cargo but $1,000,000 for vehicles transporting oil and certain other hazardous substances. According to Fairmont, because the minimum insuring requirement for the type of vehicle and materials transported by the tractor-trailer involved in the accident is $750,000, that is all the policy requires it to pay. Thus, the issue before the court is whether the MCS– 90 endorsement is limited to the minimum financial requirements of 49 C.F.R. § 387.9 or to the limits of the policy to which it is attached.

 

In this case, the face amount of the policy shows limits of $1,000,000 and the endorsement policy expressly obligates Fairmont to pay any judgment within those limits. Fairmont, however, argues that a motor carrier may obtain one policy with an attached endorsement meeting the highest requisite minimum for the type of cargo it transports and that this is precisely what Ontario did in this instance. Unfortunately for Fairmont, even if this is an accurate characterization of what Ontario intended to do, it is not reflected anywhere in the endorsement agreement itself. Rather, the endorsement simply reflects $1,000,000 policy limit per occurrence.

 

Fairmont cites no regulatory authority for the assertion that motor carriers may purchase a single endorsement intended to cover the highest requisite minimum for the type of cargo it transports.

 

Moreover, when faced with other situations involving the applicability of the policy limits as opposed to minimum financial limits, courts have held that the insurer must pay the face amount of the policy, subject to its right of reimbursement from the insured. See Carolina Cas. Ins. Co. v. Zinsmaster, 2007 WL 670937 at *4–5 (N.D.Ind. Feb. 27, 2007) ( MCS– 90 endorsement’s security cannot be below minimum financial requirements, but level of payment is amount of coverage under the policy); Stevens v.Fireman’s Fund Ins. Co., 2002 WL 31951274, at *6–8 (S.D.Ohio Nov. 6, 2002) (potential liability under MCS– 90 constrained by stated policy limit), aff’d, 375 F.3d 464 (6th Cir.2004); Hamm v. Canal Ins. Co., 10 F.Supp.2d 539, 545–48 (M.D.N.C.1998) (policy’s per accident limit establishes maximum liability under MCS– 90), aff’d, 178 F.3d 1283 (4th Cir.1999). In concluding as they do, these courts focus on the purpose behind MCS– 90 endorsements:

 

The regulations provide for an insurer’s right of reimbursement. See 49 C.F.R. § 387.15. The endorsement states, in pertinent part, “The insured agrees to reimburse the company … for any payment that the company would not have been obligated to make under the provisions of the policy except for the agreement contained in this endorsement.” 49 C.F.R. § 387.15 (Illustration I); see also Canal Ins. Co. v. Distribution Servs., Inc., 176 F.Supp.2d 559, 565 (E.D.Va.2001) “[The insured’s] reimbursement obligation is … consistent with … the language … of the MCS– 90 Endorsement.”). The endorsement also states, “[A]ll terms, conditions, and limitations in the policy to which the endorsement is attached shall remain in full force and effect as binding between the insured and the[insurer].” 49 C.F.R. § 387.15 (Illustration I).

 

MCS– 90 endorsement ensures that a motor carrier has independent financial responsibility to pay for losses sustained by the general public arising out of its operations. The endorsement is designed to protect the public, not the policyholder; the obligation the endorsement creates runs to the public, not to the insured. It seeks to ensure that ultimate responsibility lies with the insured trucking company.

Real Legacy Assur. Co. v. Santori Trucking, Inc., 560 F.Supp.2d 143, 146–147 (D.Puerto Rico, 2008). By obligating insurers to pay up to the full amount of the policy limits to satisfy a judgment against an insured, subject to their right of reimbursement from the insured, the courts have held that the purpose of the endorsement is advanced. This court agrees.

 

In this case, the policy’s per accident limit is $1,000,000. The amount of the judgment exceeds $1,000,000 and thus, under the policy Fairmont the court concludes that it is obligated to pay the full amount of the policy to satisfy the judgment obtained by the Hartys against Ontario.

 

Prejudgment Interest

The final issue remaining is a determination of prejudgment interest. The MCS– 90 endorsement expressly provides that any surety benefit is not owed until a final judgment is recovered against the insured. In this case, a final judgment against Hummer and Ontario, the insured, in the state court case was entered on November 18, 2009. Because Fairmont’s surety obligation runs from the date of a final judgment against Ontario and not against itself, interest began accruing against Fairmont on November 18, 2009.

 

The parties, however, refer to the interest accruing from the date of the state court judgment to the present as “prejudgment interest” presumably because no final judgment has been entered against Fairmont in this declaratory judgment case. In theory, since a final judgment has not been issued in this case, the interest sought is “prejudgment” in this case. However, what the Hartys appear to be seeking is both post-judgment interest on the state court judgment and prejudgment interest in this court for the same time frame. While the Hartys are certainly entitled to interest from Fairmont to compensate them for the delay in payment occasioned by Fairmont’s filing of this declaratory judgment action, the court is reluctant to order it in this declaratory judgment case. The entitlement to post-judgment interest in the state court case is a matter for the state court to resolve. Accordingly, to the extent, the Hartys seek an additional assessment of prejudgment interest from this court, the court concludes that it appears duplicative of the post-judgment interest that is to be assessed by the state court and is DENIED.

 

CONCLUSION

Based on the foregoing, the portions of the Hartys’ Motion for Summary Judgment [DE 44] that were previously taken under advisement are GRANTED in part and DENIED in part. The court GRANTS the motion as to Fairmont’s liability under the MCS– 90 endorsement and concludes the amount of the surety owed to the Hartys is $1,000,000 (One Million Dollars). The court DENIES the motion as to the assessment of prejudgment interest. The Clerk is directed to enter a final judgment in favor of the Hartys’ in the amount of $1,000,000 (One Million Dollars).