United States District Court,

S.D. Georgia,

Savannah Division.

PROGRESSIVE MOUNTAIN INSURANCE COMPANY, Plaintiff,

v.

MADD TRANSPORTATION, LLC; Vickie Robinson, a/k/a Vickie Robinson as guardian of Ted Owens; and Ipsco Koppel Tubulars, LLC, Defendants.

No. CV413–254. | Signed March 27, 2015.

 

 

ORDER

WILLIAM T. MOORE, JR., District Judge.

*1 Before the Court is Plaintiff’s Motion for Summary Judgment. (Doc. 53.) Defendants1 Madd Transportation, LLC (“Madd”) and IPSCO Koppel Tubulars, Inc. (“IPSCO”) have filed responses in opposition (Doc. 57, Doc. 59), to which Plaintiff has filed a reply (Doc. 61). For the following reasons, Plaintiff’s motion is GRANTED. All other pending motions in this case are DISMISSED AS MOOT. The Clerk of Court is DIRECTED to close this case.

 

 

BACKGROUND

This action arises out of an injury sustained by Ted Owens, a truck driver for Defendant Madd.2 (Doc. 58 ¶ 1.) Defendant Madd is a Georgia-based interstate motor carrier in the business of transporting goods for other companies on its tractor-trailers. (Id. ¶¶ 1–2.) However, Defendant

 

Madd does not own its own tractor-trailers, but rather leases them from its President Mark Williams and Operational Manager Andre Doyle. (Id. ¶ 3.) These tractor-trailers are then used by drivers-such as Mr. Owens-who pick up and transport loads pursuant to assignments from Defendant Madd.3 (Id. ¶¶ 3, 11.) Drivers have the option of either accepting or rejecting an assignment from Defendant Madd. (Id. ¶ 13.) Defendant Madd does not withhold taxes from their drivers’ wages or pay premiums for the driver’s worker’s compensation coverage. (Id. ¶ 10.)

 

The incident from which this case arises occurred on or about May 15, 2012. (Id. ¶¶ 17–18.) Mr. Owens had accepted an assignment from Defendant Madd to transport several bundles of large metal pipes from Defendant IPSCO’s facility in Ambridge, Pennsylvania to another destination. (Id. ¶¶ 16–18.) Pursuant to that assignment, Mr. Owens drove from Georgia and arrived at Defendant IPSCO’s facility to pick up the load. (Id. ¶ 17–18.) After Mr. Owens positioned the tractor-trailer next to a loading platform, one of Defendant IPSCO’s employees used a crane to load eight bundles of metal pipe onto Mr. Owens’s tractor-trailer. (Id. ¶ 19–22.) After the eighth bundle of pipe was loaded, Mr. Owens moved between the loading platform and the trailer flatbed to throw securement straps over the bundles. (Id. ¶¶ 23–24, 32.) The eighth bundle remained stationary for roughly forty-five to sixty seconds, but eventually fell off the trailer and struck Mr. Owens. (Id. ¶¶ 26, 33.) As a result, Mr. Owens suffered significant injuries. (Id. ¶ 33.)

 

At the time of the incident, Defendant Madd held a Commercial Auto Policy with Plaintiff (the “Policy”). (Id. ¶ 34.) The Policy stated, in part, that “[if] an insured auto is involved in an accident or loss for which this insurance may apply, the accident or loss must be reported to [Plaintiff] as soon as practicable….” (Id. ¶ 35.) The Policy also provided an exclusion from coverage for “[b]odily injury to an employee of any insured arising out of or within the course of that employee’s employment by any insured; or [p]erforming duties related to the conduct of any insured’s business….” (Id.) The Policy further stated that the exclusion applied “whether the insured may be liable as an employer or in any other capacity.” (Id.) In addition, the policy provided an exclusion for “[b]odily injury or property damage resulting from or caused by the movement of property by a mechanical device, other than a hand truck, not attached to an insured auto.” (Id.)

 

*2 On or about May 7, 2013, Mr. Owens’s sister and guardian Vickie Robinson filed suit against Defendant IPSCO in Pennsylvania state court. (Id. ¶ 38.) Defendant IPSCO in turn joined Defendant Madd as a third-party defendant in the underlying suit and asserted a crossclaim alleging that Defendant Madd negligently trained and supervised Mr. Owens. (Id. ¶¶ 39–40.) Defendant Madd subsequently notified Plaintiff of the accident and the underlying suit in July of 2013. (Id. ¶ 37.)

 

Plaintiff provided Defendant Madd a defense in the underlying suit under a reservation of rights. (Id. ¶¶ 42–43.) Plaintiff then filed suit in this Court seeking a declaratory judgment that, under the terms of the Policy, it had no duty to defend or indemnify Defendant Madd in the underlying suit.4 (Doc. 24.) In its Motion for Summary Judgment, Plaintiff argues that Defendant Madd failed to provide timely notice of the incident to Plaintiff-a condition precedent for the Policy to apply. (Doc. 53, Attach. 1 at 11.) In addition, Plaintiff argues that even if the Policy is effective, coverage for the incident is precluded by either the mechanical device or employee exclusions referenced above. (Id. at 13, 16.) Defendants respond that Defendant Madd had no reason to suspect or believe that the incident would lead to any potential claim against Madd, excusing any delay in reporting the incident. (Doc. 57 at 4; Doc. 59, Attach. 1 at 5.) Furthermore, Defendants contend that the mechanical device exclusion is inapplicable because it is presently impossible to determine the cause of the pipe bundle’s fall. (Doc. 57 at 7; Doc. 59, Attach. 1 at 11.) Finally, Defendants argue that the employee exclusion does not preclude coverage because Mr. Owens was an independent contractor and, in any case, the determination of Mr. Owens’s employment status should be left for the underlying suit (Doc. 57 at 9; Doc. 59, Attach. 1 at 14–16.)

 

 

ANALYSIS

I. SUMMARY JUDGMENT STANDARD

According to Fed.R.Civ.P. 56(a), “[a] party may move for summary judgment, identifying each claim or defense-or the part of each claim of defense-on which summary judgment is sought.” Such a motion must be granted “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.” Id. The “purpose of summary judgment is to ‘pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.’ “ Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (quoting Fed.R.Civ.P. 56 advisory committee notes).

 

Summary judgment is appropriate when the nonmovant “fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The substantive law governing the action determines whether an element is essential. DeLong Equip. Co. v. Wash. Mills Abrasive Co., 887 F.2d 1499, 1505 (11th Cir.1989).

 

*3 As the Supreme Court explained:

[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.

Celotex, 477 U.S. at 323. The burden then shifts to the nonmovant to establish, by going beyond the pleadings, that there is a genuine issue as to facts material to the nonmovant’s case. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991).

 

The Court must review the evidence and all reasonable factual inferences arising from it in the light most favorable to the nonmovant. Matsushita, 475 U.S. at 587–88. However, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Id. at 586. A mere “scintilla” of evidence, or simply conclusory allegations, will not suffice. See, e.g., Tidwell v. Carter Prods., 135 F.3d 1422, 1425 (11th Cir.1998). Nevertheless, where a reasonable fact finder may “draw more than one inference from the facts, and that inference creates a genuine issue of material fact, then the Court should refuse to grant summary judgment.” Barfield v. Brierton, 883 F.2d 923, 933–34 (11th Cir.1989).

 

 

II. EMPLOYEE EXCLUSION

The Court first addresses whether Plaintiff owes a duty to defend or indemnify Defendant Madd despite the Policy’s exclusion for injuries to Defendant Madd’s employees. The Policy expressly excludes “[b]odily injury to an employee of any insured arising out of or within the course of that employee’s employment by any insured; or [p]erforming duties related to the conduct of any insured’s business….” (Doc. 53, Attach. 1 at 7–8.) According to Plaintiff, Mr. Owens is a statutory employee of Defendant Madd for purposes of the Policy and thus no coverage should exist. (Id . at 17–18.) Specifically, Plaintiff states that the Policy is governed by the Federal Motor Carrier Safety Regulations (“FMCSR”), which include independent contractors as employees for insurance purposes. 49 C.F.R. § 390.5 (2014).

 

Defendants respond that Mr. Owens’s employment status is an issue that will be resolved in the underlying suit. (Doc. 57 at 9; Doc. 59, Attach. 1 at 16.) In addition, Defendant Madd contends that Defendant IPSCO’s third-party complaint in the underlying suit clearly alleges that Mr. Owens was not covered by the Policy’s exclusion because he was an independent contractor. (Doc. 59, Attach. 1 at 14–16.) Furthermore, Defendant Madd argues that Georgia law governs the terms of the Policy and the nature of Mr. Owens’s work demonstrates that he is, in fact, an independent contractor according to Georgia’s common law definition of that term. (Id.)

 

With regard to Mr. Owens’s employment status being determined in the underlying suit, the Court finds Defendants’ arguments off point. The issue before the Court is whether Mr. Owens qualifies as an “employee” under the terms of the Policy, not whether he is Defendant Madd’s employee for purposes of establishing liability for negligent hiring or supervision. Because the Court is concerned with interpretation of the Policy’s language, the Court finds the prospective determination of Mr. Owens’s employment status in the underlying suit immaterial to this case. Furthermore, Defendant IPSCO’s reference to Mr. Owens as an independent contractor in its third-party complaint is not dispositive of the issue. It is true that the Court looks at the facts alleged in Defendant IPSCO’s third-party complaint to determine whether Plaintiff owes any duty pursuant to the Policy. See HDI–Gerling Am. Ins. Co. v. Morrison Homes, 701 F.3d 662, 666 (11th Cir.2012) (“[T]he issue is not whether the insured is actually liable … in the underlying action; the issue is whether a claim has been asserted which falls within the policy coverage.”). However, Plaintiff concedes that while Mr. Owens may qualify as an independent contractor, he nevertheless may still be considered an employee for purposes of the Policy.

 

*4 The Policy does not include any separate definition of “employee,” therefore the Court must determine what the term means for purposes of the Policy. The Court agrees with Defendant Madd that the contract is interpreted pursuant to Georgia law.5 “[W]hether an insurer has a duty to defend depends on the language of the policy as compared with the allegations of the complaint.” Hoover v. Maxum Indem. Co., 291 Ga. 402, 407–08, 730 S.E.2d 413, 418 (2012). To avoid a duty to defend or indemnify, the allegations of the complaint must unambiguously exclude coverage under the policy. JNJ Found. Specialists, Inc. v. D.R. Horton, Inc., 311 Ga.App. 269, 271, 717 S.E.2d 219, 223 (2011). “ ‘Thus, the issue is not whether the insured is actually liable to the plaintiffs in the underlying action; the issue is whether a claim has been asserted which falls within the policy coverage and which the insurer has a duty to defend.’ “ Bituminous Cas. Corp. v. N. Ins. Co. of N.Y., 249 Ga.App. 532, 533, 548 S.E.2d 495, 497 (2001) (quoting Penn–Am. Ins. Co. v. Disabled Am. Veterans, 224 Ga.App. 557, 558, 481 S.E.2d 850, 851 (1997)). However, if the complaint does not assert a claim covered by the Policy, Plaintiff is justified in refusing to provide both a defense and indemnification in the underlying suit. City of Atlanta v. St. Paul Fire & Marine Ins. Co., 231 Ga.App. 206, 208, 498 S.E.2d 782, 785 (1998).

 

Although Georgia law applies to interpretation of the Policy, it does not follow that Georgia’s common law distinction between independent contractor and employee has any bearing on the terms of the Policy. Interstate motor carriers are required to hold a minimum level of liability insurance. See Motor Carrier Safety Act of 1984, 49 U.S.C. § 13906 (2000); 49 C.F.R. § 387.1. Notably, however, the FMCSR “do[ ] not require motor carriers to obtain coverage for ‘injury to or death of [their] employees while engaged in the course of their employment.’ “ Consumers Cnty. Mut. Ins. Co. v. P.W. & Sons Trucking, Inc., 307 F.3d 362, 366 (5th Cir.2002) (quoting 49 C.F.R. § 387.15). As a result, a majority of courts have relied on the FCMSR’s language to interpret provisions of insurance policies drafted in compliance therewith, particularly employee exclusions. See, e.g., Ooida Risk Retention Grp., Inc. v. Williams, 579 F.3d 469, 473 (5th Cir.2009) (“The [FMCSR] govern the meaning of terms under insurance policies designed to comply with federal requirements for motor carriers.”); Consumers Cnty., 307 F.3d at 366 (“In light of the clear intention of the parties to comply with federal regulations and the broad application of § 390.5 throughout those regulations, it is reasonable to conclude that the parties intended § 390.5 to supply the definition of the term employee in the policy.”); Perry v. Harco Nat. Ins. Co., 129 F.3d 1072 (9th Cir.1997) (FMCSR’s definition of employee controlling where policy included federally-mandated endorsement). But see, e.g., Gramercy Ins. Co. v. Expeditor’s Exp. Inc., 575 F. App’x 607, 609 (2014) (insurance policy’s amendment to comply with FMCSR did not alter policy’s original definition of employee). These courts reason that interstate motor carrier insurance contracts adopt the FMCSR’s definitions, unless the policy specifically states otherwise, because the federal law’s underlying intent was to eliminate the common law distinction between independent contractors and employees. See, e.g., Luizzi v. Pro Transp., Inc., 2013 WL 3968736, at *29 (E.D.N.Y. July 31, 2013) (unpublished).

 

*5 While the Eleventh Circuit has not addressed this issue directly, the Court finds using the FMCSR to determine the parties’ intent entirely appropriate in this case. Defendants do not dispute that the Policy was designed specifically in accordance with the FMCSR, nor do they dispute that Defendant Madd is an interstate motor carrier subject to federal insurance requirements and regulations. In addition, the Court notes that Georgia has specifically adopted the FMCSR into its administrative code. Ga.Code. Ann. § 515–16–4.01 (2015) (“The [FMCSR] … contained in Title 49 of the Code of Federal Regulations, Parts 350, 382, 383, and 390 through 397, as now in force and as hereafter amended … are by this Rule made Transportation Rules of this Commission for all carriers regulated by this Commission.”). Courts have considered a state’s adoption of the FMCSR indicative of the parties’ intent to use the federal definitions in their insurance contracts. See, e.g ., Lancer Ins. Co. v. Newman Specialized Carriers, Inc., 903 F.Supp.2d 1272, 1270–80, (holding independent contractor as employee where FMCSR adopted into Alabama’s regulatory code). Also, courts have declined to read the FMCSR’s definition of a statutory employee into insurance policies such as this one only where those policies include separate definitions of “employee.” See, e.g., Gramercy, 575 F. App’x at 608 (distinguishing case because insurance policy included separate definition of “employee”); Northland Cas. Co. v. Rocky Harrell, 2007 WL 2319863 (E.D.Ark. Aug. 9, 2007) (unpublished). As stated above, such is not the case here.

 

Finally, the Policy includes the federally-mandated MCS–90 endorsement, which states that the Policy “does not apply to injury or death of [Defendant Madd’s] employees while engaged in the course of their employment.” (Doc. 59, Attach. 3 at 61.) As the Ninth Circuit correctly pointed out in Perry, the MCS–90 endorsement’s language is explicitly dictated by federal law and governed by the FMCSR. 129 F.3d at 1074–75; see also 49 C.F.R. § 387.15 (MCS–90 form endorsement to be included in interstate motor carrier’s insurance policy). Under Georgia law, “every insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended, or modified by any rider, endorsement, or application made a part of the policy.” O.C.G.A. § 33–24–16. An endorsement’s language controls where there is any conflict between it and an original policy because it is the more current expression of the parties’ intent. See Utica Mut. Ins. Co. v. Dunn, 106 Ga.App. 877, 878 (1962). As a result, it would defy logic and Georgia law for the Policy to include distinct definitions of the term “employee” in the endorsement and the rest of the Policy. See Consumers Cnty., 307 F.3d at 366 (“ ‘[E]mployee’ should not be given different meanings under an insurance policy depending on the context in which it is used.”) Accordingly, the Court concludes the FMCSR’s statutory definition of an employee is the correct standard to use in interpreting the Policy.

 

*6 According to the FMCSR, an “employee” is

any individual, other than an employer, who is employed by an employer and who in the course of his or her employment directly affects commercial motor vehicle safety. Such term includes a driver of a commercial motor vehicle (including an independent contractor while in the course of operating a commercial motor vehicle), a mechanic, and a freight handler. Such term does not include an employee of the United States, any State, any political subdivision of a State, or any agency established under a compact between States and approved by the Congress of the United States who is acting within the course of such employment.

49 C.F.R. § 390.5 (2014). Defendants rely entirely on their contention that Mr. Owens is an independent contractor to avoid the Policy’s employee exclusion. However, § 390.5 expressly includes independent contractors in its description of employees. In addition, it is undisputed that Mr. Owens was working as a truck driver for Defendant Madd at the time of the incident.6 As the Eleventh Circuit has stated, “federal law creates a statutory employment relationship between interstate carriers and the drivers of the trucks leased to them.” Judy v. Tri-state Motor Transit Co., 844 F.2d 1496, 1501 (1988). As such, the Court finds Mr. Owens was a statutory employee under 49 C.F.R. § 390.5 and would still be excluded from the Policy even if Defendants’ contentions are correct. Plaintiff, therefore, has no duty to defend or indemnify Defendant Madd in the underlying suit because Mr. Owens falls within the Policy’s employee exclusion. Accordingly, the Court need not address the other arguments contained in Plaintiff’s Motion for Summary Judgment.

 

 

Conclusion

For the foregoing reasons, Plaintiff’s Motion for Summary Judgment (Doc. 53) is GRANTED. All other pending motions in this case are DISMISSED AS MOOT. The Clerk of Court is DIRECTED to close this case.

 

SO ORDERED.

 

 

 

Footnotes

 

1

 

Defendant Robinson has not made an appearance in this case and is presently in default. (Doc. 26.)

 

2

 

For the purposes of ruling on Plaintiff’s Motion for Summary Judgment, the Court construes the facts in the light most favorable to Defendants. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 577–78 (1986).

 

3

 

While it is not entirely clear from the parties’ briefs, the Court assumes that Mr. Owens and the other drivers own their own trucks, but not the trailers themselves. In any case, this issue ultimately proves immaterial to the Court’s analysis.

 

4

 

Both Defendant Madd and Defendant IPSCO have filed Motions to Dismiss or Stay with regard to Plaintiff’s duty to indemnify, arguing that because the underlying suit is still pending, the issue of indemnification is not yet ripe for review. (Doc. 39; Doc. 48.) Defendants are correct that a duty to defend is separate from a duty to indemnify. See City of Atlanta v. St. Paul Fire & Mar. Ins. Co., 231 Ga.App. 206, 208, 498 S.E.2d 782, 785 (1998). However, the resolution of Plaintiffs duty to defend is so inextricably intertwined with its duty to indemnify that finding an absence of any duty to defend is dispositive of both issues. See, e.g., Phila. Indem. Ins. Co. v. Yachtsman’s Inn Condo Ass’n, Inc., 595 F.Supp.2d 1319, 1322 (S.D.Fla.2009) (“[A] court’s determination that the insurer has no duty to defend requires a finding that there is no duty to indemnify.”) Accordingly, practicality and judicial economy warrant the exercise of this Court’s discretion to provide a declaratory judgment with respect to both Plaintiff’s duty to defend and duty to indemnify. See Edwards v. Sharkey, 747 F.2d 684, 686 (11th Cir.1984).

 

5

 

A district court applies the choice of laws rules of the state in which it sits. Georgia uses the rule of lex loci contractus when interpreting insurance contracts, which holds that a contract is subject to the substantive law of the state in which it was made-in this case, Georgia. Fed. Ins. Co. v. Nat’l Dist. Co., 203 Ga.App. 763, 765, 417 S.E.2d 671, 673 (1992).

 

6

 

Courts have diverged as to whether an independent contractor truck driver is a statutory employee under § 390.5 when not driving the vehicle. Compare Pouliot v. Paul Arpin Van Lines, Inc., 292 F.Supp.2d 374, 382 (D.Conn.2003) (holding driving vehicle is synonymous with “operating” vehicle) with Lancer, 903 F.Supp.2d at 1280 (holding independent contractor truck driver statutory employee under § 390.5 while unloading vehicle). However, Defendants raise no argument on this matter. Accordingly, the issue is moot.

 

 

United States District Court,

S.D. New York.

PARK INSURANCE COMPANY, Plaintiff,

v.

Monico LUGO, et al., Defendants.

No. 13 Civ. 03567(LGS). | Signed April 6, 2015.

 

 

FINDINGS OF FACT AND CONCLUSIONS OF LAW

LORNA G. SCHOFIELD, District Judge.

*1 Plaintiff Park Insurance Company (“Park”) brings this interpleader action under 28 U.S.C. § 1335 to obtain a discharge of liability to two competing sets of claimants, by depositing with the Court the insurance proceeds at issue. The principal threshold question is the amount that must be deposited, which depends on the extent of insurance coverage, and specifically the applicability of a particular endorsement to the insurance policy. Based on the facts adduced at a half-day trial, the endorsement does apply, and Park may be discharged based on its previous deposit with the Court of $750,000.

 

 

I. BACKGROUND AND PROCEDURAL HISTORY

Park issued a business automobile insurance policy (the “Policy”) to Sav–On Waste Services, LLC (“Sav–On”) for up to $500,000 and a Form MCS–90 Endorsement for Motor Carrier Policies of Insurance for Public Liability (the “Endorsement”) under Sections 29 and 30 of the Motor Carrier Act of 1980 (“MCA”) for up to $750,000 for a one-year period beginning May 23, 2011.

 

Defendants are Monico Lugo and Sarah Lugo (together, the “Lugos”) and Thomas Young and Susan Eichhorn–Young (together, the “Youngs”). Defendants were seriously injured in a multi-vehicle accident on Interstate 84 in Westfall, Pennsylvania in June 2011 (“the Accident”). The Lugos are New York domiciliaries. The Youngs are Pennsylvania domiciliaries. The Lugos and Youngs brought claims in the New York and Pennsylvania state courts, respectively, against (1) Daniel Solano, the driver of a tractor trailer involved in the accident; (2) Eco America Trucking Corp. (“Eco”), the corporate operator of the tractor trailer; and (3) Sav–On, the owner of the tractor trailer. Defendants’ collective damages are likely to exceed the value of the amount interpleaded in this action.

 

Park filed its Interpleader Complaint against the Youngs and the Lugos on May 28, 2013, seeking to interplead the $455,013.01 remaining under the policy, determine Defendants’ competing rights to that amount, and obtain discharge of Park’s liability upon deposit of that amount with the Court. The Lugos moved to dismiss for lack of subject matter jurisdiction because Park had not also included proceeds from the Endorsement for a combined total of $750,000. The federal regulations enacted pursuant to the MCA require for-hire motor carriers transporting non-hazardous property in interstate commerce to maintain a minimum level of financial responsibility in an amount of $750,000 or greater. See 49 CFR §§ 387.7(a), 387.9.

 

Park responded with an Amended Interpleader Complaint, agreeing to deposit a $750,000 bond to ensure the Court’s subject matter jurisdiction, but disputing that Defendants are entitled to any proceeds under the Endorsement. On May 27, 2014, Park deposited $750,000 with the Court.

 

Park and the Lugos cross-moved for summary judgment to determine Park’s liability to Defendants on the Endorsement. Park was found to have no liability under the Endorsement to pay any judgment against Eco and/or Solano, who are not insureds under the Policy. Summary judgment was not entered on the issue of whether the Endorsement covers any judgment against Sav–On as a result of the Accident because issues of material fact precluded a determination of the dispositive issue-whether Sav–On was acting as a “motor carrier” at the time of the Accident.

 

*2 On December 15, 2014, the parties presented evidence on the question of whether Sav–On was acting as a motor carrier at the time of the Accident. The parties called three witnesses. Two witnesses testified live-Edward Hom, the principal and sole owner of Sav–On, the corporate insured and owner of the tractor trailer; and Victor Sanchez, the principal and sole owner of Eco, the corporate operator of the tractor trailer. Daniel Solano, the driver, testified through selected portions of his deposition testimony. The parties also submitted a stipulation of uncontested facts and documentary exhibits that included the Policy, the Endorsement, and Sav–On’s bank records.

 

 

II. FINDINGS OF FACT

Based on the documents admitted into evidence and credibility judgments of the testifying witnesses, the following are the Court’s findings of fact relating to the dispositive issue of whether Sav–On was acting as a motor carrier at the time of the Accident.

 

 

A. The Policy and Endorsement

On June 9, 2011, Park issued the Policy to Sav–On, which covered the period from May 23, 2011, through May 23, 2012. The Policy provides accident liability insurance of up to $500,000 per accident and covers ten semi-trailers and two truck-tractors owned by Sav–On, including the tractor and trailer involved in the Accident.

 

The Policy includes the Endorsement, which provides $750,000 to satisfy any final judgment against Sav–On for bodily injury or property damage resulting from negligence in the operation of motor vehicles subject to certain financial responsibility requirements under the MCA.

 

 

B. Sav–On

Sav–On is owned and operated exclusively by Edward Hom. In 2011, Sav–On owned approximately ten trailers and two tractors, including the tractor-trailer involved in the Accident. Sav–On hired owner-operators of trucks to haul municipal solid waste from transfer stations to landfills. Sav–On also engaged in a “brokering” business, advising truckers where to get their loads of garbage, in return for a commission paid by the municipality or other entity that controlled the garbage.

 

Hom does not maintain a commercial driver’s license, and Sav–On is not registered with the United States Department of Transportation, Federal Motor Carrier Safety Administration as a motor carrier. Sav–On did apply for a Municipal Residual Waste Transporter Authorization from the Pennsylvania Department of Environmental Protection, which was necessary to transport municipal waste through the state of Pennsylvania.

 

The lack of record keeping, lack of written contracts, large cash withdrawals without any record of how the cash was spent, and Hom’s lack of memory about basic facts all suggest a systematic way of doing business that was designed to be, and largely was, “off the record.”

 

 

C. Eco

Eco was a trucking company whose business was hauling municipal waste to landfills.

 

Eco was a registered motor carrier with the Department of Transportation. At the time of the Accident, Eco owned one truck tractor and was in the process of purchasing a second, the one involved in the Accident, from Sav–On. Eco was wholly owned by Victor Sanchez and ceased to do business in 2012.

 

*3 In 2011, Eco had three truck drivers, including the owner Mr. Sanchez and Mr. Solano, who was the driver of the tractor involved in the Accident. Mr. Solano was sufficiently confused about the identity of his employer that he gave a statement in July 2011 stating that he had been employed by Sav–On, but changed that statement in his 2013 deposition, stating that his employer had been Eco. In May 2011, a month before the Accident, Sav–On paid Mr. Solano, the driver of the truck in the accident, $1,200, but Mr. Hom has no record or recollection of what the payment was for.

 

 

D. Relationship Between Sav–On and Eco

From week to week, Eco “leased” from one to six trailers from Sav–On, depending on the number of loads Eco was scheduled to deliver. Sav–On and Eco had entered into two lease agreements, each for one trailer. To the extent Eco needed more than the two trailers covered by the lease agreements, the parties operated by verbal agreement. If there ever was a written lease agreement that covered the trailer involved in the Accident, it no longer exists, and Sav–On had the only copy of it. Sanchez never had a copy of any lease agreement, nor did he request one.

 

The trailer involved in the Accident was owned by Sav–On and in use by Eco to haul municipal waste. Sav–On registered it, insured it and paid the premium on it. Eco paid Sav–On weekly for the use of the trailer, as well as a fee of $25 per load.

 

The tractor involved in the Accident also was owned by Sav–On but registered by Eco. Sav–On had purchased the tractor to sell to Eco. Eco made monthly payments to Sav–On toward the purchase of the tractor and ultimately purchased it sometime after the accident. Eco was responsible for paying for fuel, repairs and maintenance on the tractor. Sav–On insured the tractor, but it is unclear whether Sav–On or Eco paid the insurance premium. If there ever was a written sales agreement for the tractor involved in the Accident, it no longer exists, and Sav–On had the only copy of it. Eco was legally required to keep a copy of the agreement in the truck, but did not do so.

 

Sav–On provided Eco with two credit cards to pay for fuel or repairs. The driver, Mr. Solano, had possession of one of the credit cards. Eco was to reimburse Sav–On for any fuel or repairs charged to the credit cards. Sav–On and Eco have no records of how much Eco charged on the credit cards.

 

Eco hauled municipal waste for at least two companies-Tully Environmental and Margiotta Enterprises. At the time of the Accident, Solano was returning from a job for Margiotta. Eco’s customers received a weekly Sav–On invoice and made payments directly to Sav–On for Eco’s services. Sav–On deducted the amounts Eco owed to Sav–On–for the use of the trailer, the purchase of the truck, credit card charges, Sav–On’s fee per load, and any other items-and then paid the balance to Eco. If Eco had a “negative week” in which expenses exceeded income, Sav–On loaned Eco money, which Eco repaid. Sav–On and Eco have no records of any of these amounts or transactions.

 

*4 Sav–On’s banking records (obtained from the bank, not Sav–On) reflect frequent and substantial cash withdrawals. For example, in May 2011, there were 6 cash withdrawals totaling $33,000. In June 2011, there were 4 cash withdrawals totaling $32,000. Sav–On maintains no records to reflect how the cash was spent.

 

 

III. CONCLUSIONS OF LAW

Based on the above factual findings, a plain reading of the MCA and its regulations, and the applicable case law, Sav–On was a “motor carrier” at the time of the Accident and Park is therefore liable on the Endorsement.

 

The MCA, 49 U.S.C. § 10101 et seq., and its regulations require motor carriers that operate motor vehicles for transporting non-hazardous property in interstate commerce to carry proof of financial responsibility of at least $750,000. 49 U.S.C. § 31139(b); 49 C.F.R. §§ 387.1, 387.7. A Form MCS–90 Endorsement is one way for a motor carrier to establish its compliance with the financial responsibility requirements. 49 C.F.R. § 387.7(d).

 

The Endorsement appended to the Policy provides that “the insurer [Park] agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured [Sav–On] for public liability [defined to include “liability for bodily injury, property damage”] 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 ….“ (emphasis added). The parties do not dispute that the tractor-trailer involved in the Accident is a “motor vehicle” subject to the MCA.

 

The parties agree that the only issue is whether Sav–On was a “motor carrier” under the MCA. But see Shropshire v. Shaneyfelt, No. 12 Civ. 1657, 2013 WL 3666353, at *4 (W.D.Pa. July 12, 2013) (stating that “the Court is not aware of any binding precedent that requires that the Court definitively rule that [the insured] was/was not a ‘for-hire motor carrier’ “ in determining whether an MCS–90 endorsement applies). The MCA defines “motor carrier” as “a person providing motor vehicle transportation for compensation.” 49 U.S.C. § 13102(14). Federal regulations promulgated pursuant to the MCA define “motor carrier” as a “for-hire motor carrier or a private motor carrier” and provide that a motor carrier includes “a motor carrier’s agent, officer, or representative.” 49 C.F.R. § 387.5.

 

Because at the time of the Accident, Sav–On was the owner of a motor vehicle that transported property in interstate commerce, and Sav–On received compensation for that transport, Sav–On was a motor carrier for purposes of the MCA. See Herrod v. Wilshire Ins. Co., 499 F. App’x 753,760 (10th Cir.2012) (citing 49 C.F.R. § 387 .5 in explaining that the central inquiry in determining whether an entity is a motor carrier under the MCA is whether it received compensation for transporting goods or property across state lines).

 

*5 Case law interpreting the MCS–90 requirement under the MCA provides further support for this conclusion. “[T]he MCA and the regulations promulgated pursuant thereto … were designed to stem the unregulated use of non-owned [i.e. leased] vehicles that threatened both public safety and the vitality of the trucking industry.” Integral Ins. Co. v. Lawrence Fulbright Trucking, Inc ., 930 F.2d 258, 261 (2d Cir.1991). In Integral, the Second Circuit held that “when a judgment is entered against the owner of a motor vehicle insured under an MCS–90 endorsement, the insurer is obligated to indemnify, even when the judgment is based on a theory of vicarious liability.” Id. at 262. Like the insurer in Integral, Park is liable on the Endorsement for any judgment entered against Sav–On, which is the insured under the Endorsement.

 

For the MCA’s requirements to apply, the statute does not appear to require that the insured operate as a “motor carrier” with respect to certain “motor vehicles” or even for the particular time at issue. Some courts construing the statute, however, have read these additional requirements into the statue. See, e.g., Herrod, 499 F. App’x at 759 (“[I]n order to determine whether [an] MCS–90 endorsement applies, it must be determined initially whether [the insured] was operating as a for-hire motor carrier at the time of the accident.”); Del Real v. U.S. Fire Ins. Crum & Forster, 64 F.Supp.2d 958, 965 n. 9 (E.D.Cal.1998) (implying that for an MCS–90 endorsement to apply, the insured must be a motor carrier as to the particular motor vehicle at issue). For example, the court in Shropshire, relying on Integral, concluded that a lessor who owns the motor vehicle in question; knows that the motor vehicle will be used in interstate transport; and has that motor vehicle registered in its name is liable under an MCS–90 endorsement as a “for-hire motor carrier” under the MCA.2013 WL 3666353, *4.

 

Like the insured vehicle-owners in Integral and Shropshire, Sav–On owned the tractortrailer in question and “leased [it] … for use in transporting goods in interstate commerce.” Id. Further, at the time of the Accident, Sav–On was receiving direct compensation from Margiotta for such transportation. Accordingly, based on the holdings in Integral and Shropshire, the Endorsement applies, and Park is liable to provide coverage under it.

 

Park’s reliance on Del Real v. U.S. Fire Insurance Crum & Forster in urging a contrary conclusion is misplaced for two reasons. First, Del Real’ s limited holding has no application here. The court in Del Real held that where plaintiffs have offered “no contrary evidence” to disturb the conclusion that a defendant “is an equipment lessor of trailers, and not a for-hire motor carrier,” the defendant was not a motor carrier for the purposes of the MCA. 64 F.Supp.2d at 965. As the other case Park relies on, Castro v. Budget Rent–A–Car Sys., Inc., clarifies, Del Real stands for the limited proposition that where “there was a lease agreement between [lessor and lessee], nothing more,” the lessor is not a motor carrier for purposes of the MCA. 154 Cal.App. 4th 1162, 1176 (2007). Here, the relationship between Sav–On and Eco was much more than that of lessor and lessee. Sav–On maintained close control over Eco’s operations of the vehicle. Sav–On provided cash advances and general financing for any upkeep of the vehicle. Sav–On, and not Eco, received direct payment for the vehicle’s transportation services.

 

*6 Second, here, unlike in Del Real, there is no explanation for why Sav–On carried the Endorsement unless it was acting as a motor carrier. The lessor of the motor vehicle in Del Real had an MCS–90 endorsement “only because [it] maintain[ed] D.O.T. licenses” for other vehicles that were not implicated in the case. 64 F.Supp.2d at 965 n. 9. Here, by contrast, Sav–On had no reason, and refused to provide any at trial, for carrying an MCA-compliant Endorsement unless it was acting as a motor carrier. Indeed, by Hom’s own testimony, Sav–On maintained all the insurance requirements for the tractor-trailer at issue, which, as discussed above, necessarily included the Endorsement.

 

Accordingly, the Endorsement applies.

 

 

IV. CONCLUSION

For the reasons discussed above, Park is liable for any judgment against Sav–On under the Endorsement. No later than April 14, 2015, Park shall file a motion for discharge with a proposed form of order (a courtesy copy of which should be sent in Word format to the Court’s chambers email address) or the parties shall file a joint letter informing the Court of how they wish to proceed with the case.

 

SO ORDERED.