2021 WL 1950037

United States District Court, N.D. Texas, Fort Worth Division.
LIBERTY INSURANCE CORPORATION, Plaintiff,
v.
ARCH INSURANCE COMPANY, ET AL., Defendants.
NO. 4:20-CV-098-A
|
Filed 05/14/2021

MEMORANDUM OPINION AND ORDER
JOHN McBRYDE United States District Judge
*1 Came on for consideration the motion of defendant TIG Insurance Company (“TIG”) for summary judgment. The court, having considered the motion, the responses of plaintiff, Liberty Insurance Corporation, and third-party defendant, M.A. Mortenson Companies, Inc. (“Mortenson”), the replies, the record, and applicable authorities, finds as follows:

I. Underlying Facts
The record establishes the following undisputed facts:

On March 19, 2012, Mortenson and L.O. Transport, Inc. (“L.O.”), entered into a subcontract agreement pursuant to which L.O. agreed to perform aggregate hauling for Mortenson, which was the contractor for construction of Bobcat Bluff Wind Project in Archer County, Texas. Doc.1 80 at 1-45. The agreement provided in pertinent part as to insurance:
16.1 Prior to starting the Work, [L.O.] shall procure, maintain and pay for such insurance as will protect against claims for bodily injury or death, or for damage to property, including loss of use, which may arise out of operations by [L.O.] or by any of its subcontractors or by anyone employed by any of them, or by anyone for whose acts any of them may be liable….
16.2 [L.O.] shall procure and maintain the following minimum insurance coverages and limits of liability:
…
Commercial General Liability
$2,000,000 each occurrence
$2,000,000 aggregate (applicable on a per project basis)
…
Automobile liability $2,000,000 each accident
…
16.4 [L.O.] shall endorse its Commercial General Liability [and] Automobile Liability … policies to add Mortenson [and others] as “additional insureds” with respect to liability arising out of (a) operations performed for Mortenson or Owner by or for [L.O.], (b) [L.O.’s] completed Work, (c) acts or omissions of Mortenson or Owner in connection with their general supervision of operations by or for [L.O.], (d) [L.O.’s] use of Mortenson’s tools and equipment, and (e) claims for bodily injury or death brought against any of the additional insured by [L.O.’s] employees, or the employees of its subcontractors of any tier, however caused, related to the performance of operations under the Contract Documents. Such insurance afforded to Mortenson, Owner and others as additional insureds under [L.O.’s] policies shall be primary insurance and not excess over, or contributing with, any insurance purchased or maintained by Mortenson or Owner or others required to be included as additional insureds.
…
Id. at 20-21. Further, the subcontract agreement provided as to indemnity:
17.1 To the fullest extent permitted by law, [L.O.] shall defend and indemnify Mortenson and all others whom Mortenson is obligated to defend and indemnify by the Contract Documents, (collectively, “the indemnified parties”) from and against any and all suits or claims alleging damages, losses and expenses, including attorneys’ fees, attributable to injuries to persons or damage to property (including loss of use), arising out of or resulting from [L.O.’s] Work, including all suits and claims for which any or all of the indemnified parties may be or may be claimed to be liable, and including all suits and claims that arise during and after construction of the Project. [L.O.] understands and agrees that this Paragraph obligates [L.O.] to do defend and indemnify the indemnified parties from all suits and claims that allege negligence or other wrongful conduct on the part of the indemnified parties, and to pay all costs of defense of the indemnified parties, including attorneys fees and ancillary costs and expenses incurred by the indemnified parties…
*2 17.2 [L.O.] further agrees to obtain, maintain and pay for commercial general liability insurance which conforms to Article 16 …
17.3 [L.O.] understands and agrees to undertake these obligations regardless of whether the injured person asserting a suit or claim is an employee of [L.O.], its subcontractors, anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable….
Id. at 21, 24.

TIG is the successor by merger to American Safety Indemnity Company (“ASIC”), which issued two policies to L.O. as its insured: Commercial General Liability Policy (Occurrence), Policy No. ENV024057-11-03, effective from November 7, 2011 to November 7, 2012 (the “ASIC CGL policy”), Doc. 80 at 124-80, and Commercial Excess Liability (Limited Umbrella) Insurance (Occurrence), Policy No. ENU024060-11-03, effective from November 7, 2011 to November 7, 2012 (the “ASIC excess policy”). Id. at 182-209 (together “the ASIC policies”). In addition, defendant Arch Insurance Company (“Arch”) issued its Policy No. HOPKG0042200 to L.O., effective November 7, 2011, to November 7, 2012. Doc. 19 at 2, ¶ 9. The Arch policy included a Commercial Auto Coverage Part.2 Id.

On April 11, 2014, James M. Shelton (“Shelton”) filed a first amended petition against Mortenson and others in Cause No. CV14-04-241 in the 271st Judicial District Court of Wise County, Texas (the “underlying lawsuit”). In it, Shelton alleged that on or about April 12, 2012, he was driving an 18 wheeler tractor-trailer combination with a full load of gravel on Bell Road in Archer County when two other empty tractor-trailers headed in the opposite direction failed to yield the right of way to him, forcing Shelton to run off the road to avoid a head-on collision. Shelton’s truck rolled into a ditch on the side of the road and he sustained severe injuries. Doc. 80 at 50-60. Shelton asserted causes of action for negligence, negligent hiring, negligent entrustment, negligent supervision, and gross negligence against Mortenson. He did not name L.O. as a defendant. Id. In his third amended petition filed April 9, 2015, Shelton added an allegation that the manner in which Bell Road was widened, constructed, maintained, and/or modified by Mortenson for the Bobcat Bluff Wind Project was also a proximate cause of his truck rolling. Id. at 66.

In May 2014, Mortenson placed its commercial general liability carrier, plaintiff, on notice of the underlying lawsuit. Doc. 80 at 95. Plaintiff undertook the defense of Mortenson in the underlying lawsuit. Id. at 1-45. By letter dated June 3, 2016, plaintiff made demand on L.O. to reimburse it for defense costs of the underlying lawsuit. Doc. 90 at 37. L.O. apparently forwarded Mortenson’s demand to Arch, which, by letter dated September 23, 2016, denied coverage under its policy. Id. at 94-103.

On February 13, 2017, Mortenson filed suit against L.O. under Cause No. CV17-02-130 in the District Court of Wise County, Texas, 271st Judicial District, for breach of contract arising out of the failure of L.O. to defend Mortenson in the underlying lawsuit. Doc. 90 at 197-253. On November 1, 2018, L.O. filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code, which was assigned Case No. 18-52579-cag in the United States Bankruptcy Court for the Western District of Texas, San Antonio Division. Mortenson did not make an appearance in the bankruptcy case.

*3 The underlying lawsuit was tried in July 2019 and the jury returned a verdict against Mortenson. Doc. 80 at 101. The final judgment was signed August 27, 2019.3 Id. at 102. Mortenson appealed and the appeal is currently pending under Case No. 02-19-00435-CV in the Court of Appeals for the Second District, Fort Worth, Texas.

On August 13 or 15, 2019, L.O. tendered the defense of Cause No. CV17-02-130, the contractual indemnification claim, to TIG’S predecessor, ASIC. Doc. 80 at 122; Doc. 90 at 259. By letter dated November 19, 2019, ASIC denied the claim. Doc. 90 at 258-71.

On February 5, 2020, plaintiff filed its complaint in this action. Doc. 1. Plaintiff seeks defense and indemnity of Mortenson in the underlying lawsuit as an additional insured under the ASIC policies. It also seeks to recover as contractual indemnitee under the subcontractor agreement between Mortenson and L.O., saying that it is subrogated to that right. This lawsuit was the first notice TIG received that Mortenson sought defense and indemnification in the underlying lawsuit as an additional insured under the ASIC policies. Doc. 80 at 122.

II. Grounds of the Motion
TIG asserts three grounds in support of its motion. Doc. 79. First, TIG has no duty to defend or indemnify Mortenson as an additional insured under the ASIC policies due to Mortenson’s and plaintiff’s material breach of the policies’ notice provisions. Second, coverage is excluded by the ASIC CGL policy’s auto exclusion. And, third, Mortenson is not an insured under the ASIC excess policy.

III. Analysis

A. Failure to Give Notice
In its first ground, TIG urges that it has no duty to defend or indemnify Mortenson as an additional insured under the ASIC policies because plaintiff and Mortenson materially breached the policies’ notice provisions by failing to give notice of demand for defense and indemnity until five months after the final judgment was entered in the underlying lawsuit. The ASIC CGL policy provides that notice of an occurrence, claim or suit must be given to the insurer “as soon as practicable” and that the insured must “immediately” send copies of any demands, notices, summonses or legal papers received. Doc. 80 at 138. The ASIC excess policy requires that the insurer be notified “promptly” of an occurrence or offense (which may result in a claim), claim or suit. Id. at 192-93.

When a commercial general liability insurance policy requires notice of a claim or suit “as soon as practicable,” the failure to give such notice defeats coverage if the insurer was prejudiced by the delay. PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630, 636-37 (Tex. 2008). Texas courts have recognized that prejudice occurs as a matter of law when: (1) the insurer, without notice or actual knowledge of a suit, receives notice after entry of default against the insured; (2) the insurer receives notice of the suit and the trial date is fast approaching, thereby depriving it of an opportunity to investigate or mount an adequate defense; (3) the insurer receives notice of a lawsuit after the case has proceeded to trial and judgment has been entered against the insured; or (4) the insurer receives notice of a default judgment against its insured after the judgment becomes final and nonappealable. St. Paul Guardian Ins. Co. v. Centrum G.S. Ltd., 383 F. Supp. 2d 891, 903 (N.D. Tex. 2003) (citing numerous Texas cases). The insurer has no duty to notify the insured of coverage and no duty to defend until the insured notifies the insurer that it has been served with process and expects the insurer to defend. Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Crocker, 246 S.W.3d 603, 609 (Tex. 2008); Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 173-74 (Tex. 1995). Once the case is over–that is, the jury has returned its verdict–notice is clearly too late. Berkley Reg’l Ins. Co. v. Philadephia Indem. Ins. Co., 690 F.3d 342, 350-51 (5th Cir. 2012). See also Berkley Reg’l Ins. Co. v. Philadelphia Indem. Ins. Co., 600 F. App’x 230, 237 (5th Cir. 2015); Jamestown Ins. Co., RRG v. Reeder, 508 F. App’x 306, 309 (5th Cir. 2013). The cows have long since left the barn. Berkley, 690 F.3d at 351 (noting that the argument that the insurer could still participate in the appeal rang hollow).4

*4 In this case, the summary judgment evidence establishes that the underlying lawsuit was filed against Mortenson on April 11, 2014. Mortenson gave notice to plaintiff in May 2014 and plaintiff undertook Mortenson’s defense. The jury returned its verdict on July 19, 2019. Final judgment was signed August 27, 2019. TIG was not placed on notice of any claim for the defense and indemnification of Mortenson as an additional insured in the underlying lawsuit until February 7, 2020, when it received plaintiff’s complaint in this action. That notice was clearly untimely and prejudicial to TIG as a matter of law.5

That L.O. tendered the underlying lawsuit to TIG for defense and indemnity on August 15, 2019, did not impose any duty on TIG to defend or indemnify Mortenson. Crocker, 246 S.W.3d at 609. TIG was not obligated to act unless and until Mortenson made demand on it. Id. And, contrary to Mortenson’s argument, there is no probative summary judgment evidence to support the allegation that TIG knew at any time before the filing of this lawsuit that Mortenson was demanding defense and indemnity of the underlying lawsuit as an insured under the ASIC policies.6

Mortenson finally argues that it is excused from giving timely notice to TIG because it did not know about the ASIC policies. Doc. 89 at 13. The case upon which it relies does not support its position. In Century Sur. & Ins. Corp. v. Anderson, 446 S.W.2d 897 (Tex. App.–Fort Worth 1969, no writ), a grandchild was badly burned by acts of negligence of the grandmother. Suit was brought on behalf of the grandchild. The grandparents were incorrectly told by the bank that was trustee for a trust that covered the premises where they resided that there was no insurance. They hired an attorney to see about the possibility of removing the bank as trustee given its failure to obtain insurance and he immediately determined that the policy existed and made demand for defense and indemnity on the insurance company. At the time of the demand, the suit by the grandchild had never been tried and was still pending. The court reviewed a number of cases and determined that under the facts and circumstances of that case, notice had been given as soon as practicable.

Here, Mortenson has not shown that it acted with diligence in seeking to determine whether L.O. had obtained the insurance required pursuant to the subcontract agreement between them. L.O. was required to provide certificates of insurance to Mortenson prior to beginning work. Doc. 80 at 21, ¶ 16.6. Mortenson apparently chose to ignore the matter until after the verdict in the underlying lawsuit. Information regarding L.O.’s insurance policies should have been obtained long before the verdict and long before L.O. filed bankruptcy. Mortenson has not cited any authority to support the proposition that repeatedly tendering the underlying lawsuit to L.O. constitutes diligence.7

B. The CGL Policy’s Auto Exclusion
*5 In its second ground, TIG argues that even if the court were to determine that it was not prejudiced by the lack of notice of the claim, the ASIC CGL policy’s auto exclusion would preclude coverage for Mortenson. The ASIC CGL policy had limits of liability of $1,000,000 per occurrence and $2,000,000 in the general aggregate with a $2,500 deductible per occurrence. Doc. 80 at 124. It contained an exclusion for bodily injury “arising out of the ownership, maintenance, use or entrustment to others of any [auto] owned or operated by or rented or loaned to any insured. Use includes operation and ‘loading or unloading.’ ” Id. at 132.

In this case, it is clear that Shelton’s injuries arose out of the use of an “auto” under the ASIC CGL policy since it was a tractor-trailer designed for travel on public roads. Doc. 80 at 65, 140. And, Mortenson has admitted that Shelton was employed by L.O. as a truck driver and was acting in that capacity when the facts giving rise to the underlying lawsuit occurred. Doc. 89 at 5; Doc. 90 at 199. That the bodily injury arose out of the operation of the vehicle by L.O. through Shelton is not an extrinsic fact but the very basis for the underlying lawsuit and for potential insurance coverage under the ASIC policies. Clearly, coverage is excluded.

Mortenson argues that establishing the exclusion would violate the eight corners rule, pursuant to which an insurer’s duty to defend is determined by an analysis of the pleadings and the policy. Doc. 89 at 15 (citing GuideOne Elite Ins. Co. v. Fielder Road Baptist Church, 197 S.W.3d 305 (Tex. 2006)). As Mortenson admits, however, the pleadings in the underlying lawsuit do not include any factual allegation that Shelton was employed by an insured. In fact, L.O. is not named in the underlying lawsuit. Id. at 16. But, unless L.O. was somehow involved, there could be no insurance coverage. An exception to the eight corners rule applies because extrinsic evidence is relevant to the determination of coverage only, not to liability in the underlying lawsuit. GuideOne, 197 S.W.3d at 309-09 & nn. 1 & 2. That Mortenson recognizes this to be the case is implicit in its demand to L.O. for defense and indemnity:
The facts and allegations in this case fall squarely within the ambit of LO Tranport’s defense and indemnity obligation. James Shelton was employed by LO Transport and contends that he was injured in the course and scope of that employment on April 12, 2012 in connection with work LO Transport was performing for Mortenson. …
Doc. 90 at 37. Shelton was injured when the truck he was driving for L.O. overturned. The fact that gives rise to potential insurance coverage is that Shelton was driving for L.O. at the time of the accident. And, that same fact establishes that the auto exclusion applies.

C. The ASIC Excess Policy
Finally, TIG argues that Mortenson is not a named insured under the ASIC excess policy. Under pertinent provisions of that policy, the word “insured” means any person or organization qualifying as such under Section II-Who Is An Insured. Doc. 80 at 187. Section II in turn provides:
1. If you are designated in the Declarations as:
…
c. An organization other than a partnership or joint venture, you are an insured. …
2. Each of the following is also an insured:
a. As respects the “auto hazard”:
(1) Anyone using an “auto” you own, hire or borrow provided it is with your permission; and
(2) Any of your executive officers, directors, partners or employees operating an “auto” you do not own, hire, or borrow while it is being used in your business.
…
No person or organization is an insured with respect to the conduct of any current or past partnership or joint venture that is not shown as a Named Insured in the Declarations or an Additional Named Insured listed by endorsement to the policy.
*6 Id. at 191.

Mortenson is not designated in the Declarations section of the ASIC excess policy as an insured. Nor does the ASIC excess policy contain any endorsement identifying Mortenson as an additional insured. Doc. 80 at 182-209. Further, Mortenson does not fall within the definition of “additional insured.” Id. at 195. Neither Mortenson nor plaintiff has raised a genuine issue of material fact as to this issue and TIG is entitled to judgment as a matter of law.

D. Indemnity
Mortenson argues that TIG is not entitled to summary judgment as to all of the claims asserted in this lawsuit because it fails to address whether Mortenson is entitled to contractual indemnity from L.O., which it alleges would be covered by the ASIC policies. But neither plaintiff nor Mortenson has standing to bring an action against TIG on that basis, because L.O.’s liability to Mortenson has not been determined. Ohio Cas. Ins. Co. v. Time Warner Ent. Co., L.P., 244 S.W.3d 885, 888 (Tex. App.–Dallas 2008, pet. denied) (Texas is not a direct action state).

Mortenson also argues that determination of TIG’S duty to indemnify Mortenson is premature because the underlying lawsuit is on appeal. Doc. 89 at 9-10. In this case, however, TIG has established that there is no insurance coverage under the ASIC policies. If there is no coverage, there can be no duty to defend or indemnify. See Farmers Tex. Cnty. Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 84 (Tex. 1997).

IV. Order
The court ORDERS that TIG’S motion for summary judgment be, and is hereby, granted; that plaintiff and Mortenson take nothing on their claims against TIG; and that such claims be, and are hereby, dismissed with prejudice.

All Citations
Slip Copy, 2021 WL 1950037

Footnotes

1
The “Doc. ___” reference is to the number of the item on the docket in this action.

2
Plaintiff’s claims against Arch have been dismissed without prejudice, Doc. 82, and that dismissal has been made final. Doc. 83.

3
The judgment included $510, 153.51 for past damages; $510, 153.51 prejudgment interest; and $5,264,619,10 for future damages. Doc. 80 at 102.

4
To the extent Mortenson appears to argue that TIG has a duty at this point to pursue the appeal of the underlying action on its behalf, the case it cites does not stand for that proposition. Doc. 89 at 12 (citing Associated Auto. Inc. v. Acceptance Indem. Ins. Co., 705 F. Supp. 2d 714, 723-24 (S.D. Tex. 2010)). And, if it did, it would be inconsistent with the Fifth Circuit’s holding in Berkley Reg’l Ins. Co. v. Philadelphia Indem. Ins. Co., 590 F.3d 342 (5th Cir. 2012).

5
The contention that TIG would not have been harmed because it would have denied coverage had Mortenson made a demand for defense and indemnity is not supported by the record. This is not a case like Sentry Select Ins. Co. v. Lopez, No. EP-14-CV-284-KC, 2016 WL 4257751, at *9 (W.D. Tex. Mar. 18, 2016), where there was undisputed evidence that the insurer knew about the lawsuit, conducted its own independent investigation, and determined that it would have denied a defense even had demand been made.

6
The documents to which Mortenson refers are unauthenticated and confusing. For example, Mortenson alleges that Exhibit I is a communication with TIG’s agent, but there is nothing to show who the agent is or by what authority it is acting. In any event, the document attaches a copy of the petition in No. CV1 7-02-130, the suit by Mortenson seeking contractual indemnity from L.O. That document does not constitute notice to TIG that Mortenson seeks defense and indemnity in the underlying lawsuit as an additional insured under the ASIC policies. Nor do the others to which it refers. Doc. 89 at 7 (citing Exs. K, L, & M).

7
There is no support for Mortenson’s representation that it tendered the underlying lawsuit to L.O. “with the understanding that they would provide information about the policies.” Doc. 89 at 14. In any event, demand on L.O. is not demand on TIG.

2021 WL 1747897

Court of Appeals of Indiana.
PROGRESSIVE SOUTHEASTERN INSURANCE COMPANY, Appellant-Plaintiff,
v.
B&T BULK LLC, Bruce A. Brown, Robin S. Johnson, as Personal Representative of the Estate of Dona S. Johnson, and Robin S. Johnson, Individually, Appellees-Defendants,
and
State Farm Mutual Automobile Insurance Company, Appellee-Intervenor
Court of Appeals Case No. 20A-CT-1765
|
FILED May 4, 2021
Appeal from the Carroll Circuit Court, The Honorable Benjamin A. Diener, Judge, Trial Court Cause No. 08C01-1811-CT-13
Attorneys and Law Firms
Attorneys for Appellant: Janet G. Horvath, J. Thomas Vetne, Jones Obenchain, LLP, South Bend, Indiana
Attorney for Appellees B&T Bulk LLC and Bruce A. Brown: Tracey S. Schafer, Anderson, Agostino & Keller, P.C., South Bend, Indiana
Attorneys for Appellee Robin S. Johnson: R.T. Green, Collin W. Green, Letha A. Maier, Blackburn & Green, Indianapolis, Indiana
Attorney for Appellee State Farm: Lizabeth R. Hopkins, Kopka Pinkus Dolin PC, Crown Point, Indiana

Vaidik, Judge.

Case Summary
*1 [1] In 2017, an employee of an Indiana trucking company was on his way to pick up a load in Logansport when he crossed a median and collided with a car, killing the driver. Although the truck was not listed under the trucking company’s insurance policy, the policy included an MCS-90 endorsement, which the federal Motor Carrier Act requires interstate motor carriers to have and which provides coverage for claims resulting from the negligent operation of a truck even if the truck is not specifically listed under the company’s insurance policy. The parties filed cross-motions for summary judgment as to whether the MCS-90 endorsement applies, and the trial court found it does.

[2] On appeal, the insurance company makes two arguments that the MCS-90 endorsement doesn’t apply: (1) the truck driver was on an intrastate—not interstate—trip at the time of the accident and (2) the truck wasn’t carrying any property at the time of the accident. As for (1), even though the majority of courts have held the MCS-90 endorsement only applies to the interstate transportation of property under the federal Motor Carrier Act, Indiana Code section 8-2.1-24-18(a) applies this requirement to intrastate transportation. As for (2), we find the MCS-90 endorsement applies when a truck, although empty, is on its way to pick up a load. We therefore affirm the trial court.

Facts and Procedural History
[3] B&T Bulk LLC is a Mishawaka-based motor carrier that hauls bulk cement in Indiana and Michigan. It is a registered interstate motor carrier operating under “U.S. DOT # 676788.” Appellant’s App. Vol. III p. 186. In 2017, B&T had a commercial auto policy (“the policy”) with Progressive Southeastern Insurance Company that covered specifically listed motor vehicles in its fleet. The policy included an MCS-90 endorsement, which the federal Motor Carrier Act of 1980 requires motor carriers to have. See Markel Ins. Co. v. Rau, 954 F.3d 1012, 1017 (7th Cir. 2020); Carolina Cas. Ins. Co. v. E.C. Trucking, 396 F.3d 837, 841 (7th Cir. 2005); Prime Ins. Co. v. Wright, 133 N.E.3d 749, 752 n.3 (Ind. Ct. App. 2019), trans. denied; see also 49 U.S.C. § 31139(b); 49 C.F.R. §§ 387.7(a), 387.9, 387.15. The primary purpose of an MCS-90 endorsement is “to assure that motor carriers maintain an appropriate level of financial responsibility for motor vehicles operated on public highways.” 49 C.F.R. § 387.1; see also John Deere Ins. Co. v. Nueva, 229 F.3d 853, 857 (9th Cir. 2000) (“[T]he primary purpose of the MCS-90 is to assure that injured members of the public are able to obtain judgment from negligent authorized interstate carriers.”). The endorsement provides coverage for claims resulting from the negligent operation of a commercial vehicle even if the negligently driven vehicle is not specifically listed under the motor carrier’s insurance policy. Rau, 954 F.3d at 1017. The minimum level of financial responsibility for motor carriers of nonhazardous property is $750,000. 49 U.S.C. § 31139(b); 49 C.F.R. § 387.9.

*2 [4] Here, the “Form MCS-90 Endorsement,” which provides $750,000 in coverage, provides:
The insurance policy to which this endorsement is attached provides automobile liability insurance and is amended to assure compliance by the insured, within the limits stated herein, as a motor carrier of property, with Sections 29 and 30 of the Motor Carrier Act of 1980 and the rules and regulations of the Federal Motor Carrier Safety Administration (FMSCA).
In consideration of the premium stated in the policy to which this endorsement is attached, the insurer (the company) agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured 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…. However, all 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 company. The insured agrees to reimburse the company for any payment made by the company on account of any accident, claim, or suit involving a breach of the terms of the policy, and 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.
Appellant’s App. Vol. II pp. 147-48.

[5] On December 4, B&T sent its employee Bruce A. Brown to pick up a load of cement from Lehigh Cement in Logansport and deliver it to Kuert Concrete in South Bend. Brown drove a semi-truck and trailer (which was empty at the time) that were owned by B&T but not listed on the policy. Before arriving at Lehigh, Brown crossed a median on State Road 25 in Logansport and collided with a car driven by Dona S. Johnson, killing her. Because of the accident, B&T was subject to a Federal Motor Carrier Safety Administration (FMCSA) inspection. See Appellant’s App. Vol. III pp. 186-87, 190, 225-26.

[6] In July 2018, Dona’s husband, Robin S. Johnson, individually and on behalf of Dona’s estate (collectively, “Dona’s estate”), filed a wrongful-death complaint against B&T and Brown (collectively, “B&T”) in Cass Superior Court. See Cause No. 09D02-1807-CT-22. B&T asked Progressive to defend and indemnify it. After a coverage investigation, Progressive filed an amended complaint for declaratory judgment in Carroll Circuit Court in January 2019, asking the trial court to declare (1) Progressive had no duty to defend or indemnify B&T “in any lawsuit arising out of the December 4, 2017 accident” since the semi-truck and trailer were not listed on the policy (and therefore not insured) and (2) “Progressive’s exposure is limited to the extent the MCS-90 endorsement applies to the December 4, 2017 accident.” Appellant’s App. Vol. II p. 23.

*3 [7] In November 2019, Progressive moved for summary judgment, arguing it had no duty to defend or indemnify B&T and the MCS-90 endorsement did not apply. The next month, State Farm Mutual Automobile Insurance Company sought to intervene. Specifically, State Farm alleged it had insured Dona at the time of the accident and had made “certain payments for medical care and property damage as a result of the December 4, 2017 accident” and “certain payments for uninsured motorist benefits to [Dona’s estate] which were made based upon the denial of coverage by Progressive, and are being held in trust until the resolution of this action.” Appellee’s App. Vol. II p. 4. The trial court allowed State Farm to intervene.

[8] In March 2020, Dona’s estate and B&T filed cross-motions for summary judgment. State Farm joined Dona’s estate’s motion. Following a hearing in August, the trial court determined Progressive had no duty to defend or indemnify B&T but that the MCS-90 endorsement applied.

[9] Progressive appeals the trial court’s determination that the MCS-90 endorsement applies. Dona’s estate, B&T, and State Farm (collectively, “the Appellees”) do not appeal the trial court’s determination that Progressive has no duty to defend or indemnify B&T.

Discussion and Decision
[10] We review motions for summary judgment de novo, applying the same standard as the trial court. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). That is, “The judgment sought shall be rendered forthwith if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Ind. Trial Rule 56(C).

I. Interstate vs. Intrastate
[11] Progressive first argues the MCS-90 endorsement only applies to the interstate transportation of property and because Brown was on an intrastate trip at the time of the accident, there is no coverage. Section 30 of the Motor Carrier Act is codified at 49 U.S.C. § 31139, which provides:
(1) The Secretary of Transportation shall prescribe regulations to require minimum levels of financial responsibility sufficient to satisfy liability amounts established by the Secretary covering public liability, property damage, and environmental restoration for the transportation of property by motor carrier or motor private carrier (as such terms are defined in section 13102 of this title) in the United States between a place in a State and–
(A) a place in another State;
(B) another place in the same State through a place outside of that State; or
(C) a place outside the United States.
(Emphasis added); see also 49 C.F.R. § 387.3(a) (“This subpart applies to for-hire motor carriers operating motor vehicles transporting property in interstate or foreign commerce.” (emphasis added)).1

[12] “There is a split of authority as to whether the MCS-90 endorsement applies to intrastate accidents.” 1 William J. Schermer & Irvin E. Schermer, Automobile Liability Insurance, § 2:15 (Nov. 2020 update); see also Michael J. Leizerman, Litigating Truck Accident Cases, § 3:9 (Dec. 2020 update). However, most courts–including the federal circuit courts that have addressed the issue—have held the MCS-90 endorsement does not apply to accidents that occur during a purely intrastate trip. Under this approach, called the trip-specific approach, “the [MCS-90] endorsement covers vehicles only when they are presently engaged in the transportation of property in interstate commerce.” Canal Ins. Co. v. Coleman, 625 F.3d 244, 249 (5th Cir. 2010) (emphasis added); see also Lyons v. Lancer Ins. Co., 681 F.3d 50, 60 (2d Cir. 2012) (concluding an MCS-90 endorsement did not apply because “the accident occurred on [a] trip that was wholly intrastate” (emphasis added)); Martinez v. Empire Fire & Marine Ins. Co., 322 Conn. 47, 139 A.3d 611, 619 (2016) (“We are persuaded to follow the ‘trip-specific’ interpretation used by the Second Circuit in Lyons. It is consistent with the text of the MCS-90 endorsement and the statute and regulations governing that endorsement, and has been embraced by a majority of courts to consider the question.”); Automobile Liability Insurance, § 2.15 (collecting cases).

*4 [13] The Appellees respond that even if the MCS-90 endorsement only applies to the interstate transportation of property under the Motor Carrier Act, the Indiana General Assembly has applied the minimum levels of financial responsibility in 49 C.F.R. part 387 to intrastate transportation. Indiana Code section 8-2.1-24-18(a) provides, “49 CFR Parts 40, 375, 380, 382 through 387, 390 through 393, and 395 through 398 are incorporated into Indiana law by reference, and … must be complied with by an interstate and intrastate motor carrier of persons or property throughout Indiana.” (Emphases added).

[14] Whether our legislature has applied the federally required minimum levels of financial responsibility to intrastate transportation is an issue of first impression in this state. However, as the Appellees note, this Court addressed Section 18(a)’s incorporation of a different federal regulation into Indiana law by reference in Sandberg Trucking, Inc. v. Johnson, 76 N.E.3d 178 (Ind. Ct. App. 2017). There, a passenger in a car sued a trucking company, alleging its truck driver, who had stopped on the shoulder of an interstate after striking a deer, was negligent in failing to activate his emergency flashers as required by 49 C.F.R. § 392.22. The trucking company claimed 49 C.F.R. § 392.22 did not apply because the truck driver was not engaged in interstate commerce at the time of the accident. Id. at 182. On appeal, we assumed the truck driver was “engaged in exclusively intrastate commerce” and focused on Section 18(a), which incorporates 49 C.F.R. part 392 into Indiana law by reference and provides it “must be complied with by an interstate and intrastate motor carrier of persons or property throughout Indiana.” Id. at 187 (emphasis added). We held the legislature’s intent was to apply the regulation to intrastate motor carriers given its explicit inclusion of “intrastate” in the statute and that to hold otherwise would be absurd. Id. at 188.

[15] Progressive argues Sandberg Trucking is “inapposite” and doesn’t apply because it “addresses a motor carrier’s responsibilities, not the obligations of the motor carrier’s insurers, to provide coverage for liability arising from intrastate travel.” Appellant’s Reply Br. p. 9. However, unless an insurance contract provides otherwise, “all applicable law in force at the time the agreement is made impliedly forms a part of the agreement without any statement to that effect.” Cent. Mut. Ins. Co. v. Motorists Mut. Ins. Co., 23 N.E.3d 18, 22 (Ind. Ct. App. 2014), trans. denied; Westfield Cos. v. Knapp, 804 N.E.2d 1270, 1274 (Ind. Ct. App. 2004), trans. denied. Indeed, the policy in this case provides: “If any provision of this policy fails to conform to the statutes of the state listed on your application as your business location, the provision shall be deemed amended to conform to such statutes.” Appellant’s App. Vol. II p. 146. Accordingly, in order to write policies in Indiana, Progressive had to comply with Section 18(a)’s requirement that the minimum levels of financial responsibility in 49 C.F.R. part 387 apply to intrastate transportation.

[16] At oral argument, Progressive made an additional argument based on a notice of additional authorities it filed shortly before the argument. Specifically, Progressive cited Indiana Code section 8-2.1-24-17(a), which provides:
A person may not operate a motor vehicle for the transportation of property upon a public highway, and a motor carrier may not be certified, unless the motor carrier complies with the rules adopted by the [Indiana Department of Revenue] governing the filing and approval of surety bonds, policies of insurance, qualifications of a self-insurer, or other securities or agreements.
*5 According to Progressive, “Section 17 can’t be read as the General Assembly intending to adopt the federal requirements because the General Assembly has instructed the Indiana Department of Revenue to rule make in the same area for intrastate commerce that Part 387 has already covered.” Oral Arg. Video at 13:20-13:42.

[17] Progressive, however, did not cite Section 17 or make this argument in its appellant’s brief. See Oral Arg. Video at 46:12-46:22 (B&T’s attorney explaining she didn’t “delve” into this issue because Progressive didn’t brief it). Indiana Appellate Rule 48 provides:
When pertinent and significant authorities come to the attention of a party after the party’s brief or Petition has been filed, or after oral argument but before decision, a party may promptly file with the Clerk a notice of those authorities setting forth the citations. There shall be a reference either to the page of the brief or to a point argued orally to which the citations pertain, with a parenthetical or a single sentence explaining the authority.
As this Court has explained, Appellate Rule 48 does not mean a party may present an argument that was available but not presented in their appellant’s brief simply by filing a notice of additional authority. Chupp v. State, 830 N.E.2d 119, 126 (Ind. Ct. App. 2005). This is because an issue not raised in an appellant’s brief may not be raised for the first time in a reply brief. Id. (citing James v. State, 716 N.E.2d 935, 940 n.5 (Ind. 1999)). Accordingly, Appellate Rule 48 does not allow “a party who failed to present an issue in his appellant’s brief to bypass the general rule that un-raised issues may not be presented for the first time in a reply brief by filing a citation to additional authority.” Id. Instead, “where a party has properly presented an issue, he may supplement his brief by providing citations to additional authority to support the argument previously raised.” Id. Because Progressive did not make this argument in its appellant’s brief, it has waived the issue.

[18] Waiver notwithstanding, even though Section 17 requires motor carriers to comply “with the rules adopted by the [Indiana Department of Revenue] governing the filing and approval of surety bonds, policies of insurance, qualifications of a self-insurer, or other securities or agreements,” the Department of Revenue must regulate within the confines of Section 18(a), which requires that the minimum levels of financial responsibility in 49 C.F.R. part 387 apply to intrastate transportation. Indeed, 45 Indiana Administrative Code 16-1-2, which Progressive also cited in its notice of additional authorities, confirms that the Department of Revenue did just that:
(a) General Filing Requirements. Every common and contract carrier of passengers and/or property for hire by motor vehicle over the highways of the state of Indiana, in intrastate and/or interstate commerce shall, subject to the approval of the [Public Service Commission of Indiana], file with and keep in effect and on file Uniform Motor Carrier Bodily Injury and Property Damage Liability Certificate of Insurance (commonly known as Form E Indiana) covering public liability, property damage, loss to cargo subject to the exceptions and minimum amounts hereinafter set out.
(b) Public Liability and Property Damage Coverage. The minimum amounts for public liability and property damage coverage shall be those contained in Title 49, Code of Federal Regulations, Part 387.
*6 (Emphases added). According to this regulation, an intrastate motor carrier must have public-liability coverage in the minimum amounts set forth in 49 C.F.R. part 387. And for nonhazardous property, that amount is $750,000. See 49 C.F.R. § 387.9. Contrary to Progressive’s argument, this regulation is consistent with the legislature’s intent in Section 18(a) that the minimum levels of financial responsibility in 49 C.F.R. part 387 apply to intrastate transportation. As in Sandberg Trucking, we hold the legislature’s intent was to apply the minimum levels of financial responsibility in 49 C.F.R. part 387 to intrastate motor carriers given its explicit inclusion of “intrastate” in the statutes.

II. Transportation of Property
[19] Progressive next argues the MCS-90 endorsement doesn’t apply because B&T “wasn’t transporting property” at the time of the accident. Appellant’s Br. p. 17. 49 U.S.C. § 13102(23) defines the term “transportation” as follows:
(A) a motor vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both, regardless of ownership or an agreement concerning use; and
(B) services related to that movement, including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.
(Emphasis added).

[20] The parties do not direct us to any cases addressing the specific facts of this case, and we can find none. Progressive, however, cites three cases it says are similar and therefore should apply here: (1) Canal Insurance Co. v. Coleman, 625 F.3d 244 (5th Cir. 2010), (2) Titan Indemnity Co. v. Gaitan Enterprises, Inc., 237 F. Supp. 3d 343 (D. Md. 2017), and (3) Brunson ex rel. Brunson v. Canal Insurance Co., 602 F. Supp. 2d 711, 716 (D.S.C. 2007). The Appellees, also relying on Titan, argue B&T was transporting property at the time of the accident because Brown was on his way to pick up a load of cement.

[21] In the first case, Coleman, an employee of a trucking company was returning home from work. As he backed his truck (which had no trailer attached) into his driveway, he collided with a car. The sole issue on appeal was whether the trucking company’s MCS-90 endorsement covered the accident. Although the Fifth Circuit said the MCS-90 endorsement “does not cover vehicles when they are not presently transporting property in interstate commerce,” the court did not address whether the employee was engaged in the transportation of property because the accident victim “explicitly conceded that [the employee’s] liability was not ‘for the transportation of property.’ ” Coleman, 625 F.3d at 251, 252. The court noted that given 49 U.S.C. § 13102’s “broad” definition of “transportation,” “it [was] at least arguable that [the employee’s] conduct at the time of the accident could be termed ‘transportation of property.’ ” Id. at 252. However, “because the district court accepted [the accident victim’s] stipulation that it was not,” the Fifth Circuit “d[id] not reach that question.” Id.

[22] In the second case, Titan, a truck driver was waiting in line at an asphalt plant to fill his dump truck with a load of asphalt when a fatal accident occurred. In addressing whether an MCS-90 endorsement applied, the district court had to determine whether the truck driver was engaged in the transportation of property at the time of the accident. The court noted 49 U.S.C. § 13102(23)(B) defines “transportation” “exceptionally broadly to include ‘services related to’ the movement of property.” Titan, 237 F. Supp. 3d at 348. The court found the truck driver was in the process of “receiving” the cargo he was to haul, which was explicitly included within the statutory definition of transportation. Id.

*7 [23] In the last case, Brunson, a truck driver drove his tractor-trailer only a few miles from his home “strictly on a personal mission to sell it” when an accident occurred. 602 F. Supp. 2d at 716. In addressing whether an MCS-90 endorsement applied, the district court found the truck driver was not transporting property at the time of the accident. Specifically, the court noted the truck driver, in his deposition, answered “no” when asked “were you hauling anything when the accident … happened.” Id.

[24] Coleman and Brunson do not support Progressive’s argument. In Coleman, the Fifth Circuit did not reach the question of whether the employee was engaged in the transportation of property at the time of the accident because the accident victim stipulated otherwise. Moreover, the court said given 49 U.S.C. § 13102’s “broad” definition of “transportation,” it was “arguable” the employee was engaged in the transportation of property. In Brunson, the truck driver was “strictly on a personal mission” when the accident occurred. Here, Brown was not on a personal mission at the time of the accident; rather, he was on his way from B&T in Mishawaka to Lehigh in Logansport to pick up a load of cement.

[25] Progressive argues Titan supports its argument because the truck driver in that case “was in the process of receiving the cargo he was to haul,” which Brown wasn’t doing. Appellant’s Reply Br. p. 16. The Appellees claim Titan supports their argument because Brown was “en route” to pick up a load of cement. See, e.g., Dona’s Estate’s Br. p. 14. We find Titan supports the Appellees’ argument. Although Brown was not in line to receive the cargo he was to haul, he was on his way from B&T in Mishawaka to Lehigh in Logansport to pick it up. Once he received the load, Brown intended to transport it to Kuert in South Bend. Travel from a trucking facility to a customer location to pick up a load is a “service[ ] related to” the transportation of property. Accordingly, B&T was engaged in the transportation of property at the time of the accident even though its trailer was empty.

[26] We affirm the trial court’s summary-judgment ruling that the MCS-90 endorsement applies.

[27] Affirmed.

Brown, J., and Pyle, J., concur.
All Citations
— N.E.3d —-, 2021 WL 1747897

Footnotes

1
It also applies to motor carriers operating motor vehicles in intrastate commerce if they are transporting hazardous property, 49 C.F.R. § 387.3(b), but this case does not involve hazardous property.