Supreme Court of Indiana

December 16, 2021, Argued; February 25, 2022, Decided; February 25, 2022, Filed

Supreme Court Case No. 21S-CT-496

Reporter

2022 Ind. LEXIS 131 *; 2022 WL 575417

Progressive Southeastern Insurance Company, Appellant, -v- Bruce A. Brown, et al., Appellees.

Prior History:  [*1] Appeal from the Carroll Circuit Court. No. 08C01-1811-CT-13. The Honorable Benjamin A. Diener, Judge. On Petition to Transfer from the Indiana Court of Appeals. No. 20A-CT-1765.

Core Terms

motor carrier, transporting, endorsement, intrastate, insured, financial responsibility requirements, non-hazardous, trip, interstate commerce, intrastate commerce, interstate, regulations, time of an accident, truck, federal law, trip-specific, incorporates, hazardous

Case Summary

Overview

HOLDINGS: [1]-While the appellate court properly affirmed the trial court’s order that a commercial insurer had no duty to defend or indemnify a driver in the underlying traffic accident, it erred in finding that the MCS-90 endorsement applied because the endorsement only applied to an accident that occurred during an intrastate trip transporting non-hazardous property, the insured company was not engaged in interstate commerce and the driver was on an intrastate trip at the time of the accident.

Outcome

Judgment affirmed in part, and reversed in part.

LexisNexis® Headnotes

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Torts > … > Motor Vehicles > Particular Actors, Circumstances, & Liabilities > Motor Carriers

Insurance Law > … > Coverage > Compulsory Coverage > Proof of Financial Responsibility

 Common Carrier Duties & Liabilities, State & Local Regulation

The federal Motor Carrier Act of 1980 requires some motor carriers to maintain minimum levels of financial responsibility. One way carriers can comply with these requirements is by adding an MCS-90 endorsement to their insurance policy. This endorsement provides that if a motor vehicle is involved in an accident, the insurer may be required to pay any final judgment against the insured arising out of the accident.

Civil Procedure > … > Summary Judgment > Entitlement as Matter of Law > Appropriateness

Civil Procedure > Judgments > Summary Judgment > Entitlement as Matter of Law

Civil Procedure > Appeals > Summary Judgment Review > Standards of Review

Civil Procedure > … > Summary Judgment > Entitlement as Matter of Law > Legal Entitlement

Civil Procedure > … > Summary Judgment > Entitlement as Matter of Law > Genuine Disputes

 Entitlement as Matter of Law, Appropriateness

Appellate courts review summary-judgment decisions de novo. Summary judgment is appropriate only when the designated evidence shows no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. R. Trial P. 56(C).

Antitrust & Trade Law > Regulated Industries > Transportation > Common Carriers

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Torts > … > Motor Vehicles > Particular Actors, Circumstances, & Liabilities > Motor Carriers

Business & Corporate Compliance > … > Transportation Law > Commercial Vehicles > Rates & Tariffs

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

 Transportation, Common Carriers

Under section 30 of the Motor Carrier Act of 1980, certain motor carriers must maintain minimum levels of financial responsibility. 49 U.S.C.S. § 31139. The governing statutes and regulations ensure a motor carrier has independent financial responsibility to pay for losses sustained by the general public arising out of its trucking operations.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Torts > … > Motor Vehicles > Particular Actors, Circumstances, & Liabilities > Motor Carriers

Insurance Law > Claim, Contract & Practice Issues > Policy Interpretation > Exclusions

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

 Common Carrier Duties & Liabilities, State & Local Regulation

In the context of the Motor Carrier Act of 1980, the MCS-90 is an endorsement to an underlying insurance policy between the motor carrier and its insurer. The endorsement obligates an insurer to pay certain judgments against the insured even though the insurance contract would have otherwise excluded coverage. The MCS-90 thus creates a suretyship among the injured public, the insured, and the insurer.

Antitrust & Trade Law > Regulated Industries > Transportation > Common Carriers

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Transportation Law > Intrastate Commerce

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Torts > … > Motor Vehicles > Particular Actors, Circumstances, & Liabilities > Motor Carriers

 Transportation, Common Carriers

Section 30 of the Motor Carrier Act of 1980, codified at 49 U.S.C.S. § 31139, provides the minimum financial responsibility requirements apply to motor carriers. These requirements apply when a motor carrier transports property in foreign or interstate commerce. They also apply when a motor carrier in intrastate commerce transports hazardous property. 49 U.S.C.S. § 31139(d)(1); 49 C.F.R. § 387.3(b). Thus, section 30’s financial responsibility requirements apply in only two circumstances: first, when a motor carrier transports property in foreign or interstate commerce; second, when a motor carrier transports hazardous property in foreign, interstate, or intrastate commerce. And because the MCS-90 applies only when the motor carrier is subject to section 30’s requirements, the MCS-90 also applies only in these circumstances.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Transportation Law > Carrier Duties & Liabilities > Definitions

Transportation Law > Intrastate Commerce

 Common Carrier Duties & Liabilities, State & Local Regulation

Federal courts use three different approaches to determine whether an MCS-90 applies to a particular loss. The trip-specific approach is the narrowest approach and is the majority one. This approach relies on the unambiguous language of both the MCS-90 and section 30 of the Motor Carrier Act and looks at whether the motor carrier’s employee was transporting property on an interstate trip at the time of the loss. Under the second approach, even an intrastate trip can satisfy the interstate commerce requirement if the shipper has a fixed and persisting transportation intent to ship the goods to an interstate terminal. The final and broadest approach applies the MCS-90 when the court finds it aligns with the public policy behind the Motor Carrier Act.

Antitrust & Trade Law > Regulated Industries > Transportation > Common Carriers

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Torts > … > Motor Vehicles > Particular Actors, Circumstances, & Liabilities > Motor Carriers

Business & Corporate Compliance > … > Transportation Law > Interstate Commerce > State Powers

 Transportation, Common Carriers

In the context of the Motor Carrier Act of 1980, despite the MCS-90’s limitations under the federal law, states remain free to create their own regulations governing insurance requirements for motor carrier transportation within their state borders.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Transportation Law > Intrastate Commerce

Torts > … > Motor Vehicles > Particular Actors, Circumstances, & Liabilities > Motor Carriers

 Common Carrier Duties & Liabilities, State & Local Regulation

In the context of the Motor Carrier Act of 1980, while section 18(a) requires all intrastate motor carriers to comply with Part 387, the section incorporates Part 387 in full and does not amend any subparts or provide alternate definitions for interstate or intrastate. Section 387.3(b) says that the minimum financial responsibility requirements apply to intrastate motor carriers only when they transport hazardous property. 49 C.F.R. § 387.3(b). Under a plain reading of both section 18(a) and Part 387, the financial responsibility requirements do not apply to intrastate motor carriers transporting non-hazardous property.

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

 Compulsory Coverage, Motor Carriers

In the context of the Motor Carrier Act of 1980, as section 18(a) incorporates Part 387 in its entirety, courts cannot choose which subparts to apply, which to ignore, and which to amend. Thus, section 18(a) does not expand Part 387’s minimum financial responsibility requirements to intrastate commerce of non-hazardous property.

Counsel: FOR PROGRESSIVE SOUTHEASTERN INSURANCE COMPANY, APPELLANT: Philip Kenneth Joseph Lashutka, Janet G. Horvath, J. Thomas Vetne, Jones Obenchain, LLP, South Bend, Indiana.

FOR B&T BULK, LLC, AND BRUCE A. BROWN, APPELLEES: Tracey S. Schafer, Anderson, Agostino & Keller, P.C., South Bend, Indiana.

FOR ROBIN S . JOHNSON, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF DONA S. JOHNSON, AND ROBIN S. JOHNSON, INDIVIDUALLY, APPELLEES: R. T. Green, Collin W. Green, Letha A. Maier, Blackburn & Green, Indianapolis, Indiana, Todd A. Richardson, Lewis & Kappes, P.C., Indianapolis, Indiana.

FOR STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, APPELLEE-INTERVENOR: Lizabeth R. Hopkins, Kopka Pinkus Dolin, P.C., Crown Point, Indiana.

Judges: Opinion by Justice Slaughter. Chief Justice Rush and Justices David, Massa, and Goff concur.

Opinion by: Slaughter

Opinion

Slaughter, Justice

  insurance policy. This endorsement provides that if a motor vehicle is involved in an accident, the insurer may be required to pay any final judgment against the insured arising out of the accident. We must decide whether, under either federal or state law, the MCS-90 endorsement applies to an accident that occurred during an intrastate trip transporting non-hazardous property. We hold it does not.

I

B&T Bulk is a motor carrier based in Mishawaka, Indiana, and operates in both Indiana and Michigan. In 2017, a B&T Bulk employee, Bruce Brown, was driving a truck and empty trailer to pick up a load of cement in Logansport, Indiana, for delivery to South Bend, Indiana. Brown’s truck crossed the centerline and struck Dona Johnson’s oncoming vehicle. She died in the collision.

Before the accident, B&T Bulk had bought a commercial auto policy from Progressive Southeast Insurance Company, the plaintiff below. But at the time of the accident, the truck and trailer were not listed on the policy. The policy did have an MCS-90 endorsement, however, creating a suretyship whereby Progressive agreed to pay a final judgment against B&T Bulk in certain negligence cases.

Johnson’s widower filed a wrongful-death [*3]  action against Brown and B&T Bulk, individually and on behalf of Johnson’s estate. Progressive filed this separate cause of action, seeking a declaration that (1) it has no duty to defend or indemnify B&T Bulk or Brown because the truck and trailer involved in the accident were not listed in the policy as insured autos; and (2) the MCS-90 endorsement does not apply. State Farm, Johnson’s insurance carrier, intervened in the declaratory action. Progressive, B&T Bulk, Brown, Johnson’s husband, and Johnson’s estate, joined by State Farm, filed cross-motions for summary judgment.

The trial court entered an order finding (1) Progressive has no duty to defend or indemnify Brown; (2) the truck and trailer were not insured autos; and (3) the MCS-90 endorsement applies. Progressive appealed only the MCS-90 issue. The court of appeals affirmed, holding that the MCS-90 endorsement applies. Progressive Se. Ins. Co. v. B&T Bulk, LLC, 170 N.E.3d 1125, 1134 (Ind. Ct. App. 2021). Progressive sought transfer, which we granted, Progressive Se. Ins. Co. v. Brown, 176 N.E.3d 446 (Ind. 2021), thus vacating the appellate opinion.

II

  Rogers v. Martin, 63 N.E.3d 316, 320 (Ind. 2016); Ind. Trial Rule 56(C). Here, the parties agree there are no disputed issues of material fact. Thus, the sole issue is whether, as a matter of law, the MCS-90 endorsement applies to intrastate trips transporting non-hazardous property. We hold it does not and reverse the trial court on this issue.

In Part A, we hold under the plain language of the MCS-90 and the weight of federal authority that the endorsement does not apply to intrastate trips transporting non-hazardous property as a matter of federal law. In Part B, we hold that the endorsement also does not apply under Indiana law because the state statute incorporating the federal regulations does not expand the regulations’ scope.

A

Under section 30 of the Motor Carrier Act of 1980, certain motor carriers must maintain minimum levels of financial responsibility. 49 U.S.C. § 31139. The governing statutes and regulations ensure a motor carrier “has independent financial responsibility to pay for losses sustained by the general public arising out of its trucking operations.” Travelers Ins. Co. v. Transport Ins. Co., 787 F.2d 1133, 1140 (7th Cir. 1986). Motor carriers have three options to comply with the financial responsibility requirements, one of which is at issue here: the Form MCS-90 endorsement. 49 C.F.R. § 387.7(d)(1).

  policy between the motor carrier and its insurer. The endorsement “obligates an insurer to pay certain judgments against the insured . . . even though the insurance contract would have otherwise excluded coverage.” Canal Ins. Co. v. Coleman, 625 F.3d 244, 247 (5th Cir. 2010). It also requires the insured to reimburse the insurer for any payment made to the public under the endorsement. The MCS-90 thus “creates a suretyship among the injured public, the insured, and the insurer”. Auto-Owners Ins. Co. v. Munroe, 614 F.3d 322, 327 (7th Cir. 2010). See also Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868, 878-79 (10th Cir. 2009) (en banc) (adopting the “Majority View” that the MCS-90 creates a suretyship).

Appellees argue that the “clear and unambiguous language” of the MCS-90 dictates that it applies to this accident. We disagree. The MCS-90, by its terms, applies only to “motor vehicles subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980”. Section 29 is not relevant here because it merely amends a statute, now superseded, that was a predecessor to the Motor Carrier Act. See Pub. L. No. 96-296, § 29, 94 Stat. 820 (1980).

  a place outside of that State”; or (C) “a place outside the United States”. 49 U.S.C. § 31139(b)(1); 49 C.F.R. § 387.3(a). In other words, these requirements apply when a motor carrier transports property in foreign or interstate commerce. They also apply when a motor carrier in intrastate commerce transports hazardous property. 49 U.S.C. § 31139(d)(1); 49 C.F.R. § 387.3(b). Thus, section 30’s financial responsibility requirements apply in only two circumstances: first, when a motor carrier transports property in foreign or interstate commerce; second, when a motor carrier transports hazardous property in foreign, interstate, or intrastate commerce. And because the MCS-90 applies only when the motor carrier is subject to section 30’s requirements, the MCS-90 also applies only in these circumstances.

Here, all parties agree that Brown’s trip was purely intrastate and that he was not transporting hazardous property at the time of the accident. But that does not end our inquiry because intrastate trips can also qualify as interstate commerce. Thus, whether the MCS-90 applies here depends on whether Brown was engaged in interstate commerce at the time of the accident. We hold he was not. Because the MCS-90 is a federally mandated form, the operation and effect of which are a matter of federal [*7]  law, Carolina Cas. Ins. Co. v. E.C. Trucking, 396 F.3d 837, 841 (7th Cir. 2005) (citing John Deere Ins. Co. v. Nueva, 229 F.3d 853, 856 (9th Cir. 2000)), we turn to federal law to answer this question.

Federal courts use three different approaches to determine whether an MCS-90 applies to a particular loss. The trip-specific approach is the narrowest approach and is the majority one. See, e.g., Coleman, 625 F.3d at 251. This approach relies on the unambiguous language of both the MCS-90 and section 30 of the Motor Carrier Act and looks at whether the motor carrier’s employee was transporting property on an interstate trip at the time of the loss. Ibid.

Another, similar approach determines “[w]hether transportation is interstate or intrastate . . . by the essential character of the commerce, manifested by shipper’s fixed and persisting transportation intent at the time of the shipment“. Klitzke v. Steiner Corp., 110 F.3d 1465, 1469 (9th Cir. 1997) (emphasis in original). See also Lyons v. Lancer Ins. Co., 681 F.3d 50, 58 (2d Cir. 2012) (“the existence of the requisite interstate nexus may be determined by looking to the intent of the goods’ seller or shipper with respect to the goods’ destination”); Century Indem. Co. v. Carlson, 133 F.3d 591, 598 (8th Cir. 1998) (examining “the ‘essential character’ of the shipment from the shipper’s intent”). Under this approach, even an intrastate trip can satisfy the interstate commerce requirement if the shipper has a “fixed and persisting transportation intent” to ship the goods to an interstate [*8]  terminal. Carlson, 133 F.3d at 598.

The final and broadest approach, and the one Appellees ask us to adopt, applies the MCS-90 when the court finds it aligns with the public policy behind the Motor Carrier Act. See Canal Ins. Co. v. YMV Transport, Inc., 867 F. Supp. 2d 1099, 1108 (W.D. Wash. 2011) (declining to apply trip-specific approach when question is whether vehicle was paid to transport goods because “such an approach is inconsistent with the purposes of the Motor Carrier Act”); Royal Indem. Co. v. Jacobsen, 863 F. Supp. 1537, 1542 (D. Utah 1994) (rejecting trip-specific approach because it “would not advance the public policy goals of the Motor Carrier Act”).

We agree with the weight of authority that rejects the public-policy approach because it ignores the unambiguous language of the MCS-90 endorsement and section 30 of the Motor Carrier Act. As for the two remaining approaches (trip-specific and fixed-intent-of-the-shipper) we need not choose today which is better. Under either approach B&T Bulk was not engaged in interstate commerce here.

The parties agree that Brown was on an intrastate trip at the time of the accident. And Appellees do not argue that Brown intended to leave Indiana at any point on his trip. Therefore, under either the trip-specific or fixed-intent-of-the-shipper approach, Brown was not engaged in interstate commerce at the time of the [*9]  accident. Thus, we hold under federal law that the MCS-90 endorsement does not apply to this accident.

Our inquiry does not end here, however, because despite the MCS-90’s limitations under the federal law, states “remain free to create their own regulations governing insurance requirements for motor carrier transportation within their state borders.” Martinez v. Empire Fire and Marine Ins. Co., 322 Conn. 47, 139 A.3d 611, 620 (Conn. 2016). Here, Appellees argue that under Indiana law, the MCS-90 applies to motor carriers transporting non-hazardous property in intrastate commerce. We address this argument next.

B

Our general assembly has incorporated into Indiana law the federal regulations governing the minimum levels of financial responsibility for motor carriers, including 49 C.F.R. Part 387:

49 CFR Parts 40, 375, 380, 382 through 387, 390 through 393, and 395 through 398 are incorporated into Indiana law by reference, and, except as provided in subsections (d), (e), (f), (g), and (j), must be complied with by an interstate and intrastate motor carrier of persons or property throughout Indiana.

Ind. Code § 8-2.1-24-18(a). The exceptions do not apply here, so the issue is whether this incorporation statute expands Part 387 beyond what federal law requires. Specifically, Appellees argue that section 18(a) expands the financial responsibility requirements to all intrastate [*10]  motor carriers, regardless of what type of property they are transporting. Their argument relies on the fact that section 18(a) does not limit Part 387’s applicability to certain types of intrastate carriers. We hold this argument is unavailing.

While section 18(a) requires all intrastate motor carriers to comply with Part 387, the section incorporates Part 387 in full and does not amend any subparts or provide alternate definitions for “interstate” or “intrastate”. Thus, we must look to Part 387 and each of its subparts to determine what an intrastate motor carrier must do to comply. Section 387.3(b) says that the minimum financial responsibility requirements apply to intrastate motor carriers only when they transport hazardous property. 49 C.F.R. § 387.3(b). Under a plain reading of both section 18(a) and Part 387, the financial responsibility requirements do not apply to intrastate motor carriers transporting non-hazardous property.

Appellees urge the opposite conclusion, which would require us to cherry-pick which subparts of Part 387 to apply and to fill in the gaps with our own views. Were we to hold that section 18(a) expands Part 387 to apply to intrastate transport of non-hazardous property, we would have to ignore section 387.3‘s limitations on the financial responsibility requirements. [*11]  Id. at § 387.3. We would also have to determine how much public-liability coverage is required because section 387.9 does not provide a coverage amount for motor carriers transporting non-hazardous property in intrastate commerce. Id. at § 387.9. If our legislature had intended to adopt only specific subparts of Part 387 or to amend it after incorporation, it could have done so. But as section 18(a) incorporates Part 387 in its entirety, we cannot choose which subparts to apply, which to ignore, and which to amend. Thus, we hold that section 18(a) does not expand Part 387’s minimum financial responsibility requirements to intrastate commerce of non-hazardous property.

We recognize that today’s opinion is at odds with our court of appeals’ opinion in Sandberg Trucking, Inc. v. Johnson, 76 N.E.3d 178 (Ind. Ct. App. 2017). In Sandberg, the court held that 49 C.F.R. § 392.22 applied to motor carriers engaged in purely intrastate commerce, despite a contrary federal regulation. Id. at 188. The court reasoned that it would be absurd to hold that the general assembly “went to the trouble of adopting federal regulations and specifically making them applicable to intrastate commerce while simultaneously adopting one that nullified the entire adoption.” Ibid. But this approach asks us to ignore the plain language of section 18(a). Again, were we to agree with the [*12]  Sandberg court’s interpretation, we would have to read each provision of each regulation and determine when replacing “interstate” with “intrastate” made sense with our understanding of the legislature’s policy goals under section 18(a). We decline to impose our own value judgments for those the legislature could have enacted but did not. Thus, to the extent Sandberg is at odds with our opinion today, we overrule it.

Because section 18(a) does not expand Part 387’s applicability to motor carriers transporting non-hazardous property in intrastate commerce, the MCS-90 endorsement does not apply to this accident under state law.

* * *

Brown was neither engaged in interstate commerce at the time of the accident nor transporting hazardous property. Thus, we hold that the MCS-90 endorsement does not apply under either federal or state law. We affirm the trial court’s judgment that Progressive has no duty to defend or indemnify Brown and reverse its judgment that the MCS-90 endorsement applies here.

Rush, C.J., and David, Massa, and Goff, JJ., concur.

End of Document

United States District Court for the Northern District of Georgia, Atlanta Division

February 28, 2022, Decided; February 28, 2022, Filed

CIVIL ACTION NO. 1:21-CV-00086-JPB

Reporter

2022 U.S. Dist. LEXIS 34859 *; 2022 WL 596791

PROGRESSIVE MOUNTAIN INSURANCE COMPANY, Petitioner, v. YAOBIN CHEN and SEASON SEAFOOD TRADING, INC., Respondents.

Core Terms

allegations, coverage, motion to dismiss, declaratory relief, workers’ compensation, declaratory judgment

Counsel:  [*1] For Progressive Mountain Insurance Company, Petitioner: Frederick Mills Valz, III, LEAD ATTORNEY, Copeland, Stair, Kingma & Lovell, LLP, Atlanta, GA; Jena Grace Emory, LEAD ATTORNEY, Copeland, Stair, Valz & Lovell, LLP, Atlanta, GA.

For Yaobin Chen, Respondent: Marvin S. Arrington, Jr., LEAD ATTORNEY, Arrington & Phillips, LLP, Atlanta, GA; Russell T. Deutschman, Office of Kenneth S. Nugent, Duluth, GA.

Judges: J. P. BOULEE, United States District Judge.

Opinion by: J. P. BOULEE

Opinion

ORDER

This matter comes before the Court on Yaobin Chen’s (“Respondent”) Motion to Dismiss [Doc. 13]. This Court finds as follows:

BACKGROUND

This case arises from an August 18, 2019, accident, in which Respondent crossed into oncoming traffic and was seriously injured. [Doc. 1, p. 4]. At the time of the accident, Respondent was driving a live fish transport vehicle owned by Season Seafood Trading, Inc., his employer, and insured by Progressive Mountain Insurance Company (“Petitioner”) under an automobile insurance policy (the “Policy”). [Doc. 13-1, p. 1]. On November 3, 2020, Respondent sent Petitioner a demand letter for $750,000. [Doc. 1, p. 5]. Petitioner filed a Petition for Declaratory Judgment in this Court on January 7, 2021, [*2]  seeking a declaration as to the parties’ rights and obligations under the Policy. Id. at 3.

The parties appear to dispute whether the Policy provides coverage for Respondent’s claims for injuries resulting from the August 18, 2019 accident. The Policy named Season Seafood Trading, Inc., as the insured party and was effective from June 4, 2019, to December 4, 2019. [Doc. 1-1, p. 3]. The Policy contained an MCS-90 Endorsement,¹ which excluded coverage for “injury or death of the insured’s employees while engaged in the course of their employment.” Id. at 7. Petitioner claims that Respondent is an “employee” for the purposes of the MCS-90 Endorsement.² [Doc. 1, p. 7]. The Policy also included exclusions that expressly denied coverage for bodily injury to the insured’s employees³ and for injuries that would be covered by worker’s compensation. [Doc. 1-1, p. 19]. Petitioner argues that Respondent qualifies an “employee” under the Policy’s employee exclusion and that he is eligible for worker’s compensation from his employer. Id. at 9, 11. Therefore, Petitioner alleges that Respondent is not entitled to coverage under the Policy based on the MCS-90 Endorsement or, in the alternative, the employee [*3]  and worker’s compensation exclusions.

Respondent filed a Motion to Dismiss on April 6, 2021, arguing that the Petition should be dismissed on two grounds. [Doc. 13]. First, Respondent claims that Petitioner’s declaratory judgment action is in reality a nonjusticiable request for an advisory opinion.⁴ Second, he argues that Petitioner failed to allege sufficient facts to state a claim for declaratory relief.

ANALYSIS

A. Legal Standard

“At the motion to dismiss stage, all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff.” Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273 n.1 (11th Cir. 1999). In determining whether this action should be dismissed for failure to state a claim, Federal Rule of Civil Procedure 8(a)(2) provides that a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Although detailed factual allegations are not necessarily required, the pleading must contain more than “‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action.’” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). Importantly, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” [*4]  Id. (quoting Twombly, 550 U.S. at 570).

Challenges to subject-matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure take two forms. A facial attack questions subject-matter jurisdiction based on the allegations in the complaint alone. Morrison v. Amway Corp., 323 F.3d 920, 924 n.5 (11th Cir. 2003). “On a facial attack, a plaintiff is afforded safeguards similar to those provided in opposing a Rule 12(b)(6) motion—the court must consider the allegations of the complaint to be true.” Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990). This is not the case for a factual attack, which contests jurisdiction “in fact, irrespective of the pleadings. In resolving a factual attack, the district court may consider extrinsic evidence such as testimony and affidavits.”⁵Morrison, 323 F.3d at 925 (citation omitted). Finally, “[t]he burden of proof on a motion to dismiss for lack of subject-matter jurisdiction is on the party asserting jurisdiction.” Murphy v. Sec’y, U.S. Dep’t of Army, 769 F. App’x 779, 782 (11th Cir. 2019).

B. Justiciability of Petitioner’s Claim

Respondent’s first basis for dismissal is that the Petition seeks a nonjusticiable advisory opinion from the Court. “Echoing the ‘case or controversy’ requirement of Article III, the Declaratory Judgment Act ‘provides that a declaratory judgment may only be issued in the case of an actual controversy.’” A&M Gerber Chiropractic LLC v. GEICO Gen. Ins. Co., 925 F.3d 1205, 1210 (11th Cir. 2019) (quoting Emory v. Peeler, 756 F.2d 1547, 1551-52 (11th Cir. 1985)). A controversy exists under the Declaratory Judgment Act if “the facts alleged, under all the circumstances, show [*5]  that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273, 61 S. Ct. 510, 85 L. Ed. 826 (1941). “Federal courts long have held that an insurance company seeking determination of its liabilities under an insurance contract could utilize the Declaratory Judgment Act for such a purpose.” State Farm Mut. Auto. Ins. Co. v. Bates, 542 F. Supp. 807, 817 (N.D. Ga. 1982). In the insurance context, even if it is unclear whether the injured party will sue or obtain a judgment against the insured, “‘there is held to be sufficient controversy between the insurer and the injured person that a declaratory judgment is permissible.’” GTE Directories Pub. Corp. v. Trimen Am., Inc., 67 F.3d 1563, 1569 (11th Cir. 1995) (quoting 10A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2757 (2d ed. 1983)). In other words, “[t]hat the liability may be contingent does not necessarily defeat jurisdiction of a declaratory judgment action.” Id. (quoting Associated Indem. Corp. v. Fairchild Indus., Inc., 961 F.2d 32, 35 (2d Cir. 1992)).

According to Respondent, because Petitioner did not explain “what cause of action might even trigger [its] coverage to apply to [Respondent],” the Petition merely asks this Court for an advisory opinion. [Doc. 13-1, p. 2]. In a similar vein, Respondent contends that a pre-litigation “demand to pay does not trigger any rights or duties if [*6]  there is no cause of action which could require payment.”⁶ Id. However, the Eleventh Circuit Court of Appeals permits “entertaining a declaratory judgment action on a somewhat hypothetical set of facts.” GTE Directories Pub. Corp., 67 F.3d at 1569. The absence of an underlying cause of action does not deprive this Court of jurisdiction over Petitioner’s claim for declaratory relief. See, e.g., W. World Ins. Co. v. J&R Roofing, Inc., No. 1:14-CV-2174, 2014 U.S. Dist. LEXIS 188452, 2014 WL 12366405, at *4 (N.D. Ga. Dec. 8, 2014) (“Although no underlying lawsuit has yet been filed, there is a ‘practical likelihood’ that [the defendant] will be sued for the fire loss.”); cf. Edwards v. Sharkey, 747 F.2d 684, 686-87 (11th Cir. 1984) (“Moreover, the Supreme Court of the United States has held that a ‘case or controversy’ exists to support declaratory relief between an injured third party and an insurance company even in the absence of a judgment in favor of the third party against the insured.”). In fact, requiring Petitioner to wait until a suit is filed to seek clarity about its rights and obligations under the Policy runs contrary to the purposes of the Declaratory Judgment Act. Am. Ins. Co. v. Evercare Co., 699 F. Supp. 2d 1355, 1359 (N.D. Ga. 2010).

Furthermore, the Court finds that a sufficient case or controversy exists in this matter. Showing a case or controversy for the purposes of declaratory relief requires the plaintiff to “allege facts from which it appears that [*7]  there is a ‘substantial likelihood that he will suffer injury in the future.’” A&M Gerber Chiropractic, 925 F.3d at 1211 (quoting Malowney v. Fed. Collection Deposit Grp., 193 F.3d 1342, 1346 (11th Cir. 1999)). According to the Petition, Respondent sent Petitioner a demand for $750,000, which equals the Policy’s coverage limit, and Petitioner anticipates that Respondent will contest Petitioner’s stance regarding the parties’ rights and obligations under the Policy. These facts show a “substantial likelihood” that Petitioner will suffer future injury. See, e.g., Am. Ins. Co., 699 F. Supp. 2d at 1359 (finding that the “possibility or conjecture of a future lawsuit” was “sufficient to establish a controversy or a threatened injury”). Based on Petitioner’s well-pleaded allegations, the Court finds that the Petition does not seek an advisory opinion from this Court and that Petitioner met its burden of showing that a case or controversy exists.

C. Sufficiency of Factual Allegations

Respondent’s second basis for dismissal is that Petitioner failed to allege sufficient facts—specifically, those related to the applicability of the Motor Vehicle Act, Respondent’s employment status and his eligibility for worker’s compensation—to state a claim for declaratory relief. Petitioner contends that under the proper standard, its allegations on these points [*8]  withstand a motion to dismiss.

Respondent argues that Petitioner did not “[p]rove” why the vehicle driven by Respondent was covered under the Motor Vehicle Act. [Doc. 13-1, p. 3]. In particular, Respondent takes issue with the absence of “proof of whether the cargo transported by [Respondent] would trigger the determination that this claim falls under some part of the Motor Carrier Act.” Id. at 4. However, Petitioner alleged that the Policy contained an MCS-90 Endorsement, pursuant to the requirements of the Motor Vehicle Act, and that Respondent sent Petitioner a demand letter for coverage under the Policy. Contrary to Respondent’s assertion, Petitioner need not “prove” its claims to survive a motion to dismiss. At this stage in the litigation, Petitioner’s only obligation is to allege “sufficient factual matter” that, when accepted as true, states a plausible claim to relief. Iqbal, 556 U.S. at 678. Petitioner fulfilled this obligation with respect to the applicability of the Motor Vehicle Act.

Respondent also contends that Petitioner failed to “[e]stablish” Respondent’s worker’s compensation eligibility, and he seems to suggest that Petitioner’s allegations about his employment status are similarly deficient. [*9]  [Doc. 13-1, pp. 3-4]. In the Petition, Petitioner alleges that the Policy excluded from coverage either under the MCS-90 Endorsement or the employee exclusion—any injuries of an insured’s employees. Petitioner also contends that the Policy did not extend coverage to claims that would be covered by worker’s compensation. Further, Petitioner alleges that Respondent was an “employee” for the purposes of the MCS-90 Endorsement and the employee exclusion and that he is entitled to worker’s compensation benefits from his employer.⁷ Petitioner cites language from the Policy to substantiate all of these assertions, and Petitioner claims that Respondent is likely to dispute its interpretation of the Policy’s language at issue. Again, Petitioner need not prove its claims at this stage in the litigation. When the facts in the Petition are accepted as true and construed in the light most favorable to Petitioner, they are sufficient to state a claim for declaratory relief. See Hill v. White, 321 F.3d 1334, 1335 (11th Cir. 2003).

CONCLUSION

For the foregoing reasons, Respondent’s Motion to Dismiss [Doc. 13] is DENIED.

SO ORDERED this 28th day of February, 2022.

/s/ J. P. Boulee

J. P. BOULEE

United States District Judge

End of Document

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¹ The Motor Carrier Act of 1980 requires commercial motor carriers to comply with certain financial responsibility requirements, including minimum insurance coverage. Nat’l Specialty Ins. Co. v. Martin-Vegue, 644 F. App’x 900, 906 (11th Cir. 2016). A motor carrier may prove its compliance with the minimum insurance requirement through an MCS-90 Endorsement. Id.

² The Motor Carrier Act defines an “employee” as “any individual . . . who is employed by an employer and who in the course of his or her employment directly affects commercial motor vehicle safety” and includes in the definition “a driver of a commercial motor vehicle (including an independent contractor while in the course of operating a commercial motor vehicle).” 49 C.F.R. § 390.5.

³ Petitioner explains that because the MCS-90 Endorsement is subject to the Motor Carrier Act, that statute “provides the definition of an employee for the Policy.” [Doc. 1, p. 9].

⁴ Respondent does not explicitly frame this argument as an issue of the Court’s subject-matter jurisdiction. However, because the existence of a case or controversy implicates jurisdiction, the Court will address this argument as if it were directed to this issue. See Miller v. FCC, 66 F.3d 1140, 1145-46 (11th Cir. 1995) (“Article III of the Constitution limits the jurisdiction of the federal courts to actual ‘cases’ or ‘controversies.’ . . . The prohibition on advisory opinions is a logical corollary of the case or controversy requirement.”); see also Atlanta Gas Light Co. v. Aetna Cas. & Sur. Co., 68 F.3d 409, 414 (11th Cir. 1995) (“Any time doubt arises as to the existence of federal jurisdiction, [the Court is] obliged to address the issue before proceeding further.”).

⁵ As noted, Respondent does not frame the Motion to Dismiss under Rule 12(b)(1) and therefore does not clarify the nature of his challenge to the Court’s jurisdiction. Nevertheless, the Court interprets Respondent’s Motion as posing a facial attack. See, e.g., Am. Ins. Co. v. Evercare Co., 699 F. Supp. 2d 1355, 1358 (N.D. Ga. 2010) (viewing an argument that “the allegations in [the] complaint do not satisfy the case or controversy requirement” as a facial attack to subject-matter jurisdiction).

⁶ Respondent cites only Georgia law in the Motion to Dismiss. However, federal law controls the justiciability of an action. Cincinnati Ins. Co. v. Holbrook, 867 F.2d 1330, 1332 (11th Cir. 1989) (“[A]n invocation of the federal Declaratory Judgment Act . . . is neither precluded nor controlled by Georgia’s procedural law.”), abrogated on other grounds by Wilton v. Seven Falls Co., 515 U.S. 277, 115 S. Ct. 2137, 132 L. Ed. 2d 214 (1995). Georgia law thus has no bearing on whether a federal court can adjudicate an action under the Declaratory Judgment Act. See, e.g., Payne v. State Farm Fire & Cas. Co., No. 1:11-CV-00309, 2011 U.S. Dist. LEXIS 170663, 2011 WL 13220695, at *3 (N.D. Ga. Aug. 2, 2011) (“Federal law determines whether a federal court can render a declaratory judgment, and therefore, Georgia law with regard to whether this case is a justiciable controversy does not control federal law here.”).

⁷ Respondent does not contest Petitioner’s claim that he is an employee as defined under the Policy, and in fact, Respondent agrees that “the best cause of action in this situation would be [worker’s] compensation.” [Doc. 13-1, p. 3].