FALLS LAKE NATIONAL INSURANCE COMPANY, Plaintiff, v. ISRAEL MARTINEZ, JR., et al., Defendants. In this insurance coverage dispute, Falls Lake National Insurance Company “Falls Lake” seeks a declaratory judgment that it has no obligation to indemnify Israel Martinez, Jr., Salinas Express, LLC “Salinas Express”, or SMC Transport, LLC “SMC” in connection with a personal injury action that Brandon Lester filed against Martinez, Salinas Express, SMC, and others in this court. See Lester v. SMC Transport, LLC, No. Background I. The Underlying Personal Injury Action Before sunrise on October 26, by Salinas Express the “Salinas Express Tractor” Martinez, Roy Salinas “Roy” Just before 6 00 a.m. At the same time On December 9, 2015, Lester filed the underlying personal injury action against SMC, Martinez, Salinas Express, and Shifflett. On September 2, 2016, the court ruled on a number of motions filed by the parties in that action, including Lester’s motion for partial summary judgment. As is relevant in the instant action, the court ruled that Martinez and Roy were employees of Salinas Express at the time of the accident, that they were acting within the scope of their employment, and, thus, that Salinas Express is “vicariously liable for their negligent conduct.” Lester v. SMC Transport, LLC, No. 7 15CV00665, 2016 2 27 28 W.D. Va. Sept. 2, II. The Insurance Policies A. The Policy Issued by Falls Lake At the time of the accident, Salinas Express was insured under a motor carrier liability policy issued by Falls Lake the “Falls Lake Policy” The following are “insureds” a. You for any covered “auto”. b. Anyone else while using with your permission a covered “auto” you own 1 2 e. Anyone liable for the conduct of an “insured” described above but only to the extent of that liability. However 3 1 a Id. at § IIA In addition to the scheduled vehicles for which the Falls Lake Policy provides coverage, the policy lists three types of vehicles which “are also covered ‘autos’ for Covered Autos Liability Coverage.” Id. at § IC specifically Any “auto” you do not own while used with the permission of its owner as a temporary substitute for a covered “auto” you own that is out of service because of its a. Breakdown; b. Repair; c. Servicing; d. “Loss”; or e. Destruction. Id. at § IC B. The Policy Issued by United Specialty During the time period at issue issued by United Specialty the “United Specialty Policy” SMC Tractor was not listed on the United Specialty Policy’s schedule of covered autos at the time of the accident liability coverage under the United Specialty Policy for the underlying accident. 4 The United Specialty Policy contains an MCS 90 endorsement.1 That endorsement provides In consideration of the premium stated in the policy to which this endorsement is attached, the insurer company United Specialty agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured SMC 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 However United Specialty MCS 90 Endorsement at 2 III. The Instant Action After the underlying personal injury action was commenced by Lester brought this action seeking a declaratory Salinas Express the accident. The declaratory 1″An MCS 90 endorsement is an endorsement added to a trucker’s insurance policy to satisfy federal motor carrier regulations requiring minimum levels of financial responsibility.” Nat’l Specialty Ins. Co. v. Martin Vegue, 644 F. App’x 900, 903 n.4 11th Cir. 2016 citing 49 5 partial summary Standard of Review An award of summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56a. In determining whether a genuine dispute of material fact exists, the court must “view the facts and all justifiable inferences arising therefrom in the light most favorable to the nonmoving party.” Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 4th Cir. 2013; see also Anderson v. Liberty Lobby, Inc., 477 Discussion I. Applicable Law Under Texas law 2 The court notes that Roy is not named as a defendant in the underlying personal injury action. 6 Underwriters at Lloyds London, 810 F.3d 986, 990 5th Cir. II. Coverage under the Falls Lake Policy A. Salinas Express In their respective motions, Falls Lake and Lester dispute whether Salinas Express is entitled to indemnification under the Falls Lake Policy. Although Salinas Express is the named “insured” under the Falls Lake Policy and the Salinas Express Tractor is a “covered ‘auto,'” Falls Lake argues that coverage is unavailable for Lester’s injuries because they arose from an accident involving Lester’s vehicle, the SMC Tractor, and Shifflett’s vehicle, and did not “result from the ownership, maintenance or use of” the Salinas Express Tractor. See Falls Lake Policy § IIA 7 Under Texas law, the insuring language at issue is interpreted broadly. See Lincoln Gen. Ins. Co. v. Aisha’s Learning Ctr., 468 F.3d 857, 859 60 5th Cir. In Lindsey For an injury to fall within the “use” coverage of an automobile policy 1 2 Id. at 157. The Supreme Court has since held that “the analysis is the same whether the policy requires that an injury ‘result from’ or ‘arise out of’ the covered auto’s use.” Lancer Ins. Co. The Supreme Court’s attempted to enter his parents’ parked and locked truck through the truck’s sliding rear window 8 to retrieve an article of clothing. Lindsey Applying the Lindsey factors to the instant case, the court concludes that Lester’s injuries resulted from the use of the Salinas Express Tractor. First, the accident occurred while the Salinas Express Tractor was being towed from the rest area. Using a vehicle in this manner is not “unexpected or unnatural.” Lindsey, 997 S.W.2d at 158; see also State Farm Fire and Casualty Co. v. Pinson, 984 F.2d 610, 612 4th Cir. The second factor is whether the accident arose within the vehicle’s natural territorial limits before its use terminated. See Lindsey 3″Where a vehicle is a mere situs of injury 9 concludes that this factor is also satisfied. The mere fact that Lester’s vehicle made contact with the SMC Tractor, rather than the Salinas Express Tractor, is not dispositive. See, e.g., State & County Mut. Fire Ins. Co. v. Trinity Universal Ins. Cos., 35 S.W.3d 278, 282 Tex. App. El Paso 8th Dist. The third factor is whether the covered vehicle “produced the injury” in question. Lindsey, 997 S.W.2d at 157. As discussed above, the causation inquiry in this context involves “but for causation, though not necessarily direct or proximate causation.” Utica Nat’l Ins. Co., 141 S.W.3d at 203. A but for cause is “one without which the event would not have occurred.” Transcon. Ins. Co. v. Crump, 330 S.W.3d 211, 223 Tex. Based on the undisputed evidence in the instant case 10 Express Tractor “produced” Lester’s injuries For these reasons, the court concludes that the accident at issue resulted from the use of the Salinas Express Tractor, and, thus, that Salinas Express is entitled to liability coverage under the Falls Lake Policy. Accordingly, the court will deny Falls Lake’s motion for partial summary B. SMC The parties also dispute whether SMC is entitled to coverage under the Falls Lake Policy. United Specialty First, SMC is not an additional “insured” under the Falls Lake Policy. In arguing to the contrary, SMC cites to subsection e 4In addition to arguing that Salinas Express is not entitled to coverage, Falls Lake argues that coverage is not owed to Salinas Express’ employees, Martinez and Roy. In light of the court’s conclusion that Salinas Express is entitled to coverage under the Falls Lake Policy, and its earlier ruling that Salinas Express is vicariously liable for the negligent conduct of Martinez and Roy, the issue of whether Martinez and Roy are also entitled to coverage is ultimately of no consequence. In any event, this issue involves a dispute of material fact regarding the ownership of the Salinas Express Tractor and whether Martinez and Roy were acting on behalf of the owner. Accordingly, it cannot be resolved at this stage of the 11 if SMC could be deemed an “insured” under subsection e After defining “Who Is an Insured,” the Falls Lake Policy excludes certain motor carriers from the definition. As is relevant in the instant case 1 a Falls Lake Motor Carrier Coverage Form § IIA1, Docket No. 1 2. “Accordingly, coverage is extended under the policy to non employee motor carriers only if their insurance policies offer reciprocal coverage.” Ill. Nat’l Ins. Co. v. Temian, 779 F. Supp. 2d 921, 926 N.D. Ind. In this case, it is undisputed that SMC is a “motor carrier” subject to motor carrier insurance requirements. Moreover, the court agrees with Falls Lake and Lester that SMC met those requirements by means other than “‘auto’ liability insurance.” Indeed, it is undisputed that the SMC Tractor was not insured at the time of the accident under any policy of insurance procured by SMC. Although the United Specialty Policy issued to SMC contains an MCS 90 endorsement, that endorsement “does not provide insurance coverage.” Real Legacy Assurance Co. v. Santori Trucking, Inc., 560 F. Supp. 2d 143, 147 D.P.R. 12 Assurance Co., 560 F. Supp. 2d at 147 148; see also Canal Ins. Co. v. Carolina Cas. Ins. Co., 59 F.3d 281, 283 1st Cir. Additionally, the court agrees with Falls Lake and Lester that the SMC Tractor is not a “covered ‘auto'” under the Falls Lake Policy. In arguing to the contrary, United Specialty relies on § IC Any “auto” you do not own while used with the permission of its owner as a temporary substitute for a covered ‘auto’ you own that is out of service because of its a. Breakdown; b. Repair; c. Servicing; d. “Loss”; or e. Destruction. Id.at § IC 13 Even assuming that United Specialty’s recitation of the “undisputed” evidence is correct, the mere fact that the SMC Tractor was used to tow the Salinas Express Tractor from the rest stop does not mean that it was a “temporary substitute” for the disabled vehicle. Because the term “temporary substitute” is not defined in the Falls Lake Policy, the court must consider its “ordinary, everyday meaning.” Progressive County Mut. Ins. Co. v. Sink, 107 S.W.3d 547, 552 Tex. Applying this standard would have performed but for its temporary disability. The same cannot be said for the SMC 14 Tractor Conclusion For the reasons stated, Falls Lake’s motion for partial summary judgment will be granted in part and denied in part, Lester’s motion for partial summary judgment will be granted, and United Specialty’s motion for partial summary judgment will be denied. The Clerk is directed to send certified copies of this DATED This s Glen E. Conrad Chief United States District Judge 15 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF VIRGINIA FALLS LAKE