Hopefully you are all busy reading the full year report which was sent to you a few days ago. That is the most up to date information so we will keep this one very short and address only the little news and cases which have come up in the last few weeks.
TRUCK FATALITIES – The FHWA has reported that truck involved fatality rates declined 12.3 percent to 1.86 per 100 million miles in 2008. It is the largest year to year drop and the fifth consecutive year showing a reduction in numbers. There was an 11 percent reduction in folks injured in large truck crashes, down to 39.6 per 100 million. The FHWA also reports that total vehicles traveled by truck increased in 2008 to 227.45 billion miles
DRIVER TEXTING – U.S. Transportation Secretary Ray LaHood’s announced this month that text messaging behind the wheel is prohibited for commercial drivers effective immediately. Although the safety regulations do not specifically address texting, LaHood has stated that since the safety regulations do prohibit the use of equipment or accessories that decrease safety during the operation of a commercial vehicle, it can apply to texting. Section 390.17 of the safety regulations does apply to electronic devices that send and receive text messages.
HOURS OF SERVICE – As we reported in the yearly resume, Hours of Service rules are back on the table. In addition, the ATA has now filed a suit seeking clarification of what documents carriers must keep to prove hours-of-service compliance. Those are the documents that a carrier must hold for six months to verify HOS compliance. The ATA has asked that the DOT be required to issue a Notice of Proposed Rulemaking within 60 days of the court’s ruling and a final rule within six months of the NPRM publication date. Congress originally directed the agency to make the rule effective in 1996. While there are informal guidelines it makes it difficult for a carrier to properly comply without knowing exactly what is required hence the suit by the ATA.
EMERGENCY HOURS RULINGS – With the extreme weather seen in the country this year a number of states are waiving the hours-of-service rules for truckers. Florida has extended driving time to 14 hours in hopes of getting crops out of the fields and orchards. Virginia, North Carolina, Missouri and Mississippi have also waived the rules in order to get fuel and road treatment chemicals delivered.
STATE LEGISLATION – In this coming year we are seeing more states enact legislation to insure that their highway safety rules mirror federal legislation so that funding is not lost. For example, Indiana and New Hampshire have proposed bills to strengthen out-of-service violations and Jersey lawmakers sent legislation to the governor for signature. Wisconsin’s laws are already in effect. All of the new legislation will lengthen time out of service and increase the penalties imposed on drivers.
CURRENT CASES:
Even the courts were relatively quiet. Generally we wade through numerous cases to find those of interest to underwriters. This month there were not many at all.
CARGO:
Cargo insurers in California should be aware that an Appellate Court has held that a motor carrier under a cargo policy is required to be notified of any suit clauses under the policy, even when represented by counsel. The court held that the motor carrier was a first party claimant as defined by statute and therefore got a greater benefit. While granting that benefit to the insured, the court still denied coverage to the insured because of a misrepresentation when an insured failed to disclose that it was hauling motor vehicles and indicated only that it was hauling containerized freight on its application. (Superior Dispatch, Inc. v. Insurance Corp. of New York, 2010 WL 187957 (Cal.App. 2 Dist.))
We were actually getting worried that we would not find a preemption case this month. We were limited to finding a case in the Southern District in Texas in which the court upheld the preemption issue on a motion for reconsideration. The court held that the Carmack Amendment preempted any claim for non-delivery of COD checks, acknowledging that it preempted any claim for an intentional tort, including conversion. The motor carrier was entitled to assert its limitation of liability. (Tran Enterprises, LLC v. DHL Express (USA), Inc., 2010 WL 148404 (S.D.Tex.))
AUTOMOBILE:
Adding an additional insured to a package policy can be tricky. The Eastern District in California considered the issue in an action involving a joint hauling agreement. Although we generally see contracts between shippers and carriers, this time the contract also contained a requirement that another carrier be added as an additional insured on a cargo policy and an interchange policy. When the additional insured endorsement was issued, however, it modified all coverages including the auto liability. The insurer was successful in having the court determine that the second carrier could not be an additional insured under the auto policy because the hauling agreement did not require indemnity for auto liability. (Carolina Cas. Ins. Co. v. Ortiz, 2010 WL 55880 (E.D.Cal.))
The 4th Circuit held that Virginia Code § 46.2-2143 is a registration statute that sets forth the financial responsibility and insurance requirements before the Department of Motor Vehicles can issue registration for a vehicle operated by a motor carrier and is not a statute which requires that an auto policy limits be increased automatically. Where a carrier was not obligated to register the tractor-trailer involved in this accident in Virginia, as he was from another state, the policies out of state insurance clause could not be used to support an argument that policy limit should be increased to $750,000. (Canal Ins. Co. v. Barker, 2009 WL 5175590 (C.A.4 (Va.))
Federal Express was unsuccessful in upholding a lower court decision when the 8th Circuit concluded that perhaps it did control the operations of drivers who were working for carriers who were operating under contracts with Federal Express. The court held that there were sufficient indicia of control to warrant a remand for trial. The Court did, however, preclude the plaintiff from asserting a claim under the FMCSR as the plaintiff had never specifically pled a claim under the statute. (Huggins v. FedEx Ground Package System, Inc., 2010 WL 154883)
We know that most drivers are not happy when involved in accidents which may be reported to the DOT. This month a driver who was terminated by Swift sought to assert a libel claim in Arizona against Swift because Swift reported to DriverFacts 3 small incidents in which the driver was involved. The court dismissed the action as the record showed that Swift specifically identified the three incidents at issue as not “DOT Reportable” and properly noted that none of the incidents involved injuries or damages in excess of $5000.00 Nothing was incorrect so a libel claim would not stand. Reid v. Swift Transp. Co., Inc., 2010 WL 133690 (Ariz.App. Div. 1).
Various companies have separate claim entities which handle the adjustment of losses but are not the issuing insurer. In this case an insurer sought recovery from an insurance agent for payments it was compelled to make under filings for accidents involving nonscheduled vehicles. The agents insurer denied coverage, The District Court in South Carolina held that a plaintiff had no basis to assert a claim against the claims division for coverage under a policy, dismissing the action against that division. The Court also held that a third party judgment holder had no right to assert a bad faith claim against the actual insurer, leaving only the actual coverage issue to be addressed in subsequent proceedings. National Specialty Ins. Co. v. AIG Domestic Claims, Inc., 2010 WL 200800 (D.S.C.)
A Georgia Appellate Court held that the state’s direct action statute, which permits a direct action against a motor carrier’s insurer before obtaining a judgment against the insured, did not apply to an excess policy insurer. The statute did not specify what type of insurance carrier, i.e. primary or excess, but the court held that the intent of the statute was to address the minimum financial responsibility insurer which would generally be the primary insurer. The Court also held that the fact that the motor carrier was self-insured for the million dollar requirement did not change the analysis. (Werner Enterprises, Inc. v. Stanton, — S.E.2d —-, 2010 WL 103879 (Ga.App.))
The District Court in Montana considered the request of one trucking company for dismissal of contribution claims against it arising from a accident involving 5 different tractor-trailers. Reading the story of the event is itself interesting, showing how difficult it is to figure out who is ever at fault. One carrier sought dismissal because it was already out of the initial accident scene when the plaintiff was injured. Even that was not enough where so many carriers were involved and arguments continued to exist as to which carriers could have contributed to subsequent injuries. (Florea v. Werner Enterprises, Inc., 2010 WL 49810 (D.Mont.))
MISCELLANEOUS:
Today we see many joint operations with one corporation doing warehousing and another doing trucking. This month a New York Appellate court held, in an action against the NJ warehouse for personal injuries, that the actions of the trucking company in transporting goods in NY could not support jurisdiction over the warehouse. The court also held that the warehousing had not engaged in continuous and systematic course of doing business in New York even where the corporation mailed brochures to customers in New York, had website accessible worldwide, and stored products at warehouses that were transported to or from New York, where corporation was organized and had principal place of business in New Jersey, was not registered to do business in New York, neither owned nor leased any real or personal property in New York, paid no New York taxes, did not transport products sold to New York customers, and had corporate officers that did not reside in New York and only visited New York once or twice annually to solicit sales or maintain customer relationships. (Parsons v. Kal Kan Food, Inc., 2009 WL 4981578 (N.Y.A.D. 3 Dept.))
