Here we are at the end of February already. It amazes me how quickly the months go by and how things just never slow up anymore. We would like to thank those of you who have responded to our recent survey. If you have not, we would ask that you take a few moments and complete it so that we can determine what else we can do to help make your use of our services the best it can be. If you do not have the email with the link to the survey please contact Mark Schweber and he will get it to you. Shuie and his gang of teckies are constantly finding new ways to improve and enhance the CAB experience and are always interested in hearing from you on things you might like to see.
This month we report:
MEXICAN CARRIERS – The beleaguered long haul cross border pilot program has finally added a new participant. The FMCSA approved Grupo Behr de Baja California as the 10th participant. Whether they will get to the required numbers before the program expires looks unlikely.
VEHICLE CRASHES – The National Safety Council released its preliminary analysis of vehicle crashes for 2012. It estimates that 36,200 people died in vehicle crashes in 2012, up from the previous year total of 34,600. There was also an increase in needed medical care following the events, up 5%. The rate of vehicle deaths increased 1.23 per 100 million vehicle miles traveled. This report is slightly different from the NHTSA report as it reports all deaths as long as they occurred within one year of the accident. The NTHSA only counts traffic deaths that occurred within 30 days of the crash.
MOTOR COACH REGULATIONS – The FMCSA has announced a crackdown on unsafe bus operations. The FMCSA will work with local and state police to investigate driver qualifications, equipment, scheduling and other safety concerns of high-risk carriers. The first part of the crackdown will take the next two months and will include a complete analysis of bus safety and enforcement programs. More bus companies are expected to be taken off the roadway.
INTERMODAL FREIGHT – The Intermodal Association of North America reports that intermodal freight in North America set an all-time record of 14.6 million shipments in 2012, with a huge growth in domestic container shipments in the fourth quarter. We remind underwriters of the additional concerns and risk in underwriting containerized freight when the condition, quality and value of the cargo is often unknown.
BROKER BONDS – October 1, 2013 is the date set for compliance with the new broker bonds. The bond is being increased from $10,000 to $75,000. All brokers and forwarders must be registered by that date. You can view the frequently asked questions on the changes in broker regulations here.
HOURS OF SERVICE – The Commercial Vehicle Safety Alliance has requested that the FMCSA delay implementing scheduled changes to the hours-of-service rules for truck drivers until three months after a pending legal challenge is resolved. Oral arguments are set for March 1 and at the current time the rules are set to take effect in July.
OUT OF SERVICE ORDERS – California driver Nebyou Brook has been shut down by the FMCSA for “egregious” violation of safety and traffic laws while operating a truck, including possession and consumption of alcohol and controlled substances while driving, and hours of service violations. The FMCSA also shut down Top Class Bus Co and Colleen James, the registered agent for the company, after federal investigators found extensive safety violations, including driver fatigue, forged logs, lack of maintenance and substance abuse and drug testing. Earlier in the month they shut down Scapadas Magicas LLC, a passenger carrier which crashed on a mountain road, killing 7 passengers and injuring dozens. FMCSA investigators also found that the company had failed to ensure that its vehicles were systematically inspected, repaired and maintained, or that its drivers were properly qualified and licensed.
EMPLOYMENT SCREENING – The NTSB has released its recommendations to the FMCSA following a fatal crash involving a truck and an Amtrak train in Nevada in 2011. The NTSB has urged the FMCSA to create a national database for commercial drivers and require motor carriers to screen 10 years of driver employment history prior to hiring. Specifically, the four NTSB recommendations to FMCSA are as follows:
H-12-54: Create a mechanism to gather and record commercial driving-related employment history information about all drivers who have a commercial driver’s license, and make this information available to all prospective motor carrier employers.
H-12-55: Using the mechanism developed in Safety Recommendation H-12-54, require motor carriers to conduct and document investigations into the employment records of prospective drivers for the 10 years that precede the application date.
H-12-55: Require motor carriers to retrieve records from the Commercial Driver’s License Information System (CDLIS) and the National Driver Register (NDR) for all driver applicants so that they can obtain a complete driving and license history of prospective drivers.
H-12-56: Inform commercial vehicle inspectors of (1) the importance of taking pushrod stroke measurements within the specified pressure range, (2) the relationship between pushrod stroke and specific air pressure, and (3) the consequence of taking measurements outside of this range.
CASES:
AUTO
The Appellate Division in New Jersey concluded that a shipper was not entitled to seek a defense and indemnity under a trucker’s auto policy. In this case an action was commenced by the driver when he was negligently harmed when a bungee cord supplied by the shipper on a rack used for delivery broke free. The court held that the use of the bungee court was not integral to the unloading and therefore did not arise out of the use of the auto. (Gap v. Travelers Insurance Co., 2013 WL 462081)
Deciding the issue under Missouri law, the Northern District of Missouri concluded that a shipper owes a duty to protect a driver only from latent defects in loading cargo. However when determining whether a defect was latent, the court considered the experience of the driver and the fact that the shipper had made no representations as to the safety of the cargo, ultimately concluding that the defect was patent, granting summary judgment to the shipper. (Aragon v. Wal-Mart Stores, 2013 WL 593837)
In the Appellate Court in Illinois the court upheld a $2,275 million dollar judgment against a trucking company and its driver concluding that the many objections and contentions of trial raised by the defendants were without merit, forfeited or harmless. (Kennedy v. Garfoot Trucking, 2013 WL 508997)
Penske was not found responsible for failure to maintain its equipment in an action by a driver who was injured when totes fell on him. The fact that Penske negligently failed to insure that the internal lights in the trailer were working did not exceed the percentage of negligence of the driver, who continued to use the equipment knowing that the lights were defective, placing himself in harm’s way by unloading in the dark. (Ritter v. Penske Trucking, 2013 WL 530487)
In Florida an insurer who has a duty to defend is precluded from seeking contribution from another insurer who had the same duty to defend. However, as it did in this case, if there is a finding that the non-defending insurer had a primary duty and an obligation to indemnify the harsh no-subrogation rule would not apply. (Progressive Express Insurance Company v. Florida Department of Financial Services, 2013 WL 440128.)
The Middle District of Georgia refused to write an MCS-90 or a Form F into an auto policy where there was no evidence that the insurer ever intended to write the trucking operations of the insured. The auto policy which was in question was found to provide coverage only for ordinary passenger vehicles. (Grange Insurance Co. v. Pinson Trucking Co., 2013 WL 443619)
The Court of Appeals in Kentucky considered the definition of an auto when addressing coverage under a general liability policy. The Court held that the policy did not cover claims against a rental company for negligently selecting and loading an excavator onto a designated trailer as those claims arose from the use of an auto as defined by the policy. The Court rejected the argument that the trailer was mobile equipment not subject to the exclusion (Nautilus Insurance Co. v. GrayCo Rentals, Co., 2013 WL 406421)
The District Court in Maryland refused to allow an insurer to proceed with a declaratory judgment which sought to determine whether an auto or a g/l policy applied to a potential liability for misdelivery of cargo which resulted in damage when comingled with other product. Where there was no evidence that the shipper or consignee had filed any action and any action was likely time barred if subsequently filed the court concluded that there was no controversy to warrant the action continuing. (Empire Fire & Marine v. Gross, 2013 WL 524766)
The Eastern District of Virginia upheld a defense verdict in favor of a trucker, supporting a jury instruction which permitted a negative inference when there was a material missing witness- the plaintiff! The Court held that the plaintiff clearly had material information about the accident and that counsel’s gamesmanship on evaluating these issues was his own decision and he could not complain about it after losing at trial. (Scott v Watsontown Trucking Co., 2013 WL371654)
A trucker was not held to the employer of an individual who was bringing a part to a driver when there was an accident. The Appellate Court in Louisiana held that the evidence only showed that the individual was a friend helping a friend and that the trucker and its insurer would not be liable for the injuries caused by the accident. (Ralph Coleman v. Gregory Landry, 2013 WL 440102)
The Southern District of New York held that a shipper can be bound by a forum selection clause entered into by its agent with a downstream carrier and that the agreement was sufficient to confer personal jurisdiction on the shipper (Mahmoud Shaban & Sons, Inc. v Mediterranean Shipping Co., 2013 WL 316151)
CARGO
For those of you who have heard me raise my concerns about the fact that a motor truck cargo form and a continent cargo form can both be triggered, pay attention. The Northern District in Illinois held that to be the case, concluding that the insured could argue coverage under both forms when it sought recovery for a cargo loss which it had brokered to a third party, but which it may have legally bound itself to transport. Interestingly the court also held that while the contingent policy stated that it was excess over the trucker’s limits, it also stated that it was reduced by the trucker’s limits, thereby rendering that coverage non-existent when the limits were the same. (Custom Companies v. North River Insurance Co., 2013 WL 441170)
Summary judgment was denied to a shipper who sought recovery from a motor carrier for breaching its agreement as to the type of commodities which could be hauled in trailers used for the shipper’s goods. The shipper had been subjected to damages when allegedly contaminated goods were delivered to its customer and intermingled with other product. The Court held that there were questions of fact as to whether an indemnity agreement extended to this type of claim, and also concluded that a negligence claim would not stand where there a contract in place between the parties. (Cargill v Ron Burge Trucking, 2013 WL 608520.)
MISCELLANEOUS
Removal on the grounds of diversity and $75,000 minimum damages was held valid in the Northern District of Georgia, despite the fact that removal took place more than a year after the suit was filed. The Court held that the plaintiff acted in bad faith by failing to disclose that the damages would be greater than the jurisdictional limit until after the one year mark had past and that removal was timely where the defendant was not made fully aware that the damages were in excess of $75,000 until such time as the plaintiff had served specific monetary information on the damages. (Cameron v Teeberry Logistics, 2013 WL 388428)
In the Middle District in Florida the Court remanded a personal injury action back to state court when the only allegation that the jurisdictional limit was more than $75,000 was a letter sent for settlement purposes prior to suit being filed. (Downs v. Beam Brothers Trucking, 2013 WL 593939)
The issue of whether New Jersey or New York law applied to the determination of an additional insured under a trucker’s policy is on its way to the 2d Circuit. The Southern District certified an interlocutory appeal on the issue so as to avoid the potential for unnecessary litigation if the policy does not cover the additional party. (Certain Underwriters at Lloyd’s of London v. Illinois National Ins. Co., 2012 WL 310383)
Happy St. Patty’s Day, Happy Spring, Happy Passover and Happy Easter! Whatever you celebrate – Enjoy!
