Opinion
CASE NO. 2:21-CV-00432
2022-06-01
KIM KOOL INC. v. COBRA TRUCKING LLC et al.
John T. Andrishok, Taylor Porter et al., Baton Rouge, LA, for Kim Kool Inc. Ian A. MacDonald, Jones Walker, Lafayette, LA, for Cobra Trucking LLC. Michael P. Corry, Christie P. Noel, Briney Foret Corry, Lafayette, LA, for Progressive County Mutual Insurance Co.
John T. Andrishok, Taylor Porter et al., Baton Rouge, LA, for Kim Kool Inc.
Ian A. MacDonald, Jones Walker, Lafayette, LA, for Cobra Trucking LLC.
Michael P. Corry, Christie P. Noel, Briney Foret Corry, Lafayette, LA, for Progressive County Mutual Insurance Co.
MEMORANDUM ORDER
TERRY A. DOUGHTY, UNITED STATES DISTRICT JUDGE
Pending before the Court is a Motion for Summary Judgment [Doc. No. 24] filed by Defendant Progressive County Mutual Insurance Company ("Progressive"). An Opposition [Doc. No. 26] was filed by Kim Kool, Inc. ("Kim Kool").
For the following reasons, the Motion for Summary Judgment filed by Progressive is DENIED.
I. BACKGROUND AND PROCEDURAL HISTORY
Kim Kool is in the business of designing and manufacturing heat exchangers and cooling packages for industrial applications. In 2019, Kim Kool contracted with Compression Leasing Services ("CLS") in Casper, Wyoming to fabricate a custom heat exchanger. Kim Kool had previously entered into a trucking brokerage agreement with Total Quality Logistics ("TQL") to transport its products to customers across the country. In December 2019, Kim Kool used TQL to obtain transportation of one of its heat exchangers from Sulphur, Louisiana, to Casper, Wyoming. TQL retained the services of Cobra Trucking Company, LLC ("Cobra"), a Texas limited liability company with a principal place of business in Rosenberg, Texas. Cobra is a common carrier which maintains a United States Department of Transportation assigned carrier number.
[Doc. No. 26]
[Doc. No. 24]
On or about December 19, 2019, Cobra took possession of the heat exchanger in Sulphur, Louisiana, and proceeded to Houston, Texas prior to traveling to Casper, Wyoming. When Cobra picked up the heat exchanger, it was subject to a bill of lading, which provided that Cobra, as a common carrier, is "fully responsible and absolutely liable for any loss or damage to the described cargo regardless of the circumstances occasioning such." Cobra then proceeded to Houston, Texas. When Cobra picked up the heat exchanger from Kim Kool, a protective tarp was placed over the heat exchanger in order to "protect against the elements." Kim Kool maintains that at some point between the trip from Texas to Wyoming, the protective tarp "failed" and caused extensive damage to the heat exchanger, "including damage to the fins of the exchanger and significant paint damage to the sheet metal and frame."
[Doc. Nos. 24, 26]
[Doc. No. 26, p.2]
[Id.]
[Id.]
The damage to the heat exchanger was discovered when the equipment arrived at the CLS facility in Wyoming. However, CLS needed the equipment urgently, and CLS and Kim Kool worked together to repair the heat exchanger. Kim Kool alleges that the costs it incurred to repair the damages totaled $94,646.08. Kim Kool further maintains that CLS would not accept the heat exchanger unless it was repaired, and Kim Kool reimbursed CLS for the portion it paid for the repairs.
[Id.]
Kim Kool then forwarded an invoice to TQL for the damages. TQL rejected the claim, and informed Kim Kool to pursue Cobra for damages. Kim Kool submitted a claim to Cobra and Progressive, Cobra's insurer, and it was rejected.
[Id., p. 3]
Progressive issued a commercial auto policy to Cobra with an effective period of March 28, 2019, to March 28, 2020. The policy contains a Form F Public Policy Endorsement and a Form MCS-90 Endorsement for Motor Carrier Liability Policies of Insurance for Public Liability Under Sections 29 and 30 of the Motor Carrier Act of 1980. These are both dated September 6, 2019.
Number 00550984-0
[Doc. Nos. 24, 26]
In the instant Motion, Progressive moves for summary judgment on the basis that the driver of the Cobra truck was an "excluded driver" pursuant to a "Named Driver Exclusion Endorsement," and, because of this, it states it is precluded from coverage under the Texas policy. Kim Kool maintains that Progressive disregards the public liability endorsements in their Motion, which mandates coverage for the damages that were sustained by Kim Kool.
[Doc. No. 24]
[Doc. No. 26]
On August 21, 2020, Kim Kool filed the instant lawsuit, which alleged that Cobra was negligent and breached its obligation as a common carrier in failing to properly secure the heat exchanger and to otherwise ensure that the heat exchanger was fully protected during the trip. Kim Kool also alleges that Progressive issued an insurance policy to Cobra and that policy covered liability in the accident. On February 22, 2021, this matter was removed from the 14th Judicial District Court, Calcasieu Parish to this Court.
The issues are briefed, and the Court is prepared to rule.
II. LAW AND ANALYSIS
A. Summary Judgment Standard
Summary judgment shall [be] grant[ed] ... 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. 56(A). A fact is "material" if proof of its existence or nonexistence would affect the outcome of the lawsuit under applicable law in this case. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is genuine if the evidence is such that a reasonable fact finder could render a verdict for the nonmoving party. Id.
If the moving party can meet the initial burden, the burden then shifts to the nonmoving party to establish the existence of a genuine issue of material fact for trial. Norman v. Apache Corp. , 19 F.3d 1017, 1023 (5th Cir. 1994). The nonmoving party must show more than some metaphysical doubt as to the material facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In evaluating the evidence tendered by the parties, the Court must accept the evidence of the nonmovant as credible and draw all justifiable inferences in its favor.
In deciding unopposed summary judgment motions, the Fifth Circuit has noted that a motion for summary judgment cannot be granted simply because there was no opposition. Hetzel v. Bethlehem Steel Corp. , 50 F.3d 360, 362 (5th Cir. 1995). The movant has the burden to establish the absence of a genuine issue of material fact and, unless it has done so, the court may not grant the motion, irrespective of whether any response was filed. Powell v. Delaney , No. CIV.A.SA00CA0426NN, 2001 WL 1910556, at *5–6 (W.D. Tex. June 14, 2001). Nevertheless, if no response to the motion for summary judgment has been filed, the court may find as undisputed the statement of facts in the motion for summary judgment. Id. at 1 and n.2 ; see also Thompson v. Eason , 258 F. Supp. 2d 508, 515 (N.D. Tex. 2003) (where no opposition is filed, the nonmovant's unsworn pleadings are not competent summary judgment evidence and movant's evidence may be accepted as undisputed). See also: UNUM Life Ins. Co. of Am. v. Long , 227 F. Supp. 2d 609 (N.D. Tex. 2002) ("Although the court may not enter a ‘default’ summary judgment, it may accept evidence submitted by [movant] as undisputed."); Bookman v. Shubzda , 945 F. Supp. 999, 1002 (N.D. Tex. 1996) ("A summary judgment nonmovant who does not respond to the motion is relegated to his unsworn pleadings, which do not constitute summary judgment evidence.").
The court has no obligation to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Forsyth v. Barr , 19 F.3d 1527, 1533 (5th Cir. 1994).
B. Analysis
Progressive asserts in its Motion for Summary Judgment that it is entitled to dismissal in this suit because of its "Named Driver Exclusion Endorsement" ("Exclusion Endorsement"). The Exclusion Endorsement states in pertinent part:
If you have agreed to exclude any person, as listed on the declaration page, from coverage under this policy, then we will not provide coverage for any claim arising from an accident or loss involving a motorized vehicle being operated by that excluded driver. This includes any claim for damages made against any named insured, any person insured under the policy, or any other person or organization that is vicariously liable for an accident arising out of the operation of a motorized vehicle by the excluded driver or any claim for uninsured or underinsured motorist coverage, medical payments coverage, or physical damage coverage made by you, a relative, or any insured person with respect to an accident arising out of the operation of a motorized vehicle by the excluded driver.
[Doc. No. 24-4, pp. 1-2]
Specifically, Progressive asserts that the driver of the Cobra truck during the incident at issue was an excluded driver as described in this Exclusion Endorsement. Progressive further asserts that it is entitled to summary judgment because Texas law should apply in this case, and that there is a conflict between Louisiana and Texas law here. Progressive maintains that a named driver exclusion, like the one here, is enforceable in Texas but not in Louisiana. Therefore, Progressive states that an application of Louisiana law to read into the Texas policy would re-write the policy to provide liability coverage for a situation the actual contract had excluded.
In response, Kim Kool argues that the Form F Public Policy Endorsement ("Public Policy Endorsement") and Form MCS-90 Endorsement for Motor Carrier Liability Policies of Insurance for Public Liability Under Sections 29 and 30 of the Motor Carrier Act of 1980 ("Form MCS-90") (collectively "Public Liability Endorsements") both preclude the granting of summary judgment in favor of Defendants.
The Public Policy Endorsement states in pertinent part:
The certification of the policy, as proof of financial responsibility under the provisions of any State motor carrier law or regulations promulgated by any State Commission having jurisdiction with respect thereto, amends the policy to provide insurance for automobile bodily injury and property damage liability in accordance with the provisions of such law or regulations to the extent of the coverage and limits of liability required thereby ; provided only that the insured agrees to reimburse the company for any payment made by the company which it would not have been obligated to make under the terms of this policy except by reason of the obligation assumed in making such certification.
[Doc. No. 26-2, p. 2] (emphasis added). Louisiana is listed on this form as a state commission with whom the Uniform Motor Carrier Bodily Injury and Property Damage Liability Certificate of Insurance has been filed.
The Form MCS-90 states in pertinent part:
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 (FMCSA). 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. Such insurance as is afforded, for public liability, does not apply to injury or death of the insured's employees while engaged in the course of their employment or property transported by the insured designated as cargo.
[Doc. No. 26-2, p. 5]. The Schedule of Limits within the Form MCS-90 states that "For-hire (in interstate or foreign commerce with a gross vehicle weight rating of 10,000 or more pounds) ... Property (nonhazardous) ... $750,000."
Kim Kool's argument is that the purpose of the MCS–90 Endorsement is to assure compliance with federal minimum levels of financial responsibility for motor carriers. 49 C.F.R. § 387.1. The MCS–90 Endorsement must be attached to any liability policy issued to for-hire motor carriers operating motor vehicles transporting property in interstate commerce. 49 C.F.R. §§ 387.3, 387.7.
The United States Court of Appeals for the Fifth Circuit held that "[t]he endorsement creates a suretyship, which obligates an insurer to pay certain judgments against the insured arising from interstate commerce activities, even though the insurance contract would have otherwise excluded coverage." Canal Ins. Co. v. Coleman , 625 F.3d 244, 247 (5th Cir. 2010). The Canal court clarified that the MCS-90 endorsement only applies to cover a vehicle when "presently engaged in transportation of property in interstate commerce." Id. at 249. Thus, Kim Kool asserts that the obligation imposed by the MCS-90 is not one of defense, but it instead is one of indemnity in the form of suretyship. If the case were to result in that of a final judgment favor of a third party against an insured, the insurer would have the obligation to pay that final judgment up to the applicable policy limits even in the event that there is an applicable exclusion such that the insurer has no duty to defend its insured. Canal Ins. Co. v. XMEX Transp., LLC , 126 F.Supp.3d 820, 828 (W.D. Tex. 2015).
Essentially, Kim Kool argues that the MCS-90 Endorsement would provide coverage for the damages that the heating exchange system sustained, up to the mandatory limit of $750,000. Kim Kool asserts that it is uncontested that an exclusion would apply here, thereby triggering the Public Liability Endorsements.
The Form F Public Policy Endorsement and Form MCS-90 Endorsement for Motor Carrier Liability Policies of Insurance for Public Liability Under Sections 29 and 30 of the Motor Carrier Act of 1980.
Progressive did not file a reply to Kim Kool's response that the Public Liability Endorsements would preclude the application of the excluded driver endorsement.
The Court agrees with Kim Kool that the Public Liability Endorsements would preclude the application of the excluded driver endorsement. In particular, the Form F Public Policy Endorsement literally states that "The certification of the policy ... amends the policy to provide insurance for automobile bodily injury and property damage liability[.]" [Doc. No. 26-2, p. 2] (emphasis added). Additionally, the Form MCS-90 Endorsement states:
Id.
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.
[Doc. No. 26-2, p. 5].
Based on this finding, the Court has determined that Progressive is not entitled to summary judgment on the issue of the named driver exclusion issue as it relates to a choice of law provision. Progressive itself has not provided the Court with any argument about how its own Endorsements would or would not amend the Excluded Driver Endorsement that it claims would be "re-written" if Louisiana Law were to be applied to it.
Id.
III. CONCLUSION
Based on the reasons set forth herein,
IT IS ORDERED that Defendant Progressive County Mutual Insurance Company's Motion for Summary Judgment [Doc. No. 24] is DENIED .