Opinion
CAUSE NO. 1:20CV305-LG-RPM
2022-03-28
WESCO INSURANCE COMPANY, Plaintiff v. Edward Eugene RICH and Edward Shayne Rich as Wrongful Death Beneficiaries of Ladonna C. Rich, Deceased; Yasser Sardinas Armesto; DKY Express, LLC; Sam Freight Solutions, LLC; Dairon M. Lopez; Daimi Ramos; Samuel Ramos Gonzalez; and Prime Property & Casualty Insurance, Inc., Defendants
David M. Ott, Victoria Jones Rains, Bryan Nelson, PA, Hattiesburg, MS, Benjamin Lyle Robinson, Taylor, Wellons, Politz & Duhe, LLC, Madison, MS, for Plaintiff. S. Wayne Easterling, S. Wayne Easterling, Attorney, Hattiesburg, MS, Ransom P. Jones, III, Ransom P. Jones, III, Attorney, Leakesville, MS, for Defendants Edward Eugene Rich, Edward Shayne Rich.
David M. Ott, Victoria Jones Rains, Bryan Nelson, PA, Hattiesburg, MS, Benjamin Lyle Robinson, Taylor, Wellons, Politz & Duhe, LLC, Madison, MS, for Plaintiff. S. Wayne Easterling, S. Wayne Easterling, Attorney, Hattiesburg, MS, Ransom P. Jones, III, Ransom P. Jones, III, Attorney, Leakesville, MS, for Defendants Edward Eugene Rich, Edward Shayne Rich. MEMORANDUM OPINION AND ORDER CONCERNING THE PARTIES' MOTIONS FOR SUMMARY JUDGMENT LOUIS GUIROLA, JR., UNITED STATES DISTRICT JUDGE
BEFORE THE COURT are the [71] Motion for Summary Judgment filed by Edward Eugene Rich and Edward Shayne Rich on behalf of the wrongful death beneficiaries of Ladonna C. Rich, Deceased (hereafter collectively referred to as "the beneficiaries of Rich") as well as the [77] Motion for Summary Judgment filed by Wesco Insurance Company in this declaratory judgment action. The parties have fully briefed the Motions. After reviewing the submissions of the parties, the record in this matter, and the applicable law, the Court finds that Wesco's Motion for Summary Judgment should be granted, and the Motion for Summary Judgment filed by the beneficiaries of Rich must be denied.
BACKGROUND
This declaratory judgment action arose out of a July 28, 2018, automobile accident in which a Nissan Sentra driven by Ladonna C. Rich was struck by a 2010 Freightliner driven by Dairon Lopez on Interstate 10 in Jackson County, Mississippi. (Compl. at 4, ECF No. 1). Rich was killed in the accident. (Id.) The Freightliner was owned by Yasser Sardinas Armesto, who is a member of DKY Express, LLC. (Id.). At the time of the accident, Armesto had allegedly leased the Freightliner to Sam Freight Solutions, LLC. (Id. at 5). Wesco had issued a Commercial Motor Carrier insurance policy to Sam Freight, and Prime Property & Casualty Insurance, Inc. had issued a Commercial Auto Insurance Policy to DKY Express. (Compl. at 4, ECF No. 1). The Freightliner was not listed as a covered automobile on either policy. (Compl., Exs. A & B, ECF No. 1-1 & 1-2). Both policies contain a Form MCS-90 Endorsement, which provides that the insurer agrees to pay
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 vehicle is specifically described in the policy . . . .(Compl., Ex. A at 104, ECF No. 1-1; Compl., Ex. B at 32, ECF No. 1-2). Each endorsement also requires the insured to reimburse the insurer for any payment that the insurer "would not have been obligated to make under the provisions of the policy except for the agreement contained in the endorsement." (Id.).
Ladonna Rich's husband and son, Edward Eugene Rich and Edward Shayne Rich, sued Armesto, DKY Express, Sam Freight, Lopez, and unknown defendants A, B, and C in the Circuit Court of Jackson County, Mississippi. (Compl. at 4, ECF No. 1). Sam Freight's insurer, Wesco, filed the present Complaint for Declaratory Judgment seeking the following declarations:
a. The Wesco policy does not provide coverage for the subject accident;(Id. at 7). In a prior opinion, this Court held that Prime was entitled to judgment on the pleadings because (1) the 2010 Freightliner was not a "covered auto" under the Prime policy, (2) Wesco did not have standing to seek a declaration of coverage under Prime's MCS-90 endorsement, and (3) coverage under a MCS-90 endorsement is dependent upon a 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.
b. The Prime policy does provide coverage for the subject accident;
c. If the Prime policy does not provide such coverage and the Prime MCS 90 does not apply and Wesco MCS 90 does apply, then Wesco is entitled to a judgment against Samuel Ramos Gonzalez as the owner of Sam Freight and Sam Freight Solutions for all amounts Wesco must pay the Plaintiffs in the [state court lawsuit].
The remaining parties, Wesco and the Rich beneficiaries, have filed Cross-Motions for Summary Judgment that primarily seek a determination as to the amount of coverage under the Wesco MCS-90 endorsement. The parties agree that this Court should determine the amount of coverage under the endorsement even though no judgment has been entered against Wesco's insured in state court. The parties seek this declaration to assist them with settlement negotiations.
DISCUSSION
A motion for summary judgment may be filed by any party asserting that there is no genuine issue of material fact, and that the movant is entitled to prevail as a matter of law on any claim. Fed. R. Civ. P. 56. The movant bears the initial burden of identifying those portions of the pleadings and discovery on file, together with any affidavits, which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant carries its burden, the burden shifts to the non-movant to show that summary judgment should not be granted. Id. at 324-25, 106 S.Ct. 2548. The non-movant may not rest upon mere allegations or denials in its pleadings but must set forth specific facts showing the existence of a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Factual controversies are resolved in favor of the non-moving party, but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
I. WHETHER THE UNDERLYING WESCO POLICY PROVIDES COVERAGE FOR THE ACCIDENT
Wesco first seeks a declaration that its underlying policy does not provide coverage for the accident because the 2010 Freightliner is not a "covered auto" under the policy. The beneficiaries of Rich do not appear to dispute this argument, and the policy unambiguously states that only those vehicles "specifically described" in "Item Three of the Declarations for which a premium charge is shown" are covered. (Wesco policy, Ex. A to Compl. at 32, ECF No. 1-1). The only vehicle listed in Item Three of the Declarations is a 2012 Volvo tractor; thus, the underlying Wesco policy does not provide coverage for the 2010 Freightliner. As a result, Wesco is entitled to summary judgment to this extent.
However, the MCS-90 endorsement to the Wesco policy extends coverage to a final judgment against Wesco's insured, Sam Freight, for operation of any vehicle. See T.H.E. Ins. Co. v. Larsen Intermodal Servs., Inc., 242 F.3d 667, 671 (5th Cir. 2001) ("Basically, the MCS-90 makes the insurer liable to third parties for any liability resulting from the negligent use of any motor vehicle by the insured, even if the vehicle is not covered under the insurance policy."). As a result, the Court will next analyze the terms of the MCS-90 endorsement.
II. AMOUNT OF COVERAGE PROVIDED BY WESCO MCS-90 ENDORSEMENT
It appears that no judgment has yet been entered against Wesco's insured Sam Freight, but the parties seek a declaration as to the amount of coverage that the MCS-90 endorsement would provide in the event of a judgment against Sam Freight. No other issues remain in this lawsuit.
The Motor Carrier Act (MCA) contains provisions "addressing . . . the use by motor carriers of leased or borrowed vehicles to avoid financial responsibility for accidents that occurred while goods were being transported in interstate commerce." Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868, 873 (10th Cir. 2009). For example, interstate motor carriers are required to provide proof of financial responsibility of at least $750,000. 49 U.S.C. § 31139(b). Regulations promulgated by the Federal Motor Carrier Safety Administration (FMCSA) pursuant to the MCA require motor carriers to provide proof of financial responsibility in one of three ways: (1) by an MCS-90 endorsement to an insurance policy; (2) by a surety bond; or (3) by self-insurance. Yeates, 584 F.3d at 874. Sam Freight chose an MCS-90 endorsement to its Wesco policy to satisfy this requirement.
The Wesco MCS-90 endorsement states, "This insurance is primary[,] and the company shall not be liable for amounts in excess of $750,000 for each accident." (Wesco policy, Ex. A to Compl. at 104, ECF No. 1-1). The endorsement further provides:
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).(Id. at 105).
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 [Sam Freight] 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 . . . .
It is understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, this endorsement, or any other endorsement thereon, or violation thereof, shall relieve the company from liability or from the payment of any final judgment, within the limits of liability herein, irrespective of the financial condition, insolvency or bankruptcy of the insured. However, all terms, conditions, and limitations shall remain in full force and effect as binding between the insured and the company. The insured agrees to reimburse the company for any payment made by the company on account of any accident, claim, or suit involving a breach of the terms of the policy, and for any payment that the company would not have been obligated to make under the provisions of the policy except for the agreement contained in this endorsement.
The beneficiaries of Rich argue:
When the policy was issued in January of 2018[,] the Declaration[s] page . . . of the policy reflects that Wesco charged an annual premium in the amount of $11,808 for $1,000,000 of coverage. Seven months later[,] after an accident that resulted in the death of a 55-year-old lady who was a wife and mother, Wesco maintains that it is going to charge Sam [Freight] for $1,000,000 in coverage[,]
but it is only going to actually insure Sam [Freight] for $750,000 coverage.(Rich Mem. at 3, ECF No. 72). In other words, the beneficiaries contend that the policy limits of $1 million stated on the declarations page of the policy applies to coverage under the endorsement rather than the $750,000 limit stated in the endorsement itself. The heirs cite Hamm v. Canal Ins. Co., 10 F. Supp. 2d 539 (M.D.N.C. 1998), aff'd, 178 F.3d 1283 (4th Cir. 1999), and Carolina Cas. Ins. Co. v. Est. of Karpov, 559 F.3d 621 (7th Cir. 2009), in support of their arguments.
The Hamm case is not applicable to the current case. In Hamm, the plaintiff relied on language in the MCA while seeking liability limits that "go beyond the limits set out in both the declarations page of the policy and the MCS-90 endorsement." Hamm, 10 F. Supp. 2d at 543. In Hamm, the declarations page provided $1 million per occurrence and the MCS-90 endorsement provided for $1 million per accident. The slight difference in language in the declarations and endorsement was not at issue. See id. The plaintiff argued that MCA language requiring that the motor carrier obtain security sufficient to pay "for each final judgment" required the insurer to pay policy limits for each final judgment obtained against the insured regardless of the number of claims that arose in a single accident. Id. at 543. The Hamm court held that the limit of liability provided in the endorsement applied to a single accident and separate limits would not be imposed for each claimant injured in that single accident. Id. at 548.
Carolina Cas. Ins. Co. v. Est. of Karpov also concerned whether the MCA's "each final judgment" language required insurers to provide a minimum of $750,000 per claimant or per accident. Est. of Karpov, 559 F.3d at 623. The MCS-90 endorsement in that case provided for $1 million in coverage for each accident. Id. The plaintiffs had argued that MCA required $750,000 of coverage per person. Id. The Seventh Circuit held that both the MCA and the MCS-90 endorsement imposed per accident limits, not per claimant limits. Id.
The Rich beneficiaries have failed to cite any authority that would permit this Court to ignore the limit of liability stated in the MCS-90 endorsement. "Endorsements for policies of insurance (Form MCS-90) and surety bonds (Form MCS-82) must be in the form prescribed by the FMCSA and approved by the OMB." 49 C.F.R. § 387.15. The MCS-90 form includes a blank for carriers to insert a separate limit of liability than that stated in the declarations. This indicates that the form endorsement's reference to "limits stated herein" and "the limits of liability stated herein" points to the limits stated in the endorsement, not the limits stated on the declarations page of the policy. Wesco agreed to provide $1 million in coverage for "covered autos" and $750,000 in public liability coverage for vehicles operated by Sam Freight that were not listed as "covered autos" on the declarations page.
The form MCS-90 can be viewed on the FMCSA webpage, https://www.fmcsa.dot.gov/registration/form-mcs-90-endorsement-motor-carrier-policies-insurance-public-liability-under (last visited March 22, 2022).
CONCLUSION
For the foregoing reasons, the Court finds that the underlying Wesco policy did not provide coverage for the accident at issue because the 2010 Freightliner was not a "covered auto." However, the MCS-90 endorsement to the policy extends coverage for any judgment entered against Wesco's insured, Sam Freight, for operation of a motor carrier. The MCS-90 endorsement unambiguously provides that Wesco shall not be liable for amounts in excess of $750,000 for each accident.
IT IS THEREFORE ORDERED AND ADJUDGED the [71] Motion for Summary Judgment filed by Edward Eugene Rich and Edward Shayne Rich on behalf of the wrongful death beneficiaries of Ladonna C. Rich, Deceased is DENIED and the [77] Motion for Summary Judgment filed by Wesco Insurance Company is GRANTED. This lawsuit is hereby DISMISSED WITH PREJUDICE because all issues presented have been resolved by the Court. A separate judgment will be entered pursuant to Fed. R. Civ. P. 58.
SO ORDERED AND ADJUDGED this the 28th day of March, 2022.