United States District Court, W.D. Oklahoma
L. RUSSELL UNITED STATES DISTRICT JUDGE.
the Court are cross motions for summary judgment, Docs. 32
& 35, and the matter is fully briefed. Docs. 36, 42,
& 43. For the reasons that follow, summary judgment is
entered in favor of Plaintiff.
lone issue before the Court is whether Garnishee Global Hawk
Insurance Co. must reimburse Plaintiff Environmental Cleanup,
Inc. (ECI) for cleanup services ECI performed at the request
of Defendant Ruiz Transport. ECI believes it is entitled to
reimbursement, while Global Hawk disagrees. Both parties have
moved for summary judgment. The specific dispute is whether
Global Hawk is liable under the surety obligation included in
the policy it issued to Ruiz Transport. Ruiz Transport and
Global Hawk included the surety obligation in the insurance
contract in order to comply with the Motor Carrier Act, a
federal law governing trucking companies like Ruiz Transport.
enacted the Motor Carrier Act of 1980 (MCA), Pub.L. No.
96-296, 94 Stat. 793, “to deregulate the trucking
industry, increase competition, reduce entry barriers, and
improve quality of service.” Carolina Casualty Ins.
Co. v. Yeates, 584 F.3d 868, 873 (10th Cir. 2009). And
in no small part, the MCA was meant to “address abuses
that had arisen in the interstate trucking industry which
threatened public safety, including 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.” Canal
Ins. Co. v. Distribution Servs., Inc., 320 F.3d 488, 489
(4th Cir. 2003). To that end, the MCA and subsequent
regulations promulgated by the Federal Motor Carrier Safety
Administration now require interstate motor carriers to
obtain “a special endorsement . . . providing that the
insurer will pay within policy limits any judgment recovered
against the insured motor carrier for liability resulting
from the carrier's negligence, whether or not the vehicle
involved in the accident is specifically described in the
policy. Yeates, 584 F.3d at 874 (citing Ill.
Cent. R.R. v. Dupont, 326 F.3d 665, 666 (5th Cir.
2003)). The endorsement guarantees that commercial motor
carriers are “willing and able to comply with . . .
[certain] minimum financial responsibility
requirements.” 49 U.S.C. § 13902(a)(1).
motor carrier proves this “requisite financial
responsibility in one of three ways-(1) by an MCS-90
endorsement, (2) by a surety bond, or (3) by
self-insurance.” Yeates, 584 F.3d at 874; 49
U.S.C. § 31139(f)(1)(A); 49 C.F.R. § 387.7(d)(1).
Many carriers opt for the MCS-90 endorsement, which is why
every liability insurance policy issued to motor carriers of
interstate commerce contains the MCS-90 endorsement.
Herrod v. Wilshire Ins. Co., 499 Fed.Appx. 753, 755
(10th Cir. 2012). The endorsement is essentially a surety
obligation; it provides that the motor carrier's insurer
“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 . . . the
[MCA]” whether or not the vehicle involved in the
accident is specifically described in the policy. 49 C.F.R.
§ 387.15; Doc. 35, Ex. 1. That said, the MCS-90
endorsement does not create a windfall for the motor carrier
or alter the terms of the insurance policy's other
coverage limits, since “[a] motor carrier may be
required to reimburse the MCS-90 insurer for any payout the
insurer would not otherwise have been obligated to
make.” Carolina Cas. Ins. Co. v. Yeates, 584
F.3d 868, 879 (10th Cir. 2009).
question is whether the MCS-90 endorsement on Ruiz
Transport's insurance policy applies, thus entitling ECI
to compensation for the substantial remediation services it
performed for Ruiz. Global Hawk issued the insurance policy
to Ruiz on June 13, 2014, and the policy was still in effect
on May 26, 2015. Doc. 32, Ex. 1. That day, Ruiz Transport was
hauling transformers from Mexico to Kansas when the tractor
pulling the trailers was involved in a single-vehicle
accident, spilling hundreds of gallons of transformer oil and
diesel fuel on the highway and surrounding areas.
Id.; Doc. 35, at 4. On Ruiz's request, ECI
performed remediation services over a four-day period: it
allegedly shipped samples of contaminated soil to a testing
site, removed and delivered several tons of contaminated soil
to a disposal facility, and subsequently swapped out the
contaminated soil for several tons of uncontaminated soil-all
to the tune of approximately $112, 000. Doc. 35, at 2.
sued Ruiz Transport after it refused to pay. And when Ruiz
Transport did not respond, the Court entered a default
judgment in favor of ECI in the amount of $126, 431.10. Doc.
12. ECI then commenced this post-judgment garnishment
proceeding against Global Hawk, arguing that the MCS-90
endorsement entitled it to reimbursement. Doc. 16. In
ECI's view, the endorsement's coverage limit of $750,
000-as required under the MCA, 49 U.S.C. §
31139(b)(2)-clearly covers the judgment rendered against Ruiz
Transport. The endorsement expressly provides that the
insurer agrees to pay for final judgments recovered against
the insured for public liability resulting from the
negligent operation of covered vehicles. Doc. 35, Ex. 1. The
endorsement specifically defines public liability to include
environmental restoration. And environmental
restoration is broadly defined as
restitution for the loss, damage, or destruction of natural
resources arising out of the accidental discharge, dispersal,
release, or escape into or upon the land . . . of any
commodity transported by a motor carrier. This shall include
the cost of removal and the ocst of necessary measures taken
to minimize or mitigate damage to human health, the natural
environment, fish, shellfish, and wildlife.
other words, ECI contends this is precisely the type of
accident contemplated by the MCS-90 Endorsement. Global Hawk,
however, disagrees. It argues that the MCS-90 endorsement
does not apply and ECI is entitled to recover only $10, 000-
the coverage limit for pollution liability under Ruiz's
purchased policy. Doc. 32, Ex. 1, at 42.
Summary Judgment Standard
judgment is proper if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that
there is no genuine issue as to any material fact and that
the movant is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56. The Court “view[s] the evidence and
draw[s] reasonable inferences therefrom in the light most
favorable to the nonmoving party.” Sanders v. Sw.
Bell Tel., L.P., 544 F.3d 1101, 1104 (10th Cir. 2008)
(internal quotation marks omitted).