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Militello v. Ican Logistics, Inc.

United States District Court, W.D. Oklahoma

April 11, 2018

GINA MILITELLO, now ERIN, Individually and as Administratrix of The Estate of ASHLEY NICOLE CRABTREE, Deceased, Plaintiff,
v.
ICAN LOGISTICS, INC., a Foreign For Profit Corporation; ZEYS WANG, an Individual; and HONGYUE TRUCKING, INC., Defendants. and ICAN LOGISTICS, INC., Defendant/ Third-Party Plaintiff,
v.
WESCO INSURANCE COMPANY, Third-Party Defendant.

          ORDER

          VOE HEATON CHIFE U.S. DISTRICT JUDGE.

         Plaintiff Gina Militello[1] filed this wrongful death action individually and on behalf of her deceased daughter, Ashley Nicole Crabtree, against ICAN Logistics, Inc. (“ICAN”), [2] Zeyu Wang, and Hongyue Trucking, Inc. (“Hongyue”). Her claims arise out of a vehicle accident involving the decedent and defendant Wang. ICAN filed a third-party complaint against Wesco Insurance Company (“Wesco”), who then filed a counterclaim and crossclaims for declaratory judgment against ICAN, Militello, Hongyue and Wang. Wesco and ICAN have filed motions for summary judgment and Ms. Militello has filed a partial motion for summary judgment.[3] In this order the court will address Wesco's and plaintiff's motions.

         Summary judgment is appropriate only “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 genuine dispute as to a material fact ‘exists when the evidence, construed in the light most favorable to the non-moving party, is such that a reasonable jury could return a verdict for the non-moving party.'” Carter v. Pathfinder Energy Servs., Inc., 662 F.3d 1134, 1141 (10th Cir. 2011) (quoting Zwygart v. Bd. of Cnty. Comm'rs, 483 F.3d 1086, 1090 (10th Cir.2007)). Considering the motions filed under this standard, the court concludes both Wesco's and plaintiff's motions should be denied.

         Background

         Plaintiff's daughter was killed when her vehicle collided with a tractor-trailer driven by Zeyu Wang on March 6, 2016, in Oklahoma City, Oklahoma. In the amended complaint (“complaint”) plaintiff alleges that defendant Hongyue leased a tractor and trailer and provided a driver, Wang, to ICAN. Plaintiff alleges that both ICAN and Hongyue should have known that Wang, who purportedly left California around March 5, 2016, transporting cargo in the tractor-trailer, [4] was not qualified to operate the vehicle because he could not speak or write English sufficiently to, among other things, understand traffic signs and make legible entries on reports and records. Plaintiff alleges that Wang violated federal motor carrier regulations by failing to take mandatory rest breaks while driving from California. She specifically claims that when the accident occurred Wang had been driving more than eleven hours, been on duty more than fourteen hours and had falsified his record of duty logs. Plaintiff contends that, even though there was a sign on the road where the accident occurred which stated “'Congestion Be Prepared to Stop, ' Wang negligently struck the rear of Crabtree's vehicle, fatally injuring her daughter. Doc. #15, p. 4, ¶¶ 28-29.[5] Plaintiff asserts claims for negligence and negligence per se against ICAN, Wang and Hongyue.

         ICAN filed a crossclaim against Hongyue, asserting it is entitled to contractual indemnity pursuant to the terms of the lease agreement (“Agreement”) they executed and common law indemnity for any liability imposed in this action. ICAN claims that Hongyue breached the Agreement by failing to list it as an additional insured on an insurance policy Hongyue obtained from Westco. ICAN also filed a third-party complaint against Wesco. ICAN alleges that at the time of the accident Wesco insured defendant Hongyue for “any and all of the alleged liability claimed by Plaintiff against Hongyue Trucking, Inc.” and that its (ICAN's) agreement with Hongyue required Hongyue to list it as an additional insured on the Wesco insurance policy. Doc. #18, p. 2, ¶¶ 3, 5. ICAN alleges that Wesco “breached its duty and the Lease Agreement by failing to make ICAN an additional insured under its policy.” Id. at ¶6.

         Wesco issued a commercial motor carrier insurance policy (“Policy” or “basic Policy”) to Hongyue with effective dates of February 9, 2016 to February 9, 2017. Wesco seeks a declaratory judgment that it has no duty under the Policy to defend and/or indemnity ICAN, Hongyue, Wang or any other party, principally because Hongyue was not acting as a for-hire motor carrier at the time of the accident. In her motion plaintiff asks the court to determine as a matter of law that Hongyue was a “for-hire motor carrier for the trip at issue.” Doc. #57, p. 9.

         Analysis

         It is undisputed that the basic insurance policy Wesco issued to Hongyue does not provide insurance coverage for the accident.[6] The leased tractor and trailer (“tractor”) that are the subject of the Agreement between ICAN and Hongyue were not specifically described in the Policy and are not, therefore, “covered autos” under its terms. Because they were not “covered autos, ” ICAN, Hongyue and Wang are not “insureds” under the Policy. However, attached to the basic Policy is a federally mandated MCS-90 endorsement. Plaintiff argues that it applies to provide insurance coverage for the accident.

         “Federal regulations require interstate trucking companies to maintain insurance or another form of surety ‘conditioned to pay any final judgment recovered against such motor carrier for bodily injuries to or the death of any person resulting from the negligent operation, maintenance or use of motor vehicles.'” Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868, 870 (10th Cir. 2009) (quoting 49 C.F.R. § 387.301(a); see also id. § 387.7). Most interstate trucking companies obtain the MCS-90, a specific endorsement to one or more of their insurance policy or policies, “which guarantees payment of minimum amounts, as set forth in the regulations, to an injured member of the public.” Id. (quoting 49 C.F.R. §§ 387.7, 387.9). “An MCS-90 endorsement is intended to eliminate[] the possibility of a denial of coverage by requiring the insurer to pay any final judgment recovered against the insured for negligence in the operation, maintenance, or use of motor vehicles subject to federal financial responsibility requirements, even though the accident vehicle is not listed in the policy.” Id. (internal quotation marks omitted).

         In Yeates the Tenth Circuit concluded that “the MCS-90 endorsement is intended to impose a surety obligation on the insurance company.” Id. at 879. It held:

[W]hen an injured party obtains a negligence judgment against a motor carrier, an insurer's obligation under the MCS-90 endorsement is not triggered unless (1) the underlying insurance policy (to which the endorsement is attached) does not provide liability coverage for the accident, and (2) the carrier's other insurance coverage is either insufficient to meet the federally-mandated minimums or non-existent. Once the federally-mandated minimums have been satisfied, however, the endorsement does not apply.

Id.

         Wesco asserts that most of the requirements that must be met for the MCS-90 endorsement to be triggered have not been satisfied here. It contends that a final judgment has not been entered against Hongyue, the named insured, and “the other motor carrier's aggregate coverage is [sufficient] to satisfy the federally mandated minimum levels of financial responsibility.” Doc. #49, p. 25.[7] Wesco also argues that, for the endorsement to be triggered, Hongyue must have been “operating as a for-hire motor carrier at the time of the accident.” Herrod v. Wilshire Ins. Co., 499 Fed.Appx. 753, 760 (10th Cir. 2012). As explained by the Tenth Circuit in Herrod, the “financial responsibility requirements of the MCA apply to ‘motor carriers.'” Herrod, 499 Fed.Appx. at 759 (citing 49 U.S.C. §31139(b)). The MCA defines the term as “a person providing motor vehicle transportation for compensation.” 49 U.S.C. § 13102(14). A “motor carrier” is defined by the regulations promulgated pursuant to the MCA and accompanying the MCS-90 endorsement as a “for-hire motor carrier or a private motor carrier.” 49 C.F.R. § 387.5. “[F]or-hire carriage is defined as “the business of transporting, for compensation, the goods or property of another.” Id. A motor carrier includes “a motor carrier's agent, officer, or representative.” 49 C.F.R. § 387.5. Wesco ...


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