Opinion ID: 170978
Heading Depth: 1
Heading Rank: 4

Heading: Majority Approach

Text: The majority of circuits approach the MCS-90 endorsement using a different framework from Empire Fire. We find their framework persuasive. First, the cases describe the insurer's obligation under the MCS-90 endorsement as one of a surety rather than a modification of the underlying policy. [8] The endorsement is a safety net in the event other insurance is lacking. See Canal Ins. Co. v. Carolina Cas. Ins. Co., 59 F.3d 281, 283 (1st Cir.1995) (holding the endorsement to be a suretyship by the insurance carrier to protect the publica safety netbut not insurance relieving ... [another] insurer. On the contrary, it simply covers the public when other coverage is lacking); see also Kline v. Gulf Ins. Co., 466 F.3d 450, 455-56 (6th Cir.2006) (same); Canal Ins. Co. v. Underwriters at Lloyd's London, 435 F.3d 431, 442 n. 4 (3rd Cir. 2006) (same); Canal Ins. Co. v. Distrib. Servs., Inc., 320 F.3d 488, 490 (4th Cir. 2003) (same); T.H.E. Ins. Co. v. Larsen Intermodal Servs., Inc., 242 F.3d 667, 672 (5th Cir.2001) (same); Harco Nat'l Ins. Co. v. Bobac Trucking Inc., 107 F.3d 733, 736 (9th Cir.1997); Occidental Fire & Cas. Co. of N.C. v. Int'l Ins. Co., 804 F.2d 983, 986 (7th Cir.1986). Under this reasoning, an MCS-90 insurer's duty to pay a judgment arises not from any insurance obligation, but from the endorsement's language guaranteeing a source of recovery in the event the motor carrier negligently injures a member of the public on the highways. Second, in marked contrast to our approach in Empire Fire, these cases describe the surety obligationto pay a negligence judgment against a motor carrier under the MCS-90 endorsementas one that is triggered only when (1) the underlying insurance policy to which the endorsement is attached does not otherwise provide coverage, and (2) either no other insurer is available to satisfy the judgment against the motor carrier, or the motor carrier's insurance coverage is insufficient to satisfy the federally-prescribed minimum levels of financial responsibility. E.g., Kline, 466 F.3d at 455-56; Underwriters at Lloyd's London, 435 F.3d at 442 n. 4; Minter v. Great Am. Ins. Co. of N. Y., 423 F.3d 460, 470 (5th Cir.2005). Third, according to the majority case law, the MCS-90 endorsement, its terms, and its operating provisions that supercede any limitation in the underlying insurance policy are only implicated as between an injured member of the public and the MCS-90 insurer. E.g., Distrib. Servs., Inc., 320 F.3d at 493. Referencing the express language of the MCS-90 endorsement which provides that all terms, conditions, and limitations in the policy to which the [MCS-90] endorsement is attached shall remain in full force and effect as binding between the insured and the company,these cases conclude the MCS-90 endorsement operates only to protect the public and does not alter the relationship between the insured and the insurer as otherwise provided in the policy. Id. Further, the MCS-90 endorsement cannot reasonably be read to alter the terms of the policy for the benefit of other insurers. Id. The endorsement, in other words, is irrelevant to and has no effect on the ultimate allocation of a judgment against a motor carrier as between the carrier and its various insurers. [9] Finally, under the majority's approach just as we held in Adams the MCS-90 endorsement operates only to guarantee a source of payment of a judgment, and does not relieve the motor carrier or its liability insurers (assuming the respective insurance policies extend to the accident at issue) of their duty to satisfy an injured party's judgment against the carrier. The peculiar nature of the MCS-90 endorsement grants the judgment creditor the right to demand payment directly from the insurer, and simultaneously grants the insurer the right to demand reimbursement from the insured. Underwriters at Lloyd's London, 435 F.3d at 442 n. 4. 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. The endorsement thereby presents neither a windfall for the motor carrier, nor does it alter the motor carrier's coverage under its other insurance policies. See Bobac Trucking Inc., 107 F.3d at 736. With this background, we turn to our analysis of the claims here.