Opinion ID: 532071
Heading Depth: 2
Heading Rank: 2

Heading: The Canal Policy

Text: 22 The Canal policy issued to Custom does not provide coverage for this occurrence in the traditional sense. The main body of the policy insures Custom for liability incurred by any insured while using specifically listed vehicles, all tractors, alone or coupled with unnamed trailers. The Custom-owned trailer involved in the accident was not specifically described in the policy, nor was it attached to a listed tractor. Thus the insuring language of the policy does not provide coverage for the accident. 23 The policy contains, however, an endorsement entitled ENDORSEMENT FOR MOTOR CARRIER POLICIES OF INSURANCE FOR PUBLIC LIABILITY UNDER SECTIONS 29 AND 30 OF THE MOTOR CARRIER ACT OF 1980 (ICC endorsement). The endorsement (MCS-90) provides: 24 [Canal] 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 ... 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.... Such insurance as is afforded for public liability does not apply to injury to or death of the insured's employees ... or property transported by the insured.... 25 [N]o condition, provision, stipulation, or limitation contained in the policy, this endorsement, or any other endorsement thereon, or violation thereof, shall relieve [Canal] from liability or from the payment of any judgment, within the limits of liability herein described.... However, all terms, conditions, and limitations in the policy to which this endorsement is attached 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 ... and for any payment that the company would not have been obligated to make under the provisions of this policy except for the agreement contained in this endorsement. (Emphasis added). 26 Canal contends that this ICC endorsement does not constitute insurance; it neither increases nor extends coverage to Custom beyond that expressed in the policy itself. The endorsement merely obligates Canal to pay third-party judgments rendered against Custom regardless whether the vehicles involved were covered under the policy. Canal then is entitled to reimbursement from Custom for judgments paid that Canal would not have been required to pay under the policy but for the ICC endorsement. Because the endorsement is not insurance, Canal argues, it provides no coverage, and First General is Custom's sole insurer with respect to Brown's accident. 27 First General responds that the endorsement by its own terms constitutes insurance. Moreover, it is primary insurance, albeit not as a matter of law. Assuming, but not conceding, that it provides primary insurance as well, First General asserts that the other insurance clauses of the two policies are identical and compatible, each limiting liability to its proportion of the total available coverage. Finally, liability must be further apportioned between the tractor and the trailer in compliance with the rule of Blue Bird Body Co., Inc. v. Ryder Truck Rental, Inc., 583 F.2d 717 (5th Cir.1978). 28 The issue to be decided at this juncture is whether an insurance policy, such as Canal's, provides primary coverage for purposes of determining liability as between two insurers where: (1) the policy itself covers only specifically listed vehicles; (2) the policy contains ICC-mandated endorsement BMC 90 requiring the insurer to pay third-party judgments obtained against its insured for occurrences involving non-listed vehicles, the insurer having the right to seek reimbursement from the insured in this circumstance; and (3) where another policy, not containing a similar endorsement, provides primary coverage. This precise question has not been answered in the Fifth, or any other, Circuit. However, our review of congressional intent, applicable ICC regulations, and our decisions in other contexts involving ICC endorsement BMC 90 lead us to conclude that such a policy does not provide primary coverage in this situation.
29 The operation and effect of ICC-mandated endorsements are a matter of federal law. Carter v. Vangilder, 803 F.2d 189, 191 (5th Cir.1986). Congress has mandated that the ICC issue operating permits to motor carriers only if the motor carrier has filed with the ICC an adequate bond, insurance policy, or other type of security ... in an amount not less than ... the Secretary of Transportation prescribes.... 49 U.S.C. Sec. 10927(a)(1). In addition, the ICC is empowered to promulgate regulations to insure that motor carriers operating tractors or trailers as lessees under leasing arrangements, such as Custom, assume total responsibility for the operation of their rented vehicles, including obtaining adequate insurance. Id. Sec. 11107. 30 Pursuant to section 11107, the ICC requires that all equipment leases entered into by authorized carrier lessees contain provisions stating that the lessee shall have exclusive possession, control, and use of the equipment for the duration of the lease, and that the lessee assume complete responsibility for the operation of the equipment for the duration of the lease. 49 C.F.R. Sec. 1057.12(c) (1988). Further, a motor carrier may not engage in interstate commerce unless it has filed with the ICC a surety bond or certificate of sufficient insurance 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 subject to ICC regulation. Id. Sec. 1043.1(a)(1) (emphasis added). 31 To assure compliance with the latter regulation and the underlying congressional mandate expressed in 49 U.S.C. Sec. 10927, the ICC has prescribed a form endorsement, BMC 90 (Rev.1982), 49 C.F.R. Sec. 1003.1; see id. Sec. 1003.3, successor and identical in relevant part to the endorsement in Canal's policy, MCS 90 (Rev.1981).
32 The decisions of this court indicate that the policy embodied in the statutes and regulations was to assure that injured members of the public would be able to obtain judgments collectible against negligent authorized carriers. Our cases have held, however, that this policy has no application to coverage disputes among insurers. 33 In Carolina Casualty Insurance Co. v. Underwriters Insurance Co., 569 F.2d 304 (5th Cir.1978), we held that the ICC endorsement did not render the attached policy primary insurance as a matter of law as against another carrier's policy not containing the endorsement. Id. at 313. We stated: 34 The purpose of [section 10927] and regulations is to assure to members of the public and shippers that a certified carrier has independent financial responsibility, within the dollar limits prescribed, to pay for losses created by its carrier operations. 35 Id. at 312 (emphasis added). The endorsement accomplishes this purpose by reading out of the policy excess- and other-insurance clauses as against injured members of the public. Id. However, this extinguishment serves no purpose as against the insured or among insurers. Indeed, the last sentence of the endorsement prescribes that as between the insurer and the insured all terms of the policy are to remain in effect. Id. (see supra italicized language of endorsement). ICC policy factors are frequently determinative where protection of a member of the public or a shipper is at stake, but those factors cannot be invoked by another insurance company which has contracted to insure a specific risk and which needs no equivalent protection. Id. at 313 (emphasis added); see also Empire Indemnity Insurance Co. v. Carolina Casualty Insurance Co., 838 F.2d 1428, 1433 (5th Cir.1988) (policy not specifically covering tractor-trailer involved in accident but containing endorsement did not create coverage); Carter v. Vangilder, 803 F.2d 189 (5th Cir.1986). 36 Where, as here, a policy does not provide coverage for nonlisted vehicles except to third-party members of the public through operation of ICC form endorsement BMC 90, the policy provides no coverage for purposes of disputes among insurers over ultimate liability. Therefore, as against First General, Canal's policy provides no coverage. Because we hold that First General provides coverage and Canal does not, we do not reach First General's contention that liability should be further apportioned according to Blue Bird Body Co., supra.