Court Opinion

ID: 3072090
Source: CourtListenerOpinion
Date Created: 2015-10-16 00:43:11.117861+00
Date Added: 2024-06-11T12:46:41.570509
License: Public Domain

IN THE
                         TENTH COURT OF APPEALS

                                No. 10-14-00032-CV

SOUTHERN COUNTY MUTUAL INSURANCE COMPANY,
                                 Appellant
v.

GREAT WEST CASUALTY COMPANY,
                                                          Appellee

                          From the 278th District Court
                             Madison County, Texas
                         Trial Court No. 13-13371-278-06

                                   OPINION

      Southern County Mutual Insurance Company appeals the trial court’s grant of a

summary judgment in favor of Great West Casualty Company.             Great West sued

Southern County to collect on a judgment in an amount of $31,162.02 rendered in favor

of Great West against an insured of Southern County. Because the trial court did not err

in granting Great West’s motion for summary judgment, the trial court’s judgment is

affirmed.
BACKGROUND

       Tyron Black was injured in a vehicle collision with an employee of Standard Lee

Hodges and his business, UTB Trucking, while the employee was acting in the course

and scope of his employment. Hodges’s insurance company, Southern County, denied

coverage of Black’s claims because the vehicle involved in the collision was not covered

by Hodges’s insurance policy with Southern County. Black then sought compensation

for his injuries through his employer’s workers’ compensation carrier, Great West,

which paid Black $31,162.02. Great West, as the subrogee of Black, sued Hodges,

individually and doing business as UTB Trucking, to recoup the money Great West

paid to Black. Great West obtained a judgment against Hodges in the amount of

$31,162.02. When Hodges did not pay the judgment, Great West sued Southern County

to enforce the judgment pursuant to a federal motor carrier endorsement, the MCS-90,

attached to Hodges’s policy with Southern County.

       Southern County and Great West each filed traditional motions for summary

judgment: Southern County arguing that Great West could not recover through the

MCS 90 endorsement because the endorsement was not applicable to disputes among

insurers, and Great West arguing that the endorsement inures to the benefit of an

insurer asserting its subrogation rights pursuant to the Texas Labor Code. The trial

court granted Great West’s motion for summary judgment. In three issues argued

together, Southern County argues that the trial court erred in granting Great West’s

Southern County Mutual Insurance Company v. Great West Casualty Company           Page 2
motion for summary judgment and in denying Southern County’s motion for summary

judgment because a workers’ compensation carrier may not use the MCS-90

endorsement to recover its subrogation interest.

SUMMARY JUDGMENT

       We review a trial court's decision to grant or to deny a motion for summary

judgment de novo. See Tex. Mun. Power Agency v. Pub. Util. Comm'n of Tex., 253 S.W.3d
184, 192, 199 (Tex. 2007) (citing rule for review of grant of summary judgment and

reviewing denied cross-motion for summary judgment under same standard); BMTP

Holdings, L.P. v. City of Lorena, 359 S.W.3d 239, 243 (Tex. App.—Waco 2011), aff’d 409
S.W.3d 634 (Tex. 2013). In our review of cross-motions for summary judgment, we

review the summary judgment evidence presented by each party, determine all

questions presented, and render the judgment that the trial court should have rendered.

Tex. Mun. Power Agency, 253 S.W.3d at 192 (citing Comm'rs Court v. Agan, 940 S.W.2d 77,

81 (Tex. 1997)). Under the traditional summary judgment standard, the movant has the

burden to show that no genuine issues of material fact exist and that it is entitled to

judgment as a matter of law. TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., Inc.,

690 S.W.2d 546, 548 (Tex. 1985); Lotito v. Knife River Corporation-South, 391 S.W.3d 226,

227 (Tex. App.—Waco 2012, no pet.).

Southern County Mutual Insurance Company v. Great West Casualty Company            Page 3
The MCS-90 Endorsement

       There is no dispute that Hodges had an insurance policy with Southern County

which denied coverage of Black’s personal injury claims because Hodges’s vehicle

involved in the collision was not covered by the insurance policy with Southern

County. There is also no dispute that the policy contained the federally-mandated

"Endorsement for Motor Carrier Policies of Insurance for Public Liability under Sections

29 and 30 of the Motor Carrier Act of 1980," referred to as an MCS-90, which must be

attached to any liability policy issued to a registered motor carrier pursuant to 49 U.S.C.

§§ 13906(a)(1), 31139(b)(2) and 49 C.F.R. § 387. Further, there is no dispute that Great

West obtained a judgment against Hodges for the amount Great West paid to Black and

that Hodges failed to pay that judgment. The dispute is whether Great West, standing

in the shoes of Black, may enforce the MCS-90 endorsement and require Southern

County to pay the final judgment Great West recovered against Hodges for the benefits

Great West paid to Black as a result of the collision. This particular dispute has not

been addressed by any court in Texas.

       The MCS-90 in Southern County’s policy states in pertinent part:

       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 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,
Southern County Mutual Insurance Company v. Great West Casualty Company                   Page 4
       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 described, irrespective of the financial condition,
       insolvency or bankruptcy of the insured.

       49 C.F.R. § 387.15 (emphasis added). As the Fifth Circuit has said, “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.” T.H.E. Ins. Co. v. Larsen Intermodal Servs., 242 F.3d 667, 671

(5th Cir. 2001). Such is the case in this appeal.

       But Southern County argues that the MCS-90 is limited to recovery by the

injured party, not an insurance company. The purpose of the MCS-90, Southern County

argues, is to assure that injured members of the public would be able to obtain

judgments collectible against negligent authorized carriers. In support of its argument,

Southern County relies on various courts’ opinions interpreting the applicability of the

MCS-90 to the facts of those particular opinions. However, none of those cases involve

disputes between a subrogee of an injured member of the public and the insurer of the

negligent motor carrier. See e.g. Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868 (10th Cir.

2009) (dispute between motor carrier's two insurers); Travelers Indem. Co. v. W. Am.

Specialized Transp. Servs., 409 F.3d 256 (5th Cir. 2005) (dispute between a primary and an

excess carrier of the motor carrier); Canal Ins. Co. v. Distribution Services, Inc., 320 F.3d
488 (4th Cir. 2003) (dispute between insurers for trucking company and leasing

Southern County Mutual Insurance Company v. Great West Casualty Company                Page 5
company from which trucker leased the truck involved in the accident); T.H.E. Ins. Co.

v. Larsen Intermodal Services, Inc., 242 F.3d 667 (5th Cir. 2001) (dispute between motor

carrier's liability insurer and its insured trucking company for reimbursement of

amounts paid in settlement of third party personal injury claims arising from collision);

Occidental Fire & Casualty Co. v. International Ins. Co., 804 F.2d 983 (7th Cir. 1986)

(dispute between trucking company's insurer and truck lessor's insurer); Carolina Cas.

Ins. Co. v. Underwriters Ins. Co., 569 F.2d 304 (5th Cir. 1978) (dispute between insurers of

the owner of the tractor and the owner of the trailer and the insurers of the lessee and

sub-lessee of the tractor and trailer).

       We understand and agree with the general principle stated in those opinions that

as between an insurer with an MCS-90 endorsement and its insured or between joint

insurers of the insured, the MCS-90 endorsement is not triggered. See e.g. T.H.E. Ins. Co.

v. Larsen Intermodal Servs., 242 F.3d 667, 673 (5th Cir. 2001). However, in this case, the

situation is different. The dispute is not between joint insurers of Hodges or between

Hodges and Southern County. The dispute is between Great West, who paid Black’s

personal injury expenses, and Southern County who was obligated pursuant to the

MCS-90 to pay the judgment against Hodges, Southern County’s insured, for Black’s

expenses.

       The dispute here is much like that found in Global Hawk v. Century-National Ins.,

138 Cal. Rptr. 3d 363 (Cal. Ct. App. [1st Dist.] 2012, rev. denied). In Global Hawk,

Southern County Mutual Insurance Company v. Great West Casualty Company               Page 6
Century-National paid its own insured who was injured by Global Hawk's insured.

Global Hawk denied coverage based on the fact that the vehicle involved was not on

the accepted schedule of insured vehicles. Century-National then sued Global Hawk

for reimbursement because under California's Insurance Code and Century-National's

subrogation agreement with its insured, Century-National stood in the shoes of its

insured and was entitled to sue the tortfeasor and the tortfeasor's employer and its

insurer, Global Hawk, for Century-National’s insured's injuries and for reimbursement

of the benefits it paid to its insured. Global Hawk, 138 Cal. Rptr. 3d at 369-370. The court

of appeals agreed with Century-National and held that Century-National was entitled

to reimbursement through the MCS-90 endorsement. Id. at 370. See also Tri-Nat'l, Inc. v.

Yelder, No. 1:12CV209 SNLJ, 2014 U.S. Dist. LEXIS 15526 (E.D. Mo. Feb. 7, 2014, no

review h.).

Workers’ Compensation Subrogation

       In this case, Black was injured and claimed workers’ compensation benefits as he

was entitled to do. See TEX. LABOR CODE ANN. §§ 409.003, 417.001(a) (West 2006). Great

West, as the workers’ compensation carrier, paid those benefits.          According to the

Workers’ Compensation Act, “if a benefit is claimed by an injured employee, the

insurance carrier is subrogated to the rights of the injured employee … and may enforce

the liability of the third party in the name of the injured employee….” Id. § 417.001(b).

The principal purpose of this section is to ensure that workers' compensation carriers

Southern County Mutual Insurance Company v. Great West Casualty Company               Page 7
are reimbursed when a third party is liable for the injured employee's damages.

Reliance Ins. Co. v. Hibdon, 333 S.W.3d 364, 375 (Tex. App.—Houston [14th Dist.] 2011,

pet. denied).

       Subrogation places one party in the place of another so that the new party gains

the rights of the former party regarding a claim. Hartford Cas. Ins. Co. v. Albertsons

Grocery Stores, 931 S.W.2d 729, 733 (Tex. App.—Fort Worth 1996, no pet.). In a workers’

compensation claim, the carrier's cause of action is derivative of the injured employee's

cause of action, and it initially belongs to the employee, subject to the carrier's right to

recover the amount it paid the employee. Id. citing Guillot v. Hix, 838 S.W.2d 230, 232

(Tex. 1992). The carrier's right overrides that of the employee after it pays or agrees to

pay compensation. Id. And, because it has a statutory right to subrogation, a carrier's

right to reduce liability upon payment by a third party must not be "compromised." Id.

       Southern County does not argue that Black could not recover under the MCS-90

had Black chosen to sue Hodges and obtain a judgment against Hodges rather than

accepting benefits from the workers’ compensation carrier, Great West. Because of the

subrogation provision, Great West gained Black’s right to sue Hodges and recover from

Southern County the unpaid judgment pursuant to the MCS-90 endorsement once

Great West paid benefits to Black. In essence, Great West became Black. Since Black

could recover from Southern County pursuant to the MCS-90 endorsement, so too

could Great West. See Global Hawk v. Century-National Ins., 138 Cal. Rptr. 3d 363 (Cal.

Southern County Mutual Insurance Company v. Great West Casualty Company               Page 8
Ct. App. [1st Dist.] 2012, rev. denied); see also Ft. Worth Lloyds v. Haygood, 246 S.W.2d
865, 870 (Tex. 1952) (“there is nothing unjust in giving to the carrier who pays the

compensation the right to recoupment under the statute.”).

CONCLUSION

       The MCS-90 endorsement is triggered because Hodges’ underlying insurance

policy with Southern County did not provide liability coverage for the accident and

Hodges did not pay the judgment against him. As a result, Great West is entitled to

payment from Southern County under the MCS-90 endorsement and the Workers’

Compensation Act to satisfy the judgment against Hodges. Therefore, Great West is

entitled to judgment as a matter of law. For these same reasons, Southern County is not

entitled to judgment as a matter of law.

       The trial court’s judgment is affirmed.

                                           TOM GRAY
                                           Chief Justice

Before Chief Justice Gray,
       Justice Davis, and
       Justice Scoggins
Affirmed
Opinion delivered and filed May 22, 2014
[CV06]

Southern County Mutual Insurance Company v. Great West Casualty Company            Page 9