Court Opinion

ID: 6073324
Source: CourtListenerOpinion
Date Created: 2022-01-13 17:20:40.079881+00
Date Added: 2024-06-11T08:53:00.564328
License: Public Domain

Friedmann, J.
(dissenting in part and concurring in part).
In determining whether the plaintiff is entitled to summary judgment on his complaint in the instant case, this Court must determine whether the Federally-mandated MCS-90 endorsement contained in the policy which Providence issued to Blue Hen requires Providence to indemnify the plaintiff for a default judgment which he obtained against two individuals who fall within the policy definition of an “insured,” but who are not “named insureds” of the policy, and where the plaintiff has not yet obtained a judgment against Blue Hen. Because I conclude that the MCS-90 endorsement does not require indemnification under such circumstances, I respectfully dissent insofar as this Court affirms the judgment in favor of the plaintiff, and would reverse the judgment, vacate the order, grant the motion of Providence for summary judgment, and deny the plaintiff s cross motion for summary judgment.
The underlying facts, which are essentially undisputed and accurately set forth in the majority opinion, need not be repeated.
As noted by the majority, because Blue Hen is a licensed interstate motor carrier, Federal law required that the commercial motor vehicle policy which Providence issued to Blue Hen contain what is commonly referred to as an “MCS-90 endorsement” (see, 49 USC § 13906 [a] [1]; 49 CFR 387.15). Pursuant to that endorsement, insofar as is relevant to the instant appeal, Providence “agree [d] to pay * * * 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” (49 CFR 387.15 [emphasis added]). The primary issue to be resolved on Providence’s appeal is whether the term “insured,” as used in the MCS-90 endorsement, refers to anyone who falls within the policy definition of an insured, or refers to the “named insured,” in this case Blue Hen. I agree with Providence that the term “insured” refers to the named insured interstate motor carrier, and that the plaintiff in this case was required to obtain a judgment against Blue Hen before Providence can be required to pay the judgment obtained by the plaintiff.
*147Under Federal law, a motor carrier may be registered as an interstate carrier only if that carrier, or “registrant,” “files with the Secretary [of Transportation] a bond, insurance policy, or other type of security” in a minimum amount “sufficient to pay, not more than the amount of the security, for each final judgment against the registrant for bodily injury to, or death of, an individual resulting from the negligent operation, maintenance, or use of motor vehicles, or for loss or damage to property * * * or both” (49 USC § 13906 [a] [1] [emphasis added]). In connection with this requirement, the Code of Federal Regulations provides, inter alia, that “[n]o common or contract carrier * * * shall engage in interstate * * * commerce, and no certificate or permit shall be issued to such a carrier or remain in force unless and until there shall have been filed with and accepted by the Commission surety bonds, certificates of insurance * * * conditioned to pay any final judgment recovered against such motor carrier for bodily injuries to or death of any person resulting from the negligent operation, maintenance or use of motor vehicles in transportation subject to Subchapter II, Chapter 105, Subtitle IV of Title 49 of the United States Code” (49 CFR 387.301 [a] [1] [emphasis added]).
In order to comply with this requirement, a liability policy issued to an interstate carrier must contain an MCS-90 endorsement. Under this endorsement, the 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” (49 CFR 387.15 [emphasis added]). Although, as noted by the majority, the term “insured” is not defined in 49 CFR 387.15, which provides the mandatory language of the MCS-90 endorsement, the term is defined elsewhere in the applicable Code of Federal Regulations. The terms “insured and principal” are defined as “the motor carrier named in the policy of insurance, surety bond, endorsement, or notice of cancellation, and also the fiduciary of such motor carrier” (49 CFR 387.5). Applying this definition of “insured” to the MCS-90 endorsement, I conclude that a plaintiff injured in a collision with a licensed interstate carrier must obtain a judgment against that carrier before the MCS-90 endorsement requires the carrier’s insurer to pay the judgment.
This very issue was addressed by Judge Levi in the District Court for the Eastern District of California in Del Real v United States Fire Ins. Crum & Forster (64 F Supp 2d 958, affd 188 F3d 512 [9th Cir 1999]). In that case, the plaintiffs’ decedent *148was killed in a multivehicle accident. The plaintiffs commenced an action in California state court against Manke Trucking and Gilbert Vidrios, the owner and operator, respectively, of the truck involved in the accident; Strick Leasing, the owner-lessor of the trailer pulled by Manke’s truck; and Xtra Corp. (hereinafter Xtra), of which Strick Leasing was a subsidiary. The action against Strick and Xtra was dismissed with prejudice, and Manke and Vidrios stipulated to liability. Manke’s insurer stipulated to pay the policy limits of $750,000, and the plaintiffs obtained a judgment in the amount of $2,059,539. Thereafter, the plaintiffs commenced the Federal action against United States Fire Insurance (hereinafter U.S. Fire), Xtra’s insurer, to recover the unpaid portion of the judgment ($1.3 million). The policy issued by U.S. Fire to Xtra (hereinafter the U.S. Fire policy) contained an MCS-90 endorsement.
Insofar as is relevant to the instant appeal, the plaintiffs claimed that because Vidrios and Manke were permissive users, they were insureds under the U.S. Fire policy, and therefore, the MCS-90 endorsement extended coverage to the plaintiffs as judgment creditors of Vidrios and Manke, even though Manke and Vidrios were neither named insureds nor listed as additional insureds on the U.S. Fire policy. In rejecting this argument, Judge Levi stated:
“Plaintiffs are not entitled to recover under the MCS-90 endorsement for two reasons. First, Manke and Vidrios are not ‘insureds’ under the MCS-90 endorsement. The endorsement obligates the insurer only to pay ‘any final judgment recovered against the insured.’ It is ambiguous whether the term ‘insured’ is limited to the named insured or also includes lessees and other permissive users. Because the exact language used in the endorsement is mandated by a federal regulation and not subject to modification by the parties, the definition of ‘insured’ found in the policy is not conclusive. See 49 C.F.R. § 387.15 (1994).
“The language of the endorsement, the relevant federal regulations, and the intent of the parties all indicate that the term ‘insured’ refers only to the named insured * * * It is unlikely that the term ‘insured’ was intended to include lessees. Lessees are not parties to the insurance contract, and cannot be said to have knowingly entered into an *149agreement to reimburse the insurance company for payments made on the MCS-90 endorsement. The named insured cannot reasonably be understood to have agreed to reimburse the insurance company for payments made to judgment creditors of lessees. The relevant federal regulations reinforce the conclusion that only the named insured is an ‘insured’ under the endorsement: ‘insured and principal’ are defined as ‘the motor carrier named in the policy of insurance, surety bond, endorsement, or notice of cancellation, and also the fiduciary of such motor carrier.’ 49 C.F.R. § 387.5 (1994).” (Del Real v United States Fire Ins. Crum & Forster, 64 F Supp 2d 958, 964; see also, T.H.E. Ins. Co. v Larsen Intermodal Servs., 242 F3d 667, 672, supra [5th Cir 2001] [“the policy embodied in the [former Interstate Commerce Commission] regulations ‘was to assure that injured members of the public would be able to obtain judgments collectible against negligent authorized carriers’ ”]; Jackson v O’Shields, 101 F3d 1083, 1085 [under the MCS-90 endorsement, the insurer “undertook to pay any final judgment rendered against (the interstate carrier)”]; White v Excalibur Ins. Co., 599 F2d 50, 55 [5th Cir 1979] [MCS-90 endorsement did not obligate interstate carrier’s insurer to pay judgment which plaintiff obtained against driver of rig leased by interstate carrier. The plaintiff was barred from recovering from the interstate carrier’s insurer due to her failure to secure a judgment against the insured motor carrier. By the terms of 49 USC § 315, in order for the interstate carrier’s insurer to be liable under the policy filed with the ICC the interstate carrier must first be adjudicated liable as a party].)
In sum, I agree with Judge Levi’s reasoning.
It is important to note that such a result would not leave the plaintiff without a remedy. Rather, if and when he obtains a judgment against Blue Hen, it is clear that Providence would then have to pay such a judgment. Thus, in my opinion, the objectives of the statute from which the MCS-90 endorsement derives and the regulations promulgated by the Secretary of *150Transportation would not be frustrated by requiring the plaintiff to obtain a judgment against Blue Hen.
I agree with my colleagues in the majority that the plaintiff’s cross appeal must be dismissed, as his application for sanctions remains pending and undecided (see, Katz v Katz, 68 AD2d 536, supra).
Altman, J. P., and Cozier, J., concur with Goldstein, J.; Friedmann, J., dissents in part and concurs in part, and votes to reverse the judgment, vacate the order, grant Providence’s motion for summary judgment, deny the plaintiffs cross motion for summary judgment, and dismiss the cross appeal from the order in a separate opinion.
Ordered that the judgment is affirmed; and it is further,
Ordered that the cross appeal is dismissed; and it is further,
Ordered that the plaintiff is awarded one bill of costs.