Prime Ins. Co. v. Wright

OPINION AND ORDER

William C. Lee, Judge U.S. District Court.

This matter is before the Court on the Motion for Summary Judgment filed by Defendant Darnell Wright (ECF No. 24). Plaintiff Prime Insurance Company filed a response in opposition to the motion (ECF No. 27) and Wright filed a reply brief (ECF No. 30). For the reasons set forth below, the motion is GRANTED.

I. Background.

On November 12, 2013, Decardo Humphrey (not a party in this case) was driving a truck for Defendant Riteway Trucking when he was involved in a collision with Defendant/Movant Darnell Wright. Wright filed suit against Riteway Trucking, Riteway Transportation and Humphrey (the “Riteway Defendants”) in the Allen Superior Court seeking damages for personal injuries he sustained in the crash. The Riteway Defendants did not answer Wright's state court Complaint so Wright obtained a default judgment. The state court entered an Order of Default Judgment on August 20, 2015, holding that the Riteway defendants were in default and entering

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judgment in favor of Wright.^[1] While the motion for default judgment was pending, Prime Insurance filed a Petition to Intervene due to its potential obligation to defend and indemnify its insured. Also, shortly after Wright filed his lawsuit in state court, Prime filed a Complaint for Declaratory Judgment in this Court seeking a declaration that Prime had no duty to provide coverage or to defend its named insured, Riteway Trucking, Inc., or any other defendant named in Wright's state court Complaint. Prime Ins. Co. v. Riteway Trucking, Inc., et al., No. 1:15-CV-105 (N.D. Ind. 2018). In that case, “[t]his Court ultimately held that Prime did not owe a duty to defend or indemnify Riteway, that Riteway failed to meet its obligations under its insurance policy, and that Riteway and its alter egos shall be liable to Prime for any payments issued under an MCS-90 endorsement to the insurance policy. The Court did not reach whether the MCS-90 endorsement would apply to pay the judgment against Riteway.” Defendant Wright's Memorandum in Support (ECF No. 25), p. 3.^[2] On October 25, 2018, after this Court's finding of

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no coverage, the Allen Superior Court denied a motion by Prime to set aside the default judgment. The Indiana Court of Appeals affirmed the trial court's order of default and the Indiana Supreme Court denied transfer. Id. (citing Prime Ins. Co. v. Wright, 133 N.E.2d 749 (Ind.Ct.App. 2019), trans. denied sub nom., Prime Ins. Inc. v. Wright, 2020 WL 807005 (Ind. Feb. 13, 2020)). Wright states that “a final judgment has been entered on Wright's claims against Riteway and the sole remaining issue is whether the MCS-90 endorsement included in the policy of insurance by Prime to Riteway applies in this case, which would require Prime to pay the judgment in the Allen Superior Court entered in Wright's favor.” Id., p. 4.

Prime filed this action for declaratory relief seeking a finding that it is not responsible under the MCS-90 for payment of the judgment rendered in favor of Wright in the state court. Wright “disagrees and seeks payment from Prime under the endorsement.” Id. Wright moves the Court to find that he is entitled to summary judgment on the issue of the applicability of the MCS-90.

In its response in opposition, Prime argues that Wright's motion “should be denied for three reasons. First, applying the majority trip-specific approach, the driver, Decardo Humphrey . . . was not transporting property at the time of the accident. Therefore, the accident falls outside the scope of the MCS-90. Second, even if the majority rule were not applied, the MCS-90 only applies to the transportation of property by interstate commerce, and Movant has not established that Mr. Humphrey was engaged in interstate commerce. Third, there exists evidence of misrepresentation that, as a matter of public policy, should preclude Plaintiff from recovering

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under the MCS-90. For any and/or all of these reasons, Defendant's Motion for Summary Judgment should be denied.” Plaintiff's Response in Opposition (ECF No. 27), p. 1.

II. Standard of Review.

Federal Rule 56 states that a “court shall grant summary judgment 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). The Supreme Court has explained that “the burden on the moving party may be discharged by ‘showing'-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving party's case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). “‘If the moving party has properly supported his motion, the burden shifts to the non-moving party to come forward with specific facts showing that there is a genuine issue for trial.'” Simpson v. Gen. Dynamics Ordnance & Tactical Sys.-Simunition Operations, Inc., 2019 WL 6912332, at *2 (N.D. Ind. Dec. 19, 2019) (quoting Spierer v. Rossman, 798 F.3d 502, 507 (7th Cir. 2015)). Within this context, the Court must construe all facts and reasonable inferences from those facts in the light most favorable to the nonmoving party. Id. (citing Frakes v. Peoria Sch. Dist. No. 150, 872 F.3d 545, 550 (7th Cir. 2017)). A court's role in deciding a motion for summary judgment “is not to sift through the evidence, pondering the nuances and inconsistencies, and decide whom to believe. The court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial.” Waldridge v. Am. Heochst Corp., 24 F.3d 918, 920 (7th Cir. 1994). Summary judgment is not a substitute for a trial on the merits nor is it a vehicle for resolving factual disputes. Id. Therefore, after drawing all reasonable inferences from the facts in favor of the non-movant, if genuine doubts remain and a reasonable fact-finder could find for the party opposing the motion,

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summary judgment is inappropriate. See Shields Enterprises, Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir. 1992); Wolf v. City of Fitchburg, 870 F.2d 1327, 1330 (7th Cir. 1989). If it is clear that a plaintiff will be unable to satisfy the legal requirements necessary to establish his or her case, summary judgment is not only appropriate, but mandated. See Celotex, 477 U.S. at 322; Ziliak v. AstraZeneca LP, 324 F.3d 518, 520 (7th Cir. 2003).

III. Discussion.

A. “Transporting property” issue and interstate versus intrastate issue.

MCS-90 endorsements are a product of federal law. As this Court has explained:

Federal law requires common carriers, such as trucking companies, to obtain insurance to cover motor vehicle accidents. Carolina Casualty Ins. Co. v. Yeates, 533 F.3d 1202, 1204 (10th Cir. 2008). Related federal regulations require all interstate carriers 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” under the carrier's permit. 49 C.F.R §§ 387.301(a), 387.7; see also Travelers Ins Co. v. Transport Ins. Co., 787 F.2d 1133, 1140 (7th Cir 1986) (noting that ICC regulations are intended “to ensure that an ICC carrier has independent financial responsibility to pay for losses sustained by the general public arising out of its trucking operations”). To satisfy this insurance requirement, the regulations require the attachment of an MCS-90 endorsement to each insurance policy of the carrier, which guarantees payment in the amount of at least $750, 000 per accident. 49 C.F.R. §§ 387.7, 387.9. The endorsement creates a suretyship, which obligates an insurer to pay certain judgments against the insured arising from interstate commerce activities, even though the insurance contract would have otherwise excluded coverage. See Auto-Owners Ins. Co. v. Munroe, 614 F.3d 322, 327 (7th Cir. 2010); Carolina Casualty Ins. v Yeates, 584 F.3d 868, 881 (10th Cir. 2009); Minter v. Great Am. Ins. Co. of N.Y., 423 F.3d 460, 470 (5th Cir. 2005). Thus, “the payment obligation [under an MCS-90 endorsement] is broader than the policy itself and applies regardless of “‘whether or not each motor vehicle is specifically described in the policy,' and despite any “condition, provision, stipulation, or limitation contained in the policy.'” Auto-Owners, 614 F.3d at 327[.]

Fairmont Specialty Ins. Co. v. 1039012 Ontario, Inc., No. 2:10-CV-070, 2011 WL 3651333, at *3 (N.D. Ind. Aug. 19, 2011).

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Stated broadly, MCS-90 endorsements provide coverage for people injured as a result of the negligence of a trucking company that is engaged in transporting property over the roads and highways. Wright contends that Humphrey was doing exactly that at the time of the collision and so MCS-90 coverage applies. Citing Humphrey's deposition testimony, Wright explains as follows:

Riteway employed a dispatcher to inform its drivers of the pick up and delivery of loads. [Citing Humphrey Deposition (ECF No. 24-3)), p. 26.] When Humphrey would arrive at the yard in South Holland, [Illinois] he received his trip details from the dispatcher. Id. at 29. Riteway coordinated the details of every trip, including contacting the company needing goods shipped, negotiating pricing, and providing instructions to its drivers to pick up the loads. Id. at 31-32. Humphrey's routes were often interstate, with loads being taken to and picked up from states such as Illinois, Michigan, Indiana, and Ohio. Id. at 34, 40. Regardless of how many days a trip took, Humphrey always started in South...