Progressive Se. Ins. Co. v. B&T Bulk LLC

170 N.E.3d 1125

PROGRESSIVE SOUTHEASTERN INSURANCE COMPANY, Appellant-Plaintiff,

v. B&T BULK LLC, Bruce A. Brown, Robin S. Johnson, as Personal Representative of the Estate of Dona S. Johnson, and Robin S. Johnson, Individually, Appellees-Defendants,andState Farm Mutual Automobile Insurance Company, Appellee-Intervenor

Court of Appeals Case No. 20A-CT-1765

Court of Appeals of Indiana.

Filed May 4, 2021

Rehearing Denied July 1, 2021

Attorneys for Appellant: Janet G. Horvath, J. Thomas Vetne, Jones Obenchain, LLP, South Bend, Indiana

Attorney for Appellees B&T Bulk LLC and Bruce A. Brown: Tracey S. Schafer, Anderson, Agostino & Keller, P.C., South Bend, Indiana

Attorneys for Appellee Robin S. Johnson : R.T. Green, Collin W. Green, Letha A. Maier, Blackburn & Green, Indianapolis, Indiana

Attorney for Appellee State Farm: Lizabeth R. Hopkins, Kopka Pinkus Dolin PC, Crown Point, Indiana

Vaidik, Judge.

Case Summary

[1] In 2017, an employee of an Indiana trucking company was on his way to pick up a load in Logansport when he crossed a median and collided with a car, killing the driver. Although the truck was not listed under the trucking company's insurance policy, the policy included an MCS-90 endorsement, which the federal Motor Carrier Act requires interstate motor carriers to have and which provides coverage for claims resulting from the negligent operation of a truck even if the truck is not specifically listed under the company's insurance policy. The parties filed cross-motions for summary judgment as to whether the MCS-90 endorsement applies, and the trial court found it does.

[2] On appeal, the insurance company makes two arguments that the MCS-90 endorsement doesn't apply: (1) the truck driver was on an intrastate—not interstate—trip at the time of the accident and (2) the truck wasn't carrying any property at the time of the accident. As for (1), even though the majority of courts have held the MCS-90 endorsement only applies to the interstate transportation of property under the federal Motor Carrier Act, Indiana Code section 8-2.1-24-18(a) applies this requirement to intrastate transportation. As for (2), we find the MCS-90 endorsement applies when a truck, although empty, is on its way to pick up a load. We therefore affirm the trial court.

Facts and Procedural History

[3] B&T Bulk LLC is a Mishawaka-based motor carrier that hauls bulk cement in Indiana and Michigan. It is a registered interstate motor carrier operating under "U.S. DOT # 676788." Appellant's App. Vol. III p. 186. In 2017, B&T had a commercial auto policy ("the policy") with Progressive Southeastern Insurance Company that covered specifically listed motor vehicles in its fleet. The policy included an MCS-90 endorsement, which the federal Motor Carrier Act of 1980 requires motor carriers to have. See Markel Ins. Co. v. Rau , 954 F.3d 1012, 1017 (7th Cir. 2020) ; Carolina Cas. Ins. Co. v. E.C. Trucking , 396 F.3d 837, 841 (7th Cir. 2005) ; Prime Ins. Co. v. Wright , 133 N.E.3d 749, 752 n.3 (Ind. Ct. App. 2019), trans. denied ; see also 49 U.S.C. § 31139(b) ; 49 C.F.R. §§ 387.7(a), 387.9, 387.15. The primary purpose of an MCS-90 endorsement is "to assure that motor carriers maintain an appropriate level of financial responsibility for motor vehicles operated on public highways." 49 C.F.R. § 387.1 ; see also John Deere Ins. Co. v. Nueva , 229 F.3d 853, 857 (9th Cir. 2000) ("[T]he primary purpose of the MCS-90 is to assure that injured members of the public are able to obtain judgment from negligent authorized interstate carriers."). The endorsement provides coverage for claims resulting from the negligent operation of a commercial vehicle even if the negligently driven vehicle is not specifically listed under the motor carrier's insurance policy. Rau , 954 F.3d at 1017. The minimum level of financial responsibility for motor carriers of nonhazardous property is $750,000. 49 U.S.C. § 31139(b) ; 49 C.F.R. § 387.9.

[4] Here, the "Form MCS-90 Endorsement," which provides $750,000 in coverage, provides:

The insurance policy to which this endorsement is attached provides automobile liability insurance and is amended to assure compliance by the insured, within the limits stated herein, as a motor carrier of property, with Sections 29 and 30 of the Motor Carrier Act of 1980 and the rules and regulations of the Federal Motor Carrier Safety Administration (FMCSA).

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 and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere.... However, all terms, conditions, and limitations in the policy to which the 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, claim, or suit involving a breach of the terms of the policy, and for any payment that the company would not have been obligated to make under the provisions of the policy except for the agreement contained in this endorsement.

Appellant's App. Vol. II pp. 147-48.

[5] On December 4, B&T sent its employee Bruce A. Brown to pick up a load of cement from Lehigh Cement in Logansport and deliver it to Kuert Concrete in South Bend. Brown drove a semi-truck and trailer (which was empty at the time) that were owned by B&T but not listed on the policy. Before arriving at Lehigh, Brown crossed a median on State Road 25 in Logansport and collided with a car driven by Dona S. Johnson, killing her. Because of the accident, B&T was subject to a Federal Motor Carrier Safety Administration (FMCSA) inspection. See Appellant's App. Vol. III pp. 186-87, 190, 225-26.

[6] In July 2018, Dona's husband, Robin S. Johnson, individually and on behalf of Dona's estate (collectively, "Dona's estate"), filed a wrongful-death complaint against B&T and Brown (collectively, "B&T") in Cass Superior Court. See Cause No. 09D02-1807-CT-22. B&T asked Progressive to defend and indemnify it. After a coverage investigation, Progressive filed an amended complaint for declaratory judgment in Carroll Circuit Court in January 2019, asking the trial court to declare (1) Progressive had no duty to defend or indemnify B&T "in any lawsuit arising out of the December 4, 2017 accident" since the semi-truck and trailer were not listed on the policy (and therefore not insured) and (2) "Progressive's exposure is limited to the extent the MCS-90 endorsement applies to the December 4, 2017 accident." Appellant's App. Vol. II p. 23.

[7] In November 2019, Progressive moved for summary judgment, arguing it had no duty to defend or indemnify B&T and the MCS-90 endorsement did not apply. The next month, State Farm Mutual Automobile Insurance Company sought to intervene. Specifically, State Farm alleged it had insured Dona at the time of the accident and had made "certain payments for medical care and property damage as a result of the December 4, 2017 accident" and "certain payments for uninsured motorist benefits to [Dona's estate] which were made based upon the denial of coverage by Progressive, and are being held in trust until the resolution of this action." Appellee's App. Vol. II p. 4. The trial court allowed State Farm to intervene.

[8] In March 2020, Dona's estate and B&T filed cross-motions for summary judgment. State Farm joined Dona's estate's motion. Following a hearing in August, the trial court determined Progressive had no duty to defend or indemnify B&T but that the MCS-90 endorsement applied.

[9] Progressive appeals the trial court's determination that the MCS-90 endorsement applies. Dona's estate, B&T, and State Farm (collectively, "the Appellees") do not appeal the trial court's determination that Progressive has no duty to defend or indemnify B&T.

Discussion and Decision

[10] We review motions for summary judgment de novo, applying the same standard as the trial court. Hughley v. State , 15 N.E.3d 1000, 1003 (Ind. 2014). That is, "The judgment sought shall be rendered forthwith if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Ind. Trial Rule 56(C).

I. Interstate vs. Intrastate

[11] Progressive first argues the MCS-90 endorsement only applies to the interstate transportation of property and because Brown was on an intrastate trip at the time of the accident, there is no coverage. Section 30 of the Motor Carrier Act is codified at 49 U.S.C. § 31139, which provides:

(1) The Secretary of Transportation shall prescribe regulations to require minimum levels of financial responsibility sufficient to satisfy liability amounts established by the Secretary covering public liability, property damage, and environmental restoration for the transportation of property by motor carrier or motor private carrier (as such terms are defined in section 13102 of this title) in the United States between a place in a State and--

(A) a place in another State ;

(B) another place in the same State through a place outside of that State; or

(C) a place outside the United States.

(Emphasis added); see also 49 C.F.R. § 387.3(a) ("This subpart applies to for-hire motor carriers operating motor vehicles transporting property in interstate or foreign commerce." (emphasis added)).¹

[12] "There is a split of authority as to whether the MCS-90 endorsement applies to intrastate accidents." 1 William J. Schermer & Irvin E. Schermer, ...