Lyons v. Lancer Ins. Co.

• Decision Date: 21 May 2012
• Docket Number: Docket No. 10–4569–cv.
• Citation: 681 F.3d 50
• Parties: Thomas E. LYONS and Celeste M. Lyons, Plaintiffs–Appellants, v. LANCER INSURANCE COMPANY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Second Circuit

681 F.3d 50

Thomas E. LYONS and Celeste M. Lyons, Plaintiffs–Appellants,

v.LANCER INSURANCE COMPANY, Defendant–Appellee.

Docket No. 10–4569–cv.

United States Court of Appeals, Second Circuit.

Argued: Nov. 16, 2011.

Decided: May 21, 2012.

Edward J. Carroll, Kingston, NY, for Plaintiffs–Appellants.

Roy W. Vasile, Merrick, NY (Curtis, Vasile, Merrick, NY, on the brief), for Defendant–Appellee.

Before: KEARSE and RAGGI, Circuit Judges, and KAHN, District Judge ^*.

KEARSE, Circuit Judge:

Plaintiffs Thomas E. Lyons (“Mr. Lyons”) and Celeste M. Lyons (collectively “Lyons”), who were awarded a judgment in August 2006 in a state-court negligence action (the “Negligence Action Judgment”) against T.F.D. Bus Company (“TFD” or “T.F.D.”), one of whose buses had struck a vehicle operated by Mr. Lyons, appeal from a judgment of the United States District Court for the Southern District of New York, Warren W. Eginton, District Judge ^**, dismissing their complaint seeking a judgment declaring that defendant Lancer Insurance Company (“Lancer”), an insurer of TFD, is obligated to pay each plaintiff $5,000,000 or more in satisfaction of the essentially unpaid Negligence Action Judgment, and ordering Lancer to pay those amounts. The district court granted Lancer's motion for summary judgment dismissing the complaint on the ground that the relevant insurance coverage was limited to interstate trips and that the TFD bus trip that resulted in Mr. Lyons's injury was a trip wholly within New York State. On appeal, plaintiffs contend that the district court erred in granting summary judgment against, rather than for, them, arguing principally that the bus that struck the Lyons vehicle was supposed to have been traveling on an interstate mission. For the reasons that follow, we affirm the judgment of the district court.

I. BACKGROUND

The relevant facts do not appear to be in dispute. The following description of the events is taken largely from the statement each side submitted pursuant to Local Rule 56.1 (“Rule 56.1 Statement”) in connection with Lancer's motion for summary judgment, and from the undisputed evidence underlying the district court's summary judgment opinion, Lyons v. Lancer Insurance Co., No. 7:07–cv–7095, 2010 WL 6442153 (S.D.N.Y. Oct. 20, 2010) (“District Court Opinion”); see id. at *1 n. 1 (“Because the parties agree about most facts underlying this dispute, the Court will accept all cited evidence, except for any logical or legal conclusions contained in the various statements.”).

A. TFD and the February 14, 1989 Accident

In 1989, TFD, which ceased business operations in 2007, was a private interstate common carrier based in Mount Vernon, New York, authorized to provide commercial transportation of passengers in any of the contiguous States of the United States. Some 85 percent of its revenues came from operating school buses pursuant to contracts with nearby school districts in New York State, principally for public schools in Mount Vernon, New Rochelle, and Yonkers. TFD owned 90–odd vehicles, including yellow school buses, other buses, cars, and minivans. The yellow school buses were also used for other purposes, such as private charters that represented approximately five percent of TFD's business.

During 1989, Michael A. Thomas (“Thomas” or “Michael Thomas”) was employed by TFD as a bus driver. In the 1988–89 school year, Thomas was regularly scheduled by TFD to transport students to and from Emerson Junior High School (“Emerson” or “Emerson J.H.S.”) in Yonkers, picking them up every morning from three or four specified locations in Yonkers, and returning them to those locations each afternoon after picking them up from Emerson.

On the afternoon of February 14, 1989, Thomas drove a TFD yellow school bus with seating capacity for 44 adult passengers, which TFD called “bus 287,” to Emerson Junior High School and picked up students to transport them to the usual drop-off locations. At approximately 2:51 p.m., before reaching the first drop-off location, bus 287 collided with the vehicle operated by Mr. Lyons, which was stopped at a red light. As a result of the accident, Mr. Lyons sustained injuries that prompted plaintiffs to commence personal injury litigation against Thomas and TFD. Following, inter alia, a default by TFD in 1992 and a jury trial in 1999 on issues of damages, plaintiffs eventually obtained, to the extent pertinent here, the August 2006 Negligence Action Judgment against TFD, which awarded them a total of $2,470,000, plus interest from 1992. That judgment remains essentially unsatisfied.

B. The Present Action

Federal law required that a motor carrier for hire engaging in the interstate transportation of passengers, e.g., transportation between a place in a State and a place in another State or between two places in the same State but passing through another State, provide evidence of financial responsibility. See Bus Regulatory Reform Act of 1982, Pub.L. No. 97–261, § 18, 96 Stat. 1102, 1120 (1982) (“Bus Act” or “Act”) (codified as amended at 49 U.S.C. § 10927, note (1988), renumbered49 U.S.C. § 31138 in 2006 Code). The Act provided that the Secretary of Transportation (or “Secretary”) would establish regulations setting minimum permissible levels of financial responsibility and that, not later than three years after the effective date of the Bus Act, the minimum with respect to a vehicle having a seating capacity of 16 or more passengers would be $5,000,000. See Bus Act § 18(b)-(c).

Such financial responsibility could be established by evidence of insurance, see id. § 18(d), reflected in an insurance policy endorsement on “Form MCS–90B,” 49 C.F.R. § 387.31(d)(1). That form stated that the insurer agreed to pay, within the limits of the policy to which the endorsement was attached, “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 Section 18 of the Bus Regulatory Reform Act of 1982, regardless of ... whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere.” 49 C.F.R. § 387.39 (Illustration I) (emphasis added). In 1989, TFD's buses, including bus 287, were insured by Lancer. The Lancer–TFD insurance policy (“Policy”) included the required Form MCS–90B endorsement as quoted above.

In 2007, with the Negligence Action Judgment essentially unsatisfied by TFD, plaintiffs commenced the present action against Lancer seeking a judgment under federal statutory law, including the Bus Act and regulations promulgated thereunder, declaring Lancer obligated to satisfy the Negligence Action Judgment entered in their favor against TFD (Federal Complaint ¶¶ 1–3), and ordering Lancer to pay each plaintiff $5,000,000 or more. Plaintiffs alleged principally that “at the time of the accident,” TFD bus 287 “was being used for hire as an interstate transporter” ( id. ¶ 12), “during interstate commerce” ( id. ¶ 13), and that Lancer was thus obligated by the federally mandated Form MCS–90B endorsement to pay the Negligence Action Judgment.

Following a period of discovery, both sides moved for summary judgment. Plaintiffs, in support of their contention that the 1989 accident occurred while bus 287 was being used on an “interstate” trip, submitted affidavits from Thomas and from former TFD vice president Albert M. Groccia, and excerpts from depositions of Thomas and Groccia taken in 2009.

Groccia testified that on the morning of February 14, 1989, TFD had provided charter service to a group of senior citizens in Mount Vernon, taking them to Armonk, New York. ( See Deposition of Albert M. Groccia, January 30, 2009 (“Groccia Dep.”), at 41–42.) TFD was supposed, that afternoon, to send a bus to Armonk, arriving there at 2 p.m., to bring that group back to Mount Vernon. ( See id. at 42–43, 44.) Although both Mount Vernon and Armonk are within New York State, the most efficient route between the two included several miles on Interstate Highway 684 (“I–684”) ( see id. at 11–13), and part of that stretch of I–684 was in the State of Connecticut ( see id. at 13). Groccia testified that that was the route he would have recommended ( see id. at 13, 97–100); and Thomas stated in his affidavitthat on the occasions when he had driven buses between Mount Vernon and Armonk—before and after the date of the accident—he had “always followed [TFD]'s recommended route,” which passed “through the State of Connecticut” (Affidavit of Michael A. Thomas dated June 8, 2009 (“Thomas Aff.”), ¶ 4).

Although Groccia testified that he had “[n]o idea how” Thomas came to be the operator of bus 287 on the afternoon of the accident (Groccia Dep. 9; see id. (“I don't know how he became the operator”)), Groccia proceeded to testify that on the afternoon of February 14, 1989, Michael Thomas was supposed to have driven bus 287 to Armonk to pick up the senior citizens at 2 p.m. and bring them back to Mount Vernon, rather than to pick up students from Emerson Junior High School in Yonkers ( see, e.g., id. at 10–11, 14–15, 39, 44). Groccia stated that if Thomas had gone to Armonk to pick up the senior citizens, he would not have been in Yonkers. ( See, e.g., id. at 39, 40, 45.) He also testified that although bus 287 was used “for all kind[s] of work” ( id. at 12), it lacked a Yonkers permit that would have authorized it to operate within that city ( see id. at 27).

Thomas was employed by TFD for some 20 years beginning in 1982. He testified that he sometimes drove charter buses for TFD and that his regular duty in 1989 was to transport the Emerson students to and from school. The designated Emerson J.H.S. route was entirely within the City of Yonkers. Thomas's “job was to take that route every day.” (Deposition of Michael A. Thomas, January 30, 2009 (“Thomas Dep.”), at 17; see also Groccia Dep. 33 (“Michael Thomas was assigned...