CANAL Ins. CO v. COLEMAN

• Decision Date: 01 November 2010
• Docket Number: No. 10-60196.,10-60196.
• Citation: 625 F.3d 244
• Parties: CANAL INSURANCE CO., Plaintiff-Appellee, v. Bernetta COLEMAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

625 F.3d 244

CANAL INSURANCE CO., Plaintiff-Appellee,

v.Bernetta COLEMAN, Defendant-Appellant.

No. 10-60196.

United States Court of Appeals,Fifth Circuit.

Nov. 1, 2010.

R. Dale Thomas, Jesse D. Nelson, Rainey, Kizer, Reviere & Bell, P.L.C., Jackson, MS, Amanda Clearman Waddell, Rainey, Kizer, Reviere & Bell, P.L.C., Memphis, TN, for Plaintiff-Appellee.

David Reid Wamble, Law Office of D. Reid Wamble, P.L.L.C., Olive Branch, MS, for Coleman.

Appeal from the United States District Court for the Northern District of Mississippi.

Before DeMOSS, BENAVIDES and ELROD, Circuit Judges.

BENAVIDES, Circuit Judge:

An MCS-90 endorsement to an automotive insurance policy obligates an insurer to cover an insured's negligence involving “vehicles subject to the financial responsibility requirements of ... the Motor Carrier Act.” The Motor Carrier Act, in turn, creates minimum levels of financial responsibility “for the transportation of property by motor carrier ... within the United States.” Plaintiff-appellee Canal Insurance Company seeks a declaratory judgment that the MCS-90 endorsement does not cover an accident where the truck involved was not engaged in the transportation of property at the time of the accident. The district court granted summary judgment for Canal. We affirm. We hold that the MCS-90 covers only liability for the transportation of property. That said, we take no position as to whether the liability in this case was “for the transportation of property,” because the parties stipulated that it was not.

I. Facts and Procedural Background

This is an insurance dispute arising from a truck accident. The relevant facts are undisputed. Timothy Briggs, Jr., a trucker and employee of Defendant P.S. Transport, was backing a truck into his driveway when he collided with a Toyota Camry occupied by Defendant-appellant Bernetta Coleman and her husband Glen. At the time of the accident, Briggs was returning home from work. He was driving the truck “bobtail” when he collided with the Colemans, meaning that the truck had no trailer attached. ¹ The sole issue on this appeal is whether P.S. Transport's automotive insurance policy-and more specifically, the policy's federally mandated MCS-90 endorsement-covers the accident between Briggs and the Colemans.

The Colemans sued Briggs and P.S. Transport in state court in Mississippi. They assert personal-injury claims against Briggs for negligence, and they also seek to recover from P.S. Transport under the doctrine of respondeat superior. In response to the state-court lawsuit, Canal filed this suit in the United States District Court for the Northern District of Mississippi against Briggs, P.S. Transport, and the Colemans. Canal seeks a declaratory judgment that it is not required under the P.S. Policy to indemnify P.S. Transport for any judgment the Colemans obtain. ²

The insurance policy at issue on this appeal is a Basic Automobile Liability Policy that Plaintiff-appellee Canal issued in favor of P.S. Transport (“the P.S. Policy”). ³ The policy provides:

SECTION A-BASIC AUTOMOBILE LIABILITY INSURANCE

I. COVERAGE A-BODILY INJURY LIABILITY

COVERAGE B-PROPERTY DAMAGE LIABILITY:

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance, or use ... of an owned automobile ....

P.S. Transport did not own the truck Briggs was driving at the time of the accident. Rather, the truck was under a “lease-and-employment” agreement, meaning that Briggs owned the truck but leased it to P.S. Transport as part of his employment contract. Accordingly, Briggs's truck was not an “owned automobile” within the meaning of the policy and did not fall within the plain terms of the policy's coverage.

[1] [2] Although the P.S. Policy did not explicitly cover Briggs's truck, it did contain a federally mandated policy endorsement, the MCS-90. The purpose of the MCS-90 endorsement is to “assure compliance” with federal minimum levels of financial responsibility for motor carriers. See 49 C.F.R. § 387.15 illus. 1. The MCS-90 endorsement must be attached to any liability policy issued to for-hire motor carriers operating motor vehicles transporting property in interstate commerce. See 49 C.F.R. §§ 387.3, 387.7. 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. Minter v. Great Am. Ins. Co. of N.Y., 423 F.3d 460, 470 (5th Cir.2005).

After Canal filed this declaratory-judgment action, P.S. Transport failed to respond, and the district court entered default judgment against it. Both Canal and Coleman moved for summary judgment on various issues, including the one currently on appeal: whether the MCS-90 endorsement applies. ⁴ The district court granted Canal's motion and denied Coleman's. Coleman appealed. She now asks this Court to reverse the district court's order granting summary judgment in favor of Canal and order the district court to grant her motion for summary judgment.

II. Standard of Review

[3] [4] We review “ ‘the grant of summary judgment de novo, applying the same standards as the district court.’ ” In re Egleston, 448 F.3d 803, 809 (5th Cir.2006) (quoting In re Intelogic Trace, Inc., 200 F.3d 382, 386 (5th Cir.2000)). Summary judgment is appropriate when “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). “We construe all facts and inferences in the light most favorable to the nonmoving party when reviewing grants of motions for summary judgment.” Murray v. Earle, 405 F.3d 278, 284 (5th Cir.2005) (citation omitted).

III. Analysis

[5] The sole question the Court must answer today is whether the MCS-90 endorsement covers the Briggs-Coleman accident. This is a question of federal law. Lincoln Gen. Ins. Co. v. Garcia, 501 F.3d 436, 439 (5th Cir.2007). We conclude that the answer is “no” because (1) the MCS-90 only covers liability for the transportation of property, and (2) the parties stipulate that Briggs was not engaged in the transportation of property at the time of the collision.

Our analysis proceeds in four parts. First, in Part III.A, we consider the plain text of the MCS-90 and the statute it effectuates and conclude that the MCS-90 only provides coverage “for the transportation of property.” Second, in Part III.B, we look to relevant precedent from this Court and find that it supports our conclusion about the MCS-90's scope. Third, in Part III.C, we ask whether the MCS-90 applies in this case in light of our determination that it only covers liability for the “transportation of property.” Finally, in Part III.D, we consider and reject Coleman's alternative reading of the MCS-90.

A.

In order to determine the scope of the MCS-90's coverage, we look first to its plain terms. The endorsement provides:

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. Such insurance as is afforded, for public liability, does not apply to injury to or death of the insured's employees while engaged in the course of their employment, or property transported by the insured, designated as cargo. It is understood and agreed that no condition, provision, 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. 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.

49 C.F.R. § 387.15 illus. 1 (emphasis added). In short, the endorsement requires Canal to pay any final judgment against P.S. Transport for “public liability” resulting from the negligent use of “motor vehicles subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980.” Id. Because the parties do not make negligence an issue on this appeal, the issue before us today is simply whether Briggs's truck was “subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980.”

We must next look to the relevant portion of the Motor Carrier Act, § 30, to determine whether Briggs's vehicle was subject to its financial-responsibility requirements. ⁵ It reads:

The Secretary of Transportation shall prescribe regulations to require minimum levels of financial responsibility sufficient to satisfy liability amounts established by the Secretary covering ...