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Carolina Cas. Ins. Co. v. Estate of Karpov

 

 

United States Court of Appeals,

Seventh Circuit.

CAROLINA CASUALTY INSURANCE COMPANY, Plaintiff-Appellee,

v.

ESTATE OF Dimitry KARPOV, Deceased, and Margarita Karpov, Administratrix of the Estate of Dimitry Karpov, Defendants-Appellants.

No. 08-1163.

 

Argued Oct. 22, 2008.

Decided March 17, 2009.

 

Background: Insurer brought action against insureds and victims in a tractor-trailer/automobile accident, seeking a declaratory judgment that its liability was limited to the $1 million per-accident limit set forth in insurance policy. The United States District Court for the Northern District of Indiana, Theresa L. Springmann, J., 2007 WL 670937, granted summary judgment in favor of insurer. Administratrix of victim’s estate appealed.

 

Holdings: The Court of Appeals, Manion, Circuit Judge, held that:

(1) Motor Carrier Act (MCA) did not establish a per-person liability limit of $750,000, and

(2) MCS-90 endorsement attached to policy did not establish a per-person liability limit of $750,000.

 

Affirmed.

 

West Headnotes

 

Insurance 217  2898(1)

 

217 Insurance

217XXII Coverage–Automobile Insurance

217XXII(G) Truckers’ and Motor Carriers’ Liability

217k2896 Amount of Insurance

217k2898 Policy Limits

217k2898(1) k. In General. Most Cited Cases

Sections of Motor Carrier Act setting forth a $750,000 minimum level of financial responsibility and requiring a carrier to file with Secretary of Transportation a security sufficient to pay, not more than the amount of the security, for each final judgment did not establish a per-person liability limit of $750,000, and thus policy limit of $1 million per accident was insurer’s maximum liability for multi-victim tractor-trailer/automobile accident, rather than $750,000 per person. 49 U.S.C.A. §§ 31139(b)(1)-(2), 13906(a)(1).

 

Insurance 217  2898(1)

 

217 Insurance

217XXII Coverage–Automobile Insurance

217XXII(G) Truckers’ and Motor Carriers’ Liability

217k2896 Amount of Insurance

217k2898 Policy Limits

217k2898(1) k. In General. Most Cited Cases

MCS-90 endorsement attached to insurance policy verifying compliance with the Motor Carrier Act (MCA) did not establish a liability limit at $750,000 per person, and thus policy limit of $1 million per accident was insurer’s maximum liability for multi-victim tractor-trailer/automobile accident; MCA did not mandate $750,000 per-person minimum, endorsement set limit at $1 million and expressly stated that it provided coverage within the limits stated, and regulation setting forth appropriate form for MCS-90 endorsement stated policy limits on a per-accident basis. 49 U.S.C.A. §§ 13906(a)(1), 31139(b)(1)-(2); 49 C.F.R. § 387.15.

*622 Robert D. Brown (argued), Spangler, Jennings & Dougherty, Merrillville, IN, for Plaintiff-Appellee.

 

Peter H. Weinberger, Stuart E. Scott (argued), Spangenberg, Shibley & Liber, LLP, Cleveland, OH, for Defendants-Appellants.

 

Before CUDAHY, MANION, and WILLIAMS, Circuit Judges.

 

MANION, Circuit Judge.

 

Carolina Casualty sought a declaratory judgment that its liability was limited to the $1 million per-accident limit set forth in the insurance policy it issued to Net Trucking, Inc. and Stanislaw Gill. The defendants, who were among several of the victims in a tractor-trailer/automobile accident, argued that the Motor Carrier Act (“MCA”) and an endorsement Carolina Casualty issued verifying compliance with the MCA established coverage at $750,000 per person. The district court rejected this argument, holding that the policy limited liability to $1,000,000 per accident. The district court granted Carolina Casualty summary judgment and we affirm.

 

I.

 

On Sunday August 21, 2005, Stanislaw Gill, who was driving a tractor-trailer for Net Trucking, Inc., rear-ended a stopped automobile in a construction zone on the Indiana Toll Road. This collision set off a chain reaction which eventually led to the death of four individuals, the injury of numerous others, and property damage to several automobiles and the Indiana Toll Road.

 

At the time of the accident, both Net Trucking and Gill were insured under a policy issued by Carolina Casualty. The policy stated that Carolina Casualty’s maximum liability for any one accident, regardless of the number of claimants or vehicles involved, was $1 million. Attached to the Carolina Casualty policy, as required for all commercial trucking insurance policies, was an “MCS-90” endorsement which likewise provided that Carolina Casualty’s maximum liability per accident was $1 million.

 

Carolina Casualty initiated this interpleader action, naming as defendants Gill, Net Trucking, and those individuals who were injured in the August 21, 2005, accident or who had filed claims arising out of the accident. Carolina Casualty sought a declaration that its liability was limited to $1 million for the entire accident. Carolina Casualty also deposited $1 million into the district court registry for the benefit of the various claimants.

 

The parties to the interpleader action filed cross-motions for summary judgment. The district court ruled in favor of Carolina Casualty, holding that its liability was *623 limited to the $1 million per-accident policy limit and that neither the MCA nor the MCS-90 endorsement issued by Carolina Casualty established a $750,000 per-person policy minimum. Interpleader defendant Margarita Karpov, individually and as the administratrix of the estate of Dimitry Karpov, appeals.

 

II.

 

The Carolina Casualty insurance policy issued to Gill and Net Trucking expressly established a $1 million per-accident policy limit. Specifically, the “TRUCKERS COVERAGE FORM,” “SECTION II-LIABILITY COVERAGE,” provided:

 

C. Limit Of Insurance.

 

Regardless of the number of covered “autos,” “insured,” premiums paid, claims made or vehicles involved in the “accident,” the most we will pay for the total of all damages and “covered pollution cost or expense” combined, resulting from any one “accident” is the Limit of Insurance for Liability Coverage shown in the Declarations.

 

In turn, the “Truckers/Motor Carrier Coverage Form Declarations” page listed $1,000,000 under “LIMIT THE MOST WE WILL PAY FOR ANY ONE ACCIDENT OR LOSS.”Additionally, the MCS-90 endorsement provided: “The policy to which this endorsement is attached provides primary or excess insurance as indicated by the X, for the limits shown.” An “X” was placed in the box corresponding to: “This insurance is primary and the company shall not be liable for amounts in excess of $1,000,000 for each accident.”

 

Notwithstanding this clear and unambiguous per-accident limit, the appellants argue that the MCA and the MCS-90 endorsement establish a $750,000 per-person liability minimum. The $750,000 figure comes from the MCA, which provides:

 

(b) General requirement and minimum amount-(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…. (2) The level of financial responsibility established under paragraph (1) of this subsection shall be at least $750,000.

 

49 U.S.C. § 31139(b)(1)-(2).

 

The appellants argue that the $750,000 minimum level of financial responsibility applies on a per-person basis. In support of their position, they point to 49 U.S.C. § 13906(a)(1), which provides:

 

(1) Liability insurance requirement.-The Secretary may register a motor carrier under section 13902 only if the registrant files with the Secretary a bond, insurance policy, or other type of security approved by the Secretary, in an amount not less than such amount as the Secretary prescribes pursuant to, or as is required by, sections 31138 and 31139, and the laws of the State or States in which the registrant is operating, to the extent applicable. The security must be 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 (except property referred to in paragraph (3) of this subsection), or both. A registration remains in effect only as long as the registrant continues to satisfy the security requirements of this paragraph.

 

(Emphasis added.)

 

The appellants argue that because 49 U.S.C. § 13906(a)(1) states that the security*624 must be sufficient to pay “for each final judgment” for bodily injury to, or death of, “an individual,” the minimum amount of security required by section 31139, namely $750,000, applies on a per-person basis and not on a per-accident basis, notwithstanding the clear language of the insurance policy.

 

The appellants’ argument, however, ignores the full text of section 13906. The relevant provision states: “The security must be 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….”49 U.S.C. § 13906(a)(1) (emphasis added). The court in Hamm v. Canal Insurance Company, 10 F.Supp.2d 539 (M.D.N.C.1998), aff’d, 178 F.3d 1283 (4th Cir.1999), aptly explained the meaning of this statutory language.

 

With respect to the statute, it provides that “the security must be sufficient to pay, not more than the amount of the security.” The clear meaning of this statement is that whatever amount is to be paid will not exceed the amount of the security which has been established by the statute or the policy itself. This would mean that if the actual amount of the security is the minimum required by the statute, then the limit of potential liability for an insurer would be $750,000. However, if as in this case, the insured voluntarily elects to obtain a security in a larger amount, such as $1 million, then that amount becomes the limits of potential liability for the insurer for claims resulting from a single accident.

 

Id. at 544 (emphasis added).

 

The Hamm decision was appealed to the Fourth Circuit, which in an unpublished decision held that “the district court correctly determined that Canal’s potential financial obligation is limited by the terms of the Policy and the MCA to $1 million per accident.”  Hamm, 178 F.3d 1283 at 1999 WL 232034, *1.

 

Fourth Circuit Local Rule 32.1 permits the citation to unpublished decisions issued prior to January 1, 2007, if the decision has precedential value and there is “no published decision that would serve as well.”

 

Similarly, in Stevens v. Fireman’s Fund Insurance Co., 2002 WL 31951274 (S.D.Ohio Nov. 7, 2002), aff’d 375 F.3d 464 (6th Cir.2004), the insurer had issued a policy with a liability limit of $1 million per accident. The insured was involved in an accident resulting in injuries to four individuals and environmental cleanup, costing in excess of $2.5 million. Id. at *1, n. 1. The injured parties cited to 49 U.S.C. § 13906 for the proposition that the insurer must pay not more than the amount of the security for each final judgment and thus argued that the insurer was required to pay up to $1 million for each injured person. Id. at *5. The district court in Stevens found the Hamm decision persuasive and rejected this argument, holding that no coverage existed beyond the $1 million limit of liability. Id. at *7-8.

 

We agree with Hamm and Stevens and likewise conclude that the “not more than the amount of the security ” statutory language refers to the $1,000,000 security per-accident that Net Trucking obtained from Carolina Casualty.

 

The appellants have not cited any case law interpreting section 13906 as establishing a per-person limit. Nonetheless, the appellants claim that even if the statute did not establish a per-person liability limit, the MCS-90 endorsement, which Carolina Casualty attached to its insurance policy, set the liability limit at $750,000 per person. The MCS-90 endorsement provided that:

 

*625 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].

 

The appellants argue that this endorsement established as a policy limit the $750,000 per-person minimum established by section 13906. There are three problems with this argument. First, as noted above, section 13906 does not mandate a $750,000 per-person minimum. Second, even if the statute did establish such a minimum, the endorsement expressly stated that it provides coverage “within the limits stated herein,” and the endorsement set the limit at $1,000,000. Third, the Secretary of Transportation has set forth in 49 C.F.R. § 387.15, Illustration I, the appropriate form for the MCS-90 endorsement. This form states the policy limits on a per-accident basis, providing: “The policy to which this endorsement is attached provides primary or excess insurance, as indicated by ‘X’, for the limits shown: This insurance is primary and the company shall not be liable for amounts in excess of $ ______ for each accident.” 49 C.F.R. § 387.15, Illustration I (emphasis added). Accordingly, the MCS-90 endorsement did not establish a $750,000 per-person liability minimum.

 

The appellants attempt to overcome the express language of the policy and the MCA by referring to legislative history and public policy. However, neither legislative history nor public policy can overcome the clear statutory language and regulatory form, which establish $750,000 as the minimum amount of financial responsibility, and the policy language which defines the liability on a per-accident basis. Five Points Rd. Jt. Vent. v. Johanns, 542 F.3d 1121, 1128 (7th Cir.2008) (stating that resort to legislative history is only necessary if the statutory language is ambiguous); see also Hamm, 10 F.Supp.2d at 544-48 (rejecting public policy argument that MCA-90 endorsement establishes a $750,000 per-person limit). The $1,000,000 per accident policy limit governs.

 

III.

 

The insurance policy clearly and expressly limited Carolina Casualty’s liability to a maximum of $1,000,000 per accident. Neither the MCA nor the MCS-90 endorsement establishes a per-person limit. Accordingly, the district court properly granted Carolina Casualty summary judgment. For these and the foregoing reasons, we AFFIRM.

 

C.A.7 (Ind.),2009.

Carolina Cas. Ins. Co. v. Estate of Karpov

559 F.3d 621

 

END OF DOCUMENT

 

Canal Ins. Co. v. J. Perchak Trucking, Inc.

United States District Court,

M.D. Pennsylvania.

CANAL INSURANCE COMPANY, Plaintiff

v.

J. PERCHAK TRUCKING, INC., Frances T. Moreck, Jr., and Elizabeth Pagnotti, Defendants.

No. 3:CV-07-2272.

 

April 6, 2009.

 

MEMORANDUM AND ORDER

 

THOMAS I. VANASKIE, District Judge.

 

At issue in this declaratory judgment action is whether Plaintiff Canal Insurance Company (“Canal”) owes a duty to defend and/or a duty to indemnify its insured, J. Perchak Trucking, Inc. (“Perchak”) and its employee, Francis T. Moreck, Jr., in connection with a personal injury action brought by Elizabeth Pagnotti, who was a passenger in the tractor trailer operated by Moreck at the time of the underlying accident. Pagnotti filed a lawsuit against Moreck and Perchak in the Court of Common Pleas of Luzerne County, and under the terms of Perchak’s coverage, Canal has provided a defense. Canal subsequently filed this declaratory judgment action and moved for summary judgment before the parties engaged in discovery. (Dkt. Entry 19.) Canal argues that the Occupant Hazard Exclusion (“OHE”) in Perchak’s policy relieves it of any duty to defend and/or indemnify its insureds.

 

For the convenience of the reader of this Memorandum opinion in electronic form, hyperlinks to the Court’s record and to authority cited herein have been inserted. No endorsement of any provider of electronic resources is intended by the use of hyperlinks.

 

On July 31, 2008, Plaintiff was granted leave to file an amended complaint. (Dkt.29.) Plaintiff’s Amended Complaint includes an additional count requesting a declaration that there is no uninsured motorist coverage for Pagnotti’s claims. (Dkt. 31, at 8.) Since Plaintiff’s Amended Complaint was filed after the Motion for Summary Judgment, Plaintiff’s Motion will be analyzed as a Motion for Partial Summary Judgment.

 

Pagnotti acknowledges that the OHE endorsement, on its face, excludes coverage for her claim. She contends, however, that the OHE endorsement is not enforceable because it conflicts with a federally-mandated endorsement for policies issued to motor carriers involved in interstate commerce, known as the MCS-90 endorsement.Alternatively, Pagnotti, citing to Pennsylvania regulatory provisions, including 52 Pa.Code § 32.12, contends that the OHE endorsement is invalid as a matter of state law. Pagnotti also relies upon the Pennsylvania Public Utility Commission’s May 23, 2005, Declaratory Order, Insurance Coverage Requirements for Motor Carriers, M00041816, 2005 WL 1876133 (May 23, 2005), which determined that “exclusionary clauses … found in individual insurance policies issued to motor carriers do not relieve an insurer, which has filed a Form “E” certification with the Commission, from providing coverage in the event of an accident.”

 

Effectively, the MCS-90 endorsement obligates Canal to pay any final judgment recovered against Perchak for liability arising out of the negligent operation of one of its tractor trailers regardless of a policy exclusion. See Progressive Cas. Ins. Co. v. Hoover, 570 Pa. 423, 809 A.2d 353, 360 (Pa.2002).

 

In pertinent part, this regulation provides:

 

(a) No common carrier or contract carrier of property may engage in intrastate commerce and no certificate will be issued, or remain in force, except as provided in § 32.15 (relating to applications to self-insure), until there has been filed with and approved by the Commission, a certificate of insurance by an insurer authorized to do business in this Commonwealth, to provide for the payment of valid accident claims against the insured for bodily injury to or the death of persons, or the loss or damage to property of others resulting from the operation, maintenance or use of a motor vehicle in the insured’s authorized service. The liability of the insurance company on each motor vehicle operated in common or contract carrier service shall be in amounts not less than $300,000 per accident.

 

52 Pa.Code § 32.12(a).

 

It is not clear whether Canal has filed the requisite Form “E” Certification.

 

Canal asserts that the MCS-90 endorsement triggers a duty to indemnify only in the event that the accident occurred while the vehicle in question was involved in interstate commerce. (Canal’s Reply Brief, Dkt. Entry 34, at 5.) Canal argues that the state regulation on which Pagnotti bases her invalidity argument “applies to intrastate commerce only.” (Canal’s Reply Brief, Dkt. Entry 34, at 15.)

 

As presented by the parties, a threshold question is whether the insured’s tractor trailer was operating in interstate or intrastate commerce. If the tractor trailer was not operating in interstate commerce, then there may be no need to consider the effect of MCS-90. If it was operating in interstate commerce, then it may be that consideration of the invalidity argument based upon Pennsylvania law is obviated. Neither party has presented any factual premise for deciding whether the tractor trailer was moving in interstate or intrastate commerce at the time of the accident. This issue can be complex. See, e.g., Progressive Cas. Ins. Co. v. Hoover, 570 Pa. 423, 809 A.2d 353 (Pa.2002). The parties have also not addressed the question of what impact, if any, a finding that the vehicle was moving in interstate commerce may have on the argument that the OHE is invalid based upon a state regulation that pertains to vehicles moving in intrastate commerce.

 

Federal courts are not to issue opinions that rest upon hypothetical facts. See Flast v. Cohen, 392 U.S. 83, 96 n. 14, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968); Burkey v. Marberry, 556 F.3d 142, 149 (3d Cir.2009). In this case, it would not be appropriate for this Court to adjudicate on Canal’s summary judgment motion the effect of either the MCS90 endorsement or 52 Pa.Code § 32.12 because, in order to do so, the Court would have to make assumptions as to whether or not the insured vehicle was in interstate commerce. Consideration of the important issues presented in this case should be made only in the context of a concrete determination as to whether the insured’s vehicle was involved in interstate or intrastate commerce at the time of the accident. Only then will the case have the appropriate factual context for avoiding resolution of an abstract question or rendering an advisory opinion on an issue that is not really pertinent to the parties’ situation.

 

It may be that the interstate commerce question can be resolved on a summary judgment motion. Accordingly, the summary judgment motion will be denied without prejudice to presenting the issues for resolution on an appropriate factual record. Of course, if the threshold question cannot be decided on a summary judgment motion, a trial will be held.

 

ACCORDINGLY, IT IS HEREBY ORDERED THAT:

 

1. Plaintiff’s Motion for Summary Judgment (Dkt. Entry 19) is DENIED, WITHOUT PREJUDICE.

 

2. A scheduling conference will be conducted in Chambers on April 24, 2009, at 9:00 a.m.

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