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March 31, 1996

R. E. TURNER, INC., Plaintiff,

The opinion of the court was delivered by: FOSCHIO


 The parties to this action filed a consent to proceed before the undersigned on April 14, 1995. The matter is presently before the court on Defendant's motion for summary judgment, dated June 23, 1995, and Plaintiff's cross-motion for summary judgment, dated July 12, 1995.


 Plaintiff, R. E. Turner, Inc., filed this action in New York State Supreme Court, Chautauqua County, on January 27, 1994, seeking a declaratory judgment against Defendant stating that any damages or losses suffered by Plaintiff as the result of a vehicular accident were covered by the terms of the policy issued by Defendant to Plaintiff. On February 22, 1994, Defendant removed the action to federal court based on diversity. Plaintiff is a New York corporation; Defendant is a Connecticut insurance corporation authorized to conduct business and doing business in New York.

 On June 23, 1995, Defendant filed a motion for summary judgment on the ground that, as a matter of law, its policy with Plaintiff provided no coverage for Plaintiffs liability, or, alternatively, that it was only liable to Plaintiff in the amount of $ 5000. Thereafter, on July 12, 1995, Plaintiff filed a cross-motion for summary judgment seeking a judgment declaring that the policy of insurance issued by Defendant to Plaintiff provided coverage for all damages and losses arising from the vehicular accident at issue in this case. Oral argument was held December 6, 1995.

 For the reasons as set forth below, Defendant's motion for summary judgment is DENIED. Plaintiff's cross-motion for summary judgment is GRANTED.


 Plaintiff, R. E. Turner, Inc., ("Turner"), is the successor-in-interest of Turner Buffalo, Inc. *fn1" Both entities are incorporated in New York. At the time of the incident at issue in this case, Turner, d/b/a Ellicott Trucking, owned a 1980 International Harvestor tractor, serial no. 14720. By an agreement dated September 22, 1992, Turner leased this 1980 tractor to West Contract Services a/k/a EE Operating Corporation ("West"). West is a common carrier authorized by the Interstate Commerce Commission ("ICC").

 Pursuant to the terms of the lease, West assumed "exclusive possession, control and use" of the tractor for a period of two years, the term of the lease. As required by the lease and federal regulations, a placard bearing West's name and ICC docket number was affixed to the sides of the tractor. The lease also authorized the subleasing and tripleasing of the tractor under certain conditions, and provided that such subleases could be authorized by either Turner or West. Subleasing the tractor avoids return of the vehicle to the terminal without a load ("deadheading").

 The lease also required that certain levels of insurance for the tractor be obtained. Specifically, Paragraph 20 of the lease required West to obtain insurance coverage at levels required by the Code of Federal Regulations, and required Turner to maintain "bobtail" insurance, i.e. insurance that would cover any "miles operated" by Turner during the terms of the lease when the tractor was not in actual service for West. Defendants' Notice of Motion filed June 23, 1995, ("Defendant's Motion"), Exh. D at P 20.

 As required, Turner obtained the necessary insurance. In order to obtain "bobtail" insurance, Turner entered into an agreement with Defendant, the Connecticut Indemnity Company, and obtained a policy, effective May 11, 1992, which had a liability limit of $ 500,000, and which provided for coverage for property damage, bodily injury, and damages "arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of pollutants." The policy also contained an endorsement entitled "Truckers - Insurance for Non-Trucking Use." This endorsement contained an exclusion which provided as follows:

This insurance does not apply to:
a. A covered "auto" while used to carry property in any business.
b. A covered "auto" while used in the business of anyone to whom the "auto" is rented.

 Defendants' Motion, Exh. B Truckers - Insurance for Non-Trucking Use Endorsement.

 The policy also included an endorsement, described as "Endorsement #2," which provided as follows:

 Connecticut Indemnity Company Insurance Policy, Endorsement #2, dated June 30, 1992.

 Endorsement #4 of the policy contained a number of "additional definitions," defining "covered auto" to include only those autos which, at the time of the loss, were subject to a valid, long-term lease, existing with a designated certified carrier covering that vehicle, of not less than 30 consecutive days. Further, the long-term lease agreement was required to show exclusive possession, control and use of the described equipment by the carrier, and required the carrier to provide bodily injury and property damage liability insurance. Defendants' Motion, Exh. B. There is no dispute that such a long-term lease between Turner and West existed or that West had secured the required insurance coverage.

 The policy issued by Defendant, No. BA 453676, specifically identified the 1980 tractor as the covered vehicle. ...

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