United States District Court, S.D. New York
May 5, 2005.
CONNECTICUT INDEMNITY COMPANY, Plaintiff,
QBC TRUCKING, INC., JQ & SONS TRUCKING, INC., BERRY CHIU, PROGRESSIVE CASUALTY INSURANCE CO., APL LINES, INC., EAGLE INSURANCE CO., SUNG-IK JUNG, Defendants.
The opinion of the court was delivered by: WILLIAM PAULEY, District Judge
MEMORANDUM AND ORDER
Plaintiff Connecticut Indemnity Co. ("Connecticut Indemnity")
brings this declaratory judgment action against Defendants QBC
Trucking, Inc. ("QBC"), JQ & Sons Trucking, Inc. ("JQ & Sons"),
Berry Chiu, Progressive Casualty Insurance Co.
("Progressive"),*fn1 APL Lines, Inc., Eagle Insurance Co.
("Eagle") and Sung-Ik Jung (collectively, "Defendants") to
determine which insurance policies cover the vehicular accident
between Chiu and Jung on July 18, 2002 (the "accident"). (Amended
Verified Complaint ("Compl.") ¶ 1; Progressive's Rule 56.1
Statement ("Progressive 56.1 Stmt.") ¶¶ 2-3.)
Connecticut Indemnity moves for summary judgment and a
declaration that the exclusion contained in its insurance policy
is valid and that Plaintiff does not bear any coverage
responsibility for the accident. In turn, Progressive moves for
summary judgment dismissing the counts against it and a declaration that its coverage obligation
is excess to that of Connecticut Indemnity and/or Eagle.
I. The Accident
On July 18, 2002, Chiu and Jung were involved in a vehicular
accident in Queens, New York. (Compl. ¶¶ 12, 13, 15.) Chiu, QBC's
principal, was driving a 1996 Kenworth Tractor (the "Kenworth
Tractor"), which prominently displayed a JQ & Sons logo.
(Connecticut Indemnity's 56.1 Statement ("CI 56.1 Stmt.") ¶ 13.)
QBC owns the Kenworth Tractor, but had leased it to JQ & Sons
under a permanent lease agreement. (Progressive 56.1 Stmt. ¶ 3.)
JQ & Sons, a federally regulated motor carrier registered with
the Department of Transportation ("DOT"), regularly dispatched
QBC for jobs in New York and New Jersey. (Progressive 56.1 Stmt.
¶¶ 7, 8.) QBC carries its insurance through Connecticut
Indemnity, while JQ & Sons is insured by Progressive and Eagle.
On July 18th, JQ & Sons dispatched Chiu to pick up a trailer in
Elizabeth, New Jersey. On his return, Chiu collided with Jung
near 37th Avenue in Queens. (Progressive 56.1 Stmt. ¶ 9 & Ex. B:
Police Report.) Jung brought suit in New York Supreme Court,
Kings County, against Chiu, QBC and JQ & Sons for his personal
injuries. (CI 56.1 Stmt. ¶ 2; Compl. ¶ 14.) In his Kings County
action, Jung seeks damages in excess of $20,000,000. (CI 56.1
Stmt. ¶ 2; Progressive 56.1 Stmt. ¶ 10.) Chiu, QBC and JQ & Sons
are all defendants in that action. (CI 56.1 Stmt. ¶ 2;
Progressive 56.1 Stmt. ¶ 11.) II. The Insurance Policies
On the date of the accident, Chiu and QBC carried a
non-trucking liability policy from Connecticut Indemnity (the "CI
Policy"). (CI 56.1 Stmt. ¶ 17.) The CI Policy provided coverage
for QBC's personal use of the Kenworth Tractor and contained
provisions excluding coverage for commercial use. (CI 56.1 Stmt.
¶ 19.) As a pre-condition for the insurance, Connecticut
Indemnity required QBC to maintain a permanent lease providing
that the lessor of the Kenworth Tractor carried insurance for
business usage. (CI 56.1 Stmt. ¶ 22.)
JQ & Sons had two insurance policies, one from Progressive and
another from Eagle. Progressive is registered with the DOT as JQ
& Sons' primary insurer, and its policy (the "Progressive
Policy") provides $1,000,000 in liability coverage for an
accident. (CI 56.1 Stmt. ¶¶ 26-28; Progressive 56.1 Stmt. Ex. H.)
The Eagle policy (the "Eagle Policy") covers JQ & Sons'
"non-owned autos" and "hired autos," and provides $500,000 in
liability coverage. (CI 56.1 Stmt. ¶¶ 23-25; Eagle 56.1 Statement
("Eagle 56.1 Stmt.") ¶¶ 5, 10; Progressive 56.1 Stmt. ¶¶ 12-14.)
A. The Connecticut Indemnity Policy
The CI Policy excludes two categories of vehicles from
a. A covered "auto" while used to carry property in
b. A covered "auto" while used in the business of
anyone to whom the "auto" is rented, if the rental
agreement requires the lessee to carry primary
insurance for liability arising out of the lessee's
use of the "auto."
However, the above exclusions apply only if there is
other liability insurance which is valid and
collectible, applicable to the covered "auto," which
provides the minimum kinds of insurance required by
law and which meets the minimum limits specified by
the compulsory or financial responsibility laws of the jurisdiction where the
covered "auto" is being used or the minimum limits
specified by any law governing motor carriers of
passengers or property, whichever is applicable.
(CI 56.1 Stmt. ¶ 21; Progressive 56.1 Stmt. ¶ 18.) The CI Policy
expressly schedules the Kenworth Tractor as a "covered `auto.'"
(CI 56.1 Stmt. ¶ 20.) Additionally, the CI Policy's Certificate
of Insurance contains a disclaimer:
THIS CERTIFICATE OF INSURANCE IS ISSUED BASED ON A
WARRANTY BY THE CONTRACTOR THAT HE/SHE IS PERMANENTLY
LEASED TO THE GOVERNMENTALLY REGULATED MOTOR CARRIER
NAMED ON THIS CERTIFICATE. ALL COVERAGE EXPIRES WHEN
THE PERMANENT LEASE HAS BEEN BROKEN, CANCELED, OR
TERMINATED BY EITHER THE CONTRACTOR OR THE MOTOR
(CI 56.1 Stmt. ¶ 22.)
B. The Progressive Policy
The Progressive Policy provides that the insurance company
"will pay damages . . . for which an insured is legally liable
because of an accident." (Progressive 56.1 Stmt. ¶ 20.) The
accident must arise "out of the maintenance or use of [an]
insured auto." Further, the "insured" must be identified in the
policy or must be driving an "insured auto" described in the
policy. (Progressive 56.1 Stmt. ¶ 25.) The Progressive Policy
expressly lists two vehicles that it covers and schedules two
additional undescribed trailers for which JQ & Sons paid
premiums. (Progressive 56.1 Stmt. Ex. H.) The Kenworth Tractor is
not scheduled in the Progressive Policy. (Progressive 56.1 Stmt.
¶ 26.) Therefore, Progressive argues that its policy does not
cover the Kenworth Tractor.
Because Progressive was insuring JQ & Sons, a federally
registered motor carrier, it filed a BMC-91X form as required by
DOT regulations. (CI 56.1 Stmt. ¶¶ 26-29.) A BMC-91X filing requires an insurer to carry an MCS-90 endorsement on its
policy. (CI 56.1 Stmt. ¶ 29.) See also 49 C.F.R. § 387.15. An
MCS-90 endorsement states, in pertinent part:
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. . . . 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 this endorsement
is attached shall remain in full force and binding
between the insured and the company.
(CI 56.1 Stmt. ¶ 32.) See also 49 C.F.R. § 387.15, at
Here, while the Progressive policy does not contain an MCS-90
endorsement, the terms of such an endorsement are included by
reference. (Progressive 56.1 Stmt. Ex. H ("If we are required by
any applicable filing which we have made on your behalf to
provide coverage not otherwise provided by this policy . . . the
coverage provided hereunder for such person shall be the minimum
coverage required by law."); see also Transcript of Oral
Argument, dated Jan. 20, 2005 ("Tr.") at 15.)
C. The Eagle Policy
JQ & Sons also carried a non-owned vehicle policy through
Eagle. (Eagle 56.1 Stmt. ¶ 5.) The Eagle Policy provides coverage
to vehicles that JQ & Sons "lease[d], hire[d], rent[ed] or
borrow[ed]" and "used in connection with business." (CI 56.1
Stmt. ¶¶ 23-24; Eagle 56.1 Stmt. ¶ 10.) The Eagle Policy provides a maximum of $500,000
of coverage for a single incident, and states the following with
respect to other insurance policies held by JQ & Sons:
a. . . . For any covered "auto" you don't own, the
insurance provided by this Coverage Form is excess
over any other collectible insurance.
(Eagle 56.1 Stmt. ¶ 10.)
I. Summary Judgment Standard
A court may grant summary judgment only if "there is no genuine
issue of material fact" and "the moving party is entitled to
summary judgment as a matter of law." Fed.R.Civ.P. 56(c). The
movant bears the burden of establishing that no genuine issues of
material fact exist. Celotex Corp. v. Catrett, 477 U.S. 317,
322-24 (1986); see also Overton v. N.Y. State Div. of Military
& Naval Affairs, 373 F.3d 83, 89 (2d Cir. 2004) ("An issue of
fact is genuine `if the evidence is such that a jury could return
a verdict for the nonmoving party.'" (quoting Anderson v.
Liberty Lobby, 477 U.S. 242, 248 (1986))). "A fact is material . . .
if it `might affect the outcome of the suit under the
governing law.'" Overton, 373 F.3d at 89 (quoting Anderson,
477 U.S. at 248). Once the movant satisfies this requirement, the
burden shifts to the non-moving party "to make a showing
sufficient to establish the existence of an element essential to
that party's case, and on which that party will bear the burden
of proof at trial." Celotex, 477 U.S. at 322.
Although a court must resolve all ambiguities and draw all
inferences in favor of the non-moving party, Flanigan v. Gen.
Elec. Co., 242 F.3d 78, 83 (2d Cir. 2001), the court must
inquire whether "there is sufficient evidence favoring the
nonmoving party for a jury to return a verdict for that party."
Anderson, 477 U.S. at 249-50. It is well established that
"conclusory statements, conjecture, or speculation by the party resisting the
motion will not defeat summary judgment." Kulak v. City of New
York, 88 F.3d 63, 71 (2d Cir. 1996); accord Anderson,
477 U.S. at 249-50. An "opposing party's facts must be material and
of a substantial nature, not fanciful, frivolous, gauzy,
spurious, irrelevant, gossamer inferences, conjectural,
speculative, nor merely suspicions." Contemporary Mission v.
United States Postal Serv., 648 F.2d 97, 107 n. 14 (2d Cir.
1981) (internal citations and quotation marks omitted).
II. Connecticut Indemnity's Motion for Summary Judgment
A. Validity of Connecticut Indemnity's Exclusion
Connecticut Indemnity seeks a declaration that the exclusion in
the CI Policy is valid under New York law. In determining the
validity of the exclusion, this Court has ample guidance because
Connecticut Indemnity's efforts to draft a legally binding
exclusion are the subject of considerable precedent. See Conn.
Indemnity Co. v. 21st Century Transp. Co., 186 F. Supp. 2d 264
(E.D.N.Y. 2002); R.E. Turner v. Conn. Indem. Co.,
925 F. Supp. 139 (W.D.N.Y. 1996); Conn. Indem. Co. v. Varela, No. 94 Civ.
1586 (JFK), 1995 WL 16800 (S.D.N.Y. Jan. 18, 1995).
In Royal Indemnity Company v. Providence Washington Insurance
Company, upon certification from the Second Circuit, the New
York Court of Appeals examined the validity of a similar
business-use exclusion in a policy covering commercial vehicles.
92 N.Y.2d 653 (1998). The New York Court of Appeals answered the
following question in the negative:
Whether a non-trucking-use exclusion from coverage in
an insurance policy obtained by the owner of a
commercial vehicle is valid under New York law,
despite the absence of express language in the policy
stating that the exclusion is effective only if the
vehicle's lessee is required to obtain insurance
coverage, where the insurer has established that its
standard underwriting policy is not to issue a policy containing such an exclusion
unless the vehicle has insurance coverage.
92 N.Y.2d at 656. It relied on New York's policy that "part[ies]
injured by the negligent operation of a motor vehicle [have]
`recourse to a financially responsible defendant.'" Royal
Indem., 92 N.Y.2d at 658 (quoting Morris v. Snappy Car Rental,
84 N.Y.2d 21, 29 (1994)). Thus, the New York Court of Appeals
concluded that the exclusion in the insurance policy violated
public policy because it was not expressly conditioned on the
presence of insurance coverage for business use of the vehicle.
Royal Indem., 92 N.Y.2d at 658. Significantly, in Royal
Indemnity, the court held the exclusion invalid even though the
insured had coverage available in addition to the insurance
policy subject to litigation. Royal Indem.,
92 N.Y.2d at 657-58; see also 21st Century, 186 F. Supp. 2d at 271. In
sum, the business-use exclusion was void not because of an
actual gap in coverage, but because of a potential gap in
coverage. See Royal Indem., 92 N.Y.2d at 658.
In 2002, Senior District Judge Glasser held that a modified
version of the exclusion was also contrary to New York's public
policy. 21st Century, 186 F. Supp. 2d at 274. The court
reasoned that "New York public policy requires victims of motor
vehicle accidents to have `recourse to a financially responsib[e]
defendant.'" 21st Century, 186 F. Supp. 2d at 270-71 (quoting
Snappy Car Rental, 84 N.Y.2d at 29). Because neither the
"Non-Trucking Use Endorsement, nor the CI Policy as a whole,"
included a provision "expressly provid[ing] that it is only
operative if the lessee has business use liability coverage in
effect for the accident in question," the court found that the
exclusion was invalid as being contrary to New York public
policy. 21st Century, 186 F. Supp. 2d at 274.
After 21st Century but before the accident, Connecticut
Indemnity modified the exclusion again. As a result, the CI
Policy now conditions its business-use exclusion on the presence of an alternate collectible liability insurance for a
vehicle when used for business purposes. (CI 56.1 Stmt. ¶ 21 &
Ex. K; Progressive 56.1 Stmt. ¶ 18.) This new requirement removes
the infirmity found to be fatal in 21st Century, because any
potential gap in insurance is bridged by the contingent nature of
the exclusion. See 21st Century, 186 F. Supp. 2d at 274.
Therefore, this Court finds that the modified business-use
exclusion in the CI Policy is valid.
B. Applicability of Connecticut Indemnity's Exclusion
Having determined that the business-use exclusion in the CI
Policy is valid, this Court must address whether the exclusion in
the CI Policy is applicable.
1. Timeliness of Connecticut Indemnity's Disclaimer
Citing First Financial Insurance Company v. Jetco Contracting
Corporation, Eagle argues that Connecticut Indemnity's
disclaimer of coverage forty-four days after the accident was
unreasonable and, therefore, void. (Eagle Memorandum in
Opposition to Connecticut Indemnity's Motion for Summary
Judgment, dated Nov. 29, 2004 ("Eagle Opp.") at 6 (citing
1 N.Y.3d 64, 68-69 (2003)).) This Court disagrees.
In First Financial, the New York Court of Appeals addressed
the question of whether an insurer was justified in delaying its
denial of coverage "until after the insurer ha[d] conducted an
investigation into alternate, third-party sources of insurance
benefiting the insured, although the existence or non-existence
of alternate insurance sources [wa]s not a factor in the
insurer's decision to deny coverage." 1 N.Y.3d at 68. Such is not
the case here. Connecticut Indemnity's delay in disclaiming
coverage stems primarily from its efforts to determine the
existence of alternate insurance sources. "In order to discourage
an insurance company from disclaiming coverage too quickly, the reasonableness of the time
that the insurer takes to disclaim coverage is measured from the
date it has sufficient information to determine whether
disclaiming coverage is proper." U.S. Liab. Ins. Co. v. 204 W.
78th St. Hous. Corp., No. 01 Civ. 1033 (NRB), 2002 WL 22049, at
*3 (S.D.N.Y. Jan. 8, 2002). Here, Connecticut Indemnity's
disclaimer was "within two months," and, therefore, "reasonable
as a matter of law" in light of Connecticut Indemnity's
investigation of alternate insurance sources. U.S. Liability
Ins., 2002 WL 22049, at *3.
2. Presence of Alternate Insurance Sources
For Connecticut Indemnity's business-use exclusion to apply,
the CI Policy requires the presence of "other liability insurance
which is valid and collectable, which provides the minimum kinds
of coverage required by . . . [the] laws of the jurisdiction
where the covered `auto' is being used." (CI 56.1 Stmt. ¶ 51.)
The first step, therefore, is to determine whether federal and/or
New York law regarding insurance coverage governs.
a. Coverage under Federal Law
If federal law applies, DOT regulations require that an insured
carry a minimum coverage of $750,000 in liability insurance.
See 49 C.F.R. § 387.9. In its papers,*fn2 Connecticut
Indemnity argues that the federal minimum coverage requirements
do not apply in this action and that only New York State's minima
must be satisfied by alternate insurance sources. (Connecticut
Indemnity's Reply Memorandum, dated Dec. 10, 2004 ("Conn. Reply")
at 22.) Progressive argues that Chiu's trip from Elizabeth, New Jersey,
to Queens cannot be the subject of DOT regulation because it
occurred entirely within the New York City commercial zone.
(Progressive's Opposition to Connecticut Indemnity's Motion for
Summary Judgment, dated Nov. 24, 2004 ("Progressive Opp.") at 10
(citing 49 U.S.C. § 13506(b)(1)).) Eagle counters that the DOT
regulation applies because JQ & Sons is a federally licensed
motor carrier. (Eagle Mem. at 5.)
Any transportation occurring within the commercial zone of New
York City is beyond the DOT's jurisdiction and therefore exempt
from DOT regulations. 49 U.S.C. § 13506(d)(1); see Broadway
Delivery Corp. v. United Parcel Serv. Of Am., 651 F.2d 122, 124
(2d Cir. 1981) (noting that because the New York City commercial
zone encompasses New York City and parts of Northern New Jersey,
it is exempt from regulation by the Interstate Commerce
Commission (now the DOT)). For the purposes of the DOT
regulation, the commercial zone of New York City encompasses the
five boroughs of the City and "[a]ll points within a line drawn
twenty miles beyond the municipal limits of New York, N.Y."
49 C.F.R. § 372.235.
On the day of the accident, Chiu was transporting goods from
Elizabeth, New Jersey to Queens, which was also the site of the
accident. (Progressive 56.1 Stmt. ¶ 9.) At oral argument, this
Court took judicial notice of the fact that Elizabeth, New Jersey
is within twenty miles of New York City's municipal limits. (Tr.
at 23.) Thus, all relevant transportation took place within the
New York City commercial zone, outside the DOT's jurisdiction.
Accordingly, DOT regulations do not govern the minimum coverage
required from alternate insurance sources. See Broadway
Delivery Corp., 651 F.2d at 124; see also Siskey v. Gen.
Teamsters, Local No. 261, 419 F. Supp 48, 51 (W.D. Pa. 1976)
(holding that a driver with routes within a commercial zone was
exempt from DOT regulations). b. Coverage under New York State Law
None of the parties dispute the applicability of New York law,
which requires a $50,000 minimum in insurance coverage. See
N.Y. Comp. Code R. & Regs. Title 11, § 60-1.1(a). Here, the Eagle
Policy provides a primary coverage of $500,000, far exceeding New
York's required minimum.*fn3 Indeed, at oral argument,
Eagle's counsel conceded: "I don't believe that Eagle in any way,
shape or form has walked away or said that we don't have a
primary coverage responsibility." (Tr. at 21.) However, Eagle
contends that its primary coverage responsibility is removed by
the "Other Insurance" provision in its policy. (Eagle Opp. at 6.)
That provision states that the Eagle Policy is excess to other
collectible insurance policies for non-owned vehicles. (Eagle
56.1 Stmt. ¶ 10.) Because the Kenworth Tractor was not owned by
JQ & Sons, Eagle argues that the Eagle Policy is excess to the CI
Policy and cannot provide the minimum liability insurance
required by New York law. (Eagle Opp. at 6.)
Eagle's argument is unavailing. As an initial matter, the CI
Policy excludes from coverage all business usage of the Kenworth
Tractor. The CI Policy provides that the exclusion will cease to
operate only if the Kenworth Tractor becomes uninsured or insured
in an amount less than that required by applicable laws. Here,
neither condition occurred; at the time of the accident, the Eagle Policy amply met the minimum amount of
liability insurance under New York law.
Because the CI Policy does not constitute "other collectible
insurance" for rendering the Eagle Policy secondary, the Eagle
Policy is not excess with respect to the Kenworth Tractor. Thus,
this Court finds that Connecticut Indemnity's exclusion applies.
Accordingly, Connecticut Indemnity has no coverage obligation
with respect to the accident.
III. Progressive's Motion for Summary Judgment
Progressive's summary judgment motion argues that any
obligations it might have pursuant to its federal filings are
excess to the obligations of Connecticut Indemnity and/or Eagle.
For the reasons set forth below, Progressive's motion is granted
in part and denied in part.
First, Progressive's application to dismiss all counts against
it is denied in light of this Court's holding that the CI
Policy's exclusion applies. See Section II supra. This Court
similarly finds that Progressive's obligations are not excess to
that of Connecticut Indemnity. See Section II supra. All that
remains of Progressive's summary judgment motion is its request
that the Court declare Progressive's obligations in excess to
those of Eagle.
Eagle does not dispute that the Progressive Policy provides no
coverage except to the extent its federal filings
require.*fn4 Thus, the sole question is whether
Progressive's obligations pursuant to the MCS-90 endorsement, as
required by Progressive's federal filing, creates primary
coverage responsibility. A. Effect of MCS-90 Endorsement
As noted above, federal regulations are inapplicable to this
case. Nevertheless, this Court will examine the issues raised
regarding the effect of the MCS-90 endorsement. The MCS-90
endorsement is designed to "assure that injured members of the
public are able to obtain judgment[s] from negligent authorized
interstate carriers." John Deere Ins. Co. v. Nueva,
229 F.3d 853, 857 (9th Cir. 2000). Where an injured party obtains a
judgment, the MCS-90 creates a primary coverage responsibility as
to that injured party. See Green v. Royal Indem. Ins. Co.,
No. 93 Civ. 4335 (MBM), 1994 WL 267749, at *6 (S.D.N.Y. June 15,
1994) ("It follows that the plain language of the MCS-90
endorsement provides broad coverage for members of the public
injured by commercial trucks."); see generally T.H.E. Ins. Co.
v. Larsen Intermodal Serv., Inc., 242 F.3d 667, 673 (5th Cir.
2001); Integral Ins. Co. v. Lawrence Fulbright Trucking, Inc.,
930 F.2d 258, 260-62 (2d Cir. 1991); Pierre v. Providence Wash.
Ins. Co., 99 N.Y.2d 222, 234-35 (2002).
The question before this Court, however, is whether the MCS-90
creates a primary coverage responsibility as between insurers
not as between an insurer and an injured party. The Second
Circuit has not considered this issue.
A majority of the circuits have held that an MCS-90 endorsement
has no effect on the allocation of loss among insurers. See,
e.g., Canal Ins. Co. v. Distrib. Serv., Inc., 320 F.3d 488,
492 (4th Cir. 2003) (listing cases holding that the MCS-90
endorsement does not allocate loss between insurers, and agreeing
with that holding); T.H.E. Ins. Co., 242 F.3d at 673 (5th Cir.
2001); Empire Fire & Marine Ins. Co. v. J. Transp. Inc.,
880 F.2d 1291, 1298-99 (11th Cir. 1989); Occidental Fire & Cas. Co.
of N.C. v. Int'l Ins. Co., 804 F.2d 983, 986 (7th Cir. 1986);
Grinnell Mut. Reinsurance Co. v. Empire Fire & Marine Ins. Co.,
722 F.2d 1400, 1404 (8th Cir. 1983); Carolina Cas. Ins. Co. v. Ins. Co. of N.A.,
595 F.2d 128, 140-41 (3d Cir. 1979). These Courts of Appeals reached
their conclusion by relying on the plain language of the
endorsement, which alters the terms of the insurance policy with
respect to injured parties, but does not extend the changes to
the relationship between the insurer and the insured. See
49 C.F.R. § 387.15, at Illustration I (stating that "no condition,
provision, stipulation, or limitation contained in the policy . . .
shall relieve the [insurer] from liability or from the payment
of any final judgment [to an injured party]," even though "all
terms, conditions, and limitations in the policy to which this
endorsement is attached shall remain in full force and binding
between the insured and the [insurer]"); see also Canal Ins.
Co., 320 F.3d at 492 ("The language makes clear that the MCS-90
endorsement operates to protect the public but does not alter the
relationship between the insured and the insurer as otherwise
provided in the policy.").
Other courts have held that the MCS-90 endorsement implicates
insurer liability vis-à-vis other insurance companies. See
Prestige Cas. Co. v. Mich. Mut. Ins. Co., 99 F.3d 1340, 1348-49
(6th Cir. 1996); Empire Fire & Marine Ins. Co. v. Guar. Nat'l.
Ins. Co., 868 F.2d 357, 361-62 (10th Cir. 1989). However, these
circuits have limited their holding, stating that the MCS-90
endorsement "does not establish primary liability over other
policies that are also primary by their own terms." Prestige
Cas. Co., 99 F.3d at 1348; Empire Fire, 868 F.2d at 361. Under
that view, an MCS-90 endorsement does not render the Progressive
Policy primary to the Eagle Policy.
This Court holds that Progressive's MCS-90 did not affect the
allocation of loss between Progressive and Eagle. This view
comports with a plain reading of the endorsement and fulfills the
underlying policy objectives. It ensures that the public has a
viable avenue of redress. Indeed, the DOT supports this
interpretation, and noted in an amicus curiae brief filed with
the Supreme Court that "the [MCS-90] form specifically preserves
those terms as between the insurer and the named
insured."*fn5 Amicus Curiae Brief of United States in
John Deere Ins. Co. v. Guillermo Nueva, No. 00-1491 (U.S.
Supreme Court) at 6.
Here, because the Eagle Policy provides coverage for the
accident, Progressive does not have a primary coverage
obligation, and its motion for summary judgment on that issue
with respect to Eagle is granted. CONCLUSION
For the reasons set forth above, Connecticut Indemnity's motion
for summary judgment is granted, and Progressive's motion for
summary judgment is granted in part and denied in part.