The opinion of the court was delivered by: David N. Hurd United States District Judge
MEMORANDUM-DECISION and ORDER
Plaintiffs Warren Groat and his wife (collectively "plaintiffs" or "Groats") brought this action seeking a judgment for $611,325.60 plus interest pursuant to the Motor Carrier Act of 1980, as amended, 49 U.S.C. §§ 13101--14901, and for breach of an arbitration contract executed in the course of underlying personal injury litigation. Jurisdiction exists pursuant to 28 U.S.C. § 1332, as the parties have diverse citizenship.
Plaintiffs moved for summary judgment. Defendant opposed and cross-moved for summary judgment. Plaintiffs replied. Oral argument was heard in Utica, New York, on September 7, 2012.
Defendant Global Hawk Insurance Company ("Global Hawk") issued a commercial motor vehicle insurance policy to non-party R-Man Logistics, Inc. ("R-Man") to be effective October 26, 2007, to October 26, 2008. The policy included an MCS-90 endorsement, as required by the federal Motor Carrier Act for truckers operating in interstate commerce. In part, the MCS-90 endorsement provided, in keeping with the purpose of the Motor Carrier Act, that essentially nothing would relieve Global Hawk from liability if a judgment was obtained against the insured, R-Man, for public liability relating to operation of covered motor vehicles. The MCS-90 endorsement states:
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.
Compl. Ex. A at 9--10*fn1 ("MCS-90"). The policy required R-Man to provide driver data to Global Hawk, which must approve the drivers. The policy listed current drivers. In addition, R-Man submitted driver data for additional drivers, on February 8, 2008, and July 17, 2008.
R-Man added Carlos Victoria ("Victoria") as a driver. However, R-Man never submitted driving record data for him as the insurance policy requires.
According to Global Hawk, it would not have approved Victoria as an added driver*fn2 because of his poor driving record. He had prior accidents, had his commercial driver's license suspended, and received at least three convictions for driving with a suspended driver's license.
On July 28, 2008, Victoria, while driving an R-Man truck, was involved in an accident with Warren Groat. Plaintiffs brought an action in New York State Supreme Court, Columbia County for negligence and loss of consortium, against R-Man and Victoria. Global Hawk sent a reservation of rights letter to R-Man dated August 8, 2008, but defended the lawsuit. According to Global Hawk, R-Man and Victoria did not participate in the defense of the suit as is required by the policy.
The state Supreme Court granted partial summary judgment on liability in favor of the Groats on August 24, 2010. The damages award was determined by an arbitrator, pursuant to a contract entered into between the Groats and Global Hawk (by defense counsel), then confirmed by the state court on November 4, 2011. On November 8, 2011, Global Hawk denied coverage on two grounds: (1) because it was not informed of and did not approve Victoria as a driver, the policy was void ab initio; and (2) R-Man and Victoria failed to aid in the defense of the suit as the policy required. Meanwhile, Global Hawk filed a declaratory judgment action seeking rescission of the policy in California state court on October 26, 2011. Bains Decl. Ex. G (Dkt. No. 9-9). The basis upon which Global Hawk sought rescission in the California case was failure ot R-Man and Victoria to aid in defense of the Groats' negligence suit (without mentioning failure to obtain approval of Victoria as a driver). Id. On November 29, 2011, the New York state court filed a judgment against R-Man and Victoria, and in favor of plaintiffs, in the amount of $611,325.60. Global Hawk has declined to satisfy the judgment for the above-stated reasons. This action followed.