United States District Court, S.D. New York
OPINION AND ORDER
LORNA G. SCHOFIELD, District Judge.
This is an interpleader action filed by Plaintiff Park Insurance Company ("Park") against Defendants Monico Lugo and Sarah Lugo (together, the "Lugos") and Thomas Young and Susan Eichhorn-Young (together, the "Youngs"). This action arises from an automobile accident in which the Lugos and the Youngs were injured and subsequently brought claims in Pennsylvania and New York state courts, respectively, against Daniel Solano, Eco America Trucking Corp. ("Eco") and Sav-On Waste Services, LLC (Sav-On"), the latter of which holds a business automobile insurance policy (the "Policy") and a Form MCS-90 Endorsement for Motor Carrier Policies of Insurance for Public Liability (the "Endorsement") issued by Park.
Before the Court is Park's motion for summary judgment finding that (1) Park has no liability under the Endorsement to pay any judgment that may be entered against Sav-On; (2) Park has no liability under the Endorsement to pay any judgment that may be entered against Eco and/or Solano; and (3) the Youngs and the Lugos are entitled to the limits of the Policy and are not entitled to any sums under the Endorsement. Also before the Court is the Lugos' motion for summary judgment finding that Park is obligated to provide the proceeds of the Endorsement to satisfy its obligations in this matter and directing Park to deposit with the Court $750, 000 or, in the alternative, dismissing this action on the ground that Park lacks clean hands. For the reasons discussed below, Park's motion is granted in part and denied in part, and the Lugo's motion is denied.
The facts are taken from the parties' summary judgment submissions and, as required on this motion, viewed in the light most favorable to the nonmoving parties on their respective motions.
On June 9, 2011, Park issued the Policy to Sav-On, which was effective from May 23, 2011 through May 23, 2012 and obligated Park to pay up to $500, 000 per accident for damages assessed against Sav-On, who is the named insured under the Policy. In connection with the Policy, Park also issued the Endorsement to Sav-On, which provides $750, 000 to satisfy certain financial responsibility requirements under the Motor Carrier Act of 1980 ("MCA") applicable to "motor carriers" engaged in interstate commerce.
On June 20, 2011, Solano transported non-hazardous municipal waste from a transfer station in Goshen, New York to the Keystone Landfill in Dunmore, Pennsylvania and then began a return trip to the Goshen station with an empty trailer in order to pick up a second load of waste, which he intended also to transport to the Keystone Landfill. On this return trip, Solano was involved in a multiple-vehicle accident on Interstate 84 in Westfall, Pennsylvania (the "Accident"). Other vehicles involved in the Accident included two passenger cars, one containing the Youngs and one containing the Lugos, all four of whom were seriously injured in the Accident.
At the time of the Accident, Solano was driving a tractor-trailer owned by Sav-On. Park presents evidence, in the form of sworn testimony, that Sav-On had leased the trailer to Eco pursuant to a written lease agreement and that Sav-On had sold the tractor to Eco pursuant to an installment sales contract, under which Eco had made some payments but had not paid the purchase price in full. However, neither the lease nor the sales agreement between Sav-On and Eco has been produced by anyone in discovery. Park presents evidence, in the form of sworn testimony, that Sav-On's copies of the lease and sales agreements were destroyed in Hurricane Sandy in October 2012.
The Lugos dispute the existence of the lease and sales agreements and adduce evidence that the business relationship between Sav-On and Eco was something other than that of a lessorlessee and seller-buyer, including evidence that Sav-On was involved in the business of hauling waste and was paid directly for the loads of waste hauled by Eco. Park adduces evidence that Sav-On played no role in brokering and was not paid a broker or any other fee in connection with the load of waste that Solano transported on the day of the Accident, while Defendants adduce evidence that Sav-On may have played such a role and been paid a fee.
There is also a dispute between the parties as to whether, at the time of the Accident, Solano was employed by Eco or by Sav-On, and the parties offer conflicting evidence. At his deposition, Solano testified that he was working for Eco on the day of the Accident; however, prior to this deposition, in an interview by Park's investigators, he signed a statement that said he was working for Sav-On on the day of the Accident.
Eco is a motor carrier with a number assigned by the United States Department of Transportation ("USDOT") and is in the business of transporting non-hazardous municipal waste. Sav-On presents evidence that it was in the business of leasing trailers to carriers of nonhazardous municipal waste. However, the Lugos present evidence that Sav-On denied leasing any "vehicles or equipment" in its application for insurance coverage from Park. Sav-On never had a USDOT number; however, Sav-On did apply to the Pennsylvania Department of Environmental Protection to gain Municipal and Residual Waste Transporter authorization for its trailers.
The following business procedures undertaken by Sav-On and Eco are undisputed: After Eco hauled a load of waste using the tractor-trailer owned by Sav-On, Eco would give Sav-On the "manifest, " which contained both the generator ticket, which identified the transfer station from where the waste originated, and the disposal ticket, which was a receipt from the landfill where the waste was deposited. Then, Sav-On would create an invoice for the waste-hauling services and give that invoice to Eco, which Eco would submit to the company responsible for payment. The company responsible for payment would submit the payment directly to Sav-On in the form of checks made out to Sav-On. After receiving the payment, Sav-On would remit a smaller payment to Eco.
Park presents evidence, in the form of sworn testimony, that the payment remitted to Eco from Sav-On was smaller than the payment submitted to Sav-On because Sav-On would deduct amounts Eco owed to Sav-On under the trailer lease and the sales contract for the tractor, as well as insurance and maintenance costs. Park presents evidence, in the form of sworn testimony, that this procedure was followed pursuant to an agreement between Sav-On and Eco and that the purpose of ...