United States District Court, S.D. New York
FINDINGS OF FACT AND CONCLUSIONS OF LAW
LORNA G. SCHOFIELD, District Judge.
Plaintiff Park Insurance Company ("Park") brings this interpleader action under 28 U.S.C. § 1335 to obtain a discharge of liability to two competing sets of claimants, by depositing with the Court the insurance proceeds at issue. The principal threshold question is the amount that must be deposited, which depends on the extent of insurance coverage, and specifically the applicability of a particular endorsement to the insurance policy. Based on the facts adduced at a half-day trial, the endorsement does apply, and Park may be discharged based on its previous deposit with the Court of $750, 000.
I. BACKGROUND AND PROCEDURAL HISTORY
Park issued a business automobile insurance policy (the "Policy") to Sav-On Waste Services, LLC ("Sav-On") for up to $500, 000 and a Form MCS-90 Endorsement for Motor Carrier Policies of Insurance for Public Liability (the "Endorsement") under Sections 29 and 30 of the Motor Carrier Act of 1980 ("MCA") for up to $750, 000 for a one-year period beginning May 23, 2011.
Defendants are Monico Lugo and Sarah Lugo (together, the "Lugos") and Thomas Young and Susan Eichhorn-Young (together, the "Youngs"). Defendants were seriously injured in a multi-vehicle accident on Interstate 84 in Westfall, Pennsylvania in June 2011 ("the Accident"). The Lugos are New York domiciliaries. The Youngs are Pennsylvania domiciliaries. The Lugos and Youngs brought claims in the New York and Pennsylvania state courts, respectively, against (1) Daniel Solano, the driver of a tractor trailer involved in the accident; (2) Eco America Trucking Corp. ("Eco"), the corporate operator of the tractor trailer; and (3) Sav-On, the owner of the tractor trailer. Defendants' collective damages are likely to exceed the value of the amount interpleaded in this action.
Park filed its Interpleader Complaint against the Youngs and the Lugos on May 28, 2013, seeking to interplead the $455, 013.01 remaining under the policy, determine Defendants' competing rights to that amount, and obtain discharge of Park's liability upon deposit of that amount with the Court. The Lugos moved to dismiss for lack of subject matter jurisdiction because Park had not also included proceeds from the Endorsement for a combined total of $750, 000. The federal regulations enacted pursuant to the MCA require for-hire motor carriers transporting non-hazardous property in interstate commerce to maintain a minimum level of financial responsibility in an amount of $750, 000 or greater. See 49 CFR §§ 387.7(a), 387.9. Park responded with an Amended Interpleader Complaint, agreeing to deposit a $750, 000 bond to ensure the Court's subject matter jurisdiction, but disputing that Defendants are entitled to any proceeds under the Endorsement. On May 27, 2014, Park deposited $750, 000 with the Court.
Park and the Lugos cross-moved for summary judgment to determine Park's liability to Defendants on the Endorsement. Park was found to have no liability under the Endorsement to pay any judgment against Eco and/or Solano, who are not insureds under the Policy. Summary judgment was not entered on the issue of whether the Endorsement covers any judgment against Sav-On as a result of the Accident because issues of material fact precluded a determination of the dispositive issue - whether Sav-On was acting as a "motor carrier" at the time of the Accident.
On December 15, 2014, the parties presented evidence on the question of whether Sav-On was acting as a motor carrier at the time of the Accident. The parties called three witnesses. Two witnesses testified live - Edward Hom, the principal and sole owner of Sav-On, the corporate insured and owner of the tractor trailer; and Victor Sanchez, the principal and sole owner of Eco, the corporate operator of the tractor trailer. Daniel Solano, the driver, testified through selected portions of his deposition testimony. The parties also submitted a stipulation of uncontested facts and documentary exhibits that included the Policy, the Endorsement, and Sav-On's bank records.
II. FINDINGS OF FACT
Based on the documents admitted into evidence and credibility judgments of the testifying witnesses, the following are the Court's findings of fact relating to the dispositive issue of whether Sav-On was acting as a motor carrier at the time of the Accident.
A. The Policy and Endorsement
On June 9, 2011, Park issued the Policy to Sav-On, which covered the period from May 23, 2011, through May 23, 2012. The Policy provides accident liability insurance of up to $500, 000 per accident and covers ten semi-trailers and two truck-tractors owned by Sav-On, including the tractor and trailer involved in the Accident.
The Policy includes the Endorsement, which provides $750, 000 to satisfy any final judgment against Sav-On for bodily injury or property damage resulting from negligence in the operation of motor vehicles subject to ...