MCS-90 Applicable To Truck In-between Loads

In November 2013, Decardo Humphrey (Humphrey) was involved in an automobile accident with Darnell Wright (Wright). Humphrey was a driver for Riteway Trucking (Riteway). Humphrey had dropped off his first load in Fort Wayne, IN and was on his way to pick up another load before returning to his home state of Illinois when his truck collided with Wright’s car.

Wright accused Humphrey of negligence and sued Riteway in an Indiana court. Riteway failed to appear, so Wright was issued a default judgment of $400,000. Riteway also did not cooperate with its insurance carrier, Prime Insurance Company (Prime). Not cooperating with Prime resulted in forfeiting coverage benefits of its policy.

However, the insurance policy contained an MCS-90 endorsement. The MCS-90 endorsement included payment to someone injured when the insurer need not defend or indemnify the client.

The district court had to determine if Wright could recover damages under the MCS-90 endorsement and did not allow Prime to attack the default judgment. Since Prime could not attack the default judgment, it filed a second lawsuit in federal court. Prime sought declaratory judgment that the MCS-90 endorsement did not entitle Wright to a monetary settlement. The district court disagreed and ordered Prime to pay damages to Wright.

At the appeals court, Prime looked to the trip-specific approach, which only applied when a truck was loaded with freight and moving from one state to another when an accident occurred. Wright rebutted with the fixed-intent approach, which applied when the driver had a fixed intent to transport freight across state lines in the near future. However, the district court used the totality-of-the-circumstances approach. The appeals court noted that all three possibilities presented were supported by District courts across the country.

After the appellate court reviewed the MCS-90 endorsement, it found that Prime agreed to pay any judgment resulting from negligence in the operation, maintenance or use of motor vehicles subject to the final responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980. The court also reviewed the statutes and codes and found that intent is unnecessary and that transportation was defined to include movement-related services. Carrying freight at the instant of a collision is not essential to the word transportation, only that it must be interstate or international.

Humphrey was engaged in interstate freight transportation. He started his journey in Illinois to Indiana, where he dropped off freight and picked up more to return to Illinois. He collided with Wright during the interstate freight transportation. While Humphrey’s truck was empty, he was still arranging for the interchange of property, which resulted in the endorsement being applicable. The appeals court stated that the only thing that needed to be known was if the collision occurred during an interstate journey to deliver freight or one of the steps mentioned in the code or statute. The answer was yes. The appellate court did not allow any further arguments from Prime and affirmed the district court's judgment.

Prime Insurance Company, Plaintiff-Appellant, v. Darnell Wright, Defendant-Appellee, United States Court of Appeals For the Seventh Circuit, No. 22-1002, January 13, 2023 https://law.justia.com/cases/federal/appellate-courts/ca7/22-1002/22-1002-2023-01-13.html?utm_source=summary-newsletters&utm_medium=email&utm_campaign=2023-01-20-insurance-law-b352bde18f&utm_content=text-case-title-5