Motor Carrier's MCS-90 Endorsement's Interstate Coverage Applied to Intrastate Trip

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MOTOR CARRIER’S MCS-90 ENDORSEMENT’S INTERSTATE COVERAGE APPLIED TO INTRASTATE TRIP

Commercial Automobile	Federal Motor Carrier Safety Administration (FMCSA)
MCS-90 Endorsement	Negligence

ER Transport Services, Inc. (ER) was a Florida corporation headquartered in Miami, Florida. It obtained an insurance policy with Transportation Casualty Insurance Company (TCI). ER operated in various states and the policy included the MCS-90 endorsement to comply with Federal Motor Carrier Safety Administration (FMCSA) requirements. Half of ER’s business consisted of hauling mulch from tree removal and other debris caused by hurricane damage.

On February 23, 2004, Arturo M. Rosello, an ER employee, was driving an ER-owned tractor-trailer in the City of Virginia Beach, Virginia. His destination was Chesapeake, Virginia, where the vehicle was to be measured to haul mulch to be delivered to Suffolk, Virginia. Rosello was driving the tractor-trailer on Interstate 64 in Virginia Beach when it collided with a vehicle driven by Craig K. Heron. Both Craig and Alma Heron were killed and their daughter Cassandra sustained serious and permanent injuries.

TCI moved for a declaratory judgment in the circuit court against the Heron’s estates and Cassandra’s guardian. It sought a judicial determination that the insurance policy it issued to ER did not cover the accident and that it was not obligated to pay any judgment that might be rendered as a result of it. The circuit court ruled that the MCS-90 endorsement applied to only accidents that occurred in the course of transportation in interstate commerce. The court reasoned that the accident occurred while the tractor-trailer driver was engaged in an exclusively intrastate activity and that the coverage under the MCS-90 endorsement was not available. It entered a final declaratory judgment order consistent with that opinion. The Heron’s estates and Cassandra’s guardian appealed.

This case was complicated by the fact that Rosello had a bad driving record and TCI’s policy explicitly excluded him. All parties stipulated that the policy did not provide coverage for the accident unless coverage was provided by the MCS-90 endorsement.

The Supreme Court of Appeal determined that the appeal turned entirely on a question of law. It noted that several courts had interpreted the language of the MCS-90 endorsement and arrived at different conclusions. The circuit court analyzed those decisions and concluded that the language should be interpreted in light of federal statutes and regulations that prescribed its use. It reasoned that the endorsement applies only in accordance with cited sections of the Motor Carrier Act of 1980 that only required coverage when a vehicle transported property in interstate commerce and based its decision on a specific section of the Act.

The Supreme Court analysis was less complex. It decided that the question presented was simply interpreting the plain language of a written contract. It adhered to a previous case where the language of the endorsement was plain, clear, and unambiguous. In consideration of the premium, the insurance company agrees to pay “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 cited sections of the Motor Carrier Act of 1980, regardless of whether or not each motor vehicle was specifically described on the policy and whether or not such negligence occurred on any route or in any territory authorized to be served by the insured or elsewhere.”

The court determined that the facts of the case stipulated that ER was the named insured that owned a vehicle subject to the Act’s financial responsibility requirements. ER was subject to a claim and a potential judgment for damages that resulted from negligence in operating that vehicle. TCI was obligated to pay any such judgment that arose from negligence in operating that vehicle anywhere. The contract language did not have any terms that limited coverage to the use or operation of the vehicle in interstate commerce and the court refused to read such terms into the contract. It did not find it necessary to consider federal statutes or regulations that motivated the parties to adopt the language they chose to employ because it determined that the language spoke for itself.

The Supreme Court of Virginia reversed the judgment appealed from and remanded the case back to the circuit court with instructions to enter a declaratory judgment consistent with this opinion.

Supreme Court of Virginia. Craig K. Heron, Jr. et al., v. Transportation Casualty Insurance Company. Record No. 061813. Sept. 14, 2007. 650 S.E.2d 699 274 Va. 534, 650 S.E.2d 699, Fed. Carr. Cas. P 84,515