Fowler et al v. Canal Insurance Company et al
MEMORANDUM OPINION re: Canals motion to dismiss 11 - Accordingly, the Court denies Canals motion to dismiss (Doc. 11 ). Signed by Judge Madeline Hughes Haikala on 8/5/2015. (KEK)
2015 Aug-06 AM 09:00
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
Larry Jason Fowler, Julie Ann }
Canal Insurance Company, Todd }
Hauling, Inc., Gerald Todd, and }
Gannon Derek Sanders,
Case No.: 5:14-CV-984-MHH
Factual and Procedural Background
This declaratory judgment action concerns insurance coverage issues
relating to a traffic accident. Plaintiffs Larry and Julie Fowler and their two
children were traveling in a pickup truck when their truck collided with a 1999
Kenworth tractor-trailer truck. (Doc. 1-1, p. 4). Defendant Gannon Derek Sanders
was driving the tractor-trailer truck. Mr. and Mrs. Fowler and their two children
sustained injuries in the accident. (Id.). The Fowlers allege that defendant Todd
Hauling, Inc. owned the tractor-trailer that Mr. Sanders was operating and that
defendant Gerald Todd owns Todd Hauling. (Doc. 1-1, pp. 4-5).
Defendant Canal Insurance Company issued a commercial automobile
insurance policy to Todd Hauling. The Fowlers allege that the Canal policy
provides coverage for specifically described vehicles, and the 1999 Kenworth
involved in the accident is not among the vehicles listed in the policy. The
Fowlers also contend that the Canal policy provides coverage for specifically
described drivers, and Mr. Sanders is not among the drivers identified in the
policy. (Doc. 1-1, p. 5).1
Despite these allegations, the Fowlers assert that Canal must provide
coverage to Todd Hauling, Mr. Todd, and Mr. Sanders for any claims that the
Fowlers assert against the three parties concerning the traffic accident because
Canal’s policy includes an MCS-90 Endorsement. (Doc. 1-1). The Endorsement,
required under the Motor Carrier Act of 1980, “makes the insurer liable to third
parties for any liability resulting from the negligent use of any motor vehicle by the
insured, even if the vehicle is not covered under the insurance policy.” See T.H.E.
Ins. Co. v. Larsen Intermodal Serv’s, Inc., 242 F.3d 667, 670 (5th Cir. 2001).
The Fowlers attached a copy of the Canal policy to their complaint. (Doc. 1-1, p. 24). The
Court may treat the policy as part of the Fowlers’ complaint. See Fed. R. Civ. P. 10(c) (“A copy
of a written instrument that is an exhibit to a pleading is part of the pleading for all purposes.”);
see also Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1215-16 (11th Cir.
2012) (documents attached to the complaint as an exhibit are treated as part of the complaint).
According to the copy of the insurance policy attached to the Fowlers’ complaint, Mr. Sanders
was reported to Canal as a Todd Hauling driver on August 8, 2011. (Doc. 1-3, p. 15). The
accident involving the Fowlers occurred on June 26, 2011. (Doc. 1-1, p. 4).
The Fowlers originally filed this declaratory judgment action in the Circuit
Court of Cullman County, Alabama against Canal Insurance Company, Todd
Hauling, Mr. Todd, and Mr. Sanders. (Doc. 1-1, p. 2). The Fowlers sought “a
declaration of the rights and obligations under a Commercial Automobile Policy
issued by [Canal to Todd Hauling].” (Doc. 1-1, p. 2). Todd Hauling, Mr. Sanders,
and Mr. Todd filed a cross-claim against Canal. The cross-claim plaintiffs seek a
declaration that Canal has a duty under the policy that it issued to Todd Hauling to
provide a defense in the Fowlers’ underlying state court action. (Doc. 1-5, p. 7).
Canal removed the declaratory judgment action to this Court on the basis of
federal question jurisdiction. (Doc. 1, p. 2). Canal then filed a motion to dismiss
the Fowlers’ claims against the company. (Doc. 11). In this opinion, the Court
considers Canal’s motion to dismiss.
Following Canal’s removal of this action from state to federal court, no party
filed a motion to remand; however, the Court questioned whether it may exercise
jurisdiction in this case on the basis of federal question jurisdiction under 28
U.S.C. § 1331. The Court asked the parties to brief the jurisdictional issue. (Doc.
Although the Eleventh Circuit Court of Appeals does not appear to have
addressed the question, the Fifth Circuit Court of Appeals and district courts within
that circuit have held that “[t]he MCS-90 is regulated under 49 C.F.R. § 387.15 . . .
and its application to [the subject] accident is a question of federal law.”
Thompson v. Zurich Am. Ins. Co., 2012 U.S. Dist. LEXIS 161110, at *9 (E.D. La.
Nov. 9, 2012) (citing Canal Ins. Co. v. Coleman, 625 F.3d 244, 247 (5th Cir. 2010)
(“The sole question the Court must answer today is whether the MCS-90
endorsement covers the Briggs-Coleman accident. This is a question of federal
law.”). Courts elsewhere have held that issues involving an MCS-90 endorsement
are not sufficient to give rise a federal question that supports federal jurisdiction
under § 1331. See, e.g., Atlantic Casualty Insurance Company v. United Tours,
2013 WL 2389887 at *3 (E.D. Va. May 30, 2013).
Though it is not clear that the Court may exercise jurisdiction over this case
on the basis of federal question jurisdiction, the Court recognizes that the parties
are completely diverse, and the amount in controversy exceeds $75,000. (Doc. 11, p. 3). Therefore, the Court has jurisdiction over this matter pursuant 28 U.S.C. §
B. Canal’s Motion to Dismiss
Canal argues that the Court should dismiss the Fowlers’ claims against the
company because the Fowlers are not insureds under Todd Hauling’s policy, and
under Alabama law, an injured party may not file a direct action against an insurer
until the injured party secures a judgment against the insured. (Doc. 11, pp. 2-3).
Under Alabama’s Direct Action statute, an “injured party . . . can bring an action
against the insurer only after he has recovered a judgment against the insured and
only if the insured was covered against the loss or damage at the time the injured
party’s right of action arose against the insured tortfeasor.” Maness v. Ala. Farm
Bureau Mut. Cas. Ins. Co., 416 So. 2d 979, 981–82 (Ala. 1982) (citing Ala. Code
§27-23-1, et seq. (1975)); see also State Farm Mut. Auto. Ins. Co. v. Brown, 894
So. 2d 643, 650 (Ala. 2004) ( “§ 27-23-2 prevents the [plaintiffs] from bringing
this action . . . There is no justiciable controversy because the [plaintiffs] have yet
to obtain a judgment against [the insured] that would obligate [the insurer] to the
[plaintiffs] in any way. . . . [T]he [plaintiffs’] claim violates the direct-action
If the Fowlers’ claim against Canal was the only claim in this action and if
the Court were to find that the Fowlers’ claim was an impermissible direct action,
the Court would grant Canal’s motion to dismiss. Here, though, in their crossclaim, defendants/cross-claim plaintiffs Todd Hauling, Mr. Todd, and Mr. Sanders
have demanded coverage under the Canal policy for the Fowlers’ underlying state
court action. (Doc. 1-5). Consequently, the Court realigns the parties in this action
to reflect their interests in the litigation. The Court regards Todd Hauling, Mr.
Todd, and Mr. Sanders as plaintiffs in this declaratory judgment action, and the
Court regards Canal and the Fowlers as defendants in this declaratory judgment
action. See City of Vestavia Hills v. General Fidelity Ins. Co., 676 F.3d 1310,
1313 (11th Cir. 2012) (“[F]ederal courts are required to realign the parties in an
action to reflect their interests in the litigation.”). Accordingly, the Court denies
Canal’s motion to dismiss (Doc. 11).
DONE and ORDERED this August 5, 2015.
MADELINE HUGHES HAIKALA
UNITED STATES DISTRICT JUDGE
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