Canal Insurance Company v. ML&S Trucking, Inc. et al
ORDER granting defendants' 70 Motion for Summary Judgment; granting defendants' 73 Motion for Summary Judgment and denying plaintiff's 39 Motion for Summary Judgment; further pursuant to its insurance policy, Canal owes ML&S Trucking, Inc. a duty to defend and indemnify it for the claims made by Thomas W. Young in the underlying case. Signed by Honorable Paul K. Holmes, III on July 6, 2011. (rw)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FORT SMITH DIVISION
CANAL INSURANCE COMPANY
ML&S TRUCKING, INC.; MARCUS
D. MORRIS; LEODIS BURGESS; PACIFIC
CARGO SERVICES, INC. d/b/a Pacific
Cargo Services; WON B. KIM; OLGA
M. DEPADILLA; and THOMAS W. YOUNG
Currently before the Court are Plaintiff’s Motion for Summary
Judgment (Doc. 39) and supporting documents; Defendant, Thomas W.
Young’s Response (Doc. 45), Plaintiff’s Reply (Doc. 48); Defendant
supporting documents; ML&S Trucking, Inc.’s (hereinafter sometimes
referred to as “ML&S”) Motion for Summary Judgment (Doc. 73) and
supporting documents; and Plaintiff’s Response to Defendants Young
& ML&S’s Motions for Summary Judgment (Doc. 76). For the reasons
set forth herein, Plaintiff’s Motion for Summary Judgment (Doc. 39)
is DENIED, and Defendants’ Motions for Summary Judgment (Docs. 70
and 73) are GRANTED.
I. Procedural History
Plaintiff, Canal Insurance Company filed a Complaint for
Declaratory Judgment in this Court on March 22, 2010, requesting
that this Court determine and adjudicate the rights of the parties
and to declare that Plaintiff does not provide any insurance
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coverage in connection with an accident which occurred on May 4,
2009, which is the subject of another lawsuit before this Court
(Case No. 2:09-CV-2148; hereinafter referred to as “the underlying
case”). Specifically, Plaintiff requests that the Court determine
that it has no duty or obligation to defend ML&S Trucking, Inc.,
Marcus D. Morris, and/or Leodis Burgess; that it has no duty to pay
any sums for liability and/or indemnity; that it has no statutory
judgments rendered against the defendants in the underlying case,
and that it is legally and/or equitably entitled to reimbursement
from the defendants in the underlying case for any and all costs it
has incurred defending the underlying case. See Doc. 1.
Plaintiff filed its Motion for Summary Judgment (Doc. 39) on
February 23, 2011, claiming that it is entitled to be fully and
finally discharged from all liability, including duties to defend
and indemnify their insured, ML&S Trucking, Inc., in the underlying
case, and that it has no duty to pay public indemnity under the
Defendant ML&S Trucking, Inc. filed its Answer on April 20,
2011 (Doc. 51), and Plaintiff moved to strike the answer as
Plaintiff’s Motion to Strike the answer of ML&S Trucking, Inc.,
this Court determined that, based on the record before it, the
issues in this case were purely legal ones, and ordered Defendants
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to file Motions for Summary Judgment so the case could be decided
on the basis of the Motions. Defendants Young and ML&S filed their
Motions for Summary Judgment on May 31, 2011 (Docs. 70 and 73,
respectively). Plaintiff filed its Response to Defendants’ Motions
on June 13, 2011 (Doc. 76).
II. Summary Judgment Standard
In determining whether summary judgment is appropriate, the
burden is placed on the moving party to establish both the absence
of a genuine dispute of material fact and that it is entitled to
judgment as a matter of law. See Fed. R. Civ. P. 56; Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106
S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Nat’l Bank of Commerce of El
Dorado, Ark. v. Dow Chem. Co., 165 F.3d 602 (8th Cir. 1999). The
Court must review the facts in a light most favorable to the party
opposing a motion for summary judgment and give that party the
benefit of any inferences that logically can be drawn from those
facts. Canada v. Union Elec. Co., 135 F.3d 1211, 1212-13 (8th Cir.
1998). In order for there to be a genuine issue of material fact,
the non-moving party must produce evidence “such that a reasonable
jury could return a verdict for the nonmoving party.” Allison v.
Flexway Trucking, Inc., 28 F.3d 64, 66 (8th Cir. 1994) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct.
2505, 91 L. Ed. 2d 202 (1986)).
The Plaintiff’s case involves an insurance coverage question.
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Canal Insurance Company seeks a determination that the plaintiff in
the underlying case, Thomas W. Young, is excluded from coverage on
the grounds that he is classified as an “employee”, or that he
falls within the “occupant hazard” exclusion of the policy. If
neither exclusion applies, Canal asserts that Young is not a member
of the public and therefore not covered by the policy’s MCS-90
endorsement, which acts as a surety and comes into play when “the
underlying insurance policy to which the endorsement is attached
does not otherwise provide liability coverage.” Carolina Cas. Ins.
Co. v. Yeates, 584 F.3d 868, 881 (10th Cir. 2009).
In its complaint, Plaintiff asserts that Mr. Young should be
classified as an “employee” and cites language from its policy
which excludes coverage for: “Bodily injury to an “employee” of the
“insured” arising out of and in the course of: (1) Employment by
the “insured; or (2) Performing the duties related to the conduct
In support of its argument that Young should be classified as
an employee for purposes of the policy exclusion, Canal relies on
language from the Motor Carrier Safety Act, 49 U.S.C. § 31132(2),
which defines “employee” as:
[A]n operator of a commercial motor vehicle (including an
independent contractor when operating a commercial motor
vehicle), a mechanic, a freight handler, or an individual
not an employer, who(A) directly affects commercial motor vehicle safety in
the course of employment; and
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(B) is not an employee of the United States Government,
a State, or a political subdivision of a State. Id.
In this case, the parties do not dispute that Thomas Young
never operated the subject vehicle, never helped load or unload the
vehicle, and performed no function to assist the driver of the
vehicle. Certainly he was not an employee of ML&S under the
between the driver of the truck and Mr. Young with respect to any
duties Young was to perform was outside the scope of the driver’s
authority and was repudiated by ML&S as evidenced by the driver’s
Based on the information submitted, including arguments of
counsel, the Court finds that that Mr. Young was not an “employee”
for purposes of the policy exclusion. Therefore, the employee
exclusion contained in Canal’s insurance policy does not apply.
occupant of the vehicle at the time of the accident. Canal’s policy
excludes coverage for “[b]odily injury sustained by any person
while in or upon, entering or alighting from the ‘auto’” (Canal
Policy Section II B. (14)). Mr. Young testified at his deposition
that he was outside the truck at the time of the accident. Both
parties agree that Mr. Young was “situated between the rear tandems
of the ML&S tractor and the cab of the ML&S tractor” (Doc. 41; Doc.
46; Doc. 72; Doc. 74; and Doc. 77).
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The facts before the Court indicate that Mr. Young was outside
the tractor at the time of the accident, and that he was not “in or
upon, entering or alighting” from the tractor at the time of the
accident. The Court finds that this policy exclusion does not apply
to the facts of this case.
Finally, Canal states that, if Mr. Young is not excluded from
coverage under either the employee or occupant exclusion, Mr. Young
is not a member of the public and thus not entitled to protection
by the MCS-90 endorsement. The policy of insurance issued by Canal
in this case contained this endorsement, which is required pursuant
to 49 C.F.R. § 387.301(a) and § 387.7. The main purpose of the MCS90 endorsement is to ensure that the public is adequately protected
from the risks created by a motor carrier’s operations and to
ensure the collectability of a judgment against the motor carrier.
Carolina Cas. Ins. Co. v. Yeates, supra, at 875.
Because the Court has found that neither the Employee nor
Occupant Hazard exclusions apply, there is no need to address the
applicability of the MCS-90 endorsement.
It is the finding of the Court that neither the employee
exclusion nor the occupant hazard exclusion of the Plaintiff’s
insurance policy apply to Young’s claims which gave rise to the
Judgment (Docs. 70 and 73) are hereby GRANTED and Plaintiff’s
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Motion for Summary Judgment (Doc. 39) is hereby DENIED. Pursuant to
its insurance policy, Canal owes ML&S Trucking, Inc. a duty to
defend and indemnify it for the claims made by Thomas W. Young in
the underlying case.
IT IS SO ORDERED this 6th day of July, 2011.
/s/ Paul K. Holmes, III
PAUL K. HOLMES, III
UNITED STATES DISTRICT JUDGE
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