Militello et al v. Ican Logistics Inc et al
ORDER denying the amended motion for summary judgment 49 filed by third-party defendant Wesco and the motion for partial summary 57 filed by plaintiff Militello...see order for specifics. Signed by Honorable Joe Heaton on 4/11/2018. (cla)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
GINA MILITELLO, now ERIN,
Individually and as Administratrix of
The Estate of ASHLEY NICOLE
ICAN LOGISTICS, INC., a Foreign
For Profit Corporation; ZEYS WANG, an
Individual; and HONGYUE TRUCKING,
ICAN LOGISTICS, INC.,
WESCO INSURANCE COMPANY,
Plaintiff Gina Militello 1 filed this wrongful death action individually and on behalf
of her deceased daughter, Ashley Nicole Crabtree, against ICAN Logistics, Inc.
Although the plaintiff is now Ms. Erin, the court will continue to refer to her as Ms.
(“ICAN”), 2 Zeyu Wang, and Hongyue Trucking, Inc. (“Hongyue”). Her claims arise out
of a vehicle accident involving the decedent and defendant Wang. ICAN filed a third-party
complaint against Wesco Insurance Company (“Wesco”), who then filed a counterclaim
and crossclaims for declaratory judgment against ICAN, Militello, Hongyue and Wang.
Wesco and ICAN have filed motions for summary judgment and Ms. Militello has filed a
partial motion for summary judgment. 3 In this order the court will address Wesco’s and
Summary judgment is appropriate only “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). “A genuine dispute as to a material fact ‘exists when the evidence,
construed in the light most favorable to the non-moving party, is such that a reasonable
jury could return a verdict for the non-moving party.’” Carter v. Pathfinder Energy Servs.,
Inc., 662 F.3d 1134, 1141 (10th Cir. 2011) (quoting Zwygart v. Bd. of Cnty. Comm'rs, 483
F.3d 1086, 1090 (10th Cir.2007)). Considering the motions filed under this standard, the
court concludes both Wesco’s and plaintiff’s motions should be denied.
Plaintiff’s daughter was killed when her vehicle collided with a tractor-trailer driven
by Zeyu Wang on March 6, 2016, in Oklahoma City, Oklahoma. In the amended complaint
It is unclear whether the correct spelling of defendant’s name is ICAN or ICan. Even
defendant has spelled it both ways. Compare Doc. #6 with Doc. #71. The court will use ICAN.
Plaintiff improperly moved for summary judgment in her response to third-party
defendant Wesco’s motion for summary judgment. See LCvR7.1(c).
(“complaint”) plaintiff alleges that defendant Hongyue leased a tractor and trailer and
provided a driver, Wang, to ICAN. Plaintiff alleges that both ICAN and Hongyue should
have known that Wang, who purportedly left California around March 5, 2016, transporting
cargo in the tractor-trailer, 4 was not qualified to operate the vehicle because he could not
speak or write English sufficiently to, among other things, understand traffic signs and
make legible entries on reports and records. Plaintiff alleges that Wang violated federal
motor carrier regulations by failing to take mandatory rest breaks while driving from
California. She specifically claims that when the accident occurred Wang had been driving
more than eleven hours, been on duty more than fourteen hours and had falsified his record
of duty logs. Plaintiff contends that, even though there was a sign on the road where the
accident occurred which stated “’Congestion Be Prepared to Stop,’ Wang negligently
struck the rear of Crabtree’s vehicle, fatally injuring her daughter. Doc. #15, p. 4, ¶¶ 2829. 5 Plaintiff asserts claims for negligence and negligence per se against ICAN, Wang and
ICAN filed a crossclaim against Hongyue, asserting it is entitled to contractual
indemnity pursuant to the terms of the lease agreement (“Agreement”) they executed and
common law indemnity for any liability imposed in this action. ICAN claims that Hongyue
breached the Agreement by failing to list it as an additional insured on an insurance policy
A bill of lading dated March 6, 2016, shows that Wang was transporting a shipment of
goods on behalf of Best Buy.
References to documents are to the CM/ECF document and page number.
Hongyue obtained from Westco. ICAN also filed a third-party complaint against Wesco.
ICAN alleges that at the time of the accident Wesco insured defendant Hongyue for “any
and all of the alleged liability claimed by Plaintiff against Hongyue Trucking, Inc.” and
that its (ICAN’s) agreement with Hongyue required Hongyue to list it as an additional
insured on the Wesco insurance policy. Doc. #18, p. 2, ¶¶ 3, 5. ICAN alleges that Wesco
“breached its duty and the Lease Agreement by failing to make ICAN an additional insured
under its policy.” Id. at ¶6.
Wesco issued a commercial motor carrier insurance policy (“Policy” or “basic
Policy”) to Hongyue with effective dates of February 9, 2016 to February 9, 2017. Wesco
seeks a declaratory judgment that it has no duty under the Policy to defend and/or
indemnity ICAN, Hongyue, Wang or any other party, principally because Hongyue was
not acting as a for-hire motor carrier at the time of the accident. In her motion plaintiff
asks the court to determine as a matter of law that Hongyue was a “for-hire motor carrier
for the trip at issue.” Doc. #57, p. 9.
It is undisputed that the basic insurance policy Wesco issued to Hongyue does not
provide insurance coverage for the accident. 6 The leased tractor and trailer (“tractor”) that
are the subject of the Agreement between ICAN and Hongyue were not specifically
described in the Policy and are not, therefore, “covered autos” under its terms. Because
ICAN’s assertion to the contrary in its response brief, based on the existence of the
alleged “insured contract” between ICAN and Hongyue, is not persuasive.
they were not “covered autos,” ICAN, Hongyue and Wang are not “insureds” under the
However, attached to the basic Policy is a federally mandated MCS-90
endorsement. Plaintiff argues that it applies to provide insurance coverage for the accident.
“Federal regulations require interstate trucking companies to maintain insurance or
another form of surety ‘conditioned to pay any final judgment recovered against such motor
carrier for bodily injuries to or the death of any person resulting from the negligent
operation, maintenance or use of motor vehicles.’” Carolina Cas. Ins. Co. v. Yeates, 584
F.3d 868, 870 (10th Cir. 2009) (quoting 49 C.F.R. § 387.301(a); see also id. § 387.7). Most
interstate trucking companies obtain the MCS-90, a specific endorsement to one or more
of their insurance policy or policies, “which guarantees payment of minimum amounts, as
set forth in the regulations, to an injured member of the public.” Id. (quoting 49 C.F.R. §§
387.7, 387.9). “An MCS–90 endorsement is intended to eliminate the possibility of a
denial of coverage by requiring the insurer to pay any final judgment recovered against the
insured for negligence in the operation, maintenance, or use of motor vehicles subject to
federal financial responsibility requirements, even though the accident vehicle is not listed
in the policy.” Id. (internal quotation marks omitted).
In Yeates the Tenth Circuit concluded that “the MCS-90 endorsement is intended
to impose a surety obligation on the insurance company.” Id. at 879. It held:
[W]hen an injured party obtains a negligence judgment against a motor
carrier, an insurer's obligation under the MCS–90 endorsement is not
triggered unless (1) the underlying insurance policy (to which the
endorsement is attached) does not provide liability coverage for the accident,
and (2) the carrier's other insurance coverage is either insufficient to meet the
federally-mandated minimums or non-existent. Once the federally-mandated
minimums have been satisfied, however, the endorsement does not apply.
Wesco asserts that most of the requirements that must be met for the MCS-90 endorsement
to be triggered have not been satisfied here. It contends that a final judgment has not been
entered against Hongyue, the named insured, and “the other motor carrier’s aggregate
coverage is [sufficient] to satisfy the federally mandated minimum levels of financial
responsibility.” Doc. #49, p. 25. 7 Wesco also argues that, for the endorsement to be
triggered, Hongyue must have been “operating as a for-hire motor carrier at the time of the
accident.” Herrod v. Wilshire Ins. Co., 499 Fed. Appx. 753, 760 (10th Cir. 2012). As
explained by the Tenth Circuit in Herrod, the “financial responsibility requirements of the
MCA apply to ‘motor carriers.’” Herrod, 499 Fed. Appx. at 759 (citing 49 U.S.C.
The MCA defines the term as “a person providing motor vehicle
transportation for compensation.” 49 U.S.C. § 13102(14). A “motor carrier” is defined by
the regulations promulgated pursuant to the MCA and accompanying the MCS-90
endorsement as a “for-hire motor carrier or a private motor carrier.” 49 C.F.R. § 387.5.
“[F]or-hire carriage is defined as “the business of transporting, for compensation, the goods
or property of another.” Id. A motor carrier includes “a motor carrier’s agent, officer, or
representative.” 49 C.F.R. § 387.5. Wesco claims ICAN was the for-hire carrier, not
Hongyue, when the tractor trailer Wang was driving collided with the decedent’s car. It
also asserts that the MCS-90 endorsement in Wesco’s Policy is not triggered because other
Wesco assert that the policy issued by Arch Insurance Company, a nonparty, to ICAN
(the other motor carrier) provides $1,000,000 in coverage, which meets the federally–mandated
insurance is available to provide the federally mandated minimum coverage. Plaintiff
claims Hongyue was a, if not the, for-hire carrier when the accident occurred.
The court agrees with Wesco that the MCS-90 endorsement cannot be triggered
unless and until Ms. Militello obtains a negligence judgment against Hongyue. See Yeates,
585 F.3d at 879. It does not agree with Wesco, though, that it is relieved of its MCS-90
surety obligation because the federally mandated limits are available through another
insured’s policy (here ICAN’s policy with Arch). Several courts, including the Tenth
Circuit in an unpublished opinion, have rejected the position urged by Wesco that “the
public liability to be satisfied is per accident, not per carrier.” Fairmont Specialty Ins. Co.
v. 1039012 Ontario, Inc., 2011 WL 3651333, at *3 (N.D. Ind. Aug. 19, 2011); see Herrod,
499 Fed. Appx. at 759-60. The critical issue is whether Hongyue was “transporting the
goods of another for compensation at the time of the accident in order to qualify it as a forhire motor carrier for purposes of triggering [Wesco’s] MCS-90 obligation.” Id. at *5 n.7;
see 49 C.F.R. § 387.5. Material questions of fact exist which preclude its resolution.
The lease Hongyue and ICAN executed required Hongyue to employ the driver to
operate the leased equipment and to pay all expenses associated with operating the tractor
trailer during the term of the lease including, but not limited to, fuel, maintenance, and
repair costs. Doc. #57-1, p. 1, ¶4. The lease did not include any reference to compensation.
Among other thing it did not identify “[t]he amount to be paid by the authorized carrier for
equipment and driver’s services” as required by 49 C.F.R. 376.12(d). 8 While, as Wesco
points out, ICAN received payment for the shipment of goods that were being transported
on the day of the accident, it immediately turned around the next day and paid that entire
sum to Hongyue. See Park Ins. Co. v. Lugo, 2015 WL 1535791, at *5 (S.D.N.Y. April 6,
2015) (“Here, the relationship between Sav–On and Eco was much more than that of lessor
and lessee. Sav–On maintained close control over Eco's operations of the vehicle. Sav–On
provided cash advances and general financing for any upkeep of the vehicle. Sav–On, and
not Eco, received direct payment for the vehicle's transportation services.”). That is
sufficient evidence from which a reasonable jury could conclude that Hongyue was
operating as a for-hire carrier at the time of the accident. Wesco’s motion for summary
judgment will therefore be denied. Plaintiff’s motion for partial summary judgment will
also be denied because the evidence is disputed as to Hongyue’s status on March 6, 2016.
One additional matter needs to be addressed. In its response to plaintiff’s motion
for summary judgment, Wesco raises a new argument – that because Hongyue is an insured
under the policy Arch provided to ICAN, Hongyue’s insurance coverage is sufficient to
satisfy the MCA’s financial responsibility requirements so the MCA-90 endorsement under
its policy with Wesco is not triggered. 9 Plaintiff contends that, pursuant to the terms of the
Under the paragraph heading “Compensation,” the Agreement states, “Lessor will be
compensated for lease of the equipment in the following manner: Lessor shall pay 0% of the gross
earning of the Equipment each week.” Doc. #57-1, p. 1.
The Tenth Circuit and other courts have concluded that the MCS-90 endorsement is not
triggered if the motor carrier’s insurance coverage is sufficient to meet the federally-mandated
minimum levels. See Yeates, 584 F.3d at 885-86.
Arch policy and the lease agreement between Hongyue and ICAN, the Wesco policy is
deemed primary and the Arch policy is considered to provide excess coverage. Plaintiff
argues that, because under California law primary insurance must be exhausted before a
secondary insurer has exposure, “Hongyue would only have coverage under the Arch
policy once its MCS-90 coverage is exhausted.” Doc. #63, p. 10. Plaintiff also asserts that
Wesco’s new position is barred by the “mend the hold” doctrine.
The court will not consider Westco’s argument that Hongyue is considered an
insured under the Arch policy at this time. That coverage issue has not been sufficiently
briefed, plus plaintiff raises serious questions as to whether Westco should be allowed to
assert a new position late in the proceedings. Notably Westco did not rely on the argument
in support of its motion for summary judgment, but asserted it only in response to plaintiff’s
Material questions of fact exist regarding Hongyue’s status as a for-hire motor
carrier at the time of the accident underlying plaintiff’s claims. Accordingly, the amended
motion for summary judgment [Doc. #49] filed by third-party defendant Wesco and the
motion for partial summary [Doc. #57] filed by plaintiff Militello are DENIED.
IT IS SO ORDERED.
Dated this 11th day of April, 2018.
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