Steve Pierre,
Respondent,
v.
Providence Washington Insurance
Company,
Appellant.
2002 NY Int. 154
In November 1994, plaintiff Steve Pierre was injured
when his vehicle was struck by a tractor-trailer driven by Steven
Harris. Harris' employer, Preston Conquest, owned the tractor
cab but the trailer was owned by Blue Hen Lines, a federally-
registered motor carrier engaged in the business of transporting
goods in interstate commerce. Conquest had leased the tractor to
Blue Hen and agreed to provide Blue Hen with a driver. In turn,
the lease obligated Blue Hen to obtain liability insurance
Blue Hen purchased a liability policy, which was in effect on the day of the accident, from defendant Providence Washington Insurance Company. As a condition precedent to coverage, a notice of accident provision in the policy required that an insured promptly notify the insurance carrier of any accident arising from operation of the vehicle. The parties agree that Harris and Conquest met the policy's definition of an "insured."
In June 1995, plaintiff sued Harris and Conquest,
respectively the driver and owner of the tractor, obtaining a
default judgment against them. After an inquest, a judgment for
compensatory damages was entered in the amount of $227,560. In
the course of litigation, plaintiff learned that Blue Hen owned
the trailer and that Providence had issued a trucker's liability
policy to Blue Hen to cover losses from motor vehicle accidents
occurring in the course of Blue Hen's business.[1]
Plaintiff
forwarded the judgment to Providence and requested payment under
Plaintiff commenced this action against Providence in October 1997 seeking payment of the judgment. After discovery, Providence moved for summary judgment dismissing the complaint on the ground that the failure of Harris and Conquest to timely notify it of the accident absolved the company of liability.
Plaintiff cross-moved for summary judgment, relying on the terms of a federally-mandated policy endorsement, known as the MCS 90, attached to liability policies issued to motor carriers who transport goods in interstate commerce. Plaintiff noted that, under federal law, motor carriers must register with the federal government and demonstrate that they have secured adequate financial resources to pay judgments arising from accidents occurring in the course of their transport business, ordinarily accomplished through purchase of a liability insurance policy with the MCS 90 endorsement.
As required by federal regulation (see 49 CFR 387.15),
the MCS 90 endorsement provides that the insurance carrier agrees
to pay any final judgment "recovered against the insured for
bodily injury or death of any person," as a result of the
In response to plaintiff's cross-motion, defendant
claimed that an MCS 90 endorsement was not part of the insurance
policy issued to Blue Hen. Although Providence had filed a
certificate of insurance with the Interstate Commerce Commission
certifying that it had included the endorsement and provided Blue
Hen the coverage mandated by federal law, it initially asserted
in Supreme Court that the MCS 90 endorsement was not part of the
policy (a position it subsequently abandoned). In addition,
Providence argued that even if the endorsement was read into the
policy, it would not provide a basis for plaintiff to recover
Supreme Court denied Providence's motion for summary judgment and granted plaintiff's cross-motion, holding that Providence was obligated to pay the judgment. Concluding that the federal security requirement had to be read into the policy, the court reasoned that the MCS 90 endorsement eliminated the prompt notice condition as a defense in a claim brought by an injured party. The court found that plaintiff could recover, notwithstanding his failure to obtain a judgment against Blue Hen, because Harris and Conquest met the policy's definition of an "insured" and the insurer was required under the endorsement to pay any final judgment "recovered against the insured."
Providence appealed and the Appellate Division affirmed, with one Justice dissenting. The court echoed Supreme Court's rationale and emphasized that the result was consistent with the public policy considerations underlying the MCS 90 endorsement requirement: to provide a safety net to members of the public injured as a result of negligent operation of tractor- trailers used in interstate commerce. Rather than applying the insurance policy's definition of "insured," the dissenting Justice would have relied on a definition that appears in the federal regulations, which he interpreted as more restrictive than the policy definition. The Appellate Division granted Providence leave to appeal to this Court and we now affirm.
Before we interpret the MCS 90 endorsement, it is helpful to consider the purpose of the federal statutory and regulatory scheme governing the interstate trucking industry. Congress passed the Motor Carrier Act of 1980 to update federal regulation of the national motor carrier industry "to reflect the transportation needs and realities of the 1980's" (Pub L 96-296, § 3). The legislation was, in part, intended to address abuses that had arisen in the industry which threatened public safety, including the use by motor carriers of leased or borrowed vehicles to avoid financial responsibility for accidents that occurred while goods were being transported in interstate commerce (Empire Fire and Marine Ins. v Guaranty National Ins., 868 F2d 357, 362 [10th Cir 1989]).
The legislation imposed a "liability insurance
requirement" upon each motor carrier registered to engage in
interstate commerce which mandated that a motor carrier file "a
bond, insurance policy, or other type of security" in an amount
determined by the Secretary of Transportation and the laws of the
State or States in which the motor carrier intended to operate
(49 USC § 13906[a][1]; see also former 49 USC § [1]).
The security must be sufficient to cover "each final judgment
against the registrant for bodily injury to, or death of, an
individual resulting from the negligent operation, maintenance,
or use of motor vehicles, or for loss or damage to property" (49 USC § 13906[a][1]; see also former 49 USC § [1]).
With the oversight of the Interstate Commerce Commission, the Federal Department of Transportation promulgated regulations implementing the financial security requirements set forth in section 30 of the legislation, which were intended "to create additional incentives to motor carriers to maintain and operate their vehicles in a safe manner and to assure that motor carriers maintain an appropriate level of financial responsibility for motor vehicles operated on public highways" (49 CFR 387.1). The Department determined that the "legislative history of Section 30 indicates a congressional belief that increased financial responsibility will lead to improved safety performance as unsafe motor carriers will incur higher premiums than safe carriers, or will be unable to obtain coverage" (46 Fed Reg 30974 [1981]). To this end, the Department concluded that section 30 was "a remedial legislative measure *** [that] should be interpreted broadly" (46 Fed Reg 30974, 30977).
In particular, the Department promulgated a motor
carrier endorsement form known as the MCS 90 (see 49 CFR
"In consideration of the premium stated in the policy to which this endorsement is attached, the insurer (the company) agrees to pay, within the limits of liability described herein, 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 Sections 29 and 30 of the Motor Carrier Act of 1980 regardless of whether or not each motor vehicle is specifically described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere. *** It is understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, this endorsement, or any other endorsement thereon, or violation thereof, shall relieve the company from liability or from the payment of any final judgment, within the limits of liability herein described, irrespective of the financial condition, insolvency or bankruptcy of the insured" (49
CFR 387.15).[3]
The endorsement also states that any policy conditions or
limitations remain in effect as between the insured and the
insurance carrier and the carrier may obtain reimbursement from
the insured for any payment the carrier would not have been
obligated to make absent the endorsement.[4]
In this case, Providence now concedes that the MCS 90
endorsement must be read into the liability policy as if it had
been attached when Providence issued the policy to Blue Hen. The
parties also agree that the endorsement modifies the terms of the
policy by excusing any conditions or limitations, including the
notice of accident condition on which Providence disclaimed. It
is further undisputed that Blue Hen agreed in its lease agreement
with Conquest to provide liability coverage for the use of the
tractor-trailer in Blue Hen's business and that this motor
vehicle accident occurred in the course of Blue Hen's business.[5]
Indeed, this is precisely the type of risk Providence agreed to
cover when it issued the trucker's liability policy to Blue Hen.[6]
The parties disagree, however, on what the injured party must do to be entitled to the expanded protection afforded by the MCS 90 endorsement. The controversy focuses on the meaning of the phrase "any final judgment recovered against the insured" in the MCS 90 endorsement.
Plaintiff notes that the term "insured" is not defined in the endorsement and argues as a result that the court must look to the definition of that term in the body of the policy. Because Harris and Conquest fall within the policy definition of insured, plaintiff contends the final judgment against them constituted the requisite "final judgment recovered against the insured" referenced in the MCS 90 endorsement. Providence argues that the endorsement must be viewed as distinct from the underlying policy and that its enhanced protections are triggered only if the injured party obtains a judgment against the named insured who purchased the policy, in this case Blue Hen. Notwithstanding the definition of "insured" in the policy, Providence contends that same term has a separate meaning under the endorsement, which can be discerned only by reference to other financial security regulations. We agree with plaintiff.
The MCS 90 endorsement, a creature of federal
Three federal cases are particularly helpful in resolving the issue before us. In each case, an insurance company was obligated to compensate an injured party under an MCS 90 endorsement even though the judgment in the personal injury action was not obtained against the named insured.
In John Deere Ins. Co. v Nueva (229 F3d 853), plaintiff Nueva, a bus driver, suffered personal injuries when his bus collided with a tractor-trailer driven by Garcha. The tractor was owned by a company (Blue Star) and an individual, both uninsured. The trailer was owned by Sahota, the named insured in a trucker's liability policy issued by John Deere Insurance Company. Prior to the accident, Sahota had agreed to sell the trailer to Blue Star but title had not yet been transferred; the trailer was being operated by Blue Star in the course of its business when plaintiff was injured. Plaintiff sought to recover under the MCS 90 endorsement to Sahota's liability policy. John Deere sought a declaratory judgment that it had no duty to indemnify Sahota, Garcha or Blue Star because the trailer was not among the covered vehicles listed in the policy. The District Court granted John Deere summary judgment but the United States Court of Appeals for the Ninth Circuit reversed and held that plaintiff could recover under the endorsement.
The Ninth Circuit's analysis turned on the definition
of "insured" in Sahota's liability policy. As permissive users
of a vehicle not listed in the policy's schedule of covered
vehicles, Garcha and Blue Star did not meet the policy definition
of insured. However, noting that the MCS 90 endorsement states
that the insurer agrees to pay "regardless of whether or not each
motor vehicle is specifically described in the policy," the court
concluded that the endorsement negated the policy limitation
Adams v Royal Indemnity Co. (99 F3d 964 [10th Cir
1996]) also involved an action brought by an injured plaintiff
seeking to recover under an MCS 90 endorsement. The underlying
personal injury judgment was entered against the driver of the
tractor-trailer rather than the named insured -- the motor
carrier that leased the vehicle and purchased the trucker's
liability policy. The Court of Appeals for the Tenth Circuit
held that the motor carrier's policy could be used to pay the
judgment obtained against the driver of the truck, who was using
the vehicle with the motor carrier's permission at the time of
the accident, even though the truck was not listed as a covered
vehicle in the policy. As in John Deere, the driver did not fall
within the policy definition of an insured but the court
determined that the MCS 90 endorsement modified and expanded the
policy definition, thereby bringing the driver within the ambit
of the policy and rendering the insurance company liable for
In another Tenth Circuit case, Campbell v Bartlett (975 F2d 1569), the injured party secured a judgment against the trucking company that bought the liability policy and its driver employee, who had caused the accident by driving under the influence of alcohol. In addition to a compensatory damages judgment entered against the company and the driver, a punitive damages judgment was entered against the driver alone. The Tenth Circuit held that the insurance carrier was required to satisfy both portions of the judgment, even though the punitive damages award had not been assessed against the named insured. The court concluded that the dispositive issue was whether the driver was an insured within the terms of the MCS 90 endorsement. Noting that the endorsement itself does not define who is an insured, the court interpreted the term using the definition in the liability policy. Because the driver, a permissive user of a covered vehicle, met the policy definition of an insured, the insurance carrier was responsible for payment of the judgment.
The pivotal factor in these cases was not which party
the personal injury judgment was entered against; instead, the
focus was on the coverage provisions of the liability policies to
which the MCS 90 endorsements were attached. In cases where the
party responsible for the accident fell within the policy
definition of an insured (as in Campbell) or was insured under
the policy coverage provisions as specifically modified by the
The same result should obtain in this case. Indeed,
plaintiff's claim is even stronger than that of the injured
parties in John Deere and Adams because it is undisputed that
Harris and Conquest meet the policy's definition of an insured. We reject Providence's contention that the MCS 90
endorsement should not be treated as a part of the underlying
trucker's liability policy but should be viewed as imposing
conditions distinct from those contained in the policy.[10]
First,
Most significantly, the endorsement delineates
circumstances when the insurance carrier must compensate an
injured party even if the policy purports to absolve the insurer
of responsibility. Had the drafters intended to use the
endorsement to create contractual obligations distinct from those
in the policy, they would have included separate provisions in
the endorsement defining coverage, rather than merely negating
exceptions included in the policy. Under Providence's view of
the endorsement, a party insured under the policy might not be
covered under the endorsement. We see nothing in the language of
the endorsement indicating that coverage is being contracted in
this manner; to the contrary, by its plain terms the endorsement
Finally, we are unpersuaded that our interpretation of
the term "insured" is unworkable in the context of other
provisions of the endorsement, including the clause which allows
the carrier to seek reimbursement from the insured, in some
circumstances, for proceeds paid out under the endorsement.
Providence apparently assumes that it could not pursue
reimbursement from Harris and Conquest because it did not
Accordingly, the order of the Appellate Division should
be affirmed, with costs. The certified question should not be
answered upon the ground that it is unnecessary inasmuch as the
Appellate Division order was final. PIERRE V PROVIDENCE WASHINGTON INSURANCE COMPANY
No. 170
WESLEY, J. DISSENTING: We respectfully dissent. For 67 years, Congress has required an interstate motor
carrier to provide proof of financial security as a precondition
to registration. When the motor carrier satisfies this
obligation by obtaining liability insurance coverage, Congress
has imposed a limited federal exception (the MCS-90 endorsement)
to the insurance contract -_ the insurer must pay, up to the
limits of liability, any judgment obtained against the motor
carrier, notwithstanding any coverage preconditions or
limitations in the insurance contract.[12]
Because this exception
On November 30, 1994, Steve Pierre was injured at the
intersection of Eastern Parkway and St. John's Place in Brooklyn
when his 1980 Ford van was struck on the passenger side by a
tractor trailer as it attempted to make a left turn across
Pierre's lane of travel. The tractor was owned by Preston
Conquest and was leased to Blue Hen (Blue Hen owned the trailer).
The tractor was operated by Stevie Dwayne Harris, an employee of
Conquest. Providence Washington Insurance Company issued a
commercial motor vehicle liability policy to Blue Hen that
covered the tractor and trailer. The policy contained a prompt
notice of loss clause. In June of 1995, Pierre commenced an action against
Harris and Conquest.[13]
The summons and complaint were served on
the Secretary of State pursuant to section 253 of the Vehicle and
Traffic Law. Not surprisingly, neither Conquest nor Harris
appeared and Pierre took a default judgment against both with an
assessment of damages and costs for $227,560 following an
While the Blue Hen action was pending, Pierre's
attorneys notified Providence of the default in the
Harris/Conquest action and demanded payment on the judgment.
Providence denied coverage based on the failure of Harris,
Conquest or Blue Hen to provide timely notice of the accident as
required by the policy. Two months later, plaintiff commenced
this action. The complaint asserts that Conquest, Harris and
Blue Hen are insureds under the policy and Providence must
therefore pay the Harris and Conquest judgment pursuant to
section 3420 of the Insurance Law. Pierre and Providence cross-moved for summary judgment.
Supreme Court granted Pierre's motion without reaching the merits
of Providence's late notice defense. The court examined the MCS-
90 endorsement in conjunction with the Providence policy. The
court reasoned that the MCS-90 requires Providence to pay any
The Appellate Division affirmed with one justice
dissenting (see Pierre v Providence Washington Ins. Co., 286 AD2d
139 [2nd Dept. 2001]). The court acknowledged that the MCS-90 is
mandated by federal law. However, the court asserted that
federal regulations did not define insured and looked to the
language of the policy to determine the meaning of that term as
used in the MCS-90. The endorsement (MCS-90) must be read in
conjunction with other provisions of the policy (id., at 145).
Because Harris and Conquest were other insureds under the
policy, the court concluded that the provisions of the MCS-90
precluding denial of liability premised on a coverage limitation
or exclusion was in play. The dissenter took the view that the
clear legislative purpose of the statutorily mandated MCS-90 was
to suspend limitations of coverage in commercial motor carrier
policies only when a judgment is obtained against the named
insured -_ the registered motor carrier. The dissenter adopted
the reasoning of the Federal District Court in a similar case
(see Del Real v U.S. Fire Ins. Crum & Forster, 64 F Supp 958,
affd 188 F3d 512 [9th Cir 1999]). In our view, the language of the MCS-90 can only be
understood in the statutory and regulatory context that created
the form. The words employed are those of Congress and the
The Secretary of Transportation has regulatory
authority over the transportation of goods or passengers by motor
carriers in interstate commerce (see 49 USC § 13501). No person
may operate as a motor carrier subject to that jurisdiction
unless registered to do so (see 49 USC § 13901). Federal
registration of a commercial motor carrier is conditioned upon
the carrier's filing with the Secretary of Transportation proof
of insurance, a security bond or other security sufficient to
pay, up to a prescribed limit for each final judgment against
the registrant for bodily injury or property damage resulting
from the negligent operation, maintenance, or use of motor
vehicles (49 USC § 13906[a][1]) (emphasis added). The focus of
the statute is repeated in its implementing regulations. [N]o
certificate or permit shall be issued to such a carrier * * *
unless and until there shall have been filed with and accepted by
the FMCSA [Federal Motor Carrier Safety Administration] surety
bonds, certificates of insurance, proof of qualifications as
self-insurer, or other securities or agreements * * * conditioned
to pay any final judgment recovered against such motor carrier
(49 CFR 387.301 [a][1])(emphasis added).[16]
In essence, the same
language is carried over to the MCS-90; however, because that
form is designed to be attached to an insurance policy, the form
We find it very troubling that the majority view of the
endorsement is broader than the enabling legislation. If indeed
the regulatory language is broader than the statute that
authorizes it, one would think that a court would interpret the
regulation consistent with the statute, or limit its sweep to
that permitted by Congress. Apparently the majority feels
comfortable with this admitted excess. Our view of the language
of the endorsement is limited to that authorized by Congress. We agree with the majority that the endorsement is a
creature of federal law. Thus, federal law governs how we must
view the endorsement and its terms (see Clarendon Natl. Ins. Co.
v Insurance Co. of West, 2000 US Dist. LEXIS 13920 * 13 2000 WL
892864, * 5 [ED Cal June 30, 2000][finding federal law governs
the interpretation of the federally mandated MCS-90 provision];
see also Carter v Vangilder, 803 F2d 189, 191 (5th Cir 1986)
[finding that federal law applies to the operation and effect of
federally-mandated endorsements]). However, we would restrict
our analysis to the traditional sources employed in examining the
language of a document that is created by a regulation. Those
regulations do provide a definition of the insured as used in
MCS-90 (see 49 CFR 387.5). Under the regulation insured is
defined as the motor carrier named in the policy of insurance,
surety bond, endorsement, or notice of cancellation * * * (id.)
(emphasis added). In the context of the statutory and regulatory
The phrase the insured appears numerous times in the
form.[17]
Pursuant to settled federal rules of statutory
construction, where the same word or phrase is used in different
parts of a statute or act, the same meaning must attach to each
(see Furthermore, the ultimate criterion is the
administrative interpretation [of the regulation], which becomes
The Solicitor General notes that limiting the
obligation assumed by the insurer under the federal financial
responsibility rules to judgments that include the named insured
is consistent with the logic and structure of the statute. MCS-90
requires Providence to accept liability beyond that which it
would normally insure in a state-regulated transaction. The
endorsement, however, also requires a corresponding concession by
the insured motor carrier, Blue Hen, to reimburse the insurer for
any payments the insurer makes on claims that are not covered by
the underlying policy. Consequently, the increased risk imposed
on the insurer is that the carrier will be unable to satisfy the
reimbursement obligation. Because this risk can be easily
assessed with regard to a prospective named-insured _ but not
with respect to unknown third parties _ it makes sense to limit
the obligation assumed by the insurer to judgments that include
the named insured.[19] The statute and regulations protect the public in the
event of an accident involving vehicles owned or operated by
commercial motor carriers ( In addition to requiring carriers to obtain liability
insurance, Congress and the Secretary of Transportation have
imposed control and responsibility obligations on the carriers.
A motor carrier subject to DOT jurisdiction is required to have
control of and be responsible for operating those [leased] motor
vehicles (49 USC § 11107[a][4]). To enforce this provision, the
DOT regulations mandate that every lease entered into by a DOT-
licensed carrier contain a provision that requires the interstate
carrier/lessee to assume complete responsibility for the
operation of the equipment for the duration of the lease (49 CFR 1057.12[c]). We cannot discern how Pierre could not have
prevailed in the Blue Hen action and obtained a judgment against
Form MCS-90 is not intended, and does not purport to
vary any term of the underlying coverage. To the contrary, the
form specifically preserves those terms as between the insurer
and the named insured. The endorsement requires the insurer to
pay certain judgments entered against the motor carrier, whether
or not the events giving rise to the judgment come within the
policy's coverage, and subject to reimbursement by the carrier if
they do not. It does not, however, modify the policy's
definition of an insured. If an injured party obtains a judgment against the
insured motor carrier, the endorsement requires the insurer to
pay the judgment, without regard to coverage under the policy.
Conversely, if the injured party obtains a judgment against a
defendant other than the insured motor carrier, the insurer may
or may not be required to pay that judgment under the policy _
for instance, if Pierre can establish that timely notice of the
accident was given to Providence, then consideration of the
endorsement is unnecessary.[21]
The policy and the endorsement
Simply put, the MCS-90 is a separate federally mandated
The sum of the majority's efforts is an odd result.
Plaintiff contends he was injured when his vehicle was struck by
a tractor trailer. He commenced an action for personal injuries,
against the non-resident driver and non-resident owner of the
tractor by alternate service. Both default. Plaintiff then sues
the named insured within the statute of limitations and although
federal law supports his claim, he discontinues the action.
Plaintiff then sues the insurer on the judgment. He now seeks to
avoid the possibility that no one ever informed the carrier of
the accident until after entry of the default judgment. The policy concededly covers the driver and owner of
the tractor. The insurer reserved its rights under the prompt
The majority's view of the MCS-90 eviscerates the
policy and creates absolute liability against the insurer for
anyone injured by a vehicle operating under the motor carrier's
registration who obtains a judgment against only the operator.
It substitutes its view of good policy for the express provisions
chosen by Congress. Had Congress intended such a result, it
could have been easily accomplished. It could have required that
the provisions of the MCS-90 apply to a judgment not just against
the insured, but against any insured as defined in the
liability policy ( We would therefore modify the order of the Appellate
see M/O Council of The City of New
York v Pub. Serv. Commn. of the State of New York, __ NY2d __, __
2002 NY Slip Op 07485 * 8 [October 22, 2002]["'the interpretation
of a regulation by the agency which promulgated it and is
responsible for its administration is entitled to deference if
the determination is not irrational or unreasonable'"], quoting
Matter of Gaines v Div. of Hous. & Community Renewal, , 90 NY2d 545, 549 [1998]). In conjunction with this appeal, Providence
has submitted the Solicitor General's amicus brief on a petition
for a writ of certiorari to the United States Supreme Court in a
case relied on by the majority, John Deere Ins. Co. v. Nueva (229
F3d 853 [9th Cir 2000], cert denied, 122 S. Ct. 1063 [2002]).
The amicus brief represents the official view of the Department
of Transportation, the Federal Motor Carrier Safety
Administration and the United States Department of Justice with
regard to the MCS-90 and the responsibilities of an insurer of a
registered motor carrier under the statute. In their view, the
existing federal regulations only require a carrier's insurer to
satisfy a judgment, regardless of the coverage terms of the
policy, when the judgment includes the carrier.[18]
see National Mut. Ins. Co. v Liberty
Mutual Ins. Co., 196 F2d 597 [DC Cir 1952] cert denied, 344 US 819 [1952]). They guarantee that resources will be available to
see Wellman, 496 F2d at 139).
Footnotes
1 Plaintiff commenced a separate action against Blue Hen. According to defendant, the action was dismissed with prejudice; plaintiff indicates only that the action was "discontinued." In any event, the parties agree that, for reasons not disclosed in the record, the action against Blue Hen is no longer pending.
2 Ultimately, the Department determined proof of financial security could consist of the MCS 90 endorsement issued by an insurer, the MCS 82 surety bond issued by a surety or the filing of a written decision, order or authorization of the Federal Motor Carrier Safety Administration authorizing the motor carrier to self-insure, provided the motor carrier maintained a satisfactory safety rating (see 49 CFR 387.7[d]). However, at the time the MCS 90 endorsement at issue in this case was drafted, self-insurance was not an available option (see 46 Fed Reg 30974, 30983).
3 The endorsement further provides: "Such insurance as is afforded, for public liability, does not apply to injury to or death of the insured's employees while engaged in the course of their employment, or property transported by the insured, designated as cargo. *** However, all terms, conditions and limitations in the policy to which the endorsement is attached shall remain in full force and effect as binding between the insured and the company. The insured agrees to reimburse the company for any payment made by the company on account of any accident, claim or suit involving a breach of the terms of the policy, and for any payment that the company would not have been obligated to make under the provisions of the policy except for the agreement contained in this endorsement. It is further understood and agreed that, upon failure of the company to pay any final judgment recovered against the insured as provided herein, the judgment creditor may maintain an action in any court of competent jurisdiction against the company to compel such payment. The limits of the company's liability for the amounts prescribed in this endorsement apply separately to each accident and any payment under the policy because of any one accident shall not operate to reduce the liability of the company for the payment of final judgments resulting from any other accident" (49 CFR 387.15).
4 Like many regulations, the financial security regulations do not merely mimic the statute; they are more detailed and contain provisions not found in the enabling legislation. For example, in addition to allowing an injured party to recover from the insurer after obtaining a judgment against any party insured under the policy, not just the registered motor carrier, the MCS 90 endorsement also grants the insurance carrier a right to seek reimbursement from the insured for any judgment which would not have been paid but for the endorsement. If Providence believed that the literal language in the endorsement regulation -- which does not restrict recovery to instances when an injured party has obtained a judgment against the registered motor carrier -- was unduly broad or inconsistent with the enabling statute, it could have challenged the regulation in the appropriate forum. Moreover, the "interests of the insurance industry" were well represented in this original drafting of MCS 90 (see 46 CFR 30974, 30976), so it can hardly be supposed that the industry would fail to voice its objections to the endorsement. The issue not having been raised in this case, this Court is in no position to determine whether federal agencies exceeded their jurisdiction when they promulgated the endorsement. Although the dissent suggests that this regulation, as interpreted by the federal courts, may be so broad as to exceed the regulatory authority delegated by Congress (dissent, at 6, 13), that issue is simply not before us.
5 The lease also provides that the driver of the tractor- trailer "shall be subject to the direction and control of the LESSEE," Blue Hen. This provision, like the agreement to provide liability coverage, is required by law (see 49 CFR 376.12[c][1]).
6 Providence issued a policy which covered Harris and Conquest. Thus, the insurance carrier is not being held accountable for the risks posed by "unknown third parties" (dissent, at 9); it is being directed to pay a judgment obtained against parties it agreed to insure. Rather than redefining "[t]he risk for which the insurer issued the policy" (dissent, at 14), we are applying the policy definition of "insured" drafted by Providence.
7 We have relied on the recent decisions in John Deere,
Campbell and Adams rather than the federal cases cited by the
dissent (dissent, at 12, n 11) because those cases are factually
distinguishable or are otherwise unpersuasive. Most predated the
Motor Carrier Act of 1980 and the financial security regulations
promulgated thereunder. Only one involved a claim by an injured
member of the public (see Wellman v Liberty Mutual Ins. Co., 496
F2d 131, 137 [8th Cir 1974] [court did not interpret the terms of
the MCS 90 endorsement or its predecessor]). As the Ohio Supreme
Court noted, claims involving an injured parties' right to
compensation "implicate the key rationale behind the MCS-90
endorsement, which is the protection of the public" (Lynch v Yob,
95 OhioSt3d at 447). Disputes between insurance companies (see
Carolina Casualty Ins. Co. v Ins. Co. of North America, 595 F2d
128 [3rd Cir 1979]; National Mutual Ins. Co. v Liberty Mutual
Ins. Co., 196 F2d 597 [DC Cir], cert denied 344 US 819 1952]),
coverage claims brought by defendants in personal injury actions
(Del Real v United States Fire Ins. Co., 64 FSupp 2d 958 [ED Cal],
affd without opn 188 F3d 512 [9th Cir 1999]) or those brought on
behalf of employees of the motor carrier (White v Excalibur Ins.
Co., 599 F2d 50 [5th Cir], cert denied 444 US 965 1979]
[wrongful death claim by representative of off-duty driver of
tractor-trailer killed by negligence of another employee
rejected, in part, because decedent was not a member of the
public]) are of limited value because they do not require courts
to interpret the endorsement in light of the public policy
concerns underlying the financial security requirements. In Del
Real, the only recent case identified by the dissent, the named
insured was not a motor carrier subject to federal financial
security requirements. In addition, the Ninth Circuit's
rationale for upholding the denial of a coverage claim by the
defendants in the personal injury action is unknown because the
case was affirmed without explanation in an unpublished decision
(see Del Real v United States Fire Ins. Co., 188 F3d 512).
9 In so holding, we do not impose "absolute liability" on the insurer as the dissent contends (dissent, at 14). The policy Providence issued to Blue Hen covered Harris and Conquest. In addition, Blue Hen was responsible, under the lease agreement and by federal law, for the negligent conduct attributed to Harris and Conquest as the dissent recognizes (dissent, at 10). Since we all agree that plaintiff could have obtained a judgment against Blue Hen based solely on the negligence of Harris and Conquest, there is no basis to claim that it is somehow unfair to require Blue Hen's insurer to pay the judgment against Harris and Conquest.
10 Rather than citing judicial authority for this argument, Providence and the dissent (dissent, at 8-9) rely on an amicus brief filed by the United States Solicitor General on behalf of the United States Department of Transportation in opposition to the insurer's application for a writ of certiorari in the United States Supreme Court in the John Deere case. In that brief, the Solicitor General took the position that the Ninth Circuit had erred in concluding that an insurance company could be compelled under an MCS 90 endorsement to pay a judgment against someone other than the named insured. The Solicitor General nonetheless opposed a grant of certiorari because he concluded that a judgment would be obtained against someone other than the motor carrier only if the motor carrier loaned its vehicle to another motor carrier who failed to carry the requisite insurance.
The facts of this case fall outside such an assumption and
are otherwise distinguishable from John Deere, most notably
because Harris and Conquest were insureds under the policy. Due
to these distinctions, and the fact that the Department has
apparently never stated its views in any other forum (with the
exception of the regulatory history we cite), it is unclear what
the Solicitor General's position would be in this case. In John
Deere, the Solicitor General noted that no insurer or other
entity has ever sought administrative guidance in this regard
which may explain the lack of agency documentation addressing the
question. Although the Department is in a position to amend the
endorsement regulation to substitute the term "named insured" or
"registered motor carrier" for the term "insured" for purposes of
clarification, despite the decisions of the federal courts on
which we rely, it has not done so. For all of these reasons, we
credit federal appellate court authority based on the legislative
and regulatory history articulated at the time the pertinent
regulations were adopted rather than deferring to the views
expressed in an amicus brief submitted in another,
distinguishable case (see generally,
11 It should be noted that the MCS 90 endorsement contains special definitions of some terms used therein, including accident, motor vehicle, bodily injury and public liability. Several of these definitions were proposed by commenters "representing the interests of the insurance industry" (see 46 Fed Reg 30974, 30976). The term insured, however, is not among them.
12 An MCS-90 endorsement is often referred to as an ICC endorsement because its form was initially prescribed under statutes delegating some of the enforcement of their provisions to the Interstate Commerce Commission. The BMC-90, the original ICC endorsement, was the predecessor to the MCS-90 and was in all material respects identical to the MCS-90. Congress abolished the ICC in 1995 (see Pub. L. No. 104-88, 109 Stat. 803) and provided that [a]ll * * * regulations * * * issued by the ICC in performing functions transferred to the Secretary of Transportation shall continue in effect according to their terms until modified, terminated, superseded, set aside or revoked in accordance with law (ICC Termination Act, Pub. L. No. 104-88, § 204[a], 109 Stat. 941). The Motor Carrier Safety Improvement Act of 1999 (Pub. L. No. 106-159, 113 Stat. 1748) created the Federal Motor Carrier Safety Administration (FMCSA) within the Department of Transportation (DOT), and charged it with carrying out duties and powers related to motor carriers or motor carrier safety vested in the Secretary by various provisions of Title 49 (Pub. L. No. 106-159, § 113[f][1], 113 stat. 1750).
13 Although Pierre claimed the tractor trailer struck his vehicle, he did not sue for property damage.
14 Pierre asserts that he sustained a herniated disk and several bulging disks. He was not transported to the hospital for the accident. The record contains no medical reports documenting his injuries.
15 Plaintiff's counsel notes in his brief that the action was discontinued. We agree with the majority that the basis for the discontinuance is not apparent in the record.
16 The Secretary's regulations set a minimum coverage requirement at $750,000 (49 CFR 387.7[a]).
17 See Majority Opn, at 9 fn 4 for text of form MCS-90.
18 The majority is content to ignore the views of the Secretary of Transportation and finds comfort in that it adopts the insurance contract based analysis of the Ninth and Tenth Circuits. We on the other hand think the view of the Secretary of Transportation _- who created the form _- does deserve deference (see Chevron, USA, Inc. v. Natural Resources Defense Council, Inc., 467 US 837 [1984]).
19 The majority concludes that because Harris and Conquest were other insureds under the policy, they were not unknown third parties to Providence (Maj. Opn, at 11 fn 7). We disagree. There is nothing in this record that would imply that Providence knew or would know of all of Blue Hen's lease arrangements or the financial status of those entities. Certainly, Harris and Conquest were not specifically identified by the policy as named insureds.
20 The majority's view would create a curious anomaly. A motor carrier can satisfy the financial security requirements of the statute by filing a bond (MCS-82). However, the bond mandates payment only upon a judgment against the motor carrier (see J.B. Hunt Transport Inc. v USF Distribution Services Inc., 2002 US Dist. LEXIS 17166 [ED Pa 2002]). Thus, an injured third party would obtain two different results depending upon the method of statutory compliance chosen by the motor carrier. There is no basis in law or logic for such a distinction.
21 In opposing Providence's summary judgment motion, Pierre submitted an affidavit from Harris in which Harris asserts that he notified Blue Hen of the accident. Had Pierre obtained a judgment against Blue Hen, the late notice issue would be academic and the judgment long since paid.
22 Although the majority eschews the Solicitor General's position in favor of those expressed by federal appellate courts (Majority Opn, at 17), the majority fails to consider decisions of the federal courts over the last 50 years, all of which take the view that liability of an insurer under MCS-90 would only be triggered by a judgment against the registered motor carrier (see National Mut. Ins. Co., 196 F2d at 599 [the court, after examining language of the BMC-90 endorsement, the predecessor to the MCS-90, found that an insurer is required to make payment under the endorsement only upon entry of a judgment that included the insured motor carrier]; Wellman v Liberty Mut. Ins. Co., 496 F2d 131, 139 [8th Cir 1974][finding the financial responsibility provisions only allow recovery when the injured party takes the intermediate step of obtaining judgment against the carrier]; White v Excalibur Ins. Co., 599 F2d 50, 55 [5th Cir 1979] cert denied, 444 US 965 [1979] [finding under 49 USC § 315, the predecessor to the current 49 USC § 13906, that in order for [the insurer] to be liable under the policy filed by [the carrier] with the ICC, [the carrier] must first be adjudicated liable as a party]; Casualty Ins. Co. v Insurance Co. of North America, 595 F2d 128, 139 [3rd Cir 1979][finding the governing statute and regulation do not require a motor carrier to defend claims * * * or to pay judgments entered against others but require only that the carrier give security 'to pay any final judgment recovered against such motor carrier . . .'; they mention * * * nothing about payments of judgments recovered against other parties]; Del Real v United States Fire Ins. Crum & Forster, 64 F Supp 2d 958, 964 [ED Cal 1998], affd, Del Real v United States Fire Ins. Crum & Forster, 188 F3d 512 [1999][finding [t]he language of the endorsement, the relevant federal regulations * * * indicate that the term 'the insured' refers only to the named insured]).