Northland Insurance v. NH Insurance CV-95-434-B 02/26/99 P UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Northland Insurance C o .
v. Civil No. 95-434-B
New Hampshire Insurance C o .; Textile Trucking of New Hampshire, Inc., et a l .
MEMORANDUM AND ORDER
New Hampshire Insurance Co. and Northland Insurance Co.
issued successive commercial automobile insurance policies on
behalf of Textile Trucking of New Hampshire, Inc. Following a
collision between one of Textile Trucking's vehicles and a
bicyclist. Textile made demands on both insurers for a defense
and indemnification against any liability resulting from the
collision. In response, Northland brought this declaratory
judgment action, pursuant to 28 U.S.C.A. § 1332 (West 1993) and
28 U.S.C.A. §§ 2201 and 2202 (West 1994), seeking a determination
as to which insurer, if either, owes coverage to Textile Trucking
and the employee who was driving the vehicle involved in the collision. Northland, New Hampshire Insurance, and Textile
Trucking have each filed cross motions for summary judgment.
I. BACKGROUND
Textile Trucking transports raw wool in interstate commerce.
In 1993 and 1994, it operated pursuant to a permit issued by the
Interstate Commerce Commission ("ICC").1
Textile Trucking applied to New Hampshire Insurance in
August 1993, seeking commercial automobile insurance to cover its
fleet of trucks. It also reguested that New Hampshire Insurance
provide any liability coverage reguired by state and federal law
and file certificates of insurance with the ICC and state
regulators in Massachusetts, New Hampshire and New Jersey.
New Hampshire Insurance issued Textile Trucking an insurance
policy valid from August 31, 1993, until August 31, 1994. The
policy covered five Textile Trucking vehicles, including the 1985
Mack truck involved in the collision that gave rise to the
current dispute. Attached to the policy was a cancellation and
1 In December 1995, Congress transferred the ICC's responsibilities to the Department of Transportation and the newly created Surface Transportation Board. ICC Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803 (1995) (codified as amended in scattered sections of 49 U.S.C.A.). non-renewal endorsement that had the effect of automatically
renewing the policy upon its expiration unless New Hampshire
Insurance took certain actions. To prevent renewal. New
Hampshire Insurance had to provide Textile Trucking with notice
of non-renewal sixty days prior to the policy's expiration,
except where, inter alia: (1) New Hampshire Insurance manifested
a "willingness to renew"; (2) New Hampshire Insurance refused to
renew "due to [Textile Trucking's] non-payment of premium"; or
(3) Textile Trucking failed to pay "any advance premium reguired
by [New Hampshire Insurance] for . . . renewal."
When New Hampshire Insurance issued the insurance policy, it
also filed (1) a Form BMC 91X Certificate of Insurance with the
ICC; and (2) Uniform Motor Carrier Bodily Injury and Property
Damage Liability Certificates of Insurance ("Form E
Certificates") with regulatory authorities in Massachusetts, New
Hampshire and New Jersey. A Form BMC 91X Certificate states that
a motor carrier's liability insurance policy has been amended by
the attachment of a Form MCS 90 Endorsement. A Form E
Certificate states that the policy has been amended by the
attachment of a Uniform Motor Carrier Bodily Injury and Property
Damage Liability Insurance Endorsement ("Form F" Endorsement).
3 Both the Form MCS 90 Endorsement and the Form F Endorsement are
subject to special cancellation requirements that operate
independently of the policy's cancellation provisions.
New Hampshire Insurance canceled its policy with Textile
Trucking several times during the course of the 1993-94 policy
period because of the company's alleged failure to make timely
premium payments. When New Hampshire Insurance cancels a policy
for non-payment of premiums, it typically also cancels all
federal and state filings made on behalf of the insured. If the
policy is later reinstated, the company reinstates the federal
and state filings. In this case, while New Hampshire Insurance
reinstated the ICC and New Jersey filings each time it reinstated
the policy, it canceled, but did not reinstate, the Massachusetts
and New Hampshire filings.
In June 1994, New Hampshire Insurance sent Textile Trucking
two non-renewal notices, advising the company of its willingness
to renew the policy upon payment of a specified premium. The
non-renewal notices, however, required Textile Trucking to remit
the specified premium payment by August 31, 1994, in order to
maintain its coverage.
Textile Trucking alleges that after it received the non
renewal notices, an employee of its insurance broker, Elliot
4 Agency, informed the company that it had a thirty-day "grace
period" between the renewal payment "due date" and the date that
coverage would actually expire. Textile Trucking's belief that
it was entitled to a thirty-day grace period was reinforced, the
company claims, by New Hampshire Insurance's practice of
routinely providing policyholders a second notice of cancellation
and an additional thirty days after the first premium due date in
which to pay the premium. Claiming that it relied on the Elliot
Agency's representations and New Hampshire Insurance's practice
in other cases. Textile Trucking did not make the reguired
premium payment by the August 31, 1994 deadline specified in the
non-renewal notices.
On September 15, 1994, Textile Trucking used the Elliot
Agency to obtain a commercial automobile insurance policy from
Northland. This policy provided coverage retroactively from
September 1, 1994, to September 1, 1995. The policy covered four
Textile Trucking vehicles, but not the vehicle involved in the
accident. Pursuant to Textile Trucking's reguest, Northland also
filed a form BMC 91X Certificate of Insurance with the ICC. The
ICC received the certificate on September 21, 1994, several hours
after the accident.
5 Textile Trucking claims that the September 1, 1994 start
date specified in the Northland policy was a mistake because the
company instructed its broker that it did not want coverage to
begin until October 1, 1994. It also asserts that it did not
seek coverage from Northland for the vehicle involved in the
accident because its broker led it to believe that the vehicle
would be covered under the New Hampshire Insurance policy until
September 30, 1994, when Textile Trucking intended to remove the
vehicle from service.
On September 21, 1994, a Mack truck driven by a Textile
Trucking employee, Mark Kaar, collided with a bicyclist in
Charlestown, Massachusetts. The bicyclist suffered serious
injuries and brought suit against Textile Trucking and Kaar.
Textile Trucking and Kaar made demands for a defense and
indemnification on both New Hampshire Insurance and Northland.
Northland then brought this declaratory judgment action to
determine which insurer, if either, owes coverage to Textile
Trucking and Kaar.
II. STANDARD OF REVIEW
Summary judgment is appropriate only "if the pleadings,
depositions, answers to interrogatories, and admissions on file,
6 together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law." Fed. R. Civ. P.
56(c); see Lehman v. Prudential Ins. Co. of America, 74 F.3d 323,
327 (1st Cir. 1996). A "genuine" issue is one "that properly can
be resolved only by a finder of fact because [it] . . . may
reasonably be resolved in favor of either party." Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) . A "material" fact
is one that "affect[s] the outcome of the suit." Id. at 248. In
ruling on a motion for summary judgment, the court construes the
evidence in the light most favorable to the non-moving party.
See Oliver v. Digital Equip. Corp., 846 F.2d 103, 105 (1st Cir.
1988) .
Where the nonmoving party bears the burden of persuasion at
trial, it must "make a showing sufficient to establish the
existence of [the] element[s] essential to [its] case" in order
to avoid summary judgment. Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986). It is not sufficient for the non-moving party
to "rest upon mere allegation[s] or denials [contained in that
party's] pleading." LeBlanc v. Great Am. Ins. Co., 6 F.3d 836,
841 (1st Cir. 1993) (guoting Anderson, 477 U.S. at 256). Rather,
to establish a trial-worthy issue, there must be enough competent
7 evidence "to enable a finding favorable to the nonmoving party."
Id. at 842 (internal citations omitted). Where the moving party
bears the burden of persuasion at trial, the movant must also
support its position with materials of evidentiary guality. See
Desmond v. Varrasso (In re Varrasso), 37 F.3d 760, 763 n.l (1st
Cir. 1994). Further, "[the] showing must be sufficient for the
court to hold that no reasonable trier of fact could find other
than for the moving party." Lopez v. Corporacion Azucarera de
Puerto Rico, 938 F.2d 1510, 1516 (1st Cir. 1991).
III. DISCUSSION
The parties seek to determine whether either New Hampshire
Insurance or Northland owes Textile Trucking and Kaar any
coverage for liability that may result from the underlying
lawsuit. Each insurer denies that it is liable to Textile
Trucking and claims that to the extent that any coverage is owed,
the other insurer bears responsibility for providing it.
Conversely, Textile Trucking asserts that both insurers owe it
some measure of coverage. I address each insurer's coverage
obligations in turn under its policy, the filings it made with
the ICC and any filings it made with state authorities.
8 A. New Hampshire Insurance's Coverage Obligations
1. The Policy
Textile Trucking concedes that it did not renew the New
Hampshire Insurance policy by making the reguired premium payment
on or before the date specified in the insurer's non-renewal
notices. Nevertheless, it argues that New Hampshire Insurance
was obligated to continue coverage for a 30-day "grace period"
after the date specified in the notices because its agents made
certain statements and the insurer took actions which reasonably
led the company to believe that it was entitled to the grace
period. This argument is best understood as an eguitable
estoppel claim.2
Eguitable estoppel is a doctrine that "forbid[s] one to
speak against his own act, representations, or commitments to the
injury of one to whom they were directed and who reasonably
relied thereon." Great Lakes Aircraft Co. v. City of Claremont,
135 N.H. 270, 290 (1992). In other words, a "wrongdoer may be
2 On March 5, 1998, I issued an order rejecting Textile Trucking's claim that the non-renewal notices were deficient because they failed to comply with the reguirements of the policy's non-renewal endorsement. See Northland Insurance Co. v. New Hampshire Insurance Co., et al.. Civil Action No. 95-434-B (March 5, 1998). Textile Trucking's failure to make the premium payment called for in the notices thus caused the policy to expire on August 31, 1994 unless the company can succeed with its eguitable estoppel claim.
9 estopped from making assertions, even if true, which are contrary
to acts and representations previously made." Id. Thus, as
Textile Trucking asserts, an insurer can be estopped from
applying the terms of a contract to deny an insured coverage in
light of the insurer's prior representations and actions to the
contrary. See Olszak v. Peerless Ins. Co., 119 N.H. 686, 690-91
(1979); Great Lakes Aircraft Co., 135 N.H. at 290.
The four essential elements of eguitable estoppel are: (1) a
representation of material facts made by a party with knowledge
of their falsity; (2) ignorance of the truth of the matter on the
part of the party to whom the representation was made; (3) the
intention on the part of the first party that the second party
should act upon the representation; and (4) the detrimental
reliance of the second party on the representation. See
Hawthorne Trust v. Maine Sav. Bank, 136 N.H. 533, 538 (1992).
The party asserting a claim of eguitable estoppel has the burden
of proof as to each of these elements. See Healey v. Town of New
Durham Zoning Bd. of Adjustment, 140 N.H. 232, 240 (1995).
Textile Trucking's eguitable estoppel claim fails because it
has not produced sufficient evidence to support its claim that
New Hampshire Insurance or one of its agents made the
misrepresentations on which the claim is based. Although it
10 points to evidence of statements allegedly made by employees of
the Elliot Agency that might reasonably have caused the company
to believe that it could claim the benefit of a 30-day grace
period, it cannot prove that the employees were acting as agents
of New Hampshire Insurance when they made the statements. See
generally North River Ins. Co. v. Cv Thompson Trans. Agency, 840
F.2d 139, 142 n .3 (1st Cir. 1988); Mutual Benefit Life Ins. Co.
v. Gruette, 129 N.H. 317, 322 (1987); Commercial Cas. Ins. Co. v.
Mansfield, 98 N.H. 120, 133 (1953). Nor can it prove that New
Hampshire Insurance routinely gave other insureds the benefit of
a 30-day grace period. Without such evidence, the company cannot
demonstrate that its actions were the result of any acts or
statements attributable to New Hampshire Insurance. Accordingly,
it cannot avoid summary judgment by claiming eguitable estoppel.
2. Federal Filings
Textile Trucking and Northland next argue that New Hampshire
Insurance owes the company coverage pursuant to the MCS 90
Endorsement even if the policy to which the endorsement was
attached expired prior to the accident. The company bases this
argument on New Hampshire Insurance's alleged failure to comply
with the endorsement's special cancellation rules. I analyze
this contention by first discussing the federal statutes and
11 regulations that required Textile Trucking to purchase the
coverage provided pursuant to the MCS 90 Endorsement.
(a) Filing Requirements
When New Hampshire Insurance insured Textile Trucking, the
Motor Carrier Act of 1980, 49 U.S.C.A. § 10927 (West 1994)3
required any interstate motor carrier operating pursuant to a
permit issued by the ICC to file proof of liability insurance
"sufficient to pay . . . for each final judgment against the
carrier for bodily injury to, or death of, an individual
resulting from the negligent operation . . . of [its] motor
vehicles." Id. § 10927(a)(1). The legislative purpose
underlying the proof of insurance requirement was "to ensure that
an ICC carrier has independent financial responsibility to pay
for losses sustained by the general public arising out of its
trucking operations." Travelers Ins. Co. v. Transport Ins. Co.,
787 F .2d 1133, 1139 (7th Cir. 1986).
The Act also authorized the United States Department of
Transportation ("DOT")and the ICC to promulgate regulations to
further the Act's purpose. See 49 U.S.C.A. § 10321(a) (West
3 The current version of the Act is codified at 49 U.S.C.A. § 13906 (West 1997 and Supp. 1998).
12 1994) .4 Pursuant to this authority, the DOT and the ICC adopted
regulations requiring interstate motor carriers to: (1) maintain
a specified minimum amount of liability insurance, see 49 C.F.R.
§ 387.7(a)(1997) (stating the DOT's financial responsibility
requirement), § 387.9(1997)(prescribing minimum levels of
liability insurance), § 1043.1(a) (1) (1995) (stating the ICC's
financial responsibility requirement), § 1043.2(b) (1995)
(prescribing minimal levels of liability insurance); and (2) file
proof of insurance with the ICC, see id. §§ 1043.1(a) (1) (1995),
1043.7(a)(3)(1995). In a case such as this, the regulations
specified that the required insurance was to be provided by a
Form MCS 90 Endorsement, see 49 C.F.R. § 1043.7(a) (4) (1995), and
the proof of insurance requirement was to be satisfied by the
filing of a Form BMC 91X, see 49 C.F.R. § 1043(a) (3) (1995) .
The coverage provided pursuant to an MCS 90 Endorsement
takes the form of a suretyship, see Canal Ins. Co. v. Carolina
Cas. Ins. C o ., 59 F.3d 281, 283 (1st Cir. 1995) ("[W]e consider
the [Form MCS-90 type] endorsement to be . . . a suretyship by
the insurance carrier to protect the public . . ."), which
requires the insurer to pay only final judgments assessed against
4 The current version of this statute can be found at 49 U.S.C.A. § 13301(a) (West 1997).
13 the policyholder. See John Deere Ins. Co. v. Truckin' U.S.A.,
122 F.3d 270, 274-75 (5th Cir. 1997) (MCS-90 Endorsement does not
obligate one insurer to indemnity another insurer which has
settled a claim with injured party); Harco Nat'l Ins. Co. v.
Bobac Trucking, Inc., 107 F.3d 733, 736 (9th Cir. 1997) (MCS-90
Endorsement does not require insurer to defend insured). An
insurer that pays a claim pursuant to an MCS 90 Endorsement also
retains a right to recover any payment made on the claim from the
insured. See Harco Nat'l Ins. Co., 107 F.3d at 736. Thus, an
MCS 90 Endorsement does not obligate an insurer to either defend
or indemnify its insured against a liability claim. Instead, the
insurer must pay any judgment awarded against the policyholder
subject to a right of reimbursement.
(b) Cancellation Requirements
Once a Form BMC 91X Certificate is filed with the ICC and
an insurance policy is amended by the attachment of a Form MCS 90
Endorsement, the coverage provided pursuant to the endorsement
remains in effect unless it is canceled in a manner prescribed by
federal regulations. The regulations permit an insurer to cancel
an MCS-90 Endorsement by: (1) providing the insured with notice
35 days prior to cancellation, see 49 C.F.R. § 387.7(b)(1)(1997),
and (2) providing the ICC with notice 30 days prior to cancella-
14 tion, see 49 C.F.R. § 1043.7(d)(1995). An MCS 90 Endorsement
also will be canceled automatically notwithstanding the
insurer's failure to comply with the endorsement's cancellation
requirements if the policyholder purchases "replacement"
insurance. See 49 C.F.R. § 387.7(c) (1997); 49 C.F.R.
§ 1043.7(e)(1995). In this case. New Hampshire Insurance argues
that the coverage it provided to Textile Trucking pursuant to the
MCS 90 Endorsement was terminated prior to the accident when the
endorsement was effectively replaced by Northland's MCS 90
Endorsement on September 1, 1994.5
Textile Trucking and Northland both challenge New Hampshire
Insurance's claim that the MCS 90 Endorsement was terminated by
replacement. They argue that the Northland policy cannot qualify
as a replacement policy because, unlike the New Hampshire policy
it supplanted, the Northland policy did not cover the vehicle
that was involved in the accident. This argument misses the
point. The coverage provided by Northland's MCS 90 Endorsement
5 Northland's BMC 91X certificate was not received by the ICC until September 21, 1994, a few hours after the accident at issue occurred. Nevertheless, Northland's MCS 90 Endorsement qualifies as a replacement policy as of September 1, 1994 because its BMC 91X Certificate specified that the coverage provided pursuant to the endorsement became effective on that date. See 49 C.F.R. §§ 1043.7(e)(1995) (insurer's liability "shall be considered as having terminated the effective date of the replacement certificate of insurance") and 387.7(c)(1997)(same).
15 was identical to the coverage provided by the MCS 90 Endorsement
attached to the New Hampshire Insurance policy.6 Both
endorsements covered the vehicle that was involved in the
accident. See MCS-90 Endorsement (insurer must pay any final
judgment against the insured within the endorsement's limits of
liability "regardless of whether or not each motor vehicle is
specifically described in the policy"). Under these circum
stances, it is irrelevant that Northland's policy did not list
the vehicle involved in the accident as a covered vehicle.
Accordingly, the MCS 90 Endorsement amending the Northland policy
gualifies as a replacement policy and New Hampshire Insurance's
coverage obligations pursuant to the endorsement were canceled on
September 1, 1994, when the Northland policy and its endorsements
became effective.
3. State Filing Requirements
Textile Trucking and Northland next argue that the company
is entitled to coverage from New Hampshire Insurance because of
the Form E Certificates that New Hampshire Insurance filed on
behalf of Textile Trucking in New Jersey, Massachusetts, and New
Hampshire. In responding to this argument, I first discuss the
6 As I explain below, Northland's policy was amended by the MCS 90 Endorsement even though the company inadvertently failed to attach the endorsement to the policy.
16 federal laws and regulations that gave rise to the Form E filing
reguirement. I then describe several recent changes to these
reguirements and turn to the merits of the claim.
(a) Form E Filing Requirement
Until January 1, 1994, federal law provided that an
interstate motor carrier could not operate in a state that
reguired motor carriers to file evidence of liability insurance
coverage unless the carrier first filed a Form E Certificate of
Insurance with the state's regulatory authorities. See 49 C.F.R.
§ 1023.51 (1992) (stating the filing reguirement), § 1023.52
(1992) (reguiring that certificate of insurance must be a Form E
filing). By filing a Form E Certificate, an insurer certified
that it had issued a policy of insurance to its insured that had
been amended by a Form F Endorsement. See 49 C.F.R. § 1023.53
(1992) (endorsement reguired must be a Form F Endorsement). This
endorsement obligated an insurer to provide the insurance
reguired by the law of the state where the Form E filing was made
subject to a right of reimbursement from the insured. Once a
Form E Certificate was filed, the regulations stated that it
could not be canceled without providing 30 days advance notice.
See 49 C.F.R. §§ 1023.71 (1992)(specifiying that a Form K Notice
of Cancellation was reguired to cancel a Form E filing).
17 (b) Single State Registration System
In 1991, Congress passed the Intermodal Surface Transporta
tion Efficiency Act which, among other things, directed the ICC
to replace the existing multi-state registration system with a
simplified single state registration system. See Intermodal
Transportation Efficiency Act of 1991, Pub. L. No. 102-240, §
4005 (effective Jan. 1, 1994). Regulations implementing the new
system went into effect on January 1, 1994. See Single State
Insurance Registration, 58 F.R. 28,932 (1993), codified at 49.
C.F.R. §§ 1023 and 1162 (1994)).
The regulations implementing the single state registration
system permit a motor carrier to satisfy the new registration
reguirements by registering in the state where its principal
place of business is located, if that state is a participating
state.7 See 49 C.F.R. § 1023.3 (1993). Otherwise, the motor
carrier must register in the participating state where it expects
to operate the greatest number of vehicles in the coming year.
See id. Proof of insurance under the new system is demonstrated
by the filing of a Form BMC 91 or Form BMC 91X Certificate in the
7 States are not reguired to participate in the single state registration system. Federal law, however, does not otherwise authorize states to impose insurance reguirements on interstate motor carriers.
18 registration state. See 49 C.F.R. §§ 1023.4(c) (2) (1993)
(requiring motor carrier to file proof of liability insurance
required by 49 C.F.R. § 1043); 1043.7(3)(1992) (specifying use of
Form BMC 91 and Form BMC 91X Certificates) . Because the new
single state registration system replaced the old multiple state
registration system, it eliminated any federal requirement that a
motor carrier file Form E Certificates. 42 U.S.C.A. § 11506(c)
(1)(A) (effective Jan. 1, 1994) (noting that under the new
system, a motor carrier will be required to "register annually
with only one State); Single State Insurance Registration, 58
F.R. 28,932 (1993), codified at 49. C.F.R. §§ 1023 and 1162
(1994)) (stating the commission's intent to replace the more
burdensome multi-state registration system, which required
individual Form E filings, with a more simplified system).
Massachusetts and New Hampshire participate in the single
state registration system but New Jersey does not. Instead, New
Jersey requires intrastate motor carriers to file Form E
Certificates. See N.J. Adm. Code Title 13 §§ 44D-1.1 (defining
"public mover"), 44D-4.2(b) (requiring public movers to file
proof of insurance).
19 (c) Analysis of New Hampshire Insurance's Coverage Obligations Under the New Hampshire and Massachusetts Filinas
New Hampshire Insurance originally filed Form E Certificates
on behalf of Textile Trucking in Massachusetts, New Hampshire,
and New Jersey. It canceled these filings several months prior
to the September 21, 1994 accident because Textile failed to make
timely premium payments. Although it reinstated the New Jersey
filing when Textile Trucking made the reguired premium payment,
it did not reinstate the Massachusetts and New Hampshire filings.
Based on this series of events. Textile Trucking argues that New
Hampshire Insurance remains obligated pursuant to the Form E
filings it made in Massachusetts and New Hampshire because the
insurer should not be allowed to benefit from its wrongful
failure to reinstate those filings after Textile remitted its
late premium payments.
Textile Trucking's argument is based on the incorrect
premise that New Hampshire Insurance erred in failing to
reinstate the Massachusetts and New Hampshire Form E filings. By
the time Textile made its late premium payments, the multi-state
registration system under which the Massachusetts and New
Hampshire Form E filings were made had been replaced by the
single state registration system. Because both Massachusetts and
20 New Hampshire elected to participate in that system, they no
longer required motor carriers to file Form E Certificates.
Instead, a motor carrier could demonstrate proof of insurance by
filing a Form BMC 91 or Form BMC 91X Certificate in the motor
carrier's home state.8 Since Textile Trucking was not longer
required to file Form E Certificates in either Massachusetts or
New Hampshire, the insurer cannot be faulted for failing to
reinstitute these filings.
(d) Analysis of New Hampshire Insurance's Coverage Obligations Under the New Jersey Filing
Textile Trucking and Northland also argue that New Hampshire
Insurance is obligated to cover the accident because it failed to
cancel the New Jersey Form E filing prior to the accident. I
reject this argument because I conclude that this filing did not
impose any obligation on New Hampshire Insurance to cover an
accident that occurred outside New Jersey and involved parties
with no connections to the state.
The Form E Certificate that New Hampshire Insurance filed in
New Jersey provides that the company's insurance policy has been
8 Neither Textile Trucking nor Northland argues that New Hampshire Insurance owes any coverage obligation by virtue of the Form BMC 91X it filed when it registered in New Hampshire in accordance with the single state registration system. Thus, I do not address the significance of that filing here.
21 amended by a Form F Endorsement "covering the obligations imposed
upon such motor carrier by the provisions of the motor carrier
law of the state . . . Accordingly, I look to New Jersey law
to determine the scope of the coverage provided pursuant to the
Form E Certificate and the Form F Endorsement.
New Jersey's motor carrier law reguires only intrastate
motor carriers to file proof of insurance with the state. See
N.J. Adm. Code Title 13 §§44D-4.2(b)(reguiring "public movers" to
file proof of insurance), 44D-1.1 (limiting definition of "public
mover" to carriers engaged in intrastate commerce); 44D-4.2(e)(1)
(specifying proof of insurance must be demonstrated by a Form E
filing). Although New Jersey law does not expressly limit the
coverage that must be provided pursuant to the Form F Endorsement
to accidents that occur within the state's borders, given the
fact that the law applies only to intrastate motor carriers, that
is its most plausible construction. Further, the more expansive
interpretation proposed by Northland and Textile Trucking, which
would extend the insurance reguirement to accidents that occur
anywhere in the United States regardless of whether the insured
is a New Jersey motor carrier, would give the statute an
extraterritorial impact that is inconsistent with the
Constitution's Interstate Commerce Clause. See, e.g., Edgar v.
22 Mitre Corp., 457 U.S. 624, 642 (1982) ("the commerce clause also
precludes the application of a state statute to commerce that
takes place wholly outside the state's borders, whether or not
the commerce has effects within the state"). For these reasons,
I decline to interpret New Jersey's motor carrier law to impose
an insurance requirement on the out-of-state activities of an
interstate motor carrier not based in New Jersey.9
B. Northland's Coverage Obligations
Textile Trucking offers three arguments as to why Northland
owes it a coverage obligation. First, it contends that the
Northland policy's audit provision, which allows Northland to
adjust the premium to account for undisclosed exposures, entitles
Textile Trucking to coverage for the vehicle involved in the
accident even though Textile did not originally list that vehicle
on its policy application. Second, it asserts that Northland is
liable for certain alleged misrepresentations made by employees
9 Northland's reliance on DeHart v. Liberty Mutual Ins., 1998 W.L. 834330 (Ga. 1998) is misplaced. Unlike the present case, the coverage question at issue in DeHart arose in 1987, when federal law authorized states like New Jersey to impose Form E Certificate of Insurance requirements on interstate motor carriers. See supra at pp. 17-19. Moreover, DeHart involved an attempt to apply a Georgia proof of insurance requirement to the interstate activities of a Georgia motor carrier. A state obviously has a far stronger interest in regulating the interstate activities of one of its own companies than it has in regulating the out-of-state activities of a foreign corporation.
23 of the Elliot Agency that caused Textile Trucking to mistakenly
believe that it was covered under the New Hampshire Insurance
policy until October 1, 1994. Finally, it points to the fact
that Northland neglected to attach the MCS 90 Endorsement to the
policy and argues that, in such circumstances, Northland's filing
of a BMC-91X certificate with the ICC obligated it to provide a
defense and indemnification rather than the more limited
suretyship coverage that ordinarily is provided pursuant to an
MCS 90 Endorsement. I address each argument in turn.
1. The Audit Provision
The scope of the coverage provided by the Northland policy
is described in Northland's "Truckers Coverage Form." The
pertinent section of this Form states that:
We [Northland] will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance, or use of a covered "auto."
We have the right and duty to defend any "suit" asking for such damages. . . . However, we have no duty to defend "suits" for "bodily injury" or "property damage" . . . . not _____ covered by this Coverage Form. . . .
Def. Northland Ex. C (Truckers Coverage Form, Section II)(Doc.
16)(emphasis added).
The term "covered auto" is defined in Section I of the
Northland Truckers Coverage by reference to one of ten "covered
24 auto designation symbols" numbered 41-50. See Def. Northland Ex.
C. The Northland policy insuring Textile Trucking specifically
provides for a "46" covered auto designation. Section 46 defines
"covered autos" as:
SPECIFICALLY DESCRIBED AUTOS. Only those "autos" described in ITEM THREE of the Declarations for which a premium charge is shown.
Id. An attached endorsement to the Northland policy. No. T-237,
makes a clerical amendment to the definition of a section 46
"covered auto:"
SPECIFICALLY DESCRIBED AUTOS. Only those "autos" described in ITEM FOUR of the Declarations for which a premium change [sic] is shown.
Id. (emphasis added). Inspection of Item Four of the Northland
policy coverage declarations reveals that the Textile Trucking
vehicle involved in the accident, a 1985 Mack Tractor identified
by the ID number 1M2N1794 7FA001679, is not listed as a covered
vehicle.
Textile Trucking attempts to overcome its failure to seek
coverage for the vehicle involved in the accident by relying on
the policy's audit provision. This provision states:
Premium Audit a. The estimated premium for this coverage form is based on the exposures you told us you had when the policy began. We will compute the final premium due and the first named insured will be billed for the balance. if any . . . .
Although Textile Trucking cites no authority to support its
position, it argues that the audit provision somehow obligates
Northland to cover the vehicle involved in the accident even
though it was not listed as a "covered auto." This argument is
unconvincing. If the policy's audit provision were to be
interpreted as Textile Trucking suggests, it would eviscerate the
policy's reguirement that the policyholder list the vehicles for
which it seeks coverage. Accordingly, I decline Textile
Trucking's reguest to give the policy's audit provision such an
interpretation.
2. Northland's Coverage Obligations Arising From Representations Made by Employees of the Elliot Agency
Textile Trucking next argues that Northland is liable for
certain allegedly negligent misrepresentations and other errors
made by representatives of the Elliot Agency. This argument
lacks merit for the simple reason that Textile Trucking has
failed to produce sufficient evidence to support its assertion
that any employees of the Elliot Agency were acting as
Northland's agents when they allegedly made the misrepresenta
tions on which the claim is based. Instead, the record in this
case clearly demonstrates that the Elliot Agency was acting as
26 Textile's agent when it procured insurance from Northland. See,
e.g., Aff. of Lenehan (attached to Doc. 23); Dep. of St. Germain
(appended to Docs 62, 63 at pp. 23-27); Dep. of Desaulniers
(appended to Docs. 62, 63 at pp. 9, 12, 17, 26, 28). While the
Elliot Agency could conceivably be liable to Textile Trucking for
its alleged misrepresentations, the company has no basis for
attributing that liability to Northland.
3. Northland's Coverage Obligations Based on the Form BMC 91X Certificate
Textile Trucking's final argument is that Northland is
liable because it filed a Form BMC 91X Certificate with the ICC
and thus agreed to cover all of Textile Trucking's vehicles,
regardless of whether they were listed as covered autos in the
Northland policy. Northland concedes that it is obligated to
provide the coverage mandated by the Form MCS 90 Endorsement
which it agreed to add to the policy when it filed the Form BMC
91X Certificate with the ICC. It insists, however, that it is
liable only as a surety and that its liability is subject to a
right of reimbursement from Textile Trucking. Textile Trucking
responds by claiming that since Northland neglected to attach the
Form MCS 90 Endorsement to the policy, it is obligated to treat
the vehicle involved in the accident as if it had been listed as
a covered auto and provide Textile Trucking with the full
27 coverage available to it under the policy rather than the far
more limited coverage available under the MCS 90 Endorsement.
This argument is also unpersuasive. Northland's filing of a
Form BMC 91X certificate with the ICC certifies that the motor
carrier's liability insurance policy has been amended by the
addition of, in this case, a Form MCS 90. See Form BMC 91X
Certificate. It is the MCS 90 Endorsement that, by its terms,
obligates the user to cover all of the insured's motor vehicles
"regardless of whether or not each motor vehicle is specifically
described in the policy . . ." 49 C.F.R. § 387.15 (1997) (Form
MCS 90). Accordingly, to the extent that Northland is liable in
this case by virtue of having filed a Form BMC 91X Certificate
with the ICC, its liability arises from the fact that by making
this filing, its policy is deemed to have been amended to include
an MCS 90 Endorsement.
Northland concedes, as it must, that it is obligated to
cover the accident based upon the MCS 90 Endorsement. This
obligation, however, takes the form of a suretyship and imposes
no duty to indemnify or provide a defense to Textile Trucking,
see John Deere Ins. Co., 122 F.3d at 274-75; Harco Nat'l Ins.
C o ., 107 F.3d at 736, or the operators of its vehicles, see
Radman v. Jones Motor Co., 914 F. Supp. 1193, 1193 (W.D. Pa.
28 1996) .10 Moreover, this obligation is subject to the insurer's
right to seek reimbursement from the insured. See Harco Nat'1
Ins. C o ., 107 F.3d at 736.
Because Northland concedes that its policy was construc
tively amended to include a Form MCS-90 Endorsement, I hold that
Northland is obliged, subject to the limits specified in the MCS
90 Endorsement, to pay any final judgment recovered against
Textile Trucking arising from the underlying lawsuit. Northland
is not obliged, however, to indemnify or provide a defense to
either Textile Trucking or Kaar with respect to the underlying
lawsuit. Instead, Northland is entitled to recover any payments
made pursuant to the endorsement from Textile Trucking.
IV. CONCLUSION
For the foregoing reasons. New Hampshire Insurance's motion
for summary judgment, alleging (1) its underlying insurance
policy was canceled by replacement on September 1, 1994, and (2)
asserting the absence of any continuing obligation on the part of
New Hampshire Insurance pursuant to Form E filings made by the
10 The conclusory assertions to the contrary made by Textile Trucking's "expert" on the issues of law do not give rise to the kind of factual dispute that would prevent me from granting summary judgment on this issue.
29 insurer in Massachusetts, New Hampshire, and New Jersey, is
granted.
Northland's motion for summary judgment is granted as to
Northland's claims that (1) it has no obligation to indemnify
Textile Trucking for the accident involving a vehicle unlisted on
its policy, and (2) because the Elliot Agency was not acting as
Northland's agent, its statements and/or representations cannot
bind Northland. Northland's motion is denied as to its claims
that New Hampshire Insurance had a duty to act as a surety
arising from uncanceled or improperly canceled Form E filings in
Massachusetts, New Hampshire, or New Jersey.
Textile Trucking's motion for summary judgment is denied
except insofar as Textile claims that Northland owes Textile
Trucking a suretyship obligation subject to a right of
reimbursement.
The result of these motions is that Northland owes Textile
Trucking a suretyship obligation to pay any final judgment
arising from the accident involving the Textile Trucking vehicle,
within the limits specified by the Form MCS-90 Endorsement,
subject to a right of reimbursement from Textile Trucking. New
Hampshire Insurance is released from all claims of liability
30 arising out of any such judgment.11
SO ORDERED.
Paul Barbadoro Chief Judge February , 1999
cc: Russell Hilliard, Esg. Roger Phillips, Esg. Andrew Dunn, Esg. Ira Lipsis, Esg. R. Matthew Cairns, Esg.
11 Northland also sued the Elliot Agency seeking reimbursement for any liability it might have based upon any statements or actions by any employees of that agency. This claim appears to be moot in light of my ruling that Northland's coverage obligation is limited to the obligation it assumed pursuant to the policy's Form MCS 90 Endorsement. Accordingly, as all other claims in the case have been resolved, I will direct the clerk to enter judgment in accordance with this order and my order of March 5, 1998 unless any party objects on or before March 15, 1999.