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H & S Obtains Summary Judgment In Favor Of Empire Fire & Marine Ins. Co. On An Issue Of First Impression In Connecticut




by:
Halloran Sage LLP - Hartford Office

 
August 21, 2013

Previously published on March 11, 2013

On December 24, 2012, the Court, Zemetis, J., granted Empire Fire and Marine Insurance Company’s (“Empire”) Motion for Summary Judgment in a case involving an issue of first impression in Connecticut regarding the federally mandated MCS-90 endorsement.  The facts of the case can be summarized as follows:

The plaintiff, Renee Martinez, filed a lawsuit against Empire’s insured, Tony’s Long Wharf Towing, LLC (“Tony’s”), as a result of a motor vehicle accident in which the plaintiff sustained injuries.  When the accident occurred, Edward Reynolds, Tony’s employee, was operating a Dynamic Wrecker, owned by Tony’s, on his way to pick up motor vehicle parts, when he collided into the plaintiff’s vehicle.  Empire did not defend Tony’s in response to the plaintiff’s claims and the plaintiff obtained a judgment, in the amount of $693,025.69, against Tony’s.

Thereafter, the plaintiff commenced a direct action against Empire pursuant to Conn. Gen. Stat. § 38a-321, seeking to hold Empire liable for the unpaid judgment.  Empire moved for summary judgment in that action as:

(1) the Dynamic Wrecker was deleted from the policy prior to the subject motor vehicle accident; and

(2) there is no coverage for the Dynamic Wrecker under the MCS-90 endorsement as the Dynamic Wrecker was not being operated “for hire” in interstate commerce at the time of the accident.

In her objection, the plaintiff conceded that the Dynamic Wrecker was deleted from the policy prior to the subject motor vehicle accident.  Thus, the only remaining issue was the applicability of the federally-mandated MCS-90 endorsement based upon the facts of the underlying accident.  Importantly, this presented an issue of first impression in Connecticut.

“[T]he federal MCS-90 endorsement form for motor carrier insurance policies pursuant to the Motor Carrier Act of 1980 (“Motor Carrier Act”) . . . provides mandatory accident coverage for motor carriers that are used to carry property for-hire in interstate or foreign commerce without regard to whether the vehicle is named in the insured’s policy or that the policy would have otherwise excluded coverage.” Mem. Of Decision, at 6.

“[A] for-hire carriage means the business of transporting, for compensation, the goods or property of another” and “[m]otor carrier means a for-hire motor carrier [which] . . . includes . . . an employee concerned with the installation, inspection, and maintenance of motor vehicle equipment and/or accessories.”  Id. at 9-10 (citing 49 C.F.R. § 387.5).  See also Brunson v. Canal Ins. Co., 602 F.Supp 2d 711, 716 (D.S.C. 2007).

Interstate commerce, in turn, “may be determined by looking to the intent of the goods’ seller or shipper with respect to the goods’ destination:  Whether the transportation is of an interstate nature can be determined by reference to the intended final destination of the transportation when that ultimate destination was envisaged at the time the transportation commenced . . . [I]nterstate transportation can satisfy the interstate commerce requirement of the [Motor Carrier Act] if the shipper has a fixed and persisting transportation intent beyond the terminal . . . at the time of [the subject event].”  Mem. Of Decision, at 10 (quoting Lyons v. Lancer, 681 F.3d 50, 57-58 (2d Cir. 2012)).  In addition, “the interstate commerce requirement is satisfied if the goods being transported . . . are involved in a ‘practical continuity of movement’ in the flow of interstate commerce.”  Bilyou v. Dutchess Beer Distributors, Inc., 300 F.3d 217, 223 (2d Cir. 2002).  “The question whether commerce is interstate or intrastate must be determined by the ‘essential character of the commerce . . .’”  Mem. Of Decision, at 11 (quoting Minnesota v. Roberts, 344 N.W. 2d 407, 409 (Minn. 1984)).

With these guidelines in mind, the Martinez court found that Reynolds, Tony’s employee, “was being compensated for transporting the property of another, the motor vehicle parts, and that he was also compensated for maintaining motor vehicle equipment."  Id. at 12.  The court then turned to the question of whether the trip was undertaken in interstate commerce.  On the basis of the insured’s uncontroverted deposition testimony, the court held that it was undisputed that Reynolds’ “trip was conducted entirely within the State of Connecticut and that the final destination of the goods, the repair parts, was within the State of Connecticut.”  Id. at 13.

The court’s analysis did not, however, end there.  The court next looked to whether there was a fixed and persisting intent that the repair parts be transported beyond the terminal.  The court held that “[t]he evidence shows that despite the supposed ultimate use of the repaired trucks/wreckers in interstate commerce, it was Reynolds’ and [Tony’s] intent that the parts be delivered to [Tony’s], a facility within Connecticut, as the terminus of the parts’ journey.”  Id. at 14.  In so holding, “the court [rejected] the plaintiff’s argument, unsupported by legal precedent, that once the repair parts were installed on [Tony’s] wreckers, the wreckers would be used in transporting goods in interstate commerce and hence the federally mandated coverage applies even though the repair parts would then be installed in the wreckers and the parts no longer be a drop in the stream of interstate commerce themselves.”  Id.  Moreover, the court held that “[t]here is no case law that supports the expansion of the scope of the Motor Carrier Act to cover the intrastate transport of goods that may only travel in interstate commerce as incorporated in another object, as is the case here.”  Id.

Consequently, summary judgment was entered in favor of Empire and Empire is not liable to the plaintiff for the unpaid judgment.1 Id.


1 An appeal of this decision was filed on January 30, 2013.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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