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FIREMAN'S FUND INS. CO. v. EMPIRE FIRE & MARINE INS.

April 19, 2001

FIREMAN'S FUND INSURANCE COMPANY, AS SUBROGEE OF DONALD MILLER, ET AL.
v.
EMPIRE FIRE & MARINE INSURANCE COMPANY



The opinion of the court was delivered by: Edmund V. Ludwig, J.

MEMORANDUM

In this declaratory judgment action, plaintiff Fireman's Fund Insurance Company, as subrogee of Donald Miller and Buck Run Transport, Inc., moves for summary judgment on the issue of liability. Fed.R.Civ.P. 56.*fn1 Jurisdiction is diversity, 28 U.S.C. § 1332, and Pennsylvania law governs substantive issues.

The relevant facts are not in dispute. On November 13, 1992, plaintiff's subrogor, Donald Miller, entered into a lease with Buck Run Transport, Inc. (BRT), an interstate petroleum products hauler licensed by the Interstate Commerce Commission. Cmplt. ex. C. Miller, the lessor, provided the tractor and his services as driver and, under the lease, displayed a placard bearing BRT's name on the tractor. BRT, the lessee, supplied the trailer and load of petroleum to be delivered. At all pertinent times, Miller was the named insured in a policy issued by defendant Empire Fire & Marine Insurance Company (Empire); BRT was the named insured in a policy issued by Fireman's Fund Insurance Company (FFIC); and each policy had a coverage limit of $1,000,000.*fn2

On March 17, 1993, Miller was involved in an accident in Chadds Ford, Pa. After he collided with two vehicles that were driven by Alfred Zeccardi and Christopher O'Brien, thousands of gallons*fn3 of fuel spilled from the trailer.*fn4 In September, 1998, FFIC paid Zeccardi $175,000 on behalf of Miller and BRT.*fn5 In this lawsuit, FFIC asserts that Empire had a duty to defend and indemnify*fn6 Miller and BRT and, therefore, owes FFIC the settlement amount, clean-up costs, and legal expenses, totaling $338,449.14.*fn7

Although not in so many words, both parties appear to agree that their policies are applicable to the accident. See Contrans, Inc., v. Ryder Truck Rental, Inc., 836 F.2d 163, 165 (3d Cir. 1988) ("It is an accepted principle of insurance law that where an accident arises out of the use of a combined vehicle such as a tractor-trailer and where separate policies cover the tractor and the trailer, all insurance applicable to the combined vehicle comes into play, regardless of which part of the rig was physically involved in the accident."); see also Blue Bird Body Co. v. Ryder Truck Rental, Inc., 583 F.2d 717, 726-27 (5th Cir. 1978) (when accident arises out of the use of a tractor-trailer, it implicates both regardless of which part of the unit was involved). Here, FFIC contends: (1) contrary to Empire's position,*fn8 the ICC endorsement in FFIC's policy and Miller's display of BRT's ICC placard on his tractor do not make FFIC primary as a matter of law; and (2) under the "Other Insurance" provisions in the two policies, Empire owes primary coverage, and FFIC's policy is excess.*fn9 Pltf. mem. at 4-5.

Under a section entitled "endorsements — other automobile coverage," FFIC's policy contains an "endorsement for motor carriers policies of insurance for public liability under sections 29 and 30 of the Motor Carrier Act of 1980 . . . MCS 90 01-90. This insurance is primary and the company shall not be liable for amounts in excess of $1,000,000 for each accident."*fn10 Cmplt. ex. B. Although courts have disagreed as to how an ICC endorsement impacts the allocation of insurance risk,*fn11 our Court of Appeals has determined that federal motor carrier requirements do not alter otherwise existing rights and responsibilities of insurance carriers: Carolina Casualty Ins. Co. v. Insurance Co. of North America, 595 F.2d 128, 140-41 (3d Cir. 1979). In Carolina Casualty, an ICC-certified motor carrier leased a truck for which the lessor also provided a driver. While on the lessee's business and displaying the lessee's ICC placards, the truck was involved in a collision causing personal injuries to third parties, who sued the lessee, lessor, and the driver in state court. While the state action was pending, the insurer of the lessor, Carolina Casualty Insurance Company, filed a declaratory judgment action to determine whether the ICC carrier's insurer, the Insurance Company of North America, owed primary coverage. Id. at 129-130.

The district court found that under federal motor carrier regulations, "liability for damages to the [injured plaintiffs] is imputed to and imposed by law on [the ICC carrier, lessee]." Id. at 132. Our Court of Appeals vacated, holding that responsibility among motor carriers and their insurers must be determined by state law, not by federal requirements. Id. at 139-40. The decision reasoned that "where the case is `concerned with responsibility as between insurance carriers,' and not with the federal policy of protecting the public, `I.C.C. considerations are not determinative' and a court should consider the express terms of the parties' contracts." Id. at 138 (quoting Allstate Ins. Co. v. Liberty Mut. Ins. Co., 368 F.2d 121, 125 (3d Cir. 1966)); see also Occidental Fire and Casualty Co. of North Carolina v. Brocious, 772 F.2d 47, 52-53 (3d Cir. 1985) (federal requirements do not absolve lessors of otherwise existing obligations under contracts allocating financial risk among themselves as private parties); Maryland Casualty Co. v. City Delivery Serv. Inc., 817 F. Supp. 525, 531 (M.D.Pa. 1993) (under Carolina Casualty, ICC regulations have no further effect on insurance policy interpretation; so long as the public interest is protected and third parties have been compensated, "responsibility among the motor carriers and their various insurers is determined by state insurance and contract law, not by federal requirements").

FFIC, therefore, is correct that the ICC endorsement and Miller's display of the placard do not make it primary as a matter of law; if Empire's view is otherwise, it is inconsistent with the law in this Circuit. See Diamond State Ins. Co. v. Ranger Ins. Co., 47 F. Supp.2d 579, 587 (E.D.Pa. 1999) (under Carolina Casualty, a driver's use of ICC placards does not impose primary coverage as a matter of law); Twin City Fire Ins. Co. v. Federal Ins. Co., Civ. A. No. 92-5834, 1994 WL 719796, at *3 (E.D.Pa. Dec. 23, 1994) (argument that a vehicle displaying a carrier-lessee's placard listing its ICC certificate number made lessee's insurance primary was rejected based in part on Carolina Casualty).

Since "application of the relevant I.C.C. regulations does not determine which insurer . . . is responsible for providing primary coverage, the Court must now resort to an analysis of the insurers' individual policies." Diamond State, 47 F. Supp.2d at 590. FFIC argues that the "Other Insurance" provisions contained in the policies makes Empire's coverage primary, not excess.*fn12 Empire's policy:

SECTION V — TRUCKERS CONDITIONS

B. GENERAL CONDITIONS

6. OTHER INSURANCE — PRIMARY AND EXCESS INSURANCE PROVISIONS

(1) on the same basis, primary or excess, as for the power unit if the power unit is a ...

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