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

United States District Court, Eastern District of Pennsylvania


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

a. This Coverage Form's liability Coverage is primary for any covered "auto" while hired or borrowed by you and used exclusively in your business as a "trucker" and pursuant to operating rights granted to you by a public authority. This Coverage Form's Liability Coverage is excess over any other collectible insurance for any covered "auto" while hired or borrowed from you by another "trucker." However, while a covered "auto" which is a "trailer" is connected to a power unit, the Coverage Form's Liability Coverage is:

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

(2) excess if the power unit is not a covered "auto."

b. Except as provided in paragraph a. above, this Coverage Form provides primary insurance for any covered "auto" you own and excess insurance for any covered "auto" you don't own.

d. When this Coverage Form and any other Coverage Form, policy or self-insurance covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverages Forms, policies or self-insurance covering on the same basis.

Cmplt. ex. A.*fn13

The FFIC policy:

SECTION IV — BUSINESS AUTO CONDITIONS

B. GENERAL CONDITIONS

5. OTHER INSURANCE

A. For any covered auto you own, this coverage form provides primary insurance. For any covered auto you don't own, the insurance provided by this coverage form is excess over any other collectible insurance. However, while a covered auto which is a trailer is connected to another vehicle, the liability coverage [that] this coverage form provides for the trailer is:

(1) excess while it is connected to a motor vehicle you do not own.

(2) primary while it is connected to a covered auto you own.

C. When this coverage form and any other coverage form or policy covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the limit of insurance of our coverage form bears to the total of the limits of all the coverage forms and policies covering on the same basis.

Cmplt. ex. C.

Under FFIC's policy, inasmuch as the BRT trailer was connected to a vehicle that BRT did not own (Miller's tractor), FFIC's obligation is limited to excess coverage under § IV(B)(5)(A)(1), if anything.*fn14 See, e.g., Reliance Ins. Co. v. Federal Ins. Co., No. Civ.A.99-CV-5076, 2000 WL 1664008, at *5 (E.D.Pa. Nov. 3, 2000) (in construing identical language, the policy "intended only to provide primary coverage to those of its insureds who owned covered autos"). Under § V(B)(6)(a) of Empire's policy, Miller's tractor was a "covered auto," and, at the time of the accident, it was leased to BRT, a "trucker."*fn15 It follows that if FFIC's policy encompasses the tractor — i.e., as "other collectible insurance" — Empire's coverage is also excess; otherwise, Empire's policy is primary under V(B)(6)(b)."*fn16

According to Empire, FFIC's policy is "other collectible insurance" because:

The Fireman's Fund policy is specifically endorsed to provide public liability for motor carriers, Form MCS 90 01-90. Such coverage requires that [FFIC] respond to judgments entered as a result of the negligence and/or use of a motor vehicle under its ICC authority. Such coverage is clearly collectible and, in fact, has been paid by Fireman's Fund to a member of the public, Alfred Zecarrdi [sic].

Nevertheless, given its reliance*fn17 on the ICC endorsement, Empire's contention must be rejected, ala Carolina Casualty, 595 F.2d at 138 ("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") (quoting Allstate, 368 F.2d 121, 125 (3d Cir. 1966)); see Diamond State, 47 F. Supp.2d at 590. On the other hand, without citing caselaw or relevant policy provisions, FFIC maintains that, because it does not insure the tractor — i.e., the "covered auto" contemplated in § V(B)(6)(a) of Empire's policy — its policy is not "other collectible insurance."*fn18

"When interpreting a contract of insurance it is necessary to consider the intent of the parties as manifested by the language of the instrument." Bowers v. Feathers, 448 Pa. Super. 263, 268, 671 A.2d 695, 697 (1995). Because the parties have not discussed the meaning of "other collectible insurance" in Empire's policy or cited applicable caselaw, no ruling will be made at this time. The parties will be directed to submit further argument on the issue not inconsistent with this opinion.*fn19

An order follows.

ORDER

AND NOW, this 19th day of April, 2001, the parties are directed to submit further argument by May 4, 2001, as set forth in the accompanying memorandum.


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