National Specialty Insurance Company v. Audrey Martin-Vegue

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 14-15811
Non-Argument Calendar
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D.C. Docket No. 2:13-cv-14431-DLG
NATIONAL SPECIALTY INSURANCE COMPANY,
Plaintiff-Appellee,
versus
AUDREY MARTIN-VEGUE,
individually and as Personal Representative
of the Estate of Howard Martin-Vegue,
Defendant-Appellant.
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Appeal from the United States District Court
for the Southern District of Florida
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(February 25, 2016)
Before TJOFLAT, WILSON and JULIE CARNES, Circuit Judges.
PER CURIAM:
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This appeal arises out of a declaratory judgment action that Plaintiff
National Specialty Insurance Company (“Plaintiff” or “the insurance company”)
brought against Defendant Audrey Martin-Vegue to determine the applicability of
an insurance policy in connection with a fatal trucking accident. The district court
denied coverage under the policy at issue and granted summary judgment to
Plaintiff. After careful review, we affirm.
I. Background
On November 29, 2012, Andrii Plys was driving a tractor trailer carrying a
load of Mexican beach pebbles from Gardena, California, to Delray Beach,
Florida. During the trip, Plys collided with Howard Martin-Vegue’s vehicle on
Interstate 95 in Martin County, Florida, causing collisions with several other cars
and resulting in Martin-Vegue’s death. Defendant, Martin-Vegue’s surviving
spouse, filed a lawsuit in Florida state court against Plys and motor carrier ABS
Transport, Inc. (“Transport”).1 Although the facts of the underlying accident are
not in dispute for the purpose of this appeal, the parties dispute whether Plys was
operating the tractor trailer on behalf of Transport or on behalf of another company
with a similar name, ABS Freight Transportation, Inc. (“Freight”). Plaintiff
insurance company issued insurance liability policies to both companies, and in
fact Plaintiff has already paid the policy limits under Transport’s insurance plan.
1 Defendant filed suit on her own behalf and as the personal representative of her husband’s
estate.
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Yet as explained more fully below, Defendant argues that she may recover under
Freight’s policy as well. In short, the Freight policy applies if Plys was driving on
behalf of Freight. But if Plys was driving on behalf of Transport, then there is no
coverage.
A. The Relationship Between Freight and Transport
Freight and Transport were motor carriers with connections both to the
accident and to each other. The individual owners of Freight and Transport used to
be married to each other but were separated at the time of the November 2012
accident. Freight’s owner is Nenad Bojkovski; Transport’s owner was Kristina
Mangarova until she dissolved the company. While married, the couple worked
for Freight, but in March 2012, around the time Mangarova separated from her
husband, she left Freight and created Transport.2
Freight then leased the trailer involved in the accident to Transport under an
equipment lease agreement dated October 15, 2012. At the time of the accident,
the tractor Plys was driving displayed Transport’s name and U.S. Department of
Transportation identification number. Transport had leased the tractor from an
independent trucking company called Deen, LLC. Under the lease agreement,
Deen also provided one of its employees, the driver Plys, to drive the tractor for
2 Mangarova actually created a company under the name KM Freight in 2008 before marrying
Bojkovski, but the company was dormant until they separated in 2012, at which point the wife
changed the company name to ABS Transport, Inc.
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Transport. According to Plys, he never drove for Freight, although Freight owned
the trailer he was pulling on the day of the crash. Thus, on the day of the
November 29, 2012, accident, the tractor, trailer, and driver were all leased to
Transport.
Making matters more complicated, even though the above indicates that
Transport was the lessee of the trailer at the time of the accident, there is
paperwork from before the accident showing that Freight agreed to carry the
pebbles involved in the crash. One of the documents is a Confirmation of Contract
Carrier Verbal Agreement (“Carrier Contract”) between a dispatcher for Freight
and a trucking broker named International Commodity Carriers Corporation
(“ICCI”). ICCI links motor carriers like Freight and Transport with customers in
need of someone to transport their goods. When a motor carrier begins working
with ICCI, it must enter into a contract and confirm it has authority to operate as a
motor carrier under federal regulations and has appropriate insurance. Dispatchers
for motor carriers can then access postings showing loads available for truckers to
haul. When a dispatcher wants to take a certain job, he calls ICCI and negotiates a
rate for the shipment.
In this case, the ICCI Carrier Contract confirmed a verbal agreement for
Freight to haul the pebbles from California to Florida. Freight’s name and contact
information are included on the document, so one may possibly infer that someone
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from Freight called ICCI to arrange transport of the pebbles.3 The Carrier Pickup
& Delivery Schedule (“Delivery Schedule”), another pre-haul document ICCI
generated, similarly identifies Freight.
B. Procedural Background
Freight and Transport each held $1 million insurance policies issued by
Plaintiff. After Defendant filed her state-court lawsuit against Transport and Plys,
she entered into a settlement agreement under which she “fully and finally settle[d]
and terminate[d] any and all past, present, or future” claims against Transport
related to the accident. As to Plys, she settled all claims “except to the extent that
there is other liability insurance coverage available to [him].” This settlement
exhausted the $1 million limits of Transport’s policy.
After the settlement, Plaintiff filed this declaratory action seeking a ruling
that it owes no coverage under Freight’s insurance policy because (1) Plys is not an
insured under its terms and (2) the MCS-90 endorsement4—which guarantees a
3 The Carrier Contract identifies the dispatcher who entered into the verbal agreement with
ICCI. His e-mail address bears the domain name “@abstransport.com.” Confusingly,
employees of both Freight and Transport used that domain name. Defendant argues that the
document on its face is evidence the dispatcher must have worked for Freight. Yet Mangarova
testified that the dispatcher worked on behalf of Transport only, and Bojkovski denies Freight
ever employed him. Ultimately, for the reasons discussed infra, we find that the Carrier Contract
and the employer of the dispatcher are not material to our ultimate inquiry of who hauled the
goods.
4 An MCS-90 endorsement is an endorsement added to a trucker’s insurance policy to satisfy
federal motor-carrier regulations requiring minimum levels of financial responsibility. See 49
U.S.C. § 31139(b); 49 C.F.R. § 387.15.
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minimum level of coverage in the event Freight becomes liable but coverage is
otherwise excluded under the policy’s terms—does not apply. The Freight policy
defines “insureds” as follows:
a. You for any covered “auto”.
b. Anyone else while using with your express or implied
permission a covered “auto” you own, hire or borrow. However, none
of the following are “insureds” under this subparagraph:
. . . .
(8). Anyone that is using an “auto” of yours under a written
lease or trailer interchange agreement.
Plaintiff maintains that Plys falls under the exclusion found in subsection (8)
because Plys was using a trailer that was leased to Transport at the time of the
accident.
During discovery for this action, Defendant obtained the ICCI pre-haul
documents bearing Freight’s information. Now contending that Freight, not
Transport, was the actual motor carrier responsible for the accident, Defendant
amended her complaint in the Florida suit to add it as a defendant. And because
Defendant’s settlement agreement with Plys allows her to sue him based on any
other liability insurance he has, Defendant seeks additional recovery from Plys
under the Freight liability policy, arguing that he was using the trailer on Freight’s
behalf, and not pursuant to a written lease agreement with Transport.
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To resolve this coverage issue, the parties filed cross-motions for summary
judgment in this action. The district court granted summary judgment to Plaintiff,
the insurance company in this action. Based on the record evidence, the court
concluded that “Transport, not Freight, was the motor carrier for-hire at the time of
the accident.” Thus, because Plys was operating the leased trailer on behalf of
Transport, the court found that Plys is not an insured under subparagraph (8) of the
Freight policy’s exclusions. In addition, the court reasoned that the MCS-90
endorsement is inapplicable because Freight was not the for-hire motor carrier.
Defendant argues on appeal that the district court erred in denying coverage
because there are factual disputes about (1) Plys’s status as an insured under the
Freight policy and (2) whether the MCS-90 endorsement applies to the accident.
II. Standard of Review
“We review a district court’s grant or denial of summary judgment de novo,
considering all the facts and reasonable inferences in the light most favorable to the
nonmoving party.” Norfolk S. Ry. Co. v. Groves, 586 F.3d 1273, 1277 (11th Cir.
2009). Summary judgment is appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, 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 judgment as a matter of law.” Fed. R. Civ. P. 56(c); Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). “An issue of fact is ‘material’ if, under the
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applicable substantive law, it might affect the outcome of the case.” Hickson
Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1259–60 (11th Cir. 2004).
III. Discussion
We first examine whether the district court erred in finding as a matter of
law that Plys is not an insured under the Freight policy. Then we decide if any
other coverage is available under Freight’s MCS-90 endorsement.
A. Coverage of Plys under the Freight Insurance Policy
Again, in the section of the Freight policy defining the insureds, “[a]nyone
that is using an ‘auto’ of yours under a written lease or trailer interchange
agreement” is denied coverage. An “auto” includes a trailer or semitrailer. The
parties agree that Illinois law governs the Freight policy, and Illinois courts require
that the unambiguous terms of insurance policies be given their plain, ordinary,
and popular meaning. Outboard Marine Corp. v. Liberty Mut. Ins. Co., 607
N.E.2d 1204, 1212 (Ill. 1992).
In deciding whether Plys was using the trailer under a written lease, we look
not only to whether a written lease existed, but also to whether Plys was in fact
using the trailer on behalf of Transport. First, there is no genuine dispute that a
written lease existed. Defendant contends there is evidence that the October 15,
2012 agreement was in fact created after the November 29, 2012 accident. She
suggests that Bojkovski had an incentive to shift responsibility from Freight to
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Transport to prevent the accident from adding to his company’s already poor
driving record. As evidence that the lease was created after the November 2012
accident, Defendant notes that Mangarova signed the lease on Transport’s behalf
using the last name “Mangarova,” not “Bojkovski.” Defendant argues that
Mangarova was still married to Bojkovski when the lease was purportedly
executed, so the fact that she signed the name “Mangarova” means that the
agreement was manufactured sometime after the couple’s divorce following the
November accident.
We are unpersuaded. Mangarova testified that she usually signed documents
using her own last name even while married, and besides, she and Bojkovski were
already separated when she signed the agreement. Furthermore, Defendant’s claim
that Mangarova’s signature on the lease does not conform to her signature on other
documents is unfounded. Mangarova’s signature on the lease appears to match the
one on her affidavit filed in this litigation. There is no evidence the signature is
forged, and a jury could not reasonably infer from these arguments that Mangarova
created the equipment lease after the November accident. As a result, the
undisputed evidence demonstrates that a written lease for the trailer existed when
Plys caused the accident.
The undisputed evidence also shows that Plys was using the trailer under the
written lease, as required by the exclusion. First, and contrary to Defendant’s
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argument, the Carrier Contract is not evidence that Freight was the motor carrier.
For one thing, a representative from ICCI confirmed that sometimes a company
contracts to haul a load even though another company ends up as the carrier. This
practice––“double broking,” as ICCI called it in the Carrier Contract––voids the
initial contract. So, if the contracting carrier performs as agreed, ICCI pays upon
receipt of an invoice and a bill of lading. But if another carrier hauls the load,
ICCI would pay the actual carrier as long as that carrier has authority to haul under
federal regulations, carries sufficient insurance, and produces the signed bill of
lading showing it in fact transported the goods. Therefore, that Freight entered into
the Carrier Contract does not determine who actually hauled the goods.
And here, all the evidence concerning the identity of the transporter of the
pebbles points to Transport. Defendant does not dispute that Transport leased both
the tractor and driver involved in the accident. As explained above, Transport also
leased the trailer. Mangarova and Plys testified that the latter worked exclusively
for Transport; Bojkovski confirmed that Freight never employed him. In fact, the
tractor Plys drove displayed Transport’s name and DOT number. There is no
dispute that Transport had authority to haul as a motor carrier and carried sufficient
insurance. Plys even signed the bill of lading for the goods. Transport thus
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fulfilled ICCI’s requirements for payment.5 Defendant fails to contradict any of
this evidence.6
We further find that the district court did not improperly credit Bojkovski
and Mangarova’s testimony. Defendant accuses them of altering a copy of the
ICCI Delivery Schedule to remove Freight’s identifying information and to
conceal its involvement in the accident.7 Given this accusation, she asserts that
Bojkovski and Mangarova’s testimony is unreliable, and so a jury must determine
their credibility. Offering evidence for impeachment purposes, however, cannot
create a genuine issue of fact at the summary judgment stage. See McMillian v.
Johnson, 88 F.3d 1573, 1584 (11th Cir. 1996) (holding that impeachment evidence
is not substantive and “may not be used to create a genuine issue of material fact
for trial”). Setting aside Defendant’s credibility arguments (upon which she relies
heavily), there is no substantive evidence that Plys was hauling the goods for
Freight when he caused the fatal accident.
5 For what it’s worth, which appears to be little, nobody has attempted to claim payment for the
load of pebbles.
6 Defendant takes issue with the district court’s failure to consider an expert witness who opined
that Freight was the motor carrier for the goods. That expert looked at the ICCI documents and
concluded that Freight was assigned the load and was therefore the motor carrier. But as
explained, we agree with the district court that the pre-haul documents do not create a genuine
issue for trial because all the evidence shows that Transport was the actual carrier on the day of
the accident, whether or not Freight entered into a Carrier Contract.
7 At some point, Transport supplied Plaintiff with a copy of the Delivery Schedule that omitted
references to Freight. Still, nobody disputes that the accurate version of the Delivery Schedule
from ICCI names Freight.
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In sum, the undisputed evidence demonstrates that Plys was using the trailer
under a written lease, on behalf of Transport, at the time of the accident.
Consequently, based on the plain terms of the Freight policy’s exclusions, Plys is
not an insured.
B. Applicability of the Freight Policy’s MCS-90 Endorsement
The second issue on appeal is whether, notwithstanding the exclusion of
coverage under the Freight policy’s terms, the MCS-90 endorsement applies to the
underlying accident to guarantee a minimum level of coverage. The Motor Carrier
Act of 1980 (“MCA”), in addition to deregulating the trucking industry and
reducing barriers to entry, addressed safety issues and financial responsibility for
trucking accidents. See Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868, 873 (10th
Cir. 2009). In particular, Congress addressed “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.” Canal Ins. Co. v.
Distribution Servs., Inc., 320 F.3d 488, 489 (4th Cir. 2003). To that end, the MCA
imposes a minimum insurance requirement on each motor carrier registered to
engage in interstate commerce. Id.; see also 49 U.S.C. § 31139(b) (stating that the
MCA’s minimum financial obligations apply to “motor carriers”). Motor carriers
transporting non-hazardous property must demonstrate financial responsibility of
at least $750,000. 49 C.F.R. § 387.9. They must further establish proof of that
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responsibility in one of three ways: “(1) by an MCS-90 endorsement, (2) by a
surety bond, or (3) by self-insurance.” Yeates, 584 F.3d at 874; see also 49 C.F.R.
§ 387.7(d)(1)–(3).
The regulations implementing the MCA provide the specific forms required
to establish proof of financial responsibility, including the MCS-90 endorsement
relevant to this case. That endorsement provides, in part:
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.
49 C.F.R. § 387.15 (emphasis added).
Federal law controls the interpretation and operation of the MCS-90.
Distribution Servs., 320 F.3d at 492. While the Eleventh Circuit has not
extensively analyzed this endorsement, a majority of courts treat “the insurer’s
obligation under the MCS-90 endorsement as one of a surety.” Yeates, 584 F.3d at
878 (collecting cases). In that regard, this obligation is triggered only when:
(1) the underlying insurance policy (to which the endorsement is
attached) does not provide liability coverage for the accident, and (2)
the carrier’s other insurance coverage is either insufficient to meet the
federally-mandated minimums or non-existent.
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Id. at 879; see also T.H.E. Ins. Co. v. Larsen Intermodal Servs., Inc., 242 F.3d 667,
672 (5th Cir. 2001) (explaining that “the insurer’s obligations under the MCS-90
are triggered when the policy to which it is attached provides no coverage to the
insured”). If a motor carrier’s insurance pays a judgment satisfying the regulatory
minimum, the goal of public financial responsibility has been accomplished and
the endorsement does not apply. See id.
Here, Defendant argues that the endorsement guarantees payment of a
judgment of up to $1 million against Freight, even if coverage is excluded under
the terms of the policy, because Freight was the for-hire motor carrier of the load
of pebbles.8 Federal regulations define a for-hire motor carrier as a carrier in “the
business of transporting, for compensation, the goods or property of another.” 49
C.F.R. § 387.5. So, to decide if Freight’s MCS-90 endorsement could possibly
apply here, the relevant question is whether Freight was the for-hire motor carrier
for the pebbles at the time of the accident.9
8 The parties do not dispute that the MCS-90 would satisfy a judgment against only the policy’s
named insured––in this case, Freight. See, e.g., Ooida Risk Retention Grp., Inc. v. Williams, 579
F.3d 469, 477–78 (5th Cir. 2009) (explaining that federal regulations define the “insured” as “the
motor carrier named in the policy of insurance, surety bond, [or] endorsement” (emphasis in
original) (quoting 49 C.F.R. § 387.5)); Armstrong v. U.S. Fire Ins. Co., 606 F. Supp. 2d 794,
823–26 (E.D. Tenn. 2009) (concluding “that the only sensible reading and interpretation of the
MCS-90 is that ‘the insured’ is the named insured”).
9 The parties agree that the time of the accident is the relevant focal point in deciding Freight’s
status––and thus whether it was subject to the MCA’s financial responsibility requirements.
Other courts agree that it is proper to “determine[] the MCS-90’s applicability with reference to
time of the loss.” Canal Ins. Co. v. Coleman, 625 F.3d 244, 250–51 (5th Cir. 2010) (collecting
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As we already discussed, there is no genuine dispute that Plys was hauling
the pebbles on behalf of Transport. Although Defendant contends that Freight was
the for-hire motor carrier if it was entitled to payment for the haul, Transport
fulfilled ICCI’s requirements for payment. Transport had authority to haul as a
motor carrier and carried sufficient insurance. Plys, who always drove on behalf of
Transport, also signed the bill of lading for the goods. There is thus no colorable
evidence Freight was the for-hire motor carrier engaged in “the business of
transporting, for compensation, the goods or property of another” when Plys
caused the fatal accident. 10 Id. Instead, all the evidence shows Plys was driving
for Transport. Because Transport was therefore the motor carrier for hire, not
cases). For that reason, whether Freight initially entered into the Carrier Contract is not relevant
to the applicability of the MCS-90.
10 We also find no evidence of a joint venture between Freight and Transport under the laws of
Illinois (where both companies were based). We agree with the district court that Defendant fails
to produce evidence of many of the elements of a joint venture, including an agreement to carry
on a joint enterprise, joint control over the enterprise, and the sharing of profits and losses. See
Yokel v. Hite, 809 N.E.2d 721, 727 (Ill. App. Ct. 2004) (stating that the criteria for a joint venture
are: “(1) an express or implied agreement to carry on a joint enterprise, (2) a manifestation of
that intent by the parties, (3) a joint proprietary interest, as demonstrated by the contribution of
property, finances, effort, skill, or knowledge by each party to the joint venture, (4) some degree
of joint control over the enterprise, and (5) a provision for the parties to share in both the profits
and the losses of the enterprise”).
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Freight, the district court properly ruled that Freight’s MCS-90 endorsement is not
implicated.11
IV. Conclusion
For the foregoing reasons, we affirm the district court’s entry of summary
judgment in favor of Plaintiff.
AFFIRMED.
11 Plaintiff made several other arguments about why the MCS-90 should not apply here even if
Freight were the for-hire motor carrier. Given our ruling above, we need not address Plaintiff’s
alternative arguments.
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