Prime Insurance Company v. Darnell Wright

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 22-1002
PRIME INSURANCE COMPANY,
Plaintiff-Appellant,
v.
DARNELL WRIGHT,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Indiana, Fort Wayne Division.
No. 1:19-CV-478 — William C. Lee, Judge.
____________________
ARGUED DECEMBER 1, 2022 — DECIDED JANUARY 13, 2023
____________________
Before EASTERBROOK, HAMILTON, and KIRSCH, Circuit
Judges.
EASTERBROOK, Circuit Judge. Decardo Humphrey was a
driver for Riteway Trucking. All of his trips began in South
Holland, Illinois. Riteway would send him to a destination,
often in another state; after unloading his truck, Humphrey
would receive instructions about where to pick up his next
load, which he would take to South Holland or another desti-
nation. He always ended up in Illinois to start another trip.

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2 No. 22-1002
In November 2013 Humphrey drove a truck to Fort
Wayne, Indiana. After he dropped off the freight, Riteway di-
rected him to another site in Fort Wayne, where he was to pick
up a load. While en route to the pickup site, Humphrey’s
truck collided with a car driven by Darnell Wright. After co-
operating with Wright and the police, Humphrey picked up
his new load and delivered it in Illinois.
Wright, who accused Humphrey of negligence, eventually
sued Riteway in a state court of Indiana. Riteway did not ap-
pear, and a default judgment for $400,000 was entered against
it. Riteway also did not cooperate with Prime Insurance Co.
and thus forfeited the benefit of the policy that Prime had is-
sued.
Although Riteway lost its insurance coverage, the policy
contained an endorsement known as the MCS-90 (“the En-
dorsement”), which provides payments to an injured party
even when the insurer need not defend or indemnify its client.
A federal court determined that Riteway’s obduracy had cost
it the benefit of Prime’s policy but reserved all questions
about whether Wright could recover under the Endorsement.
The state’s judiciary declined to allow Prime to a`ack the de-
fault judgment. Prime Insurance Co. v. Wright, 133 N.E. 3d 749
(Ind. App. 2019). This led Prime to file a second suit in federal
court, seeking a declaratory judgment that the Endorsement
does not entitle Wright to any money. The district court held
that the Endorsement applies and ordered Prime to pay up.
2021 U.S. Dist. LEXIS 228400 (N.D. Ind. Nov. 30, 2021).
Prime contends that we should follow the “trip specific”
approach adopted by Canal Insurance Co. v. Coleman, 625 F.3d
244 (5th Cir. 2010). Under this approach, the Endorsement ap-
plies only when a truck is loaded with freight and moving

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No. 22-1002 3
from one state to another at the moment of the collision.
Wright urges us to follow the “fixed intent” approach used in
Century Indemnity Co. v. Carlson, 133 F.3d 591 (8th Cir. 1998).
Under that approach, the Endorsement applies when the
driver has a fixed intent to transport freight across state lines
in the near future. The district court instead used what it
called a “totality of the circumstances” approach. Decisions
by district courts across the country support all three possibil-
ities.
The Endorsement reads:
In consideration of the premium stated in the policy to which this
endorsement is aIached, 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 ter-
ritory authorized to be served by the insured or elsewhere. Such
insurance as is afforded, for public liability, does not apply to in-
jury to or death of the insured’s employees while engaged in the
course of their employment, or property transported by the in-
sured, designated as cargo. It is understood and agreed that no
condition, provision, stipulation, or limitation contained in the
policy, this endorsement, or any other endorsement thereon, or
violation thereof, shall relieve the company from liability or from
the payment of any final judgment, within the limits of liability
herein described, irrespective of the financial condition, insol-
vency or bankruptcy of the insured. However, all terms, condi-
tions, and limitations in the policy to which the endorsement is
aIached shall remain in full force and effect as binding between
the insured and the company. The insured agrees to reimburse the
company for any payment made by the company on account of
any accident, claim, or suit involving a breach of the terms of the
policy, and for any payment that the company would not have

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4 No. 22-1002
been obligated to make under the provisions of the policy except
for the agreement contained in this endorsement.
This is windy and stilted, but the core undertaking is straight-
forward. Prime agreed to pay any judgment “resulting from
negligence in the operation, maintenance or use of motor ve-
hicles subject to the financial responsibility requirements of
Sections 29 and 30 of the Motor Carrier Act of 1980”.
The fact that these statutes have been repealed, and that
the laws governing truck transportation have been recodified
since the Endorsement’s language was specified by a federal
regulation, introduces some complexity. Our path has been
simplified by the parties’ agreement that the pertinent lan-
guage now appears in 49 U.S.C. §31139(b)(1). This says:
The Secretary of Transportation shall prescribe regulations to re-
quire minimum levels of financial responsibility sufficient to sat-
isfy liability amounts established by the Secretary covering public
liability, property damage, and environmental restoration for the
transportation of property by motor carrier or motor private car-
rier (as such terms are defined in section 13102 of this title) in the
United States between a place in a State and—
(A) a place in another State;
(B) another place in the same State through a place outside of
that State; or
(C) a place outside the United States.
The regulation issued under this provision, which includes
the Endorsement’s language, can be found at 49 C.F.R. §387.7.
Section 31139(b)(1) does not call on courts or the Secretary
to investigate the “totality” of circumstances. It does not re-
quire the Secretary or the judiciary to probe anyone’s intent.
It offers a bit of support for Coleman, because it includes the
phrase “transportation of property”, which Coleman

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No. 22-1002 5
expounded. But it does not include the qualifier “at the time
of the accident” or anything similar. Nor does 49 U.S.C.
§13102, to which §31139 refers.
Still, §13102(23)(B) is helpful, because it defines “transpor-
tation” to include “services related to that movement, includ-
ing arranging for, receipt, delivery, elevation, transfer in
transit, refrigeration, icing, ventilation, storage, handling,
packing, unpacking, and interchange of passengers and prop-
erty.” This tells us that carrying freight at the instant of a col-
lision is not essential to “transportation”; the word is more ca-
pacious. Transportation remains essential, and that transpor-
tation must be interstate or international. Section 13501 sup-
plies the general rule for identifying that kind of transporta-
tion. Under §13501, all motor freight transportation from a
place in one state to a place in another is covered.
Humphrey was engaged in interstate freight transporta-
tion under the definition in §13501, as supplemented by
§13102(23)(B). He set out from Illinois to Indiana, where he
dropped some freight and picked up more, which he returned
to Illinois. During this journey his truck and Wright’s car col-
lided. The brief time that the truck was empty in Indiana is
easily described as movement arranging for the interchange
of property: loads must be picked up before they can be de-
livered. This means that the Endorsement applies. Cf. South-
west Airlines Co. v. Saxon, 142 S. Ct. 1783 (2022) (loading bag-
gage into an airplane’s hold is an activity in interstate com-
merce, for the purpose of 9 U.S.C. §1, even though the loader
never moves across a state line).
We have avoided “tests” by tracing the vital language. The
Endorsement asks whether particular travel was subject to
certain financial responsibility requirements. That sends us to

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6 No. 22-1002
§31139, which sends us to §13102(23). Section 13501 adds a
general definition. None of these destinations tells us to ask
about anyone’s intent, about whether a truck was carrying
freight at the moment of impact, or about the “totality” of an-
ything (let alone what would be in the list of circumstances
that must be totally contemplated). All we need to know is
whether the collision occurred during an interstate journey to
deliver freight or one of the steps mentioned in §13102(23)(B).
The answer to that question is “yes.”
Prime’s other arguments do not require discussion. It is
not entitled to relitigate the state court’s decision in favor of
the default judgment. 28 U.S.C. §1738. And the award of in-
terest from the date of the state judgment is not problematic.
AFFIRMED

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