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Parsing the MCS-90 endorsement

Parsing the MCS-90 endorsement

Parsing the MCS-90 endorsement
April 29
12:37 2022

INSURANCE-RELATEDCOURTCASES

Digested from case reports published online

COURT DECISIONS

Parsing the MCS-90 endorsement

The federal Motor Carrier Act of 1980 requires some motor carriers to maintain minimum levels of financial responsibility. One way carriers can comply with these requirements is by adding an MCS-90 endorsement to their insurance policy. This endorsement provides that if a motor vehicle is involved in an accident, the insurer may be required to pay any final judgment against the insured arising out of the accident.

B&T Bulk is a motor carrier based in Mishawaka, Indiana, and operates in both Indiana and Michigan. In 2017,a B&T Bulk employee, Bruce Brown, was driving a truck and empty trailer to pick up a load of cement in Logansport, Indiana, for delivery to South Bend, Indiana. Brown’s truck crossed the center line and struck Dona Johnson’s oncoming vehicle. She died in the collision.

Before the accident, B&T Bulk had bought a commercial auto policy from Progressive Southeast Insurance Company. But at the time of the accident, the truck and trailer were not listed on the policy. The policy did have an MCS-90endorsement, however, creating a suretyship whereby Progressive agreed to pay a final judgment against B&T Bulk in certain negligence cases.

Johnson’s widower filed a wrongful death action against Brown and B&T Bulk, individually and on behalf of Johnson’s estate. Progressive filed a separate cause of action, seeking a declaration that (1) it had no duty to defend or indemnify B&T Bulk or Brown because the truck and trailer involved in the accident were not listed in the policy as insured autos; and (2) the MCS-90 endorsement did not apply. State Farm, Johnson’s insurance carrier, intervened in the declaratory action. Progressive, B&T Bulk, Brown, Johnson’s husband, and Johnson’s estate, joined by State Farm, filed cross-motions for summary judgment.

The trial court entered an order finding that (1) Progressive had no duty to defend or indemnify Brown; (2) the truck and trailer were not insured autos; and (3) the MCS-90 endorsement applied.

Progressive appealed only on the MCS-90 issue. The court of appeals affirmed, holding that the MCS-90 endorsement applied. Progressive sought transfer, which the court granted, thus vacating the appellate opinion.

On appeal, the Indiana Supreme Court stated that the sole issue was whether the MCS-90 endorsement applied to intrastate trips transporting nonhazardous property. The court held that it did not and reversed the trial court’s decision.

According to the court, whether MCS-90 applied in this situation depended on whether Brown was engaged in interstate commerce at the time of the accident. The court held that he was not.

The supreme court affirmed the trial court’s judgment that Progressive had no duty to defend or indemnify Brown and reversed its judgment that the MCS-90 endorsement applied.

Progressive Southeastern Insurance Company v. Brown et al.—Indiana Supreme Court—February 25, 2022—No. 21S-CT-496.

 

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Jim Brooks

Jim Brooks

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