Indiana Supreme Court reverses ruling on MCS-90 endorsement

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A trucking company and its driver involved in a fatal collision will not be able to rely on the insurance company’s MCS-90 endorsement after the Indiana Supreme Court ruled the coverage does not apply to an accident during an intrastate trip where non-hazardous materials were being transported.

Bruce Brown, an employee of B&T Bulk, a motor carrier in Mishawaka, was driving an empty trailer to pick up a load of cement when he crossed the centerline and collided with Dona Johnson. She died as a result.

Johnson’s widower filed a wrongful-death action against Brown and B&T Bulk. Progressive Insurance Co., which covered the motor carrier, filed a separate cause of action, seeking, in part, a declaration that the MCS-90 endorsement does not apply. Under an MCS-90 endorsement, the insurer may be required to pay any final judgment against the insured arising out of an accident.

The Carroll Circuit Court entered an order finding, among other things, that the MCS-90 endorsement applied. Progressive appealed and the Court of Appeals of Indiana affirmed in Progressive Se. Ins. Co. v. B&T Bulk, LLC, 170 N.E.3d 1125, 1134 (Ind. Ct. App. 2021).

Granting transfer, the Indiana Supreme Court reversed the trial court. The unanimous court found the MCS-90 endorsement does not apply to an accident that occurred during an intrastate trip transporting non-hazardous property.

As the justices noted, the MCS-90 is an endorsement to an underlying insurance policy between the motor carrier and its insurer. The endorsement, as held by Canal Ins. Co. v. Coleman, 625 F.3d 244, 247 (5th Cir. 2010), “obligates an insurer to pay certain judgments against the insured … even though the insurance contract would have otherwise excluded coverage.” It also requires the insured to reimburse the insurer for any payment made to the public under the endorsement.

In this case, the parties agreed that Brown was on an intrastate trip at the time of the accident. And Appellees do not argue that Brown intended to leave Indiana at any point on his trip. Therefore, the Supreme Court concluded, under either the trip-specific or fixed-intent-of-the-shipper approach, Brown was not engaged in interstate commerce at the time of the accident.

The justices held that under federal law that the MCS-90 endorsement does not apply to this accident in Progressive Southeastern Insurance Company v. Bruce A. Brown, et al., 21S-CT-496.

Yet, the Supreme Court maintained that it also had to address the appellees’ argument that under Indiana law, the MCS-90 applied to motor carrier transporting non-hazardous property within the state.

The justices held the issue was whether Indiana Code § 8-2.1-24-18(a) expands 49 C.F.R. Part 387 beyond what the federal law requires.

Specifically, the appellees argued that section 18(a) expands the financial responsibility requirements to all intrastate motor carriers, regardless of what type of property they are transporting. They relied on the fact that section 18(a) does not limit Part 387’s applicability to certain types of intrastate carriers.

Ultimately, the Supreme Court found the argument unavailing.

“We recognize that today’s opinion is at odds with our court of appeals’ opinion in Sandberg Trucking, Inc. v. Johnson, 76 N.E.3d 178 (Ind. Ct. App. 2017),” Justice Geoffrey Slaughter wrote for the court. “In Sandberg, the court held that 49 C.F.R. § 392.22 applied to motor carriers engaged in purely intrastate commerce, despite a contrary federal regulation. The court reasoned that it would be absurd to hold that the general assembly ‘went to the trouble of adopting federal regulations and specifically making them applicable to intrastate commerce while simultaneously adopting one that nullified the entire adoption.’ But this approach asks us to ignore the plain language of section 18(a).

“Again, were we to agree with the Sandberg court’s interpretation, we would have to read each provision of each regulation and determine when replacing ‘interstate’ with ‘intrastate’ made sense with our understanding of the legislature’s policy goals under section 18(a),” Slaughter continued. “We decline to impose our own value judgments for those the legislature could have enacted but did not. Thus, to the extent Sandberg is at odds with our opinion today, we overrule it.”

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