Present: Hassell, C.J., Koontz, Kinser, Lemons, and Agee,
JJ., and Russell and Lacy1, S.JJ.
CRAIG K. HERON, JR., ET AL. OPINION BY
SENIOR JUSTICE CHARLES S. RUSSELL
v. Record No. 061813 September 14, 2007
TRANSPORTATION CASUALTY INSURANCE COMPANY
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
Lydia Calvert Taylor, Judge
The Federal Motor Carrier Act of 1980, Pub. L. 96-296, 94
Stat. 793 (1980), requires entities registered as interstate
motor carriers with the Federal Motor Carrier Safety
Administration (FMCSA) to maintain liability insurance for the
protection of the public. 94 Stat. at 820-32.2 The requisite
insurance is provided by a federally-mandated form called an
“MCS-90” endorsement, and is a required part of any policy of
insurance maintained by a registered interstate motor carrier.
This appeal presents the question whether MCS-90 coverage
extends to judgments recovered against a registered interstate
motor carrier arising from negligence in the operation of a
vehicle engaged in a purely intrastate haul.
1
Justice Lacy participated in the hearing and decision of
this case prior to the effective date of her retirement on
August 16, 2007.
2
The codification of these provisions is currently found
in 49 U.S.C. §§ 13906, 31138 and 31139 (2000 & Supp. IV 2004).
Federal regulations implementing the requirements of the
statutes and setting forth the text of the required
endorsement may be found in 49 C.F.R. at §§ 387.1 et seq.,
particularly §§ 387.7, 387.9, and 387.15 (2006).
Facts and Proceedings
The essential facts are stipulated. ER Transport
Services, Inc. (ER) is a Florida corporation with its
principal place of business in Miami, Florida. ER was
registered with the FMCSA as an interstate motor carrier and
its vehicle bore its motor carrier number (formerly called an
ICC number) at the time of the events in question. ER
obtained an insurance policy with Transportation Casualty
Insurance Company (TCI) through an insurance broker in
Florida, disclosing that ER was engaged in operations in
various states, and furnishing its motor carrier number so
that the policy would conform to FMCSA requirements. The
policy, issued on February 3, 2004, contained the MCS-90
endorsement, which reads in pertinent 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.
Fifty percent of ER’s business consisted of hauling mulch
resulting from tree removal, as well as other debris caused by
hurricane damage. On February 23, 2004, ER’s employee, Arturo
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M. Rosello, who had traveled from Florida to Virginia the
previous day, was driving a tractor-trailer owned by ER in the
City of Virginia Beach. Rosello’s destination was nearby
Chesapeake, Virginia, where the vehicle was to be measured to
haul mulch. The mulch, in turn, was to be delivered to
Suffolk, Virginia. While driving on Interstate 64 in Virginia
Beach, Rosello’s tractor-trailer collided with an automobile
operated by Craig K. Heron. Craig K. Heron and Alma P. Heron
were killed and their daughter, Cassandra S. Heron, suffered
serious and permanent injuries.
TCI brought a motion for declaratory judgment in the
circuit court against the estates of Craig and Alma Heron and
the guardian of Cassandra Heron, seeking a judicial
determination that the insurance policy issued by TCI to ER
provided no coverage for the accident and that TCI had no
obligation to pay any judgment that might be rendered as a
result of it. After hearing the case on stipulated facts,
exhibits and depositions, the court ruled that the MCS-90
endorsement only applies to accidents that occur in the course
of transportation in interstate commerce. The accident in
question here, the court reasoned, occurred while the driver
of the tractor-trailer was engaged in an activity that was
exclusively intrastate, and therefore the MCS-90 coverage was
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not available.3 The Court entered a final declaratory judgment
order consistent with that ruling and we awarded an appeal to
the guardian and the personal representatives of the Herons.
Analysis
Because this appeal turns entirely upon a question of
law, we review the circuit court’s decision de novo. PMA
Capital Ins. Co. v. US Airways, Inc., 271 Va. 352, 357-58, 626
S.E.2d 369, 372 (2006). The language of the MCS-90
endorsement has been interpreted and applied by several courts
which have reached differing conclusions.4 The circuit court
analyzed those authorities and concluded that the language of
the endorsement should be interpreted in the light of the
federal statutes and regulations that engendered its use.
3
Because Rosello had a bad driving record, the policy
explicitly excluded him as a covered driver. The parties
stipulate that the policy affords no coverage for the accident
unless coverage is provided by the MCS-90 endorsement.
4
See, e.g., Century Indem. Co. v. Carlson, 133 F.3d 591,
594 (8th Cir. 1998) (MCS-90 applies only to motor carriers
engaged in interstate commerce); Reliance Nat'l Ins. Co. v.
Royal Indem. Co, No. 99 Civ. 10920 (NRB), 2001 U.S. Dist.
LEXIS 12901, at *15-21 (S.D.N.Y. Aug. 24, 2001) (when a
shipper enters into a lease for a vehicle with the clear
intent of using it for interstate shipping services, MCS-90
applies to a single intrastate use of such vehicle); Royal
Indem. Co. v. Jacobsen, 863 F. Supp. 1537, 1540-42 (D. Utah
1994) (MCS-90 applies to the transport of commodities, even
when such commodities are exempt from the ICC's jurisdiction);
Branson v. MGA Ins. Co., 673 So.2d 89, 91 (Fla. Dist. Ct. App.
1996) (MCS-90 does not apply to wholly intrastate hauls);
Thompson v. Harco Nat'l Ins. Co., 120 S.W.3d 511, 514-16 (Tex.
App. 2003) (MCS-90 does not apply to solely intrastate
transport).
4
Thus, the court reasoned, the MCS-90 coverage applies only in
accordance with the mandates of §§ 29 and 30 of the Motor
Carrier Act of 1980, which only require coverage when a
vehicle transports property in interstate commerce. The court
concluded that “the coverage provided by the MCS-90 form is
limited to interstate commerce, as contemplated by 49 C.F.R.
§387.3.”
With deference to the authorities that have reached a
different result, our analysis is less complex. Regardless of
the forces that have motivated the insurance industry to adopt
the language of the MCS-90 endorsement, the question presented
to us is a simple one of interpreting the plain language of a
written contract. The MCS-90 is a part of a contract between
insurer and insured. In Magann Equipment v. Buffkin, 238 Va.
712, 385 S.E.2d 619 (1989), we considered the language of the
MCS-90 endorsement in a different context, determining which
of two insurance policies provided primary, rather than
secondary, coverage. Although we found the language unclear
as to its effect on the rest of the policy, we found the
language of the MCS-90 endorsement, within its four corners,
to be clear and unambiguous. Id. at 720, 385 S.E.2d at 623.
We held that the endorsement must be construed by first
looking to its language. Id. at 718, 385 S.E.2d at 622. In
the present case, the parties agree that the rest of the
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policy has no application. Thus, the answer to the question
presented on appeal lies entirely within the four corners of
the MCS-90 endorsement.
Written contracts are construed as written, without
adding terms that were not included by the parties. When the
terms in a contract are plain and unambiguous, the contract is
construed according to its plain meaning. The words that the
parties used are normally given their usual, ordinary and
popular meaning. No word or clause in a contract will be
treated as meaningless if a reasonable meaning can be given to
it, and there is a presumption that the parties have not used
words needlessly. PMA Capital Ins. Co., 271 Va. at 358, 626
S.E.2d at 372-73.
We adhere to the view we adopted in Magann: The language
of the MCS-90 endorsement, insofar as it sets forth the
coverage therein provided, is clear, plain and unambiguous.
In consideration of the premium, the insurer agrees to pay
“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
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authorized to be served by the insured or elsewhere.” On the
stipulated facts, ER, the named insured, was the owner of a
vehicle that was subject to the financial responsibility
requirements of the Motor Carrier Act. ER was subject to a
claim and a potential judgment for damages resulting from
negligence in the operation of that vehicle. The insurer was
obligated to pay any such judgment arising from negligence in
the operation of that vehicle anywhere. The contract language
contains no terms limiting the coverage to the use or
operation of the vehicle in interstate commerce, and we will
not read such absent terms into the contract the parties made.
It is therefore unnecessary to consider the federal statute or
regulations that motivated the parties to adopt the language
they chose to employ. The language speaks for itself.
Conclusion
For the reasons stated, we will reverse the judgment
appealed from and remand the case to the circuit court with
direction to enter a declaratory judgment consistent with this
opinion.
Reversed and remanded.
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