In the
United States Court of Appeals
For the Seventh Circuit
No. 09-3427
A UTO-O WNERS INSURANCE C OMPANY,
Plaintiff-Appellee,
v.
JOSHUA M. M UNROE, et al.,
Defendants-Appellants.
Appeal from the United States District Court
for the Central District of Illinois.
No. 08 CV 02181—Harold A. Baker, Judge.
A RGUED F EBRUARY 17, 2010—D ECIDED JULY 22, 2010
Before R IPPLE, M ANION, and S YKES, Circuit Judges.
M ANION, Circuit Judge. After Joshua Munroe and his
wife entered a settlement agreement that released those
who allegedly caused a severe tractor-trailer accident
from any individual liability above their liability
insurance coverage, Auto-Owners Insurance Company
brought a declaratory judgment action to establish that
the insurance policy limited coverage to $1,000,000. The
district court agreed with Auto-Owners and granted its
2 No. 09-3427
motion for summary judgment. The Munroes appeal,
arguing that the coverage limit was higher either under
the terms of the policy or under minimum limits
required by the Motor Carriers Act. Because the policy
unambiguously limits coverage to $1,000,000 and the
federal minimum limits are inapplicable here, we affirm.
I.
On November 6, 2006, Joshua Munroe sustained signifi-
cant injuries when the tractor-trailer he was driving in
the northbound lane of Illinois Route 1 in Edgar County,
Illinois, struck the rear of a southbound tractor-trailer
driven by Monty Murphy, and then careened into a fiery
head-on collision with Roger Snyder’s tractor-trailer,
which was following close behind. Murphy had been
attempting to pass yet another tractor-trailer, this one
operated by Gerald Sturgeon. When he saw Munroe
approaching, Murphy attempted to pull back into his
own lane but could not completely clear Munroe’s lane.
Munroe was air-lifted from the scene. He suffered
severe burns and broken bones throughout his body
and incurred medical expenses in excess of $474,000.
All three southbound trucks were owned and operated
by Wayne Wilkens Trucking and had been traveling in
convoy. All were covered under a single insurance
policy issued by Auto-Owners. The policy declarations
listed each of the tractor-trailers (and many others), and
each declaration specified a limit of $1,000,000 for each
occurrence. The policy also contained a Combined Limit
of Liability provision, which stated that the maximum
No. 09-3427 3
total coverage was the $1,000,000 limit stated in the
declarations, regardless of how many automobiles were
listed in the declarations or involved in the accident.
Munroe and his wife sued Wilkens and the drivers of the
tractor-trailers. They alleged that all three drivers acted
negligently: Sturgeon by failing to yield and letting the
second pass at a safe time and place, Murphy by passing
when unsafe, and Snyder for following too closely and
failing to avoid the head-on collision. All three tractor-
trailers were allegedly exceeding the posted speed limit.
Wilkens was allegedly negligent in hiring and training
the drivers.
The Munroes entered a partial settlement agreement in
which they agreed to release Wilkens and the drivers
from any individual liability above their liability
insurance coverage in exchange for $903,449.48, the
remainder of the $1,000,000 coverage limit after property
damage was paid to the owner of Munroe’s tractor-trailer.
The agreement acknowledged that Auto-Owners would
seek a declaratory judgment that the limit of the
liability insurance coverage under the policy was in fact
$1,000,000. The Munroes reserved the right to proceed
with their case if the court determined the coverage
limit was greater than $1,000,000.
As anticipated, Auto-Owners brought the present suit
for declaratory judgment against the Munroes. Both sides
moved for summary judgment. The district court granted
summary judgment to Auto-Owners, holding that the
insurance policy unambiguously limited coverage to
$1,000,000 for each occurrence and dismissing the
4 No. 09-3427
Munroes’ additional argument that federal law mandated
at least $2.25 million insurance. The Munroes appeal.
II.
The Munroes advance two arguments. First, they argue
that the Auto-Owners policy provided at least $3 million
of coverage, either because each vehicle was subject to
a separate $1,000,000 limit or because the accident consti-
tuted three separate occurrences, with a $1,000,000 limit
each, due to the separate negligent acts of each of the
drivers. Second, they argue that even if the policy is
construed against them, federal law mandates at least
$750,000 worth of insurance coverage for each vehicle
and that we should read the policy as providing a mini-
mum of $2.25 million coverage for this accident. We
consider each argument in turn.
A.
We review the district court’s grant of summary judg-
ment, and its construction of the insurance policy,
de novo. Ace Am. Ins. Co. v. RC2 Corp., 600 F.3d 763, 766
(7th Cir. 2010). The parties agree that Illinois law governs
the interpretation of the insurance policy in dispute.
Like any contract, an insurance policy is construed ac-
cording to the plain and ordinary meaning of its unambig-
uous terms. Nicor, Inc. v. Associated Elec. & Gas, 860 N.E.2d
280, 286 (Ill. 2006). Ambiguity exists only where a
term is susceptible to more than one reasonable inter-
pretation. Id.
No. 09-3427 5
The insurance policy at issue in this case is not ambigu-
ous. It provides up to $1,000,000 of coverage per occur-
rence for each insured vehicle. The policy contains a
severability clause, which provides that the coverage
applies separately to each person against whom a
claim is made “except as to our limit of liability.” The
“Combined Limit of Liability” provision, which re-
places the limit of liability provision referenced in
the severability clause, provides that the per-occurrence
limit—$1,000,000—is the most that Auto-Owners will
pay, “regardless of the number of automobiles shown
in the Declarations . . . or automobiles involved in
the occurrence.” While the Munroes attempt to find
ambiguity, including in the terms “automobiles” and
“combined,” these contortions merit little discussion
here: applied to the facts of this case, the unambiguous
terms of the policy limit the coverage to $1,000,000 for
each occurrence, notwithstanding the involvement of
three Wilkens tractor-trailers.
Thus, the only question of any real substance is whether
there was more than one “occurrence” here. The policy
defines an occurrence using the same language that the
Illinois courts have interpreted many times in the past:
“an accident that results in bodily injury or property
damage and includes, as one occurrence, all continuous or
repeated exposure to substantially the same generally
harmful conditions.”
The parties agree that Illinois has adopted the “cause
theory” to determine the number of occurrences under
an insurance policy for purposes of coverage limitations
6 No. 09-3427
of deductibles. Under the cause theory, the number of
occurrences is determined according to the number of
“separate and intervening human acts” giving rise to
the claims under the policy. Nicor, 860 N.E.2d at 294.
But the cause theory (like the opposing effect theory)
answers a question that presupposes there are several
discrete events. All of the Illinois cases applying the
cause theory involve multiple discrete events rather
than an uninterrupted continuum: the only question is
whether all of the discrete events should be attributed to
a common cause. Most recently, for instance, the
Illinois Supreme Court concluded that the deaths of
two boys due to negligently maintained property consti-
tuted two occurrences despite a common cause under
an exception to the cause theory. Addison Ins. Co. v. Fay,
905 N.E.2d 747, 756 (Ill. 2009). Previously, in Nicor, the
court found that there were multiple occurrences when
separate negligent acts of various employees caused
nearly two hundred discrete exposures to mercury con-
tamination. 860 N.E.2d at 286. Before Nicor, the Illinois
Appellate Court’s relevant decisions all involved mul-
tiple claims or injuries. For example, the negligent manu-
facture and sale of asbestos building materials gave rise
to a single occurrence despite many claims of exposure.
U.S. Gypsum Co. v. Admiral Ins. Co., 643 N.E.2d 1226, 1259
(Ill. App. Ct. 1994). And a single trucker caused
two “occurrences” when his separate act of negligence
following an initial collision with his tractor-trailer
caused a second collision five minutes later. Illinois
Nat’l. Ins. Co. v. Szczepkowicz, 542 N.E.2d 90, 91 (Ill. App.
Ct. 1989).
No. 09-3427 7
Whether there is a single continuous event or several
discrete events will not always be obvious, but in this
case we have a helpful guidance from Illinois Appel-
late Court precedent. In Szczepkowicz, a truck driver
stopped his tractor-trailer in the middle of a state
highway, blocking both northbound lanes. 542 N.E.2d
at 91. An automobile struck the rear wheels of the tractor-
trailer, and the driver then moved his vehicle forward
enough to free up most of one lane, but failed to com-
pletely remove the vehicle from the travel lanes. Id.
Five minutes later, a second vehicle traveling north-
bound smashed into the side of the tractor-trailer. Id.
Lawsuits arose from both collisions and the truck’s
insurer sued for a declaratory judgment to establish its
maximum liability. Id. The insurer argued that both
collisions constituted a single accident, but the appellate
court, applying the cause theory, held that the two colli-
sions resulted from two separate causes: when the
driver moved the tractor-trailer after the first collision,
he negligently failed to clear all lanes, and this separate
and intervening act caused a second accident five
minutes later. Id. at 92. The two collisions were not the
result of a “single force, nor an unbroken or uninterrupted
continuum that, once set in motion, caused multiple
injuries.” Id.
None of these cases implies, as the Munroes claim, that
the cause theory can be used to turn a single discrete event
into multiple occurrences. Unlike Szczepkowicz, this case
does involve a single force and an uninterrupted chain-
reaction involving several vehicles, and thus a single
continuous occurrence. Although there may have been
8 No. 09-3427
several causes for the uninterrupted events, none of
these causes occurred after the force that caused the
injury had been set in motion. In other words, even if the
causes could properly be called separate, none were
intervening causes. All of them came together at the
same time to produce a single set of circumstances that
caused a single accident: Munroe’s truck collided with
one Wilkens truck and then, out of control, hit the fol-
lowing truck head-on. He has one claim against the
trucking company and the drivers, allegedly caused by
three separate acts of negligence. This single claim gives
rise to a single occurrence under the insurance policy,
with a $1,000,000 limit.
In sum, no Illinois court has held that a single claim
or injury can give rise to multiple occurrences merely
because several acts of negligence combined to produce
a single result. There is no indication that the Illinois
Supreme Court would reach such a result, contrary to
common sense and the Illinois courts’ own interpreta-
tion of the cause theory.
B.
The Munroes also argue that the federal Motor Carriers
Act, 49 U.S.C. § 13906(f), and its implementing regula-
tions, requires that the three Wilkens tractor-trailers
involved in the accident have a combined coverage of at
least $2.25 million. This is so, according to the Munroes,
because Wilkens satisfied its obligation under federal law
to ensure a minimum amount of funds is available to
pay damages caused to the public by its trucks by in-
No. 09-3427 9
cluding an MCS-90 endorsement in the insurance policy.
The MCS-90 endorsement, they argue, requires a mini-
mum of $750,000 coverage for each vehicle involved in
the accident.
The MCS-90 provides that Auto-Owners “[a]grees
to pay, within the limits of liability described [in the
endorsement], any final judgment recovered against the
insured for public liability resulting from negligence in
the operation, maintenance or use of motor vehicles.” The
form also clearly states that “the limits of [Auto-Owner’s]
liability for the amounts prescribed in this endorsement
apply separately, to each accident.” While the endorse-
ment in the record has not been filled in with a specific
amount of coverage, the minimum coverage scheduled
on the second page of the endorsement is $750,000 for a
for-hire vehicle with a gross weight of 10,000 pounds or
more carrying nonhazardous property.
No court, to our knowledge, has discussed how the MCS-
90 applies when more than one insured vehicle under
the same endorsement is involved in the same acci-
dent—a rather unusual set of facts, especially in this case.
We are skeptical of the Munroes’ argument that the MCS-
90 applies per-vehicle as well as per-accident, in light of
our precedent applying the MCS-90 on a strictly per-
accident basis even when an accident involves more than
one injured party. See Carolina Cas. Ins. Co. v. Estate of
Karpov, 559 F.3d 621, 625 (7th Cir. 2009).
But we need not answer this question here because the
MCS-90 is inapplicable for a more fundamental reason:
there is no final judgment in this case, so Auto-Owners’
10 No. 09-3427
payment obligation under the MCS-90 has not been
triggered. Moreover, because the Munroes have agreed
to release Wilkens from any liability beyond what the
insurance policy provides, there will never be an unpaid
final judgment in this case: the parties have settled and
the underlying case will presumably be dismissed once
this declaratory judgment action is complete. Under its
terms, the MCS-90 simply requires an insurance com-
pany to pay “any final judgment recovered against the
insured for public liability resulting from negligence in
the operation . . . of motor vehicles subject to the finan-
cial responsibility provisions of [the Motor Carrier Act].”
The Munroes attempt to escape the impossibility of a
triggering final judgment in this case by arguing that the
MCS-90 requirements are relevant because they set the
minimum insurance amounts, and that we should effec-
tively amend the policy to provide that amount. But this
is not how the MCS-90 works. The insurer guarantees
payment of a final judgment against the insured, but “all
terms, conditions and limitations in the policy to which
the endorsement is attached shall remain in full force
and effect as binding between the insured and the com-
pany.” The payment obligation is broader than the
policy itself and applies regardless of “whether or not
each motor vehicle is specifically described in the pol-
icy,” and despite any “condition, provision, stipulation,
or limitation contained in the policy.” Thus, an insurer
is required to pay even if, for example, the insured oper-
ates a leased vehicle not shown in the declarations or
the accident is caused by a type of event excluded by
the policy. In other words, the MCS-90 does not modify
No. 09-3427 11
the terms of the policy, but instead obliges the insurer
to pay up to $750,000 of a final judgment regardless of
the terms of the policy.
Rather than modify the policy to which it is attached, the
MCS-90 creates a suretyship among the injured public, the
insured, and the insurer, under which the insurer agrees
to guarantee a minimum payment to the injured public,
regardless of whether the injury would, in fact, be
covered by the policy. See Carolina Cas. Ins. Co. v. Yeates,
584 F.3d 868, 881 (10th Cir. 2009). Under this surety-
ship, the insurer is only obliged to pay what the insured
actually owes, and then only if that debt arises from a
final judgment. See id. at 881 (“The essence of suretyship
is the undertaking to answer for the debt of another.
The surety’s liability is coextensive with that of the
debtor and arises only when the debtor fails to discharge
his duties or to respond in damages for that failure.”
(quoting Peter A. Alces, The Law of Suretyship and
Guaranty § 1:1 (2009))). And, ultimately, the insured is
liable for any payment beyond the policy limits: the MCS-
90 expressly provides that “the insured agrees to reim-
burse the company for any payment made by the
company . . . for any payment that the company would not
have been obligated to make under the provisions of
the policy except for the agreement contained in this
endorsement.”
Because of this, when an injured claimant releases a
motor carrier from liability beyond the coverage limits of
its insurance policy, there can be no liability that the
insurer is responsible for under the MCS-90. This is true
12 No. 09-3427
regardless of whether the settlement amount is greater
or less than the liability limits mandated by the MCS-90.
The MCS-90 guarantees payment of a final judgment up
to a certain amount; it does not guarantee a minimum
settlement amount.
Otherwise, the release would be ineffective: because the
motor carrier would ultimately be responsible for the
payment in excess of the policy limits, a finding of addi-
tional liability against the insurer would be tantamount
to additional liability against the insured. Here, the
Munroes released Wilkens from any liability above the
coverage provided by the insurance policy, and Auto-
Owners has agreed to pay its coverage limit under the
policy, which we have determined to be $1,000,000
and which is unaffected by the MCS-90. Therefore, there
never will be an unpaid final judgment for more than
$1,000,000 in this case.
III.
Accordingly, we hold that the insurance policy unambig-
uously limits coverage to $1,000,000 per occurrence and
that there was a single occurrence in this case because
there was a single continuous event. Further, the MCS-90
endorsement does not affect Auto-Owners’ liability
because it applies only if triggered by an unpaid final
judgment against Wilkens. Therefore, we A FFIRM the
judgment of the district court.
7-22-10