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2015 2 New FMCSA Hours-of-Service Exemptions 5 The Road Ahead - Team Updates 6 Online Article Listing 7 Team Directory
TRANSPORTATION INDUSTRY NEWS Brokers, What Kind of Contingent Auto Policy Do You Have? Excess or Reduction—Illinois Court of Appeals Finds Policy to Be Reduction. Last month, the Illinois Court of Appeals ruled that an insurer owed no duty to defend or indemnify its insured pursuant to a contingent liability policy when the insured had a valid and collectible primary policy, but which was inadequate to fully cover the claimed damages. The case is Bartkowiak v. Underwriters at Lloyds, London, No. 1-13-3549 (Ill. App. Ct. Aug. 13, 2015). The
underlying facts in the case are as follows. In October 2009, a truck delivering road-surfacing materials, driven by Stan Wdowikowski (“Driver”), struck and killed Joseph Bartowiak (“Plaintiff”), a road
was entitled “Contingent Automobile Liability” insurance (the “Policy”). Id. Pursuant to the Policy, Insurer was obligated to only defend and indemnify Broker for damages resulting from automobile liability
construction flagger. Bartkowiak, at *1. A lawsuit was filed by Plaintiff’s estate against Driver, the trucking company that employed him, Denise Wdowikowski Trucking, Inc. (“Motor Carrier”), and the truck broker that brokered the job to DWT, Jack Gray Services, Inc. (“Broker”). Id. Broker was listed as an additional insured on Motor Carrier’s automobile liability policy. Id. In addition, Broker had a policy of insurance with defendant Underwriters at Lloyd’s, London (“Insurer”). Id. The Insurer’s policy
that may arise on a contingent basis. Id. (emphasis added). More specifically, the Policy stated “that the coverage provided under this Certificate of Insurance shall not apply if there is a valid collectible Automobile Liability insurance of any nature.” Id. The Policy required Broker to obtain primary automobile liability insurance; this requirement was fulfilled by being an additional insured on Motor Carrier’s automobile policy. Id. Continued on page 4
New FMCSA Hours-of-Service Exemptions The Federal Motor Carrier Safety Administration (“FMCSA”) recently announced hours-of-service exemptions for drivers of commercial motor vehicles (“CMV”) transporting certain types of goods.
OVERWEIGHT/SPECIALIZED CARRIERS - All specialized carriers and drivers transporting oversize/ overweight loads in interstate commerce requiring a governmental permit Exemption •
Exempt from 30-minute rest break requirement
Expiration Date •
June 18, 2017
Requirements • • • •
Load must be moving in interstate commerce Driver must have copy of the exemption document in possession Motor carrier must have satisfactory safety rating or be unrated Motor carrier must have Safety Measurement System scores below intervention threshold
LIVESTOCK HAULERS - Drivers hauling livestock, defined as: “cattle, elk, reindeer, bison, horses, deer, sheep,
goats, swine, poultry (including egg-producing poultry), fish used for food, and other animals . . . that are part of a foundation herd (including dairy producing cattle) or offspring . . . .” in interstate commerce
Exemption •
Exempt from 30-minute break requirement while the livestock is loaded on the CMV
Expiration Date •
June 12, 2017
Requirements •
Motor carrier must have a satisfactory safety rating or be unrated
CONCRETE HAULERS - Drivers of ready-mixed concrete trucks Exemption •
Permitted to use 30 minutes or more of “waiting time” to fulfil rest break requirement
Requirements 2
• • • •
Expiration Date •
April 3, 2017
Must be waiting with CMV at job site or terminal and performing no other on-duty activities Driver must have copy of the exemption document in possession Motor carrier must have satisfactory safety rating or be unrated Motor carrier must have Safety Measurement System scores below intervention threshold
BEE HAULERS - Drivers transporting bees in interstate commerce Exemption
Exempt from 30-minute break requirement while the bees are loaded on the CMV
Expiration Date •
June 19, 2017
Requirements • •
Must have a satisfactory safety rating or be unrated Driver must have copy of the exemption document in possession
RADIOACTIVE MATERIAL TRANSPORTERS - DOE contract driver-employees hauling security sensi-
tive radioactive materials
Exemption •
Permitted to use 30 minutes or more of “on-duty attendance time” in order to comply with 30minute break requirement
Expiration Date •
June 30, 2017
Requirements •
Driver must not be performing other work during attendance time
PASSENGER CARRIERS- Drivers of regular route passenger carriers Exemption •
Exempt from changing duty status from “driving” to “on-duty not driving” for certain stops
Expiration Date •
May 31, 2017
Requirements •
Stop must be less than 10 minutes
TRANSPORTERS OF SECURITY-SENSITIVE HAZARDOUS MATERIALS - Drivers carrying security-sensitive hazardous materials subject to security plans under Pipeline and Hazardous Materials Safety Administration regulations Exemption •
Permitted to apply “on-duty attendance” of hazardous materials towards 30 minute rest break requirement, provided no other “on-duty” tasks performed
Expiration Date •
August 21, 2017
Requirements • • • •
Driver must be transporting hazardous material requiring placarding pursuant to 49 CFR part 172, subpart F, or select agents and toxins identified in § 172.800(b)(13) that do not require placarding Must have filed security plans requiring constant attendance of hazardous materials pursuant to §§ 172.800–804. Carrier must be unrated or have a satisfactory safety rating. Exemption document must be in driver’s possession while utilizing exemption and it must be presented to law enforcement upon request.
Finally, if a commercial motor vehicle utilizing the exemption is involved in an accident while operating under the terms of the exemption, the carrier must notify the FMCSA within 5 business days of such accident. These notifications must include certain information and must be e-mailed to the FMCSA.
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Broker tendered its defense in the wrongful death suit to Insurer; Insurer, however, denied coverage for the reason that the Motor Carrier’s policy served as a valid and collectible liability policy. Id., at *2.
A settlement was reached in the wrongful death suit; pursuant to the settlement the estate received $7.8 million, including $1 million from Motor Carrier’s automobile liability policy. Id. Still facing a potential exposure of several million dollars, Broker assigned its rights under the Policy to plaintiff. Id. Plaintiff filed the present action seeking a declaration that Insurer’s owed a duty to defend and indemnify Broker under the Policy. Id. The trial court dismissed plaintiff’s lawsuit concluding that Motor Carrier’s automobile liability policy constituted a valid and collectible liability policy; therefore, Insurer had no duty to defend or indemnify Broker. Id., at *3. The trial court refused to convert the Insurer’s contingent policy to one of excess coverage. It was from this decision that the plaintiff appealed. The issue before the Illinois Appellate Court was whether the Policy provided coverage only in the event Broker had no primary coverage due to some invalidity or failure of the primary insurance policy. At both the trial court and appellate levels,
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plaintiff argued that the Policy’s exclusionary language did not apply for the reason that Motor Carrier’s automobile liability policy did not constitute a “valid and collectible” insurance for the reason that it failed to wholly cover the loss. Plaintiff argued that “collectible” implied some sort of monetary limit, to the extent that an underlying policy of insurance does not cover the entire loss, it is “uncollectible.” Id., at *6-7.
Accordingly, when Motor Carrier’s policy did not cover the entire loss, according to plaintiff, it was not collectible and Insurer was obligated to defend and indemnify Broker. Id. In essence, plaintiff’s argument was that the Policy was not a contingent policy; rather, the Policy provided excess coverage when the primary coverage failed to fully cover the loss. Insurance policies are contracts between the insurer and the insured
and the intent of the parties dictates how that contract is applied. Courts generally look to the language of a policy to determine the intent of the parties. Id., at *7. If the Policy language is unambiguous, the Policy will be enforced as written. Id. Here, the Court construed “the policy as a whole and [took] into account the type of insurance provided and the purposes of the entire contract.” Id. The Illinois Court of Appeals ultimately affirmed the decision of the trial court and held that the subject clause was not an excess clause, but an escape clause. Id., at *8. The Court concluded that “the parties’ intent [was] clear. … where, for some reason, the automobile liability insurance for the trucks brokered by the insured, Broker, completely failed due to invalidity or insolvency. If Broker could collect at all from [Motor Carrier’s automobile liability policy], then [Insurer’s] policy would not apply.” Id. The Policy was intended to cover Broker’s loss in a very specific contingency situation. Id. According to the Court, that was the deal the parties struck, and which the Court would not disturb. Id. The Illinois Appellate Court’s decision that Insurer was not obligated to defend or indemnify its insured should serve as a reminder to all the importance of annually reviewing your insurance coverage with your broker or counsel, knowing what coverage you do and don’t have, and taking steps to fill any potential gaps in coverage. Once an accident or event occurs, it is often too late to take corrective steps to fill coverage gaps.
THE ROAD AHEAD •
October 1-2 is the Annual Meeting of the Motor Carrier Insurance Educational Foundation in Orlando. Rob Moseley will be addressing the latest coverage issues facing underwriters and retail agents in the Transportation Sector.
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Rob will be attending the SC Trucking Association Board Retreat in Columbia on October 5-6. For Columbia, October marks that time of year when you can stop sweating at night.
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Matt Stone, Rob Moseley, the Georgia Motor Trucking Association and friends are sponsoring “The CMV Collision: How to Protect Your Company” at the Georgia International Convention Center in College Park, Georgia on October 6, 2015. Registration is free. https://events.r20.constantcontact.com/register/ eventReg?oeidk=a07eb70zvan1fe676ce&oseq=&c=&ch=
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Marc Tucker will join Rob at the NC Forestry Association meeting in Myrtle Beach on October 7-9. They will be talking on how to contract for transportation services without taking on additional liability.
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The City of Brotherly Love will host the ATA Management Conference and Exhibition October 17-20. Rob will be speaking on a panel involving freight claims related to cargo theft.
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Kurt Rozelsky and Matt Stone will attend the TIDA Annual Conference in San Antonio, Texas on October 26-28. They will be sure to remember the Alamo.
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The ATA Safety Management Council Conference on November 2-4 will see Rob speaking on cargo theft and the issues presented. Rob might even go to the Clinton library – he heard a couple of the books haven’t been colored yet.
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Matt Stone will teach the litigation segment of the North American Transportation Management Institute (NATMI) Fleet Safety seminars in Atlanta, GA on December 2 and 7.
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Matt will attend CLM Insurance Coverage, Extra-Contractual, Claims/Litigation Management Conference in New York, NY in December.
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more articles online... Insurer Gets a Taste of South Carolina Bad Faith Law in Failure to Settle Within Time Demand Case smithmoorelaw.com/TNLBad Faith The South Carolina federal district court recently entered an order requiring Nationwide to pay $1.1 million—the difference between the coverage provided under an automobile policy and the amount of the judgment entered against its insured—after Nationwide failed to comply with a time-limit demand by a single business day.
Brokers, Carriers, and Cargo Claims smithmoorelaw.com/TNLBrokers-Carriers-Cargo Lessons learned for brokers and carriers in the realm of high value freight and cargo loss, where litigation determines who is responsible for knowing the value of a shipment and obtaining appropriate insurance coverage.
US Department of Labor Weighs In on Worker Status smithmoorelaw.com/TNLWorkerStatus One of the most difficult employment law issues facing employers is the status of their workers—whether they are employees or independent contractors. The new standard is no longer about control or right to control.
Less Can Mean More In The Eyes Of The FMCSA smithmoorelaw.com/TNLEyes-of-FMCSA This article will discuss the applicability of the Unified Registration System (“URS”) to a scenario that may go unnoticed to some.
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TEAM DIRECTORY
All email extensions: @smithmoorelaw.com
ERIK ALBRIGHT
ROB MOSELEY
MIKE BOWERS
KRISTEN NOWACKI
STEPHEN COHEN
BOB PERSONS
MANNING CONNORS
MARY RAMSAY
RICK COUGHLIN
JOHN REIS
BENNETT CRITES
JACK RIORDAN
JULIE EARP
JOSEPH ROHE
Greensboro, NC | 336.378.5368 erik.albright@
Charleston, SC | 843.300.6633 mike.bowers@
Atlanta, GA | 404.962.1023 stephen.cohen@
Greensboro, NC | 336.378.5236 manning.connors@
Greensboro, NC | 336.378.5471 rick.coughlin@
Charleston, SC | 843.300.6653 bennett.crites@
Greensboro, NC | 336.378.5256 julie.earp@
JAY HOLLAND
Wilmington, NC | 910.815.7165 jay.holland@
*TEAM LEADER* Greenville, SC | 864.751.7643 rob.moseley@
Greenville, SC | 864.751.7753 kristen.nowacki@
Atlanta, GA | 404.962.1075 bob.persons@
Charleston, SC | 843.300.6659 mary.ramsay@
Charlotte, NC | 704.384.2693 john.reis@
Greenville, SC | 864.751.7638 jack.riordan@
Greenville, SC | 864.751.7668 joseph.rohe@
JENNIFER RATHMAN
Atlanta, GA | 404.962.1074 jennifer.rathman@
SHAWN KALFUS
KURT ROZELSKY
FREDRIC MARCINAK
PETER RUTLEDGE
ALEX MAULTSBY
MATT STONE
Atlanta, GA | 404.962.1042 shawn.kalfus@
Greenville, SC | 864.751.7691 fredric.marcinak@
Greensboro, NC | 336.378.5331 alex.maultsby@
KEVIN MCCARRELL
Greenville, SC | 864.751.7652 kevin.mccarrell@
Greenville, SC | 864.751.7624 kurt.rozelsky@
Greenville, SC | 864.751.7610 peter.rutledge@
Atlanta, GA | 404.962.1057 matt.stone@
MARC TUCKER
Raleigh, NC | 919.755.8713 marc.tucker@
75 SML Attorneys Named the Best Lawyers in America© 2016 75 SML attorneys have been selected by their peers for inclusion in The Best Lawyers in America© 2016, the oldest and most respected peer-review publication in the legal profession. Of the 75 attorneys honored, nine were named “Lawyer of the Year,” a designation given to a single lawyer in each specialty in each community. Included are attorneys from each of the firm’s key practice areas: Corporate, Financial Services, Health Care, Intellectual Property, Labor and Employment, Litigation, Real Estate, Tax, and Wealth Management.
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Smith Moore Leatherwood LLP Attorneys at Law 2 West Washington Street Suite 1100 Greenville SC 29601 T (864) 751-7600 F (864) 751-7800 www.smithmoorelaw.com
Emergency Response Team As part of the array of transportation services provided to firm clients, our 24/7 emergency response team is standing by to serve clients with urgent needs following a catastrophic accident. The team has handled numerous night time and weekend emergencies for our clients. Members of the emergency response team take responsibility for preserving physical and electronic evidence, taking driver and witness statements, making arrangements for cargo salvage, and managing relations with law enforcement. Additionally, firm clients benefit from the team’s knowledge of substantive experts and criminal defense counsel.