Armstrong v. United States Fire Insurance (606 F. Supp. 2d 794, 2009)

MEMORANDUM OPINION

J. RONNIE GREER, District Judge.

In these judgment declaratory actions, all parties have moved for summary judgment or judgment as a matter of law. Currently pending before the Court is the motion of Edward D. Armstrong, Jr., et al. (the “Armstrong plaintiffs”) for summary judgment, [Doc. 177], the motion for summary judgment filed by William and Karen Harmon, (the “Harmon plaintiffs”) [Doc. 179], the motion for summary judgment filed by Valerie Carlson, (“Carlson”), [Doc. 181], North River Insurance Company’s (“North River”) motion for judgment as a matter of law, [Doc. 183], the motion for judgment as a matter of law filed by United States Fire Insurance Company (“U.S. Fire”), [Doc. 185], and the motion of XTRA, Inc. and XTRA Lease, LLC (jointly referred to as “XTRA”) for summary judgment. [Doc. 84], Responses and replies have been filed, and the Court heard oral argument on the motions on February 17, 2009. The motions are now ripe for disposition. For the reasons which follow, the Carlson, Harmon plaintiffs’ and Armstrong plaintiffs’ motions will be denied and the motions of North River, U.S. Fire and XTRA will be granted.

I. Factual and Procedural Background

On March 7, 2004, Nasko Nazov (“Nazov”) was operating a tractor-trailer rig northbound on Interstate 81 in Greene County, Tennessee when he drove, apparently at a high rate of speed, into the rear of vehicles which were stopped as the result of an unrelated traffic accident. As a result of the collision, Edward Dean Armstrong, III, his wife, Melissa Carlson Armstrong, and his two minor children, Brittany Nicole Armstrong and Edward Dean Armstrong, IV, occupants of one of the automobiles, were killed. Also struck was an automobile driven by William Harmon and occupied by his wife, Karen Harmon, who suffered serious personal injury as a result of the collision.

At the time of the accident, Nazov was an employee of World Trucking Inc. and/or World Trucking Express, Inc. (jointly referred to as “World Trucking”), which was the lessee of the tractor-trailer. Marjan Milev (“Milev”) owned the tractor involved in the collision and XTRA was the owner and lessor of the trailer involved in the collision. Dobrin Zahariev Dobrikov and Stanislava Z. Dobrikov are the owners of World Trucking.

Thereafter, three separate diversity lawsuits were filed in this Court: Valerie Carlson v. World Trucking, Inc., Nasko Nazov and Marjan Milev, No. 2:05-CV-44; Edward Dean Armstrong, Jr., Kathy Lynn Chesney , and Susan Kay Smith Armstrong v. World Trucking, Inc., World Trucking Express, Inc., Nasko Nazov, Marjan Milev, Dobrin Zahariev Dobrikov and Stanislava Z. Dobrikov, No. 2:05-CV-62; and William Harmon and Karen Harmon v. World Trucking, Inc., World Trucking Express, Inc, Nasko Nazov, Marjan Milev, Dobrin Zahariev Dobrikov and Stanislava Z. Dobrikov, No. 2:05-C V-65. XTRA, the owner and lessor of the trailer involved in the collision, is not a defendant in any of these lawsuits.

Collectively, these lawsuits will be referred to as the “tort cases.” The tort cases were reported settled; however, the plaintiffs have refused to complete those settlements and dismiss the tort cases because, they allege, they discovered the insurance policy which is the subject of this lawsuit after entering into those settlement agreements. The tort cases, therefore, remain pending, although they have been stayed pending resolution of these declaratory judgment actions.

On March 9, 2007, U.S. Fire and North River filed a declaratory judgment action in the United States District Court for the District of New Jersey which named as defendants World Trucking, Inc., World Trucking Express, Inc. and XTRA Corporation. The subject of the New Jersey declaratory judgment action is a liability policy issued by U.S. Fire to XTRA Corporation and an umbrella liability policy issued by North River to XTRA Corporation. U.S. Fire sought a declaration from that court that U.S. Fire has no duty to defend or indemnify World Trucking, Inc. and/or World Trucking Express, Inc. for the claims in the tort cases filed in this Court and for a declaration that World Trucking, Inc. and World Trucking Express, Inc. are not additional insureds under the U.S. Fire policy. North River seeks a declaration from the Court that North River has no duty to indemnify World Trucking, Inc. and/or World Trucking Express, Inc. for the claims made by the plaintiffs in the underlying tort cases and a declaration that World Trucking, Inc. and World Trucking Express, Inc. are not additional insurers under the North River policy.

On May 9, 2007, the Armstrong plaintiffs filed a complaint for declaratory judgment in this Court against U.S. Fire, North River, Nazov, Milev, World Trucking, the Dobrikovs, XTRA, Carlson and the Harmon plaintiffs. The declaratory judgment action filed in this Court involves the same policies issued by U.S. Fire and North River to XTRA which are referenced in the New Jersey declaratory judgment action. The Armstrong plaintiffs seek a declaration of the Court that U.S. Fire and North River have a duty to indemnify the defendants in the tort cases for the use and benefit of the plaintiffs in those tort cases and that Nazov, Milev, World Trucking, Inc. and World Trucking Express, Inc. are additional insureds under the insurance policies issued by U.S. Fire and North River.

On February 13, 2008, the United States District Court for the District of New Jersey sua sponte transferred venue of the New Jersey action to this Court, where it was consolidated with the action filed by the Armstrong plaintiffs.

II. The Insurance Policies at Issue

A. The U.S. Fire Policy

Policy # 1380265299 was issued by U.S. Fire to XTRA Corporation for the policy period from December 1, 2003, to October 1, 2004. The policy provides Commercial Auto (Business or Truckers) Coverage with liability limits of $1,000,000.00 for any one accident or loss. The policy provides liability coverage and obligates U.S. Fire to “pay all sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies, caused by an ‘accident’ and resulting from the ownership, maintenance or use of a covered ‘auto’ ”. U.S. Fire Policy, Sec. II, A.

The policy contains the following provisions relevant to the issues in this case:

I. Who is an Insured

The following are “insureds”:

a. You for any covered “auto”.

b. Anyone else while using with your permission a covered “auto” you own, hire or borrow ...

Id., Sec. II, A, 1.

“Insured” means any person or organization qualifying as an insured in the Who Is An Insured provision of the applicable coverage----

Id., Sec. V, G.

“Auto” means a land motor vehicle, “trailer” or semi-trailer designed for travel on public roads but does not include “mobile equipment”.

Id., Sec. V, B.

“Trailer” includes semitrailer.

Id., Sec. V, P.

5. Other Insurance

a. For any covered “autos” you own, this Coverage Form provides primary insurance. For any covered “auto” you don’t own, the insurance provided by this Coverage Form is excess over any other collectible insurance. However, while a covered “auto” which is a “trailer” is connected to another vehicle, the Liability Coverage this Coverage Form provides for the “trailer” is:

(1) Excess while it is connected to a motor vehicle you do not own.

(2) Primary while it is connected to a covered “auto” you own.

Id., See. IV, 5, a.

The U.S. Fire policy contains two endorsements which are relevant to this case. The policy contains an “Endorsement No. CO-013 which provides: “IT IS AGREED THAT THE LESSEES OF VEHICLES, LEASED TO THEM BY THE NAMED INSURED, ARE NOT AN INSURED UNDER THIS POLICY.” The policy also contains an “ENDORSEMENT FOR MOTOR CARRIER POLICIES OF INSURANCE FOR PUBLIC LIABILITY UNDER SECTIONS 29 AND 30 OF THE MOTOR CARRIER ACT OF 1980,” commonly known as an MCS-90 endorsement.” The MCS-90 endorsement reads as follows:

The insurance policy to which this endorsement is attached provides automobile liability insurance and is amended to assure compliance by the insured, within the limits stated herein, as a motor carrier of property, with Sections 29 and 30 of the Motor Carrier Act of 1980 and the rules and regulations of the Federal Highway Administration (FHWA) and the Interstate Commerce Commission (ICC).

In consideration of the premium stated in the policy to which this 6 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. Such insurance as is afforded, for public liability, does not apply to injury to or death of the insured’s employees while engaged in the course of their employment, or property transported by the insured, designated as cargo. It is understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, this endorsement, or any other endorsement thereon, or violation thereof, shall relieve the company from liability or for the payment of any final judgment, within the limits of liability herein described, irrespective of the financial condition, insolvency or bankruptcy of the insured. However, 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 company. The insured agrees to reimburse the company for any payment made by the company on account of any accident, claim, or suit involving a breach of the terms of the policy, and 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.

It is further understood and agreed that, upon failure of the company to pay any final judgment recovered against the insured as provided herein, the judgment creditor may maintain an action in any court of competent jurisdiction against the company to compel such payment.

The limits of the company’s liability for the amounts prescribed in this endorsement apply separately, to each accident, and any payment under the policy because of any one accident shall not operate to reduce the liability of the company for the payment of final judgments resulting from any other accident.

B. The North River Policy

North River issued policy # 553-085033-4 to XTRA for the policy period from October 1, 2003, to October 1, 2004. The policy is a Commercial Umbrella Policy with limits of liability for each occurrence, and in the aggregate, of $15,000,000.00. The North River policy identifies the U.S. Fire policy as “underlying” automobile liability insurance and contains an “Automobile Limitation” endorsement which provides:

With respect to “Bodily Injury” or “Property Damage” arising out of the ownership, maintenance, operation, use, loading or unloading of any “Automobile”, this policy is limited to the coverage provided to you in the “Underlying Insurance”.

If coverage is not provided by such policies, coverage is excluded from this policy-

The North River policy’s insuring agreement provides liability coverage on behalf of the “Insured” for sums which the “Insured” is “legally obligated to pay as damages” for “Bodily Injury” or “Property Damage” occurring during the policy period and caused by an “Occurrence”. North River policy, Sec. I, A. The term “Insured” includes the “Named Insured” (XTRA) and “any person who has [XTRA’ S] permission to use an ‘Automobile’ owned by [XTRA], loaned to [XTRA], or hired for use by [XTRA], and any person or organization legally responsible for the use of that ‘Automobile’ ... Id., Sec. Ill, B, 1 and C, 3. “Automobile” is defined as “a land motor vehicle, trailer or semitrailer designed for travel on public roads, ...” Id., Sec. IV. “Occurrence” includes an automobile accident. Id.

The North River policy does not contain a provision similar to that contained in endorsement CO-013 in the U.S. Fire policy; however, it does contain the “Automobile Limitation” set forth above, thus incorporating the exclusion of endorsement CO-013 to the extent it limits coverage under the U.S. Fire policy. The North River policy does not explicitly contain a form MCS-90 endorsement.

III. Standard of Review

Summary judgment is proper where “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). In ruling on a motion for summary judgment, the Court must view the facts contained in the record and all inferences that can be drawn from those facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Nat’l Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 907 (6th Cir. 2001). The Court cannot weigh the evidence, judge the credibility of witnesses, or determine the truth of any matter in dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The moving party bears the initial burden of demonstrating that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). To refute such a showing, the non-moving party must present some significant, probative evidence indicating the necessity of a trial for resolving a material factual dispute. Id. at 322, 106 S.Ct. 2548. A mere scintilla of evidence is not enough. Anderson, 477 U.S. at 252, 106 S.Ct. 2505; McLean v. Ontario, Ltd., 224 F.3d 797, 800 (6th Cir.2000). This Court’s role is limited to determining whether the ease contains sufficient evidence from which a jury could reasonably find for the non-moving party. Anderson, 477 U.S. at 248-49, 106 S.Ct. 2505; Nat’l Satellite Sports, 253 F.3d at 907. If the non-moving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to summary judgment. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. If this Court concludes that a fair-minded jury could not return a verdict in favor of the non-moving party based on the evidence presented, it may enter a summary judgment. Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505; Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir.1994).

The party opposing a Rule 56 motion may not simply rest on the mere allegations or denials contained in the party’s pleadings. Anderson, 477 U.S. at 256, 106 S.Ct. 2505. Instead, an opposing party must affirmatively present competent evidence sufficient to establish a genuine issue of material fact necessitating the trial of that issue. Id. Merely alleging that a factual dispute exists cannot defeat a properly supported motion for summary judgment. Id. A genuine issue for trial is not established by evidence that is “merely colorable,” or by factual disputes that are irrelevant or unnecessary. Id. at 248-52, 106 S.Ct. 2505.

Judgment as a matter of law is appropriate where, after a party has been fully heard on an issue, “there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.” Fed.R.Civ.P. 50(a). In making this determination, the court must view the evidence in the light most favorable to the nonmovant. Diamond v. Howd, 288 F.3d 932, 935 (6th Cir.2002).

IV. Choice of Law

Jurisdiction in these cases is invoked under 28 U.S.C. § 1331, with all parties seeking a declaratory judgment under the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq. The parties agree that the Court must apply state law on questions of policy interpretation and scope of coverage of the policies at issue, and they agree that the Court must apply the choice of law of the state in which it sits. See Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Under Tennessee law, the substantive rights of parties to an insurance contract are governed by the laws of the state contemplated by the parties. Absent an enforceable choice of law clause in the policy, the parties are presumed to have intended to apply the laws of the state in which the contract was entered into. Standard Fire Ins. Co. v. Chester-O’Donley & Assoc., 972 S.W.2d 1, 5 (Tenn.Ct.App.1998). Consequently, with respect to insurance contracts without enforceable choice of law clauses, Tennessee courts apply the substantive law of the state where the policy was issued and delivered. Id.

The tort plaintiffs, in their briefs in support of their motion, appear to assume, without discussion, that it is Tennessee’s substantive law which applies to these cases. U.S. Fire and North River, on the other hand, argue that both policies “were issued to XTRA Corporation at 200 Nyala Farms Road, Westport, Connecticut,” [Doc. 223, p. 4], and argue that Connecticut law applies to these cases. At oral argument on the pending motions, counsel for the Armstrong plaintiffs suggested that it might be Missouri or New Jersey law which applies, because XTRA has offices in those states. In a supplemental filing, [Doc. 250], the Armstrong plaintiffs now assert that Arizona is the state of delivery of the policies at issue and that this Court should apply Arizona law on the issues governed by state law in these cases. In support of their position, the Armstrong plaintiffs have attached to their supplemental filing letters produced during discovery which purport to establish that the policies were delivered to XTRA in Phoenix, Arizona.

The evidence in the record on the issue of where the policies at issue were delivered is scant and insufficiently developed to establish clearly the state of delivery of the policies. For reasons more fully discussed below, however, it is unnecessary for the Court to decide which state’s law to apply because there is no real difference in the relevant laws of the states involved and application of the laws of either Tennessee, Connecticut or Arizona would produce the same result. A court need not make a choice of law if, in fact, there is not a real difference or conflict between the relevant laws of the states involved and should apply the forum state’s law if it is not in conflict with that of other jurisdiction involved. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 816, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985). In fact, a conflict between the laws of the states at issue is a necessary predicate to deciding which state’s laws should govern the issues presented in the case. Hataway v. McKinley, 830 S.W.2d 53, 57 (Tenn. 1992). Because the result is the same on the issues governed by state law in these cases, regardless of whether the Court applies Tennessee, Connecticut or Arizona law, the Court will apply Tennessee law.

The parties agree that state law does not apply on one issue in the case. Federal law applies to the operation and effect of the MCS-90. John Deere Ins. Co. v. Nueva, 229 F.3d 853 (9th Cir.2000) (citing Planet Ins. Co. v. Transport Indemnity Co., 823 F.2d 285, 288 (9th Cir.1987)); Canal Ins. Co. v. First General Ins. Co., 889 F.2d 604, 610 (5th Cir.1989), modified on other grounds 901 F.2d 45 (5th Cir.1990); see also Carolina Cas. Ins. Co. v. E.C. Trucking, 396 F.3d 837 (7th Cir.2005). Although it does not appear that the Sixth Circuit has addressed this precise question, no reason exists why the Sixth Circuit would not follow the established rule from other circuits. See, e.g., Kline v. Gulf Ins. Co., 466 F.3d 450, 453 fn. 5 (6th Cir.2006), (citing cases from the Third and Fifth Circuits for the general rule that “an MCS-90 is to be interpreted under federal law” and suggesting that the Sixth Circuit would follow the rule, at least in cases where the MCS-90 is incorporated into the policy for purposes of “compliance with federal regulations” — i.e. required by the Motor Carrier Act.)

V. Pending Motions

For purposes of clarity, the Armstrong, Harmon and Carlson plaintiffs in the tort actions will be referred to in the following analysis as “plaintiffs”, and U.S. Fire, North River and XTRA will be referred to as “defendants,” unless the context indicates otherwise.

A. Plaintiffs’ Motions For Summary Judgment

Plaintiffs argue that the U.S. Fire policy provides coverage to Nazov, Milev, and World Trucking as permissive users of the trailer leased from XTRA, notwithstanding endorsement CO-013, which excludes from coverage lessees of vehicles, and without reference to what plaintiffs see as the “broadening provisions” of the MCS-90. According to plaintiffs, the trailer owned by XTRA is a covered auto which was contractually in the possession of World Trucking, thus making the operator and driver of the trailer permissive users under the terms and conditions of the policy and establishing coverage. Plaintiffs argue that the endorsement CO-013, which provides “that the lessees of vehicles, leased to them by the named insured, are not insureds under this policy,” does not operate to limit permissive user coverage because “vehicle” is not defined in the policy and is ambiguous. Because the term is a technical one which cannot be given its “plain, ordinary and popular” meaning, its meaning is uncertain and should be “construed against the insurance company and in favor of the insured.” Plaintiffs also argue that the endorsement Co-013 is against public policy.

Alternatively, plaintiffs maintain that the MCS-90 endorsement operates to negate the CO-013 endorsement because the CO-013 endorsement “constitutes a condition or limitation that attempts to alter the underlying policy and relieve U.S. Fire from liability.” [Doc. 178, p. 18]. Plaintiffs rely primarily on decisions of the Ohio and Virginia Supreme Courts in Lynch v. Yob, 95 Ohio St.3d 441, 768 N.E.2d 1158 (2002) and Heron v. Transportation Cas. Ins. Co., 274 Va. 534, 650 S.E.2d 699 (2007) and decisions of the Ninth and Tenth Circuits in John Deere Ins. Co. v. Nueva, 229 F.3d 853 (9th Cir.2000), cert. denied, 534 U.S. 1127, 122 S.Ct. 1063, 151 L.Ed.2d 967 (2002) and Adams v. Royal Indem. Co., 99 F.3d 964 (10th Cir.1996) as authority for the proposition that the MCS-90 eliminates any limiting clauses in the underlying policy, such as the CO-013 endorsement, which restrict the scope of coverage. Any other interpretation of the MCS-90 would frustrate the purpose of the MCS-90, according to the plaintiffs. Furthermore, plaintiffs argue, the MCS-90 endorsement is triggered to provide coverage despite the fact that the injured parties have available to them other insurance coverage in excess of the statutory financial responsibility limit, citing Carolina Cas. Ins. Co. v. Yeates, 533 F.3d 1202 (10th Cir.2008), reh’g en banc granted, 545 F.3d 915 (10th Cir.2008); Green v. Royal Indem. Co., 1994 WL 267749 (S.D.N.Y.1994), Hamm v. Canal Ins. Co., 10 F.Supp.2d 539 (M.D.N.C.1998) and Kline v. Gulf Ins. Co., 466 F.3d 450 (6th Cir.2006).

As for the North River policy, plaintiffs argue that it is a “following form” policy which provides coverage for any loss covered under the U.S. Fire policy. Because World Trucking, Nazov and Milev are insureds under the U.S. Fire policy, they are also insureds under the North River policy.

B. U.S. Fire’s Motion For Summary Judgment

U.S. Fire argues initially that World Trucking, Nazov and Milev are not insureds under the U.S. Fire policy because “[t]heir names do not appear on the declarations page, nor do they appear on the named insured endorsement page.” [Doc. 186, p. 7] U.S. Fire also argues1 that the endorsement CO-013 expressly excludes lessees, such as World Trucking, from coverage under the policy. U.S. Fire also maintains that, even if World Trucking, Nazov and Milev were insureds under the policy, they have not complied with certain conditions of coverage and are, therefore, not entitled to recover under the policy.

Secondly, U.S. Fire asserts that the MCS-90 endorsement attached to the U.S. Fire policy does not cover the lessee of a trailer, relying on Del Real v. United States Fire Ins. Crum and Forster, 64 F.Supp.2d 958 (E.D.Cal.1998), aff'd, 188 F.3d 512 (9th Cir.1999)(Table). Based on Del Real, U.S. Fire argues that the lessee of the trailer and the driver of the tractor cannot be insureds under the U.S. Fire policy and U.S. Fire therefore has no obligation to indemnify any of the defendants in the underlying tort actions. Additionally, U.S. Fire argues that the MCS-90 is inapplicable to XTRA because XTRA is not a for-hire motor carrier and the MCS-90 is only implicated when an insured is carrying goods for-hire and is therefore subject to the financial responsibility requirements of the Motor Carrier Act. Once again U.S. Fire relies on Del Real and also cites Castro v. Budget Rent-A-Car System, Inc., 65 Cal.Rptr.3d 430, 154 Cal.App.4th 1162 (Cal.Ct.App.2007) and Amerisure Mutual Ins. Co. v. Carey Transportation, Inc., 2007 WL 29235 (Mich.Ct.App.2007).

Lastly, U.S. Fire argues that the $1,000,000.00 insurance coverage carried by World Trucking satisfies the financial responsibility obligation of the federal regulations and thus the public policy considerations behind the federal regulations are satisfied. Because the for-hire carrier, World Trucking, “provides a level of compensation that meets the federal regulations,” the public policy considerations behind the MSC-90 requirement do not justify “rewriting the policy.” [Doc. 186, pp. 15-16].

C. North River’s Motion For Summary Judgment

North River makes and adopts the same arguments made by U.S. Fire and also asserts that North River could not, under any circumstances, provide coverage under its policy if the U.S. Fire policy provides no coverage. In addition, North River argues that, even if the U.S. Fire policy provides coverage, it does not necessarily follow that the North River policy does also, as plaintiffs argue. North River maintains that its policy is not a “follow form” policy, but rather that the North River policy “contains its own insuring agreement, conditions, definitions, exclusions, and endorsements.” [Doc. 184, p. 8]. Thus, the North River policy must be analyzed according to its own terms, conditions and exclusions. North River argues that its policy has no MCS-90 endorsement nor any provision which would incorporate the MCS-90 from the U.S. Fire policy. Lastly, North River maintains that, even if its policy provides coverage, it has no duty to indemnify until the U.S. Fire coverage is exhausted.

D. XTRA’s Motion For Summary Judgment

XTRA largely repeats and expands upon the arguments made by U.S. Fire and North River. XTRA does make one argument, however, not addressed by U.S. Fire or North River. XTRA relies on Federal Motor Carrier Safety Administration (“FMCSA”) “regulatory guidance” to support its argument that the MCS-90 does not extend coverage to permissive users such as World Trucking in this case. XTRA implicitly suggests that the agency guidance would likely change the result in John Deere v. Nueva and Lynch v. Yob and is controlling authority.

VI. Analysis and Discussion

A. Are World Trucking, Nazov and Milev “insureds” under the U.S. Fire basic policy, without regard to the endorsements?

As an initial matter, the Court will address the question of whether World Trucking, Nazov and Milev are insureds under the U.S. Fire policy without consideration of either the CO-013 or MCS-90 endorsements. If the answer to this initial question is “no,” then the Court’s inquiry ends. No defendant, however, makes any serious or substantial argument that the tort defendants do not fall within the definition of insured in the policy.

The U.S. Fire policy provides that XTRA and “anyone else” who uses a covered auto with permission of XTRA is an insured under the policy. U.S. Fire policy, Sec. II, A, 1 (emphasis added). “Auto” is defined under the policy to specifically include “trailer” or “semitrailer.” Id. Sec. IV, B. The policy clearly defines “covered auto” as any auto, including a trailer, owned by XTRA. Id. Sec. I.

No defendant disputes ownership of the trailer involved in the March 7, 2004, accident by XTRA. Nor does any party seriously dispute that the trailer was being operated on March 7 by World Trucking with the permission of XTRA pursuant to the terms of their lease agreement. Thus, World Trucking, Nazov and, potentially, Milev were permissive users of a covered auto at the time of the March 7 accident and clearly insureds under the terms of the basic U.S. Fire policy.

B. What is the effect of the endorsement CO-013 on the U.S. Fire policy?

The U.S. Fire policy includes endorsement CO-013 which reads as follows: “It is agreed that the lessees of vehicles, leased to them by the named insured, are not an insured under this policy.” Endorsement CO-013 clearly operates to ex-elude from the definition of insured under the policy the lessees of vehicles leased to them by XTRA. At first blush, the endorsement would clearly seem to operate to exclude the tort defendants, as lessees of the trailer, from the definition of an insured. The policy, however, does not contain a definition of “vehicle” or “vehicles” and plaintiffs argue that the term is ambiguous and lends itself to more than one meaning and should, thus, be construed against the insurance company.

As noted above, the policy defines the term “auto” as “a land motor vehicle, ‘trailer’ or ‘semitrailer’ designed for travel on public roads but does not include ‘mobile equipment.’ ” “Mobile equipment” is defined as various types of land vehicles, including bulldozers and other land vehicles designed for off road use, vehicles on crawler treads, vehicles maintained primarily to provide mobility to permanently mounted cranes, shovels, loaders and the like, road graders, scrapers or rollers or other permanently attached equipment and other vehicles maintained primarily for purposes other than the transportation of persons or cargo. In view of these definitions, plaintiffs argue that “vehicles could mean mobile equipment since the term is used to describe examples of property excluded from coverage, or, perhaps the term was used in lieu of land motor vehicles — its meaning is uncertain.” [Doc. 178, p. 12] (Internal quotation marks omitted).

An insurance policy is ambiguous if it is capable of more than one reasonable construction. See Harkavy v. Phoenix Ins. Co., 220 Tenn. 327, 417 S.W.2d 542, 546 (1967). Where policy language is ambiguous, Tennessee law requires that the language be construed in favor of the insured. Id. at 546; Spears v. Commercial Ins. Co. of Newark, New Jersey, 866 S.W.2d 544, 550 (Tenn.App.1993). A provision in a policy limiting or reducing coverage is to be construed strongly against the insurance company. Sturgill v. Life Ins. Co. of Georgia, 62 Tenn.App. 550, 465 S.W.2d 742, 745 (1970). Exclusions in insurance policies must be strongly construed against the insurance company and in favor of the insured. See Allstate Ins. Co. v. Watts, 811 S.W.2d 883, 886 (Tenn.1991); Travelers Ins. Co. v. Aetna Cas. & Sur. Co., 491 S.W.2d 363, 367 (Tenn.1973). These clauses should not, however, “be so narrowly construed as to defeat their evident purpose.” Tomlinson v. Bituminous Cas. Corp., 117 F.3d 1421, 1997 WL 397248 (6th Cir.1997) (unpublished) (applying Tennessee law).

This Court finds no ambiguity in the word “vehicles.” While the definitions, viewed together, suggest that the word “vehicles” has a broader meaning perhaps than the word “auto” and that the term “auto” has a broader meaning than “trailer,” it is clear that the word “vehicle” includes both autos and trailers. Plaintiffs’ efforts to create ambiguity is unconvincing. As a matter of common sense and ordinary usage, the word “vehicles” as used in endorsement CO-013 includes the trailer involved in the March 7 accident. The clear language of the endorsement compels the conclusion that the tort defendants, as lessees of the trailer at issue, are excluded by operation of the endorsement from the class of insureds under the policy.

Plaintiffs originally made a second argument with respect to the endorsement CO-013. Citing Commercial Union Ins. Co. v. Universal Underwriters, Inc., 223 Tenn. 80, 442 S.W.2d 614 (1969) and McManus v. State Farm, 225 Tenn. 106, 463 S.W.2d 702 (1971), they argued that the endorsement is not permitted by Tennessee law and void because it violates the public policy of Tennessee. Plaintiffs have now apparently abandoned that argument and argue, instead, that Arizona law applies and the endorsement is void because it violates the public policy of Arizona. Defendants respond that neither the law of Tennessee nor the law of Arizona would invalidate the lessee exclusions in the U.S. Fire policy.

On this issue, the Court is constrained to agree with defendants. Even if Tennessee law applies to the interpretation of the lessee exclusions of the U.S. Fire policy, it clearly is not void. Commercial Union did, in fact, deal with the validity of a provision in a contract of insurance limiting coverage of permissive drivers. Based on Tennessee’s then existing financial responsibility statutes, the supreme court held the provision void in view of the public policy expressed by the legislature in the Financial Responsibility Act. Commercial Union, 442 S.W.2d at 617. The almost identical question was again considered by the Tennessee Supreme Court just two years later in McManus. Once again, the policy provision in question excluded coverage for a permissive user of the insured auto. The supreme court, however, held the provision “not void” and largely overruled Commercial Union. McManus, 463 S.W.2d at 705.

Any lingering question about the continued viability of Commercial Union on the question was resolved in Purkey v. American Home Assurance Co., 173 S.W.3d 703 (Tenn.2005). In a case dealing with certified questions of law from the northern division of this Court, the Tennessee Supreme Court addressed the question of whether provisions in an automobile liability insurance policy excluding coverage for bodily injury to household or family members of the insured were void as against Tennessee law or public policy as expressed in the financial responsibility law, Tennessee Code Annotated §§ 55 — 12— 101 thru 140 (2004). The supreme court examined the interplay between Tennessee Code Annotated § 55-12-122, which requires that motor vehicle liability policies “shall insure the person named therein, and any other person using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle ...” and Tennessee Code Annotated § 56-7-121 (2000), which provides that “[njotwithstanding and other provision of law to the contrary, an insurer may exclude coverage pursuant to a contractual agreement; ...” Finding that Tennessee Code Annotated § 56-7-121 gives broad authority for exclusionary clauses in insurance policies, the court found this provision to “trump all others.” The court held that “family or household exclusions in automobile liability insurance policies do not violate Tennessee law or public policy.” Id. at 709. The court’s reasoning in Purkey applies with equal force to the policy under consideration here.

Plaintiffs likewise misconstrue Arizona law in arguing that the lessee exclusion would be invalid under that state’s statutory and case law. The plaintiffs cite “Section 28-1170(B)(2) of Arizona’s version of the Uniform Motor Vehicle Safety Responsibility Act” as requiring liability insurance policies to cover any person “using the motor vehicle ... with the express or implied permission of the named insured.” Defendants respond that plaintiffs rely on a now repealed statute. Defendants are incorrect. Section 28-1170(B)(2) has not been repealed but has been recodified at ARS § 28-4009 and provides that an “owner’s motor vehicle liability policy shall insure the person named in the policy as the insured and any other person, as insured, using that motor vehicle or vehicles with the express or implied permission of the named insured ...” ARS § 28-4009(A)(2)(2009).

Plaintiffs also correctly state that the requirements of the section, commonly known as the “omnibus clause,” is read by law into every motor vehicle liability policy in Arizona and overrides competing restrictive endorsements. Principal Casualty Ins. Co. v. Progressive Casualty Ins. Co., 172 Ariz. 545, 838 P.2d 1306 (1992). That, however, does not compel a finding that the lessee exclusions in the U.S. Fire policy is void and against Arizona public policy.

One obvious reason is that the trailer owned by XTRA is not a “motor vehicle” as that term is defined in the Arizona Financial Responsibility Act. “Motor vehicle” is defined as “a self-propelled vehicle ...” ARS 28-4001(3)(2009). Clearly, the trailer is not self-propelled. Secondly, even if the trailer could be considered a motor vehicle, Arizona’s financial responsibility requirements do not apply to a motor vehicle that is “subject to the requirements of a provision of law requiring insurance or other security on certain types of vehicles.” ARS § 28-4003(2)(2009). Thus, because of the federal financial responsibility requirements, Arizona’s requirements would not apply to the trailer. Lastly, the Arizona public policy is met if a liability insurance policy with limits of $15,000.00 for bodily injury or death of any one person in any one accident, or, in the case of bodily injury or death of two or more persons, $30,000.00, is available. Here, the $1,000,000.00 in coverage provided by World Trucking far exceeds the applicable Arizona limits of coverage.

C. Does the MCS-90 Endorsement Negate the Limitation or Exclusion of Endorsement CO-013?

Although the parties have raised other issues, this really is the crucial question at the core of this litigation. If the MCS-90 negates the CO-013 endorsement, then the tort defendants are insureds under the U.S. Fire policy; if not, there is no coverage. Any consideration of the effect of the MCS-90 in the policy necessarily requires a review of the history and purposes of the MCS-90 endorsement.

1. The History and Purpose of the MCS-90

The Motor Carrier Act of 1980, 49 U.S.C. § 10101 et seq., and the regulations promulgated thereunder require certain interstate motor carriers to obtain an insurance policy containing “a special endorsement ... providing that the insurer will pay within policy limits any judgment recovered against the insured motor carrier for liability resulting from the carrier’s negligence, whether or not the vehicles involved in the accident is specifically described in the policy.” Illinois Central Railroad Co. v. Dupont, 326 F.3d 665, 666 (5th Cir.2003). The legislation was, in part, intended to address abuses that had arisen in the industry which threatened public safety, including the use by motor carriers of leased or borrowed vehicles to avoid financial responsibility for accidents that occurred while goods were being transported in interstate commerce. Empire Fire & Marine Ins. Co. v. Guaranty Nat'l. Ins. Co., 868 F.2d 357, 362 (10th Cir.1989).

In response to the passage of the Motor Carrier Act, the Secretary of Transportation promulgated a motor carrier endorsement form known as the MCS-90. See 49 C.F.R. 387.15 (2009). The endorsement is to be attached to the truckers’ liability policy issued to a motor carrier “for the purpose of providing notice to the general public that all criteria of section 30 [the financial security requirements] have been met.” Minimum Levels of Financial Responsibility for Motor Carriers, 46 Fed. Reg. 30974, 30978 (June 11, 1981) (codified at 49 C.F.R. pt. 387). The required language of the form endorsement is set forth in the regulation.

“It is well-established that the primary purpose of the MCS-90 is to assure that injured members of the public are able to obtain judgment from negligent authorized interstate carriers.” John Deere, 229 F.3d at 857; see also 49 C.F.R. § 387.1 (“The purpose of these regulations is ... to assure that motor carriers maintain an appropriate level of financial responsibility for motor vehicles operated on public highways.”) In order to accomplish this purpose, the endorsement “makes the insurer liable to third parties for any liability resulting from the negligent use of any motor vehicle by the insured, even if the vehicle is not covered under the insurance policy.” T.H.E. Ins. Co. v. Larsen Intermodal Services, Inc., 242 F.3d 667, 671 (5th Cir.2001). The MCS-90 endorsement applies “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.” 49 C.F.R § 387.15.

The insurer is not without recourse when it is obligated to provide coverage under an MCS90 endorsement. When the insurer is required to make a payment it would not have made but for operation of the endorsement, the insurer may recover such payments from the insured. 49 C.F.R. § 387.15, Illustration I (“The insured agrees to reimburse 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 [the MCS-90] endorsement.”).

2. The Effect of the MCS-90 on the U.S. Fire Policy

The effect of the MCS-90 on the U.S. Fire policy presents a significant question about which the parties strenuously disagree. The precise issue does not appear to have been considered by the Sixth Circuit and both parties cite several state and federal court cases from other circuits which they believe support their view of the case. As noted above, the plaintiffs rely primarily on two state supreme court decisions and a duo of federal circuit court of appeals cases, while the defendants find support for their position in a California district court decision, affirmed by the Ninth Circuit, and several federal circuit court of appeals cases.

In Adams v. Royal Indem. Co., 99 F.3d 964 (10th Cir.1996), the Tenth Circuit considered a factual scenario very similar to the one in this case. Adams was seriously injured in an accident involving a tractor-trailer and obtained a substantial state court judgment against the driver of the tractor-trailer. Adams then sued Royal, the insurer of both the lessee of the trailer, who had in turn leased the trailer to the driver of the tractor-trailer involved in the accident, and the lessor of the trailer. The district court granted summary judgment in favor of Royal on grounds that the trailer was not a “covered auto” under the policy and the driver of the tractor-trailer was not an insured under either policy. The district court concluded that the MCS-90 applicable to both policies did not extend coverage to the driver because the driver could not be considered an insured.

The Tenth Circuit affirmed the district court’s finding that the trailer was not a covered auto under either policy. The Tenth Circuit also agreed with the district court that the MCS-90 did not extend coverage to the driver on the lessor’s Royal policy. The circuit court, however, held that the MCS-90 modified the definition of insured under the lessee’s Royal policy so that Royal was liable to Adams on the policy.

Both Royal policies defined an insured as including a permissive user, which the driver was, in language almost identical to the language of the U.S. Fire policy here. Also, as with the policy at issue here, “auto” was defined to include a trailer. Both policies had a schedule of covered autos; neither listed the trailer involved in the Adams accident and the policies explicitly provided that only listed autos for which a premium had been paid were covered autos. The lessee’s policy, however, had a handwritten notation in the schedule of covered autos of “any trailer,” while the lessor’s policy had a typed notation of “any undescribed trailer while singularly attached.” Both policies, as noted above, had the ICC mandated MCS-90 endorsement.

Adams argued that both basic policies provided coverage because the “omnibus clause” defined an insured as anyone “using with your permission a covered auto you own, hire or borrow.” Both the district court and the Tenth Circuit disagreed because the policy schedule of covered autos applied only to “owned vehicles” and neither the lessee nor the lessor owned the trailer involved in the Adams accident. Adams, 99 F.3d at 967. The Tenth Circuit noted that both policies contained a separate schedule of covered autos hired or borrowed, which was blank. As a result, neither policy insured the trailer involved in the accident.

The Tenth Circuit framed the issue in Adams as “whether [the driver] can be considered an “insured” under either policy after the policy is modified by the [MCS-90] endorsement, thereby triggering an obligation for Royal to satisfy Adams’ judgment against [the driver].” Id. at 969 (emphasis in original). In answering that question, the Tenth Circuit noted that Adams was “a member of the general public, which is precisely the group that is intended to be protected by the [MCS-90] endorsement.” Id. The Tenth Circuit explicitly disagreed with the district court finding that the definition of insured in the basic policy, which did not include the driver of the tractor-trailer because he was not using a covered auto, could not be expanded by the MCS-90, which did not include its own definition of insured. Thus, the Tenth Circuit held that the MCS-90 “endorsement precludes a policy from limiting the definition of an insured to one who owns, hires or borrows only specifically described motor vehicles because such a limited definition would subvert the purpose of the ICC endorsement of requiring coverage on all regulated vehicles regardless of whether or not they are listed in the policy specifically.” Id. at 970 (emphasis in original). The MCS-90, according to the Tenth Circuit, “must be read to eliminate the limiting clause that coverage applies only to covered autos.” Id. at 971.

Of particular interest was the Tenth Circuit’s rejection of the district court’s reliance on Empire Indem. Ins. Co. v. Carolina Cas. Ins. Co., 838 F.2d 1428 (5th Cir.1988), “for the proposition that the [MCS-90] does not modify a policy which defines the insured as a person driving a covered vehicle when the insured is not driving a covered vehicle.” Id. at FN 9. The Tenth Circuit noted that Empire involved a dispute among several insurers about who ultimately was liable to pay a judgment rather than a claim by a member of the public who sought to invoke the MCS-90 to collect a judgment from an insurer. Thus, the Tenth Circuit made a distinction between cases where an injured member of the public seeks recovery because of the endorsement and cases where there are disputes among insurers over ultimate liability. Id. (citing Industrial Indemnity Co. v. Truax Truck Line, Inc., 45 F.3d 986, 991 (5th Cir.1995)).

The Tenth Circuit summarized its decision as follows:

We consider our interpretation to be consistent with the purpose of the endorsement. By deleting the policy requirement that an insured is defined in terms of described autos, the insurer assumes the role mandated by Congress and the ICC of protecting the public from interstate truckers who either themselves utilize, or give permission to others to utilize, uninsured vehicles which they own, hire, or borrow, but which are not listed in their insurance policies. This ICC endorsement is mandatory and any insurer who wishes to insure entities for public liability resulting from 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 must do so knowing that there are government mandates restricting their ability to limit coverage, and they can presumably set their premiums accordingly ...

Id. at 971-72.

In John Deere Ins. Co. v. Nueva, 229 F.3d 853 (9th Cir.2000), the Ninth Circuit considered the same question under similar facts. John Deere Insurance Company brought a declaratory judgment action seeking a declaration that it had no duty under a liability policy it had issued to indemnify permissive users of the insured’s semitrailer involved in a traffic accident. In the underlying personal injury action, a tractor-trailer rear ended a bus operated by Nueva, resulting in personal injuries to Nueva. The driver and owner of the tractor were uninsured. The owner of the trailer was insured by John Deere. At the time of the accident, the owner had agreed to sell the trailer to the owner of the tractor but had not yet transferred title. The John Deere policy included the federally mandated MCS-90.

The insurance policy defined an insured as the named insured (the owner of the trailer) and anyone else using a “covered auto” with the insured’s permission. Only those autos specifically scheduled in the policy were covered autos. The trailer was not listed in the schedule of covered autos; thus, the driver and owner of the tractor-trailer were permissive users of a non-covered vehicle and not insureds under the policy’s express terms. The Ninth Circuit framed the question as “whether a federally mandated endorsement to an insurance policy creates a duty on the part of an insurer to indemnify a permissive user of an auto not covered by the underlying policy for injuries he negligently caused to members of the public.” Id. at 854.

Noting that the “purpose of the MCS-90 is to assure that injured members of the public are able to obtain judgment from negligent authorized interstate carriers,” Id. at 857 (citing Harco Nat. Ins. Co. v. Bobac Trucking, Inc., 107 F.3d 733 (9th Cir.1997)), the court found that the appellants, injured members of the public, “are precisely the group meant to be protected by the MCS-90” and made a distinction between cases where injured members of the public seek indemnity under an MCS-90 and the case were two insureds or an insurer and its insured are seeking to determine their rights pursuant to the policy. Id. at 857.

John Deere took a position very similar to the one taken by the defendants in this case, i.e., that the MCS-90 only negates the “covered auto” limitation with regard to the named insured. In rejecting John Deere’s argument, the Ninth Circuit stated:

The critical language in the endorsement is the provision which states that “the insurer agrees to pay ... any final judgment recovered against the insured for public liability ... regardless of whether or not each motor vehicle is specifically described in the policy [.]” (Emphasis added). This language indicates that whatever limitation a policy expresses regarding coverage extending only to “covered” or “specified” autos, this limitation ceases to operate when an injured member of the public seeks indemnification on behalf of the “insured”. See Empire, 868 F.2d at 362 (The MCS-90 “negates any inconsistent limiting provisions in the insurance policy to which it is attached[.]”). Furthermore, a policy containing the MCS-90 “cannot explicitly limit liability to those vehicles specifically described therein, nor can it indirectly so limit coverage by attempting to define who is an insured in terms of specifically described vehicles.” Adams, 99 F.3d at 970; See also Canal, 889 F.2d at 610 (recognizing that the MCS-90 reads excess and other-insurance clauses out of the policy as against injured members of the public.)

John Deere asks us to read the use of the word “insured” in the endorsement as referring only to its named “insured,” Sahota. In other words, John Deere maintains that the MCS-90 only negates the “covered auto” limitation with regard to the named insured, and would not impact its obligations regarding permissive users. However, we decline to limit the endorsement in this manner. Under John Deere’s proffered interpretation, the MCS-90 negates the express provision in part(a) of the “WHO IS AN INSURED” section of the policy which limits coverage to only “covered autos.” This is so because without the endorsement, Sahota would not be an “insured” under the policy if he caused injury while driving a non-covered auto. It is the endorsement that would transform him into an “insured”. Thus, it is inescapable that the effect of the MCS-90 endorsement is to modify the policy’s definition of an “insured.” ...

... the MCS-90 negates the limitation that only users of “covered autos” are “insureds”. Therefore, we conclude that under the policy before us, John Deere cannot avoid indemnifying [the driver and operator/lessee] by relying on the policy’s narrow definition of “insured” which attempts to limit that status to permissive users of solely “covered autos”. See Adams, 99 F.3d at 970.

Id. at 859.

As noted above, plaintiffs’ also rely on recent decisions of the highest state courts in Ohio and Virginia. In Lynch v. Yob, 95 Ohio St.3d 441, 768 N.E.2d 1158 (Ohio 2002), the Ohio Supreme Court relied on the holdings in Adams and John Deere to resolve a question of whether a policy of liability insurance covering a leased trailer involved in an accident provided coverage to an injured party under an MCS-90 endorsement “even though the operator of the rig was not an insured under the terms of the trailer’s main policy, and even though there is no claim that the trailer owner was negligent.” Id. at 1159.

The facts in Lynch were very similar to those in the underlying tort actions. An accident involving a tractor-trailer and an automobile took the lives of the automobile’s driver and a passenger. The tractor-trailer was driven by an employee of the tractor’s owner. The tractor was insured by AIG with a policy limit of $1 million. The trailer’s owner was also insured by AIG with a policy limit of $2.5 million. Neither the tractor owner nor the driver were insureds under the AIG policy on the trailer. Thus, no coverage was available under the basic policy; however, the policy included an MCS-90 endorsement. The trial court held that the MCS-90 provided coverage up to the $2.5 million policy limit. The intermediate court of appeals reversed the judgment of the trial court and held that AIG had no obligation to indemnify the owner and driver of the tractor. More specifically, the court of appeals held that the MCS-90 was not triggered unless there was liability on the part of an insured under the basic AIG policy. The Ohio Supreme Court reversed the Ohio Court of Appeals.

Applying federal law to interpret the MCS-90 endorsement, the Ohio Supreme Court adopted the reasoning of the Adams and John Deere decisions to find coverage available under the trailer policy’s MCS-90 endorsement. Id. On appeal, AIG argued that Adams and John Deere were “distinguishable from this case because those cases involved underlying policies that limited coverage to specifically described vehicles, while this case involves a fundamentally different underlying policy limitation, that “truckers” other than employees of the named insured are not covered while using the trailer.” Id. at 1163. AIG further argued “that the MCS-90 endorsement operates to negate exclusions from coverage but cannot transform noninsured parties into insureds.” Id. The Ohio Supreme Court rejected AIG’s argument as too restrictive a reading of John Deere and Adams and held:

... The case sub judice involves a permissive user of a noncovered vehicle, the leased trailer at issue, and so the rule of John Deere Ins. Co. v. Nueva and Adams is fully applicable. That rule that emerges from those cases is that the MCS-90 endorsement should be read to eliminate any limiting clauses in the underlying policy restricting the scope of coverage. See Adams, 99 F.3d at 971; John Deere Ins. Co. v. Nueva, 229 F.3d at 859.

We find that although there may be some factual differences between the case sub judice and the two federal appellate decisions (for example, that there is coverage available on the tractor in this case while there was not in John Deere Ins. Co. v. Nueva and Adams), the reasoning of those two cases fully applies to our determination.

Id. at 1163.

In Heron v. Transportation Cas. Ins. Co., 274 Va. 534, 650 S.E.2d 699 (2007), ER Transport Services, Inc. (“ER”) was registered with the FMCSA as an interstate motor carrier and was insured by a liability insurance policy issued by Transportation Casualty Insurance Company (“TCI”) which contained an MCS-90 endorsement. ER’s employee, driving a tractor-trailer owned by ER, collided with an automobile operated by Craig K. Heron. As a result of the collision, Craig K. Heron and Alma P. Heron died, and their daughter suffered serious personal injuries.

TCI filed a declaratory judgment action seeking a court declaration that the policy issued by TCI provided no coverage for the accident and that TCI had no obligation to pay any judgment rendered against ER or its driver. Because the driver had a bad driving record, the TCI policy explicitly excluded him as a covered driver. The parties agreed that there was no coverage unless coverage was provided by the MCS-90 endorsement. TCI argued that the MCS-90 only applies to accidents which occur in the course of transportation in interstate commerce, and not the accident in question, which occurred exclusively in intrastate commerce.

The Virginia Supreme Court found coverage by applying simple, state law contract rules to the interpretation of the MCS-90, finding that the plain language of the MCS-90 provided that the insurer would pay any final judgment against the insured (ER) resulting from negligence in the operation or use of motor vehicles subject to the requirements of the Motor Carrier Act of 1980. The parties had stipulated that ER was the owner of a vehicle that was subject to the financial responsibility requirements of the Motor Carrier Act, and was subject to a claim and potential judgment for damages resulting from negligence in the operation of that vehicle. On the stipulated facts, the Court rejected TCI’s claims that the MCS-90 endorsement only applies to accidents that occur in the course of transportation in interstate commerce. It was, therefore, not necessary for the Supreme Court to consider the federal statute or regulations that motivated the parties to adopt the MCS-90.

As noted above, U.S. Fire and North River rely heavily on Del Real v. United States Fire Ins. Crum & Forster, 64 F.Supp.2d 958 (E.D.Cal.1998), aff'd 188 F.3d 512, 1999 WL 626619 (9th Cir.1999) (unpublished opinion). In Del Real, plaintiffs in an automobile accident case obtained a state court judgment against the owner of the tractor and driver of a tractor-trailer at fault in the subject accident. They then sued in federal court seeking to recover the unpaid portion of the judgment against two insurance policies issued by U.S. Fire to the owner-lessor of the trailer involved in the accident. The insurance policies contained the federally mandated MCS-90 endorsement identical to the endorsement in the instant case. The U.S. Fire Policies excluded leased autos from coverage under the policy where other insurance coverage was available, as was the case there. Plaintiffs cl