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COAST
TO COAST QUARTERLY
Transportation and Insurance Newsletter |
Spring 2006, Volume 1, Issue 2 |
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McElfish Law Firm |
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VICTORY FOR NON-TRUCKERS, FINALLY!!!
By
Raymond D. McElfish
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For the first time since
1998, the New York Courts have upheld the exclusionary language
in a non-trucking endorsement in the recent Federal case of Connecticut
Indemnity v. QBC Trucking, et. al, 2005 WL 10388878. In
1998, the New York Court of Appeals in the case of Royal v. Providence
Washington, 92. N.Y.2d 653 (1998), struck down a standard non-trucking
exclusion written and intended to exclude coverage when the insured
tractor under the non-trucking automobile liability policy was
used to carry property in any business or used in the business
of anyone to whom the tractor was rented. Typically, in
real practice this usually meant that coverage was intended to
be excluded when the insured tractor was under lease, dispatch,
load or hauling goods on behalf of or in the business of a motor
carrier or
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trucking company. Since the well-known and landmark decision in Royal, non-trucking policies with the standard language present in Royal and utilized by most non-trucking carriers were deemed to be at least pro rata or co-primary with the policy of the motor carrier, resulting in an unexpected, and to some, an inequitable result in the State of New York. From the point of view of the non-trucking carrier, they were required to pay large trucking losses on a pro rata or co-primary basis as well as defense costs and fees, while issuing limited automobile policies for which a disproportionately small premium was collected. From the motor carrier point of view, their position was mostly likely "tough nuggies," and understandably so. As a result, some carriers curtailed non-trucking programs or dropped out of the market all together.
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| When, How and Who Gets the Benefit of Pre-Judgment Interest Resulting from a Carmack Amendment Claim in New York (You May Be Surprised)
By
Teresa A. Gruber
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We are often faced with subrogation assignments from insurers or from trucking companies in which the amount of loss seems clear, but questions arise as to additional costs that could possibly get tacked on to the total cost of recouping such losses in New York. Carriers who have claims all over the country want to know what rules apply in the State of New York. Recently, the Southern District of New York decided a case regarding prejudgment interest awarded in a Carmack Amendment claim in which, not only was an award of prejudgment interest found to be appropriate, but in which the Court clearly set forth the manner in which it was to be applied, including how to calculate the rate that should be applied in Carmack Amendment claims, as well |
as the date from which pre-judgment interest should be calculated.
See Atl.
Mut. Ins. Co. v. Napa Transp., Inc., 2005 U.S. Dist. LEXIS 28889,
(S.D.N.Y. 2005).
In Atl.
Mut. Ins. Co. v. Napa Transp., Inc., 2005 U.S. Dist. LEXIS 28889,
(S.D.N.Y. 2005), an insurer sought reimbursement for its
payments made to its insured, Johnson & Johnson, after a
trailer loaded with its products caught fire in Pennsylvania
while being transported to Rhode Island. The products were deemed
unsalvageable and were valued at $87,245.33. Plaintiff Atlantic
Mutual paid this amount to Johnson & Johnson on April 15,
2002, pursuant to a subrogation agreement, Atl. Mut. Ins. Co.
at 1-2.
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Counsel Should Take Precaution in Framing Nature of Dispute |
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In
every insurance policy, there is an implied covenant of good faith.
The state of California will summarily adjudicate a bad faith
claim in favor of an insurer if there is “genuine dispute”
or sufficient cause to withhold benefits due to dispute, whether
or not correct. (Opsal
v. United Services Automobile Association, 2 Cal.App.4th 1197
(1991).
In a recent decision, the California Appellate
Court decided that Cal Farm did not act in bad faith breach
of the policy: “If the conduct of the insurer in denying
coverage was objectively reasonable, its subjective intent [was]
relevant.” ( Cal
Farm Insurance Co. v. Krusiewicz, 2005 0DJDAR 8854).
The issue of cautiously and precisely
framing the nature of dispute comes into play when previous case
law is considered. In Congleton
v. National Union Fire Insurance Co. (189 Ca. App.3d 51 (1987)),
for example, an insurer’s “interpretation is not conclusive
of bad faith unless it is ‘inherently unreasonable.’”
Given this nuance between the language, “objectively reasonable”
and “inherently unreasonable,” insurers may have to
have more than a disagreement with the insured as to the policy
terms.
FMCSA Proposal for Motor Carrier Registration Change |
This new FMCSA proposal could
require motor carriers to obtain a new DOT number for each change
in vehicle ownership. The change is expected to simplify the motor
carrier registration process by combining three existing DOT registration
systems. The FMCSA stipulates that it must integrate 3 of the
4 existing registration systems as stipulated under 49 U.S.C.
13908(a) into a new unified system. Title 31 U.S.C. 9701 gives
agencies authority to charge for a service or thing of value provided
by the agency. Thus, FMCSA proposes to charge registration fees
that will cover past application and administrative filing costs.
The proposed new registration system will discontinue the issuance of MC, MX, and FF numbers; current MC, MX, and FF numbers are expected to be phased out within 2 years of effective date. Another component of the new registration system will be a biennial update requirement to provide valuable information about carriers and their fleets and provide useful data for assessing safety performance.
Trucking agencies such as the
American Trucking Association oppose the regulation, as it would
be a financial burden. ATA also claims that the requirement fails
to adequately define a change in ownership. Furthermore, this
agency argues that carriers with poor safety records may abuse
this rule by severing their ties to their records and exchanging
their old ID number for a new, untainted one.
Click for more information regarding the FMCSA and registration
DOT
Docket for unified registration
applied
by the vehicle manufacturer or a registered importer. The
purpose of this measure was to document the vehicle’s compliance
with Federal Motor Vehicle Safety Standards. DOT
Registration Information
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