Perry v. Harco National Insurance

Citations: 129 F.3d 1072; 97 Daily Journal DAR 14273; 97 Cal. Daily Op. Serv. 8801; 1997 U.S. App. LEXIS 33154Docket: No. 96-35806

Court: Court of Appeals for the Ninth Circuit; November 20, 1997; Federal Appellate Court

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Helene Perry, as the administrator of her late husband Kenneth Perry's estate, appeals the district court's summary judgment favoring Harco National Insurance Company regarding coverage for her husband's death while driving for Sunset Express, Inc. Perry argues that the MCS-90 endorsement in Sunset's insurance policy should cover her husband, claiming he was an independent contractor and not an excluded employee. However, the district court determined that under applicable federal regulations, Kenneth Perry qualified as an "employee" for the purpose of the endorsement, which excludes coverage for employee-related injuries or deaths. 

Perry was killed on April 11, 1990, while driving a truck leased to Sunset from M.P. Transportation Company. Following a consent judgment with Sunset, which later dissolved, Perry's estate sought recovery from Harco after Sunset assigned its rights against Harco to her. The MCS-90 endorsement requires Harco to indemnify Sunset for judgments related to liability from its vehicles, but it specifically excludes coverage for employee injuries or deaths incurred during employment. 

The district court ruled that the endorsement's definition of "employee," which includes independent contractors driving commercial vehicles, applied to Perry. Consequently, it affirmed that his death was not covered. Perry's appeal contends that this interpretation is counter to the Motor Carrier Act's purposes and unfair, but the court rejects these arguments, maintaining adherence to the regulations' plain language.

The Motor Carrier Act aims to protect the public from motor carriers avoiding liability for driver negligence by misclassifying drivers as independent contractors and to enhance the health protections for commercial vehicle operators. The Appellant contends that the definition of “employee” in § 390.5 should not be applied in the context of the Endorsement, as it does not eliminate defenses for employers against public claims or protect drivers. However, the argument is flawed for three reasons: first, the regulations do not restrict the definition of “employee” to scenarios that fulfill the cited purposes; second, other regulatory provisions specifically protect drivers; and third, the case law referenced by the Appellant does not support her interpretation.

The Appellant argues that affirming the district court's ruling would leave leased drivers without compensation for injuries or death due to negligence. However, she does have a compensation source through Workers’ Compensation, which is the only remedy against employers in Washington, albeit limited. The Appellant seeks a judicial interpretation of the Motor Carrier Act that would provide a more substantial remedy than Workers’ Compensation for leased truck drivers and establish a cause of action against motor carriers, which would involve insurers covering motor carriers' liabilities under the Endorsement.

A circuit split exists regarding the liability of motor carriers under the Motor Carrier Act for injuries to leased truck drivers, as seen in Johnson v. S.O.S. Transport (6th Cir. 1991), which allows a cause of action, versus White v. Excalibur Ins. Co. (5th Cir. 1979), which does not. The Ninth Circuit has not addressed whether the federal regulatory framework provides a cause of action against motor carriers. The court declines to establish such a cause of action, stating that even if it were found, the Endorsement's language would not cover it. The district court's summary judgment for Harco is affirmed, as the Regulations clearly define independent contractors as employees, thus classifying Perry as an employee and excluding him from the Endorsement's coverage. The appellant's reference to Proctor v. Colonial Refrigerated Transportation is distinguished because the truck driver in that case was considered a member of the public and had no ties to the motor carrier involved.