TRANSPORTATION INDUSTRY NEWS

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Annabella Pope
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FALL 2015 2 New FMCSA Hours-of-Service s 5 The Road Ahead -

TRANSPORTATION INDUSTRY NEWS Brokers, What Kind of Contingent

Excess or Reduction Illinois Court of Appeals Finds Policy to

Last month, the Illinois Court of Appeals ruled that an insurer

contingent liability policy when the insured had a valid and

cover the claimed damages. The case is Bartkowiak v.

Aug. 13, 2015). The underlying facts in the case are as follows.

driven by Stan Wdowikowski ( Driver ), struck and killed Joseph

trucking company that employed him, Denise Wdowikowski

( Motor Carrier ), and the truck broker that brokered the job

Broker was listed as an additional insured on Motor Carrier s

In addition, Broker had a policy of insurance with defendant

The Insurer s policy was entitled Contingent Automobile

Pursuant to the Policy, Insurer was obligated to only defend

liability that may arise on a contingent basis. Id.

1 FALL New FMCSA Hours-of-Service s 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 (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 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 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 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 s The Federal Motor Carrier Safety Administration ( FMCSA ) recently announced hours-of-service exemptions for drivers of commercial motor vehicles ( CMV ) transporting

2 New FMCSA Hours-of-Service s 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 Exempt from 30-minute rest break requirement June 18, 2017 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 Exempt from 30-minute break requirement while the livestock is loaded on the CMV June 12, 2017 Motor carrier must have a satisfactory safety rating or be unrated CONCRETE HAULERS - Drivers of ready-mixed concrete trucks Permitted to use 30 minutes or more of waiting time to fulfil rest break requirement April 3, 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

3 BEE HAULERS - Drivers transporting bees in interstate commerce Exempt from 30-minute break requirement while the bees are loaded on the CMV June 19, 2017 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 sensitive radioactive materials Permitted to use 30 minutes or more of on-duty attendance time in order to comply with 30- minute break requirement June 30, 2017 Driver must not be performing other work during attendance time PASSENGER CARRIERS- Drivers of regular route passenger carriers Exempt from changing duty status from driving to on-duty not driving for certain stops May 31, 2017 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 Permitted to apply on-duty attendance of hazardous materials towards 30 minute rest break requirement, provided no other on-duty tasks performed August 21, 2017 Driver must be transporting hazardous material requiring placarding pursuant to 49 CFR part 172, subpart F, or select agents and toxins identified in (b)(13) that do not require placarding Must have filed security plans requiring constant attendance of hazardous materials pursuant to Carrier must be unrated or have a satisfactory safety rating. 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 ed to the FMCSA. 3

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.

4 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, 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. 4

THE ROAD AHEAD October 1-2 is the Annual Meeting of the Motor Carrier Insurance Educational Foundation in Orlando.

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.

Park, Georgia on October 6, 2015. Registration is free. https://events.r20.constantcontact.com/register/ eventreg?

5 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. 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. 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, Registration is free. eventreg?oeidk=a07eb70zvan1fe676ce&oseq=&c=&ch= 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. The City of Brotherly Love will host the ATA Management Conference and Exhibition October Rob will be speaking on a panel involving freight claims related to cargo theft. Kurt Rozelsky and Matt Stone will attend the TIDA Annual Conference in San Antonio, Texas on October They will be sure to remember the Alamo. 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. 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. Matt will attend CLM Insurance Coverage, Extra-Contractual, Claims/Litigation Management Conference in New York, NY in December. 55

more articles online... Insurer Gets a Taste of South Carolina Bad Faith Law in Failure to Settle Within Time Demand Case smithmoorelaw.

1 million the difference between the coverage provided under an automobile policy and the amount of the judgment entered against its insured after Nationwide

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

com/tnlworkerstatus One of the most difficult employment law issues facing employers is the status of their workers whether they are employees or independent

6 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. 6

TEAM DIRECTORY All email extensions: @smithmoorelaw.com ERIK ALBRIGHT Greensboro, NC 336.378.5368 erik.albright@ ROB MOSELEY *TEAM LEADER* Greenville, SC 864.751.7643 rob.

cohen@ BOB PERSONS Atlanta, GA 404.962.1075 bob.persons@ MANNING CONNORS Greensboro, NC 336.378.5236 manning.connors@ MARY RAMSAY Charleston, SC 843.300.6659 mary.

crites@ JULIE EARP Greensboro, NC 336.378.5256 julie.earp@ JAY HOLLAND Wilmington, NC 910.815.7165 jay.holland@ SHAWN KALFUS Atlanta, GA 404.962.1042 shawn.

mccarrell@ JACK RIORDAN Greenville, SC 864.751.7638 jack.riordan@ JOSEPH ROHE Greenville, SC 864.751.7668 joseph.rohe@ JENNIFER RATHMAN Atlanta, GA 404.962.1074 jennifer.

stone@ MARC TUCKER Raleigh, NC 919.755.8713 marc.

7 TEAM DIRECTORY All ERIK ALBRIGHT Greensboro, NC ROB MOSELEY *TEAM LEADER* Greenville, SC MIKE BOWERS Charleston, SC KRISTEN NOWACKI Greenville, SC STEPHEN COHEN Atlanta, GA BOB PERSONS Atlanta, GA MANNING CONNORS Greensboro, NC MARY RAMSAY Charleston, SC RICK COUGHLIN Greensboro, NC JOHN REIS Charlotte, NC BENNETT CRITES Charleston, SC JULIE EARP Greensboro, NC JAY HOLLAND Wilmington, NC SHAWN KALFUS Atlanta, GA FREDRIC MARCINAK Greenville, SC ALEX MAULTSBY Greensboro, NC KEVIN MCCARRELL Greenville, SC JACK RIORDAN Greenville, SC JOSEPH ROHE Greenville, SC JENNIFER RATHMAN Atlanta, GA KURT ROZELSKY Greenville, SC PETER RUTLEDGE Greenville, SC MATT STONE Atlanta, GA MARC TUCKER Raleigh, NC SML Attorneys Named the Best Lawyers in America 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. 7

Smith Moore Leatherwood LLP Attorneys at Law 2 West Washington Street Suite

com Emergency Response Team As part of the array of transportation services

serve clients with urgent needs following a catastrophic accident.

physical and electronic evidence, taking driver and witness statements, making

8 Smith Moore Leatherwood LLP Attorneys at Law 2 West Washington Street Suite 1100 Greenville SC T (864) F (864) 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.

Shippers, brokers, forwarders, and other consumers of transportation services 1 face many

Shippers, brokers, forwarders, and other consumers of transportation services 1 face many THE MULTI BUSINESS MODEL: EXAMINING ADVANTAGES AND PITFALLS Rob Moseley and Fredric Marcinak Smith Moore Leatherwood, LLP 2 W. Washington St., Suite 1100 Greenville, SC 29601 rob.moseley@smithmoorelaw.com