Direnzo Towing & Recovery, Inc. v. Owner-Operator Independent Drivers Association, Inc.
4:16-cv-10073
D. Mass.Mar 9, 2018Background
- RRG issued a commercial auto policy (with MCS-90 endorsement) to Kings Trucking covering "all sums an ‘insured’ legally must pay as damages" for "property damage" and certain "covered pollution cost or expense" resulting from an accident (Oct. 26, 2013–Oct. 26, 2014).
- On Feb. 28, 2014, a Kings tractor‑trailer left the highway, damaged public infrastructure (guardrail, light pole), spilled fluids and cargo, and was described as a total loss; Worcester police summoned Direnzo Towing to remediate, recover, tow, and store the vehicle.
- Direnzo performed on‑scene remediation and heavy recovery work, invoiced Kings ~$167,700.95 (plus interest and storage fees), and obtained a default judgment against Kings in Worcester Superior Court for that amount (excluding the Chapter 93A claim).
- Direnzo sued Kings’s insurer(s) in state court seeking declaratory relief and to reach/apply insurance proceeds; defendants removed to federal court and RRG counterclaimed for declaratory relief denying coverage; discovery and summary‑judgment briefing were limited to declaratory claims.
- Magistrate Judge Hennessy recommends: (1) the underlying policy covers Direnzo’s towing, recovery, and remediation costs (summary judgment for Direnzo sua sponte as to those costs); (2) the policy does not cover post‑arrival storage fees; (3) the MCS‑90 endorsement may apply if negligence causing the damage is proved (genuine dispute of material fact); and (4) summary judgment on Direnzo’s Reach & Apply, Chapter 93A, and claims against OOSI/OOIDA is premature.
Issues
| Issue | Plaintiff's Argument (Direnzo) | Defendant's Argument (RRG/OOIDA/OOSI) | Held |
|---|---|---|---|
| Does the policy’s "property damage" coverage include Direnzo’s towing, recovery, and remediation costs? | Policy covers "all sums an insured legally must pay as damages because of property damage" including cleanup and recovery costs to remediate third‑party (public) property. | Recovery/towing/remediation are not "property damage"; coverage limited to tort damages, not contractual or quasi‑contractual claims. | Held: Policy covers towing, recovery, remediation costs because Kings’s accident caused third‑party property damage; assignment of ordinary meaning and Massachusetts precedent support coverage. Summary judgment entered for Direnzo as to these costs. |
| Are pollution/remediation costs (fuels/fluids) covered by the policy’s "covered pollution cost or expense" clause? | Such costs fall squarely within the policy’s pollution coverage where pollutants escaped from auto parts due to overturn/accident. | (Defendants disputed coverage in part.) | Held: Clause plainly covers the documented HAZMAT/cleanup costs; summary judgment denied to the extent defendants contest this coverage. |
| Do policy exclusions (contractual liability, assume‑no‑obligation, care/custody/control, no benefit to bailee) bar Direnzo’s recovery? | Exclusions do not apply because Direnzo was summoned by police (not engaged by Kings), claims include quasi‑contract, and the damaged property was public (not Kings’s). | Exclusions exclude liability assumed by contract, damage to property in insured’s care, and benefits to bailee (storage). | Held: Defendants failed to prove applicability. Contractual/assume‑no‑obligation do not apply; care/custody/control does not apply because damage was to public property; no‑benefit‑to‑bailee is ambiguous and does not bar recovery for remediation/recovery but precludes storage fees—storage excluded. |
| Does the MCS‑90 endorsement obligate insurer to pay Direnzo’s judgment? | MCS‑90 covers public liability ‘‘resulting from negligence’’; if Direnzo proves the damages resulted from Kings’ negligence, MCS‑90 may apply and allow direct recovery. | MCS‑90 requires a final judgment expressly for negligence; Direnzo’s state judgment did not plead negligence. | Held: Material dispute exists. Magistrate interprets MCS‑90 as covering judgments imposing liability that results from insured’s negligence; because factual evidence (police report noting driver fatigued/asleep) raises triable issue of negligence, MCS‑90 coverage cannot be resolved on summary judgment. MCS‑90 does not cover storage charges. |
Key Cases Cited
- OneBeacon Am. Ins. Co. v. Commercial Union Assurance Co. of Can., 684 F.3d 237 (1st Cir.) (insurance‑contract interpretation is a question of law; apply ordinary meaning)
- New Federal Mortgage Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 543 F.3d 7 (1st Cir.) (insurer bears burden to prove applicability of exclusions)
- Hazen Paper Co. v. U.S. Fidelity & Guaranty Co., 555 N.E.2d 576 (Mass. 1990) (cleanup costs from pollution may be "damages" under policy when ambiguous)
- Canal Insurance Co. v. Underwriters at Lloyd's, London, 435 F.3d 431 (3d Cir.) (describing MCS‑90 endorsement as granting judgment creditor direct remedy against insurer)
- Distribution Services, Inc. v. Canal Ins. Co., 320 F.3d 488 (4th Cir.) (MCS‑90 is a federal surety obligation triggered only when underlying policy does not otherwise provide coverage)
- Carolina Casualty Ins. Co. v. Yeates, 584 F.3d 868 (10th Cir.) (same principle regarding MCS‑90 triggering)