United States District Court, W.D. Virginia, Roanoke Division
Glen E. Conrad, Chief United States District Judge
insurance coverage dispute, Falls Lake National Insurance
Company ("Falls Lake") seeks a declaratory judgment
that it has no obligation to indemnify Israel Martinez, Jr.,
Salinas Express, LLC ("Salinas Express"), or SMC
Transport, LLC ("SMC") in connection with a
personal injury action that Brandon Lester filed against
Martinez, Salinas Express, SMC, and others in this court. See
Lester v. SMC Transport, LLC, No. 7:15CV00665 (W.D.
Va.) (the "underlying personal injury action"). The
case is presently before the court on cross-motions for
partial summary judgment filed by Falls Lake, Lester, and
United Specialty Insurance Company ("United
Specialty"). For the reasons set forth below, Falls
Lake's motion will be granted in part and denied in part,
Lester's motion will be granted, and United
Specialty's motion will be denied.
The Underlying Personal Injury Action
sunrise on October 26, 2015, Lester was traveling southbound
on Interstate 81 in Botetourt County. At approximately the
same time, Martinez was operating a semi-tractor owned by and
registered to SMC (the "SMC Tractor"), a commercial
motor carrier based in Texas. The SMC Tractor had been driven
to Virginia to pick up a disabled semi-tractor utilized by
Salinas Express (the "Salinas Express Tractor"),
another commercial motor carrier based in Texas. The disabled
tractor had been left in the parking lot of a rest stop
adjacent to the interstate.
Roy Salinas ("Roy"), and Eddie Lozano used the SMC
Tractor to tow a third tractor (the "Lozano
Tractor") to Virginia, so that Lozano could deliver the
goods that remained in the trailer attached to the disabled
Salinas Express Tractor. Upon arriving at the rest stop, the
Lozano Tractor was unhooked from the SMC Tractor and then
used to deliver the remaining goods. The Salinas Express
Tractor was then hooked up to the SMC Tractor, so that it
could be towed back to Texas.
before 6:00 a.m., Martinez and Roy attempted to leave the
rest stop in the SMC Tractor with the Salinas Express Tractor
in tow. To do so, Martinez drove north, on the entrance ramp
to the rest stop, so that he could make a U-turn onto
southbound 1-81. In attempting to make the U-turn, Martinez
caused the SMC Tractor, towing the Salinas Express Tractor,
to block at least the right lane of travel.
same time, Lester approached the entrance ramp to the rest
stop while traveling in the right lane. He was unable to stop
or maneuver his vehicle in time to avoid hitting the SMC
Tractor. A second vehicle, operated by Anthony Shifflett,
then struck Lester's vehicle.
December 9, 2015, Lester filed the underlying personal injury
action against SMC, Martinez, Salinas Express, and Shifflett.
On September 2, 2016, the court ruled on a number of motions
filed by the parties in that action, including Lester's
motion for partial summary judgment. As is relevant in the
instant action, the court ruled that Martinez and Roy were
employees of Salinas Express at the time of the accident,
that they were acting within the scope of their employment,
and, thus, that Salinas Express is "vicariously liable
for [their] negligent conduct." Lester v. SMC
Transport. LLC. No. 7:15CV00665, 2016 U.S. Dist. LEXIS
118946, at *27-28 (W.D. Va. Sept. 2, 2016). Although Lester
also moved for partial summary judgment on the issue of
whether SMC is vicariously liable for the negligence of
Martinez and Roy, the court denied that motion on the basis
that a reasonable jury could find that Martinez and Roy were
not agents of SMC.
The Insurance Policiesj
The Policy Issued by Falls Lake;
time of the accident, Salinas Express was insured under a
motor carrier liability policy issued by Falls Lake (the
"Falls Lake Policy"), under which the Salinas
Express Tractor was a "covered 'auto.'" The
Falls Lake Policy obligates Falls Lake 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.'" Falls Lake Motor Carrier Coverage Form
§ 11(A), Docket No. 1-2. Section 11(A)(1) of the Falls
Lake Policy defines "Who Is An Insured." That
section provides, in pertinent part, as follows:
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 except:
(1) The owner or any "employee", agent or driver of
the owner, or anyone else from whom you hire or borrow a
(2) Your "employee" or agent if the covered
"auto" is owned by that "employee" or
agent or a member of his or her household.
e. Anyone liable for the conduct of an "insured"
described above but only to the extent of that liability.
However, none of the following is an "insured":
(1) Any "motor carrier" for hire or his or her
agents or "employees", j other than you and your
(a) If the "motor carrier" is subject to motor
carrier insurance requirements and meets them by a means
other than "auto" liability insurance ....
Id. at § II(A)(1).
addition to the scheduled vehicles for which the Falls Lake
Policy provides coverage, the policy lists three types of
vehicles which "are also covered 'autos' for
Covered Autos Liability Coverage." Id. at
§ I(C). Those vehicles include "Temporary
Substitute Autos, " I specifically:
Any "auto" you do not own while used with the
permission of its owner as al temporary substitute for a
covered "auto" you own that is out of service