FILED
                                                 United States Court of Appeals
                    UNITED STATES COURT OF APPEALS       Tenth Circuit

                           FOR THE TENTH CIRCUIT                       October 11, 2012

                                                                     Elisabeth A. Shumaker
                                                                         Clerk of Court
CATHERINE HERROD and ALAN
PARKINSON, as guardians ad litem for
S.H., T.H., M.H., E.H., minors, C.H.,
N.H., J.H.,

             Plaintiffs-Appellees,

v.                                                        No. 11-4029
                                                  (D.C. No. 1:09-CV-00109-DB)
WILSHIRE INSURANCE COMPANY,                                 (D. Utah)

           Defendant-Third-Party-
           Plaintiff-Appellant,
______________________________

ESPENSCHIED TRANSPORT,
a Utah corporation,

             Defendant-Third-Party-
             Defendant.


                            ORDER AND JUDGMENT*


Before HOLMES, Circuit Judge, BRORBY, Senior Circuit Judge, and EBEL,
Circuit Judge.


*
      After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of this
appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R App. P. 32.1 and 10th Cir. R. 32.1.
      Wilshire Insurance Company (“Wilshire”) appeals from the district court’s

grant of summary judgment in favor of members of the Herrod family (collectively

the “Herrods”) on their claim for a monetary judgment. The Herrods sought to

recover under an insurance policy Wilshire issued to Espenschied Transport

(“Espenschied”), a freight trucking company. The Herrods had previously obtained a

judgment against Espenschied for fatal injuries suffered by Kimball Herrod in a

motor vehicle accident involving a trailer owned by Espenschied. At issue before the

district court on summary judgment was whether the Endorsement for Motor Carrier

Policies of Insurance for Public Liability Under Sections 29 and 30 of the Motor

Carrier Act of 1980 (“MCS-90 endorsement”) attached to Espenschied’s commercial

liability insurance policy was triggered, so as to obligate Wilshire to pay the

judgment against Espenschied. The district court held the MCS-90 endorsement

applied. Exercising our jurisdiction under 28 U.S.C. § 1291, we affirm in part,

vacate in part, and remand for further proceedings.

                                    I.    Background

      To put the issues on appeal in context, we begin with the relevant statutory

and regulatory background associated with the MCS-90 endorsement. Congress

enacted the Motor Carrier Act of 1980 (“MCA”), Pub. L. No. 96-296, 94 Stat. 793,

“to deregulate the trucking industry, increase competition, reduce entry barriers, and

improve quality of service.” Carolina Cas. Ins. Co. v. Yeates, 

, 873

(10th Cir. 2009). Importantly, enactment of the MCA sought, in part, to “address


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abuses that had arisen in the interstate trucking industry which threatened public

safety, including the use by motor carriers of leased or borrowed vehicles to avoid

financial responsibility for accidents that occurred while goods were being

transported in interstate commerce.” Canal Ins. Co. v. Distribution Servs., Inc.,

, 489 (4th Cir. 2003). Accordingly, in order for a “motor carrier”1 to

operate as such, the MCA requires proof of financial responsibility demonstrating

that the motor carrier is “adequately insured in order to protect the public from risks

created by the carrier[’s] operations,” Yeates, 584 F.3d at 875; see also 49 U.S.C.

§ 31139(b), (f); 49 C.F.R. § 387.7(a). The minimum level of financial responsibility

requirements apply only to “for-hire motor carriers operating motor vehicles

transporting property in interstate or foreign commerce”2 and motor carriers

transporting hazardous materials. 49 C.F.R. § 387.3.

      The MCS-90 endorsement constitutes such proof of requisite financial

responsibility under the MCA. See 49 U.S.C. § 31139(f)(1)(A); 49 C.F.R.

§ 387.7(d)(1). Consequently, every liability insurance policy issued to motor carriers

of interstate commerce contains the MCS-90 endorsement. Distribution Servs.,

320 F.3d at 489. The MCS-90 endorsement, in pertinent part, provides that the motor


1
      “Motor carrier” is defined as “a person providing motor vehicle transportation
for compensation.” 49 U.S.C. § 13012(14).
2
      As pertinent here, a for-hire motor carrier transporting property in interstate
commerce must demonstrate financial responsibility of at least $750,000. See
49 U.S.C. § 31139(b)(2); 49 C.F.R. § 387.9.


                                          -3-
carrier’s insurer “agrees to pay, within the limits of liability described herein, any

final judgment recovered against the insured for public liability resulting from

negligence in the operation, maintenance or use of motor vehicles subject to the

financial responsibility requirements of . . . the [MCA]” whether or not the vehicle

involved in the accident is specifically described in the policy.3 49 C.F.R. § 387.15;


3
      The MCS-90 endorsement, set forth in 49 C.F.R. § 387.15, states in full as
follows:

      The insurance policy to which this endorsement is attached provides
      automobile liability insurance and is amended to assure compliance by the
      insured, within the limits stated herein, as a motor carrier of property, with
      sections 29 and 30 of the Motor Carrier Act of 1980 and the rules and
      regulations of the Federal Motor Carrier Safety Administration.

      In consideration of the premium stated in the policy to which this
      endorsement is attached, the insurer (the company) agrees to pay, within
      the limits of liability described herein, any final judgment recovered against
      the insured for public liability resulting from negligence in the operation,
      maintenance or use of motor vehicles subject to the financial responsibility
      requirements of sections 29 and 30 of the Motor Carrier Act of 1980
      regardless of whether or not each motor vehicle is specifically described in
      the policy and whether or not such negligence occurs on any route or in any
      territory authorized to be served by the insured or elsewhere. Such
      insurance as is afforded, for public liability, does not apply to injury to or
      death of the insured’s employees while engaged in the course of their
      employment, or property transported by the insured, designed as cargo. It is
      understood and agreed that no condition, provision, stipulation, or
      limitation contained in the policy, this endorsement, or any other
      endorsement thereon, or violation thereof, shall relieve the company from
      liability or from the payment of any final judgment, within the limits of
      liability herein described, irrespective of the financial condition, insolvency
      or bankruptcy of the insured. However, all terms, conditions, and
      limitations in the policy to which the endorsement is attached shall remain
      in full force and effect as binding between the insured and the company.
      The insured agrees to reimburse the company for any payment made by the
                                                                                  (continued)
                                             -4-
see also Yeates, 584 F.3d at 874. The motor vehicles that are subject to the financial

responsibility requirements are those vehicles used “for the transportation of property

by motor carrier or motor private carrier.” 49 U.S.C. § 31139(b).

      The MCS-90 endorsement is intended to impose a surety obligation on the

motor carrier’s insurer – in other words, the “endorsement is a safety net that covers

the public in the event other insurance coverage is lacking.” Yeates, 584 F.3d.

at 878. An insurer’s obligation to pay a negligence judgment against its insured

pursuant to a MCS-90 endorsement is

      triggered only when (1) the underlying insurance policy to which the
      endorsement is attached does not otherwise provide coverage, and
      (2) either no other insurer is available to satisfy the judgment against the
      motor carrier, or the motor carrier’s insurance coverage is insufficient to
      satisfy the federally-prescribed minimum levels of financial
      responsibility.
Id.



      company on account of any accident, claim, or suit involving a breach of
      the terms of the policy, and for any payment that the company would not
      have been obligated to make under the provisions of the policy except for
      the agreement contained in this endorsement.

      It is further understood and agreed that, upon failure of the company to pay
      any final judgment recovered against the insured as provided herein, the
      judgment creditor may maintain an action in any court of competent
      jurisdiction against the company to compel such payment.

      The limits of the company’s liability for the amounts prescribed in this
      endorsement apply separately to each accident and any payment under the
      policy because of any one accident shall not operate to reduce the liability
      of the company for the payment of final judgments resulting from any other
      accident.


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      The issue here was whether Wilshire’s MCS-90 surety obligation was

triggered such that Wilshire was obligated to pay the judgment against Espenschied.

The parties did not dispute the pertinent facts. Espenschied was established in

1982 as an interstate trucking distribution company providing transport and sorting

services. In January 2005, Espenschied executed an Asset Purchase/Lease

Agreement and an Equipment Lease Agreement, agreeing to lease its fleet of trailers

to DATS Trucking, Inc. (“DATS”), a commercial freight trucking company. On

January 30, 2005, a dual-wheel assembly came off the axle of an Espenschied trailer

that was leased by DATS and attached to a tractor owned and operated by DATS,

killing motorist Kimball Herrod. At the time of the accident, Espenschied was

insured by Wilshire under a commercial auto liability policy that contained

a MCS-90 endorsement. Wilshire denied coverage of the claim, asserting that the

trailer involved in the accident was not listed on Espenschied’s liability policy.

      The Herrods4 brought suit in Utah state court, alleging negligence and other

claims, against Espenschied, DATS, and other parties. The state court complaint

alleged that Espenschied’s trailer was placed in service in an unsafe and defective

condition. The Herrods’ claims “focused on Espenschied’s improper maintenance of

the trailer before sending it out on the highway, including Espenschied’s failure to

have any inspection system in place concerning the securing of wheel assemblies.”

Aplee. Br. at 6. The Herrods ultimately settled their respective claims against
4
      Plaintiff-Appellee Alan Parkinson was not a party in the state court action.


                                          -6-
Espenschied and DATS.5 As part of the settlement, Espenschied executed a

confession of judgment in the amount of $1,292,499.99 that was filed in Utah state

court, and judgment was entered against it. The Herrods presented the judgment to

Wilshire and demanded payment, but Wilshire refused.

      The Herrods then brought this suit against Wilshire seeking judgment against

it in the amount of $1,000,000, which was the policy limit. On the parties’

cross-motions for summary judgment, the district court entered judgment against

Wilshire in the amount of $750,000 plus prejudgment interest, holding that

Wilshire’s MCS-90 obligation was triggered because Espenschied was a “motor

carrier” for purposes of the MCS-90 endorsement and the confessed judgment against

Espenschied constituted a negligence judgment. This appeal followed.

                               II.    Standard of Review

      “We review summary judgment decisions de novo, applying the same legal

standard as the district court.” Sanders v. Sw. Bell Tel., L.P., 

,

1104 (10th Cir. 2008). Summary judgment is appropriate “if the movant shows that

there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a). “When applying this standard,

we view the evidence and draw reasonable inferences therefrom in the light most




5
      In the settlement with DATS, DATS and its liability insurers agreed to pay the
Herrods $2,264,000.00 in cash and additional sums in future payments.


                                          -7-
favorable to the nonmoving party.” Sanders, 544 F.3d at 1105 (internal quotation

marks omitted).

                                     III.    Discussion

   A. Prior Compensation Received from DATS

      On appeal, Wilshire first contends that the district court erred in rejecting

Wilshire’s argument that its MCS-90 obligation did not apply because the Herrods

received compensation from DATS in excess of the minimum required under the

MCA. In other words, Wilshire claims the public policy behind the MCS-90

endorsement – to ensure safeguarding financial protection in the event a member of

the public is injured due to a motor carrier’s negligence – has been satisfied here by

virtue of the Herrods’ settlement with DATS and, therefore, the MCS-90

endorsement attached to Espenschied’s liability insurance policy is not triggered.

The district court rejected Wilshire’s argument, holding that the financial

responsibility requirements apply individually to each motor carrier and each motor

carrier is responsible for the judgment entered against it.

      Like the district court, we perceive nothing in the MCS-90 endorsement, the

MCA, or the relevant regulations that would suggest that a motor carrier’s MCS-90

insurer may avoid paying a negligence judgment entered against its insured on the

basis that the injured member of the public has received compensation from a

different motor carrier’s insurer in settlement of claims against that motor carrier.




                                            -8-
       A commercial motor carrier may operate only if registered to do so, 49 U.S.C.

§ 13901, which requires proof of financial responsibility that is “sufficient to

pay . . . each final judgment against the registrant [motor carrier] for bodily injury to,

or death of, an individual resulting from the negligent operation, maintenance, or use

of motor vehicles,” id. § 13906(a)(1) (emphasis added); see also 49 C.F.R. §§ 387.7,

387.301(a)(1); Distribution Servs., 320 F.3d at 489 (noting that MCA imposes a

liability insurance requirement “upon each motor carrier registered to engage in

interstate commerce” (emphasis added)). These provisions establish that the

financial responsibility requirements to engage in the transportation of interstate

commerce are specific to the individual motor carrier.

       Further, the MCS-90 endorsement provides that an insurer agrees to pay

“any final judgment recovered against the insured” resulting from the insured’s

negligence in the operation, maintenance, or use of motor vehicles. 49 C.F.R.

§ 387.15 (emphasis added). Accordingly, the text of the MCS-90 endorsement

supports the conclusion that an MCS-90 insurer’s obligation to pay a final judgment

is specific to its insured. Neither the text of the statute nor that of the regulations

indicates or implies that an MCS-90 insurer may avoid paying a negligence judgment

against its insured on the basis that the injured party has received compensation from

another motor carrier’s insurer in settlement of claims against that carrier. See also

Carolina Cas. Ins. Co. v. E.C. Trucking, 

, 841-42 (7th Cir. 2005)

(rejecting argument that MCS-90 insurer was relieved of obligation to pay final


                                           -9-
judgment rendered against its insured on the basis that injured party received

compensation via a loan-receipt agreement in settlement of claims against another

defendant).

      Finally, to the extent Wilshire relies on Yeates in support of its argument, it

misconstrues Yeates. In Yeates, we held that an MCS-90 endorsement is triggered if

the underlying insurance policy does not provide liability coverage and the motor

carrier’s other insurance is insufficient to meet the mandated federal minimum or is

nonexistent. Yeates, 584 F.3d at 879. In delineating this standard, we further stated

that “[o]nce the federally-mandated minimums have been satisfied, however, the

endorsement does not apply.” Id. Wilshire latches on to this statement to argue that,

because the Herrods have received in excess of the federally mandated minimum

through their settlement with DATS, the minimum has been satisfied and, therefore,

the MCS-90 endorsement attached to Espenschied’s policy does not apply.

      But Wilshire reads our statement in Yeates out of context. We explained in

Yeates that the MCS-90 endorsement serves as a “surety in the event judgment

against the [motor] carrier is for some reason unsatisfied.” Id. at 880-81. We stated:

      Conceivably, the motor carrier may carry adequate insurance coverage
      providing recovery – at least to the FMCSA prescribed minimums – for
      a judgment in favor of an injured party. Or, the carrier may choose to
      pay the judgment out of its own pocket. In either of these cases, the
      purposes behind the MCS-90 are satisfied, and the endorsement is
      unnecessary. On the other hand, if, for example, the carrier fails to
      maintain insurance (or sufficient insurance) on a truck involved in an
      accident and fails to pay out of its own pocket for its liability to the
      injured party, the MCS-90 endorsement’s purpose is clearly implicated.


                                         - 10 -
       The endorsement in this circumstance would effectuate a minimum level
       of recovery for the injured party from the MCS-90 provider.

Id. at 881 (citation omitted). Accordingly, once the federally mandated minimum has

been satisfied as against a particular motor carrier, either by virtue of the motor

carrier’s liability coverage or payment out of pocket, that particular motor carrier’s

MCS-90 endorsement does not apply. But what Wilshire seeks is to be relieved of

any MCS-90 surety obligation simply because the Herrods received payment from

another motor carrier, even though the judgment against Wilshire’s insured,

Espenschied, remains unsatisfied.

       We find no error in the district court’s rejection of Wilshire’s argument.

Because the federally mandated minimum has not been met, as against Espenschied,

Wilshire’s MCS-90 endorsement (theoretically) is implicated. Our holding is limited

to the situation where, as here, a negligence judgment has been entered against a

motor carrier and has not been satisfied as against that particular motor carrier. In

that instance, the motor carrier’s MCS-90 insurer may not evade payment of the

judgment against its insured on the basis that the injured party has received

compensation elsewhere. We express no opinion on whether Espenschied is a “motor

carrier.”

   B. Espenschied’s Status as a “Motor Carrier”

       Wilshire next contends that the district court erred in concluding that

Espenschied was a “motor carrier” for purposes of triggering its MCS-90



                                         - 11 -
endorsement. As will be explained more fully, we vacate this portion of the

judgment and remand for further proceedings.

       Our resolution of this issue rests primarily on the definition of the term “motor

carrier” and, as such, our discussion begins there. The financial responsibility

requirements of the MCA apply to “motor carriers.” 49 U.S.C. § 31139(b) (noting

that the Secretary of Transportation shall prescribe regulations requiring minimum

levels of financial responsibility to satisfy public liability “for the transportation of

property by motor carrier”) (emphasis added); see also 49 C.F.R. §§ 387.3, 387.7.

The MCA defines “motor carrier” as “a person providing motor vehicle

transportation for compensation.” 49 U.S.C. § 13102(14). Federal regulations

promulgated pursuant to the MCA and accompanying the MCS-90 endorsement

define “motor carrier” as a “for-hire motor carrier or a private motor carrier.”6

49 C.F.R. § 387.5. In turn, “for-hire carriage” is defined as “the business of

transporting, for compensation, the goods or property of another.” Id. Finally, the

regulations establish that the minimum financial responsibility requirements of the

MCA apply to “for-hire motor carriers operating motor vehicles transporting property

in interstate or foreign commerce” and for-hire motor carriers transporting hazardous

materials. Id. § 387.3(a), (b).
6
       The term “motor carrier” also “includes, but is not limited to, a motor carrier’s
agent, officer, or representative; an employee responsible for hiring, supervising,
training, assigning, or dispatching a driver; or an employee concerned with the
installation, inspection, and maintenance of motor vehicle equipment and/or
accessories.” 49 C.F.R. § 387.5.


                                           - 12 -
      Our review of the record reveals that Wilshire argued in the district court that

its MCS-90 endorsement was not triggered because Espenschied, as merely the lessor

of the trailer, was not a “motor carrier” as it “was not transporting property for hire

when the accident occurred.” Jt. App. at 324-25 (emphasis added); see also id. at

655. Instead, DATS, the lessee, was the only company doing so. Id. at 324-25, 655.

      The district court concluded that Wilshire’s MCS-90 obligation was triggered,

however, because Espenschied was a registered motor carrier; it owned the trailer and

was responsible for its maintenance; the Herrods sued Espenschied for its negligent

maintenance of the trailer; and the MCS-90 endorsement requires payment for injury

“resulting from negligent operation, maintenance, or use of motor vehicles.” See id.

at 1044. In so ruling, the district court addressed Wilshire’s argument that

Espenschied was not “operating, maintaining or using” the trailer at the time of the

accident, but it did not address Wilshire’s separate argument that Espenschied was

not acting as a for-hire motor carrier at the time of the accident.

      As we construe the MCA and relevant regulations, the financial responsibility

requirements of the MCA – including the MCS-90 endorsement – apply only to

for-hire motor carriers. See, e.g., 49 U.S.C. §§ 31139(b), 13102(14); 49 C.F.R.

§§ 387.3, 387.5. Accordingly, in order to determine whether Wilshire’s

MCS-90 endorsement applies, it must be determined initially whether Espenschied

was operating as a for-hire motor carrier at the time of the accident. It does not

appear that the district court made such a determination, however. It noted that


                                          - 13 -
Espenschied is a “registered motor carrier,” Jt. App. at 1044, but it did not answer the

question whether Espenschied was operating as a for-hire motor carrier at the time of

the accident.7

      To be a “for-hire carriage,” Espenschied had to be in the “business of

transporting, for compensation, the goods or property of another.” 49 C.F.R.

§ 387.5 (emphasis added). The district court’s order did not address the factual

predicate of “compensation” that is necessary to qualify Espenschied as a for-hire

motor carrier. Wilshire argued that a lessor of motor-vehicle equipment does not act

as a for-hire motor carrier, within the meaning of the MCA and the pertinent

regulations, for purposes of triggering an MCS-90 endorsement. We therefore

direct the district court, on remand, to determine whether Espenschied was acting as

a for-hire motor carrier at the time of the accident.




7
       The parties do not seem to dispute that Espenschied was a federally certified
freight trucking company and that it had motor carrier authority at the time of the
accident. Although this may be factually accurate, it does not answer the separate
question whether Espenschied was transporting the goods of another for
compensation at the time of the accident in order to qualify it as a for-hire motor
carrier for purposes of triggering Wilshire’s MCS-90 obligation.


                                          - 14 -
                                   IV.    Conclusion

      The judgment of the district court is affirmed in part, vacated in part, and

remanded for further proceedings consistent with the views expressed herein.


                                                  Entered for the Court


                                                  Wade Brorby
                                                  Senior Circuit Judge




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