ORDER RE CROSS-MOTIONS FOR SUMMARY JUDGMENT

CHARLES S. MILLER, JR., United States Magistrate Judge.

In this declaratory action initiated by plaintiff Great West Casualty Company ("Great West"), the court must decide whether defendant Steve Heinis should be afforded liability coverage by Great West, by co-defendant National Casualty Company ("National"), or by neither of said insurers, for an accident that occurred on June 18, 2011, which is the subject of a pending state court action. Before the court are cross-motions for summary judgment by Great West and National. Unless otherwise indicated, the facts are either undisputed or have been construed most favorably for National.1

I. INTRODUCTION

A. Lease of equipment by Heinis to Avery Enterprises

At the time of the June 18, 2011, accident, Heinis, a South Dakota resident, was working as a trucker in the oil fields of western North Dakota and eastern Montana, including the prolific Bakken field. Heinis owned a 2007 Volvo semi-tractor and a 1977 Trailmobile tanker-trailer that he leased to Avery Enterprises, Inc. ("Avery"), a local trucking firm headquartered in Powers Lake, North Dakota, pursuant to a written lease dated April 14, 2011. (Doc. Nos. 20-1, pp. 9-10; 20-2, pp. 4-9; 20-4).

Pursuant to the lease, Heinis had agreed to make his equipment and a driver (which in this case was himself) available to Avery for use in its business of providing trucking services to oil and gas companies operating in western North Dakota and eastern Montana. Specifically, Avery used Heinis and his equipment to haul either fresh water to drill sites for use in drilling operations or to haul contaminated "flowback" or "pit" water from the drill sites to authorized disposal facilities. (Doc. Nos. 20-1, pp. 19-20; 20-2, pp. 12, 21-22; 20-4).

The salient terms of the lease between Heinis (the "lessor") and Avery (the "lessee") were that:

(Doc. No. 20-4).

Notably, the lease did not authorize Heinis to use the equipment he leased to Avery to haul loads for himself or other carriers during the term of the lease—at least not explicitly. In fact, as noted above, Heinis was obligated to remain in "constant contact" with Avery's dispatcher and respond to dispatched loads within a "reasonable" period of time. In addition, Avery's name was on the tractor during the entire time it was leased to Avery—including the day of the accident. Not surprisingly, Heinis never attempted to use the equipment to haul loads for himself or others while it was under lease to Avery. (Doc. No. 20-1, pp. 10, 18-19, 24).

As required by the lease, Avery maintained a policy with National that included commercial liability motor carrier coverage for the equipment it leased from Heinis. And, to satisfy his obligations under the lease, Heinis obtained a "Commercial Lines Policy" from Great West that provided non-trucking liability coverage (sometimes referred to as "bobtail" insurance) for when the equipment was not being used in support of Avery's business.2 (Doc. Nos. 20-2, p. 9; 25-4; 29-5; 29-6; 29-7).

On June 16, 2011, Heinis was dispatched by Avery to transport a load of contaminated flowback water from a well site in North Dakota to a disposal facility in eastern Montana. Heinis started out from Williston, North Dakota, where he often stayed while awaiting his next dispatch because of its central location to where the work was located and the fact it had supporting services, e.g., truck stops and a variety of places to eat.3 He traveled to the well site where he loaded the flowback water and then to the disposal facility where he unloaded it. He then returned to Williston, arriving during the late evening hours of June 16 or the early morning hours of June 17, which was a Saturday. (Doc. Nos. 20-1, pp. 14-16; 20-2, p. 18-19).

Sometime prior to hauling this load, Heinis noted that there was a small leak on his tanker-trailer during loading and unloading. As a temporary measure, he used a bucket to prevent the leaking material from spilling on the ground. On June 17, Heinis decided to get the leak fixed and called Avery's principal, Kevin Avery, about having Avery's shop fix the leak. After Avery agreed, Heinis pulled the tanker-trailer from Williston to Avery's shop at Powers Lake the same day. (Doc. Nos. 20-1, pp. 21-22; 20-2, p. 13).

There is no dispute over the fact that, when Heinis took his tanker-trailer to Avery's shop for repair, he was not under dispatch from Avery. Also, there is no dispute that the repair was Heinis's responsibility under the lease, that he was free to have the repair done elsewhere, and that the cost of having the leak repaired would ultimately be charged to his account. (Doc No. 20-1, pp. 7, 17, 22).

Avery's shop was not able to get to the repair immediately. After spending the evening, Heinis backed his tanker-trailer partway into Avery's shop on the morning of Sunday, June 18, and, an employee of Avery, Jesse Miller, undertook to make the repair. When Miller applied his lit torch to the location of the leak to begin welding, there was an immediate explosion in which Miller was injured.4 It is undisputed that what exploded were residual petroleum fumes from the contaminated flowback water that Heinis had been hauling, presumably from his last load. (Doc. Nos. 20-1, p. 16; 20-2, pp. 14-15; 20-3, p. 6).5

The only factual dispute with respect to the accident, which potentially could be material for reasons discussed later, is whether Heinis had unhooked his trailer from the tractor before the repair was attempted. Heinis claimed he unhooked it because he was concerned the welding could damage the computer on the tractor and that he reconnected the tractor to the trailer following the accident to pull it out of the shop so the ambulance could get to Miller. (Doc. No. 20-1, p. 16). Kevin Avery, on the other hand, was adamant that the tractor was still hooked to the trailer when he ran into the shop following the explosion, recalling that all Heinis had to do to move the trailer was to get into the tractor and pull the trailer out of the shop. (Doc. No. 20-2, p. 15). Miller testified he too did not believe the trailer was unhooked, but could not be certain. (Doc. No. 20-3, pp. 6-7).

There is currently pending in state court a personal injury action brought by Miller against Heinis.

II. APPLICABLE LAW

A. Summary judgment standard

The standards for addressing motions for summary judgment are well known to the court and need not be repeated here. E.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Barnhardt v. Open Harvest Co-op., 742 F.3d 365, 369 (8th Cir.2014).

B. Governing law

The court's jurisdiction in this case arises out of the diversity of citizenship of the parties. Consequently, the court looks to state law to resolve the substantive questions. E.g., George K. Baum & Co. v. Twin City Fire Ins. Co., 760 F.3d 795, 799 (8th Cir.2014). The question of which state's law applies is resolved by applying the choice-of-law rules of the forum state. Id.; Platte Valley Bank v. Tetra Financial Group, LLC, 682 F.3d 1078, 1082-83 (8th Cir.2012).

III. WHETHER NATIONAL'S POLICY AFFORDS COVERAGE

A. Introduction

The complete copy of National's policy contains a myriad of different coverages, endorsements, schedules, and other changes. What has been submitted to the court is more than 1150 pages long and, even when copied double-sided, is 2½ inches thick. In deciding whether the policy provides coverage to Heinis, the court must necessarily limit its consideration to those portions of the policy the parties have identified as being relevant.

Also, the court will apply North Dakota law in construing National's policy given that: (1) National has not pointed to any policy provision purporting to dictate what law governs its interpretation; (2) the policy was issued to Avery as the "Named Insured" and Avery was headquartered and doing business in North Dakota; and (3) the policy is replete with special North Dakota endorsements. See Nodak Mut. Ins. Co. v. Wamsley, 2004 ND 174, ¶ 19, 687 N.W.2d 226.

The North Dakota Supreme Court has summarized the standards for construing insurance contracts under North Dakota law as follows:

Farmers Union Mut. Ins. Co. v. Decker, 2005 ND 173, ¶ 4, 704 N.W.2d 857 (quoting Ziegelmann v. TMG Life Ins. Co., 2000 ND 55, ¶ 6, 607 N.W.2d 898).

B. Section II(A) of National's "Motor Carrier Coverage Form" affords coverage

1. The relevant policy language

Great West contends that National owes Heinis coverage under that portion of its policy entitled "Motor Carrier Coverage Form." The language that Great West relies upon includes:

B. "Auto" means:

1. A land motor vehicle, "trailer" or semitrailer designed for travel on public roads; or * * * *

(Doc. No. 29-5, pp. 96-98, 107) (italics added). In addition, the only "Named Insured" in the declarations for purposes of applying the words "you" or "your" is Avery. (Doc. No. 29-5, p. 7).

2. Contentions of the parties re National's Motor Carrier Coverage Form

Great West argues that Heinis is entitled to coverage for the accident in question under the italicized language of National's Motor Carrier Coverage Form set forth above. In particular, Great West contends Heinis is an insured within the meaning of Section II(A)(1)(c) because the leased tractor was connected to the trailer at the time of the accident, but, even if not, the trailer was used exclusively in Avery's business. National's response is threefold. First, it argues that, even if the language relied upon by Great West nominally affords coverage, there are exclusions that take away that coverage, which are discussed separately below. Second, National contends that whether the trailer was connected to the tractor at the time of the accident is a disputed question of fact. Third, National argues that the trailer was not being used in Avery's business at the time of the accident, much less "exclusively" so.

The court will begin with the last of National's arguments. Before doing so, however, it is helpful first to discuss the fact that the same question of whether the trailer was being used in Avery's business at the time of the accident also arises in deciding whether Great West's policy affords coverage.

As noted above, Section II(A)(1)(c) of National's Motor Carrier Coverage Form provides coverage if the covered auto, which is a trailer, "is being used exclusively in your [i.e., Avery's] business." And, as discussed in more detail later, Great West's policy does not extend coverage to an auto, which includes a trailer, that is "used in the business of anyone to whom the `auto' is rented, leased or loaned." Putting aside the use of the modifier "exclusively" in National's policy, there appears to be no material difference between the "being used ... in your business" language of National's policy and the "in the business of" language of Great West's policy in terms of the meaning of the word "business," as well as more generally, the intended application of the policy language. National's policy refers to Avery's business as a motor carrier, and Great West's policy refers to the business of anyone to whom the equipment is leased, which, in this case, would also be Avery. Hence, the operative question for both policies is whether the trailer involved in the explosion was being used in Avery's business at the time of the accident and, more particularly, "exclusively" so for National's policy.

In addressing the question of whether the trailer was being used in Avery's business at the time of the accident, the discussion that follows will sometimes use "in the business of" as a shorthand reference to the operative language from both policies when discussing cases applying similar policy language.

3. Whether the trailer was being used exclusively in Avery's business at the time of the accident

a. The clear and unambiguous meaning of "in the business of"

While there are a number of accepted usages of "business" (including, for example, a verbal abuse or scolding, i.e., giving someone the "business"), the common and ordinary usage in this context is that a "business" is a commercial enterprise or activity. E.g., McGriff By and Through Norwest Capital Management & Trust Co. v. United States Fire Ins. Co., 436 N.W.2d 859, 862 (S.D.1989) ("McGriff") ("Whether we go to Webster or to Black's Law Dictionary, both of which present various definitions [of `business'], it is clear that they generally refer to a commercial enterprise or activity."); see generally Oxford English Dictionary (Online 3d ed. entry updated March 2012); Black's Law Dictionary 211 (8th ed.2004).

A few courts have concluded "in the business of," or comparable policy language, is ambiguous because courts have reached different conclusions about how it should be applied in the trucking context. E.g., Engle v. Zurich-American Ins. Group, 216 Mich.App. 482, 549 N.W.2d 589, 591 (1996); McLean Trucking Co. v. Occidental Fire & Casualty Co. of North Carolina, 72 N.C. App. 285, 324 S.E.2d 633, 636 (1985); cf. Great West Cas. Co. v. Carolina Cas. Ins. Co., Nos. A05-1619, A05-1773, A05-1804, 2006 WL 1704125, at *7 (Minn.Ct.App. June 20, 2006) (unpublished opinion) (concluding there may be a latent ambiguity after the disputed facts are resolved because the phrase as applied could refer to when a load is being hauled for the lessee or more generally to any activities that benefit the lessee).

An often-cited case taking the opposite view in light of the generally understood meaning of "business" is Hartford Ins. Co. of Southeast v. Occidental Fire & Cas. Co. of North Carolina, 908 F.2d 235, 239 (7th Cir.1990) ("Hartford") where the Seventh Circuit stated:

Id. at 239. The weight of authority appears to be with the Seventh Circuit both in terms of the meaning ascribed to "in the business of," or comparable language, as well as the conclusion, explicitly or implicitly, that the language is not ambiguous. See, e.g., Empire Fire and Marine Ins. Co. v. Brantley Trucking, Inc., 220 F.3d 679, 681-82 (5th Cir.2000) ("Empire Fire")(quoting Hartford); National Continental Ins. Co. v. Empire Fire & Marine Ins. Co., 157 F.3d 610, 612 (8th Cir.1998) ("National Continental")(relying upon the Seventh Circuit's definition in Hartford); Forkwar v. Empire Fire & Marine Ins. Co., No. WGC-09-1543, 2010 WL 3733930, at *14 (D.Md. Sept. 20, 2010) (applying Maryland law); Wenkosky v. Protective Ins. Co., 698 F.Supp. 1227, 1230-31 (M.D.Pa.1988) (concluding that comparable language in an exclusion was clearly worded and unambiguous and citing cases from other jurisdictions); Casey v. Smith, 353 Wis.2d 354, 846 N.W.2d 791, 797 (2014) (adopting the interpretation set forth in Hartford, stating "it presents a clear rule that is consistent with the plain language of the exclusion" and citing other cases).

While there are no North Dakota cases directly on point, the North Dakota Supreme Court has stated it will give undefined terms their plain meaning and will not strain to find an ambiguity simply to find coverage. E.g., Farmers Union Mut. Ins. Co. v. Decker, 2005 ND 173 at ¶ 4, 704 N.W.2d 857. And, in at least one auto insurance case, the court has concluded that "commercial" (a synonym for "business") and the similarly broad term of "occupation" were not ambiguous and should be accorded their commonly understood meanings. See Bauerle v. State Farm Mutual Automobile Ins. Co. of Bloomington, Ill., 153 N.W.2d 92 (N.D. 1967). In addition, the North Dakota Supreme Court has essentially accorded the same meaning to the term "business" in other contexts. Grand Forks Herald, Inc. v. Lyons, 101 N.W.2d 543, 547 (N.D.1960) (relying upon a Webster's dictionary definition for the term in construing a statute); Green v. Frazier, 44 N.D. 395, 176 N.W. 11, 17 (1920) (the term "private business" is readily defined as a "business or enterprise" conducted for the purpose of private gain, enjoyment, or profit).

This court predicts that, if the North Dakota Supreme Court is called upon to decide the meaning of "in the business of," or similar language, in commercial trucking policies, it will likely follow the decisions of the Fifth, Seventh, and Eighth Circuits in Empire Fire, Hartford, and National Continental, respectively, and conclude the language means occasions when the equipment is being used to further the commercial interests of the lessee, given not only how the court has previously construed the term "business," but also because these are the more persuasive decisions.

b. National's arguments for why the trailer was not being used "in the business of Avery" at the time of the accident

In this case, Avery did more than simply contact Heinis every time it wanted a load hauled and engage him to do so. Rather, for whatever reasons, Avery leased his tractor and trailer for use in its business for an indefinite term and, when the accident giving rise to the subject suit occurred, the tractor and trailer remained under lease to Avery. In view of this, the court will address, in turn, National's arguments for why the trailer was not being used in Avery's business within the meaning of National's policy at the time of the accident despite it being under lease.

i. National's argument that the trailer was not under dispatch

National's primary argument for why the trailer was not being used in Avery's business at the time of the accident is because it was not then under dispatch—a fact which is not disputed. National cites cases that it claims overwhelmingly establish that whether or not the lessor-trucker is under dispatch is the decisive factor in terms of whether the equipment is being used "in the business of" the lessee-carrier. Upon examining these cases, however, it is clear that most do not stand for the broad proposition that National asserts. In some of the cases, there were other facts that were controlling (e.g., the lessor-operator was using the equipment for personal travel or hauling loads for others) or the lease agreements were different than the one at issue in this case. Also, most of the cases did not address the specific situation presented here, where the equipment was being repaired at the time of the accident, the repairs were required by the lease, and the repairs clearly advanced the commercial interests of the lessee-carrier.6

In this case, it is clear from the record that Avery's business of providing trucking service to the oil and gas industry required not only the actual hauling of loads but also the ability to haul loads on a timely basis. This, in turn, required having the necessary operators and equipment available—both in the sense of being reasonably close (that is, the drivers not using the equipment to haul loads for other companies to distant points) and the equipment being in shape to haul the loads in a manner that would comply with any requirements of the lease agreements as well as those imposed by law. Artificially limiting what is the business of Avery to only when the equipment was actually under dispatch ignores not only the fact the equipment remained under lease to it and subject to its call while not under dispatch, but more broadly the economic reality of Avery's business being dependent upon having operators and equipment readily available.

While there is no North Dakota case on point, the court concludes the North Dakota Supreme Court would not apply "in the business of" or similar policy language to only when the leased equipment was under dispatch. Rather, the North Dakota Supreme Court would conclude the trailer was being used in the lessee-carrier's business so long as it was under lease, except, perhaps, if it was clearly being used for a purpose other than the lessee-carrier's business (e.g., hauling loads for another carrier or for an obviously personal purpose of the lessor), which National has failed to demonstrate occurred here.7

But, even if there is some doubt about this as a general matter, the North Dakota Supreme Court would conclude that the trailer was being used in Avery's business at the time of the accident in this case in view of the particular facts and circumstances, including:

See, e.g., Empire Fire, 220 F.3d at 682 (driver while en route to pick up a load after having the tractor serviced was "in the business of" the lessee-carrier, citing other repair and maintenance cases); National Continental, 157 F.3d at 612-13 (driver en route to have a front end alignment on a leased tractor between dispatches was "in the business of" the lessee-carrier because he was fulfilling contractual duties to keep the leased equipment in compliance with all laws and regulations); Hartford, 908 F.2d at 239-240 (driver while en route with the leased tractor to pick up a refrigeration trailer being repaired for a freon leak was "in the business of" the lessee because the repair furthered the lessee's commercial interests, noting the lease requirements to keep the equipment ready for lessee's services and to "exercise diligent efforts to assure continuing customer satisfaction"); Freed v. Travelers, 300 F.2d 395, 396-98 (7th Cir. 1962) ("Freed") (repairs to back end of trailer were "exclusively" within the business of the lessee-carrier, given the obligation under the lease requiring the lessor to keep the equipment "in good running order and condition," even though the lessor was responsible for the cost of the repairs and the repairs took place after the lessor had completed hauling his last load); cf. Occidental Fire & Cas. Co. of North Carolina v. Soczynski, Civil No. 11-2412, 2013 WL 101877, at **12-15 (D.Minn. Jan. 8, 2013) (acknowledging that repairs may be in the commercial interests of the lessee-carrier but concluding that they were not in that case); Casey v. Smith, 353 Wis.2d 354, 846 N.W.2d 791 (2014) (same).8

The only thing that gives the court pause is the North Dakota Supreme Court's decision in Zimprich v. Broekel, 519 N.W.2d 588 (N.D.1994). In that case, the court was not called upon to decide the meaning of the language "in the business of" a lessee-carrier within the meaning of a commercial trucking policy. Rather, the issue in Zimprich was whether, under state law, the lessor-operator was acting as an employee of the lessee-carrier at the time he was attempting to make repairs to the air-conditioning unit of the leased tractor that caused a fire resulting in suit against the lessee-carrier for damage to the surrounding property. The parties in the case who argued the lessor-operator was an employee relied in part upon a federal motor carrier regulation that made an independent contractor who "operated" a licensed motor vehicle for a lessee-carrier a "statutory employee" of the lessee-carrier. In deciding whether or not the lessor-operator was "operating" the equipment at the time of the repair as an "employee," the North Dakota Supreme Court stated:

519 N.W.2d at 591-92.

While there are things in the court's discussion that both sides here could claim as supporting their arguments, e.g., the court's characterization of Broekel being off-duty and the repair being Broekel's obligation (potentially favoring National's arguments) or the court's caveat that the repair was not required to keep the equipment operational in the sense of being able to carry loads for Hi-Tech (potentially favoring Great West's argument), the court's discussion is too focused on the question of whether Broekel was "operating" his equipment as an "employee" (which, in turn, focused on whether or not he was subject to the lessee-carrier's direction) when he attempted the repairs to be of significant help to either side with respect to whether, in this case, the trailer was being used "in the business of" Avery at the time of the accident in the sense of whether it advanced Avery's commercial interests.9 Zimprich, however, is relevant to another issue presented in this case and will be returned to later.

ii. National's arguments for why the repair was not in Avery's business

National argues the repair was not in Avery's business because it was not needed to keep the equipment operating for Avery's purposes. National points to the lack of evidence that the tanker leaked when it was being hauled down the road, i.e., it leaked only during loading and unloading, and that Heinis was able to capture the leaked material in a bucket. National then proceeds to take issue with Great West's contention that the repair was required to avoid Avery, as the federally-certificated carrier, being exposed to a violation of 49 C.F.R. 393.100(b), which is a federal motor carrier regulation requiring that cargos be secured to prevent, among other things, spilling or leaking. National contends the regulation only applies when the cargo is being transported on public roads and that the evidence here is that the trailer only leaked when it was being loaded or unloaded on what National presumes to be private property.

National is probably correct about the inapplicability of 49 C.F.R. 393.100(b) to the facts of this case. The problem with its argument more generally, however, is that Avery's business extended to the loading and unloading of the material to be hauled—not just its physical transportation, and repairs that would insure that the loading and unloading were done properly would obviously be in its commercial interest notwithstanding Heinis's use of the band-aid of the bucket to capture the leaking material.10 Moreover, National ignores the fact that Heinis was obligated under the lease to do more than meet minimum federal regulatory requirements with respect to the condition of the equipment. The lease specifically required he keep the equipment "in good working condition," and it is common sense that a leaking trailer would be a breach of that obligation.11

National also contends that the fact Heinis was obligated under the lease to pay for the repairs made it his business and not Avery's. The same can be said, however, for other things, including the fuel that Heinis was obligated to pay for. And, following this logic, there would be no coverage under National's policy if while hauling a load for Avery, Heinis pulled his rig into a truck stop for fuel and was involved in an accident. In short, the North Dakota Supreme Court would likely conclude, as other courts have, that the fact Heinis was financially obligated to pay for the repairs is insufficient to negate the fact the trailer was leased to Avery and the other factors previously discussed. See, e.g., Freed, 300 F.2d at 398 (repair was in furtherance of the lessee-carrier's business notwithstanding the lessor-operator being responsible for the cost of the repair); National Continental, 157 F.3d at 612-13 (same).12

iii. National's argument that the repair was not "exclusively" in Avery's business

National argues that, even if the repair was within Avery's business, it was not "exclusively" so. However, there is no evidence that Heinis was using the trailer to haul loads for others while it was under lease to Avery. Further, there is nothing to indicate he had the right (much less the practical ability) to do so, given the facts already mentioned, i.e., the equipment was under lease to Avery with Avery's name affixed to the tractor, the lease did not specifically authorize Heinis to use the trailer for the business purposes of others while under lease to Avery, and the lease requirements that Heinis remain in "constant contact" with Avery's dispatcher and respond to dispatches within a reasonable period of time. See Freed, 300 F.2d at 398 (repairs to back end of truck were "exclusively" within the business of the lessee-carrier for equipment used only for the lessee-carrier's business).

National also contends that the repair was not exclusively in Avery's business because it also benefitted Heinis in the sense it allowed him to continue leasing the equipment to Avery—an argument which, by the way, acknowledges the commonsense notion that a lessee would consider unacceptable a leaking piece of equipment. The North Dakota Supreme Court would also reject this argument. As already noted, the relevant language making a lessor of a trailer in certain circumstances an insured here reads:

(Doc. No. 29-5, p. 98). To include the leasing business of the person from whom the trailer is hired or borrowed as part of the determination of whether it is being used exclusively in the named insured's business would render the coverage a nullity since there would never be a situation where a leased trailer would be used exclusively in the named insured's business. Rather, the policy's use of the word "exclusively" was obviously intended to make clear there would be no coverage when the trailer, even though under lease to the named insured, was being used for purposes inconsistent with the named insured's business, e.g., hauling loads for third parties or the lessor-operator using it for a clearly personal purpose.

iv. National's argument based on the deposition testimony of Heinis and Kevin Avery

Finally, National points to the fact that both Heinis and Kevin Avery testified in their depositions that Heinis was not acting in Avery's business at the time of the accident. To the extent this opinion testimony of a layperson is relevant—much less entitled any weight (which the court doubts), it is insufficient to trump the clear meaning of "in the business of" in the policies in question, the lease requirements, and the actual conduct of the parties, either in creating a fact issue warranting a trial or altering the court's conclusions about the application of the policy language to the facts. Cf. Northland Ins. Co. v. Rhodes, No. 09-cv-01691, 2010 WL 5110107, at *10 (D.Colo. Dec. 9, 2010) (rejecting layperson opinion testimony that the truckers in the case were not employees because they had not focused upon the correct factors and, in any event, because "neither ... were competent to opine as they did").13

4. Conclusions re coverage under National's Motor Carrier Coverage Form

In summary, the court concludes that the trailer was being used exclusively in Avery's business at the time of the accident, with the result being that Section II of National's Motor Carrier Coverage Form affords coverage to Heinis for any liability he may owe Miller absent an applicable exclusion. And, since the court has reached this conclusion, a trial is not necessary to resolve the disputed question of whether the tractor was connected to the trailer at the time of the accident. For if it was, it appears this would also afford coverage under National's policy—a point that National appears not to dispute if neither of the policy exclusions it relies upon foreclose coverage. However, before addressing the exclusions, the court will first address Great West's alternative argument that National's policy also affords Heinis coverage under a "Hired Autos Specified as Covered Autos You Own" endorsement.

C. "Hired Autos Specified as Covered Autos You Own" Endorsement

1. Introduction

National's policy contains an endorsement entitled "Hired Autos Specified as Covered Autos You Own," which, among other things, modifies the coverage under the Motor Carrier Coverage Form. The endorsement reads in pertinent part as follows:

(Doc. No. 29-6, p. 167). In this case, it is undisputed that the "auto" identified in the "Schedule" of the endorsement is the trailer involved in the accident.

2. The likelihood that Heinis also has coverage under the "Hired Autos Specified as Covered Autos You Own" Endorsement

Great West contends that paragraph B of the endorsement modifies the "Who is An Insured" portion of National's Motor Carrier Coverage Form at Section II(A)(1), such that it expands the available coverage by "including" an owner or lessor named in the "schedule" as an "insured" for coverage for acts or omissions that would include those of Avery and its employees.14 Great West argues that the accident in this case arose, at least in part, as result of the acts of Miller, who was Avery's employee.

National does not dispute that the endorsement adds to those who are considered an insured under Section II(A)(1) of the Motor Carrier Form.15 Rather, it contends that the language of the endorsement does not apply for two reasons. First, National contends that the language of paragraph B "Changes in Liability Coverage" does not apply because Miller cannot recover for any percentage of fault that may be assigned to him in his suit against Heinis under North Dakota's comparative fault law. And, since Heinis can never be held liable to Miller for Miller's acts or omissions, the language relied upon by Great West does not apply, according to National.

The court disagrees. Section II of the Motor Carrier Coverage Form extends coverage for damages that the insured is required to pay arising out of "bodily injury," and the "bodily injury" covered in the endorsement is that resulting from "acts or omissions" of the Named Insured or its employees or agents. There is no mention in the language of the endorsement that the acts or omissions must be "negligent" or "intentional." In other words, fault is not an element. All the language requires is a casual connection between an act or omission of the Named Insured or its employees or agents and the resulting injury for there to be coverage. And here, since it is undisputed that the explosion took place when Miller put his put his welding torch to the trailer and ignited the residual petroleum-based fumes contained within it, a reasonable factfinder could only conclude that the accident was in substantial part the result of an act of Miller.

National also argues that the language in paragraph B of the endorsement does not apply because Heinis was not named in the schedule. While there is language in paragraph B which suggests that it only applies to owners or lessors "named in the Schedule," there is also language that references the auto designated or described in the "Schedule," and the box in the endorsement for setting forth the "Schedule" could be read as requiring only a description of the auto. In addition, Avery's policy includes a number of items of equipment of other lessors that have been added using the same form endorsement and in no case was the lessor identified by name. Finally, in the case of the trailer at issue here, as well as most of the other pieces of equipment for other lessors, the vehicle identification number ("VIN") was listed. Given the foregoing, the court suspects that, even if the endorsement nominally provides for the listing of the name of the owner or lessor of the auto, it was an overlooked requirement by the person who put the policy together for National (possibly due to the lack of clarity of the form) or that the VIN was used as a proxy for the name of the owner or lessor. At best, National has created a fact issue with respect to whether Heinis had to specifically be identified in the "Schedule" for paragraph B of the endorsement to apply, and Great West has created a fact issue with respect to whether any such requirement was waived.

In summary, if the court is wrong about there being coverage under the Motor Carrier Coverage Form of National's policy because the trailer was being used exclusively in Avery's business at the time of the accident, a trial would be required to consider the disputed facts relevant to whether the "Hired Autos Specified as Covered Autos You Own" endorsement provides coverage, in addition to the disputed fact referenced earlier as to whether the trailer was connected to the tractor at the time of the accident, so as to afford coverage under the National Carrier Coverage Form irrespective of the endorsement.

D. National's claim of exclusions from coverage

1. Relevant policy language

National claims that the "employer's liability" and "fellow employee" exclusions set forth in Section II(B)(4-5) of its Motor Carrier Coverage Form apply and preclude any coverage to Heinis. The exclusions read as follows:

(Doc. No. 29-5, pp. 99-100). Also relevant to the court's consideration of the two exclusions are the definitions of "employee," "insured," and "leased worker" under Section VI of the Motor Carrier Coverage Form, which read as follows:

(Doc. No. 29-5, p. 108).

2. The "employer's liability" exclusion

National argues that the "employer's liability" exclusion set forth above (i.e., Section II(B)(4) of the Motor Carrier Coverage Form) excludes coverage in this case because Avery is an "insured" and the injury happened to Miller, one of its employees. Great West disagrees, arguing that the operative language only applies to the insured against whom a claim of liability is being made and not all insureds. Great West contends this is particularly so when the second sentence in the definition of "insured" under Section VI(G) of the Motor Carrier Coverage Form is considered, which is that coverage applies separately to each insured who is seeking coverage, which is commonly referred to in the industry as the "severability clause."

a. The Eighth Circuit's 1966 decision in Farmers Elevator Mutual

National argues this court is bound by the Eighth Circuit's decision in Farmers Elevator Mut. Ins. Co. v. Carl J. Austad & Sons, Inc., 366 F.2d 555 (8th Cir.1966) ("Farmers Elevator Mutual"), which is a case that arose out of this district. In Farmers Elevator Mutual, the injured party was a driver employed by a trucking company that had leased its equipment to another trucking company with an ICC permit. The trucker was injured during the process of unloading propane from his truck into tanks at a local elevator. The trucker sued the elevator. In Farmers Elevator Mutual, which was an action for declaratory judgment, the elevator's insurer claimed that the insurance company for the trucking company employing the injured trucker was obligated to provide a defense and indemnity to the elevator by virtue of a provision of its policy that included as an insured a person using the truck with the permission of the named insured. The elevator's insurer claimed the elevator was using the truck during the process of unloading. Id. at 556-57.

This court held the elevator was not an insured under the trucking company's policy, concluding the elevator had not used the truck since the unloading was done exclusively by the injured trucker. This court also held that, even if the elevator was using the truck during unloading within the meaning of the policy, coverage was excluded by an employer's liability exclusion which the court concluded applied since the injured trucker was an employee of the trucking company (the named insured) even though it was the elevator (an additional insured) that was claiming coverage and the injured party was not one of its employees. Id. at 557-59.

On appeal, the Eighth Circuit upheld this court's decision that the policy language did not extend coverage to the elevator in the first instance. Id. at 558. However, the court did not stop there and proceeded to address this court's alternative holding with respect to the application of the employer's liability exclusion. The Eighth Circuit noted that "[w]hether this exclusion applies to suits against an omnibus insured by an employee of the named insured is a question that has produced a wide split of opinions among the courts." Id. at 559. The court went on to conclude that this court had not clearly erred in holding the exclusion applied given the lack of any North Dakota decision on point and the lack of any ambiguity in the policy. Id.

Great West argues that Farmers Elevator Mutual is not binding here because there is no mention in the decision of there being a severability clause, much less an argument that it would have changed the calculus with respect to application of the "employer's liability" exclusion in that case. Great West's argument is well taken. However, before discussing why, it is necessary first to consider the North Dakota Supreme Court's decision in Northwest G.F. Mut. Ins. Co. v. Norgard, 518 N.W.2d 179 (N.D.1994) ("Norgard"), which came after the Eighth Circuit's decision in Farmers Elevator Mutual.

b. The North Dakota Supreme Court's 1994 decision in Norgard

Apparently, the only case where the North Dakota Supreme Court has addressed the interplay between a severability clause and a policy exclusion is its 1994 decision in Norgard. In that case, a husband and wife had purchased a homeowner's policy that included an endorsement for coverage for a day care being operated out of their home by the wife. The husband was later convicted of gross sexual imposition for having engaged in sexual contact with one of the children attending the day care. When the parents of the child sued, the insurance carrier providing the "day care" coverage brought a declaratory action against the husband and wife contending the coverage was excluded under a sexual-molestation exclusion in the endorsement that read as follows:

The wife disagreed. She argued (1) the language of the exclusion did not apply to her because, unlike her husband who was sued for his intentional conduct, she was sued only for negligence, and (2) she was entitled to be treated separately for coverage purposes because of the severability clause in the policy, which read as follows:

Norgard, 518 N.W.2d at 180-81.

In considering the wife's argument, the North Dakota Supreme Court observed that "the jurisdictions that have attempted to reconcile severability clauses and exclusionary clauses have not done so uniformly." Id. at 182. The court discussed the divergent views taken in several cases by other courts and went on to conclude that the presence of the severability clause created an ambiguity with respect to whether the exclusion applied to the wife's claim of coverage. Id. at 182-83. The court stated:

Id. at 183. The court then proceeded in a footnote to reject the insurer's argument that the uncertainty created by the presence of the severability clause was removed by the choice of articles used to describe the insured in the exclusion. The insurance carrier had argued that the exclusion's reference to "an insured" unambiguously referred to both an insured claiming coverage and all other insureds as opposed to what would have been the case had the policy used the words "the insured," which the insurance carrier contended would have referred only to the insured seeking coverage.16 Id. at 183 n. 2.

After concluding the presence of the severability clause created an ambiguity, the North Dakota Supreme Court proceeded to resolve the ambiguity by applying statutory rules of contract construction. The court stated:

Id. at 183-84 (footnotes omitted).

c. The presence of the severability clause in this case creates an ambiguity which must be resolved against National as to the applicability of the "employer's liability" exclusion

This court is not bound by the Eighth Circuit's decision in Farmers Elevator Mutual since it did not address the applicability of a severability clause, which is material here since its presence, when considered in relation to the "employer's liability" exclusion, creates an ambiguity as to whether only claims for injuries by employees of the insured seeking coverage are excluded or whether claims for injuries by employees of all insureds, including the named insured, are excluded. The court reaches this conclusion based on its own consideration of the policy language as well as its belief that the North Dakota Supreme Court would reach the same conclusion for two reasons. The first is the fact that the court in Norgard found the presence of the severability clause in that case created an ambiguity when considered with the sexual molestation exclusion.

The second is the fact that the sexual molestation exclusion in Norgard, which the North Dakota Supreme Court characterized as "unique," is substantially different in nature from the "employer's liability" exclusion at issue here. The sexual molestation exclusion excluded liability for specific types of acts and contained language that clearly suggested the exclusion would apply regardless of who committed them. Norgard, 518 N.W.2d at 183 ("Determinative is the unique language of this exclusion; the exclusion does not pertain only to the acts of an insured, but also to the acts of `an insured's employee or any other person involved in any capacity in the day care enterprise....'"). In contrast, the focus of the "employer's liability" exclusion in National's policy is upon acts or omissions caused by persons related to the insured, so that one very plausible reading of the policy language taken as a whole in view of the severability clause is that the "employer's liability" exclusion only excludes coverage for claims brought by an employee of the insured seeking coverage. In short, if the presence of the severability clause in Norgard created an ambiguity, it is even more true in this case.

Having concluded there is an ambiguity in National's policy between the insuring language of the policy (including the severability clause) and the "employer's liability" exclusion, the court must proceed to resolve the ambiguity. And here, National has not proffered any extrinsic evidence that would be material to the issue. Consequently, even if it was appropriate to resolve the ambiguity by conducting a trial—as opposed to simply imposing the tie-breaker of construing the language against the insurer, which the case law cited earlier governing the construction of insurance contracts seems to suggest is the required course of action, the court in this instance need only do the latter. Further, this is what the North Dakota Supreme Court would likely decide, particularly given its statement in Norgard that the insurer there could have and should "more carefully reconcile[d] the severability clause and the exclusions." Norgard, 518 N.W.2d at 183.

Finally, even if the North Dakota Supreme Court would not find the policy language to be ambiguous and construe it in favor of the insured seeking coverage for that reason, the court is likely to conclude that the exclusion, given both its purpose and its wording, does not trump the severability clause. In other words, construing the policy as a whole, the exclusion would apply only when the bodily injury is to an employee of the insured claiming coverage, which appears to be the majority view. See, e.g., Penske Truck Leasing Co., Ltd. Partnership v. Republic Western Ins. Co., 407 F.Supp.2d 741, 744-52 (E.D.N.C.2006) (predicting this is what the North Carolina courts would hold and citing authority for it being the majority position).

3. The "fellow employee" exclusion

a. National's argument

National also argues that its policy exclusion for injuries to "fellow employees" applies and excludes coverage for Heinis. In advancing this argument, National makes no effort to claim Heinis was an employee of Avery (and thereby a fellow employee of Miller) under the state law. Rather, National relies upon the definition of "employee" set forth in the federal regulatory scheme governing interstate motor carriers, which makes an independent contractor who operates the equipment of a regulated carrier a "statutory employee" for some purposes.

Before turning to the specifics of this argument, it is helpful for purposes of context to first consider the scope of the federal motor carrier regulatory scheme and the fact it does not preempt state and common law liabilities, except to add to the liability of motor carriers in certain instances.

b. Federal regulatory framework

The history of the rather complex federal regulatory scheme governing interstate motor carriers has been detailed in a number of cases and need not be recited in detail here. See, e.g., Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868, 873-76 (10th Cir.2009) ("Yeates"); Prestige Casualty Co. v. Michigan Mutual Insurance Co., 99 F.3d 1340, 1342-43 (6th Cir.1996); Carolina Cas. Ins. Co. v. Insurance Co. of North America, 595 F.2d 128, 134-37 (3d Cir.1979); Luizzi v. Pro Transport, Inc., No. 02-cv-5388, 2013 WL 3968736, at **12-13 (E.D.N.Y. July 31, 2013); Crocker v. Morales-Santana, 2014 ND 182, ¶¶ 14-15, 854 N.W.2d 663; Roberson v. Industrial Com'n (P.I. & I. Motor Exp., Inc.), 225 Ill.2d 159, 310 Ill.Dec.380, 866 N.E.2d 191, 200-02 (2007) ("Roberson").In a nutshell, however, the long-standing practice of motor carriers using leased equipment supplied by independent-contractor operators led to a number of abuses. Many of the independent contractors operated on a shoestring. This led to the operation of poorly maintained equipment which created safety hazards for the traveling public. It also resulted in the inability of the independent-contractor operators to satisfy judgments for personal injuries and property damage when accidents did occur, with the more solvent motor carriers hiding behind the independent contractor status of their operators to avoid liability. In addition, the more unscrupulous carriers relied upon the independent contractor status of their operators to avoid responsibility for compliance with safety regulations. See id.

The current regulatory scheme is the end product of Congress's response over the years to address these abuses as well as other issues. Relevant here is the fact that Congress's response included: (1) provisions that make an independent-contractor lessor-operator a "statutory employee" of the motor carrier in certain situations to ensure that the lessee-carriers are responsible for compliance with safety regulations as well as the lessor-operators; (2) provisions that have the effect of making a motor carrier responsible and liable as a matter of federal law for the operation of the leased equipment vis-a-vis the traveling public when operated on public roadways; and (3) minimum requirements for financial responsibility to help ensure that any judgments obtained by the public for personal injury or property damage will be collectible. See id.

What is important to understand about the federal regulatory scheme for purposes of this case are three things. First, while it imposes additional liability upon motor carriers for the acts of its independent contractors in some instances, it does not purport to supplant, diminish, or otherwise provide safe harbor from existing tort liability of carriers and lessor-operators under state law. Second, the federal regulatory scheme does not preempt the state law distinctions between an independent contractor and an employee, except to the limited extent of making an independentcontractor operator a "statutory employee" of the lessee-carrier for purposes of enforcement of federal safety regulations and imposing respondeat superior liability for the acts of the independent contractor in certain instances. Third, there is nothing that purports to impose mandatory contract terms for private insurance contracts, except to the extent that, if a lessee carrier elects to obtain a federally-prescribed endorsement as one alternative for complying with federally-imposed minimum requirements for financial responsibility and the insurance company agrees to provide the endorsement, then the terms of that endorsement trump to the limited extent provided in the endorsement.17 See, e.g., Yeates, 584 F.3d at 875-79; Carolina Cas. Ins. Co. v. Insurance Co. of North America, 595 F.2d at 134-138; Global Hawk Ins. Co. v. Le, 225 Cal.App.4th 593, 170 Cal.Rptr.3d 403, 410-16 (1st Dist.2014) ("Global Hawk"); Roberson, 310 Ill.Dec. 380, 866 N.E.2d at 200-05.18

Undoubtedly, it is because of the foregoing that National makes no argument that the federal regulatory scheme requires that its "statutory employee" definition be read into its Motor Carrier Coverage Form. Rather, National's argument is that the "statutory employee" definition should be read into its policy because, according to it, the policy was tailored to fit the federal regulatory scheme. Before turning to the reasons why the federal definition should not be read into National's Motor Carrier Coverage Form, the court will address first why Heinis likely was not a "statutory employee" under the federal definition at the time of the accident.

c. Heinis likely was not a "statutory employee" of Avery under the federal definition even if it applied

The federal regulatory definition of "employee" that National argues should be read into its policy is set forth in 49 C.F.R. § 390.5 and reads as follows:

(italics added). Even if this definition could be read into National's Motor Carrier Coverage Form, it is unlikely that Heinis would have been a "statutory employee" of Avery at the time of the accident within the meaning of 49 C.F.R. § 390.5. The reason why requires some explanation given that this regulation has proved difficult to apply, in part because of the parenthetical in the second sentence containing the language "including an independent contractor while in the course of operating a commercial motor vehicle," a point that will be addressed first, and the "other than an employer" language in the first sentence, which will be addressed later.

A number of courts have read 49 C.F.R. § 390.5 to mean that an "independent contractor" is a statutory employee only while "operating" a commercial motor vehicle. E.g., Consumers County Mutual Ins. Co. v. P.W. & Sons Trucking, Inc., 307 F.3d 362 (5th Cir.2002) ("Consumers County") (relief driver who was sleeping at time of accident was a driver "operating" a motor vehicle and a statutory employee); Walker v. Transportation Intern. Movers, Inc., No. 06-3030, 2007 WL 4180692, at *4 (D.Or. Nov. 21, 2007) (independent contractor not a statutory employee because not driving/operating the equipment); Pouliot v. Paul Arpin Van Lines, Inc., 292 F.Supp.2d 374 (D.Conn.2003) ("Pouliot") (concluding that independent-contractor lessor-owner who was unloading his trailer was not "operating" the motor vehicle because he was not driving and hence was not a statutory employee).19 And, while there is a divergence of opinion in some of these cases as to what constitutes "operating" in terms of whether it applies only while the independent contractor is actually driving or whether it also extends to related activities, such as loading and unloading or being a relief driver who is not actually driving but supporting the operation by being on board, the analysis employed in these cases would likely not extend "operating" to the facts of this case where Heinis was merely standing by while the repair was being attempted on his trailer. See id. It is this line of cases that Great West relies upon for its argument that Heinis was not a "statutory employee" within the meaning of 49 C.F.R. § 390.5.

National responds that these cases rely upon a flawed reading of 49 C.F.R. § 390.5 and cites to Lancer Ins. Co. v. Newman Specialized Carriers, Inc., 903 F.Supp.2d 1272 (N.D.Ala.2012) ("Lancer") as a case where the court, according to it, properly construed the definition. In Lancer, an independent-contractor lessor-operator was injured while assisting with the unloading of his trailer, and one of the issues was whether he was a statutory employee of the lessee-carrier at the time. Id. at 1274. The Lancer court rejected the reasoning employed by the federal district court in Pouliot that an independent contractor must have been driving the motor vehicle to be a statutory employee, concluding that the unloading fell within the purview of operating the equipment. Id. at 1280. Then, after reaching this conclusion, the Lancer court offered an alternative grounds for its conclusion that the independent contractor was a statutory employee of the lessee-carrier, which is the one National relies upon here. The Lancer court stated it was wrong in applying § 390.5 to focus on the parenthetical in the second sentence, which suggests that an independent contractor becomes an employee while operating the equipment, and to ignore the "any individual . . . who in the course of his or her employment directly affects commercial motor vehicle safety" language of the first sentence. Id. The court then suggested, without much discussion, that any person directly affecting motor vehicle safety is a "statutory employee" based on the first sentence of § 390.5 and that the second sentence merely sets forth a non-exclusive list of examples. Id. In other words, under this reading of § 390.5, an independent contractor would be considered a "statutory employee" anytime he or she is employed by an employer and while in the course of employment "directly affects commercial motor vehicle safety"—not just when "operating a commercial motor vehicle." Id. Applying this reading of § 390.5, National contends Heinis was a "statutory employee" of Avery for purposes of the underlying action because he directly affected "motor vehicle safety" when he failed to properly clean out the truck.20

While the Lancer court's reading of the regulation is a possible one, there would be no reason to add "while in the course of operating a commercial motor vehicle" to the parenthetical referencing an independent contractor if the only purpose of the parenthetical was to clarify that independent contractors are included in the definition of "employee"—a point made in several of the other cases cited above. In addition, the Lancer court's interpretation ignores the words "other than an employer" in the first sentence and the significance of this will become more apparent in a moment.

There does not appear to be any Eighth Circuit case law on point, and this court believes the Eighth Circuit would reject the Lancer court's reading of the regulation. Like the Fifth Circuit, the Eighth Circuit would likely look to the underlying statutory language for guidance in construing the regulation. See, e.g., Ooida Risk Retention Group, Inc. v. Williams, 579 F.3d 469, 473-475 (5th Cir.2009) ("Ooida") (looking to the statutory definition to resolve the uncertainty in the meaning of "employee" under 49 C.F.R. § 390.5).

In that regard, the statutory definition of "employee," upon which 49 C.F.R. § 390.5 is based, as well as the statutory definition of "employer" are as follows:

49 U.S.C. § 31132(2)-(3). The most straightforward reading of this statutory language is that an independent-contractor lessor-operator (like Heinis) would be an "employer," and, given that, would not be an "individual not an employer" under the definition of "employee." Rather, to be an "employee," Heinis would have to fall within one of the other three categories set forth in the definition of "employee" preceding the disjunctive use of "or" in 49 U.S.C. § 31132(2). E.g., Ooida, 579 F.3d at 474-75. And, in this case, Heinis would arguably not be a "statutory employee" of Avery at the time of the accident because he was neither "operating" the motor vehicle (even under an expansive meaning of the term to include loading or unloading or acting as relief driver) nor was he working as a "mechanic" or "freight handler."

d. Even if Heinis was a "statutory employee" within the meaning of 49 C.F.R. § 390.5, the North Dakota Supreme Court would not consider him an "employee" for purposes of coverage under National's Motor Carrier Coverage Form

Even if the court is wrong and Heinis was a "statutory employee" within the meaning of 49 C.F.R. § 390.5 and the underlying statute, there remains the question of whether this "fictional" statutory definition, which is contrary to ordinary state and common law distinctions between an employee and an independent contractor, should be read into National's Motor Carrier Coverage Form with the result being that coverage is excluded under the "fellow employee" exclusion. Unlike construing the federal "statutory employee" definition, this is purely a question of state law since, as already discussed, the federal regulatory scheme has not preempted the field.

Before turning to the question of how the North Dakota courts are likely to read National's policy, it is necessary first to consider (1) the minimum requirements for financial responsibility that are imposed by federal law upon motor carriers transporting goods interstate, including the option of meeting those requirements by obtaining an MCS-90 endorsement, and (2) what the MCS-90 endorsement is and what it does. This is because the only thing that National points to as indicating that its policy was tailored to meet federal regulatory requirements, and for that reason should be read to include the federal "statutory employee" definition, is its inclusion of the MCS-90 endorsement.

i. The federally-imposed requirements for financial responsibility and the MCS-90 endorsement

As noted earlier, one of things that Congress did to protect the public against judgment-proof operators was to impose minimum requirements for financial responsibility. Section 13906 of Title 49 requires that regulated motor carriers meet specified minimum requirements for financial responsibility in one of three ways to insure that judgments against them can be collected up to the minimum amounts. First, a carrier can obtain a federally-approved endorsement from a liability insurance carrier that provides the necessary protection to the public. Second, a carrier can obtain written guaranties from approved sureties that guarantee there will be a solvent party to stand behind any judgment if it cannot be collected from the carrier. Third, a carrier with sufficient resources and with government approval can self-insure. If a carrier chooses the option of obtaining an endorsement for the necessary protection from a private insurance carrier, the form of the endorsement is prescribed by 49 C.F.R. § 387.39 and is identified therein as MCS-90. See, e.g., Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868, 873-74 (10th Cir.2009) ("Yeates"); Global Hawk, 170 Cal.Rptr.3d at 410-12.

Even more relevant to the discussion here than the fact that not all carriers need to obtain an MCS-90 endorsement (since they can meet the minimum financial responsibility requirements in one of the two other ways), is what the form endorsement purports to do. The MCS-90 endorsement in this case mirrors language prescribed by 49 C.F.R. § 387.39 and reads, in relevant part, as follows:

(Doc. No. 29-5, p. 131) (italics added).

As indicated by the italicized language, the MCS-90 endorsement does not purport to limit the existing obligations between the insured and the insurance carrier. Rather, its purpose is to guarantee up to the limits of the endorsement that there will be a financially responsible party able to satisfy a judgment rendered against an insured "for public liability resulting from negligence in the operation, maintenance or use of [regulated] motor vehicles[,]" notwithstanding what, in some instances, may be limitations in the underlying policy. In fact, the endorsement is more in the nature of a guarantee than insurance, since it obligates the insured to reimburse the insurance carrier for any amounts it is required to pay beyond what is required by the underlying policy. See, e.g., Gramercy Ins. Co. v. Expeditor's Exp., Inc., 575 Fed. Appx. 607, 608-09 (6th Cir.2014) (unpublished opinion) ("Gramercy"); Yeates, 584 F.3d at 878-79; Canal Ins. Co. v. Distribution Services, Inc., 320 F.3d 488, 490 (4th Cir.2003) ("Canal"); Northland Ins. Co. v. Rhodes, No. 09-cv-01691, 2010 WL 5110107, at *7 (D.Colo. Dec. 9, 2010) ("Northland"); Global Hawk, 170 Cal. Rptr.3d at 410-12.

ii. The North Dakota Supreme Court would reject National's argument that the federal "statutory employee" definition applies to the "fellow employee" exclusion of its policy

National cites to cases where courts have read into a motor carrier liability policy the federally-created "statutory employee" definition and excluded coverage under a "fellow employee" exclusion on the theory that the policies in question were designed around the federal motor carrier requirements. See, e.g., Consumers County, 307 F.3d at 365-67; Lancer, 903 F.Supp.2d at 1278-81; United Financial Cas. Co. v. Abe Hershberger & Sons Trucking Ltd., No. 11AP-629, 2012 WL 457715 (Ohio Ct.App. Feb. 14, 2012). These cases offer little in the way of evidence of this point, however, except, in some of the cases, to note the presence of an MCS-90 endorsement. See, e.g., Global Hawk, 170 Cal.Rptr.3d at 415. Also, some give short-shrift to the actual policy language, including whether there is anything evincing an intent to incorporate the "statutory employee" definition.

Not surprisingly, there are a number of cases to the contrary, which National has ignored. In these cases, the courts have expressed skepticism about importing federal requirements into contracts tailored for the motor carrier industry, absent some expression of intent that the requirements be incorporated, pointing to the fact that the federal motor carrier regulatory scheme does not wholesale replace state and common law liabilities that the polices are also designed to protect against and the fact the MCS-90 endorsement, given its limited purposes and "coverage," is hardly indicative of an intent to import federal requirements that would otherwise limit the obligations of the insurer in the underlying policy. See, e.g., Gramercy, 575 Fed.Appx. at 608-09; Yeates, 584 F.3d at 878-79; Canal, 320 F.3d at 492-93; Northland, 2010 WL 5110107, at *7; Global Hawk, 170 Cal.Rptr.3d at 415; cf. Wellman v. Liberty Mut. Ins. Co., 496 F.2d 131, 137-39 (8th Cir.1974); Simpkins v. Protective Ins. Co., 94 Ill.App.3d 951, 50 Ill.Dec. 449, 419 N.E.2d 557, 560 (1st Dist. 1981) ("Simpkins"). This includes several cases that have expressly rejected reading into the underlying policy the federal "statutory employee" definition and excluding coverage based on a "fellow employee" exclusion. Gramercy, 575 Fed. Appx. at 607-09; Northland, 2010 WL 5110107, at *7; cf. Global Hawk, 170 Cal. Rptr.3d at 409-16 (holding inapplicable exclusions for "worker's compensation" and "employer's liability" for the same reasons).21

In addition, one of the leading cases that National relies upon for support for its position that the federal "statutory employee" definition should be read into its policy is the Fifth Circuit's decision in Consumers County. However, in a more recent unpublished decision, the Fifth Circuit has suggested that Consumers County may be distinguishable on the ground that the underlying policy in that case did not define "employee" unlike National's policy here, which does define "employee." Canal Indem. Co. v. Rapid Logistics, Inc., 514 Fed.Appx. 474, 477-78 (5th Cir.2013) (distinguishing Consumers County but deciding the case on other grounds); see Gramercy, 575 Fed.Appx. at 609 (discussing Canal Indem. Co. and its distinguishment of Consumers County).

In terms of this case, the court predicts the North Dakota Supreme Court would find cases such as Gramercy, Northland, and Global Hawk to be the more persuasive and would conclude that the federal "statutory employee" definition should not be read into National's Motor Carrier Coverage Form (and thereby not bring into play the "fellow employee" exclusion) —since the coverage arises out of the underlying policy and not the "added" coverage by the MCS-90 endorsement. The reasons why include the following:

In fact, as this case and Zimprich illustrate, Heinis and Avery's other independent contractors are exposed to liability for acts that arise apart from operating the leased equipment on a public roadway. In obvious recognition of this fact, National's Motor Carrier Coverage Form is not limited to extending coverage for only when there may be an act for which imposition of the federal regulatory definitions might give rise to liability, but rather purports to provide what in substance is general liability coverage to Heinis as an added insured, so long as the leased equipment is being used in a manner that satisfies the other requirements of the Coverage Form. And, consistent with the policy providing general liability coverage, the "fellow employee" exclusion in National's Motor Carrier Coverage Form is a generic one and does include language limiting its application in the manner now suggested by National. See, e.g., Gear Automotive v. Acceptance Indem. Ins. Co., 709 F.3d 1259, 1262 (8th Cir.2013); 46 C.J.S. Insurance § 1370 (database updated June 2014). Under these circumstances, to impose the fictional federal "statutory employee" definition to National's policy, with the result being it would apply in those instances where traditional law distinctions between independent contractors and employees are still applicable and have the effect of reducing the scope of National's coverage, would upset the expectations of the parties and truly be the "tail wagging the dog."22

IV. WHETHER GREAT WEST'S POLICY AFFORDS COVERAGE

A. The policy language

The operative language from Great West's policy is the following:

(Doc. No. 25-4, pp. 29-33).

B. Discussion

1. What law applies

National takes the position that South Dakota law applies to the interpretation of Great West's policy because Heinis is a South Dakota resident and the policy was issued there. While that would likely be the result of the application of North Dakota's choice-of-law provisions in most cases construing contract language, see, e.g., Schleuter v. Northern Plains Ins. Co., Inc., 2009 ND 171, ¶¶ 11-14, 772 N.W.2d 879 ("Schleuter"), the court is not certain in this case given that almost all of the significant contacts are in North Dakota and the policies were obviously intended to provide complementary coverage. However, the point need not be decided because the result would be the same regardless of whether North Dakota or South Dakota law is applied.23

2. There is no coverage under Great West's policy

The court's earlier conclusion that the trailer was being used in Avery's business at the time of the accident necessarily leads to the conclusion there is no coverage under Great West's policy since it does not cover an "auto" (which includes by definition a trailer) when the covered auto is "used in the business of" anyone to whom it is "rented, leased, or loaned." That is, unless the South Dakota courts would apply the "in the business of" language to the particular facts of this case differently. National claims that they would based on the arguments it made earlier, but has not cited to any South Dakota cases deciding the issue, and, apparently, there are none.

In the alternative, National also argues that, regardless of how other courts have decided whether the "in the business of" language in Great West's policy is ambiguous, the South Dakota courts would (1) conclude the language is ambiguous, (2) resolve the ambiguity in favor of the insured, and (3) conclude Heinis has coverage under Great West's policy. National then goes on to argue that Great West's coverage would be primary to any coverage of National that may be found by the court.

The court rejects these arguments. First, there is nothing about the general rules that South Dakota applies to the construction of insurance polices which would suggest its courts would take a fundamentally different approach to deciding whether the language in question is ambiguous than the courts which have concluded that it is not. See, e.g., Schleuter, 2009 ND 171 at ¶¶ 9-10, 772 N.W.2d 879 (discussing the South Dakota cases); State Farm Fire & Cas. Co. v. Harbert, 2007 SD 107, ¶ 17, 741 N.W.2d 228 ("The existence of the rights and obligations of parties to an insurance contract are determined by the language of the contract, which must be construed according to the plain meaning of its terms.") (citation and quotation omitted). Second, while there appears to be no South Dakota cases on point, what the South Dakota Supreme Court has said in analogous cases suggests it would construe the "in business of" language the same way as this court has predicted the North Dakota Supreme Court would and also conclude the language is not ambiguous. Cf. McGriff, 436 N.W.2d at 861-63 (S.D.1989) (concluding that the word "business" in a policy exclusion for "a person or organization engaged in the business of manufacturing, distributing, selling or serving alcoholic beverages" was not ambiguous because it clearly refers to a commercial enterprise or activity and that the court would not strain to find an ambiguity when none existed); Sunshine Mut. Ins. Co. v. Addy, 72 S.D. 634, 38 N.W.2d 406 (1949) (concluding without any concern about ambiguity that the insured was operating his truck while engaged in the business of a commercial trucker under the particular facts of the case). Third, the court believes the South Dakota courts would find more persuasive the cases the court has relied upon in deciding how the North Dakota Supreme Court would decide the meaning of the "in the business of" language and the issue of ambiguity.

Consequently, the court concludes that Great West's policy does not extend coverage to Heinis for the underlying action brought against him by Avery's employee, Miller.

V. ORDER FOR JUDGMENT

Based on the foregoing, the court GRANTS Great West's motion for summary judgment (Doc. No. 18) and DENIES National's motion for summary judgment (Doc. No. 22). The court further DECLARES and ADJUDGES that defendant Heinis has coverage under National's policy up to its limits for any liability arising out of the accident on June 18, 2011, which caused injury to Avery's employee, Miller, and does not have coverage under Great West's policy.

IT IS SO ORDERED.