Ballentine Express Corporation (“Ballentine”), a commercial trucking entity and for-hire general freight carrier based in Memphis, Tennessee, entered into a Truck Rental Agreement with Enterprise in 2017, under which Ballentine rented commercial vehicles for its trucking business from Enterprise. As part of that agreement, Ballentine elected to obtain business travel insurance through the policy, which allegedly “provided primary coverage sufficient to comply with both state and federal law.”

In 2018, one of Ballentine’s drivers hit and injured another motorist, while operating a truck rented from Enterprise, which ultimately resulted in a lawsuit against the freight carrier for alleged damages in the amount of $2,000,000.

Following suit, Ballentine sought to obtain $750,000.00 from Enterprise, which Ballentine believed to be the available coverage pursuant to applicable federal and state law. However, Enterprise took the position that the liability coverage in the agreement provided only $100,000 in coverage. Thereafter, Ballentine filed suit in the western district court of Tennessee seeking declaratory relief related to the rights and liabilities of the parties under their agreement and seeking an interpretation of the Motor Carrier Act (MCA) and Federal Motor Carrier Safety Regulations (FMCSR).[i]

Ballentine argued that the agreement was required to provide coverage in the amount of $750,000 pursuant to state and federal law. According to the Motor Carrier Act (MCA) and Federal Motor Carrier Safety Regulations (FMCSR), commercial freight carriers, such as Ballentine, were required to maintain liability coverage in the amount of $750,000.00. However, Enterprise argued that it was not a commercial freight carrier or an insurer for commercial freight carriers, and therefore, the MCA and FMCSR did not apply to Enterprise, did not mandate that Enterprise provide coverage in the amount of $750,000, and did not require Enterprise to determine if Ballentine obtained conforming coverage.

The Court ultimately agreed with Enterprise and held that “the MCA and FMCSR do not create statutory obligations for insurers to determine whether a motor carrier seeks or obtains conforming coverage.”[ii] While there were other issues presented to the court, such issues are beyond the scope of this article.

Takeaways

When entering into any agreement, it is essential that each party understand the scope and meaning of the terms contained in the agreement. In this case, Ballentine interpreted “primary coverage sufficient to comply with both state and federal law” as being sufficient to provide $750,000 coverage. Notably, it does not appear that the monetary figure of $750,000 was present in the agreement, however, the $100,000 figure was clearly and unambiguously stated. Nonetheless, the interpretation of the agreement resulted in a difference of coverage in the amount of $650,000.00.

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Sources

[i] Ballentine Express Corp. v. EAN Holdings, LLC, 586 F.Supp.3d 807 (2022)

[ii] Id. at 819.