Pursuant to California Insurance Code section 11580.9, a policy which specifically described the tractor portion of a tractor/trailer rig was “primary” to another policy which did not describe any portion of the rig. ( Scottsdale Indemnity Co. v. National Continental Insurance Co. (2014) 2014 WL 4636895)
Facts
Manuel Lainez was a commercial trucker who owned a 1999 Freightliner tractor (i.e., power unit). Lainez purchased a trucker’s liability policy from Scottsdale Indemnity Company (Scottsdale) with a $1 million liability limit. The Scottsdale policy specifically described and rated the 1999 Freightliner, and covered any attached trailer.
Western Transportation Services, LLC (Western Transportation) was a company which did not own tractors or trailers, but which contracted with owner/operators and arranged for them to pick up and deliver loads to various customers. Western Transportation entered into a motor carrier agreement with Lainez pursuant to which Lainez agreed to haul goods for Western Transportation. Western Transportation obtained a commercial assigned risk policy from National Continental Insurance Company (NCI). The NCI policy described Western Transportation’s business as “trucker for hire-excess” and named Lainez as a driver. However, the NCI policy did not list, describe, or rate any vehicle.
Lainez was hauling goods for Western Transportation in his 1999 Freightliner tractor with an attached 1984 Hyundai box trailer when he was involved in a fatal collision with Constancio Barcenas. Barcenas’ heirs later filed various wrongful death actions against Lainez and Western Transportation.
NCI tendered Lainez’s and Western Transportation’s defense to Scottsdale. Initially Scottsdale agreed that Scottsdale was the “primary” insurer, and that Scottsdale would defend Lainez and Western Transportation and indemnify them up to the limits of the Scottsdale policy. However, two years later Scottsdale reversed course, asserted that NCI was a “co-primary” insurer, and demanded that NCI reimburse Scottsdale for a pro rata share of the defense costs. NCI rejected Scottsdale’s demand.
At a subsequent mediation, Barcenas’ heirs settled their wrongful death claims against Lainez and Western Transportation for a total of $675,000, with Scottsdale contributing $475,000 and NCI contributing $200,000. As part of the settlement, Scottsdale and NCI each reserved rights against the other.
Scottsdale then filed a contribution action against NCI. On cross-motions for summary judgment, the trial court ruled in favor of NCI and against Scottsdale. Scottsdale appealed.
Holding
The Court of Appeal affirmed. Pursuant to California Insurance Code section 11580.9(d), when two or more policies apply to the same motor vehicle or motor vehicles involved in an accident, the policy which describes or rates the vehicle is “primary” and any other policy is “excess.” Here, only Scottsdale’s policy described or rated any vehicle, namely, Lainez’s 1999 Freightliner tractor. Because Scottsdale’s policy specifically described the 1999 Freightliner tractor, which was part of the tractor/trailer “rig,” section 11580.9(d) applied. Thus, Scottsdale’s policy was primary and NCI’s policy was excess.
Scottsdale argued that the priority of coverage should be governed not by section 11580.9(d), but rather by section 11580.9(h). Subdivision (h) provides that when two or more policies apply to a tractor and an attached trailer, and one policy affords coverage to an insured who is a trucker and who is operating the tractor, that policy shall be primary for both the tractor and trailer, and any other policy shall be excess. Scottsdale argued that because both the Scottsdale policy and the NCI policy covered the tractor and the trailer, and because Lainez and Western Transportation were both truckers, the Scottsdale policy and the NCI policy were “co-primary” under subdivision (h). The appellate court disagreed, reasoning that subdivision (h) was only intended to apply when one policy covers a tractor and another policy covers the trailer. Subdivision (h) did not apply in a situation such as this, where both policies covered the entire tractor/trailer rig.
Comment
According to the appellate court, the conclusive presumption set forth in subdivision (h) was intended to resolve coverage disputes between insurers of tractors and insurers of trailers . There was nothing in the statute or the legislative history to suggest that subdivision (h) applies when two policies provide coverage to the entire rig. The appellate court thus concluded that subdivision (d) was the more specific subdivision that applied, thereby rendering the Scottsdale policy “primary” and the NCI policy “excess.”