Allied Premier Ins. v. United Fin. Cas. Co.
| Decision Date | 22 March 2021 |
| Docket Number | No. 20-55099,20-55099 |
| Parties | ALLIED PREMIER INSURANCE, a Risk Retention Group; a Connecticut corporation, Plaintiff-Appellee, v. UNITED FINANCIAL CASUALTY COMPANY, an Ohio corporation, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Pursuant to California Rule of Court 8.548, we certify to the California Supreme Court the question of law set forth in Part I of this order. The answer to this question is determinative of the cause pending before this court, and there appears to be no controlling precedent in the decisions of the California Supreme Court or the California Courts of Appeal.
The question to be answered is:
Under California's Motor Carriers of Property Permit Act, Cal. Veh. Code §§ 34600 et seq ., does a commercial automobile insurance policy continue in full force and effect until the insurer cancels the corresponding Certificate of Insurance on file with the California Department of Motor Vehicles, regardless of the insurance policy's stated expiration date?
The California Supreme Court may rephrase the question as it deems necessary.
Counsel for Plaintiff-Appellee Allied Premier Insurance ("Allied") is:
Hillary Arrow BoothBooth LLP11835 W. Olympic Boulevard, Suite 600ELos Angeles, CA 90064(310) 641-1800
Counsel for Defendant-Appellant United Financial Casualty Company ("United") is:
Patrick M. HowePatrick Howe Law, APC402 W. Broadway, Suite 1025San Diego, CA 92101(619) 398-3422
United issued a commercial auto insurance policy to José Porras, a commercial truck driver in California. The insurance policy went into effect on May 2, 2013. At Porras's request, United subsequently submitted a Certificate of Insurance to the California Department of Motor Vehicles ("DMV") to provide evidence of Porras's financial responsibility as a motor carrier of property, as required by California law. Cal. Veh. Code § 34630.
On April 12, 2015, United's insurance policy lapsed pursuant to its own terms when Porras failed to renew it. Nonetheless, a Certificate of Insurance filed by United on Porras's behalf remained on file with the DMV due to a clerical error by United.1
Porras then became insured under a commercial auto policy issued by Allied, which went into effect on April 13, 2015. Allied submitted a Certificate of Insurance to the DMV on Porras's behalf. After April 17, 2015, the DMV had on file Certificates of Insurance for Porras from both United and Allied. The record is unclear as to the date of United's filed Certificate upon which Allied relies.
On September 1, 2015, Porras was involved in a vehicle collision with Jennifer Jones, a 24-year-old woman, in Rialto, California. Jones died as a result of the collision. Jones's parents subsequently filed a wrongful death lawsuit against Porras in California state court. Allied defended Porras in the lawsuit and ultimately settled the lawsuit for $1 million. United declined to defend Porras or to contribute to the settlement of the lawsuit.
Allied then sued United in a separate action in California state court, seeking to recover half of the $1 million expended to settle the wrongful death action against Porras. Allied's complaint states claims for declaratory relief, equitable contribution, and equitable subrogation.
Allied's theory is that, because United failed to complete the necessary steps to cancel the Certificate of Insurance on file with the DMV, the policy remained in effect by operation of law at the time of the collision. Accordingly, Allied contends that United is required to share with Allied in the costs of settling the wrongful death action against Porras.
United removed the suit to federal court, invoking federal diversity jurisdiction under 28 U.S.C. § 1332. The parties filed cross-motions for summary judgment, each based on a joint statement of stipulated facts and exhibits.
The district court agreed with Allied and determined that United's failure to cancel the Certificate of Insurance on file with the DMV caused the insurance policy to continue in full force and effect until the time of the September 1, 2015 collision. The district court proceeded to enter judgment in favor of Allied, and against United, in the amount of $500,000.
This dispute turns on the proper interpretation of California's Motor Carriers of Property Permit Act ("MCPPA"), Cal. Veh. Code §§ 34600 et seq. , the statutory scheme by which California imposes financial responsibility requirements on commercial drivers.2 If the MCPPA requires a commercial auto insurance policy to remain in effect indefinitely until the insurer cancels the Certificate of Insurance on file with the DMV, then Allied must prevail. If not, United must prevail.
The MCPPA was enacted by the California legislature in 1996 to replace the Highway Carriers' Act ("HCA"). The MCPPA shifted the responsibility for regulation of commercial drivers from the California Public Utilities Commission to the DMV. The ambiguity in this matter is whether the MCPPA made other modifications to the HCA's framework for regulation of commercial drivers.
Under the now-repealed HCA, the California Supreme Court had made clear that a commercial driver's insurance policy would remain in effect, regardless of its stated expiration date, until the insurer provided written notice to the Public Utilities Commission that the policy was canceled. In Transamerica v. Tab Transportation , the California Supreme Court held that, because an insurer had failed to provide such notice, the driver's insurance policy continued in full force and effect—notwithstanding the policy's express terms. 12 Cal. 4th 389, 402–03, 48 Cal.Rptr.2d 159, 906 P.2d 1341 (1995). Accordingly, the first insurer was required to compensate another insurer that had paid to settle claims against the driver arising from a collision that occurred years after the first insurer's policy had ostensibly expired. Id. at 403, 48 Cal.Rptr.2d 159, 906 P.2d 1341.
We have reason to doubt that the same principle applies to the currently-effective MCPPA, however, as the language of the new statute differs from that of the old one.
The MCPPA revised the HCA's requirement that a "policy of insurance" be filed with the Public Utilities Commission as proof of a driver's financial responsibility.3 See Cal. Pub. Util. Code § 3631 (West 1995). Today, the MCPPA requires only the filing of a Certificate of Insurance with the DMV to verify the driver's maintenance of adequate insurance coverage and does not require the filing of the underlying insurance policy. Cal. Veh. Code § 34630.
More importantly, the MCPPA modified the HCA's requirement that an insurer provide notice to the Public Utilities Commission prior to cancellation of a motor carrier's insurance policy. The old statute had explicitly prohibited an insurer from cancelling a motor carrier's insurance policy without prior written notice to the Public Utilities Commission. See Cal. Pub. Util. Code § 3634 (West 1995) ().
By contrast, the MCPPA prohibits only an insurer's cancellation of a Certificate of Insurance, as distinguished from an insurance policy, without prior notice to the DMV. Cal. Veh. Code § 34630(b). ("The certificate of insurance shall not be cancelable on less than 30 days' written notice from the insurer to the department ...."); id. at § 34631.5(b)(3) (). Moreover, the MCPPA requires that each Certificate of Insurance "contain a provision that the certificate ... shall remain in full force and effect until canceled" in the prescribed manner, but the MCPPA appears not to impose such a requirement with respect to an underlying insurance policy . Id. at § 34631.5(b)(4).
Thus, it is unclear whether Transamerica 's rule—that a commercial driver's insurance policy remains in effect until the insurer provides notice to the relevant agency that the policy will be canceled—survives the textual changes between the HCA and MCPPA. There is no published California case law addressing this question—indeed, there appear to be no California precedents interpreting the MCPPA's cancellation provisions at all. In light of the differences between the HCA and the MCPPA, we remain uncertain whether Transamerica controls the outcome of this case. Accordingly, we seek guidance from the California Supreme Court regarding the proper construction of the new statute.
Allied and United set forth sharply contrasting interpretations of the MCPPA's cancellation provisions. We discuss each in turn. As neither view is supported by clearly controlling California precedent, we ask the California Supreme Court to assist us in resolving the conflict between the two positions.
According to Allied, the California Supreme Court's decision in Transamerica —and the California Court of Appeal's decision in Fireman's Fund Insurance Co. v. Allstate Insurance Co. , 234 Cal. App. 3d 1154, 286 Cal.Rptr. 146 (1991), which reached a similar outcome—remain binding precedents under the MCPPA. Allied contends that such precedents remain controlling despite the above-mentioned modification of the statutory text because they stand for the proposition that, under California law, a motor carrier's insurance policy continues in full force and effect indefinitely, regardless of its stated expiration date, until the insurer follows the prescribed statutory procedure for cancelling the policy.
Allied's position was adopted by the district court here. The district court acknowledged that both Transamerica and Fireman's Fund construed the HCA's cancellation provisions,...
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