Chong v. Fremont Indemnity Co.

• Decision Date: 15 July 1988
• Docket Number: No. A036200,A036200
• Citation: 202 Cal.App.3d 1097,249 Cal.Rptr. 264
• Court: California Court of Appeals Court of Appeals
• Parties: Vernon CHONG, Plaintiff and Appellant, v. FREMONT INDEMNITY COMPANY, Defendant and Appellant.

Page 264

249 Cal.Rptr. 264

202 Cal.App.3d 1097

Vernon CHONG, Plaintiff and Appellant, v. FREMONT INDEMNITY COMPANY, Defendant and Appellant.

No. A036200.

Court of Appeal, First District, Division 5, California.

July 15, 1988.

Review Denied Sept. 29, 1988.

Draper B. Gregory, San Ramon, for plaintiff and appellant.

Roy M. Brisbois, Mary G. Whitaker, Lewis, D'Amato, Brisbois & Bisgaard, Los Angeles, for defendant and appellant.

HANING, Associate Justice.

In this appeal we conclude that Public Utilities Code section 3631, which requires regulated highway carriers to provide liability protection, does not require vehicle liability policies to cover work-related injuries sustained by the vehicle owner's employees.

Vernon Chong appeals a summary judgment holding that Fremont Indemnity Company (hereafter respondent), as liability insurer of appellant's employer's truck, had no duty to provide coverage to the employer for bodily injuries sustained by appellant in a work-related accident. Appellant contends the vehicle liability policy issued by respondent, which excluded coverage for injuries to the insured's employees arising in the course of employment, violated Public Utilities Code section 3631. We disagree and affirm. We also dismiss respondent's cross-appeal from a sanction order as untimely.

This coverage dispute arises out of an accident occurring when a vehicle owned by appellant's employer, Leonard Piazza, d/b/a Piazza Trucking Company, and operated by appellant, went out of control on Highway 5 near Coalinga and crashed into a ravine. As a consequence, appellant was severely injured. Piazza had no workers' compensation insurance, nor was he permissibly self-insured for appellant's work-related injuries. However, at the time of the accident, appellant was pulling a set of trailers owned by Santa Clara Transfer Service. Santa Clara Transfer Service was found to be appellant's "special employer" at the time of his accident and was held liable for workers' compensation benefits. In workers' compensation proceedings appellant was found to have been injured within the course and scope of his employment and awarded maximum benefits.

Appellant also filed suit in Fresno County Superior Court against Piazza, seeking damages for his injuries. In his complaint appellant alleged that he was injured in the course and scope of his employment; the accident proximately resulted from Piazza's negligence; and Piazza had failed to obtain workers' compensation protection for his employees as required by law. ¹

The vehicle involved was insured under a "Truckmen's Insurance Policy" issued by respondent. Piazza asked respondent to undertake the defense of appellant's action, but respondent claimed the accident was specifically excluded from coverage under the policy. Ultimately, a default judgment was entered against Piazza in the amount of $2,062,468.70. Piazza assigned his rights "arising by virtue of any violation or breach of duty or obligation" owed under the policy to appellant. Thereafter, appellant filed the instant action claiming damages as a result of respondent's refusal to acknowledge its liability under the policy.

Each party moved for summary judgment. It was respondent's position that the express terms of the policy excluded coverage for appellant's accident. Respondent principally relied on a provision stating: "This insurance does not apply: ... [p] (b) to any obligation for which the insured or any carrier as his insurer may be held liable under any workers' compensation, unemployment compensation or disability benefits law, or under any similar law; [p] (c) to bodily injury to any employee of the insured arising out of and in the course of his employment by the insured or to any obligation of the insured to indemnify another because of damages arising out of such injury...." The trial court agreed that respondent's policy did not afford liability coverage for appellant's accident and granted summary judgment for respondent.

A motion for summary judgment is properly granted if "all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ.Proc., § 437c, subd. (c).) Where, as here, no evidence was presented in aid of the insurance policy's language, the construction of that language is purely a matter of law. (Employers Cas. Ins. Co. v. Foust (1972) 29 Cal.App.3d 382, 385, 105 Cal.Rptr. 505.)

The above-quoted provision of the policy is plain, conspicuous and clear. It expressly provides the insurer shall afford no liability coverage for injuries sustained by an employee of the insured arising out of the employment relationship. Appellant retorts that even if the policy excludes coverage for his injuries, such coverage must be afforded as a matter of law. "Where insurance coverage is required by law, the statutory provisions are incorporated into the insurance contract. 'The obligations of such a policy are measured and defined by the pertinent statute, and the two together form the insurance contract.... Any provisions of such a policy which are in conflict with the pertinent statutes are nullified and superseded to that extent....' [Citations.]" (Samson v. Transamerica Ins. Co. (1981) 30 Cal.3d 220, 231, 178 Cal.Rptr. 343, 636 P.2d 32.) Specifically, appellant contends that notwithstanding the express language of the policy excluding coverage for work-related injuries, coverage must be extended by virtue of a mandatory protection requirement imposed by the Public Utilities Code, and a Public Utilities Commission (PUC) endorsement attached to respondent's policy.

Attached to the policy at issue was a preprinted "Standard Form of Endorsement ..." prepared by the PUC which indicated it was issued to "assure compliance" by the insured with "the pertinent rules and regulations of the Public Utilities Commission of the State of California." The endorsement stated the insurance company agreed "that no condition, provision, stipulation, or limitation contained in the policy ... shall relieve the Company from liability" to pay any final judgment rendered against the insured. Appellant isolates this language and analyzes it in a vacuum, ignoring another provision appearing earlier in the PUC endorsement which states: "In consideration of the premium stated in the policy to which this endorsement is attached, the Company hereby agrees to pay ... any final judgment rendered against the insured for bodily injury to or death of any person ... (excluding injury to or death of the insured's employees while engaged in the course of their employment ...) resulting from the operation, maintenance or use of motor vehicles" for which a PUC permit is required. (Emphasis added.) This provision clearly provides that respondent is not required by the PUC endorsement to provide coverage for appellant's work-related injuries.

Appellant argues that the language contained in the PUC endorsement excluding coverage for injuries arising in the course of employment goes beyond the authority granted by its enabling statute and is of no force or effect. In support of his argument he cites the statutory requirement in Public Utilities Code section 3631 requiring all licensed highway carriers to provide accident liability...