Travelers Indemnity Co. v. Maryland Casualty Co.

• Decision Date: 24 January 1996
• Docket Number: No. B087655,B087655
• Citation: 41 Cal.App.4th 1538,49 Cal.Rptr.2d 271
• Court: California Court of Appeals Court of Appeals
• Parties: , 96 Cal. Daily Op. Serv. 564, 96 Daily Journal D.A.R. 827 The TRAVELERS INDEMNITY COMPANY OF ILLINOIS, Plaintiff and Respondent, v. The MARYLAND CASUALTY COMPANY, Defendant and Appellant.

Page 271

49 Cal.Rptr.2d 271

41 Cal.App.4th 1538, 96 Cal. Daily Op. Serv. 564,

96 Daily Journal D.A.R. 827

The TRAVELERS INDEMNITY COMPANY OF ILLINOIS, Plaintiff and Respondent, v. The MARYLAND CASUALTY COMPANY, Defendant and Appellant.

No. B087655.

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

Jan. 24, 1996.

Burns, Ammirato, Palumbo, Milam & Baronian, Bruce Palumbo, Valerie Julien-Peto, Pasadena, and Grace C. Mori, Long Beach, for Defendant and Appellant.

Hawkins, Schnabel, Lindahl & Beck, Jon P. Kardassakis and R. Timothy Stone, Los Angeles, for Plaintiff and Respondent.

GRIGNON, Acting Presiding Justice.

Defendant and appellant The Maryland Casualty Company appeals from the judgment entered against it and in favor of plaintiff and respondent The Travelers Indemnity Company of Illinois. This case involves a motor vehicle liability insurance coverage dispute arising out of a loss for which both insurers concede coverage, but claim to afford excess rather than primary insurance. Pursuant to INSURANCE CODE SECTION 11580.9¹, subdivision (b), the policy covering a named insured "engaged in the business of renting or leasing motor vehicles without operators" is conclusively presumed to be excess if the motor vehicle involved is a commercial vehicle. We hold that a moving company which provides trailers to its independent contractor subhaulers is not "engaged in the business of renting or leasing motor vehicles without operators" within the meaning of section 11580.9, subdivision (b). Accordingly, we conclude the insurance of the moving company is primary. We therefore affirm.

PROCEDURAL BACKGROUND

On November 5, 1990, a tractor-trailer operated by Peleti Siatuu, Jr. was involved in an accident which resulted in two consolidated personal injury actions. At the time of the accident, Siatuu worked with Apace Moving Systems, Inc. pursuant to an independent contractor agreement.

Maryland had issued a policy of motor vehicle insurance to Apace; Travelers had issued a similar policy to Siatuu. Siatuu and Apace were named as defendants in the personal injury actions. Apace was named both as the owner of the motor vehicle involved in the accident and as Siatuu's principal.

On April 8, 1992, Travelers filed this action for declaratory relief, contribution and reimbursement against Maryland, seeking to hold Maryland primarily liable to defend and indemnify Siatuu in the underlying actions. Maryland filed a cross-complaint seeking similar relief with respect to the obligation to defend and indemnify Apace.

The underlying personal injury actions settled for a total of $170,000. ² Travelers and Maryland each contributed $85,000 toward the settlement without waiving their rights to pursue the other. On March 5, 1993, Travelers moved for summary adjudication of the issue of Maryland's primary liability for the amounts paid to settle and defend the actions. ³ The trial court determined the motion as a legal question based on undisputed facts and granted Travelers's motion. After a stipulation regarding damages, judgment was entered in favor of Travelers for $97,386.15 on Travelers's complaint and against Maryland on Maryland's cross-complaint. Maryland filed a timely notice of appeal. ⁴

FACTS

The material facts are undisputed. Pursuant to the independent contractor agreement, Siatuu was to use his own tractor for moving jobs, and Apace was to provide a suitable trailer for his use. The agreement provided, however, that if Siatuu provided his own trailer, his commission percentage would increase by five percent. The trailer Siatuu pulled at the time of the accident was one of Apace's trailers. Also, Siatuu was not driving his own tractor, but instead was driving a tractor that had been leased from Westrux, International, Inc. by Apace, which passed the cost on to Siatuu. Apparently, Siatuu's tractor was being repaired. Westrux would not lease a tractor to Siatuu as an individual, so, with Apace's consent, the tractor was provided to Siatuu through a general lease agreement between Westrux and Apace.

Maryland's Coverage of Siatuu

Maryland's policy covering Apace includes among its insureds "[a]nyone ... using with your permission a covered 'auto' you own, hire or borrow." The Maryland policy describes the trailer involved in the accident. Additionally, Maryland's policy contains an "Additional Insured--Lessor" endorsement which provides that the policy applies to "trucks leased or hired on a short-term basis" from Westrux. This endorsement further provides that any leased vehicle so designated "will be considered a covered 'auto' you own and not a covered 'auto' you hire or borrow."

Travelers's Coverage of Siatuu

Two tractors and two trailers were specifically described in Travelers's policy covering Siatuu; none of these vehicles was involved in the accident. However, the Travelers's policy indisputably covered Siatuu.

DISCUSSION

Standard of Review

"Any party may move for summary judgment in any action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding." (Code Civ.Proc., § 437c, subd. (a).) "A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment." (Code Civ.Proc., § 437c, subd. (f)(2).) Summary adjudication motions are restricted to an entire cause of action, an affirmative defense, a claim for punitive damages, or an issue of duty. (Code Civ.Proc., § 437c, subd. (f)(1); Hood v. Superior Court (1995) 33 Cal.App.4th 319, 323, 39 Cal.Rptr.2d 296.) "The policy underlying motions for summary judgment and summary adjudication of issues is to ' "promote and protect the administration of justice, and to expedite litigation by the elimination of needless trials." ' " (Hood v. Superior Court, supra, 33 Cal.App.4th at p. 323, 39 Cal.Rptr.2d 296.) When the motion has been submitted to the trial court on undisputed and stipulated facts, we are not bound by the trial court's construction of the insurance policies and the applicable statutes, and instead determine these issues as a matter of law. (Transport Indemnity Co. v. Royal Ins. Co. (1987) 189 Cal.App.3d 250, 253, 234 Cal.Rptr. 516; Zurich-American Ins. Co. v. Liberty Mut. Ins. Co. (1978) 85 Cal.App.3d 481, 487, 149 Cal.Rptr. 472.)

Legislative Interpretation

Our primary duty when interpreting a statute is to determine and effectuate the Legislature's intent. (Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 39 Cal.App.4th 1379, 1382, 46 Cal.Rptr.2d 542; People v. Ramirez (1995) 33 Cal.App.4th 559, 563, 39 Cal.Rptr.2d 374.) "When the language of a statute is clear and unambiguous, there is no need for interpretation and we must apply the statute as written." (Lafayette Morehouse, Inc. v. Chronicle Publishing Co., supra, 39 Cal.App.4th at p. 1382, 46 Cal.Rptr.2d 542.) " 'Words used in a statute ... should be given the meaning they bear in ordinary use.' (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735 [248 Cal.Rptr. 115, 755 P.2d 299].)" (People v. Ramirez, supra, 33 Cal.App.4th at p. 563, 39 Cal.Rptr.2d 374.) "However, the ' "plain meaning" rule does not prohibit a court from determining whether the literal meaning of a statute comports with its purpose ...' and provisions relating to the same subject matter must be construed together and 'harmonized to the extent possible.' " (In re Kali D. (1995) 37 Cal.App.4th 381, 386, 43 Cal.Rptr.2d 581.) "An interpretation that renders related provisions nugatory must be avoided." (Lungren v. Deukmejian, supra, 45 Cal.3d at p. 735, 248 Cal.Rptr. 115, 755 P.2d 299.)

Section 11580.9

"Prior to 1970, the allocation of loss between coinsurers, two or more insurers affording coverage to the same loss, was made by judicial resort to the provisions of the respective policies. Often the policies contained provisions (so-called 'other insurance' clauses) through which one coinsurer would attempt to avoid or minimize the amount of its liability at the expense of other coinsurers.... Judicial construction of these provisions was marked by inconsistency, prompting commentators and the courts alike to request legislative clarification." (Zurich-American Ins. Co. v. Liberty Mut. Ins. Co., supra, 85 Cal.App.3d at p. 485, 149 Cal.Rptr. 472.)

The Legislature responded by enacting section 11580.9, which sets forth four conclusive presumptions regarding primary and excess coverage in motor vehicle liability coinsurance disputes. (Zurich-American Ins. Co. v. Liberty Mut. Ins. Co., supra, 85 Cal.App.3d at p. 485, 149 Cal.Rptr. 472.) The Legislative intent is set forth in section 11580.8: "The Legislature declares it to be the public policy of this state to avoid so far as possible conflicts and litigation, with resulting court congestion, between and among injured parties, insureds, and insurers concerning which, among various policies of liability insurance and the various coverages therein, are responsible as primary, excess, or sole coverage, and to what extent, under the circumstances of any given event involving death or injury to persons or property caused by the operation or use of a motor vehicle. [p] The Legislature further declares it to be the public policy of this state that Section 11580.9 ... expresses the total public policy of this state respecting the order in which two or more of such liability insurance policies covering the same loss shall apply...." The presumptions of section 11580.9 are conclusive. (Transport Indemnity Co. v. Royal Ins. Co., supra, 189 Cal.App.3d at p. 253, 234 Cal.Rptr. 516; Mission Ins. Co. v. Hartford Accident & Indemnity Co. (1984) 160 Cal.App.3d 97, 101, 206 Cal.Rptr. 383.) ⁵

Two subdivisions of section 11580.9 are at issue in this case, subdivisions (b) and (d).

Section 11580.9, subdivision (b) establishes a conclusive presumption that the policy covering an insured engaged in...