WILSHIRE INSURANCE COMPANY, INC.,
Plaintiff and Respondent, v. SENTRY SELECT INSURANCE COMPANY et al., Defendants
and Appellants.
G033136
COURT OF APPEAL OF CALIFORNIA, FOURTH APPELLATE DISTRICT, DIVISION THREE
124 Cal. App. 4th 27; 21 Cal. Rptr. 3d 60; 2004 Cal. App. LEXIS 1909; 2004
Daily Journal DAR 10189
November 15, 2004, Filed
PRIOR HISTORY: [***1]
Superior Court of Orange County, No. 02CC04950, Gregory Munoz, Judge.
DISPOSITION: Affirmed.
|
PROCEDURAL POSTURE: Appellant insurer challenged a
decision of the Superior Court of Orange County (California), which granted
respondent insurer's motion for summary judgment, denied appellant's motion
for summary judgment, and held that, under Cal. Ins. Code § 11580.9(d),
respondent was entitled to contribution from appellant concerning expenses
incurred in a wrongful death action. |
|
OVERVIEW: Respondent covered a company that owned a tractor
and appellant covered a company that owned a trailer. After the tractor
trailer was involved in an accident, a wrongful death action was filed. Respondent
made a timely demand that appellant share in the investigative expenses,
legal fees, and indemnity, but appellant refused to contribute. Respondent
undertook the defense of both insureds and then sought contribution, which
the trial court granted. On appeal, the court affirmed. By the rationale
explained in case law, the court concluded that the two policies issued by
the parties applied to the same motor vehicle or vehicles in an occurrence
out of which a liability loss had arisen, pursuant to Cal. Ins. Code § 11580.9(d).
In respondent's policy, the tractor was scheduled as an owned vehicle, and in
appellant's policy, the trailer was scheduled as an owned vehicle. Thus,
because the tractor/trailer rig was treated as a single vehicle, under §
11580.9(d), it was conclusively presumed that each insurance policy was
primary. Because each policy had the same limit for bodily injury liability,
each party had an equal obligation to contribute to the loss. |
|
OUTCOME: The court affirmed the judgment. |
CORE TERMS: trailer, tractor,
coverage, motor vehicle, insurance policies, insured, liability coverage,
insurer, insurance policy, rig, hired, written agreement, primary coverage,
occurrence, scheduled, summary judgment, excess coverage, covering, hauling,
rated, stipulated facts, borrowed, liability insurance, insurance afforded,
owned automobile, truck tractor, co-primary, promised, declarations,
endorsement
LexisNexis(R) Headnotes 
Show Headnotes
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SUMMARY:
CALIFORNIA OFFICIAL REPORTS SUMMARY
An insurance company that insured a tractor truck sought contribution from the
insurance company that insured the semi-trailer, after settling the underlying
wrongful death action when the tractor-trailer rig was involved in an accident
resulting in injury and death. The owner of the trailer leased the driver and
tractor to haul its trailer. The lease agreement required the tractor owner to
bear the risk of liability to a third party. The tractor owner purchased
liability insurance that covered the nonowned trailer and had scheduled the
tractor as an owned vehicle. The trailer owner purchased liability insurance
intended to be excess coverage for the trailer that scheduled the trailer as an
owned vehicle. Before settling the underlying action, the tractor insurer made
a timely demand that the trailer insurer share in the expenses. The insurer of
the trailer refused to contribute. The parties filed cross-motions for summary
judgment on a joint statement of stipulated facts, and the court applied Ins. Code, § 11580.9, subd.
(d), to order contribution from the insurer of the semi-trailer. (
The Court of Appeal affirmed. The court held that the insurance policies
provided by both the tractor owner and the trailer owner applied to the same
motor vehicle in an occurrence out of which liability arose because a tractor
hauling a semi-trailer is treated as a single motor vehicle. The joint
stipulation of facts acknowledged that both insurance policies described or rated
the insured tractor or trailer as an owned automobile, and since the
tractor-trailer rig was treated as a single vehicle, under Ins. Code, § 11580.9, subd.
(d), each policy was conclusively presumed to be primary. Each
policy had the same limit and the court therefore held that each insurer had an
equal obligation to contribute to the loss. Nothing prohibited Ins. Code, § 11580.9,
from being interpreted to require concurrent application of the two policies.
Insurers dissatisfied with operation of § 11580.9 could
overcome its conclusive presumptions by entering into a written agreement
signed by all the insurers and insureds to modify or amend the presumptions.
Even though the tractor [*28]
owner and its insurer agreed to provide primary coverage and the trailer owner
and its insurer agreed to provide only excess coverage, the bright-line
statutory rule required contribution by both insurance companies. (Ikola, J.,
with Bedsworth, Acting P. J., and Aronson, J., concurring.)
HEADNOTES:
CALIFORNIA OFFICIAL REPORTS HEADNOTES
Classified to California Digest of Official Reports
CA(1)
(1)
Summary Judgment § 26--Appellate Review--Scope of Review--Stipulated
facts.--Summary judgment motions with stipulated facts are subject to a de
novo review on appeal.
CA(2)(2)
Insurance Contracts and Coverage § 49--Coverage of Contracts--Automobile
Liability and Collision Insurance--Property and Interests Insured--What
Constitutes a Single Motor Vehicle--Tractor-trailer Unit.--For purposes of Ins. Code, § 11580.9, subd.
(d), a truck tractor hauling a trailer is treated as a single motor
vehicle. An accident involving a tractor-trailer unit arises out of the use of
both, regardless of which part of the unit was actually involved in the
accident.
CA(3)(3)
Insurance Contracts and Coverage § 49--Coverage of Contracts--Automobile
Liability and Collision Insurance--Property and Interests Insured--What
Constitutes a Single Motor Vehicle--Coverage of Tractor-trailer Components.--The
phrase "motor vehicle or vehicles" in Ins. Code, § 11580.9, subd.
(d), simply means one or more motor vehicles. An accident that
involved a truck tractor/trailer rig should be viewed as arising out of the use
of all components of the rig and insurance policies covering the tractor and
the trailer respectively both applied to the same motor vehicle.
CA(4)(4)
Insurance Contracts and Coverage § 101--Extent of Loss of Insured and of
Liability of Insurer--Automobile Insurance--Description or Rating of Owned
Vehicle--Coprimary Coverage--Two Policies Insuring Tractor-trailer Unit.--Insurance Code, § 11580.9,
subd. (d), provides that the insurance afforded by a policy in which
the motor vehicle is described or rated as an owned automobile shall be
primary. Where the company insuring the tractor and the company insuring the
trailer both scheduled the tractor or trailer as an owned vehicle, it was
conclusively presumed that each insurance policy was primary, even though the
agreement was that the policy covering the tractor would be [*29] primary and the
policy covering the trailer would provide excess coverage, since the
tractor/trailer rig was treated as a single vehicle, under § 11580.9, subd. (d).
Where each policy had the same limit for bodily injury liability, each insurer
had an equal obligation to contribute to the covered loss.
[6 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, § 1134.]
CA(5)(5)
Insurance Contracts and Coverage § 101--Extent of Loss of Insured and of
Liability of Insurer--Automobile Insurance--Concurrent Coverage--Statutory
Ranking of Coverage Priority.--Nothing in Ins. Code, § 11580.9,
prohibits a result where the order in which insurance policies apply is
concurrent, or making the statute inapplicable merely because its application
results in an equal ranking of priority. Two insurance policies can be ordered
concurrently, i.e., they were coprimary. Whether Ins. Code, § 11580.9, subd.
(d), applies to an occurrence depends upon the existence of the
simply stated condition. Do two or more insurance policies cover the same motor
vehicle in an occurrence out of which a liability loss shall arise? If the
answer is "yes," the statute applies. If the answer is
"no," the statute does not apply. But in no case does the result of
the statute's application determine whether it applies. A court will not adopt
an interpretation of the statute based upon its like or dislike of the outcome
of the statute's application.
CA(6)(6)
Insurance Contracts and Coverage § 101--Extent of Loss of Insured and of
Liability of Insurer--Automobile Insurance--Rating of Vehicles--Statutory
Presumption of Coverage Priority--Other Insurance Clauses.--The priority of
coverage as contracted for in insurance policies must not be confused with the
description or rating of the vehicles, which determines the priority of
coverage under Ins. Code, § 11580.9,
without regard to the priority provisions of the respective policies. The
conclusive presumption regarding the priority of coverage may not be avoided by
unilaterally imposing "other insurance" clauses the other insurer has
not bargained for. Even though the "other insurance" clauses in two
insurance policies covering a tractor and a trailer do not compete, the statute
cannot be ignored.
CA(7)(7)
Insurance Contracts and Coverage § 101--Extent of Loss of Insured and of
Liability of Insurer--Automobile Insurance--Conclusive Statutory
Presumptions--Modified or Amended by Written Agreement.--Insurance
companies dissatisfied with the operation of Ins. Code, § 11580.9,
may overcome its conclusive presumptions, although the process may be
cumbersome. Insurance Code, § 11580.9,
subd. (f), provides that the presumptions stated in Ins. Code, § 11580.9, subds.
(a) [*30] to (d), inclusive, may be modified or amended only by written agreement
signed by all insurers who have issued a policy or policies applicable to a
loss described in these subdivisions and all named insureds under these
polices.
COUNSEL:
Wilson, Kenna & Borys, Garth Goldberg and Paal H. Bakstad for Defendants
and Appellants.
McNulty & Saacke and Charles F. Saacke for Plaintiff and Respondent.
JUDGES:
Ikola, J., with Bedsworth, Acting P. J., and Aronson, J., concurring.
OPINIONBY: IKOLA
OPINION: [**60]
IKOLA, J.--On cross-motions for summary judgment, the court applied Insurance Code, section 11580.9,
subdivision (d), n1 and declared Wilshire Insurance Company, Inc.
(Wilshire) entitled to contribution from Sentry Select Insurance Company
(Sentry) n2 [**61]
in the amount of one-half the expenses incurred by Wilshire in defending and
settling a wrongful death action. Sentry appeals the judgment arguing the
statute does not apply to the stipulated facts, but if it does, it was
misapplied. Finding no error, we affirm.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n1 All further statutory references are to the Insurance Code unless otherwise
stated.
n2 Plaintiff named John Deere Insurance Company as the defendant, but the
parties stipulated that Sentry Select Insurance Company and John Deere Select
Insurance Company are the same entity, and the correct legal entity for
purposes of this case is Sentry Select Insurance Company. Our caption for this
opinion, and our discussion of the facts, refers to defendant as Sentry Select
Insurance Company in accordance with the parties' stipulation.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [***2]
FACTUAL AND PROCEDURAL BACKGROUND
Because the parties based their respective motions for summary judgment on a
joint statement of stipulated facts, we confine our summary of the facts to the
matters contained in their stipulation, including the exhibits.
The Accident and the Underlying Litigation
In July 1999, Ken Holm, doing business as Kenway Enterprises (Kenway), was
driving a 1989 Kenworth tractor (the tractor) hauling a 1981 Great Dane
semi-trailer (the trailer) when the tractor/trailer rig was involved in an
accident causing bodily injury and death. A wrongful death action was filed in
the Orange County Superior Court against, inter alia, Kenway (the owner of the
tractor) and Statewide Transportation (the owner of the trailer) [*31] (Statewide). At the
time of the loss, Wilshire insured Kenway; Sentry insured Statewide. Wilshire
made a timely demand that Sentry share in the investigative expenses, legal
fees, and indemnity, but Sentry refused to contribute. Wilshire thereupon
undertook the defense of both Kenway and Statewide, reserving its right to seek
a pro rata contribution from Sentry. After expending $ 5,635.96 in
investigative expenses, and $ 38,298.65 in attorney fees, Wilshire [***3]
settled all claims made in the litigation against Kenway and Statewide by
paying $ 210,000 on their behalf. The parties agree these amounts were
reasonable and necessary to settle the action.
The Tractor Lease
At the time of the accident, Kenway was hauling Statewide's trailer under the
terms of a written agreement by which Statewide had leased the tractor from
Kenway. Under the terms of the lease, Kenway also provided a driver for the
leased tractor. As germane to arguments made on this appeal, the lease
agreement also required Kenway "to fully indemnify [Statewide] for damage
to property or person of a third party resulting from fire, theft, collision,
or upset and to fully indemnify [Statewide] for damage to cargo arising from
any or all of these same causes." In other words, when Statewide hired
Kenway's tractor and driver to haul the Statewide load, it did so with the
understanding that Kenway would bear the risk of liability to a third party.
The Insurance Policies
To protect itself against the risk of liability assumed under these and similar
circumstances, Kenway had purchased an insurance policy from Wilshire. The
Wilshire insurance policy covered Kenway [***4]
for the subject accident with a policy limit of $ 1 million. Statewide had
purchased its own insurance policy from Sentry that, inter alia, insured any
driver hauling a Statewide trailer with Statewide's permission. Thus, the
Sentry insurance policy also covered the subject accident and it [**62] also had a policy
limit of $ 1 million. Kenway's tractor was scheduled as an owned vehicle
on the Wilshire insurance policy, and Statewide's trailer was scheduled as an owned
vehicle on the Sentry insurance policy.
The Wilshire policy provided liability coverage for damages resulting from the
use of the owned vehicles specifically described in the policy (such as the
tractor). But it also provided liability coverage for damages resulting from
the use of any nonowned trailer (such as the Statewide trailer) attached to any
power unit specifically described in the policy declarations (such as the
tractor). n3 Further, the Wilshire policy's "other insurance" clause
states that [*32]
Wilshire's liability coverage would be primary where a covered vehicle (the
tractor) is hired by another (Statewide) and a written agreement with the other
motor carrier as lessee (Statewide) requires Kenway to hold the [***5]
lessee harmless. n4 Finally, under the terms of the Wilshire policy, if a
covered trailer is connected to a covered tractor, the liability coverage for
the trailer is also primary where coverage for the tractor is primary. n5
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n3 Section I, paragraph (A) of the Wilshire policy describes the "autos"
covered by the policy as, "Only those 'autos' described in ITEM THREE of
the Declarations for which a premium charge is shown (and for Liability
Coverage any 'trailers' you don't own while attached to any power unit
described in ITEM THREE)." The tractor was scheduled in item three of the
declarations. Section VI, paragraph (B) defines "auto" as "a
land motor vehicle, 'trailer,' or semi-trailer designed for travel on public
roads."
n4 Section V, paragraph (B)(5)(a)(1) of the Wilshire policy provides as
follows. "While any covered 'auto' is hired or borrowed from you by
another 'motor carrier,' this Coverage Form's liability coverage is: [P] (1)
Primary if a written agreement between you as the lessor and the other 'motor
carrier' as the lessee requires you to hold the lessee harmless."
n5 Section V, paragraph (B)(5)(c)(1) of the Wilshire policy states: "While
a covered 'auto' which is a 'trailer' is connected to a power unit, this
Coverage Form's Liability Coverage is: [P] (1) Provided on the same basis,
either primary or excess, as the liability coverage provided for the power unit
if the power unit is a covered 'auto.' "
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [***6]
The Sentry policy provides liability coverage for damages resulting from use of
the trailer, but no provision of this policy covers liability resulting from
the use of Kenway's tractor. n6 The Sentry policy's "other insurance"
clause states the coverage is primary if the covered trailer is hired or
borrowed by Statewide (which was not the case), and excess if the trailer is
hired or borrowed from Statewide (also not the case). But where the covered
trailer is connected to a power unit that is not covered under the
policy, the coverage for liability resulting from use of the trailer is excess.
n7 The operator of the tractor [**63]
is nevertheless an "insured" because the trailer is being used with
the permission of the owner. n8 Thus, the Sentry policy, by its terms, [*33] provides liability
coverage for the accident, but the coverage is excess.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n6 Section I, paragraph (A) of the Sentry policy, like the Wilshire policy,
covers "Only those 'autos' described in ITEM THREE of the Declarations for
which a premium charge is shown (and for Liability Coverage any 'trailers' you
don't own while attached to any power unit described in ITEM THREE)." The
Kenway tractor is, of course, not described in item three of the Sentry policy,
and the coverage for a nonowned trailer attached to a tractor owned by
Statewide is not applicable under the instant facts. [***7]
n7 Section V, paragraph (B)(5)(a) of the Sentry policy states as follows:
"This Coverage Form's Liability Coverage is primary for any covered 'auto'
while hired or borrowed by you and used exclusively in your business as a
'trucker' and pursuant to operating rights granted to you by a public
authority. This Coverage Form's Liability Coverage is excess over any other
collectible insurance for any covered 'auto' while hired or borrowed from you
by another 'trucker'. However, while a covered 'auto' which is a 'trailer' is
connected to a power unit, this Coverage Form's Liability Coverage is: [P] (1)
On the same basis, primary or excess, as for the power unit if the power unit
is a covered 'auto'. [P] (2) Excess if the power unit is not a covered 'auto.'
"
n8 Section II, paragraph (A)(1) of the Sentry policy defines an
"insured," inter alia, as "Anyone else while using with your
permission a covered 'auto' you own, hire or borrow except [inapplicable
exceptions]."
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
The Court's Ruling
The court granted Wilshire's motion for summary judgment and denied Sentry's
motion, stating: "It [***8]
may not be the most equitable result in view of the circumstances of this case,
but I just think I've got to apply 11580.9(d), and I think
that dictates my ruling. [P] I think if it weren't for the application of that
code section, [Sentry's] argument would be much more persuasive." The
court no doubt was troubled making a decision that, under compulsion of a
statute, ignored the entirely consistent provisions of the "other
insurance" clauses in the respective insurance policies and arrived at a
result at odds with those provisions. After all, Wilshire had agreed to provide
primary coverage. Sentry had agreed to provide only excess coverage. Yet, in
the trial court's view, section 11580.9, subdivision (d),
required Wilshire and Sentry to share the loss equally as co-primary insurers.
While we recognize the same anomaly, we nevertheless agree with the trial court
and affirm the judgment. Section 11580.9, subdivision (d),
provides a bright-line rule applicable to these circumstances, and the court
correctly applied the statute.
DISCUSSION
CA(1)
(1)
Because the case was presented on summary judgment motions with stipulated
facts, we conduct a de novo review to decide a pure question [***9]
of law. (Oliver & Williams Elevator
Corp. v. State Bd. of Equalization (1975)
48 Cal. App. 3d 890, 894 [122 Cal. Rptr. 249] [trial on stipulated
facts presents issue of law]; Hersant v. Department of Social
Services (1997) 57 Cal.App.4th 997, 1001
[67 Cal. Rptr. 2d 483] [summary judgment subject to de novo review
on appeal].)
In 1970, the Legislature declared "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."
(§ 11580.8.) To
achieve this goal, "The Legislature further declare[d] it to be the public
policy of this state that Section 11580.9 of the Insurance
Code 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." (Ibid.)
Section 11580.9
identifies four different circumstances under which two or more policies of
automobile or motor vehicle [***10]
insurance may afford liability [*34]
insurance applicable to the same loss. As to each of these defined
circumstances, the statute states a rule, in the form of a conclusive
presumption, by which to determine that policy which provides primary coverage
and that policy which provides excess coverage. (§ 11580.9, subds. (a),
(b), (c) & (d).) The parties agree
three of the scenarios under section 11580.9 do not
apply. Wilshire contends, however, that section 11580.9, subdivision (d)
applies, and the application of subdivision (d) to the
agreed facts results in Wilshire and Sentry both providing primary coverage.
Sentry contends section 11580.9, subdivision (d)
does [**64]
not apply because, if construed as Wilshire contends, the conclusion that the
policies are co-primary does not "order" the policies as contemplated
by the statute. Sentry then looks to the "other insurance" clauses of
the respective policies to argue its policy was not primary, but excess.
Alternatively, Sentry contends the statute should be interpreted under these
facts to make Wilshire's policy primary and Sentry's policy excess.
We begin our analysis with the words of the statute. Section 11580.9, subdivision (d)
states: "[W]here [***11]
two or more policies affording valid and collectible liability insurance apply
to the same motor vehicle or vehicles in an occurrence out of which a liability
loss shall arise, it shall be conclusively presumed that the insurance afforded
by that policy in which the motor vehicle is described or rated as an owned
automobile shall be primary and the insurance afforded by any other policy or
policies shall be excess." The parties agree: Both the Wilshire and Sentry
policies afforded valid and collectible liability insurance. However, other
elements of section 11580.9, subdivision (d),
require further discussion.
The Tractor/Trailer Rig Was a Single Motor Vehicle
CA(2)(2)
At least for purposes of section 11580.9, subdivision (d),
it is well established that a truck tractor hauling a trailer is treated as a
single motor vehicle. On first impression in California, Mission Ins. Co. v. Hartford
Ins. Co. (1984) 155 Cal. App. 3d 1199
[202 Cal. Rptr. 635] (Mission) adopted the rationale used in
a number of federal diversity cases that had previously addressed the issue,
and held a tractor/trailer rig to be a single motor vehicle for purposes of section 11580.9, subdivision [***12] (d).
" '[V]irtually every jurisdiction which has addressed the question has
held that an accident involving a tractor-trailer unit "arises out
of" the use of both, regardless of which part of the unit was actually
involved in the accident. [Citations.] [P] The theory seems to be that a
trailer is of no use without a tractor, and vice versa. [Citation.] But for the
need to haul the trailer, the tractor would not have traveled the highway and
been involved in the accident.' " (Mission, at p. 1212.) " 'Where a truck and towed
trailer are involved in an accident, the courts are well-advised to avoid the
metaphysics and hold that the accident arose out of the use of each.' " (Id. at p. 1213.) [*35]
CA(3)(3)
Later, Transport Indemnity Co. v.
Royal Ins. Co. (1987) 189 Cal. App. 3d
250 [234 Cal. Rptr. 516] (Transport Indemnity), held:
"[T]he phrase 'motor vehicle or vehicles' in section 11580.9, subdivision (d),
simply means one or more motor vehicles." (Id. at p. 255.) But Transport Indemnity
also agreed with the holding of the Mission court that "an accident
which involves a truck tractor/trailer rig should be viewed as arising out [***13] of the use of all
components of the rig." (Ibid.) Thus, as in Mission, the Transport
Indemnity court held the insurance policies covering the tractor and the trailer
respectively both applied to the "same motor vehicle." (Ibid.)
Accordingly, by the rationale explained in the Mission and Transport Indemnity
decisions, we also conclude the Wilshire and Sentry polices applied to the
"same motor vehicle or vehicles in an occurrence out of which a liability
loss shall arise." (§ 11580.9, subd. (d).)
The only remaining task is to identify the equipment "described or rated
as an owned automobile" by the respective insurance policies. (Ibid.) [**65]
Each Policy Describes or Rates Its Insured's Equipment as
"Owned"--Wilshire Describes or Rates the Tractor and Sentry Describes
or Rates the Trailer
CA(4)(4)
Section 11580.9, subdivision (d),
instructs: "[T]he insurance afforded by that policy in which the motor
vehicle is described or rated as an owned automobile shall be
primary." (Italics added.) In Ohio Cas. Ins. Co. v. Aetna
Ins. Co. (1978) 85 Cal. App. 3d 521, 524
[149 Cal. Rptr. 562], the court held: a "description or rating
... in commonsense [***14]
understanding, means a particularization of the vehicle." (Italics
added.) Here, in the parties' joint statement of facts they agree: In
the Wilshire policy, the tractor was "scheduled as an owned vehicle";
in the Sentry policy, the trailer was "scheduled as an owned
vehicle." Thus, since the tractor/trailer rig is treated as a single
vehicle, under section 11580.9, subdivision (d),
it is "conclusively presumed" that each insurance policy is primary.
Because each policy has the same limit for bodily injury liability, each
insurer has an equal obligation to contribute to the loss.
Sentry's Arguments Have Equitable Appeal, but Cannot Overcome the Plain
Terms of the Statute
CA(5)(5)
Sentry argues section 11580.9 cannot
apply because co-primary coverage does not establish an order of
priority. In Sentry's view, the purpose of section 11580.9 is to
determine "the order in which two or more ... liability insurance policies
covering the same loss shall apply" (§ 11580.8), and
the word "order" means one policy must be primary and the
other excess. We disagree. We find nothing in the statute prohibiting a
result by which the [*36]
"order" in which the policies apply is concurrent, [***15] or making the
statute inapplicable merely because its application results in an equal ranking
of priority. Indeed, without phrasing its conclusion in these terms, the Mission
court held under similar circumstances that two insurance policies were
"ordered" concurrently, i.e., they were co-primary. Whether section 11580.9, subdivision (d)
applies to an occurrence depends upon the existence of the simply stated
condition. Do two or more insurance policies cover the same motor vehicle in
"an occurrence out of which a liability loss shall arise?" If the
answer is "yes," the statute applies. If the answer is
"no," the statute does not apply. But in no case does the result
of the statute's application determine whether it applies. Which is to say, we
will not adopt an interpretation of the statute based upon our like or dislike
of the outcome of its application.
CA(6)(6)
Sentry also contends that because the "other insurance" clauses afforded
by the two policies were entirely congruent under the agreed facts--Wilshire
promised its insured it would provide primary coverage for use of both the
tractor and trailer, but Sentry promised its insured it would only provide
excess coverage for [***16]
use of the trailer--both the tractor and trailer should be treated as
"described or rated as owned" under the Wilshire policy. But the
priority of coverage as contracted for in the policies must not be confused
with the "description or rating" of the vehicles, which determines
the priority of coverage under section 11580.9 without
regard to the priority provisions of the respective policies. The Legislature's
conclusive presumption regarding the priority of coverage may not be avoided by
unilaterally imposing "other insurance" clauses the other insurer has
not bargained for. A desire to minimize or eliminate litigation over competing
provisions of "other insurance" clauses in multiple policies was the
impetus for enactment of the legislation. And even though the "other
insurance" clauses do not compete in this case, the statute cannot be
ignored.
CA(7)(7)
Insurers dissatisfied with the operation of section 11580.9 may
overcome its conclusive [**66]
presumptions, although the process may be cumbersome. Section 11580.9, subdivision (f)
provides: "The presumptions stated in subdivisions (a) to (d), inclusive,
may be modified or amended only by written agreement signed by all
insurers who [***17]
have issued a policy or policies applicable to a loss described in these
subdivisions and all named insureds under these polices." (Italics
added.) Of course, there was no such agreement in this case. n9
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n9 Wilshire contended at oral argument in the court below, and again on appeal,
that an owner of a trailer, such as Statewide, may purchase a "trucker's
endorsement" which eliminates all coverage when the trailer is
towed by another, thereby relying entirely on the insurance provided by the
owner of the tractor. Sentry contends that if such a unilateral endorsement is
effective to eliminate all coverage, by the same token the language of
its "other insurance" clause must also be given effect to limit
its coverage to that of an excess insurer. Because the agreed facts do not
contain any information about the availability or the terms of such an
endorsement, and because no such endorsement existed in the instant dispute, we
do not address these arguments.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [*37]
Thus, we are compelled to conclude [***18]
that section 11580.9, subdivision (d)
controls, and its application results in the Wilshire and Sentry policies both
providing primary coverage. With equal policy limits, equal sharing of the loss
is proper.
We recognize the seeming inequity of this result. Wilshire agreed to provide
primary coverage. Sentry agreed to provide only excess coverage. Wilshire will
suffer only half the loss it promised to bear and Sentry will pay half of a
loss it never promised to bear. Yet the Legislature believed a bright-line rule
in these circumstances was beneficial. The inequity, if any, lies in the
operation of a statute we are powerless to rewrite.
DISPOSITION
The judgment is affirmed. Wilshire shall recover its costs on appeal.
Bedsworth, Acting P. J., and Aronson, J., concurred.