In Scottsdale Indemnity v. National Continental Insurance Co. (No. C071416, filed 8/20/14), a trucker named Lainez owned a tractor, held his own motor carrier permit and was insured by Scottsdale. The Scottsdale policy specifically described Lainez’s tractor and expressly covered any attached trailer.
Lainez contracted with Western, which arranged with owner-operators to deliver loads for customers. Western had a commercial policy provided by National Continental (NCI) through the assigned risk plan. The NCI policy described Western’s business as “Trucker for Hire” and listed Lainez as a driver, but did not list, describe or rate any vehicle.
When Lainez was sued following an accident, NCI tendered the defense of Western to Scottsdale, which accepted and admitted that Scottsdale was primary. But Scottsdale later demanded that NCI contribute to the defense pro-rata, asserting that NCI was co-primary. Scottsdale and NCI then contributed $475,000 and $200,000, respectively, to settle the case.
Scottsdale sued NCI for contribution to both defense and indemnity. Although Insurance Code section 11580.9(d) provides that where two or more policies apply to the same motor vehicle the policy rating or describing the accident vehicle is conclusively presumed primary, Scottsdale argued that when multiple policies cover both the tractor and the trailer, and the insureds are all in the business of truckers, subsection 11580.9(h) mandates that the insurers are all co-primaries. The subsection states that:
“[W]hen two or more policies … apply to a power unit and an attached trailer or trailers … and one policy affords coverage to a named insured in the business of a trucker, defined as any person or organization engaged in the business of transporting property by auto for hire, then the following shall be conclusively presumed: If at the time of loss, the power unit is being operated by any person in the business of a trucker, the insurance afforded by the policy to the person engaged in the business of a trucker shall be primary for both power unit and trailer….”
Scottsdale argued that because only subsection (h) of the statute refers to policies covering both “a power unit and an attached trailer,” and because both insureds were in the “business of a trucker,” that subsection applied over subsection (d). Further, because both policies covered the whole rig, and both insureds were in the business of trucking, no presumption of priority would apply, with the result that both policies would be deemed co-primary.
But the court disagreed, finding that subsection 11580.9(h) is only intended to control where different insurers cover the tractor and the trailer. While acknowledging that multiple insurers can be co-primary under the statute, the court said that subsection 11580.9(d) was the more specific section applicable to the facts: “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.”
Moreover, the court stated that “[t]he language of subdivision (h) does not address a situation where, as here, there are two trucker policies covering both the tractor and the trailer. Rather, the statute differentiates between the operation of the power unit and the operation of the trailer. ‘If at the time of loss, the power unit is being operated by any person in the business of a trucker, the insurance afforded by the policy to the person engaged in the business of a trucker shall be primary for both power unit and trailer or trailers, and the insurance afforded by the other policy shall be excess.’ … Simply put, we agree with the trial court that subdivision (h) does not speak to the involvement of two businesses engaged in trucking.”
The court concluded that: “Although the conclusive presumption set forth in subdivision (h) was intended to resolve the coverage disputes between insurers of power units and insurers of trailers, there is nothing in the statute or the legislative history to suggest it applies when two trucker’s policies provide coverage to the entire rig. As a result, subdivision (d) is the more specific subdivision that applies and thereby renders the Scottsdale policy primary and the NCI policy excess.”
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