Opinion
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
1
section 11580.9, 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
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 obligatiоn 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 stipulаtion 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
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 аction, 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)
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)
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 prоvisions (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,
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.
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 the business of renting or leasing commercial vehicles is excess to any other insurance covering the loss. Section 11580.9, subdivision (b) provides: “Where two or more policies apply to the same loss, and one policy affords covеrage to a named insured engaged in the business of renting or leasing motor vehicles without operators, it shall be conclusively presumed that the insurance afforded by that policy to a person other than the named insured or his or her agent or employee, shall be excess over and not concurrent with, any other valid and collectible insurance applicable to the same loss covering the person as a named insured or as an additional insured under a policy with limits at least equal to the financial responsibility requirements specified in Section 16056 of the Vehicle Code. The presumption provided by this subdivision shall apply only if, at the time of the loss, the involved motor vehicle either: [f] (1) Qualifies as a ‘commercial vehicle’ as that term is used in Section 260 of the Vehicle Code[; or [TEI (2) h]as been leased for a term of six months or longer.”
Section 11580.9, subdivision (d) establishes a conclusive presumptiоn that, where none of the other three statutory presumptions applies, the policy
Maryland contends Apace was “engaged in the business of renting or leasing motor vehicles without operators,” and that therefore section 11580.9, subdivision (b) applies, rendering its insurance excess. Travelers contends Apace was not so engaged, and that therefore section 11580.9, subdivision (d) applies, rendering Maryland’s insurance primary.
Application of Section 11580.9, Subdivision (b)
The language of section 11580.9, subdivision (b) is clear and unambiguous. In order for an insurer to receive the benefit of section 11580.9, subdivision (b)’s conclusive presumption, its insured must be “engaged in the business of renting or leasing motor vehicles without operators” and the involved motor vehicle must be either a commercial vehicle or one leased for at least six months. Both elements must be present in order for section 11580.9, subdivision (b) to apply. 6
It is undisputed that both the tractor and the trailer provided to Siatuu by Apace were “commercial” vehicles within the meaning of section 11580.9, subdivision (b). The only disputed issue is whether Apace was “engaged in the business of renting or leasing motor vehicles without operators.”
In determining whether an insured is engaged in the business оf renting or leasing motor vehicles without operators, we again consider the plain language of the statute. In order for an insured to be “engaged in the business of renting or leasing motor vehicles,” renting or leasing activities must be a regular part of the insured’s business. “The authorities have not established a bright line rule to determine whether an insured is engaged in [the business of] leasing or renting” motor vehicles.
(Western Carriers Ins. Exchange
v.
Pacific Ins. Co., supra,
Apace’s Business
The only facts relied on by Maryland to prove Apace was engaged in the business of renting or leasing motor vehicles without operators are those arising from its relationship with its independent contractors. Apace is
Assuming without deciding that the arrangement whereby Apace provided trailers to its independent contractor subhaulers can be characterized as a lease, we conclude that such leasing activity was merely incidentаl to Apace’s primary business of moving and storage, such that Apace was not “engaged in the business of renting or leasing motor vehicles without operators” as a matter of law. Apace did not rent or lease trailers to the general public. Indeed, the only individuals who could lease trailers from Apace for use on the highway were independent contractor subhaulers with whom Apace had entered into independent contractor agrеements. Although Apace may have made a slight profit on the lease of these trailers, such leases were wholly incidental to its business of moving and storage. If Apace had no moving and storage business for a subhauler, no trailer would be leased. The concurrent leasing of a trailer in order to enable an independent contractor to conduct subhauling work for Apace cannot turn Apace’s moving and storage business into a commerciаl vehicle rental operation. 9 Therefore, section 11580.9, subdivision (b) does not apply.
Application of Section 11580.9, Subdivision (d)
When section 11580.9, subdivision (b) does not apply, the general rule of section 11580.9, subdivision (d) governs.
(Zurich-American Ins. Co.
v.
Liberty Mut. Ins. Co., supra,
The Maryland policy insuring Apace describes the trailer pulled by Siatuu at the timе of the accident as an owned automobile. Additionally, through
In contrast, neither the trailer nor the tractor is described as owned in Travelers’s policy. Marylаnd contends, however, that because Siatuu was driving a temporary replacement tractor for a tractor that was described as owned in his policy, coverage for the temporary vehicle should be on the same basis (i.e., “owned vehicle coverage”) as coverage for the vehicle it replaced.
We disagree. The “Temporary Substitute Autos” provision of Travelers’s policy provides only that substitute vehicles will be considered “covered" autos, not that they will be considered “owned." (Cf.
Grand Rent A Car Corp.
v.
20th Century Ins. Co.
(1994)
Other Equitable and Statutory Contentions
Maryland raises both equitable and statutory arguments to avoid the application of section 11580.9, subdivision (d) to this case. None is persuasive. Maryland’s equitable arguments are easily addressed. Section 11580.8 provides that section 11580.9 constitutes the totаl public policy of the state with respect to coinsurance disputes. Therefore, specific factual arguments sounding in equity are subordinate to the conclusive presumptions of section 11580.9.
11
Maryland’s reliance on the “other insurance” clauses in
Alternatively, Maryland argues that Siatuu’s agreement, as part of the independent contractor agreement, to hold Apace harmless and to name it as an additional insured in his policy
12
constitutes an exception to the application of section 11580.9, subdivision (d) within the terms of section 11580.9, subdivision (f). Section 11580.9, subdivision (f) provides: “The presumptions stated in [Section 11580.9,] subdivisions (a) 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 policies.” Maryland argues that the “hold harmless” clause in the independent contractor agreement, combined with the “other insurance” clauses of the insurance policies, constitutes a written agreement that Siatuu’s insurer would be primarily liable for the loss. An identical contention was rejected by
Mission Ins. Co.
v.
Hartford Ins. Co., supra,
Maryland’s Cross-complaint
Maryland argues that the trial court erred in entering judgment agаinst it on its cross-complaint for indemnity with respect to the moneys paid on behalf of its insured, Apace. Because we have concluded section 11580.9, subdivision (d) applies to this case, the fact that the vehicles involved were described as owned in Maryland’s policy renders Maryland primarily liable with respect to moneys paid on behalf of Apace.
The judgment is affirmed. Maryland is to pay Travelers’s costs on appeal.
Armstrong, J., and Godoy Perez, J., concurred.
Notes
Unless otherwise notеd, all further statutory references are to the Insurance Code.
This amount was well within the policy limit of either policy.
Prior to the settlement of the underlying actions, both parties moved for summary judgment in the coverage dispute. At the hearing on both motions, the trial court indicated it was inclined to grant Travelers’s motion but could not do so because the issue of damages had not been submitted. Both motions were denied without prejudice and the parties were аdvised they could move for summary adjudication of issues.
Maryland originally filed a premature appeal from the order granting summary adjudication of issues. This appeal was dismissed.
Mission Ins. Co.
v.
Hartford Accident & Indemnity. Co., supra,
In 1983, section 11580.9, subdivision (b) was amended to read substantially as it does now. Prior to the amendment, the subdivision read, in pertinent part, “Where two or more policies are applicable to the same loss, and one of such policies affords coverage to a named insured
engaged in the business of renting or leasing commercial vehicles without operators
... or the leasing of any other motor vehicle for six months or longer, it shall be conclusively presumed that the insurance afforded by such policy to a person other than the named insured or his agent or emplоyee shall not be primary, but shall be excess over any other valid and collectible insurance applicable to the same loss . . . .” (Italics added.) Courts interpreting this language disagreed on whether the nature of the insured’s business or the status of the involved motor vehicle governed application of the subdivision. (Compare
McCall
v.
Great American Ins. Co.
(1981)
To the extent
Western Carriers Ins. Exchange
v.
Pacific Ins. Co., supra,
211 Cal.App.3d at pages 116-118 and
Mission Ins. Co.
v.
Hartford Accident & Indemnity Co., supra,
Maryland’s policy to Apace describes Apace’s business as “moving and storage.”
Maryland contends that the nature of Apace’s business should be determined as a matter of law on the undisputed facts, thus making any witness’s characterization of the business irrelevant. We agree. However, our conclusion regarding the nature of Apace’s business is in accord with the deposition testimony of Apace’s vice-president of administration (“Q: Apace is not involved in the business of renting or leasing motor vehicles without operators to others, is it? A; No.”).
Moreover, even if the tractor driven by Siatuu were somehow described as owned in Travelers’s policy, the result would be the same. “[A]n accident which involves a truck tractor/trailer rig should be viewed as arising out of the use of all components of the rig.”
(Transport Indemnity Co.
v.
Royal Ins. Co., supra,
We note, however, that if equitable arguments did apply, those arguments would not favor Maryland. “[Section 11580.9, subdivision (b) was designed to apply in a business setting where a commercial vehicle is leased to a profit-making entity.”
(Transport Indemnity Co.
v.
Alo, supra,
Siatuu did not comply with this contract provision.
Further, it should be noted that both the Maryland policy and the Travelers policy excluded coverage for liability assumed under any contract.