Global Hawk Insurance Co. v. Century-National Insurance Co., 203 Cal.App.4th 1458, 138 Cal.Rptr. 363, (California Court of Appeal, 1st Dist. February 29, 2012). Free copy of opinion available here.
Despite prevailing precedent elsewhere, in California Court of Appeals 1st District on these facts, issuer of MCS-90 endorsement can be required to reimburse directly another insurer. Put another way, MCS-90 extends beyond just the driving public who may be injured by an otherwise judgment proof motor carrier.
- Motor Carrier #2′s driver injured in collision with Motor Carrier #1’s truck.
- Issuer of Motor Carrier #1’s MCS-90 was also its liability policy insurer.
- Motor Carrier #1’s colliding truck not listed on schedule of liability policy.
- Motor Carrier #2’s driver filed claim with Motor Carrier #1’s MCS-90 endorser and liability insurer (one and the same company) – and was declined due to absence of truck from liability policy vehicle schedule.
- Motor Carrier #2’s uninsured motorist policy insurer paid driver $100,000 policy limits because Motor Carrier #1 “uninsured” as to particular truck.
Arguments & Decision:
Issuer of MCS-90 to Motor Carrier #1: MCS-90 functions as a “surety” – “not insurance”. It’s “protected class” is “the public that share the roads with big rigs” – not other insurers.
Uninsured Motorist Policy Insurer to Motor Carrier #2: Despite citation of cases from around the U.S., no California court has held what MCS-90 issuer argues here – that MCS-90’s “protected class” is restricted to “the public” and inoperative as to other insurers. If direct reimbursement not allowed here between insurers, it raises unfair procedural to those MCS-90 meant to protect: Those harmed by “fly-by-night” motor carriers that lack financial resources to shoulder financial responsibilities.
The Court: Despite absence of relevant Motor Carrier #1 truck from liability policy, MCS-90 endorsement required insurer to reimburse uninsured motorist insurer that paid out claim to $100,000 policy limit after liability insurer for Motor Carrier #1 refused on grounds that relevant truck was absent from policy schedule.
The question for the future is whether or not this holding will be limited to its specific facts (whose detail would consume more paragraphs) – at least within the jurisdiction covered by the California intermediate level appellate court that issued this ruling.
The case appears to go against a major en banc (full circuit of judges after initial decision by a three-judge panel of this circuit) holding for the U.S. Court of Appeals for the 10th Circuit which ruled that an MCS-90 endorsement applies only where both (1) underlying insurance policy to which MCS-90 endorsement is attached does not provide coverage for a motor carrier’s accident, and (2) motor carrier’s insurance coverage is either not sufficient to satisfy the federally-prescribed minimum levels of financial responsibility or it is non-existent. Carolina Casualty Insurance Co. v. Yeates, 584 F.3d 868, 875-79 (10th Cir. 2009)(See multiple precedents from around the federal appellate circuits).
Global Hawk’s core subtlety is that (1) there was liability insurance coverage for the motor carrier, and (2) such coverage was in fact sufficient to cover federally-mandated minimum financial responsibility – but neither (1) nor (2) was true of the particular truck involved in the accident.
Petition for review by the California Supreme Court was denied June 13, 2012, but legal argument on this MCS-90 point remains:
The question nationwide is whether or not this holding will eventually be adopted elsewhere in the nationwide – or whether instead it stands as a minor one-off instance of judicial activism that will comprise at best a distinctly minority position, with decisions like Carolina Casualty Insurance Co. v. Yeates continuing to comprise the majority view.