August 2023

Baker v. Amazon Logistics, Inc.

United States District Court for the Eastern District of Louisiana

July 26, 2023, Decided; July 26, 2023, Filed

CIVIL ACTION NO. 23-2078 SECTION M (2)

Reporter

2023 U.S. Dist. LEXIS 129651 *

TAMEICA BAKER, et al. VERSUS AMAZON LOGISTICS, INC., et al.

Core Terms

removal, non-removing, notice, properly join, joined, unanimity, exceptional circumstances, district court, state-court, diligence, time of removal, diversity, emails, consented

Counsel: [*1] For Tameica Baker, Individually and on behalf of her deceased husband, Alrick Baker, Alrick Baker, Jr., Individually and on behalf of her deceased father, Alrick Baker, Kalila Baker, Individually and on behalf of her deceased father, Alrick Baker, Shushana Edwards, on behalf of the Minor Children, A. B. and A. B, Plaintiffs: Timothy R. Richardson, LEAD ATTORNEY, Richardson Law Group, Madisonville, LA.

For Amazon Logistics, Inc., Amazon.com, Inc., Defendants: Henry J. Rodriguez, LEAD ATTORNEY, Donald G. Cassels, III, Victoria J. Cvitanovic, Wilson Elser, New Orleans, LA; Mark T Assad, Wilson Elser Moskowitz Edelman & Dicker, LLP, Orlando, FL.

For Cynthia Kirksey, Defendant: Matthew D. Miller, LEAD ATTORNEY, Copeland, Cook, Taylor & Bush, PA (Hattiesburg), Hattiesburg, MS.

For B3 Logistics, LLC, Brian Davis, Defendants: Wade Antoine Langlois, III, LEAD ATTORNEY, John Joseph Danna, Jr., Kaylyn Elizabeth Blosser, Gaudry, Ranson, Higgins & Gremillion, LLC (Gretna), Gretna, LA.

For Lancer Insurance Company, Defendant: Andrea Leigh Albert, LEAD ATTORNEY, Stephen J. Eckholdt, Galloway, Johnson, Tompkins, Burr & Smith (Mandeville), Mandeville, LA.

For Michael Davis, Murzuka Afrida, Justin Walker, [*2] Renee Mota, Germaine White, Defendants: Henry J. Rodriguez, LEAD ATTORNEY, Donald G. Cassels, III, Victoria J. Cvitanovic, Wilson Elser, New Orleans, LA; Mark T Assad, Wilson Elser Moskowitz Edelman & Dicker, LLP, Orlando, FL.

Judges: BARRY W. ASHE, UNITED STATES DISTRICT JUDGE.

Opinion by: BARRY W. ASHE

Opinion

ORDER & REASONS

Before the Court is a motion filed by plaintiffs Tameica Baker, Alrick Baker, Jr., Kalila Baker,¹ and Shushana Edwards² (collectively, “Plaintiffs”) to remand this matter to the 24th Judicial District Court, Parish of Jefferson, State of Louisiana.³ Defendants Amazon Logistics, Inc. (“Amazon”) and Lancer Insurance Company (“Lancer”) respond in opposition,⁴ and Plaintiffs reply in further support of their motion.⁵ Defendants file a surreply in further opposition to the motion.⁶ Having considered the parties’ memoranda, the record, and the applicable law, this Court issues this Order & Reasons granting Plaintiffs’ motion to remand.

I. BACKGROUND

This matter involves a claim against multiple defendants arising out of a car accident eventuating in a fatality. On June 5, 2023, on Interstate 10 in Biloxi, Mississippi, Alrick Baker’s vehicle was struck when an Amazon tractor trailer driven by Cynthia Kirksey [*3] attempted to pass him.⁷ As a result of the collision, Baker’s vehicle was forced off the roadway and burst into flames, which caused significant burns to his body and ultimately led to his death.⁸

Plaintiffs brought this action in state court seeking damages for Baker’s death.⁹ Plaintiffs assert that the accident was caused by Amazon’s negligence in failing to adhere to its obligations and duties under the law and its contract with B3 Logistics, LLC (“B3”).¹⁰ In addition to naming the Amazon entities,¹¹ Plaintiffs sued B3, Brian Davis, Kirksey, Ontime Carriers, LLC, Lancer, Prime Insurance Company (“Prime Insurance”), Great American Assurance Company (“Great American”), Mohave Transportation Insurance Company, and five individual Amazon employees (the “Amazon Supervisors”): Michael Davis, Murzuka Afrida, Justin Walker, Renee Mota, and Germaine White.¹²

On June 15, 2023, Amazon removed the action to this Court on the basis of a diversity of citizenship and an amount in controversy exceeding $75,000, exclusive of interest and costs.¹³ In its notice of removal, Amazon contends that, although the Amazon Supervisors are said to be citizens of Louisiana, their citizenship should not be [*4] considered in determining diversity jurisdiction because, as employees of Amazon, none can be personally liable to Plaintiffs.¹⁴ Thus, according to Amazon, Baker improperly joined the Amazon Supervisors to defeat federal diversity subject-matter jurisdiction.¹⁵ Lancer filed a consent to removal on June 26, 2023.¹⁶ Together, B3 and Brian Davis filed a consent to removal on June 27, 2023.¹⁷ The next day Plaintiffs filed the instant motion to remand.¹⁸

II. PENDING MOTION

In their motion to remand, Plaintiffs raise two issues with respect to Amazon’s removal. First, Plaintiffs argue that the nondiverse Amazon Supervisors are properly joined, and, as a result, this Court lacks subject-matter jurisdiction.¹⁹ Second, Plaintiffs assert that removal is improper because Amazon did not obtain the consent of all served defendants prior to removal as required by 28 U.S.C. § 1446(b)(2)(A).²⁰ To their motion, Plaintiffs attach proofs of service on Brian Davis (reflecting service on June 5, 2023), Renee Mota (June 12, 2023), Amazon (June 13, 2023), Lancer (June 13, 2023), Great American (June 13, 2023), Prime Insurance (June 13, 2023), and Michael Davis (June 20, 2023).²¹ With its § 1447 compliance memorandum filed on July 3, 2023, Amazon [*5] submitted these same service returns as well as the completed return for defendant Germaine White (reflecting service on June 1, 2023).²²

In opposition to the motion to remand, Amazon argues that Plaintiffs’ complaint does not state any valid claims against the Amazon Supervisors under Louisiana law, meaning, says Amazon, that these nondiverse defendants are improperly joined and should be disregarded, and, as a consequence, this Court has diversity jurisdiction.²³ However, Amazon does not address the issue of consent.²⁴

Plaintiffs then sought leave to file a reply brief, in which they again urge that the lack of complete diversity and the failure to obtain proper consent warranted remand.²⁵ Amazon opposed Plaintiffs’ motion for leave in part, claiming that Plaintiffs failed to raise the issue of consent in their original motion to remand.²⁶ Finding that the issue of consent was indeed raised by Plaintiffs in their motion to remand, this Court permitted the filing of the reply brief.²⁷ In a surreply (which the Court also allowed), Amazon argues that, at the time of removal, the state-court record reflected completed service for only Germaine White, one of the Amazon Supervisors who Amazon contends [*6] is improperly joined and thus should be disregarded.²⁸ Alternatively, Amazon asks in the surreply that, if additional defendants were served prior to removal, this Court apply an exception to the rule of unanimity due to exceptional circumstances.²⁹ Lastly, Amazon suggests that the Court allow the properly joined and served defendants to first make their appearance and then take a position as to whether they consent to the removal of this matter.³⁰

On July 17, 2023, five days after filing its surreply, Amazon filed a document titled “proof of consent to removal” purporting to be proof that insurers Prime Insurance and Great American consented to the removal.³¹ To this document, Amazon attached emails from Prime Insurance’s counsel dated July 13, 2023, and Great American’s counsel dated July 14, 2023, communicating that the insurance companies consent to the removal.³² Plaintiffs argue that Amazon’s proof of consent is untimely as both it and the alleged consents (i.e., the emails) were filed outside the 30-day time period allowed for consents to removal under 28 U.S.C. 1446(b).³³

III. LAW AND ANALYSIS

A. Removal Standard

A defendant may remove from state court to the proper United States district court “any [*7] civil action brought in a State court of which the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a). “A federal district court has subject matter jurisdiction over a state claim when the amount in controversy is met and there is complete diversity of citizenship between the parties.” Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 397 (5th Cir. 2013) (citing 28 U.S.C. § 1332(a)). Because federal courts have only limited jurisdiction, the removal statute is strictly construed, and any doubts or ambiguities are resolved against removal and in favor of remand. Vantage Drilling Co. v. Hsin-Chi Su, 741 F.3d 535, 537 (5th Cir. 2014); Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). The party seeking removal has the burden of establishing “that federal jurisdiction exists and that removal was proper.” Manguno, 276 F.3d at 723.

B. Rule of Unanimity

Procedural requirements for removal are set forth in 28 U.S.C. § 1446(b). To remove a case, a defendant must file a notice of removal within 30 days of service on the defendant. Id. § 1446(a)-(b)(1). All defendants who have been “properly joined and served” must join in or consent to the removal of the action. Id. § 1446(b)(2)(A). According to the Fifth Circuit, this “rule of unanimity” requires that each served defendant join in the notice of removal or that there be a “timely filed written indication from each served defendant, or from some person or entity purporting to formally act on its behalf in [*8] this respect and to have authority to do so, that it has actually consented to such action.” Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 1254, 1262 (5th Cir. 1988). District courts in the Fifth Circuit “have consistently remanded cases where a notice of removal included only an allegation of consent of a defendant not joining in the notice of removal.” McFarland v. Protective Ins. Co., 2019 WL 351150, at *2 (E.D. La. Jan. 29, 2019) (citing Spoon v. Fannin Cnty. Cmty. Supervision & Corr. Dep’t, 794 F. Supp. 2d 703, 707 (E.D. Tex. 2011) (collecting cases)).

The Fifth Circuit has recognized three exceptions to the rule of unanimity: (1) non-removing defendants who are improperly or fraudulently joined; (2) non-removing defendants who are merely nominal or formal parties; and (3) non-removing defendants who have not been served by the time of removal. Wagner, 2019 WL 626430, at *3 (citations omitted); World Prayer Tabernacle v. Certain Underwriters at Lloyd’s, 2022 WL 4949125, at *1 (E.D. La. Oct. 4, 2022). And it has also “recognized that ‘sometimes exceptional or unique circumstances might permit removal after the expiration of the thirty-day period prescribed by § 1446(b).'” Cavalier v. Progressive Paloverde Ins. Co., 2021 WL 4772108, at *2 (E.D. La. Oct. 12, 2021) (quoting Ortiz v. Young, 431 F. App’x 306, 307 (5th Cir. 2011)). This additional exception has only been granted by the Fifth Circuit in the “unique” case of Gillis v. Louisiana, 249 F.3d 755 (5th Cir. 2002), in which “the non-removing defendant did not file its written consent in thirty days because consent could be authorized only at a board meeting, and the plaintiff, who was also the chairman of the board, had interposed scheduling conflicts that prevented timely consent.” Cavalier, 2021 WL 4772108, at *2. Such “exceptional [*9] circumstances” will generally be found, then, only when the non-removing defendant’s “lack of timely consent arises from plaintiff’s conduct, such as plaintiff’s ‘bad faith efforts to prevent removal.'” Id. (quoting Ortiz, 431 F. App’x at 307-08). Thus, the Fifth Circuit has instructed district courts to consider the reasonableness of the removing defendant’s actions and whether the circumstances (e.g., plaintiff’s conduct) were sufficiently “exceptional” to justify a departure from the rule of unanimity. Getty, 841 F.2d at 1263.

C. Amazon’s Removal Was Procedurally Defective

Although Plaintiffs present two distinct issues in the motion to remand, the lack of unanimous consent to removal provides sufficient grounds to grant the motion.³⁴ Plaintiffs argue that removal is defective due to Amazon’s failure to file into the court record notices of consent as to all properly joined and served defendants within the 30-day period for removal.³⁵ After careful consideration, the Court agrees that Amazon’s removal was procedurally defective.

Each defendant must consent to removal and cannot rely on the removing party’s allegation of consent by the non-removing defendants. See Getty, 841 F.2d at 1262 & n.11; McFarland, 2019 WL 351150, at *2. Among the defendants who are assumed to be properly joined and who were [*10] properly served prior to removal, only Lancer and Brian Davis timely consented to removal.³⁶ This leaves the insurers Prime Insurance and Great American as the only defendants properly joined and served before Amazon’s removal whose consent to removal was not timely made a part of the court record. But Amazon alleges that Prime Insurance and Great American did consent to removal by means of emails dated July 13 and 14, 2023, respectively, and Amazon attaches these emails to the “proof of consent to removal” it filed into the record on July 17, 2023.³⁷ This “proof of consent” cannot carry the weight Amazon places on it, though, because no “timely filed written indication” of consent by Great American or Prime Insurance was filed into the record within the 30-day period for removal, which ended on July 13, 2023.³⁸ See Getty, 841 F.2d at 1262 n.11; Waguespack v. Homesite Ins. Co., 2022 WL 612071, at *2 (E.D. La. Feb. 28, 2022) (“Here, [defendant]’s notice of consent to removal was filed 31 days after the defendants were served. Thus, it was untimely.”). Nor are the emails, in and of themselves, sufficient to establish that Great American and Prime Insurance’s purported “consent” to the removal was timely. After all, it is well-established “that private emails between counsel are insufficient to [*11] constitute written consent as they fail to put either the Court or the plaintiff on notice.” Taco Tico of New Orleans, Inc. v. Argonaut Great Cent. Cent. Ins. Co., 2009 WL 2160436, at *2 (E.D. La. Jul. 16, 2009) (citing Johnson v. Health Bilal, 2009 WL 981696, at *2 (E.D. La. Apr. 13, 2009), and Marshall v. Air Liquide-Big Three, Inc., 2006 WL 286011, at *3 (E.D. La. Feb. 7, 2006)).

In short, “[b]ecause no written consent was timely filed by [all properly joined and served non-removing defendants], and because such consent cannot be filed outside of the thirty day time period, Plaintiffs have raised a procedural defect that requires remand.” Melton v. Toney, 2017 WL 11543680, at *6 (M.D. La. Dec. 5, 2017), adopted, 2017 WL 11543720 (M.D. La. Dec. 21, 2017); see also Grand Tex. Homes, Inc. v. Am. Safety Indem. Co., 2012 WL 5355958, at *3 (N.D. Tex. Oct. 30, 2012) (“Failure to join in removal is a procedural defect that cannot be cured by untimely notice of consent” and cannot be remedied after the 30-day period for removal has ended). Therefore, absent an exception to the rule of unanimity, Amazon’s removal is defective, and the case must be remanded.

Regarding the first two exceptions (non-removing defendants who are improperly or fraudulently joined or are merely nominal or formal parties), the five nondiverse Amazon Supervisors are here assumed to have been improperly joined and thus are ignored.³⁹ But no party contends that the insurer-defendants Great American and Prime Insurance are improperly joined or nominal parties. Therefore, these exceptions do not apply to these two defendants. Proceeding to the third exception (non-removing defendants who have [*12] not been served by the time of removal), Prime Insurance and Great American were served on June 13, 2023, and the case was removed on June 15, 2023.⁴⁰ Thus, these defendants were served by the time of removal, so the third exception does not apply to them.

Although the three exceptions to the rule of unanimity do not apply in this case, Amazon points to the decision in Wagner v. Government Employees Insurance Co. to argue that “exceptional circumstances” warrant departure from the rule and a denial of the motion to remand. In Wagner, the plaintiffs delayed entering into the state-court record an affidavit of service of process for the non-removing defendant until after removal. Wagner, 2019 WL 626430, at *5. Prior to removal, the removing defendant “attempted several times to ascertain whether [the non-removing defendant] had been served,” including, most notably, in a conversation with the plaintiffs the day before filing its notice of removal during which plaintiffs failed to advise that the non-removing defendant had been served more than a month before the conversation. Id. The Wagner court found that because the removing defendant “acted on the information before it at the time of removal and sought to obtain [*13] consent to removal from all of the defendants,” exceptional circumstances permitted removal even though the consent of a properly joined and served non-removing defendant had not been filed into the court record within the 30-day period. Id.

In contrast, the court in Cavalier v. Progressive Paloverde Insurance Co. distinguished Wagner and found that the removing defendant failed to “act with the requisite diligence to warrant an exception to the consent requirement.” Cavalier, 2021 WL 4772108, at *2-4. The removing defendant there represented that its only effort to obtain consent was calling the state-court clerk before removal to determine whether the non-removing defendant had been served. Id. at *3 (comparing Wagner, where the removing defendant diligently attempted to contact its co-defendants several times to obtain consent for removal and had spoken to plaintiffs who had kept silent about service on defendants). The Cavalier court found that the removing defendant’s “lack of diligence in reaching out to [the non-removing defendant] is even less excusable given that plaintiff’s state court petition included the name and address of [the non-removing defendant’s] agent for service.” Id.; see also World Prayer Tabernacle, 2022 WL 4949125 at *4 (“[M]inimal steps, such [*14] as a phone call to the plaintiff, would likely have sufficed to determine whether [the non-removing defendants] had been served. Because [the removing defendant] cannot point to diligent or good faith efforts to obtain the consent of [the non-removing defendants], this Court finds no exceptional circumstances which would justify removal of this case.”).

Here, Amazon has failed to demonstrate sufficient effort to ascertain the status of service on, or to obtain consent from, its named co-defendants, including particularly Great American and Prime Insurance, within the 30-day removal period. Unlike the removing defendant in Wagner, Amazon points to no attempts it made to determine whether the other named defendants had been served before removal, other than ordering and attaching the state-court record to its notice of removal.⁴¹ In Cavalier, the removing defendant called the state-court clerk to inquire whether the non-removing defendant had been served, and the court still found that the defendant had not acted with the requisite diligence to justify an exception to the consent requirement. Generally, courts have not found exceptional circumstances to warrant an exception to the unanimity [*15] rule when the removing defendant simply relied on the state-court record at the time of removal; instead, they require that the removing defendant make a diligent effort to contact the non-removing defendants to ask about service. Id. at *2 (citing Dupree v. Torin Jacks, Inc., 2009 WL 366332, at *5 (W.D. La. Feb. 12, 2009) (“[T]he absence of record evidence of service, standing alone, does not automatically equal exceptional circumstances.”); Grant v. FCA US, LLC, 2019 WL 2635930, at *2 (E.D. La. June 27, 2019) (“Considering Defendant[‘s] failure to attempt to contact the other Defendants … the Court finds that the facts do not present an exceptional circumstance, and remand is appropriate.”)).

Even if Amazon was unaware that other properly joined defendants had been served prior to removal (as does appear to have been true from the state-court record it attached to its notice of removal),⁴² Plaintiffs raised the issue of unanimous consent in their motion to remand, which was filed on June 28, 2023, just 13 days after Amazon’s notice of removal – and, significantly, still 15 days before the 30-day removal period expired.⁴³ With its motion to remand, Plaintiffs provided the proofs of service on Great American and Prime Insurance, among others.⁴⁴ Further, with its own compliance memorandum filed on July 3, 2023, 18 days after removal, but [*16] 10 days before expiration of the 30-day period, Amazon also included the service returns for Great American and Prime Insurance reflecting that they had been served on June 13, 2023, two days before the June 15 removal.⁴⁵ Therefore, Amazon had actual notice of service on these two defendants well within the 30-day period. Yet, Amazon waited until July 13 and 14 to contact Great American and Prime Insurance about their consent and did not file a written indication of such consent until after the 30-day period lapsed. Consequently, the Court finds that Amazon did not make diligent efforts either to obtain consent of all properly joined and served non-removing defendants, or to file into the record a timely written indication of such consent. Moreover, this case does not involve any allegation or indication of bad faith or forum manipulation by Plaintiffs. See e.g., Forman v. Equifax Credit Info. Svcs., Inc., 1997 WL 162008, at *1 (E.D. La. Apr. 4, 1997) (“There is no evidence, nor any allegation, that plaintiff withheld service to defeat removal or otherwise acted in bad faith in an attempt to manipulate the forum.”).

Lastly, Amazon suggests that the proper manner of proceeding is to allow the properly joined and served defendants to first make their appearance and then take [*17] a position as to whether they consent to the removal of this matter.⁴⁶ However, “[d]istrict courts have no power to overlook procedural errors related to the notice of removal; instead, a district court must remand a case which was removed pursuant to a procedurally defective notice.” Grigsby v. Kansas City So. Ry. Co., 2012 WL 3526903, at *3 (W.D. La. Aug. 13, 2012); see also Cornella v. State Farm Fire & Cas. Co., 2010 WL 2605725, at *3 (E.D. La. June 22, 2010) (“[T]he Court cannot cut jurisdictional corners as doing so would be contrary to Fifth Circuit jurisprudence.”). Thus, this argument fails.

IV. CONCLUSION

Accordingly, for the foregoing reasons,

IT IS ORDERED that Plaintiffs’ motion to remand (R. Doc. 12) is GRANTED, and this case is REMANDED to the 24th Judicial District Court, Parish of Jefferson, State of Louisiana.

New Orleans, Louisiana, this 26th day of July, 2023.

/s/ Barry W. Ashe

BARRY W. ASHE

UNITED STATES DISTRICT JUDGE

End of Document

¹Tameica Baker, Alrick Baker, Jr., and Kalila Baker appear individually and on behalf of the decedent, Alrick Baker, who was Tameica’s husband and Alrick Jr. and Kalila’s father.

²Shushana Edwards brings claims on behalf of her minor children, who are also Alrick Sr.’s children.

³R. Doc. 12.

⁴R. Docs. 18; 19. Lancer adopts Amazon’s legal argument; therefore, the Court refers only to Amazon’s opposition in this Order & Reasons.

⁵R. Doc. 26.

⁶R. Doc. 31.

⁷R. Doc. 12-3 at 7.

⁸Id. at 8.

⁹Id. at 1-18.

¹⁰Id. at 9.

¹¹Plaintiffs sued Amazon.com, Inc., as well as Amazon. Id. at 2.

¹²Id. at 2-4.

¹³R. Doc. 4 at 1-3.

¹⁴Id. at 5.

¹⁵Id.

¹⁶R. Doc. 9.

¹⁷R. Doc. 10.

¹⁸R. Doc. 12 at 1-2.

¹⁹R. Doc. 12-1 at 6-13 (quoting Williamson v. Aramark Schools Facilities, LLC, 2017 WL 5761626, at *4-6 (M.D. La. Oct. 30, 2017)).

²⁰Id. at 13.

²¹R. Doc. 12-4 at 1-9.

²²R. Doc. 15-1 at 42, 98-103.

²³R. Doc. 18 at 5.

²⁴R. Doc. 18.

²⁵R. Docs. 20 at 1; 20-3 at 2-6 (proposed reply brief); 26 at 2-6 (reply brief).

²⁶R. Doc. 21 at 2.

²⁷R. Doc. 25 at 1 (citing R. Doc. 12 at 13).

²⁸R. Doc. 31 at 2.

²⁹Id. at 2-3 (citing Wagner v. Gov. Emps. Ins. Co., 2019 WL 626430 (E.D. La. Feb. 14, 2019)).

³⁰Id. at 3.

³¹R. Doc. 32.

³²R. Doc. 32-1 at 1-4. Counsel for Prime Insurance writes, “You have Prime’s consent.” Counsel for Great American responds, “Yes, thank you!,” to an email from Amazon’s counsel asking, “Just so I’m clear, Great American consents to removal?”

³³R. Doc. 33 at 2.

³⁴R. Doc. 2-1 at 13. Consequently, the Court does not reach Plaintiffs’ contention that the nondiverse Amazon Supervisors were properly joined and that, as a result, the case should be remanded for lack of diversity. Instead, the Court will assume for purposes of this motion that the Amazon Supervisors were not properly joined and thus should be ignored.

³⁵R. Doc. 26 at 2.

³⁶R. Docs. 9; 10. Defendants B3 and Kirksey also timely consented to removal, R. Docs. 10; 24, but the record does not contain proof that they were served before Amazon’s removal of the case. The record reflects that defendants Mota and White were served before Amazon’s removal, R. Docs. 12-4 at 2; 15-1 at 43, 102, but, again, as Amazon Supervisors, they are assumed for purposes of this analysis to be improperly joined and so are ignored.

³⁷R. Doc. 32.

³⁸Amazon, Great American, and Prime Insurance were all served on June 13, 2023. R. Docs. 12-4 at 1, 4-5; 15-1 at 98-100.

³⁹R. Doc. 4 at 5.

⁴⁰R. Docs. 12-4 at 4-5; 4 at 1.

⁴¹R. Docs. 31 at 1; 4 at 1-2.

⁴²R. Doc. 1-2.

⁴³R. Doc. 12-1 at 13 (attaching R. Doc. 12-4).

⁴⁴R. Doc. 12-4 at 1-9.

⁴⁵R. Doc. 15-1 at 98, 100.

⁴⁶R. Doc. 31 at 3.

Allied Premier Ins. v. United Financial Casualty Co.

Supreme Court of California

July 24, 2023, Opinion Filed

ALLIED PREMIER INSURANCE, Plaintiff and Respondent, v. UNITED FINANCIAL CASUALTY COMPANY, Defendant and Appellant.

Prior History: [*1] Ninth Circuit, No. 20-55099.

Central District of California, No. 5:18-cv-00088-JGB-KK.

Allied Premier Ins. v. United Fin. Cas. Co., 991 F.3d 1070, 2021 U.S. App. LEXIS 8257, 2021 WL 1082862 (9th Cir. Cal., Mar. 22, 2021)

Core Terms

canceled, endorsement, insurer, insurance certificate, insurance policy, certificate, coverage, carrier’s, notice, motor carrier, cancellation notice, terms, equitable contribution, written notice, financial responsibility, obligations, expired, full force, provisions, insurance coverage, surety bond, reimbursement, termination, Effective, indemnify, damages, italics, trucker, renew, underlying policy

Case Summary

Overview

HOLDINGS: [1]-In answering “no” to a certified question from the Ninth Circuit, the Supreme Court held that the terms of an insurance contract generally determine the duration of the policy’s coverage. Although an endorsement can amend the policy, neither the California’s Motor Carriers of Property Permit Act nor the specific endorsement it requires extend coverage beyond the underlying policy’s expiration date. Under the Act, a commercial automobile insurance policy does not continue in full force and effect until the insurer cancels a corresponding certificate of insurance on file with the DMV. The duration of the policy’s coverage is regulated by its terms and those of any endorsement or amendment to the policy itself.

Outcome

Certified question answered.

LexisNexis® Headnotes

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

HN1 Compulsory Coverage, Motor Carriers

The terms of an insurance contract generally determine the duration of the policy’s coverage. Although an endorsement can amend the policy, neither the California Motor Carriers of Property Permit Act, Veh. Code, § 34600 et seq., nor the specific endorsement it requires extend coverage beyond the underlying policy’s expiration date.

Insurance Law > Claim, Contract & Practice Issues > Allocation

Insurance Law > Claim, Contract & Practice Issues > Coinsurance > Contribution

Insurance Law > … > Business Insurance > Commercial General Liability Insurance > Multiple Insurers

Insurance Law > Types of Insurance > Excess Insurance > Apportionment of Liability

HN2 Claim, Contract & Practice Issues, Allocation

Equitable contribution is the right to recover, not from the party primarily liable for the loss, but from a co-obligor who shares such liability with the party seeking contribution. In the insurance context, the right to contribution arises when several insurers are obligated to indemnify or defend the same loss or claim, and one insurer has paid more than its share of the loss or defended the action without any participation by the others. Where multiple insurance carriers insure the same insured and cover the same risk, each insurer has independent standing to assert a cause of action against its coinsurers for equitable contribution when it has undertaken the defense or indemnification of the common insured. Equitable contribution permits reimbursement to the insurer that paid on the loss for the excess it paid over its proportionate share of the obligation, on the theory that the debt it paid was equally and concurrently owed by the other insurers and should be shared by them pro rata in proportion to their respective coverage of the risk.

Insurance Law > Claim, Contract & Practice Issues > Allocation

Insurance Law > Claim, Contract & Practice Issues > Coinsurance > Contribution

Insurance Law > … > Business Insurance > Commercial General Liability Insurance > Multiple Insurers

Insurance Law > Types of Insurance > Excess Insurance > Apportionment of Liability

HN3 Claim, Contract & Practice Issues, Allocation

The reciprocal contribution rights of coinsurers who insure the same risk are based on the equitable principle that the burden of indemnifying or defending the insured with whom each has independently contracted should be borne by all the insurance carriers together, with the loss equitably distributed among those who share liability for it in direct ratio to the proportion each insurer’s coverage bears to the total coverage provided by all the insurance policies. The right to equitable contribution is predicated on the commonsense principle that where multiple insurers or indemnitors share equal contractual liability for the primary indemnification of a loss or the discharge of an obligation, the selection of which indemnitor is to bear the loss should not be left to the choice of the loss claimant, and no indemnitor should have any incentive to avoid paying a just claim in the hope the claimant will obtain full payment from another coindemnitor. Equitable contribution thus assumes the existence of two or more valid contracts of insurance covering the particular risk of loss and the particular casualty in question.

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

HN4 Compulsory Coverage, Certificates of Insurance

Veh. Code, § 34631.5, subd. (b)(3), provides that the certificate of insurance, evidencing the protection, shall not be cancelable on less than 30 days’ written notice to the California Department of Motor Vehicles.

Governments > Legislation > Interpretation

HN5 Legislation, Interpretation

A court generally infers a change in meaning from a change in statutory language. An essential change in the phraseology of a statutory provision would indicate an intention on the part of the legislature to change the meaning of such provision rather than interpret it. This is especially true if a court has construed the old statute as having a particular meaning. An amendment materially changing a statute following a court decision interpreting the statute in its original form is to be regarded as an indication of legislative intent to change the meaning of the law. The court should therefore reject an interpretation of the statute which would leave the prior judicial construction in effect.

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > … > Motor Vehicle Insurance > Cancellation & Renewal > Statutory Requirements

HN6 Compulsory Coverage, Certificates of Insurance

The California Motor Carriers of Property Permit Act, Veh. Code, § 34600 et seq., prohibits cancellation of a certificate of insurance without notice to the California Department of Motor Vehicles. Veh. Code, § 34630, subd. (b); 34631.5, subd. (b)(3). The Act does not speak to cancellation or termination of the underlying policy, which embodies the agreement between the parties. As a result, the Act does not prevent cancellation or termination of an insurance policy under the terms of the contract.

Insurance Law > Liability & Performance Standards > Good Faith & Fair Dealing > Duty to Defend

Insurance Law > Liability & Performance Standards > Good Faith & Fair Dealing > Indemnification

HN7 Good Faith & Fair Dealing, Duty to Defend

Insurance coverage is generally understood to mean an obligation on the insurer to defend and indemnify the insured against loss resulting from specified activities.

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > Claim, Contract & Practice Issues > Policy Cancellation, Denial & Nonrenewal > Notice Requirements

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

HN8 Compulsory Coverage, Certificates of Insurance

An uncancelled certificate of insurance that remains on file with the California Department of Motor Vehicles (DMV) does not cause the corresponding insurance policy to remain in effect in perpetuity. But that is not to say that an uncancelled certificate of insurance imposes no obligation of any kind on the responsible insurer. The statutory scheme suggests otherwise. For example, Veh. Code, § 34631.5, subd. (d), provides that every insurance certificate or equivalent protection to the public shall contain a provision that the certificate or equivalent protection shall remain in full force and effect until canceled. Further, under the Act, an insurer remains obligated to promptly notify the DMV at least 30 days before a certificate of insurance is cancelled. This obligation is an important part of the statutory scheme, alerting the DMV of the need to suspend a motor carrier‘s permit until new insurance coverage is acquired.

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Insurance Law > … > Coverage > Compulsory Coverage > Proof of Financial Responsibility

HN9 Compulsory Coverage, Certificates of Insurance

There is a linkage between an insurance policy subject to the California Motor Carriers of Property Permit Act, Veh. Code, § 34600 et seq., the certificate of insurance required by the Act, and the endorsement required by the California Department of Motor Vehicles’ regulations. But the documents are not one and the same. Rather, each serves its own function within the regulatory framework. An insurance policy is an agreement between an insurer and its insured. If a motor carrier complies with the Act by obtaining insurance, the certificate is evidence tendered to the Department that the insurer agrees to be bound by the terms of the endorsement and therefore provides sufficient protection to satisfy the Act’s financial responsibility requirements. The certificate thus demonstrates the carrier’s financial responsibility by virtue of its contractual arrangement with the insurer. It is the document that supports issuance of the carrier’s permit, and its cancellation triggers the Department’s duty to suspend that permit. The certificate, however, does not govern the obligations between the parties. The endorsement, meanwhile, serves to ensure that the policy complies with the Act’s financial responsibility requirements and amends the policy to the extent of the endorsement’s terms.

Governments > Legislation > Interpretation

HN10 Legislation, Interpretation

In construing a statute, the court considers first the words of the statute as the most reliable indicator of legislative intent.

Governments > Legislation > Interpretation

HN11 Legislation, Interpretation

A change in statutory language can, itself, be an indication of the legislature’s intent.

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

HN12 Compulsory Coverage, Certificates of Insurance

Under the California Motor Carriers of Property Permit Act, Veh. Code, § 34600 et seq., a commercial automobile insurance policy does not continue in full force and effect until the insurer cancels a corresponding certificate of insurance on file with the California Department of Motor Vehicles. The duration of the policy’s coverage is regulated by its terms and those of any endorsement or amendment to the policy itself.

Headnotes/Summary

Summary

CALIFORNIA OFFICIAL REPORTS SUMMARY

The United States Court of Appeals for the Ninth Circuit certified to the Supreme Court the following question: Under California’s Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.), does a commercial automobile insurance policy continue in full force and effect until the insurer cancels the corresponding Certificate of Insurance on file with the Department of Motor Vehicles, regardless of the insurance policy’s stated expiration date?

The Supreme Court answered “no” to the certified question. The court held that the terms of an insurance contract generally determine the duration of the policy’s coverage. Although an endorsement can amend the policy, neither the act nor the specific endorsement it requires extend coverage beyond the underlying policy’s expiration date. Under the act, a commercial automobile insurance policy does not continue in full force and effect until the insurer cancels a corresponding certificate of insurance on file with the Department of Motor Vehicles. The duration of the policy’s coverage is regulated by its terms and those of any endorsement or amendment to the policy itself. (Opinion by Corrigan, J., expressing the unanimous view of the court.)

Headnotes

CALIFORNIA OFFICIAL REPORTS HEADNOTES

CA(1) (1)

Insurance Contracts and Coverage § 28—Commercial Automobile Insurance Policy—Duration—Beyond Underlying Policy’s Expiration Date.

The terms of an insurance contract generally determine the duration of the policy’s coverage. Although an endorsement can amend the policy, neither the California Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.) nor the specific endorsement it requires extend coverage beyond the underlying policy’s expiration date.

[Cal. Forms of Pleading and Practice (2023) ch. 88, Automobiles: Automobile Insurance, § 88.16.]

CA(2) (2)

Insurance Contracts and Coverage § 120—Equitable Contribution—Multiple Insurers—Same Loss or Claim.

CA(3) (3)

Insurance Contracts and Coverage § 120—Equitable Contribution—Multiple Insurers—Equal Contractual Liability.

CA(4) (4)

Insurance Contracts and Coverage § 28—Commercial Automobile Insurance Policy—Cancellation—Notice.

Veh. Code, § 34631.5, subd. (b)(3), provides that the certificate of insurance, evidencing the protection, shall not be cancelable on less than 30 days’ written notice to the Department of Motor Vehicles.

CA(5) (5)

Statutes § 28—Construction—Language—Legislative Intent—Change in Meaning.

A court generally infers a change in meaning from a change in statutory language. An essential change in the phraseology of a statutory provision would indicate an intention on the part of the Legislature to change the meaning of such provision rather than interpret it. This is especially true if a court has construed the old statute as having a particular meaning. An amendment materially changing a statute following a court decision interpreting the statute in its original form is to be regarded as an indication of legislative intent to change the meaning of the law. The court should therefore reject an interpretation of the statute which would leave the prior judicial construction in effect.

CA(6) (6)

Insurance Contracts and Coverage § 28—Commercial Automobile Insurance Policy—Cancellation—Notice.

The California Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.) prohibits cancellation of a certificate of insurance without notice to the Department of Motor Vehicles (Veh. Code, § 34630, subd. (b); 34631.5, subd. (b)(3)). The act does not speak to cancellation or termination of the underlying policy, which embodies the agreement between the parties. As a result, the act does not prevent cancellation or termination of an insurance policy under the terms of the contract.

CA(7) (7)

Insurance Contracts and Coverage § 44—Insurer’s Obligation—Defend and Indemnity Insured—Specified Activities.

Insurance coverage is generally understood to mean an obligation on the insurer to defend and indemnify the insured against loss resulting from specified activities.

CA(8) (8)

Insurance Contracts and Coverage § 28—Commercial Automobile Insurance Policy—Full Force and Effect Until Cancelled.

An uncancelled certificate of insurance that remains on file with the California Department of Motor Vehicles (DMV) does not cause the corresponding insurance policy to remain in effect in perpetuity. But that is not to say that an uncancelled certificate of insurance imposes no obligation of any kind on the responsible insurer. The statutory scheme suggests otherwise. For example, Veh. Code, § 34631.5, subd. (d), provides that every insurance certificate or equivalent protection to the public must contain a provision that the certificate or equivalent protection must remain in full force and effect until canceled. Further, under the act, an insurer remains obligated to promptly notify the DMV at least 30 days before a certificate of insurance is cancelled. This obligation is an important part of the statutory scheme, alerting the DMV of the need to suspend a motor carrier‘s permit until new insurance coverage is acquired.

CA(9) (9)

Insurance Contracts and Coverage § 28—Commercial Automobile Insurance Policy—Endorsement—Carrier’s Financial Responsibility.

There is a linkage between an insurance policy subject to the California Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.), the certificate of insurance required by the act, and the endorsement required by the California Department of Motor Vehicles’ regulations. But the documents are not one and the same. Rather, each serves its own function within the regulatory framework. An insurance policy is an agreement between an insurer and its insured. If a motor carrier complies with the act by obtaining insurance, the certificate is evidence tendered to the department that the insurer agrees to be bound by the terms of the endorsement and therefore provides sufficient protection to satisfy the act’s financial responsibility requirements. The certificate thus demonstrates the carrier’s financial responsibility by virtue of its contractual arrangement with the insurer. It is the document that supports issuance of the carrier’s permit, and its cancellation triggers the department’s duty to suspend that permit. The certificate, however, does not govern the obligations between the parties. The endorsement, meanwhile, serves to ensure that the policy complies with the act’s financial responsibility requirements and amends the policy to the extent of the endorsement’s terms.

CA(10) (10)

Statutes § 29—Construction—Legislative Intent.

In construing a statute, the court considers first the words of the statute as the most reliable indicator of legislative intent. A change in statutory language can, itself, be an indication of the Legislature’s intent.

CA(11) (11)

Insurance Contracts and Coverage § 28—Commercial Automobile Insurance Policy—Full Force and Effect until Cancelled.

Under the California Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.), a commercial automobile insurance policy does not continue in full force and effect until the insurer cancels a corresponding certificate of insurance on file with the Department of Motor Vehicles. The duration of the policy’s coverage is regulated by its terms and those of any endorsement or amendment to the policy itself.

Counsel: Patrick Howe Law, Patrick M. Howe; Horvitz & Levy, Lisa Perrochet and Peder K. Batalden for Defendant and Appellant.

Booth, Hillary Arrow Booth and Ian P. Culver for Plaintiff and Respondent.

Judges: Opinion by Corrigan, J., with Guerrero, C. J., Liu, Kruger, Groban, Jenkins, and Evans, JJ., concurring.

Opinion by: Corrigan, J.

Opinion

CORRIGAN, J.—CA(1) (1) The United States Court of Appeals for the Ninth Circuit has certified¹ the following question for our review: Under California’s Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.; the Act),² does a commercial automobile insurance policy continue in full force and effect until the insurer cancels the corresponding Certificate of Insurance on file with the Department of Motor Vehicles (DMV or Department), regardless of the insurance policy’s stated expiration date? The answer is no. HN1 The terms of an insurance contract generally determine the duration of the policy’s coverage. Although an endorsement can amend the policy, neither the Act nor the specific endorsement it requires extend coverage beyond the underlying policy’s expiration date.

In Transamerica Ins. Co. v. Tab Transportation, Inc. (1995) 12 Cal.4th 389 [48 Cal. Rptr. 2d 159, 906 P.2d 1341] (Transamerica), this court interpreted an earlier permitting system codified in the Public Utilities Code. We held that the [*2] policy endorsement required by that scheme did extend insurance coverage until notice of cancellation was provided to the Public Utilities Commission. However, the language in the Public Utilities Code, on which we relied in Transamerica, was not carried over when later legislation replaced the Public Utilities Code permitting scheme and amended the Vehicle Code to add the Act at issue here. As a result, Transamerica‘s holding does not control the answer to the certified question.

I. BACKGROUND

The facts are taken from the parties’ joint stipulation of facts and exhibits as well as the judgment of the United States District Court, Central District of California.

A. The Act

Commercial trucker Jose Porras is a “‘motor carrier of property’” (motor carrier or carrier). (§ 34601, subd. (a).) Under the Act, a motor carrier cannot operate on public highways without securing a DMV permit, which requires proof of the carrier’s financial responsibility. (§§ 34620, subd. (a), 34630, subd. (a).) A carrier can satisfy that requirement by obtaining a policy of insurance.³ (§ 34631.) If a carrier does so, the insurer must submit a certificate of insurance to the Department as evidence that the “protection required under [section 34631.5,] subdivision (a)” is provided. (§ 34631.5, subd. (b)(1).)

The Department has published forms to facilitate [*3] the administration of the Act’s financial responsibility requirement. Two of those forms are a “Certificate of Insurance” and an “Insurance Policy Endorsement.” (See Cal. Code Regs., tit. 13, § 220.06, subds. (a), (b).) When a motor carrier complies with the Act by obtaining an insurance policy, a DMV regulation requires that the “Insurance Policy Endorsement … , amending the insurance policy to comply with insurance requirements imposed by the [Act], … be attached to and made part of, the insurance policy insuring the motor carrier.” (Cal. Code Regs., tit. 13, § 220.06, subd. (b).)

The Act requires that “proof of financial responsibility … be continued in effect during the active life” of the permit issued to the motor carrier. (§ 34630, subd. (b).) This requirement prohibits cancellation of a certificate of insurance without notice to the DMV by the insurer.⁴ (Ibid.) When an insurer gives notice that a certificate will be cancelled because the policy will lapse or be terminated, the DMV must “suspend the carrier’s permit effective on the date of lapse or termination unless the carrier provides evidence of valid insurance coverage” pursuant to section 34630, subdivision (a). (§ 34630, subd. (c).) This procedure ensures that only financially responsible carriers are permitted to operate on public highways.

B. The Facts

Effective May [*4] 2, 2013, United Financial Casualty Company (United) began insuring Porras under a commercial automobile insurance policy with an eight-digit policy number ending in 772 (the United policy or Policy 772). The policy provided that, in return for Porras’s premium payment, United would, up to the policy limit, pay specified damages Porras became responsible for as a result of an accident “arising out of the ownership, maintenance or use of” an insured vehicle. The policy also provided that United would, at its option, settle or defend any covered claim and that, if Porras failed to pay the premium to renew, the policy would “automatically terminate at the end of the current policy period.”

As required by the Act, United filed a certificate of insurance, identifying United as the insurer and Porras as the insured and giving the policy number ending in 772. United certified that a “fully executed endorsement, on a form authorized by the [DMV], is attached to the referenced policy to conform to the requirements of the [Act]” and that “[t]his Certificate … shall not be canceled on less than thirty (30) days notice from the Insurer to the DMV and written on a Notice of Cancellation form [*5] authorized by the DMV.”

United attached the required Insurance Policy Endorsement to the United policy (the Endorsement). Under the Endorsement, United agreed: (1) to “pay, consistent with the minimum insurance coverage required by [section] 34631.5 … any legal liability of insured for bodily injury, death, or property damage arising out of the operation, maintenance, or use of any vehicle(s) for which a motor carrier permit is required”; (2) that “[n]o provision, stipulation, or limitation contained in the attached policy or any endorsement shall relieve insurer from obligations arising out of this Endorsement or the Act, regardless of the insured’s financial solvency, indebtedness[,] or bankruptcy”; (3) that the “Certificate of Insurance shall not be canceled on less than thirty (30) days notice from the Insurer to the DMV”; and (4) that, “[e]xcept as specified in this endorsement, the terms, conditions, and limitations of this policy remain in full force and effect.”⁵ One of the terms in the policy was the termination date. The Endorsement also permitted United to seek “reimbursement from [Porras] for any payment made by [United] solely on account of the [Endorsement’s] provisions.”

United provided [*6] coverage for Porras through the original or renewed Policy 772 from May 2, 2013 through April 12, 2015. During that period, it appears that United filed at least three certificates of insurance and two cancellation notices, one of which the Department returned to United as an “incomplete filing.” It appears that, as the end of a policy period approached, United would file a cancellation notice with the DMV, noting the policy number and giving the date the policy would lapse. The timing of the notice made the DMV aware that, if Policy 772 was not renewed, it would lapse on the date provided, triggering the DMV’s duty to suspend Porras’s operating permit. If the policy was subsequently renewed, United would send a new certificate of insurance as evidence that Porras continued to have the required protection under Policy 772. The new certificate would indicate the date on which the new policy period began. As noted, one of United’s cancellation notices was rejected by the Department as an incomplete filing. After that filing was returned, however, United filed a new certificate of insurance, covering the ensuing period. As relevant here, United submitted its final cancellation notice [*7] on February 6, 2015, informing the Department that “the [United] policy, including applicable endorsement and certifications” is cancelled “effective thirty (30) days after the date” it was either received by the DMV, or on April 12, 2015, whichever was later. Every certificate and cancellation notice in the record bears both the 772 policy number and the number of Porras’s permit.

By April 12, 2015, Porras had not paid the premium required to renew the United policy. Effective April 13, 2015, Allied Premier Insurance (Allied) began to insure Porras under a policy that provided the required coverage. Allied submitted a certificate of insurance to the Department four days later. The record contains no indication that, when it assumed coverage and filed its own certificate, Allied was aware that United’s earlier certificate remained uncancelled because the DMV had rejected United’s cancellation notice.

On September 1, 2015, Porras was driving a truck covered by the Allied policy when he collided with a car driven by Jennifer Jones. Jones died as a result of the accident, and her parents sued Porras for wrongful death. Porras tendered his defense to Allied, which retained counsel to defend [*8] him and settled the parents’ claim for its policy limits of $1 million. United was not a party to the Jones suit, did not defend Porras in that action, and did not contribute to the settlement.

C. The Action at Issue Here

After the settlement, Allied sued United for declaratory relief, equitable contribution, and equitable subrogation, seeking reimbursement for half the amount it paid to resolve the Jones litigation. It argued that, because one of United’s cancellation notices was rejected by the Department as incomplete, United continued to have an active certificate of insurance on file with the DMV. That circumstance, according to Allied, meant United’s policy remained in effect on the date of the collision between Porras and Jones.

United urged that it had no obligation to reimburse Allied because its policy had expired when Porras failed to renew. United acknowledged one of its certificates of insurance remained on file with the DMV because a cancellation notice had been returned. However, it argued the certificate was not an insurance policy. At most, it created a surety-like obligation, providing a “safety net” for members of the public injured by commercial motor carriers. Because [*9] the certificate of insurance did not function to make United a co-insurer of Porras, United argued it was not required to contribute to the settlement.

The case was removed to federal court. The parties filed a joint stipulation of facts and exhibits and then filed cross-motions for summary judgment. The district court ruled for Allied, finding that, because United “failed properly to submit a Notice of Cancellation, its policy remained in effect” on the date of the accident, “even though [the policy] may have lapsed under its own terms or been cancelled by the parties.” Based on that finding, the court concluded that Allied and United both provided “insurance coverage on the same risk,” and that Allied was “entitled to equitable contribution in the amount of $500,000.”⁶

United appealed to the Ninth Circuit, which certified the question of law to this court. (Allied Premier Ins. v. United Financial Cas. Co. (9th Cir. 2021) 991 F.3d 1070, 1071.) In the Ninth Circuit’s view, the appeal turns on the following question of statutory interpretation: “If the [Act] requires a commercial auto insurance policy to remain in effect indefinitely until the insurer cancels the certificate of insurance on file with the DMV, then Allied must prevail. If not, United must prevail.” (Id. at p. 1073.) [*10] We hold that the Act does not require the policy to remain in effect indefinitely.

II. DISCUSSION

HN2 CA(2) (2) Equitable contribution is the “right to recover, not from the party primarily liable for the loss [here, Porras], but from a co-obligor who shares such liability with the party seeking contribution [here, United].” (Fireman’s Fund Ins. Co. v. Maryland Casualty Co. (1998) 65 Cal.App.4th 1279, 1293 [77 Cal. Rptr. 2d 296] (Fireman’s Fund).) “In the insurance context, the right to contribution arises when several insurers are obligated to indemnify or defend the same loss or claim, and one insurer has paid more than its share of the loss or defended the action without any participation by the others. Where multiple insurance carriers insure the same insured and cover the same risk, each insurer has independent standing to assert a cause of action against its coinsurers for equitable contribution when it has undertaken the defense or indemnification of the common insured. Equitable contribution permits reimbursement to the insurer that paid on the loss for the excess it paid over its proportionate share of the obligation, on the theory that the debt it paid was equally and concurrently owed by the other insurers and should be shared by them pro rata in proportion to their respective coverage of the risk.” (Ibid. [*11] )

HN3 CA(3) (3) The “reciprocal contribution rights of coinsurers who insure the same risk are based on the equitable principle that the burden of indemnifying or defending the insured with whom each has independently contracted should be borne by all the insurance carriers together, with the loss equitably distributed among those who share liability for it in direct ratio to the proportion each insurer’s coverage bears to the total coverage provided by all the insurance policies.” (Fireman’s Fund, supra, 65 Cal.App.4th at p. 1294.) The right to equitable contribution “is predicated on the commonsense principle that where multiple insurers or indemnitors share equal contractual liability for the primary indemnification of a loss or the discharge of an obligation, the selection of which indemnitor is to bear the loss should not be left to the … choice of the loss claimant, and no indemnitor should have any incentive to avoid paying a just claim in the hope the claimant will obtain full payment from another coindemnitor.” (Id. at p. 1295.)

“Equitable contribution thus assumes the existence of two or more valid contracts of insurance covering the particular risk of loss and the particular casualty in question.” (Fireman’s Fund, supra, 65 Cal.App.4th at p. 1295, italics added.) This assumption lies at the [*12] heart of the Ninth Circuit’s question. Allied’s entitlement to equitable contribution depends on whether United was obligated to indemnify Porras for any damages due to the Jones accident. Allied is entitled to equitable contribution only if it can show that United was a “co-obligor who shares … liability” with Allied for the loss resulting from that event. (Id. at p. 1293.) Allied must show that United was “obligated to indemnify or defend the same loss or claim” as Allied. (Ibid.) Resolution of this question turns on an interpretation of the Act’s requirements.

A. The Act Does Not Extend the Policy Beyond the Term Contained in the Contract

As mentioned, the district court concluded that the United policy’s coverage remained in effect, not based on the policy’s terms, but because United had not cancelled all certificates of insurance on file with the DMV. The court relied on Transamerica, supra, 12 Cal.4th 389 in reaching that conclusion. Transamerica does not control here because it interpreted a different statutory scheme.

Transamerica addressed the application of the Act’s predecessor, the Highway Carriers’ Act of 1951 (Pub. Util. Code, former § 3501 et seq.; HCA). The Legislature repealed the HCA in 1996 and replaced it with the Act, transferring primary regulatory authority over commercial truckers to the DMV. (See [*13] Hill Brothers Chemical Co. v. Superior Court (2004) 123 Cal.App.4th 1001, 1005 [20 Cal. Rptr. 3d 530]; see also Stats. 1996, ch. 1042, § 53, p. 6562.) Like the Act that replaced it, the HCA prohibited commercial truckers from operating on public highways without a permit issued by the Public Utilities Commission (PUC). To obtain a permit, a commercial trucker had to show it carried “‘adequate protection’ against liability.” (Transamerica, supra, 12 Cal.4th at p. 397, fn. omitted.) This could “be achieved by means of an insurance policy, a surety bond, or evidence … of the carrier’s qualification as a self-insurer.” (Ibid.) Proof of insurance coverage could be submitted to the PUC “in the form of ‘a certificate of insurance.’” (Id. at p. 398.)

As to cancellation of a policy, the HCA provided that “‘protection against liability shall be continued in effect during the active life of the [trucker’s] permit,’ and that ‘[t]he policy of insurance or surety bond shall not be cancelable on less than 30 days’ written notice to the [PUC], except in the event of cessation of operations as a highway carrier as approved by the [PUC].’” (Transamerica, supra, 12 Cal.4th at p. 398, quoting Pub. Util. Code, former § 3634, italics omitted.) To promote the continuous protection requirement and prohibition on cancellation without notice, the PUC promulgated General Order No. 100, which required the following provisions to be included in any policy subject [*14] to the HCA: (1) “‘A policy of insurance, or surety bond, evidencing such protection, shall not be cancelable on less than thirty (30) days’ written notice to the Public Utilities Commission’”; and (2) “‘Every insurance policy, surety bond or equivalent protection to the public shall contain a provision that such policy, surety bond or equivalent protection will remain in full force and effect until canceled in the manner provided’” by the General Order. (Transamerica, at p. 398, italics added.) The regulatory scheme also required “a standard PUC form endorsement” be “attached to every policy of insurance purchased by a highway carrier.” (Id. at pp. 394, 398.) The endorsement certified “that a liability policy issued to a highway carrier [would] continue ‘in full force and effect until canceled’” by written notice to the PUC. (Id. at p. 394, italics added.)

The dispute in Transamerica was between a commercial trucking company (Tab) and its liability insurer (Transamerica). In 1980, Tab purchased a one-year term liability insurance policy from Transamerica to comply with the HCA. (Transamerica, supra, 12 Cal.4th at p. 395.) Transamerica filed a certificate of insurance with the PUC. The certificate provided that the “policy was ‘Effective 2-1-80 Until Canceled.’” (Ibid.) Tab did not renew the [*15] Transamerica policy and, in the ensuing years, obtained insurance policies from Federal Insurance Company (Federal) and Home Indemnity Company (Home). (Ibid.) Both Federal and Home filed certificates of insurance representing their policies with the PUC. (Ibid.) However, “neither Transamerica nor Tab ever notified the PUC of the cancelation of the Transamerica policy.” (Ibid., fn. omitted.)

In 1989, a Tab truck collided with a train, causing multiple injuries and deaths. (Transamerica, supra, 12 Cal.4th at p. 395.) The plaintiffs sued Tab for various claims and sought $6 million in damages. (Id. at p. 396.) Tab demanded coverage from Transamerica, Federal, and Home under the three policies mentioned above. (Ibid.) Federal and Home “each contributed [their] policy limits (a total of $1.6 million) to a global settlement in which Tab admitted liability.” (Ibid.) Transamerica did not participate in the settlement. (Ibid.)

Transamerica then sued Tab, seeking a declaratory judgment that it was not liable for damages from the 1989 collision because its policy had previously expired. (Transamerica, supra, 12 Cal.4th at p. 396.) Tab cross-complained, asserting entitlement to coverage under the policy because the certificate of insurance Transamerica filed with the PUC “expressly stated [*16] its policy was ‘Effective 2-1-80 Until Canceled.’” (Ibid.) Because Transamerica never notified the PUC that its policy was canceled, Tab argued the policy “continued in effect.” (Ibid.) The trial court granted Tab’s motion for summary adjudication of the coverage issue. Transamerica appealed, and the Court of Appeal reversed, concluding that the Transamerica policy had “expired of its own terms [in] 1981, and that Transamerica therefore had no obligation to give 30 days’ written notice to the PUC of its intent to cancel the policy.” (Id. at pp. 396–397.)

On review, this Court reversed the Court of Appeal’s judgment and concluded that Transamerica’s policy was still “in effect at the time of the 1989 accident, thus providing coverage for Tab.” (Transamerica, supra, 12 Cal.4th at p. 400.) We reasoned that the “policy must be read in light of its original provisions as well as those added to the policy by the PUC’s standard form endorsement.” (Id. at p. 399.) We then described the policy and endorsement as follows: “As initially written, the Transamerica policy was to remain in effect for one year only, from February 1, 1980, until February 1, 1981. But … the policy was amended by the standard PUC endorsement, which provides for inclusion in the policy [*17] of the PUC’s General Order No. 100 … . [¶] Incorporation of General Order No. 100 … into the provisions of the Transamerica policy added to the provisions the requirement … that ‘such policy … will remain in full force and effect until canceled … .’ This language, of course, is in direct conflict with the language of the policy as originally written stating that the policy was to expire in February 1981.” (Id. at pp. 399–400.) We concluded that “incorporation into the policy of the PUC’s General Order No. 100 language requiring the policy to remain in ‘full force and effect until canceled’ converted the policy from a one-year term policy to a policy that was to remain in effect ‘until canceled.’” (Id. at p. 400.) It was undisputed that there was “no compliance with the notice requirements” in former section 3634 of the Public Utilities Code and General Order No. 100. Therefore, we held that the policy was “still in effect” at the time of the 1989 collision. (Transamerica, at p. 400.)

Under its terms, the HCA provided that “‘protection against liability shall be continued in effect during the active life of the permit,’ and that ‘[t]he policy of insurance or surety bond shall not be cancelable on less than 30 days’ written notice to the [PUC], except in the [*18] event of cessation of operations as a highway carrier as approved by the [PUC].’” (Transamerica, supra, 12 Cal.4th at p. 398, quoting Pub. Util. Code, former § 3634, original italics omitted, italics added.) So, the terms of the HCA required that protection against liability, which was provided by the policy, remain in effect until the motor carrier‘s permit was cancelled. To effectuate that requirement, the HCA and the required endorsement prohibited the policy from being cancelled without notice.

CA(4) (4) The Act is different. It provides that “[p]roof of financial responsibility shall be continued in effect during the active life of the motor carrier permit,” and that the “certificate of insurance shall not be cancellable on less than 30 days’ written notice from the insurer to the [DMV] except in the event of cessation of operations as a permitted motor carrier of property.” (§ 34630, subd. (b), italics added.) HN4[] Likewise, section 34631.5, subdivision (b)(3) provides that the certificate of insurance, “evidencing the protection, shall not be cancelable on less than 30 days’ written notice” to the DMV. Thus, while the HCA specifically prohibited cancellation of an insurance policy without notice, the Act only prohibits cancellation of a certificate of insurance without notice. This prohibition helps to ensure that [*19] “proof of financial responsibility” remains “in effect during the active life” of the permit. (§ 34630, subd. (b).)

The difference in statutory language is significant. Under the HCA and the endorsement required by General Order No. 100, the underlying policy could not be cancelled without notice to the PUC. As a result, Transamerica remained obligated. Its policy with Tab had been amended by the endorsement, which “converted the policy from a one-year term policy to a policy that was to remain in effect ‘until canceled.’” (Transamerica, supra, 12 Cal.4th at p. 400.) But under the new language of the Act only the certificate of insurance remains active until cancelled. Cancellation of a certificate triggers the DMV’s obligation to suspend the motor carrier‘s permit. The statute does not say that the underlying policy remains active beyond the period called for in the contract between the parties. There is no language that “converts” the stated term of the policy.

Transamerica was decided against the backdrop of a general rule that an insurance company “incurs no liability for an accident that occurs after the policy period has ended.” (Transamerica, supra, 12 Cal.4th at p. 394.) This Court concluded in Transamerica that the HCA created an exception to that general rule. The coverage provided by an insurance [*20] policy subject to the HCA could not be canceled, regardless of its stated expiration date, without written notice of the policy’s cancellation to the PUC. (Transamerica, at p. 401.) This exception was based on explicit statutory language in the HCA prohibiting cancellation of a “‘policy of insurance, or surety bond’” without notice to the PUC. (Transamerica, at p. 398, quoting Pub. Util. Code, former § 3634.)

That language was not carried over into the Act. The change does not appear inadvertent. Like the HCA, an early draft of the Act would have conditioned a motor carrier‘s “[r]egistration” with the Department on the filing of either “a policy of insurance,” a surety bond, or other evidence of insurance. (Assem. Bill 1683 (1995–96 Reg. Sess.) § 55, as amended Aug. 30, 1995.) The same draft would have required that “protection against liability … be continued in effect during the active life of the registration.” (Ibid.) In later drafts, that language was removed from the relevant provisions and replaced with requirements that: (1) a “certificate of insurance” be filed with the Department; and (2) “proof of financial responsibility … be continued in effect during the active life of the permit.” (Assem. Bill 1683 (1995–96 Reg. Sess.) § 53, as amended July 7, 1996.) These were [*21] the requirements the Legislature ultimately approved. (§ 34630, subds. (a), (b).)

HN5 CA(5) (5) We generally infer a change in meaning from a change in statutory language. An “‘essential change in the phraseology of a statutory provision would indicate an intention on the part of the legislature to change the meaning of such provision rather than interpret it.’” (Estate of Todd (1941) 17 Cal.2d 270, 274–275 [109 P.2d 913].) This is especially true if a court has construed the old statute as having a particular meaning. (See Benson v. Workers’ Comp. Appeals Bd. (2009) 170 Cal.App.4th 1535, 1557 [89 Cal. Rptr. 3d 166] (Benson).) As O’Brien v. Dudenhoeffer (1993) 16 Cal.App.4th 327 [19 Cal. Rptr. 2d 826] explained, an “amendment materially changing a statute following a court decision interpreting the statute in its original form is to be regarded as an indication of legislative intent to change the meaning of the law.” (Id. at p. 335.) We should therefore “reject an interpretation of the statute which would leave the prior judicial construction in effect.” (Ibid.)

HN6 CA(6) (6) The Act prohibits cancellation of a certificate of insurance without notice to the DMV. (§ 34630, subd. (b); § 34631.5, subd. (b)(3).) Unlike the HCA, it does not speak to cancellation or termination of the underlying policy, which embodies the agreement between the parties. As a result, the Act does not prevent cancellation or termination of an insurance policy under the terms of the contract.

It is undisputed that at least one certificate of [*22] insurance that United filed during the period it covered Porras remained uncancelled at the time of the accident. The question remains: What impact does a certificate of insurance remaining on file with the DMV have with respect to the coverage that an insurer owes to its insured? Again, we return to the language of the United policy, the certificate of insurance, and the endorsement.

B. The Effect Upon Coverage of the Certificate of Insurance and the Required Endorsement

HN7 CA(7) (7) Insurance coverage is generally understood to mean an obligation on the insurer “to defend and indemnify the insured against loss resulting from specified activities.” (2 Witkin, Summary of Cal. Law (11th ed. 2017) Insurance, § 210, p. 329.) The certificate of insurance required by the Act mentions neither of these obligations. They are, instead, imposed by the terms of the United policy and by the Endorsement, though the obligations are described differently in each document.

In its certificates of insurance, United affirmed that Porras was covered by Policy 772, that the policy covered all vehicles for which Porras’s permit was required, and that a fully executed endorsement was attached to the policy. It also agreed [*23] the certificate was not cancellable without 30 days’ written notice to the Department.

The United policy promised that, if Porras “pa[id] the premium for liability coverage for the insured auto involved,” then United would pay damages up to the policy limits. The policy also provided that United would “settle or defend, at [its] option, any [covered] claim or lawsuit for damages.” Thus, so long as Porras paid the required premium, the policy required United to (1) defend or settle any covered claim against Porras and (2) indemnify Porras for any damages, up to the limits of liability. If Porras did not pay the required premium, however, the policy would “automatically terminate at the end of the current policy period.”

The Endorsement also addressed United’s duties to defend and indemnify Porras, but it altered some of the obligations United and Porras owed to each other under the terms of the underlying policy. In the Endorsement, United promised to “pay, consistent with the minimum insurance coverage required by [section 34631.5], and consistent with the limits it provides herein, any legal liability of [Porras] for bodily injury, death, or property damage arising out of the operation, maintenance, [*24] or use of any vehicle(s) for which a motor carrier permit is required.” United also promised that “[n]o provision, stipulation, or limitation contained in the attached policy or any endorsement [would] relieve [United] from obligations arising out of this Endorsement or the Act, regardless of insured’s financial solvency, indebtedness or bankruptcy.” However, the Endorsement’s “coverage” excluded any “costs of defense or other expense that the policy provide[d].” And the Endorsement specifically stated that it did “not prevent [United] from seeking reimbursement from [Porras] for any payment made by [United] solely on account of the [Endorsement’s] provisions.” Thus, the Endorsement promised that United would pay Porras’s legal liability up to the statutorily required minimum amount notwithstanding any provision or limitation in the policy. But it also allowed United to seek reimbursement from Porras for any payment United made solely on account of its provisions, and it specifically excluded the costs of Porras’s defense from its coverage. More importantly for our purposes, the Endorsement was an amendment to the United policy. Unlike the HCA and the endorsement applying General Order [*25] No. 100 in Transamerica, nothing in the Act or the Endorsement provides that the policy must remain effective until cancellation of the certificate of insurance.

CA(8) (8) We emphasize that the question before us is a narrow one. HN8 We hold that an uncancelled certificate of insurance that remains on file with the DMV does not cause the corresponding insurance policy to remain in effect in perpetuity. But that is not to say that an uncancelled certificate of insurance imposes no obligation of any kind on the responsible insurer. The statutory scheme suggests otherwise. For example, section 34631.5, subdivision (d) provides that “[e]very insurance certificate or equivalent protection to the public shall contain a provision that the certificate or equivalent protection shall remain in full force and effect until canceled.” Further, under the Act, an insurer remains obligated to promptly notify the DMV at least 30 days before a certificate of insurance is cancelled. This obligation is an important part of the statutory scheme, alerting the DMV of the need to suspend a motor carrier‘s permit until new insurance coverage is acquired.

United has suggested in the federal litigation, and before this court, that an uncancelled certificate of insurance [*26] could impose on the insurer something akin to a surety obligation to members of the public. The Ninth Circuit has not asked us to, and we need not, resolve whether such an obligation is created and the scope of any such obligation. We express no opinion on those questions. The character, nature, and extent of the obligations owed by a company that does not properly cancel a certificate of insurance are matters that can be clarified by further litigation and/or legislative action.

C. Allied’s Counterarguments Fail

In Allied’s view, the coverage provided by an insurance policy subject to the Act cannot lapse or be canceled until the insurer files a cancellation notice with the DMV. Indeed, Allied’s primary argument is that the insurance policy, the endorsement, and the certificate of insurance are all inseparable parts of a single whole, none of which can exist or be canceled without an effect on the others.

In support of this position, Allied points to section 34630, subdivision (a), which refers to “the policy represented by the certificate,” and section 34631.5, subdivision (b)(1), which refers to the certificate of insurance as “evidence[]” of the “protection required” by the Act. Allied contends that, because the certificate is evidence of and “represents [*27] the policy,” it “cannot exist without an underlying policy.” Allied argues that “even if the policy … is set to expire on a certain date, the [certificate] and the policy it represents will remain in effect until 30 days after written notice is given to the DMV.”

Allied also relies on language in the certificate of insurance, in which United certified under penalty of perjury that Porras “is covered” by the United policy. Allied urges the use of the verb “is” means that the policy must remain active until the certificate is canceled. According to Allied, if a policy can be canceled while the corresponding certificate remains active, then the insurer would be subject to penalties for perjury. Allied argues the certificate would become “a hollow document” that “would certify a falsehood—i.e. that there is insurance available.” To support its position that the policy and the endorsement are inseparable, Allied relies on language in the Endorsement providing that it is “attached to and made a part of” the United policy. Finally, Allied points to the cancellation notice, urging that it provides notice of cancellation of all three documents: policy; certificate; and endorsement. Allied [*28] argues there is “no separate mechanism for canceling only one or two of the three … . [E]ither all are active or all are canceled.”

HN9 CA(9) (9) There is, of course, a linkage between an insurance policy subject to the Act, the certificate of insurance required by the Act, and the endorsement required by the DMV’s regulations. But the documents are not one and the same. Rather, each serves its own function within the regulatory framework. As explained, an insurance policy is an agreement between an insurer and its insured. If a motor carrier complies with the Act by obtaining insurance, the certificate is evidence tendered to the DMV that the insurer agrees to be bound by the terms of the endorsement and therefore provides sufficient protection to satisfy the Act’s financial responsibility requirements. The certificate thus demonstrates the carrier’s financial responsibility by virtue of its contractual arrangement with the insurer. It is the document that supports issuance of the carrier’s permit, and its cancellation triggers the Department’s duty to suspend that permit. The certificate, however, does not govern the obligations between the parties. The endorsement, meanwhile, serves to ensure [*29] that the policy complies with the Act’s financial responsibility requirements and amends the policy to the extent of the endorsement’s terms.

Allied’s argument, that an insurer might be subject to a perjury charge for failing to cancel a certificate of insurance when a policy expires, raises an interesting potentiality, but it does not establish that the certificate, the policy, and the endorsement are inseparable or cannot exist without one another. Indeed, the premise that the three documents are indivisible is flawed. On the contrary, a carrier can contract for coverage with an insurer, and that coverage can become legally binding on the parties without any endorsement and before any certificate is filed. The fact a certificate “remains on file” with the DMV does not act to extend the policy’s coverage beyond its expiration date. As for the Endorsement, its language clearly indicates that the nature of coverage it describes is different from that provided by the policy. The Endorsement amended the policy in several ways. If applicable, it would impose no duty to defend, and it would allow United to seek reimbursement from Porras under certain circumstances. But, unlike the endorsement [*30] in Transamerica, supra, 12 Cal.4th 389, it did not change the duration of coverage, a subject to which it did not speak. Therefore, the Endorsement did not convert the policy from one with an agreed-upon term to one which remained in effect until cancelled.

Next, Allied argues there is no indication that the Legislature intended “to modify the financial responsibility requirements for motor carriers” or to change the rule from Transamerica, supra, 12 Cal.4th 389. Rather, the Legislature’s purpose in passing the Act, according to Allied, was to conform state law to a newly enacted federal law that preempted parts of the HCA. Allied points out that neither the Act nor its legislative history singles out Transamerica for “disapproval.” According to Allied, the change in statutory language was simply based on a change in the documentation required to be filed with the Department.⁷

HN10 CA(10) (10) In construing a statute, we consider first the words of the statute as the most reliable indicator of legislative intent. (California Building Industry Assn. v. State Water Resources Control Bd. (2018) 4 Cal.5th 1032, 1041 [232 Cal. Rptr. 3d 64, 416 P.3d 53].) Here, the HCA previously prohibited cancellation of an insurance policy without notice to the PUC. In the Act, that prohibition has been removed and replaced with a prohibition on the cancellation of a certificate of insurance without notice to the DMV. If the Legislature [*31] intended to perpetuate Transamerica‘s holding, relating to the continuation of the underlying policy itself, it could have simply used the same language it used in the HCA. Allied cites no authority for the proposition that the rule from Transamerica must survive because the Legislature failed to specifically disapprove it in the new statute or to specifically note such an intention as part of its legislative history. HN11 Well established authority supports the conclusion that a change in statutory language can, itself, be an indication of the Legislature’s intent. (See O’Brien v. Dudenhoeffer, supra, 16 Cal.App.4th 327, 335, and cases cited therein; see also Benson, supra, 170 Cal.App.4th at p. 1557.) Finally, that the Legislature sought to avoid federal preemption does not mean it did not act with other purposes in mind as well.

Allied’s final argument is that, if we adopt United’s “position that the expiration of a policy eliminates the insurance company’s obligation under the policy despite [the] lack of notice to the DMV,” then “the entire system of financial responsibility for motor carriers [will] be eviscerated.” The argument, though a bit hyperbolical, is related to a policy argument we raised in Transamerica. There, we stated the “certificate of insurance that an insurance company files with the PUC serves [*32] as proof of a highway carrier’s adequate protection against liability … . [A] long-term PUC employee testified at trial that the PUC looks to the certificate as proof of a highway carrier’s compliance with the financial responsibility obligations imposed by the statutory scheme: When a certificate for a policy of insurance is on file, the PUC assumes that the policy is still in effect, thus providing coverage for the highway carrier. [¶] In addition to providing an efficient means for the PUC to administer the [HCA‘s] financial responsibility requirements … , the certificate of insurance on file with the PUC serves as assurance that the public is protected in the event of an accident involving a particular highway carrier.” (Transamerica, supra, 12 Cal.4th at p. 403.) Allied contends that, if we hold that an insurance policy subject to the Act can be canceled without notice to the DMV, then the public will be left unprotected if a motor carrier without insurance, but with an active certificate of insurance representing an expired policy, is involved in an accident.⁸

It is true that commercial trucking is a business affecting the public interest and that one goal of the regulating legislation is to ensure that truckers [*33] do not improperly seek to reduce costs by carrying inadequate insurance. (Transamerica, supra, 12 Cal.4th at p. 397.) Transamerica reasoned that, as between an insurer who failed to properly notify the PUC of a policy’s expiration and a member of the public injured by an inadequately insured trucker, the insurer should bear the risk of loss. (Id. at pp. 403–404.) The Act’s legislative history indicates that it was also intended to “enhance public safety.” (See, e.g., Sen. Com. on Energy, Utilities and Communications, analysis of Assem. Bill. No. 1683 (1995–1996 Reg. Sess.) as amended July 7, 1996, p. 2.) However, the extension of insurance coverage beyond the underlying policy’s expiration date is not the only way to achieve these public protection goals.

As discussed above, further litigation or legislative action may clarify the particulars of how the overall statutory scheme will operate to protect the public. That important policy question need not be resolved here. The certified question arises only in the context of claims for equitable contribution and subrogation between two insurance companies. It bears repeating that the plaintiffs in the underlying lawsuit were compensated to the full limits of Allied’s policy under the terms of their settlement and that, at all relevant times, Porras properly maintained an active operating permit.

III. CONCLUSION

HN12 CA(11) (11) Under the Act, a commercial automobile [*34] insurance policy does not continue in full force and effect until the insurer cancels a corresponding certificate of insurance on file with the DMV. The duration of the policy’s coverage is regulated by its terms and those of any endorsement or amendment to the policy itself.

Guerrero, C. J., Liu, J., Kruger, J., Groban, J., Jenkins, J., and Evans, J., concurred.

End of Document

¹California Rules of Court, rule 8.548.

²All undesignated statutory references are to the Vehicle Code.

³Section 34631.5, subdivision (a), establishes the required minimum amount of liability protection for bodily injury, death, and property damage. (§ 34631.5, subd. (a)(1)–(4).) The proof of financial responsibility required under section 34630 must “be evidenced by the deposit with the [DMV], covering each vehicle used or to be used under the motor carrier permit … , of one of the following”: (1) a certificate of insurance issued by an insurance company; (2) a surety bond issued by a company licensed to write surety bonds in the state; (3) evidence of qualification as a self-insurer; or (4) evidence that coverage is provided by a charitable risk pool. (§ 34631, subds. (a)–(d).)

⁴To effectuate this requirement and prohibition, the Act requires that “[e]very insurance certificate or equivalent protection to the public … contain a provision that the certificate or equivalent protection shall remain in full force and effect until canceled in the manner provided by [section 34631.5, subdivision (b)(3)].” (§ 34631.5, subd. (b)(4).) Section 34631.5, subdivision (b)(3) provides that a certificate of insurance “shall not be cancelable on less than 30 days’ written notice to the [DMV].” California Code of Regulations, title 13, section 220.06, subdivision (c) provides that “[w]ritten notice of cancellation of [a] Certificate of Insurance, required under [section 34630, subdivision (b)], shall be submitted by the insurer to the department on a Notice of Cancellation of Insurance.” This form is referred to herein as a cancellation notice.

⁵Unlike the policy, the “coverage provided by the endorsement exclude[d] any costs of defense or other expense that the policy provides.”

⁶The district court also addressed and rejected United’s argument that a certificate of insurance that “remains on record after a policy lapses functions as a surety, through which the insurer ‘promises to pay up to $750,000 towards a judgment against the trucker [for harm to a third party] where coverage for some reason is unavailable under an actual insurance policy.’” The Ninth Circuit has not asked us to assess the propriety of that ruling, and we express no view on it.

⁷Under the HCA, an insurer was required to “‘deposit’” a “‘policy of insurance’” with the PUC as proof of a trucker’s financial responsibility (Pub. Util. Code, former § 3632), though with the PUC’s consent the insurer could file a certificate of insurance “in lieu of the policy” (Transamerica, supra, 12 Cal.4th at p. 408 (dis. opn. of Baxter, J., citing Pub. Util. Code, former § 3633). Under the Act, an insurer need only file a certificate of insurance to prove a motor carrier‘s financial responsibility. (§ 34631.5, subd. (b)(1).)

⁸We conclude that a policy can be cancelled even if the corresponding certificate of insurance remains on file. Accordingly, we need not consider whether a subsequent, and properly filed, certificate of insurance supersedes the vitality of any previously filed certificate relating to the same policy.